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( An IACBE Accredited Institution )

Foundation Course
Principles of Management
Post Graduate Programme (2008 – 10)
(PGP)

Alliance Business School

Bangalore
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CHAPTER SEVEN

LEADERSHIP
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Learning Objectives

After reading this chapter, you should be able to:

o Define leadership.
o Describe the methods of developing effective leaders.
o Describe the difference between manager and leader.
o Explain the factors in leadership.
o Explain the leadership style.
o Describe the theories of leadership.
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A Leadership Story:
 A group of workers and their leaders are set a task of clearing a
road through a dense jungle on a remote island to get to the coast
where an estuary provides a perfect site for a port.
 The leaders organise the labour into efficient units and monitor the
distribution and use of capital assets – progress is excellent. The
leaders continue to monitor and evaluate progress, making
adjustments along the way to ensure the progress is maintained and
efficiency increased wherever possible.
 Then, one day amidst all the hustle and bustle and activity, one
person climbs up a nearby tree. The person surveys the scene from
the top of the tree.
 And shouts down to the assembled group below…
 “Wrong Way!”
“Management is doing things right, leadership is doing the
right things” (Warren Bennis and Peter Drucker)
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What is Leadership?

Leading people

Influencing people

Commanding people

Guiding people
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Definition of Leadership
 The art or process of influencing people so that they will
strive willingly and enthusiastically towards the
achievement of group goals. (Koontz & Weihrich).
KEY ELEMENTS OF LEADERSHIP
 The ability to use power effectively and in a responsible
manner;
 The ability to understand the fact that people are
motivated by different forces at different times and in
different situations;
 The ability to inspire; and,
 The ability to behave in a manner that will develop a
harmonious work culture.
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Methods of Developing Effective Leaders

 Proper use of management by objectives.
 Providing employees meaningful and interesting
work.
 Focusing on improving communication skills.

 Using an effective performance appraisal for

subordinates.
 Proper delegation of authority and responsibility.

 Building a team.

 Using standard procedures for effective decision-

making.
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What Makes a Good Leader?

Enthusiastic Organized &

& Creative Productive

Calm &
Collected
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Types of Leaders
 Leader by the position achieved.
 Leader by personality, charisma.
 Leader by moral example.
 Leader by power held.
 Intellectual leader.
 Leader because of ability to accomplish things.
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Leadership Traits
 Intelligence  Personality
 More intelligent than  Verbal facility
non-leaders  Honesty
 Scholarship  Initiative
 Knowledge  Aggressive
 Being able to get things  Self-confident
done  Ambitious
 Physical  Originality
 Doesn’t see to be  Sociability
correlated  Adaptability
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Leadership
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Managers vs. Leaders

Managers Leaders
 Focus on things  Focus on people

 Do things right  Do the right things

 Plan  Inspire

 Organize  Influence

 Direct  Motivate

 Control  Build

 Follows the rules  Shape entities

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Common Activities
 Planning
 Organizing
 Directing
 Controlling
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Planning
Manager Leader
 Planning  Devises strategy

 Budgeting  Sets direction

 Sets targets  Creates vision

 Establishes detailed steps

 Allocates resources
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Organizing
Manager Leader
 Creates structure  Gets people on board

 Job descriptions for strategy

 Staffing  Communication

 Hierarchy  Networks

 Delegates

 Training
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Directing Work
Manager Leader
 Solves problems  Empowers people
 Negotiates  Cheerleader
 Brings to consensus
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Controlling
Manager Leader
 Implements control  Motivate
systems  Inspire
 Performance  Gives sense of
measures accomplishment
 Identifies variances

 Fixes variances
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Five levels of Leadership

Level 1
o Position or title; people follow because they have to
(Rights).
Level 2
o Permission; people follow because they want to
(Relationships).
Level 3
o Production; people follow because of what you have done
for the organization (Results).
Level 4
o Personnel Development: People follow because of what
you have done for them (Reproduction).
Level 5
o Personhood; People follow because of who you are and
what you represent (Respect).
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Important Factors in Leadership

 The key to leadership: Priorities;
 The most important ingredient of leadership: Integrity;
 The ultimate test of leadership: Creating positive change;
 The quickest way to gain leadership: Problem solving;
 The extra plus in leadership: Attitude;
 Most appreciable asset of leadership: People;
 The indispensable quality of leadership: Vision;
 The price tag of leadership: Self-discipline;
 The most important lesson I’ve learned about leadership:
Staff development.
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Types of Leadership Style

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Types of Leadership Style

 Autocratic:
Leader makes decisions without reference to
anyone else
High degree of dependency on the leader

Can create de-motivation and alienation

of staff
May be valuable in some types of business
where decisions need to be made quickly and
decisively
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Types of Leadership Style

 Democratic:
 Encourages decision making from different
perspectives – leadership may be emphasised
throughout the organisation
Consultative: process of consultation before
decisions are taken.
Persuasive: Leader takes decision and seeks to
persuade others that the decision
is correct.
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Types of Leadership Style

 Democratic:
May help motivation and involvement.
Workers feel ownership of the firm and its
ideas.
Improves the sharing of ideas and experiences
within the business.
Can delay decision making.
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Types of Leadership Style

 Laissez-Faire:
 ‘Let it be’ – the leadership responsibilities are shared
by all.
 Can be very useful in businesses where creative ideas
are important.
 Can be highly motivational, as people have control
over their working life.
 Can make coordination and decision making time-
consuming and lacking in overall direction.
 Relies on good team work.
 Relies on good interpersonal relations.
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Types of Leadership Style

 Paternalistic:
 Leader acts as a ‘father figure’.
 Paternalistic leader makes decision but
may consult.
 Believes in the need to support staff.
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Change Leadership
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Change Leadership
 The most challenging aspect of business is
leading and managing change
 The business environment is subject to fast-paced
economic and social change
 Modern business must adapt and be flexible to
survive
 Problems in leading change stem mainly from
human resource management
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Change Leadership

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Theories of Leadership
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Theories of Leadership
 Trait theories:
Is there a set of characteristics that determine a good leader?
 Personality?
 Dominance and personal presence?
 Charisma?
 Self confidence?
 Achievement?
 Ability to formulate a clear vision?
 Are such characteristics inherently gender biased?
 Do such characteristics produce good leaders?
 Is leadership more than just bringing about change?
 Does this imply that leaders are born not bred?
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Theories of Leadership
 Behavioural:
 Imply that leaders can be trained – focus on the way of
doing things
 Structure based behavioural theories – focus on the
leader instituting structures – task orientated
 Relationship based behavioural theories – focus on
the development and maintenance of relationships –
process orientated
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Theories of Leadership
 Contingency Theories:
 Leadership as being more flexible – different leadership styles
used at different times depending on the circumstance.
 Suggests leadership is not a fixed series of characteristics that can
be transposed into different contexts
 May depend on:
 Type of staff
 History of the business
 Culture of the business
 Quality of the relationships
 Nature of the changes needed
 Accepted norms within the institution
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Theories of Leadership
 Transformational:
 Widespread changes to a business or organisation
 Requires:
 Long term strategic planning
 Clear objectives

 Clear vision

 Leading by example – walk the walk

 Efficiency of systems and processes

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Theories of Leadership
 Invitational Leadership:
 Improving the atmosphere and message sent out by the
organisation
 Focus on reducing negative messages sent out through the
everyday actions of the business both externally and, crucially,
internally
 Review internal processes to reduce these
 Build relationships and sense of belonging and identity with
the organisation – that gets communicated to customers, etc.
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Theories of Leadership
 Transactional Theories:
 Focus on the management of the organisation
 Focus on procedures and efficiency

 Focus on working to rules and contracts

 Managing current issues and problems

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Factors Affecting Style

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Factors Affecting Style

 Leadership style may be dependent on various
factors:
 Risk - decision making and change initiatives based on
degree of risk involved
 Type of business – creative business or supply driven?
 How important change is – change for change’s sake?
 Organisational culture – may be long embedded and
difficult to change
 Nature of the task – needing cooperation? Direction?
Structure?
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