Leadership Examination

Leadership Examination

 

 

Ch 14 Major Questions You Should Be Able to Answer

	14.1	The Nature of Leadership: Wielding Influence Major Question: I don’t want to be just a manager; I want to be a leader. What’s the difference between the two?
	14.2	Trait Approaches: Do Leaders Have Distinctive Personality Characteristics? Major Question: What does it take to be a successful leader?
	14.3	Behavioral Approaches: Do Leaders Show Distinctive Patterns of Behavior? Major Question: Do effective leaders behave in similar ways?
	14.4	Situational Approaches: Should Leadership Vary with the Situation? Major Question: How might effective leadership vary according to the situation at hand?
	14.5	The Uses of Transformational Leadership Major Question: What does it take to truly inspire people to perform beyond their normal levels?
	14.6	Three Additional Perspectives Major Question: If there are many ways to be a leader, which one would describe me best?

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the manager’s toolbox

Advancing Your Career: Staying Ahead in the Workplace of Tomorrow

Someday maybe you can afford to have a personal career coach—the kind long used by sports and entertainment figures and now adopted in the upper ranks of business. These individuals “combine executive coaching and career consulting with marketing and negotiations,” says one account. “They plot career strategy, help build networks of business contacts, . . . and shape their clients’ images.”¹

One such career coach is Richard L. Knowdell, president of Career Research and Testing in San Jose, California. He offers the following strategies for staying ahead in the workplace of tomorrow.²

Take Charge of Your Career, & Avoid Misconceptions

Because you, not others, are in charge of your career, and it’s an ongoing process, you should develop a career plan and base your choices on that plan. When considering a new job or industry, find out how that world really works, not what it’s reputed to be. When considering a company you might want to work for, find out its corporate “style” or culture by talking to its employees.

Develop New Capacities

“Being good at several things will be more advantageous in the long run than being excellent at one narrow specialty,” says Knowdell. “A complex world will not only demand specialized knowledge but also general and flexible skills.”

Anticipate & Adapt to, Even Embrace, Changes

Learn to analyze, anticipate, and adapt to new circumstances in the world and in your own life. For instance, as technology changes the rules, embrace the new rules.

Keep Learning

“You can take a one- or two-day course in a new subject,” says Knowdell, “just to get an idea of whether you want to use those specific skills and to see if you would be good at it. Then, if there is a match, you could seek out an extended course.”

Develop Your People & Communications Skills

No matter how much communication technology takes over the workplace, there will always be a strong need for effectiveness in interpersonal relationships. In particular, learn to listen well. Incidentally, one poll found that “appearance”—meaning clothes, accessories, and shoes—ranked second only to “communication skills” as the quality most associated with professionalism.³ (You might try imitating your bosses’ clothing styles.)

For Discussion Which of these five rules do you think is most important—and why?

Are there differences between managers and leaders? This chapter considers this question. We discuss the sources of a leader’s power and how leaders use persuasion to influence people. We then consider the following approaches to leadership: trait, behavioral, situational, transformational, and three additional perspectives.

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The Nature of Leadership: Wielding Influence I don’t want to be just a manager; I want to be a leader. What’s the difference between the two? THE BIG PICTURE Being a manager and being a leader are not the same. That said, they both are necessary in the pursuit of organizational goals. For example, leadership skills are needed to create and communicate a company’s vision, strategies, and goals, while management skills are needed to execute on these plans and goals. This section highlights how management and leadership skills are complementary and describes five sources of power leaders draw on to influence others. Leaders use the power of persuasion to get others to follow them. Five approaches to leadership are described in the next five sections.

Leadership. What is it? Is it a skill anyone can develop?

Leadership is the ability to influence employees to voluntarily pursue organizational goals.⁴ In an effective organization, leadership is present at all levels, say Tom Peters and Nancy Austin in A Passion for Excellence, and it represents the sum of many things. Leadership, they say, “means vision, cheerleading, enthusiasm, love, trust, verve, passion, obsession, consistency, the use of symbols, paying attention as illustrated by the content of one’s calendar, out-and-out drama (and the management thereof), creating heroes at all levels, coaching, effectively wandering around, and numerous other things.”⁵

Managers & Leaders: Not Always the Same

You see the words manager and leader used interchangeably all the time. However, as one pair of leadership experts has said, “Leaders manage and managers lead, but the two activities are not synonymous.”⁶

“Management,” says Tim Bucher, CEO of TastingRoom.com, a wine site, “is about doing things right—dotting the I’s, crossing the T’s. . . . But leadership is about doing the right thing. . . . You have to make a call, and in some ways it might be against company policy.”⁷

Managers do planning, organizing, directing, and control. Leaders inspire, encourage, and rally others to achieve great goals. Managers implement a company’s vision and strategic plan. Leaders create and articulate that vision and plan. The table on the next page summarizes key characteristics of each. (See Table 14.1.)

Managerial Leadership: Can You Be Both a Manager & a Leader?

Absolutely. The latest thinking is that individuals are able to exhibit a broad array of the contrasting behaviors shown in Table 14.1 (a concept called behavioral complexity).⁸ Thus, in the workplace, many people are capable of exhibiting managerial leadership, defined as “the process of influencing others to understand and agree about what needs to be done and the process of facilitating individual and collective efforts to accomplish shared objectives.”⁹ Here the “influencing” part is leadership and the “facilitating” part is management.

Managerial leadership may be demonstrated not only by managers appointed to their positions but also by those who exercise leadership on a daily basis but don’t carry formal management titles (such as certain coworkers on a team).

Page 443TABLE 14.1 Characteristics of Being a Manager & a Leader

Source: Adapted from P. Lorenzi, “Managing for the Common Good: Prosocial Leadership,” Organizational Dynamics, Vol. 33, No. 3 (2004), p. 286. Reprinted with permission from Elsevier.

Coping with Complexity versus Coping with Change: The Thoughts of John Kotter

In considering management versus leadership, retired Harvard Business School professor John Kotter suggests that one is not better than the other, that in fact they are complementary systems of action. The difference is that . . .

Management is about coping with complexity,

Leadership is about coping with change.¹⁰

Let’s consider these differences.

Being a Manager: Coping with Complexity Management is necessary because complex organizations, especially the large ones that so much dominate the economic landscape, tend to become chaotic unless there is good management.¹¹ (For a good description of a manager’s busy day, review Chapter 1, as analyzed by Henry Mintzberg.)

According to Kotter, companies manage complexity in three ways:

Determining what needs to be done—planning and budgeting. Companies manage complexity first by planning and budgeting—setting targets or goals for the future, establishing steps for achieving them, and allocating resources to accomplish them.

Creating arrangements of people to accomplish an agenda—organizing and staffing. Management achieves its plan by organizing and staffing, Kotter says—creating the organizational structure and hiring qualified individuals to fill the necessary jobs, then devising systems of implementation.

Ensuring people do their jobs—controlling and problem solving. Management ensures the plan is accomplished by controlling and problem solving, says Kotter. That is, managers monitor results versus the plan in some detail by means of reports, meetings, and other tools. They then plan and organize to solve problems as they arise.

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Amazing Amazon. Jeffrey Bezos, founder and CEO of online retailer Amazon.com, has done nearly everything Kotter suggests. For instance, Bezos’s “culture of divine discontent” permits employees to plunge ahead with new ideas even though they know that most will probably fail.

Being a Leader: Coping with Change As the business world has become more competitive and volatile, doing things the same way as last year (or doing it 5% better) is no longer a formula for success. More changes are required for survival—hence the need for leadership.

Leadership copes with change in three ways:

Determining what needs to be done—setting a direction. Instead of dealing with complexity through planning and budgeting, leaders strive for constructive change by setting a direction.That is, they develop a vision for the future, along with strategies for realizing the changes.

Creating arrangements of people to accomplish an agenda—aligning people. Instead of organizing and staffing, leaders are concerned with aligning people, Kotter says. That is, they communicate the new direction to people in the company who can understand the vision and build coalitions that will realize it.

Ensuring people do their jobs—motivating and inspiring. Instead of controlling and problem solving, leaders try to achieve their vision by motivating and inspiring. That is, they appeal to “basic but often untapped human needs, values, and emotions,” says Kotter, to keep people moving in the right direction, despite obstacles to change.

Do Kotter’s ideas describe real leaders in the real business world? Certainly many participants in a seminar convened by Harvard Business Review appeared to agree. “The primary task of leadership is to communicate the vision and the values of an organization,” Frederick Smith, chairman and CEO of FedEx, told the group. “Second, leaders must win support for the vision and values they articulate. And third, leaders have to reinforce the vision and the values.”¹²

Do You Have What It Takes to Be a Leader? Managers have legitimate power (as we’ll describe) that derives from the formal authority of the positions to which they have been appointed. This power allows managers to hire and fire, reward and punish. Managers plan, organize, and control, but they don’t necessarily have the characteristics to be leaders.

Whereas management is a process that lots of people are able to learn, leadership is more visionary. As we’ve said, leaders inspire others, provide emotional support, and try to get employees to rally around a common goal. Leaders also play a role in creating a vision and strategic plan for an organization, which managers are then charged with implementing.

Do you feel you’re up for being a leader? Is getting a college degree part of your plan for moving into the managerial ranks? Everyone is not suited to lead and you can get feedback on your readiness to lead by completing Self-Assessment 14.1.

SELF-ASSESSMENT 14.1

Assessing Your Readiness to Assume the Leadership Role

The following survey was designed to assess your readiness to assume the leadership role. Go to connect.mheducation.com and take Self-Assessment 14.1. When you’re done, answer the following questions:

1. What is your level of readiness? Are you surprised by the results?
2. Looking at the three highest- and lowest-rated items in the survey, what can you do to increase your readiness to lead? Think of specific actions you take right now.
3. Do you think your readiness to lead will change over time? Explain your rationale.

Page 445Five Sources of Power

To really understand leadership, we need to understand the concept of power and authority. Authority is the right to perform or command; it comes with the job. In contrast, power is the extent to which a person is able to influence others so they respond to orders.

People who pursue personalized power—power directed at helping oneself—as a way of enhancing their own selfish ends may give the word power a bad name. However, there is another kind of power, socialized power—power directed at helping others.¹³ This is the kind of power you hear in expressions such as “My goal is to have a powerful impact on my community.”

Within organizations there are typically five sources of power leaders may draw on: legitimate, reward, coercive, expert, and referent.

1. Legitimate Power: Influencing Behavior Because of One’s Formal PositionLegitimate power, which all managers have, is power that results from managers’ formal positions within the organization.All managers have legitimate power over their employees, deriving from their position, whether it’s a construction boss, ad account supervisor, sales manager, or CEO. This power may be exerted both positively or negatively—as praise or as criticism, for example.
2. Reward Power: Influencing Behavior by Promising or Giving RewardsReward power, which all managers have, is power that results from managers’ authority to reward their subordinates.Rewards can range from praise to pay raises, from recognition to promotions.

Example: “Talking to people effectively is all about being encouraging,” says Andrea Wong, president and CEO of Lifetime Network and Entertainment Services. She tries to use praise to reward positive behavior. “When I have something bad to say to someone, it’s always hard because I’m always thinking of the best way to say it.”¹⁴

3. Coercive Power: Influencing Behavior by Threatening or Giving PunishmentCoercive power, which all managers have, results from managers’ authority to punish their subordinates.Punishment can range from verbal or written reprimands to demotions to terminations. In some lines of work, fines and suspensions may be used. Coercive power has to be used judiciously, of course, since a manager who is seen as being constantly negative will produce a lot of resentment among employees. But there have been many leaders who have risen to the top of major corporations—such as Disney’s Michael Eisner, Miramax’s Harvey Weinstein, and Apple’s Steve Jobs—who have been abrasive and intimidating.¹⁵
4. Expert Power: Influencing Behavior Because of One’s ExpertiseExpert poweris power resulting from one’s specialized information or expertise. Expertise, or special knowledge, can be mundane, such as knowing the work schedules and assignments of the people who report to you. Or it can be sophisticated, such as having computer or medical knowledge. Secretaries may have expert power because, for example, they have been in a job a long time and know all the necessary contacts. CEOs may have expert power because they have strategic knowledge not shared by many others.
5. Referent Power: Influencing Behavior Because of One’s Personal AttractionReferent poweris power deriving from one’s personal attraction. As we will see later in this chapter (under the discussion of transformational leadership, Section 14.5), this kind of power characterizes strong, visionary leaders who are able to persuade their followers by dint of their personality, attitudes, or background. Referent power may be associated with managers, but it is more likely to be characteristic of leaders.

Page 446Leadership & Influence: Using Persuasion to Get Your Way at Work

Steve Harrison, CEO of a career management firm, was escorting Ray, his newly hired chief operating officer, to meet people at a branch office. After greeting the receptionist and starting to lead Ray past her into the interior offices, Harrison felt himself being pulled back. He watched as Ray stuck out his hand, smiled, and said, “Good morning, Melissa, I’m Ray. I’m new here. It’s so great to meet you!” He then launched into a dialogue with Melissa, to her obvious delight.

Afterward, Harrison asked Ray, “What was that all about?” “It’s called the two-minute schmooze,” Ray replied. “Our receptionists meet or talk by phone to more people critical to our company in one day than you or I will ever meet in the course of a year.”¹⁶

Ray would probably be considered a leader because of his ability to influence others—to get them to follow his wishes. There are nine tactics for trying to influence others, but some work better than others. In one pair of studies, employees were asked in effect, “How do you get your boss, coworker, or subordinate to do something you want?” The nine answers—ranked from most used to least used tactics—were as follows.¹⁷

1. Rational PersuasionTrying to convince someone by using reason, logic, or facts.

Example: “You know, all the cutting-edge companies use this approach.”

2. Inspirational AppealsTrying to build enthusiasm or confidence by appealing to others’ emotions, ideals, or values.

Example: “If we do this as a goodwill gesture, customers will love us.”

3. ConsultationGetting others to participate in a decision or change.

Example: “Wonder if I could get your thoughts about this matter.”

4. Ingratiating TacticsActing humble or friendly or making someone feel good or feel important before making a request.

Example: “I hate to impose on your time, knowing how busy you are, but you’re the only one who can help me.”

5. Personal AppealsReferring to friendship and loyalty when making a request.

Example: “We’ve known each other a long time, and I’m sure I can count on you.”

6. Exchange TacticsReminding someone of past favors or offering to trade favors.

Example: “Since I backed you at last month’s meeting, maybe you could help me this time around.”

7. Coalition TacticsGetting others to support your effort to persuade someone.

Example: “Everyone in the department thinks this is a great idea.”

8. Pressure TacticsUsing demands, threats, or intimidation to gain compliance.

Example: “If this doesn’t happen, you’d better think about cleaning out your desk.”

9. Legitimating TacticsBasing a request on one’s authority or right, organizational rules or policies, or express or implied support from superiors.

Example: “This has been green-lighted at the highest levels.”

Page 447These influence tactics are considered generic because they are applied in all directions—up, down, and sideways within the organization. The first five influence tactics are considered “soft” tactics because they are considered friendlier than the last four “hard,” or pressure, tactics. As it happens, research shows that of the three possible responses to an influence tactic—enthusiastic commitment, grudging compliance, and outright resistance—commitment is most apt to result when the tactics used are consultation, strong rational persuasion, and inspirational appeals.¹⁸

Knowing this, do you think you have what it takes to be a leader? To answer this, you need to understand what factors produce people of leadership character. We consider these in the rest of the chapter.

Five Approaches to Leadership

The next five sections describe five principal approaches or perspectives on leadership, which have been refined by research. They are (1) trait, (2) behavioral, (3) situational, (4) transformational,and (5) three additional. (See Table 14.2.)

TABLE 14.2 Five Approaches to Leadership

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Trait Approaches: Do Leaders Have Distinctive Personality Characteristics? What does it take to be a successful leader? THE BIG PICTURE Trait approaches attempt to identify distinctive characteristics that account for the effectiveness of leaders. We describe (1) positive task-oriented traits and positive/negative interpersonal attributes (narcissism, Machiavellianism, psychopathy) and (2) some results of gender studies.

Consider a leader dubbed “CEO of the Decade” in 2009 by Fortune magazine for 10 years of achievements in the fields of music, movies, and mobile phones, not to mention computing. “Remaking any one business is a career-defining achievement,” wrote Fortune editor Adam Lashinsky; “four is unheard of.”¹⁹

That leader was, of course, the late Steve Jobs of Apple. Did he have distinctive personality traits that might teach us something about leadership? Perhaps he did. He seemed to embody the traits of (1) dominance, (2) intelligence, (3) self-confidence, (4) high energy, and (5) task-relevant knowledge.

These are the five traits that researcher Ralph Stogdill in 1948 concluded were typical of successful leaders.²⁰ Stogdill is one of many contributors to trait approaches to leadership, which attempt to identify distinctive characteristics that account for the effectiveness of leaders.²¹

Positive Task-Oriented Traits & Positive/Negative Interpersonal Attributes

Traits play a central role in how we perceive leaders, and they ultimately affect leadership effectiveness.²² On the basis of more recent studies, we would revise Stogdill’s leadership list to comprise the following four positive task-oriented traits: (1) intelligence, (2) conscientiousness, (3) openness to experience, and (4) emotional stability.

These traits in turn can be expanded into a list of both positive and negative interpersonal attributes often found in leaders, as shown at left.²³ (See Table 14.3.)

TABLE 14.3 Key Positive & Negative Interpersonal Attributes Often Found in Leaders

“Dark Side” Traits: Narcissism, Machiavellianism, & Psychopathy We have discussed most positive interpersonal attributes elsewhere, but we need to describe the negative, or “dark side,” traits of some leaders: narcissism, Machiavellianism, and psychopathy.²⁴

Narcissism. Narcissism is defined as having “a self-centered perspective, feelings of superiority, and a drive for personal power and glory.”²⁵ Narcissists have inflated views of themselves, seek to attract the admiration of others, and fantasize about being in control of everything. Although passionate and charismatic, narcissistic leaders may provoke counterproductive work behaviors in others, such as strong resentments and resistance.²⁶

Machiavellianism. Inspired by the pessimistic beliefs of Niccolò Machiavelli, a philosopher and writer (The Prince) in the Italian Renaissance, Machiavellianism (pronounced “mah-kyah-vel-yahn-izm”) displays a cynical view of human nature and condones opportunistic and unethical ways of manipulating people, putting results over principles. This view is manifested in such expressions as “All people lie to get what they want” and “You have to cheat to get ahead.” Like narcissism, Machiavellianism is also associated with counterproductive work behaviors, especially as people begin to understand that they are being coldly manipulated.

Page 449   Psychopathy. Psychopathy (“sigh-kop-a-thee”) is characterized by lack of concern for others, impulsive behavior, and a dearth of remorse when the psychopath’s actions harm others. Not surprisingly, a person with a psychopathic personality can be a truly toxic influence in the workplace.

If you have a propensity for any of these, you need to know that the expression of “dark side” traits tends to result in career derailment—being demoted or fired.²⁷

Is Trait Theory Useful? Three ways in which organizations may apply trait theory are as follows:

Use personality and trait assessments. Organizations may incorporate personality and trait assessments into their selection and promotion processes (being careful to use valid measures of leadership traits).

Choose personality over intelligence. According to research, when organizations are selecting leaders, personality should be considered more important than intelligence.²⁸

Use management development programs. To enhance employee leadership traits and positive personal attributes, a great number of companies send targeted employees to management development programs that include management classes, coaching sessions, trait assessments, mentoring, and the like.²⁹

Gender Studies: Do Women Have Traits that Make Them Better Leaders?

Do women not want to be at the top of the organizational pyramid? Despite the myths, actually they do.

Indeed, a New York research firm found that 55% of women and 57% of men aspire to be CEO, challenging the notion that more women aren’t at the top because they don’t want to be there.³⁰Indeed, women have been found to be just as assertive as men.³¹ In fact, it’s possible that women may have traits that make them better managers—indeed, better leaders—than men.

The Evidence on Women Executives A number of management studies have found, according to BusinessWeek, that by and large “women executives, when rated by their peers, underlings, and bosses, score higher than their male counterparts on a wide variety of measures—from producing high-quality work to goal-setting to mentoring employees.”³² In one study of 425 high-level executives, women won higher ratings on 42 of the 52 skills measured.³³

What are the desirable traits in which women excel?

Women were found to be better at teamwork and partnering, being more collaborative, seeking less personal glory, being motivated less by self-interest than in what they can do for the company, being more stable, and being less turf conscious. Women were also found to be better at producing quality work, recognizing trends, and generating new ideas and acting on them. Women used a more democratic or participative style than men, who were apt to use a more autocratic and directive style than women.³⁴

Women have been found to display more social leadership, whereas men have been found to display more task leadership.³⁵

Women executives, when rated by their peers, managers, and direct reports, scored higher than their male counterparts on a variety of effectiveness criteria.³⁶

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Sheryl Sandberg. Named in 2014 the ninth most powerful woman in the world by Forbes and the 10th most powerful woman in business by Fortune, Sandberg is the chief operating officer (COO) and business face of Facebook. She’s also a passionate advocate for women achieving more top corporate leadership jobs. As she told a Barnard College graduating class, “A world where men ran half our homes and women ran half our institutions would be just a much greater world.”

The Lack of Women at the Top Only 24 women (4.8%) are CEOs of Fortune 500 companies, and only 45 women (5.1%) are CEOs of Fortune 1000 firms.³⁷ In addition, less than 9% of top management positions are filled by women.³⁸ Interestingly, however, companies with the top 10 highest paid female CEOs produce significantly higher dividends than firms with the top 10 highest paid male CEOs—2.98% versus 2.45%, according to one study.³⁹ So why, then, aren’t more women in positions of leadership? Among the possible explanations:

Unwillingness to compete or sacrifice. Though hardworking, many women simply aren’t willing to compete as hard as most men are or are not willing to make the required personal sacrifices.⁴⁰ As Jamie Gorelick, former vice chair of Fannie Mae but also mother of two children ages 10 and 15, said when declining to be considered for CEO: “I just don’t want that pace in my life.”⁴¹

Modesty. Women have a tendency to be overly modest and to give credit to others rather than taking it for themselves, which can undermine opportunities for promotions and raises.⁴²

Lack of mentor. Women are less likely than their male counterparts to have access to a supportive mentor.⁴³

Starting out lower, and more likely to quit. Perhaps most important, early career success is pivotal; women MBAs start out at lower levels than men do in their first jobs, putting them at a disadvantage that is hard to overcome. Further, findings from a study of over 475,000 people from 20 corporations revealed that women quit their jobs more often than men.⁴⁴ Higher quit rates can deprive women from obtaining promotions and experiences needed for career advancement.

Things may be gradually changing, though not as fast as they should. With more than half of college students being women and with women making up half the workforce, it’s possible that the new group rising through middle management could well lead to more than 100 Fortune 500 CEOs in the next 10 years.⁴⁵

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Behavioral Approaches: Do Leaders Show Distinctive Patterns of Behavior? Do effective leaders behave in similar ways? THE BIG PICTURE Behavioral leadership approaches try to determine unique behaviors displayed by effective leaders. These approaches can be divided into four categories, the first three of which are discussed in this section: (1) task-oriented behavior, (2) relationship-oriented behavior, (3) passive behavior, and (4) transformational behavior (discussed in Section 14.5).

Maybe what’s important to know about leaders is not their personality traits but rather their patterns of behavior. This is the line of thought pursued by those interested in behavioral leadership approaches, which attempt to determine the unique behaviors displayed by effective leaders. These approaches can be divided into four categories:

Task-oriented behavior

Relationship-oriented behavior

Passive behavior

Transformational behavior (discussed in Section 14.5)

Task-Oriented Leader Behaviors: Initiating-Structure Leadership & Transactional Leadership

The primary purpose of task-oriented leadership behaviors is to ensure that people, equipment, and other resources are used in an efficient way to accomplish the mission of a group or organization.⁴⁶ Examples of task-oriented behaviors are planning, clarifying, monitoring, and problem solving. However, two kinds are particularly important: (1) initiating-structure leadershipand (2) transactional leadership.⁴⁷

Men of steel. What kind of leadership behavior is appropriate for directing these kinds of workers—the kind that directs them how to complete the task or the kind that develops good worker-boss relationships?

Page 452Initiating-Structure Leadership: “Here’s What We Do to Get the Job Done” Initiating-structure leadership is leader behavior that organizes and defines—that is, “initiates the structure for”—what employees should be doing to maximize output. Clearly, this is a very task-oriented approach.

Example: Stephen Greer, head of Hong Kong–based metal recycler Hartwell Pacific, was so focused on new markets that he neglected to keep his eye on essential control systems such as accounting procedures, inventory audits, and new-hire reference checks—until the day he woke up to find the company was losing several million dollars from fraud and theft. Greer, whose entrepreneurial experience is described in Starting from Scrap, then launched oversight systems for his Asian operations: installing metal detectors, requiring three management signatures on company checks, having local finance managers report directly to headquarters instead of to their own general managers, and regularly bringing local managers to the headquarters to compare revenues, costs, and overall performance so as to determine if one site might be out of line with the others. Result: Greer’s initiating-structure leadership helped to correct the fraud and theft problems, ultimately leading to profitable growth.⁴⁸

Transactional Leadership: “Here’s What We Do to Get the Job Done, & Here Are the Rewards” As a manager, your power stems from your ability to provide rewards (and threaten reprimands) in exchange for your subordinates’ doing the work. When you do this, you are performing transactional leadership, focusing on clarifying employees’ roles and task requirements and providing rewards and punishments contingent on performance. As with initiating structure leadership, transactional leadership also encompasses setting goals and monitoring progress.⁴⁹

Example: Chicago-based ThoughtWorks, a software developer, 40 sales representatives. When the company was founded in 1993, CEO Craig Gorsline determined the sales reps’ roles and task requirements were to explain software pricing and policies, as well as close sales and do customer hand holding. The rewards paid to reps consisted of commissions on the revenue they generated, a common method of compensation in sales.

Recently, ThoughtWorks executives decided this transactional model had to be changed. Customers now used the Internet to compare pricing and policies. Moreover, paying sales commissions ran the risk of such negative behaviors as, according to The New York Times, “focusing on an individual’s profit over the company’s, emphasizing short-term outcomes, and encouraging competition among sales representatives.”⁵⁰ The new world demanded reps who could do what was right for the customer rather than themselves. Accordingly, ThoughtWorks abolished commissions in favor of paying reps a straight salary—a move many favored because it guaranteed them a steady paycheck.

Initiating-structure leadership has a moderately strong positive relationship with leadership effectiveness, according to research.⁵¹ Transaction leadership also has a positive association with leader effectiveness and group performance.⁵²

Relationship-Oriented Leader Behavior: Consideration, Empowerment, & Servant Leadership

Relationship-oriented leadership is primarily concerned with the leader’s interactions with his or her people. The emphasis is on enhancing employees’ skills and creating positive work relationships among coworkers and between the leader and the led. Such leaders often act as mentors, providing career advice, giving employees assignments that will broaden their skills, and empowering them to make their own decisions.⁵³

There are three kinds of relationship-oriented behaviors:

Consideration

Empowering leadership

Servant leadership

Page 453Consideration: “The Concerns & Needs of My Employees Are Highly Important” Consideration is leader behavior that is concerned with group members’ needs and desires and that is directed at creating mutual respect or trust. This is an important type of behavior to use in addition to task leadership because it promotes social interactions and identification with the team and leader. Considerate leader behavior has a moderately strong positive relationship with measures of leadership effectiveness.⁵⁴

The most effective leaders use different blends of task behavior and consideration when interacting with others. To what extent do you think you do this when interacting with school or work colleagues? You can answer this question by taking Self-Assessment 14.2.

SELF-ASSESSMENT 14.2

Assessing Your Task & Relationship-Oriented Leader Behavior

The following survey was designed to evaluate your own leader behavior. Go to connect.mheducation.com and take Self-Assessment 14.2. When you’re done, answer the following questions:

1. Do you prefer to use task or relationship leadership? Why do you think this is the case?
2. Look at the items for the two lowest scored items for initiating structure and consideration and then identify how you can increase the extent to which you display both types of leadership.
3. When would it be most important to display initiating structure and consideration? Explain your rationale.

Empowering Leadership: “I Want My Employees to Feel They Have Control over Their Work” Empowering leadership represents the extent to which a leader creates perceptions of psychological empowerment in others. Psychological empowerment is employees’ belief that they have control over their work. Such psychological empowerment is expected to drive intrinsic motivation, creativity, and performance.⁵⁵ Let’s see how this process works.

Increasing employee psychological empowerment requires four kinds of behaviors—leading for (1) meaningfulness, (2) self-determination, (3) competence, and (4) progress.

Leading for meaningfulness: inspiring and modeling desirable behaviors. Managers lead for meaningfulness by inspiring their employees and modeling desired behaviors. Example: Employees may be helped to identify their passions at work by the leader’s creating an exciting organizational vision that employees can connect with emotionally. Employees at drug maker Millennium, for example, are inspired by the company’s vision to cure cancer.⁵⁶

Leading for self-determination: delegating meaningful tasks. Managers can lead for employee self-determination by delegating meaningful tasks to them. “Delegating is essential,” says Gail Evans, an executive vice president at Atlanta-based CNN. “If you refuse to let your staff handle their own projects, you’re jeopardizing their advancement—because they aren’t learning new skills and adding successes to their resume.”⁵⁷

Leading for competence: supporting and coaching employees. It goes without saying that employees need to have the necessary knowledge to Page 454perform their jobs. Accomplishing this goal involves managers’ supporting and coaching their employees. Assigning a challenging task will help to fuel workers’ intrinsic motivation, and deficiencies can be handled through training, mentoring, positive feedback, and sincere recognition.

Leading for progress: monitoring and rewarding employees. Managers lead for progress by monitoring and rewarding others. We discussed how to do this in Chapter 12.

One technique used to empower employees is participative management (PM), the process of involving employees in setting goals, making decisions, solving problems, and making changes in the organization. We consider this further in the Practical Action box.

 PRACTICAL ACTION

Participative Management: Empowering Employees to Handle Decision Making

Participatory management (PM) is predicted to increase motivation, innovation, and performance because it helps employees fulfill three basic needs: autonomy, meaningfulness of work, and interpersonal contact.⁵⁸ Indeed, employees themselves seem to want to participate more in management: In one nationwide survey of 2,408 workers, two-thirds expressed the desire for more influence or decision-making power in their jobs.⁵⁹ PM can address these needs because it has been shown to increase employee job involvement, organizational commitment, and creativity, and it can lower role conflict and ambiguity.⁶⁰

Is PM Really Effective? Although participation has a significant effect on job performance and job satisfaction, that effect, unfortunately, is small.⁶¹ Accordingly, PM is probably not a quick-fix solution for low productivity and motivation. Nonetheless, it can probably be effective in certain situations, assuming that managers and employees interact constructively—that is, have the kind of relationship that fosters cooperation and respect rather than competition and defensiveness.⁶²

Factors that Can Help Make PM Work. Although participative management doesn’t work in all cases, it can be effective if certain factors are present, such as the following.⁶³

• Top management is continually involved:Implementing PM must be monitored and managed by top management.
• Middle and supervisory managers are supportive:These managers tend to resist PM because it reduces their authority. Thus, it’s important to gain the support and commitment of managers in these ranks.
• Employees trust managers:PM is unlikely to succeed when employees don’t trust management.
• Employees are ready:PM is more effective when employees are properly trained, prepared, and interested in participating.
• Employees don’t work in interdependent jobs:Interdependent employees generally don’t have a broad understanding of the entire production process, so their PM contribution may actually be counterproductive.
• PM is implemented with TQM:A study of Fortune 1000 firms during three different years found employee involvement was more effective when it was implemented as part of a broader total quality management (TQM) program.

Servant Leadership: “I Want to Serve My Subordinates & the Organization, Not Myself” The term servant leadership, coined by Robert Greenleaf in 1970, reflects not only his onetime background as a management researcher for AT&T but also his views as a lifelong philosopher and devout Quaker.⁶⁴ Servant leadership focuses on providing increased service to others—meeting the goals of both followers and the organization—rather than to oneself.

Servant leadership is not a quick-fix approach to leadership. Rather, it is a long-term, approach to life and work. Ten characteristics of the servant leader are shown opposite. (See Table 14.4.)One can hardly go wrong by trying to adopt these characteristics.

Page 455TABLE 14.4 Ten Characteristics of the Servant Leader

Source: From L. C. Spears, “Introduction: Servant-Leadership and the Greenleaf Legacy,” in L. C. Spears, ed., Reflections on Leadership: How Robert K. Greenleaf’s Theory of Servant-Leadership Influenced Today’s Top Management (New York: John Wiley & Sons, 1995), pp. 1–14. Reprinted with permission of John Wiley & Sons, Inc.

 EXAMPLE

Servant Leadership: Leaders Who Work for the Led

Who are some famous servant leaders?

A Covenant with Customers.   John Donahoe, CEO of eBay, thinks of customers first, and employees second. He tries his best to deliver what customers want. For example, reports one article, “on trips around the world he takes along a Flip video camera and films interviews with eBay sellers to share their opinions with his staff. He has even tied managers’ compensation to customer loyalty, measured through regular surveys.”⁶⁵

A Covenant with Employees. Starbucks CEO Howard Schultz is also cited as being one of the foremost practitioners of servant-style leadership. Schultz has made sure his employees have health insurance and work in a positive environment, and as a result Starbucks has a strong brand following.⁶⁶ Max De Pree, former chairman of furniture maker Herman Miller Inc., promoted a “covenant” with his employees. Leaders, he wrote, should give employees “space so that we can both give and receive such beautiful things as ideas, openness, dignity, joy, healing, and inclusion.”⁶⁷

YOUR CALL

Understandably, servant leadership is popular with employees. Can you think of situations in which this kind of leadership role would not be appropriate?

Employees whose manager displays the characteristics shown in Table 14.4 above are likely to be happier, more productive, more creative, and more willing to go above and beyond their customary duties.⁶⁸ To see how your boss measures up as a servant leader, try taking Self-Assessment 14.3.

SELF-ASSESSMENT 14.3

Assessing Your Boss’s Servant Leadership

The following survey is designed to assess the extent to which a current or former boss displayed servant leadership. Go to connect.mheducation.com and take Self-Assessment 14.3. When you’re done, answer the following questions:

1. Where does the boss stand? Are you surprised by the results?
2. Did you like this boss? Were you satisfied with your job? To what extent do you think your boss’s level of servant leadership affected your attitudes toward the boss and your job?
3. How can you become more of a servant leader? Explain.

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Passive leadership. Do you really hate to get involved in conflict? Do you think you might be tempted to “manage by exception”—not get involved in solving difficult employee problems until you’re forced to, as this executive staring out the window seems to be doing?

Passive Leadership: The Lack of Leadership Skills

Passive leadership is a form of leadership behavior characterized by a lack of leadership skills. For example, in the type of passive leadership called the management-by-exception style, managers do not intervene until problems are brought to their attention or until the problems become serious enough to demand action.⁶⁹

Another passive type is laissez-faire leadership, a form of “leadership” characterized by a general failure to take responsibility for leading. Not taking responsibility can hardly be considered leadership (although it often seems to be manifested by CEOs whose companies get in trouble, as when they say “I had no idea about the criminal behavior of my subordinates”). Interestingly, laissez-faire (“lay-zay fair”) leadership is seen more in men than women.⁷⁰

Examples of laissez-faire leadership are seen in various kinds of failure—failing to deal with conflict, to coach employees on difficult assignments, to help set performance goals, to give performance feedback, to deal with bullying, and so on. This passive leadership has a huge negative impact on employee perceptions of leaders—outweighing their positive perceptions of contributions by initiating structure, transactional, and consideration forms of leadership.⁷¹

Some Practical Implications of the Behavioral Approaches

Two key conclusions we may take away from the behavioral approaches are the following:

1. A leader’s behavior is more important than his or her traits.It is important to train managers on the various forms of task and relationship leadership.
2. There is no one best style of leadership.How effective a particular leadership behavior is depends on the situation at hand.

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Situational Approaches: Does Leadership Vary with the Situation? How might effective leadership vary according to the situation at hand? THE BIG PICTURE Effective leadership behavior depends on the situation at hand, say believers in two contingency approaches: Fiedler’s contingency leadership model and House’s path–goal leadership model.

Perhaps leadership is not characterized by universally important traits or behaviors. As we noted above, there is no one best style that will work in all situations. This is the point of view of proponents of the situational approach (or contingency approach) to leadership, who believe that effective leadership behavior depends on the situation at hand. That is, as situations change, different styles become appropriate.

Let’s consider two situational approaches: (1) the contingency leadership model by Fiedler and (2) the path–goal leadership model by House.

1. The Contingency Leadership Model: Fiedler’s Approach

The oldest model of the contingency approach to leadership was developed by Fred Fiedler and his associates in 1951.⁷² The contingency leadership model determines if a leader’s style is (1) task-oriented or (2) relationship-oriented and if that style is effective for the situation at hand. Fiedler’s work was based on 80 studies conducted over 30 years.

Packin’ pecans. Do successful entrepreneurs or small-business managers need to be task-oriented, relationship-oriented, or both? What style of leadership model would best suit a small enterprise in which employees work without the owner always being present?

Two Leadership Orientations: Tasks versus Relationships Are you task-oriented or relationship-oriented? That is, are you more concerned with task accomplishment or with people?

To find out, you or your employees would fill out a questionnaire (known as the least preferred coworker, or LPC, scale), in which you think of the coworker you least enjoyed working with and rate him or her according to an eight-point scale of 16 pairs of opposite characteristics (such as friendly/unfriendly, tense/relaxed, efficient/inefficient). The higher the score, the more the relationship-oriented the respondent; the lower the score, the more task-oriented.

The Three Dimensions of Situational Control Once the leadership orientation is known, then you determine situational control—how much control and influence a leader has in the immediate work environment.

There are three dimensions of situational control: leader-member relations, task structure, and position power.

Leader-member relations—“Do my subordinates accept me as a leader?” This dimension, the most important component of situational control, reflects the extent to which a leader has or doesn’t have the support, loyalty, and trust of the work group.Page 458

Task structure—“Do my subordinates perform unambiguous, easily understood tasks?” This dimension refers to the extent to which tasks are routine, unambiguous, and easily understood. The more structured the jobs, the more influence a leader has.

Position power—“Do I have power to reward and punish?” This dimension refers to how much power a leader has to make work assignments and reward and punish. More power equals more control and influence.

For each dimension, the amount of control can be high—the leader’s decisions will produce predictable results because he or she has the ability to influence work outcomes. Or it can be low—he or she doesn’t have that kind of predictability or influence. By combining the three different dimensions with different high/low ratings, we have eight different leadership situations. These are represented in the diagram below. (See Figure 14.1.)

FIGURE 14.1 Representation of Fiedler’s contingency model

Source: Adapted from F. E. Fiedler, “Situational Control and a Dynamic Theory of Leadership,” in Managerial Control and Organizational Democracy, ed. B. King, S. Streufert, and F. E. Fiedler (New York: John Wiley & Sons, 1978), p. 114.

Which Style Is Most Effective? Neither leadership style is effective all the time, Fiedler’s research concludes, although each is right in certain situations.

When task-oriented style is best. The task-oriented style works best in either high-control or low-control situations.

Example of high-control situation (leader decisions produce predictable results because he or she can influence work outcomes): Suppose you were supervising parking-control officers ticketing cars parked illegally in expired meter zones, bus zones, and the like. You have (1) high leader-member relations because your subordinates are highly supportive of you and (2) high task structure because their jobs are clearly defined. (3) You have high position control because you have complete authority to evaluate their performance and dole out punishment and rewards. Thus, a task-oriented style would be best.

Example of low-control situation (leader decisions can’t produce predictable results because he or she can’t really influence outcomes): Suppose you were a high school principal trying to clean up graffiti on your private-school campus, helped only by students you can find after school. You might have (1) low leader-member relations because many people might not see the need Page 459for the goal. (2) The task structure might also be low because people might see many different ways to achieve the goal. And (3) your position power would be low because the committee is voluntary and people are free to leave. In this low-control situation, a task-oriented style would also be best.

When relationship-oriented style is best. The relationship-oriented style works best in situations of moderate control.

Example: Suppose you were working in a government job supervising a group of firefighters fighting wildfires. You might have (1) low leader-member relations if you were promoted over others in the group but (2) high task structure, because the job is fairly well defined. (3) You might have low position power, because the rigidity of the civil-service job prohibits you from doing much in the way of rewarding and punishing. Thus, in this moderate-control situation, relationship-oriented leadership would be most effective.

What do you do if your leadership orientation does not match the situation? Then, says Fiedler, it’s better to try to move leaders into suitable situations rather than try to alter their personalities to fit the situations.⁷³

2. The Path–Goal Leadership Model: House’s Approach

A second situational approach, advanced by Robert House in the 1970s and revised by him in 1996, is the path–goal leadership model, which holds that the effective leader makes available to followers desirable rewards in the workplace and increases their motivation by clarifying the paths, or behavior, that will help them achieve those goals and providing them with support. A successful leader thus helps followers by tying meaningful rewards to goal accomplishment, reducing barriers, and providing support, so as to increase “the number and kinds of personal payoffs to subordinates for work-goal attainment.”⁷⁴

Numerous studies testing various predictions from House’s original path–goal theory provided mixed results.⁷⁵ As a consequence, he proposed a new model, a graphical version of which is shown below. (See Figure 14.2.)

FIGURE 14.2 General representation of House’s revised path–goal theory

Page 460What Determines Leadership Effectiveness: Employee Characteristics & Environmental Factors Affect Leader Behavior As the drawing indicates, two contingency factors, or variables—employee characteristics and environmental factors—cause some leadership behaviors to be more effective than others.

Employee characteristics. Five employee characteristics are locus of control (described in Chapter 11), task ability, need for achievement, experience, and need for path–goal clarity.

Environmental factors. Two environmental factors are task structure (independent versus interdependent tasks) and work group dynamics.

Leader behaviors. Originally House proposed that there were four leader behaviors, or leadership styles—directive (“Here’s what’s expected of you and here’s how to do it”), supportive (“I want things to be pleasant, since everyone’s about equal here”), participative (“I want your suggestions in order to help me make decisions”), and achievement-oriented (“I’m confident you can accomplish the following great things”). The revised theory expands the number of leader behaviors from four to eight. (See Table 14.5, below.)

TABLE 14.5 Eight Leadership Styles of the Revised Path–Goal Theory

Source: Adapted from R. J. House, “Path–Goal Theory of Leadership: Lessons, Legacy, and a Reformulated Theory,” Leadership Quarterly, Autumn 1996, pp. 323–352.

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Co-leaders. David Byttow (left) and Chrys Bader are co-founders of San Francisco–based Secret, an app that allows people to share messages anonymously with their friends. Which of the eight path-goal leadership styles would you expect to find dominating this organization?

Thus, for example, employees with an internal locus of control are more likely to prefer achievement-oriented leadership or group-oriented decision making (formerly participative) leadership because they believe they have control over the work environment. The same is true for employees with high task ability and experience.

Employees with an external locus of control, however, tend to view the environment as uncontrollable, so they prefer the structure provided by supportive or path–goal clarifying (formerly directive) leadership. The same is probably true of inexperienced employees.

Besides expanding the styles of leader behavior from four to eight, House’s revision of his theory also puts more emphasis on the need for leaders to foster intrinsic motivation through empowerment. Finally, his revised theory stresses the concept of shared leadership, the idea that employees do not have to be supervisors or managers to engage in leader behavior but rather may share leadership among all employees of the organization.

Does the Revised Path–Goal Theory Work? There have not been enough direct tests of House’s revised path–goal theory using appropriate research methods and statistical procedures to draw overall conclusions. Research on transformational leadership, however, which is discussed in Section 14.5, is supportive of the revised model.⁷⁶

Although further research is needed on the new model, it offers three important implications for managers:⁷⁷

Use more than one leadership style. Effective leaders possess and use more than one style of leadership. Thus, you are encouraged to study the eight styles offered in path–goal theory so that you can try new leader behaviors when a situation calls for them.

Help employees achieve their goals. Leaders should guide and coach employees in achieving their goals by clarifying the path and removing obstacles to accomplishing them.

Modify leadership style to fit employee and task characteristics. A small set of employee characteristics (ability, experience, and need for independence) and environmental factors (task characteristics of autonomy, variety, and significance) are relevant contingency factors, and managers should modify their leadership style to fit them.

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The Uses of Transformational Leadership What does it take to truly inspire people to perform beyond their normal levels? THE BIG PICTURE Four key behaviors of transformational leaders in affecting employees are they inspire motivation, inspire trust, encourage excellence, and stimulate them intellectually.

We have considered the major traditional approaches to understanding leadership—the trait, behavioral, and situational approaches. But newer approaches seem to offer something more by trying to determine what factors inspire and motivate people to perform beyond their normal levels.

One recent approach proposed by Bernard Bass and Bruce Avolio, known as full-range leadership, suggests that leadership behavior varies along a full range of leadership styles, from passive (laissez-faire) “leadership” at one extreme, through transactional leadership, to transformational leadership at the other extreme.⁷⁸ As we stated, passive leadership is not leadership, but transactional and transformational leadership behaviors are both positive aspects of being a good leader.⁷⁹ We considered transactional leadership in Section 14.3. Here let’s consider transformational leadership.

Transformational Leaders

Transformational leadership transforms employees to pursue organizational goals over self-interests. Transformational leaders, in one description, “engender trust, seek to develop leadership in others, exhibit self-sacrifice, and serve as moral agents, focusing themselves and followers on objectives that transcend the more immediate needs of the work group.”⁸⁰ Whereas transactional leaders try to get people to do ordinary things, transformational leaders encourage their people to do exceptional things—significantly higher levels of intrinsic motivation, trust, commitment, and loyalty—that can produce significant organizational change and results.

Transformational leaders are influenced by two factors:

Individual characteristics. The personalities of such leaders tend to be more extroverted, agreeable, proactive, and open to change than nontransformational leaders. (Female leaders tend to use transformational leadership more than male leaders do.⁸¹)

Organizational culture. Adaptive, flexible organizational cultures are more likely than are rigid, bureaucratic cultures to foster transformational leadership.

The Best Leaders Are Both Transactional & Transformational

It’s important to note that transactional leadership is an essential prerequisite to effective leadership, and the best leaders learn to display both transactional and transformational styles of leadership to some degree. Indeed, research suggests that transformational leadership leads to superior performance when it “augments” or adds to transactional leadership.⁸²

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 EXAMPLE

The Superior Performance of Both a Transactional & Transformational Leader: PepsiCo’s CEO Indra Nooyi

For PepsiCo CEO Nooyi, one of her “most stunning talents is the art of suasion [persuasion],” says one writer. “She can rouse an audience and rally them around something as mind-numbing as a new companywide software installation. Her . . . motto, ‘Performance With Purpose,’ is both a means of ‘herding the organization’ and of presenting PepsiCo globally.”⁸³

The Nooyi Vision. Most important is her vision for moving the company beyond what it calls “fun for you foods” (soda pop and salty snacks) and into “better for you” foods, and into tackling issues like obesity and sustainability.⁸⁴

Long Term: Healthier Food. Nooyi, says Howard Schultz, CEO of Starbucks, which has a joint-venture partnership with PepsiCo, was “way ahead of her competitors in moving the company toward healthier products. She pushed for PepsiCo to buy Quaker Oats and Tropicana, and . . . PepsiCo removed trans fats from its products well before most other companies did.”⁸⁵

Short Term: Stay Profitable. However, in remaking PepsiCo over the long term so that it sells less fat and sugar, Nooyi has also run up against the other goal for a public company—short-term results, or “maximizing shareholder value,” where the company briefly fell behind. Nooyi must be careful not to stray too far back to being driven by short-term results, especially at a time when soft drink sales have been in a long-term slide.⁸⁶ So far, however, the company has stayed profitable.⁸⁷

YOUR CALL

Do you think you might have what it takes to be both a transactional and transformational leader? What’s the evidence?

Four Key Behaviors of Transformational Leaders

Whereas transactional leaders are dispassionate, transformational leaders excite passion, inspiring and empowering people to look beyond their own interests to the interests of the organization. They appeal to their followers’ self-concepts—their values and personal identity—to create changes in their goals, values, needs, beliefs, and aspirations.

Transformational leaders have four key kinds of behavior that affect followers.⁸⁸

1. Inspirational Motivation: “Let Me Share a Vision that Transcends Us All”Transformational leaders have charisma(“kar-riz-muh”), a form of interpersonal attraction that inspires acceptance and support. At one time, charismatic leadership—which was assumed to be an individual inspirational and motivational characteristic of particular leaders, much like other trait-theory characteristics—was viewed as a category of its own, but now it is considered part of transformational leadership.⁸⁹ Someone with charisma, then, is presumed to be more able to persuade and influence people than someone without charisma.⁹⁰

A transformational leader inspires motivation by offering an agenda, a grand design, an ultimate goal—in short, a vision, “a realistic, credible, attractive future” for the organization, as leadership expert Burt Nanus calls it. The right vision unleashes human potential, says Nanus, because it serves as a beacon of hope and common purpose. It does so by attracting commitment, energizing workers, creating meaning in their lives, establishing a standard of excellence, promoting high ideals, and bridging the divide between the organization’s problems and its goals and aspirations.⁹¹

Examples: Civil rights leader Martin Luther King Jr. had a vision—a “dream,” as he put it—of racial equality. Candy Lightner, founder of Mothers Against Drunk Driving, had a vision of getting rid of alcohol-related car crashes. Apple Computer’s Steve Jobs had a vision of developing an “insanely great” desktop computer. Indra Nooyi wants to develop healthier foods, while still making a profit. “Companies today are bigger than many economies,” she says. “If companies don’t do [responsible] things, who is going to?”⁹²

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Sir Branson. One of today’s most flamboyant businessmen, Britain’s Richard Branson is shown here announcing new service for his Virgin Atlantic airline. Branson left school at 16 to start a 1960s counterculture magazine. By 2006, he was heading a $5-billion-plus empire—the Virgin Group—that includes airlines, entertainment companies, car dealerships, railroads, bridal gowns, soft drinks, financial services, and a space tourism company. Knighted in 2000—which entitles him to be called “Sir”—Branson, who is dyslexic, says he is not for scrutinizing spreadsheets and plotting strategies based on estimates of market share. “In the end,” he says, “it is your own gut and your own experience of running businesses.” Do you think charismatic business leaders like Sir Branson are able to be more successful than more conventional and conservative managers?

2. Idealized Influence: “We Are Here to Do the Right Thing”Transformational leaders are able to inspire trust in their followers because they express their integrity by being consistent, single-minded, and persistent in pursuit of their goal. Not only do they display high ethical standards and act as models of desirable values, but they are also able to make sacrifices for the good of the group.⁹³

Example: Nooyi’s goal of reinventing PepsiCo’s product line to concentrate on more nutritional drinks and snacks (and double revenue to $30 billion by 2020) is ambitious, but it actually is in accord with the times. Americans are paying more attention to healthy eating, especially because of the U.S. obesity problem, and more consumers—and companies—are focusing on corporate responsibility and issues of greenness and sustainability.⁹⁴

3. Individualized Consideration: “You Have the Opportunity Here to Grow & Excel”Transformational leaders don’t just express concern for subordinates’ well-being. They actively encourage them to grow and to excel by giving them challenging work, more responsibility, empowerment, and one-on-one mentoring.

Example: When Indra Nooyi was chosen over her friend Mike White to lead PepsiCo, she went to great lengths to try to keep him on. “I treat Mike as my partner,” she said. “He could easily have been CEO.” At meetings, she always made sure he was seated at her right.⁹⁵ (Even so, in 2010 he left to become CEO of DirectTV.⁹⁶)

4. Intellectual Stimulation: “Let Me Describe the Great Challenges We Can Conquer Together”These leaders are gifted at communicating the organization’s strengths, weaknesses, opportunities, and threats so that subordinates develop a new sense of purpose. Employees become less apt to view problems as insurmountable or “that’s not my department.” Instead they learn to view them as personal challenges that they are responsible for overcoming, to question the status quo, and to seek creative solutions.

Example: Nooyi seeks to have “a positive impact on the world,” as she puts it. However, in 2012, with shareholders complaining about PepsiCo’s slipping share price, she had to pull back somewhat from emphasizing nutritious products to boosting the old Pepsi brand. She compared the change to a racecar taking a pit stop as the company sought to regain momentum in its soft drink business. Still, as one commentator pointed out, “She needs to soothe investors, but she shouldn’t surrender to them.” He Page 465endorsed Nooyi’s moves to achieve long-term gains—“that is, if Nooyi can fend off those looking for the financial equivalent of a sugar rush.”⁹⁷

Implications of Transformational Leadership for Managers

The research shows that transformational leadership yields several positive results. For example, it is positively associated with (1) measures of organizational effectiveness;⁹⁸ (2) measures of leadership effectiveness and employee job satisfaction;⁹⁹ (3) more employee identification with their leaders and with their immediate work groups;¹⁰⁰ (4) commitment to organizational change; ¹⁰¹ and (5) higher levels of intrinsic motivation, group cohesion, work engagement, setting of goals consistent with those of the leader, and proactive behavior.¹⁰²

Besides the fact that, as we mentioned, the best leaders are both transactional and transformational, there are three important implications of transformational leadership for managers, as follows.

1. It Can Improve Results for Both Individuals & GroupsYou can use the four types of transformational behavior just described to improve results for individuals—such as job satisfaction, organizational commitment, and performance. You can also use them to improve outcomes for groups—an important matter in today’s organization, where people tend not to work in isolation but in collaboration with others.
2. It Can Be Used to Train Employees at Any LevelNot just top managers but employees at any level can be trained to be more transactional and transformational.¹⁰³This kind of leadership training among employees should be based on an overall corporate philosophy that constitutes the foundation of leadership development.
3. It Requires Ethical LeadersFor a long time, top managers were assumed to be ethical. But in recent years, that notion has been disabused by news stories about scurrilous leaders ranging from the CEOs of Enron to pyramid schemer Bernard Madoff to failed commercial bankers paying themselves huge bonuses even as they accepted taxpayer bailouts and resisted regulation.¹⁰⁴With such high-profile revelations, the need for ethical leadership has become more apparent. Without honesty and trust, even transformational leaders lose credibility—not only with employees but also with investors, customers, and the public.¹⁰⁵

To better ensure positive results from transformational leadership, top managers should follow the practices shown below. (See Table 14.6.)

TABLE 14.6 The Ethical Things Top Managers Should Do to Be Effective Transformational Leaders

Source: These recommendations were derived from J. M. Howell and B. J. Avolio, “The Ethics of Charismatic Leadership: Submission or Liberation?” The Executive, May 1992, pp. 43–54.

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Three Additional Perspectives If there are many ways to be a leader, which one would describe me best? THE BIG PICTURE Two other kinds of leadership are the leader–member exchange model, which emphasizes that leaders have different sorts of relationships with different subordinates, and e-leadership, which involves leader interactions with others via information technology. A third perspective is the role of followers in the leadership process.

Two additional kinds of leadership deserve discussion: (1) leader–member exchange (LMX) model of leadership; and (2) e-leadership.

Leader–Member Exchange (LMX) Leadership: Having Different Relationships with Different Subordinates

Proposed by George Graen and Fred Dansereau, the leader–member exchange (LMX) model of leadership emphasizes that leaders have different sorts of relationships with different subordinates.¹⁰⁶ Unlike other models we’ve described, which focus on the behaviors or traits of leaders or followers, the LMX model looks at the quality of relationships between managers and subordinates. Also, unlike other models, which presuppose stable relationships between leaders and followers, the LMX model assumes each manager-subordinate relationship is unique.

In-Group Exchange versus Out-Group Exchange The unique relationship, which supposedly results from the leader’s attempt to delegate and assign work roles, can produce two types of leader–member exchange interactions.¹⁰⁷

In-group exchange: trust and respect. In the in-group exchange, the relationship between leader and follower becomes a partnership characterized by mutual trust, respect and liking, and a sense of common fates. Subordinates may receive special assignments and may also receive special privileges.

Out-group exchange: lack of trust and respect. In the out-group exchange, leaders are characterized as overseers who fail to create a sense of mutual trust, respect, or common fate. Subordinates receive less of the manager’s time and attention than those in in-group exchange relationships.

What type of exchange do you have with your manager? The quality of the relationship between you and your boss matters. Not only does it predict your job satisfaction and happiness, but it also is related to turnover. You can assess the quality of the relationship with a current or former boss by completing Self-Assessment 14.4.

SELF-ASSESSMENT 14.4

Assessing Your Leader–Member Exchange

The following survey was designed to assess the quality of your leader–member exchange. Go to connect.mheducation.com and take Self-Assessment 14.4. When you’re done, answer the following questions:

1. Where do you stand on the different dimensions underlying leader–member exchange? Are you surprised by the results?
2. Do you think the quality of your leader–member exchange is impacting your job satisfaction or performance? Explain.
3. Based on your survey scores, how might you improve the quality of your relationship with your boss? Be specific.

Page 467Is the LMX Model Useful? It is not clear why a leader selects particular subordinates to be part of the in-group, but presumably the choice is made for reasons of compatibility and competence. Certainly, however, a positive (that is, in-group) leader–member exchange is positively associated with goal commitment, trust between managers and employees, work climate, satisfaction with leadership, and—important to any employer—job performance and job satisfaction.¹⁰⁸ There is also a moderately strong positive relationship between LMX and organizational citizenship behaviors.¹⁰⁹

E-Leadership: Managing for Global Networks

The Internet and other forms of advanced information technology have led to new possible ways for interacting within and between organizations (e-business) and with customers and suppliers (e-commerce). Leadership within the context of this electronic technology, called e-leadership, can involve one-to-one, one-to-many, within-group and between-group and collective interactions via information technology.¹¹⁰ E-leadership means having to deal with quite a number of responsibilities, such as developing business opportunities through cooperative relationships, restructuring a company into global networks, decentralizing the company’s organization, and energizing the staff.¹¹¹

E-leaders, says one writer, “have a global mind-set that recognizes that the Internet is opening new markets and recharging existing ones. They don’t bother fighting mere battles with competitors because they’re too busy creating businesses that will surround and destroy them.”¹¹² Harvard Business School professor D. Quinn Mills, author of E-Leadership, suggests that individual companies will be replaced by much broader global networks that a single CEO will not be able to manage. Thus, while 20th-century management emphasized competition, he says, future organizations will run on knowledge sharing and open exchange.¹¹³

Followers: What Do They Want, How Can They Help?

Is the quality of leadership dependent on the qualities of the followers being led? So it seems. Leaders and followers need each other, and the quality of the relationship determines how we behave as followers.¹¹⁴

What Do Followers Want in Their Leaders? Research shows that followers seek and admire leaders who create feelings of . . .

Significance. Such leaders make followers feel that what they do at work is important and meaningful.

Community. These leaders create a sense of unity that encourages followers to treat others with respect and to work together in pursuit of organizational goals.

Excitement. The leaders make people feel energetic and engaged at work.¹¹⁵

What Do Leaders Want in Their Followers? Followers vary, of course, in their level of compliance with a leader, with helpers (most compliant), showing deference to their leaders, independents (less compliant) distancing themselves, and rebels (least compliant) showing divergence.¹¹⁶

Leaders clearly benefit from having helpers (and, to some extent, independents). They want followers who are productive, reliable, honest, cooperative, proactive, and flexible. They do not want followers who are reluctant to take the lead on projects, fail to generate ideas, are unwilling to collaborate, withhold information, provide inaccurate feedback, or hide the truth.¹¹⁷

We give some suggestions on how to be a better follower—and enhance your own career prospects—in the Practical Action box opposite.

Page 468

 PRACTICAL ACTION

How to Be a Great Follower: Benefiting Your Boss—& Yourself

“We degrade the very idea of followers—lemmings!—yet the world needs people who can follow intelligently,” says Dress for Success founder Nancy Lublin. “The key word is ‘intelligently.’ Good followers ask good questions. They probe their leaders. They crunch the numbers to ensure that their visionary boss’s gorgeous plans actually works.”¹¹⁸

How do you become an intelligent follower? Four suggested steps:¹¹⁹

1. Learn about Your Boss

It’s critical you understand your boss—interpersonal style, leadership style, pressures, goals, expectations, and strengths and weaknesses. To discover these, you might try asking him or her some of the following questions.¹²⁰

1. How can I help you?
2. How do you want me to communicate with you—e-mail, phone, in person?
3. When do you like to be approached with questions, and are some situations (such as social occasions) off-limits?
4. What is your approach toward giving feedback?
5. Are there attitudes or behaviors you won’t tolerate?
6. What is your most effective way of working?
7. Learn about Yourself

Do some self-analysis. Make an attempt to understand your own needs, expectations, goals, style, and strengths and weaknesses.

3. Analyze Your Differences

Does your boss hate small talk, work late hours, run disorganized meetings, and expect you to read his or her mind—whereas none of these characteristics apply to you? Do a “gap analysis” to see where the two of you differ.

4. Try to Adjust to the Boss’s Style, While Building on Your Mutual Strengths

Naturally you will have to adapt your work style to the boss’s style rather than the other way around (after all, he or she is the boss). But based on your analysis in Step 3, you’re in a position to see how your strengths can help cover your boss’s weaknesses. For instance, if your manager is pushed for time, as most managers are, and so tends to be a bit scattered, then if you’re an organized type you can help by preparing well-thought-out agendas for meetings. You can also be respectful of the boss’s time when you drop in to have a question answered.

YOUR CALL

Although it’s always in your and the leader’s best interest if you become an “intelligent follower,” we recognize that sometimes the two of you may differ so completely in habits, dislikes, and so on that you may simply have to look for opportunities outside your present work situation. Do you think you’ve been a good follower in past jobs?

Page 469Key Terms Used in This Chapter

behavioral leadership approaches

charisma

charismatic leadership

coercive power

consideration

contingency leadership model

e-leadership

empowering leadership

expert power

full-range leadership

initiating-structure leadership

laissez-faire leadership

leader–member exchange (LMX) model of leadership

leadership

legitimate power

Machiavellianism

managerial leadership

narcissism

participative management

passive leadership

path–goal leadership model

personalized power

psychological empowerment

psychopathy

referent power

relationship-oriented leadership

reward power

servant leadership

situational approach

socialized power

task-oriented leadership behaviors

trait approaches to leadership

transactional leadership

transformational leadership

Key Points

 14.1  The Nature of Leadership: Wielding Influence

• Leadership is the ability to influence employees to voluntarily pursue organizational goals.
• Being a manager and being a leader are not the same. Management is about coping with complexity, whereas leadership is about coping with change. Companies manage complexity by planning and budgeting, organizing and staffing, and controlling and problem solving. Leadership copes with change by setting a direction, aligning people to accomplish an agenda, and motivating and inspiring people.
• To understand leadership, we must understand authority and power. Authority is the right to perform or command; it comes with the manager’s job. Power is the extent to which a person is able to influence others so they respond to orders. People may pursue personalized power, power directed at helping oneself, or, better, they may pursue socialized power, power directed at helping others.
• Within an organization there are typically five sources of power leaders may draw on; all managers have the first three. (1) Legitimate power is power that results from managers’ formal positions within the organization. (2) Reward power is power that results from managers’ authority to reward their subordinates. (3) Coercive power results from managers’ authority to punish their subordinates. (4) Expert power is power resulting from one’s specialized information or expertise. (5) Referent power is power deriving from one’s personal attraction.
• There are nine influence tactics for trying to get others to do something you want, ranging from most used to least used tactics as follows: rational persuasion, inspirational appeals, consultation, ingratiating tactics, personal appeals, exchange tactics, coalition tactics, pressure tactics, and legitimating tactics.
• Four principal approaches or perspectives on leadership, as discussed in the rest of the chapter, are (1) trait, (2) behavioral, (3) situational, and (4) transformational.

 14.2  Trait Approaches: Do Leaders Have Distinctive Personality Characteristics?

• Trait approaches to leadership attempt to identify distinctive characteristics that account for the effectiveness of leaders. We describe (1) positive task-oriented traits and positive/negative interpersonal attributes (narcissism, Machiavellianism, and psychopathy), and (2) some results of gender studies.
• Four positive task-oriented traits are (1) intelligence, (2) consciousness, openness to experience, and (4) emotional stability. These traits in turn can be expanded into a list of both positive and negative interpersonal attributes often found in leaders. Among the positive attributes are extraversion, agreeableness, and communication skills. Among the negative attributes are narcissism, Machiavellianism, and psychopathy.

Page 470•   Women may rate higher than men do on producing high-quality work, goal setting, mentoring employees, and other measures. Women excel in such traits as teamwork and partnering, being more collaborative, seeking less personal glory, being motivated less by self-interest than company interest, being more stable, and being less turf-conscious.

 14.3  Behavioral Approaches: Do Leaders Show Distinctive Patterns of Behavior?

• Behavioral leadership approaches try to determine the unique behaviors displayed by effective leaders. Four categories are task-oriented behavior, relationship-oriented behavior, passive behavior, and transformational behavior (discussed in Section 14.5).
• Task-oriented behaviors are those that ensure that people, equipment, and other resources are used in an efficient way to accomplish the mission of a group or organization. Two types of task-oriented behaviors are (1) initiating-structure leadership, leader behavior that organizes and defines what employers should be doing to maximize output, and (2) transactional leadership, which focuses on clarifying employees’ roles and task requirements and providing rewards and punishments contingent on performance.
• Relationship-oriented leadership is primarily concerned with the leader’s interaction with his or her people. There are three kinds of relationship-oriented behaviors: (1) consideration, (2) empowering leadership, and (3) servant leadership.
• Consideration is leader behavior that is concerned with group members’ needs and desires and that is directed at creating mutual respect or trust.
• Empowering leadership represents the extent to which a leader creates perceptions of psychological empowerment in others. Psychological empowerment is employees’ belief that they have control over their work. Increasing employee psychological empowerment requires four kinds of behaviors—leading for (a) meaningfulness, (b) self-determination, (c) competence, and (d) progress. Leading for meaningfulness is inspiring and modeling desirable behaviors. Leading for self-determination is delegating of meaningful tasks. Leading for competence is supporting and coaching employees. Leading for progress is monitoring and rewarding employees. One technique used to empower employees is participative management (PM), the process of involving employees in setting goals, making decisions, solving problems, and making changes in the organization.
• Servant leadership focuses on providing increased service to others—meeting the goals of both followers and the organization—rather than to oneself.
• Passive leadership is a form of leadership behavior characterized by a lack of leadership skills. One type of passive leadership is laissez-faire leadership, a form of “leadership” characterized by a general failure to take responsibility for leading.
• Two conclusions that may be drawn from behavioral approaches are that (1) a leader’s behavior is more important than his or her traits and (2) there is no one best style of leadership.

 14.4  Situational Approaches: Should Leadership Vary with the Situation?

• Proponents of the situational approach (or contingency approach) to leadership believe that effective leadership behavior depends on the situation at hand—that as situations change, different styles become effective. Two contingency approaches are described: the Fiedler contingency leadership model and the path–goal leadership model.
• The Fiedler contingency leadership model determines if a leader’s style is task-oriented or relationship-oriented and if that style is effective for the situation at hand. Once it is determined whether a leader is more oriented toward tasks or toward people, then it’s necessary to determine how much control and influence a leader has in the immediate work environment.
• The three dimensions of situational control are leader–member relations, which reflect the extent to which a leader has the support of the work group; the task structure, which reflects the extent to which tasks are routine and easily understood; and position power, which reflects how much power a leader has to reward and punish and make work assignments.
• For each dimension, the leader’s control may be high or low. A task-oriented style has been found to work best in either high-control or low-control situations; the relationship-oriented style is best in situations of moderate control.
• The House path–goal leadership model, in its revised form, holds that the effective leader clarifies paths through which subordinates can achieve goals and provides them with support. Two variables, employee characteristics and environmental factors, cause one or more leadership behaviors—which House expanded to eight from his original four—to be more effective than others.

Page 471 14.5  The Uses of Transformational Leadership

• Full-range leadership describes leadership along a range of styles (from passive to transactional to transformational), with the most effective being transactional/transformational leaders.
• Transformational leadership transforms employees to pursue goals over self-interests. Transformational leaders are influenced by two factors: (1) Their personalities tend to be more extroverted, agreeable, and proactive. (2) Organizational cultures are more apt to be adaptive and flexible.
• The best leaders are both transactional and transformational. Four key behaviors of transformational leaders in affecting employees are they inspire motivation, inspire trust, encourage excellence, and stimulate them intellectually.
• Transformational leadership has three implications. (1) It can improve results for both individuals and groups. (2) It can be used to train employees at any level. (3) It can be used by both ethical or unethical leaders.

 14.6  Three Additional Perspectives

• Two additional kinds of leadership are (1) leader–membership exchange model, and (2) e-leadership.
• The leader–member exchange (LMX) model of leadership emphasizes that leaders have different sorts of relationships with different subordinates.
• E-leadership involves leader interactions with others via the Internet and other forms of advanced information technology, which have made possible new ways for interacting within and between organizations (e-business) and with customers and suppliers (e-commerce). E-leadership can involve one-to-one, one-to-many, within-group and between-group, and collective interactions via information technology.
• Whatever their type, leaders need followers who vary in compliance from helpers to independents to rebels. Leaders want followers who are productive, reliable, honest, cooperative, proactive, and flexible. They do not want followers who are reluctant to take the lead on projects, fail to generate ideas, are unwilling to collaborate, withhold information, provide inaccurate feedback, or hide the truth.

Understanding the Chapter: What Do I Know?

1. What is the difference between being a manager and being a leader?
2. What are five sources of power?
3. In brief, what are five approaches to leadership described in this chapter?
4. What are some positive task-oriented traits and positive/negative interpersonal attributes?
5. Explain the two types of task-oriented behavior.
6. Describe the three types of relationship-oriented behaviors.
7. Briefly discuss the two types of situational leadership approaches.
8. What are key constituents of transformational leadership?
9. Explain how the leader–member exchange (LMX) model works.
10. What is e-leadership?

Management in Action

Leadership Lessons from Sir Alex Ferguson

Sir Alex Ferguson was the manager for Manchester United for 26 years. Manchester United is an English football (soccer) club that is one of the most successful sports franchises in history. As manager of that club, Ferguson won 13 English titles as well as 25 additional domestic and international titles. This case is based on an interview he did for the Harvard Business Review. Consider the seven leadership lessons and how they might apply to businesses in general.

Page 472Start with the Foundation

From the moment I got to Manchester United, I thought of only one thing: building a football club. I wanted to build right from the bottom. That was in order to create fluency and a continuity of supply to the first team. With this approach, the players all grow up together, producing a bond that, in turn, creates a spirit.

When I arrived, only one player on the first team was under 24. Can you imagine that, for a club like Manchester United? I knew that a focus on youth would fit the club’s history, and my earlier coaching experience told me that winning with young players could be done and that I was good at working with them. So I had the confidence and conviction that if United was going to mean anything again, rebuilding the youth structure was crucial. You could say it was brave, but fortune favors the brave. . . .

I always take great pride in seeing younger players develop. The job of a manager, like that of a teacher, is to inspire people to be better. Give them better technical skills, make them winners, make them better people, and they can go anywhere in life. When you give young people a chance, you not only create a longer life span for the team, you also create loyalty. They will always remember that you were the manager who gave them their first opportunity. Once they know you are batting for them, they will accept your way. You’re really fostering a sense of family. If you give young people your attention and an opportunity to succeed, it is amazing how much they will surprise you. . . .

Set High Standards & Hold Everyone to Them

Everything we did was about maintaining the standards we had set as a football club—this applied to all my team building and all my team preparation, motivational talks, and tactical talks. For example, we never allowed a bad training session. What you see in training manifests itself on the game field. So every training session was about quality. We didn’t allow a lack of focus. It was about intensity, concentration, speed—a high level of performance. That, we hoped, made our players improve with each session.

I had to lift players’ expectations. They should never give in. I said that to them all the time: “If you give in once, you’ll give in twice.” And the work ethic and energy I had seemed to spread throughout the club. I used to be the first to arrive in the morning. In my later years, a lot of my staff members would already be there when I got in at 7 a.m. I think they understood why I came in early—they knew there was a job to be done. There was a feeling that “if he can do it, then I can do it.”

I constantly told my squad that working hard all your life is a talent. But I expected even more from the star players. I expected them to work even harder. I said, “You’ve got to show that you are the top players.” And they did. That’s why they are star players—they are prepared to work harder. Superstars with egos are not the problem some people may think. They need to be winners, because that massages their egos, so they will do what it takes to win. . . . .

Never, Ever Cede Control

If the day came that the manager of Manchester United was controlled by the players—in other words, if the players decided how the training should be, what days they should have off, what the discipline should be, and what the tactics should be—then Manchester United would not be the Manchester United we know. Before I came to United, I told myself I wasn’t going to allow anyone to be stronger than I was. Your personality has to be bigger than theirs. That is vital.

There are occasions when you have to ask yourself whether certain players are affecting the dressing-room atmosphere, the performance of the team, and your control of the players and staff. If they are, you have to cut the cord. There is absolutely no other way. It doesn’t matter if the person is the best player in the world. The long-term view of the club is more important than any individual, and the manager has to be the most important one in the club. . . .

I tended to act quickly when I saw a player become a negative influence. . . .

Match the Message to the Moment

No one likes to be criticized. Few people get better with criticism; most respond to encouragement instead. So I tried to give encouragement when I could. For a player—for any human being—there is nothing better than hearing “Well done.” Those are the two best words ever invented. You don’t need to use superlatives.

At the same time, in the dressing room, you need to point out mistakes when players don’t meet expectations. That is when reprimands are important. I would do it right after the game. I wouldn’t wait until Monday. I’d do it, and it was finished. I was on to the next match. There is no point in criticizing a player forever.

Generally, my pregame talks were about our expectations, the players’ belief in themselves, and their trust in one another. I liked to refer to a working-class principle. Not all players come from a working-class background, but maybe their fathers do, or their Page 473grandfathers, and I found it useful to remind players how far they have come. I would tell them that having a work ethic is very important. It seemed to enhance their pride. I would remind them that it is trust in one another, not letting their mates down, that helps build the character of a team.

In halftime talks, you have maybe eight minutes to deliver your message, so it is vital to use the time well. Everything is easier when you are winning: You can talk about concentrating, not getting complacent, and the small things you can address. But when you are losing, you have to make an impact. I liked to focus on our own team and our own strengths, but you have to correct why you are losing. . . .

Prepare to Win

Winning is in my nature. I’ve set my standards over such a long period of time that there is no other option for me—I have to win. I expected to win every time we went out there. Even if five of the most important players were injured, I expected to win. Other teams get into a huddle before the start of a match, but I did not do that with my team. Once we stepped onto the pitch before a game, I was confident that the players were prepared and ready to play, because everything had been done before they walked out onto the pitch.

I am a gambler—a risk taker—and you can see that in how we played in the late stages of matches. If we were down at halftime, the message was simple: Don’t panic. Just concentrate on getting the task done. If we were still down—say, 1–2—with 15 minutes to go, I was ready to take more risks. I was perfectly happy to lose 1–3 if it meant we’d given ourselves a good chance to draw or to win. So in those last 15 minutes, we’d go for it. We’d put in an extra attacking player and worry less about defense. We knew that if we ended up winning 3–2, it would be a fantastic feeling. And if we lost 1–3, we’d been losing anyway. . . .

Rely on the Power of Observation

Observation is the final part of my management structure. When I started as a coach, I relied on several basics: that I could play the game well, that I understood the technical skills needed to succeed at the highest level, that I could coach players, and that I had the ability to make decisions. One afternoon at Aberdeen I had a conversation with my assistant manager while we were having a cup of tea. He said, “I don’t know why you brought me here.” I said, “What are you talking about?” and he replied, “I don’t do anything. I work with the youth team, but I’m here to assist you with the training and with picking the team. That’s the assistant manager’s job.” And another coach said, “I think he’s right, boss,” and pointed out that I could benefit from not always having to lead the training. At first I said, “No, no, no,” but I thought it over for a few days and then said, “I’ll give it a try. No promises.” Deep down I knew he was right. So I delegated the training to him, and it was the best thing I ever did. . . .

Never Stop Adapting

One of the things I’ve done well over the years is manage change. I believe that you control change by accepting it. That also means having confidence in the people you hire. The minute staff members are employed, you have to trust that they are doing their jobs. If you micromanage and tell people what to do, there is no point in hiring them. The most important thing is to not stagnate. I said to David Gill a few years ago, “The only way we can keep players at Manchester United is if we have the best training ground in Europe.” That is when we kick-started the medical center. We can’t sit still.

Most people with my kind of track record don’t look to change. But I always felt I couldn’t afford not to change. We had to be successful—there was no other option for me—and I would explore any means of improving. I continued to work hard. I treated every success as my first. My job was to give us the best possible chance of winning. That is what drove me.

FOR DISCUSSION

1. Which of Sir Alex Ferguson’s leadership lessons apply to any type of organization? Explain your rationale.
2. Use Table 14.2to evaluate the extent to which Ferguson displays the characteristics associated with being a good leader and good manager.
3. Which different positive and negative leadership traits and styles are displayed by Ferguson? Cite examples.
4. Use Table 14.4to determine the extent to which Ferguson exhibits servant leadership. Provide supportive examples.
5. Which of the four types of transformational leadership behavior are displayed by Ferguson? Provide examples.
6. What did you learn about leadership from this case?

Reprinted by permission of Harvard Business Review. Excerpt from “Ferguson’s Formula,” by Anita Elberse with Sir Alex Ferguson, October 2013. Copyright © 2013 by the Harvard Business School Publishing Corporation; all rights reserved.

Page 474Legal/Ethical Challenge

Is It Ethical for Organizations to Incentivize Their Employees to Poach People from Competing Companies?

Have you used Uber or Lyft instead of a taxi? These two companies are major competitors in the ride-share and car-for-hire market, and they are creating major competition for the taxi industry. Both companies rely on the use of apps to connect riders with drivers.

According to The Wall Street Journal, both companies are “undercutting each other’s prices, poaching drivers and co-opting innovations.” Lyft claims that Uber has “abused its service in the past several months with the goal of poaching drivers and slowing down its network. Passengers who identify themselves as working for Uber frequently order a Lyft and then ride for only a few blocks, sometimes repeating this process dozens of times a day.” Is this practice ethical?

According to an internal Uber e-mail that was sent to its drivers and reviewed by The Wall Street Journal, “the company offers $250 for referring a new driver to its service; $500 for referring a Lyft driver; and $1,000 for signing up a Lyft ‘mentor.’” A mentor is an experienced Lyft employee who trains new drivers. Losing mentors would be a blow to Lyft.

Uber denies that it is “intentionally ordering Lyft rides to add congestion to its competitor’s service, but confirmed the company does offer recruitment incentives.”

SOLVING THE CHALLENGE

Would you change your competitive practices if you were a senior leader at Uber or Lyft?

1. Yes. Having employees taking short rides to jam up your competitor’s network is not ethical. Companies should compete on price and the quality of service, and Uber seems to be using techniques that affect Lyft’s quality of service.
2. No. This is hard-core competition and neither company is breaking any laws. I applaud Uber for offering incentives to poach key employees from Lyft.
3. Invent another option.

Source: The case is based on D. MacMillan, “The Fiercest Rivalry in Tech: Uber vs. Lyft,”