Leadership and Strategy Management

Introduction
The case is based on the business firm known as Tides Centre and the leadership role that
the owner known as Wila Seldon needs to adopt for running the business successfully. The
importance of the concept of leadership is quite high for any business and they need a proper
strategy in this regard to satisfy all the conditions required in the company. There are several
leadership models that the business has an option to implement in their business. All these
models then contribute towards preparing a strategy for the whole organization. Therefore, all the
issues related to Leadership and Strategy Management related with Wila Seldon at Tides Centre
will be discussed in detail.

Traditional and Modern Understanding of Leadership

The concept of leadership is a complex and challenging topic to define accurately.
Theories have been developed to describe this unique phenomenon, and many researchers have
attempted to define leadership, each providing a unique conceptualization. The researcher known
as Bass in 2000 explained that leadership is the focus of a group process. Many researchers have
conceptualized leadership from a personality perspective, inferring that leadership is a
combination of special traits or characteristics that some people possess to influence others.
Others have agreed that the nature of leadership is situational but contend that there are different
ways of viewing the complex interactions among leader, follower, and the social context, based

on the act or behaviour. With these points to consider, some people defined leadership as a
process whereby an individual influences a group of individuals to achieve a common goal
(Avolio, 1999, 65).

(1) Traditional Leadership

There is one traditional form of leadership known as Passive /Avoidant Leadership. Both
researchers identified passive/avoidant leadership as an important component of the full-range
leadership development model. Passive/avoidant leadership (i.e., laissez-faire) lacks
involvement; it is a passive approach to managing subordinates by waiting for them to make
mistakes before taking action (also known as management by exception). Due to this laissezfaire and management by exception approach to leadership, it is expected that passive/avoidant
leadership would demonstrate lower levels of effectiveness than the other two leadership styles
(transactional and transformational) and should generally be avoided. Thus, while there is limited
research on passive/avoidant leadership, there is little empirical support for this type of
leadership. Nonetheless, it is important to mention passive/avoidant leadership because it is so
prevalent in the workplace and it should be recognized and identifiable so it can be understood.
Also, it is important to understand where passive/avoidant (laissez-faire) leadership falls on the
transformational leadership continuum to understand the framework of transformational
leadership. Passive/avoidant leadership is characterized by two major leadership strategies:
laissez-faire leadership and management by exception (passive). Laissez-faire leadership is the
absence or avoidance of leadership. Laissez-faire leaders avoid taking responsibility and are
satisfied with the status quo and wait for others to take necessary actions. According to Avolio,

these leaders are sometimes described as social loafers. Generally, with this type of leadership,
actions are postponed and decisions are not made if it is possible to avoid them. Avolio suggested
that, although this type of leadership strategy might not be practiced often, it is exhibited by most
leaders occasionally (Avolio, 1999, 65).
Management-by-exception strategies consist of active and passive forms. The only
distinction between the two management-by-exception styles is the timing of the intervention by
the leader with regard to identifying mistakes. Thus, in passive management by exception, the
leader waits passively for errors to occur and then takes corrective action. This approach creates
a low-risk culture in which employees focus on avoiding mistakes rather than on promoting
innovation and creativity. In summary, passive/avoidant leadership is a laissez-faire and passive
approach to managing subordinates and passive/avoidant leaders are expected to be generally
ineffective (Barling, 1996, 832).

(2) Modern Leadership

There is one modern leadership known as Transactional Leadership. Burns (1978)
introduced the concept of transactional and transformational leadership. Later, Bass (1985)
expanded on both Burnss transformational and Houses (1971) charismatic leadership theory by
creating two conceptually distinct constructs. These two constructs can be practiced by the same
leader to different degrees and with different intensities. According to Bass (1985), transactional
leadership has been referred to as a process of social exchange, giving something to followers
in exchange for effective performance. In other words, transactional leadership is based on
rewarding or punishing followers based on the effectiveness of their performance. Transactional

leadership has been associated with many day-to-day management functions, where external
demands require minimal adjustment in performance protocol. In addition, this leadership style
takes a managerial focus in which leaders focus on making sure that the job gets done and
keeping the group functioning effectively. Due to its pragmatic approach, transactional
leadership has been thought of as being reactive and supportive of the status quo. However,
transactional leadership builds the foundation for relationships between leaders and their
followers because it focuses on specifying expectations and responsibilities, especially when
followers are unsure of what to do (Bass, 2000, 40).
Transactional leadership is characterized by two major leadership strategies: contingent
rewards and management by exception (active). The strategy of contingent rewards emphasizes
the use of praise or rewards that are contingent on achieving expected goals or performance
standards. Rewards may range from leader recognition to bonuses and salary increases. Overall,
researchers have found contingent rewards to be reasonably effective at enhancing the
achievement of organizational goals. Specifically, recognition-based transactions have been more
positively related to follower performance than something-for-something exchanges between
leaders and followers (Bramely, 1999, 153).
In active management by exception the leader constantly monitors followers mistakes
and takes corrective actions as necessary. Although this transactional leadership strategy may be
required on some occasions, such as in high-risk situations or military combat settings, this
leadership strategy generally leads to a creation of a low-risk culture in which employees focus
on avoiding mistakes. According to Avolio, even though such corrective actions can be effective,
they limit long-term development of followers potential. Transactional leadership seems to be
best suited when circumstances are safe and secure and followers benefit from order and

structure. Based on Hersey and Blanchards (1993) situational theory of leadership, transactional
leadership closely resembles the telling style in which followers are insecure, unable, or
unwilling and therefore need somebody to give them specific directions for accomplishing a task
(Cleveland, 2005, 176).
However, the directive nature of transactional leadership has been identified to be
effective in various emergency situations in which the risk of failure is extremely high due to
mortality threats or financial and physical costs. Avolio concluded that this type of leadership has
been proven to be effective in military combat settings, where it has been associated positively
with platoon readiness and performance. One of the main criticisms of transactional leadership
is the lack of articulated organizational vision and focus on first-order directives such as policy
or procedures. For this reason, this leadership approach limits organizational change and is
ineffective with followers who want to do more than simply comply with directions or orders.
Also, in contrast to transformational leadership, which emphasizes the quality of relationship
between the leader and follower, transactional leadership focuses primarily on the contingent
nature of this relationship (Avolio, 1999, 65).
Researchers have concluded that, although some organizations functions effectively using
contingent rewards to accomplish organizational objectives, transactional leadership can be
limiting, especially when the leader has no control over rewarding followers or when facing
resource constraints, such as time pressures, lack of resources, poor appraisal methods, or doubts
about the efficacy of positive reinforcement. Bass (1985) concluded that, although transactional
leadership is not as effective as transformational leadership, it can provide a good base for
effective leadership. Specifically, transactional leadership that focuses on individualized
contingent rewards for increasing intrinsic motivation and recognition may appear to be similar

to transformational leadership because of the focus on individual consideration and inspirational

motivation. However, these two leadership styles are adjacent to each other on the leadership
continuum (Bass, 2000, 40).
There is other leadership model known as transformational leadership which is a modern
form of leadership. The concept of transformational leadership has its roots in the works of
Burns (1978), later expanded by Bass (1985), who distinguished three components of
transformational leadership: (a) charisma, or the power of leaders personality that has profound
and extraordinary impact on their followers; (b) intellectual stimulation, or the leaders ability to
stimulate followers to be innovative and creative when problem solving; and (c) individual
consideration, or the individual attention that transformational leaders give to each follower. Bass
and Avolio (1997) broadened Basss (1985) model by adding inspirational motivation or the
leaders ability to inspire, motivate, and emotionally arouse followers to accomplish
organizational goals (Coad, 1998, 177).
D. J. Brown and Moshavi (2005) concluded that transformational leadership has
dominated leadership theory for almost two decades. Transformational leaders have been
characterized as visionary, charismatic, self-aware, and confident. They have been described as
having a higher sense of vision and more willing to initiate change by challenging the
organizational status quo. Bass (1985) emphasized that transformational leaders can be viewed
as exceptional motivators who help their followers to achieve more than the followers thought
was possible. This type of leadership is especially critical in times of stress and change when
there is a need to inspire people to succeed despite adverse circumstances. Transformational
leaders are also known to be competent and trustworthy and to have the ability to inspire and
encourage followers to think independently and creatively. More important, they focus on

identifying and adjusting to followers individual differences and inspiring them to achieve
beyond expectations (DeGroot, 2000, 360).
Transformational leadership has been examined by researchers across various settings,
with results consistently demonstrating the effectiveness of this leadership style. According to
Murphy (2005), transformational leadership has been associated with high levels of
empowerment, morale, motivation, and commitment, as well as a decline in emotional
exhaustion, burnout, and absenteeism among nurses. Geyer and Steyrer (1998) demonstrated that
transformational leadership has been effective for managers, primarily due to the creation of a
more inspired, committed, and cohesive culture. Howell and Avolio (1993) confirmed that
transformational leadership was associated with a higher follower locus of control and
effectively predicted business unit performance (Geyer, 1998, 420).
Meta-analyses have confirmed a positive relationship between transformational
leadership and performance, primarily because transformational leaders develop followers who
are more involved, satisfied, empowered, and committed to their organizations. Some of the
researchers in 2004 explored whether leadership styles were related to indicators of operational
readiness, such as individual decision making and operational leadership; their results indicated
that transformational leadership was a predictor of intellectual stimulation, situational awareness,
and interpersonal influence. Bass et al. (2003) examined predictive relationship for
transformational and transactional leadership; the results revealed that both leadership styles had
positive and direct relationships with performance. However, they concluded that research still
did not clarify the mediators between transactional and transformation leadership and
performance (Eagly, 1990, 256).

Transformational leaders have the ability to clearly articulate shared goals and a vision
for the organization, providing inspiration and motivation for their followers. They inspire their
followers through their visionary capacity, as well as their ability to communicate that vision
effectively. Thus, these leaders are enthusiastic and optimistic and stimulate enthusiasm, build
confidence, and inspire followers. This inspiration provides followers with meaning, challenge,
and higher levels of self-worth and confidence directed toward accomplishing organizational
goals (Shin, 2003, 714).
The researcher Avolio (1999) emphasized that followers inspiration comes from leaders
with a strong set of personal values that makes them seem trustworthy and dependable. These
leadership styles seem to fall on a continuum based on how leaders interact with their followers
and the nature of the situation, with passive/avoidant leadership at one end of the continuum,
transformational leadership at the other end, and transactional leadership in the middle. While
passive/avoidant leadership can be identified as a negative, passive, and generally ineffective
style of leadership that should generally be avoided, transactional leadership may be effective in
situations in which follower readiness and competence are low and followers require close
supervision. Transformational leadership may be ideal for high levels of empowerment, morale,
motivation, commitment, and effectiveness (House, 1971, 339).

Preferred Leadership styles in many organizations

The preferred leadership styles in many organizations are transformational leadership
and transactional leadership. A major differentiation between transactional and transformational
leadership occurred in the early 1980s when Bass (1985) described transformational leadership

as a more powerful predictor of successful outcomes than traditional contingency approaches to

transactional leadership. According to Bass (2000), various studies have supported the greater
effectiveness of transformational compared to transactional leadership in terms of generating
subordinates extra effort, commitment, satisfaction, and contributions to success. In other words,
transformational leadership goes even further to articulate vision, empower and enhance the
development of followers, challenge followers to think in unconventional ways, and inspire
followers to accomplish the task. The process of transforming subordinates not only delegates
responsibility and empowers them but helps them to assume responsibility for their own actions,
enabling them to become leaders themselves (Bass, 2000, 40).
Transformational leaders lead through empowerment that impacts followers motivation,
making them feel in control of their work, enthusiastic, self-confident, energetic, and productive.
In contrast to transactional leadership, in which the leaders influence is exerted through
contingent extrinsic rewards, transformational leaders empower their followers, thus enhancing
their intrinsic motivation, self-efficacy, and self determination. Charbonneau et al. reported that
transformational leadership predicted both intrinsic motivation and performance, with intrinsic
motivation being the mediator between transformational leadership and performance. While
transactional leaders are considered to work most effectively within the existing organizational
structure, transformational leaders focus on improving that structure. Thus, transformational
leadership is especially prominent in times of change, growth, or crisis, and is most effective
within organizations that thrive on change and innovation (Howell, 2001, 135).

Formulation and Implementation of Strategic Plan

According to Dalton in 1999, some people fail to learn because they avoid learning
opportunities and/or use bad learning strategies. However, the categories mentioned above can
help one to learn more effectively. Dalton reported significant individual differences in
willingness to learn from experiences. People who use a wide range of learning strategies tend to
be more successful and those who are more cautious tend to be less successful. Learning
strategies are helpful for people who are faced with a challenging situation. If a person uses only
one or two strategies more than average, it is possible that the person is overusing or misusing
those one or two strategies or is avoiding a situation because it is out of the comfort zone or deals
with an unfamiliar learning strategy. However, people who use a variety of learning strategies
appropriate to the situation are likely to be able to engage in a wide variety of challenging
situations because they have learned to extract the lessons that those situations teach. In contrast,
people who avoid challenges completely or consistently use a narrow range of learning strategies
are not likely to achieve their goals (Kouzes, 1995, 198).
The literature reflects consistent support for Daltons (1999) strategies of active learning,
thinking through reflection, feeling with emotional intelligence, and accessing others for support.
According to Cone (2001), educators are aware that it is important to teach people to be active in
their learning and to think critically. Cone concluded that educators should provide an
educational paradigm that encourages an environment conducive to active learning. Active
learning is one of the seven principles for effective practice in education identified by Chickering
and Gamson and by the American Association for Higher Education and the Education
Commission of the States. The research by the Community Needs and Strengths Assessment
Project, incorporated assessments into an undergraduate community health course as an active

learning project. It was concluded that active learning created an environment in which people
could actively solve real-life problems (Velsor, 2003, 102).
This supports the notion that action learning strategies are effective. Hovelynck (2003), a
keynote presenter at the 30th Annual Experience Education Conference, mentioned that adult
students who work on solving real life problems with discussion groups and reflection use both
active learning and thinking strategies. This supports the notion that action and thinking
strategies are complementary. The most effective transformational leaders view most situations
as a learning experience with the opportunity to improve skills. These leaders reflect on
experiences to see multiple perspectives and question their own assumptions to understand how
things really work. While this may seem obvious, research has shown challenges can interfere
with effective learning from experience and effective leadership. Therefore, these developments
will lead to formulation and implementation of strategic plan in the organization (Liu, 2003,
829).

Wila Seldons leadership at Tides Centre

The leadership of Wila Seldon at Tides Centre was quite good. The reason is that she
constantly strived for better performance management in the organization. She had two models
of Leadership to follow that were Traditional and Modern Leadership model. Though, the nature
of her business made her to implement the modern Leadership model. She faced a tough business
environment because there were several competitors who tried to compete with the organization.
The situation required her to develop good strategies in order to survive in the business. It was
very important for her to follow an ideal model of leadership in order to gain success in the

business. Tides Centre did well in the past because of their outstanding sales operations and they
even had a strong position in the industry. Though, in the span of few years, there were several
other firms that entered the industry. The situation became tough for Wila Seldon and it
demanded some good strategies to do well in the market. Therefore, it is quite clear that Wila
Seldon will need to implement modern leadership model at Tides Centre (Murphy, 2005, 136).

Critical Evaluation of Wila Seldons strategic planning

The critical evaluation of Wila Seldons is one of the major components of Tides Centre.
There are several firms that conduct strategic planning in order to perform well in the future. One
of the major reasons behind this fact is that the firms have concern regarding their future
operations. There are certain external factors that cause threat to the firms operations. The basic
fact behind the preparation of PEST Analysis is to assess the external factors that can affect the
business quite badly. These same steps were taken by Wila Seldon before preparing a strategic
plan for the organization. Tides Centre has performed well over the last few years which can be
illustrated in the case. Their sales operations grew rapidly and the company easily met the
demands of its consumers. The overall strategy was quite good enough for them to sustain well
in the market and they even had a good reputation in the market (Northouse, 2007, 146).
However, the situation is changing and there are several competitors that are entering the
market and becoming the potential threat for Wila Seldon. At present, Wila Seldon needs to
change their overall strategy to increase their sales operations and to attract customers towards
their business. They can lose their market share if they are not going to prepare an ideal strategy
for their business. These are definitely some of the issues which the firm would need to take it

very seriously because the future implications of Tides Centre are dependent on these factors.
Tides Centre has done well in the past, so it would not be tough for them to regain their market
position. They are quite aware of the market dynamics and have prepared various strategies to
run their business very well. The only factor which is there in the current scenario is that Wila
Seldon needs to adopt an appropriate leadership model to form the strong foundation for their
business. All these factors would contribute towards strategic planning that Tides Centre needs to
prepare for the future. Therefore, this is the overall critical evaluation of Wila Seldons strategic
planning (Pillai, 2004, 159).

Proper strategy needed in the current situation

The steps that can be taken by anyone in the place of Wila Seldon is to prepare an ideal
strategy for the business. The first factor is to assess the external environment of the business to
deal with the problems that are affecting the business. The second option is to assess the internal
characteristics of the business in order to see that whether the business requires any improvement
or not. Then the business can look at their past performance and compare it with their present
statistics to assess the reason for the difference in the performance levels. Then the most
important factor is to adopt an appropriate leadership model that the owner can adopt to run the
business well. Therefore, these are the steps that can be taken by anyone in the place of Wila
Seldon in order to prepare an ideal strategy for the business (Reinhardt, 2004, 31).

Conclusion

It is quite clear from this assignment that the importance of leadership model and strategy
management is very high for any business. It has been seen that a well-defined strategy and the
adoption of an ideal leadership model by Wela Seldon at Tides Centre will prove to be quite
useful for the business. These factors will even help business in preparing strategic planning for
the whole organization. Therefore, all the issues and aspects related to leadership and strategy
management will be discussed in detail.

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