Chapter 17
Leadership
What Would You Do?
Leadership: Dealing with Tragedy



Sandler O’Neill & Partners,
L.P. is Investment banking
firm located in World Trade
Center on September 11
Top leaders are lost in the tragedy
Can new leadership help the firm survive
this catastrophic event?
2
Learning Objectives
What Is Leadership?
After discussing this section,
you should be able to:
1.
2.
explain what leadership is
describe who leaders are and what effective
leaders do
3
Leadership
Leaders versus Managers
Substitutes for Leadership
4
Managers versus Leaders
Managers
•
•
•
•
•
•
Do things right
Status quo
Short-term
Means
Builders
Problem solving
Leaders
•
•
•
•
•
•
Do the right thing
Change
Long-term
Ends
Architects
Inspiring & motivating
Adapted from Exhibit 17.1
5
Substitutes for Leadership: Do
Leaders Always Matter?

Leadership substitutes

subordinate, task, or organizational characteristics that
make leaders redundant or unnecessary


Leadership neutralizers

subordinate, task, or organizational characteristics that
interfere with a leader’s actions


professional orientation, intrinsically satisfying work, cohesive
work group, etc.
subordinate skills, abilities, unambiguous and routing tasks,
intrinsically satisfying work, rewards not controlled by
supervisor, etc.
Leaders don’t always matter
6
Leadership Substitutes &
Neutralizers
Characteristic
Subordinate Characteristics
 Ability, experience, training, knowledge
 Need for independence
 Professional orientation
 Indifference toward organizational rewards
Task Characteristics
 Unambiguous and routine tasks
 Performance feedback provided by the
work itself
 Intrinsically satisfying work
Organizational Characteristics
 Formalization, meaning specific plans,
goals, and areas of responsibility
 Inflexibility, meaning rigid, unbending rules
and procedures
 Highly specified staff functions
 Cohesive work groups
 Organizational rewards beyond a leader's
control
 Spatial distance between supervisors and
subordinates
People-Related
Leadership Behaviors
Task-Related
Leadership Behaviors
Neutralize
Neutralize
Substitute, Neutralize
Neutralize
Substitute, Neutralize
Neutralize
Substitute, Neutralize
Neutralize
No effect
No effect
Substitute, Neutralize
Substitute, Neutralize
Substitute, Neutralize
Neutralize
No effect
Neutralize
No effect
Neutralize
No effect
Substitute, Neutralize
Neutralize
Neutralize
Substitute, Neutralize
Neutralize
Neutralize
Neutralize
Adapted from Exhibit 17.2
7
Who Leaders Are and What Leaders
Do
Leadership
Traits
Leadership
Behavior
8
Leadership Traits
Drive
Desire to
Lead
Honesty/
Integrity
Emotional
Stability
Cognitive
Ability
Selfconfidence
Knowledge
of the
Business
9
What Really Works?
Traits & Perceptions of Leadership Effectiveness
Intelligence
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success
75%
Dominance
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success 57%
Extroversion
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success
63%
10
What Really Works? (cont’d)
Charisma & Leadership Effectiveness
Performance & Charisma
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success
72%
Charisma & Perceived Leader Effectiveness
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success
89%
Charisma & Leader Satisfaction
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Probability of success
90%
11
Leadership Behaviors

Initiating structure

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clarifies follower roles and duties
job-centered or concern for production
Consideration


creating a supportive environment
employee-centered or concern for people
12
Blake/Mouton Leadership Grid
Concern for People
9 1,9 Country Club
Management
8
Team 9,9
Management
7
6
Middle of the
5
5,5
4
Road
3
2
1
Impoverished
1,1 Management
1
2
3
4
AuthorityCompliance
5
6
7
8
9,1
9
Concern for Production
Adapted from Exhibit 17.4
13
Learning Objectives
Situational Leadership
After discussing this section,
you should be able to:
3.
4.
5.
explain Fiedler’s contingency theory.
describe how path-goal theory works.
explain the normative decision theory
14
Putting Leaders in the Right Situation:
Fiedler’s Contingency Theory
Leadership Style:
Least Preferred
Co-worker
Situational
Favorableness
Matching Leadership
Styles to
Situations
15
Fiedler’s Contingency Theory
Situational
Favorableness
Group
Performance
=
Leadership Style
Adapted from Exhibit 17.5
16
Leadership Style: Least Preferred
Co-Worker

Leadership style is the way a leader generally
behaves toward followers


seen as stable and difficult to change
Style is measured by the Least Preferred Coworker scale (LPC)


relationship-oriented
task-oriented
17
Situational Favorableness
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
How a particular situation affects a leader’s
ability to lead
Three factors



Leader-member relations
Task structure
Position power
18
Situational Favorableness
LeaderMember
Relations
Task
Structure
Position
Power
Situation
Good
Good
Good
Good
Poor
Poor
Poor
High
High
Low
Low
High
High
Low
Strong
Weak Strong Weak Strong Weak
I
II
Favorable
III
IV
V
Moderately Favorable
Strong
VI
VII
Unfavorable
Adapted From Exhibit 17.7
19
Matching Leadership Styles to
Situations
Good
Poor
LeaderMember
Relations
Task
Structure
Position
Power
Situation
Good
Good Good Good
Poor
Poor
Poor
High
High
High
High
Low
Low
Low
Strong Weak Strong Weak Strong Weak Strong
I
II
Favorable
III
IV
V
Moderately Favorable
VI
VII
Unfavorable
TaskOriented
Leaders
RelationshipOriented
Leaders
Adapted From Exhibit 17.8
20
Adapting Leader Behavior:
Path-Goal Theory
Four Leadership
Styles
Subordinate
and
Environmental
Contingencies
21
Path-Goal Theory
Subordinate Contingencies
• Perceived Ability
• Locus of Control
• Experience
Leadership Styles
•
•
•
•
Directive
Supportive
Participative
Achievement-Oriented
Outcomes
• Subordinate Satisfaction
• Subordinate Performance
Environmental Contingencies
• Task Structure
• Formal Authority System
• Primary Work Group
Adapted From Figure 17.10
22
Leadership Styles

Directive

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Supportive


being friendly and approachable
Participative


clarifying expectations and guidelines
allowing input on decisions
Achievement-Oriented

setting challenging goals
23
Subordinate & Environmental
Contingencies



Subordinate
Perceived ability
Locus of control
Experience



Environmental
Task structure
Formal authority
system
Primary work group
24
When to Use Each of the Four
Leadership Styles

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Directive Leadership
Unstructured tasks
Inexperienced workers
Workers with low perceived ability
Workers with external locus of
control
Unclear formal authority system




Supportive Leadership
Structured, simple, repetitive
tasks
Stressful, frustrating tasks
When workers lack confidence
Clear formal authority system
Participative Leadership
Achievement-Oriented Leadership
Experienced workers
 Unchallenging tasks
Workers with high perceived
ability
Workers with internal locus of
control
Workers not satisfied with rewards
Complex tasks
Adapted from Exhibit 17.11
25
Adapting Leader Behavior:
Normative Decision Theory
Decision
Styles
Decision
Quality and
Acceptance
26
Decision Styles
Style
AI - Autocratic
AII - Less autocratic
C1- Consultative
CII - More consultative
GII - Group decision
Adapted from Exhibit 17.12
Explanation
Solve the problem yourself using the information
you have.
Obtain the needed information from workers; then
solve the problem yourself. Workers provide
information but not alternatives.
Share the problem with workers individually
(but not as a group), seeking suggestions &
possible alternatives. Solve the problem yourself.
Share the problem with workers as a group, seeking
suggestions & possible alternatives. Solve yourself.
Share the problem with workers as a group,
seeking suggestions & possible alternatives.
Attempt to reach a consensus & be willing to
accept & implement the workers’ solution.
Decision Quality and Acceptance
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Using the right amount of employee
participation:
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improves decision quality
improves acceptance
Decision tree helps leader identify optimal
level of participation
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Decision Rules to Increase Decision
Quality
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Quality Rule
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Leader Information Rule
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If the quality of the decision is important, then don't use
an autocratic decision style
If the quality of the decision is important, and if the leader
doesn't have enough information to make the decision on
his or her own, then don't use an autocratic decision style
Subordinate Information Rule

If the quality of the decision is important, and if the
subordinates don't have enough information to make the
decision themselves, then don't use a group decision
style
29
Decision Rules to Increase Decision
Quality (cont’d)
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Goal Congruence Rule


If the quality of the decision is important, and subordinates'
goals are different from the organization's goals, then don't
use a group decision style
Problem Structure Rule

If the quality of the decision is important, the leader doesn't
have enough information to make the decision on his or her
own, and the problem is unstructured, then don't use an
autocratic decision style
30
Decision Rules to Increase Decision
Acceptance

Commitment Probability Rule


If having subordinates accept and commit to the
decision is important, then don't use an
autocratic decision style
Subordinate Conflict Rule

If having subordinates accept the decision is
important and critical to successful
implementation and subordinates are likely to
disagree or end up in conflict over the decision,
then don't use an autocratic or consultative
decision style
31
Decision Rules to Increase Decision
Acceptance (cont’d)

Commitment Requirement Rule

If having subordinates accept the decision is
absolutely required for successful implementation
and subordinates share the organization's goals,
then don't use an autocratic or consultative style
32
Learning Objectives
Strategic Leadership
After discussing this section,
you should be able to:
6.
explain how visionary leadership (i.e. charismatic
and transformational leadership) helps leaders
achieve strategic leadership.
33
Visionary Leadership
Charismatic
Leadership
Transformational
Leadership
34
Charismatic Leadership
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Creates an exceptionally strong relationship
between leader and follower
Lead by:
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articulating a clear vision, based on values
role modeling values
communicating high performance expectations
displaying confidence in followers
35
Been There, Done That
Richard Branson: Charisma without Hot Air
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Content employees produce happy
customers
Keeps offices at 50 people
Encourages and rewards risk taking and
creativity
36
Types of Charismatic Leaders
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Ethical Charismatics
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provide developmental opportunities
open to positive and negative feedback
recognize others’ contributions
share information
concerned with the interests of the group
Unethical Charismatics
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

control and manipulate followers
only want positive feedback
motivated by self-interest
37
Ethical and Unethical Charismatics
Charismatic Leader
Behaviors
Exercising Power
Creating the vision
Communicating with
followers
Accepting feedback
Stimulating followers
Developing followers
Living by moral
standards
Ethical Charismatics
Power is used to serve others
Followers help develop the vision
Two-way communication
Open to feedback
Want followers to think and to questions
the status quo
Focus on developing followers
Three virtues: courage, sense of fairness,
integrity
38
Ethical and Unethical Charismatics
Charismatic Leader
Behaviors
Exercising Power
Creating the vision
Communicating with
followers
Accepting feedback
Stimulating followers
Developing followers
Living by moral
standards
Unethical Charismatics
Power is used to dominate others
Vision comes solely from the leader
One-way communication, not open to
input from others
Prefer yes-men, punish candid feedback
Don’t want followers to think, prefer
uncritical acceptance of own ideas
Insensitive to followers’ needs
Follow standards only if they satisfy
immediate self interests
39
Transformational Leadership
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Generates awareness and acceptance of
group’s purpose and mission
Gets employees to see beyond their own
needs and self-interest
Goes beyond charismatic leadership
Different than transactional leadership
40
Transformational Leadership
Components

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
Charismatic leadership/idealized influence
Inspirational motivation
Intellectual stimulation
Individualized consideration
41
What Really Happened?
Leadership: Dealing with Tragedy

Deceased employees’ families

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
given pay check for the rest of the year
insurance coverage for five years
Jimmy Dunne became manager and
provided leadership that led to strong
financial recovery

developed new skills in negotiation,
calmness, patience, support, while
maintaining strong
business focus
42