chapter

16

Effective
Leadership
McGraw-Hill/Irwin
Principles of Management

2008 The McGraw-Hill Companies, Inc., All Rights

Reserved.

16 - 3

Learning Objectives
1. Explain why good leadership is critical for success as a
manager.
2. Summarize the main theoretical approaches to
leadership.
3. Identify the behaviors and skills that are commonly
associated with effective leadership.
4. Explain how the right approach to leadership might be
influenced by important contingencies.
5. Discuss the differences between transformational and
transactional leadership.

16 - 4

Managing & Leading

Leaders

Managers

Doing the
right things

Doing things
right

Focus on vision,
mission, and goals

Focuses on
preserving the
status quo

16 - 5

CEO Pay
AVERAGE annual CEO pay is $10.5 million, 369
times average worker pay of $28,310. In 1970, before
the big run-up, the multiple was 28:1, a ratio that
would make todays average worker pay $374,800.
Put another way: If CEO pay were frozen now, it
would take workers 66 years of 4% annual raises to
get back to 1/28th of what the boss makes.

Source: Business Week, October 30, 2006

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Question
All manager are
leaders and all leaders
are managers. Do you
agree? Explain.

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Organizational Challenges
The challenges facing organizations and leaders are
becoming increasingly complex. An internet survey by
the Center for Creative Leadership revealed the
following:
Type of Challenge

Frequency Percentage

Technical Challenge

43%

Adaptive Challenge

37%

Critical Challenge

10%

Source: Changing Nature of Leadership Research Report, The Center for Creative Leadership

16 - 8

Perspectives on
Leadership
Powerinfluence
perspective

Contingency
perspective

Effective
Leadership
Transformational
perspective

Trait
(competency)
perspective

Behavior
perspective

16 - 9

Perspectives of
Leadership
Power-influence approach attempts to
explain leadership effectiveness in terms of the
amount of power possessed by a leader.
Trait/competency perspective identifies the
traits and competencies of effective leaders
Behavior approach asserts that certain
behaviors are related to leadership effectiveness

16 - 10

Perspectives of
Leadership
Contingency perspective argues that the
appropriate behaviors for a leader to adopt
depend on context, and that will work in some
situations will not work in others
Transformational perspective suggests that
effective leaders transform organizations
through their vision

The Power-Influence
Perspective

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Effective leaders rely on:

- the personal power that flows from expertise
- a network of allies
- individual attributes
- power flowing from their position

What Makes
Leaders Great?
1. Self-awareness
2. Personal conviction
3. Courage
4. Creativity
5. Curiosity

Source: Biz Ed, September/October, 2005

6. Ability to inspire
7. Ability to listen
8. Ability to innovate
9. Eagerness to
experience
10.Willingness to
reflect

16 - 12

16 - 13

Skill Sets Required

by Academic Leaders
Skill set

% of Respondents indicating
as Important
Selling, marketing, and public relations
69%
Global business understanding

67%

Human resource and staffing

57%

Risk, cost, and financial management

51%

Project management

48%

E-business and IT knowledge

42%

Source: Biz Ed, March/April, 2002

Negotiation and employment law

27%

16 - 14

Competency
Perspective
Traits that can be acquired through learning

Emotional
Intelligence

Strategic
Thinking

Charisma

Achievement
Motivation

Power
Motivation

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Emotional Intelligence

Self-awareness

Self-regulation

Motivation

Empathy
Social skills

Limitations & Implications

of Competency Perspective
Not all of the traits are equally
important
Not all great leaders demonstrate all
traits
Importance of traits is context
dependent

16 - 16

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Behavior Perspective
Assumption: Certain leadership behaviors result in greater
commitment on the part of subordinates and hence higher
performance in pursuit of organization goals
People-oriented behavior A leadership style that includes
showing mutual trust and respect for subordinates,
demonstrating genuine concern for their needs
Task-oriented behavior The style of leaders who assign
employees to specific tasks, clarify their work duties and
procedures, ensure that they follow company rules, and push
them to reach their performance capacity

16 - 18

Fiedlers Leadership
Theory
Contingencies
*Leader-member relations
*Task structure
*Position power

Leadership style
*People-oriented
*Task-oriented

Outcomes
*Team, unit, or
organization
performance

Predictions of
Fiedlers Theory

Task-oriented
leaders

Leadership effectiveness

Good

Poor

16 - 19

People-oriented
leaders

Favorable
Situation

Moderately favorable
Situation

Unfavorable
Situation

Weaknesses of
Fiedlers Theory
Simplistic
Classification into two broad types seems
an unwarranted generalization
Division into people-oriented and taskoriented ignores the fact that some leaders
can exhibit both
Unrealistic to reward an effective leader
by removing him
Assumes that leaders cannot change their
style

16 - 20

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Path-Goal Theory
Personal characteristics
of subordinates
*Skills
*Needs
*Motivations

Leadership styles
*Directive
*Supportive
*Participative
*Achievement-oriented

Nature of work
environment
*Task structure
*Team
dynamics
*Formal power

Clarify path
Clear
path
Offer rewards
Employee goals

Path to goal attainment

Outcomes
(goal attainment)

Question
As a manager, Caitlyn always sets high goals for her
subordinates, has high expectations for their performance,
and displays confidence in them, encouraging and helping
them to take on greater responsibilities. According to the
Path-Goal theory, Caitlyn exhibits which of these
leadership styles?
a.
b.
c.
d.

Achievement-oriented leadership
Supportive leadership
Directive leadership
Participative

16 - 22

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Path-Goal Predictions
If followers lack confidence, supportive
leadership will increase subordinates
confidence that they can achieve goals,
which raises performance
If the task of subordinates is ambiguous,
directive leadership may be preferred
because it helps clarify the path
subordinates must follow, which again
increases performance

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Path-Goal Predictions
If the task of subordinates is standardized and
dull, achievement-oriented leadership can
motivate subordinates by setting high goals and
expressing confidence in their abilities
If the rewards offered to the employees are
inappropriate, participative leadership may allow
the leader to clarify the needs of subordinates and
change rewards to improve performance

Limitations of
Path-Goal Theory
The implicit assumption that a leader can adopt only
one style at a time seems simplistic
There is still no strong empirical consensus that pathgoal theory does a good job of explaining what is
required for effective leadership
It has a narrow definition of leadership effectiveness
Other potentially important factors of the leadership
process are ignored
It provides only a partial definition

16 - 25

Behaviors of
Transformational Leaders
Envisioning a
new future
Creating an
enduring
organization

Leading with
integrity

16 - 26

Communicating
persistently

Transformational
Leadership
Meaningful changes
in strategy and
organization

Modeling
desired
behaviors
Empowering
employees

Gender Differences
in Leadership

16 - 27

Women:
- have more people-oriented, participative leadership

- are more relationship-oriented, cooperative, nurturing, and emotional

in their leadership roles

Generally, studies have shown that men and women do not

differ in either task-oriented or people-oriented leadership
However, women do adopt a participative style more readily
Overall, subordinates have expectations from their leaders as to
how they should act, and if the leader deviates from
this belief negative evaluations may occur

16 - 28

Glass Ceiling
Proportion of Female CEOs, 2000 to 2016:
2000

2006

2010 (est.)

2016 (est.)

0.06%

2%

4.90%

6.20%

Source: Business Week, December 4, 2006