LEADERSHIP BEHAVIOR

Managing People and Performance in Organizations

presented to

Professor C. Manohar Reddy

Indian Institute of Management, Bangalore

on
November 18, 2005

by

Prashant Singhal 0511029

Prashanth Kumar A 0511030
Yamini Preethi Natti 0511058

Group 13
PGP 1, Section A
INTRODUCTION

It could be said that there are two extremes to the leadership continuum – on one end
would be the harsh and brutal aristocrat while on the other end is a caring, considerate
and supportive leader. While there are some leaders who can be identified with just one
of these, some manage to adapt themselves based on the situation. However, the success
or failure of any of these approaches to leadership depends to a large extent on the
organization setting being dealt with. Certain leaders in certain settings can make the
difference between enormous success and overwhelming failure.

'…the leader of armies is the arbiter of the people's fate, the man on whom it depends
whether the nation shall be in peace or in peril…’
Sun Tzu, circa 400 BC

The readings deal with one of the most debated topics of organizational life – leadership;
a field that has been extensively studied with the hopes of pinning down the
characteristics of a successful leader. Griffin and Moorhead present a compilation of
several theories dealing with this topic – some historical views on leadership like the trait
and behavioral approaches and a few products of more contemporary research like the
Least Preferred Co-worker (LPC) theory, the path goal theory and the Vroom’s decision
tree approach.

DEFINING LEADERSHIP

“Leadership is the art of getting someone else to do something you want done because he
wants to do it.”
Dwight D Eisenhower

Leadership can be defined as both a process and a property.

As a process, it would signify the use of non-coercive influence to direct and coordinate
a group’s activities towards meeting a goal. As a property, it is a set of characteristics
attributed to those who are perceived to use such influence successfully.

Thus while leadership could influence the group’s behavior, the extent to which the
leader’s goal meshes with the organization’s goal would define the success of the team in
an organizational setting.

LEADERSHIP vs. MANAGEMENT

"The difference between a boss and a leader: a boss says, 'Go!' - a leader says, 'Let's
go!’”
E.M.Kelly, Growing Disciples, 1995

Both leadership and management are indispensable to an organization. While leadership

is necessary to initiate and direct change and to help the organization through tough
times, effective management is needed to achieve coordination and systematic results
and to handle administrative activities during times of stability and predictability.

The following table identifies the basic distinctions between the two

Activity Management Leadership

Creating an agenda Planning and budgeting Establishing direction
establishing steps and developing a vision and strategy
timelines and allocating the for the future
necessary resources
Developing a Organizing and staffing Aligning agenda
human network for recruiting, delegating Communicating the vision and
achieving the responsibility and authority, strategy, influencing the creation
agenda defining procedures and of teams and coalitions that
 policies, establishing understand and accept their
monitoring systems validity
Executing plans Controlling and problem Motivating and inspiring
solving Energizing people to overcome
Identifying deviations barriers, fulfilling their basic but
through monitoring, unmet needs
organizing to find solutions
Outcomes Predictability Change

TRADITIONAL APPROACHES TO LEADERSHIP

The trait approach focused on identifying stable and enduring character traits that could
differentiate leaders from non-leaders. Research further was directed towards developing
ways of measuring these traits and using these methods for selecting leaders.
Some important traits included – intelligence, dominance, self-confidence, energy,
activity and task-relevant knowledge. The theory invited criticism as slowly writers
started relating leadership to traits like, height, sun-sign etc. It also lost credibility as it
could not answer how any of these traits were connected to leadership per se.
The role of gender, age and national culture were also debated. For e.g. while the
American business culture promoted profits and competition, the Japanese stressed more
on group cohesiveness and identity.

The behavioral approach assumed that the behavior of effective leaders was constant
across all situations and differed from that of the less effective leaders. Two studies
focused on this approach:
The Michigan leadership studies aimed at identifying leadership behavior patterns that
determined effective group performance. Job-centered leadership behavior and
employee-centered leadership behavior were placed at the two extremes of a continuum.
Both the types are mainly concerned with high performance but while the former focuses
just on the effective completion of a task, the latter attempts to build effective work
groups by paying close attention to the human aspects of the employees.
The Ohio State leadership studies on the other hand identified two significant kinds of
leader behavior – consideration and initiating-structure. When engaging in the
consideration behavior, the leader and subordinate share a relationship of mutual trust,
self-respect and two-way communication. The subordinate’s feelings and ideas are
respected. The initiating-structure behavior involves clear definition of leader-
subordinate roles so that the subordinate is clear about what is expected from him. Focus
is primarily on accomplishing the group’s task. Unlike in the Michigan studies, these two
traits are independent of each other and could be found in the same person in varying
degrees. The stability of a leader’s behavior depends on the stability of the situation and
the success of any one style would depend solely on the organizational setting.

The leadership grid portrays the types of leadership behavior and their potential
combinations in a two dimensional grid (9X9) – concern for production mapped against
concern for people on a scale of 1(low) to 9(high). Concern for production implies task-
oriented attitude and focus on the accomplishment of results while a manager with high
concern for people strives to avoid conflicts and maintain friendly relations with
subordinates. Though the position (9,9) appears intuitively the best, anecdotal evidence
claims it is less than the optimal solution in many situations.

While some of the above theories (e.g. leadership grid) overlooked the complexity of
leadership behavior, most of them failed to meet their primary goal – to identify universal
leader-behavior and follower-response patterns. The focus shifted to contingency theories
with the assumption that leadership behavior will vary across settings.
THE LPC THEORY OF LEADERSHIP

The “least-preferred-coworker” theory developed by Fred Fiedler attempts to explain

and reconcile both the leader’s personality and the complexity of the situation.

A leader’s personality traits in relation to leadership are identified as: task vs.
relationship motivation. These are grounded in the personality and hence constant for
any given leader. The degree of either of these is measured on the LPC scale. The
respondent selects from amongst his co-workers, his least preferred one and then
describes him on sixteen attributes on a scale on 1(negative) to 8(positive). These
descriptions speak more about the respondent as anyone’s least preferred co-worker
would be equally unpleasant – high-LPC leaders are more concerned with interpersonal
relations whereas low-LPC leaders are more concerned with task-relevant problems.

Also Fiedler identified three factors determining situation favorableness.

Leader-member relations are based on the extent to which subordinates trust,
respect and have confidence in their leader.
Task structure identifies the unambiguousness and simplicity of the task involved.
More structured the task, more favored it is as it requires lesser involvement of the leader
who could now focus on other (personnel) matters.
Leader position power is the power the leader has to assign work, reward, punish
etc. More the power, more favorable the situation is.

Leader Motivation and Situation Favorableness are mapped to recommend the following
behavior models:
 Leader-Member
Good Poor
Relations
Unstructure
Task Structure Structured Structured Unstructured
d
Hig
Position Power High Low High Low Low High Low
h

Situational
Very Very
Favorableness
Favorable Moderately Favorable Unfavorable

Recommended Leader Task

Person Oriented Task Oriented
Behavior Oriented

Fiedler recommends that in case of a leader-situation mismatch, the only solution would
be to change the situation through “job engineering” e.g. a person oriented leader in a
very unfavorable situation should attempt to improve matters by spending more time with
subordinates to improve leader-member relations and lay down procedures to provide
more task structure.

The theory is criticized on the following aspects

- inconsistency of research results
- lack of validity of the LPC measure
- Fiedler’s assumptions about inflexibility of behavior are said to be
unrealistic

THE PATH-GOAL THEORY OF LEADERSHIP

This theory evolves from the expectancy theory of motivation and is based on the
underlying assumption that leaders can readily adapt to different situations. It contends
that subordinates are motivated by their leader to the extent that their leader’s behavior
influences their expectations – by clarifying the behavior (path) that leads to desired
rewards (goals).

The theory identifies four kinds of leader behavior:

A directive leader makes clear his expectations to the subordinates, schedules work,
guides them towards accomplishing tasks and maintains definitive performance
standards.
A supportive leader shows concern for subordinate’s status, well-being and needs.
A participative leader consults subordinates and takes their suggestions into
consideration while solving issues.
An achievement oriented leader sets challenges goals, expects subordinates to perform
their best and shows the confidence that they can achieve the goals.

Leaders can change and adopt any of these styles based on the need of the situation. Two
types of situations can influence his behavior – personal characteristics of the
subordinates and characteristics of the environment.
Personal characteristics of the subordinate
- Locus of control: Extent to which individuals believe that what happens to
them is a result of their own behavior or external causes.
Those who attribute outcomes to
own behavior  more satisfied with a participative leader
external causes  more favorable to a directive leader
- Perceived ability: How people view their own ability wrt. the task.
Those who rate their ability
relatively high  low need for a directive leader
relatively low  prefer a directive leader
Characteristics of the environment
- Task structure
- Formal authority system
- Primary work group
 Leader behavior will motivate subordinates if it helps them cope with the
environmental uncertainty created by these factors.

Certain leadership styles could be redundant in certain environments. E.g. a supportive

leader is redundant when the work group provides strong social support.

VROOM’s DECISION TREE APPROACH TO LEADERSHIP

While Vroom’s approach goes by the same assumptions as the path-goal theory, it
concerns itself with only one aspect of leader behavior – subordinate participation in
decision making and argues that the extent of this depends on the characteristics of the
situation. A variety of problem attributes need to be evaluated to determine the optimum
extent of subordinate participation in decision making.

The manager assesses the situation based on various factors and assesses whether the
factor is high or low for the given decision. This path leads to another factor on which the
situation is again assessed and so on. One of two decision trees is used based on the
demand for time vs. personnel development.

The various decision styles that could be arrived at after traversing the tree are:
Decide: manager makes the decision and conveys it to the group
Delegate: manager allows the group to define the nature and parameters of the problem
and arrive at a solution
Consult (individually): manager presents the problem to each individual and takes his
suggestions into consideration
Consult (group): manager presents the problem to the group and takes their suggestions
into consideration for decision making
Facilitate: manager presents the problem to the group, defines its boundaries and
facilitates a discussion for making the decision
Though not fully scientifically tested, the theory has been well supported by research
results and it as been observed that individuals making decisions consistent with the
model are more effective that those who make decisions inconsistent with it.

OTHER CONTEMPORARY APPROACHES

The Leader-member exchange model (LMX) stresses the one-one relation between
supervisors and their subordinates – each such pair being called a ‘vertical dyad’. The
theory suggests that a special relationship is shared by the supervisor with a small group
of subordinates called the in-group. This group receives special responsibilities,
autonomy and even some extra privileges. The subordinates not part of this group for the
out-group and receive less of the supervisor’s time and attention. Though the basis of
this bias is not well-defined, it is believed to be based to an extent on the subordinate’s
competence and compatibility.

The Hersey and Blanchard Model takes the stand that the leader’s behavior depends on
the follower’s readiness defined by his degree of motivation, competence, experience and
interest in accepting responsibilities. There the style adopted by the leader changes as the
readiness of the subordinate changes.
Low readiness  “telling” style (provide direction and defining roles)
Low-Moderate readiness  “selling” style (direction and role definition +
explanation and information)
Moderate-High readiness  “participating” style (allowing participation in
decision making)
High readiness  “delegating” style (allowing followers to work independently
with minimal supervision
LEADERS MAKE A DIFFERENCE

Modern leadership theory has had two major concerns. The first is regarding who
becomes a leader and the second pertains to the question of leadership effectiveness.

Who then becomes a leader?

People tend to become leaders:

• When they possess somewhat superior abilities, skills or control over resources
that enables the group to achieve its objectives
• If their particular personality attribute makes them more visible than other
members of the group
• They know themselves very well and seek self-improvement - In order to know
oneself, one has to understand his or her attributes. Seeking self-improvement
implies continually strengthening these attributes. This can be accomplished
through self-study, formal classes, reflection, and interacting with others
• They know their job and have a solid familiarity with their employees' tasks
• Leaders search for ways to guide one’s organization to new heights. And when
things go wrong; they analyze the situation on hand, take corrective action, and
move on to the next challenge -- they do not blame others
• They use good problem solving, decision making, and planning tools
• They set an example - Be a good role model for other employees to emulate. They
must not only hear what they are expected to do, but also see. We must become
the change we want to see - Mahatma Gandhi
• Know one’s people and look out for their well-being - Know human nature and
the importance of sincerely caring for one’s workers
• Keep one’s workers informed - Knows how to communicate with not only them,
but also with seniors and other key people
 • Leaders develop and instill a sense of responsibility in co-workers - Help to
develop good character traits that will help them carry out their professional
responsibilities
• They ensure that tasks are understood, supervised, and accomplished -
Communication is the key to this responsibility
• Train as a team and not as just a group of people doing their jobs
Use the full capabilities of the organization - By developing a team spirit, a leader will be
able to exploit one’s organization, department, section etc. to its fullest capabilities

CHARACTERISTICS OF EFFECTIVE LEADERSHIP

An effective leader is a person with a passion for a cause that is larger than they are and
possesses values that are life-giving to society.

One can become an effective leader by:

• Effective communication in three critical areas which is the key to winning

organizational trust and confidence:
1. Helping employees comprehend the company's overall business strategy
2. Helping employees understand how they contribute to achieving key
business objectives
3. Sharing information with employees on both how the company is
performing as well as how an employee's own division is doing vis-à-vis
with the strategic business objectives
• Combining confidence with humility: in the absence of confidence, there is no
action and without action, there is no change. However, paradoxically a leader
needs to have humility. No matter how creative and bright one is, often the best
ideas and thinking are going to come from someone else. A leader needs to be
able to identify that, have good people around who have these ideas. This calls for
humility, or at least lack of egocentricity. The leader should be focused on the
 ends and does not have to see oneself always as the creator of the strategy to get
to that end.

• Winning respect without courting popularity

• Constantly supporting and backing other employees

• Avoiding close supervision and over bossing

• Delegating authority as and when necessary; trusting the team; relying on their
judgment; permitting group decision and having faith in the creativity of others
• Communicating openly and honestly and telling other what he/she thinks
• Making others feel important by emphasizing their strengths and contributions
• Following the golden rule by treating their followers the way the leader enjoys
being treated
• Admitting their mistakes
• Staying close to the action by being visible to the members of the organization.
Talking to people, visiting other offices and work sites, asking questions, and
observing how business is being handled. This will assist in gaining fresh insights
into the job and finding new opportunities for motivating other employees
• Promoting a game of competition. The competitive drive can be a valuable tool if
used correctly. This could be done by setting team goals and rewarding members
who meet or exceed them. In addition, one should examine the failures, and
celebrate group's success

Do LEADERS REALLY MATTER?

The observed effect of leaders on organizational outcomes is minimal for the following
reasons:

• The people selected for leadership positions are those possessing only certain,
limited styles of behavior
 • The discretion and behavior of the person in that particular position is severely
constrained
• Leaders typically affect only a few variables that impact the organizational
performance as a whole

Organizational researchers have long studied the effects of leadership on firm’s

performance. These studies have thrown up mixed results. At the forefront,
Lieberson and O'Connor's (1972) study of 167 companies showed that
environmental factors explained more variation in a firm’s
performance than organizational leadership factors. Similarly,
Salancik and Pfeffer’s (1977) study demonstrated that there was a
limited influence of mayors on city governments and that change in
mayors over time had little impact on city governments. In addition,
Hart and Quinn (1993) found that executive leadership roles (i.e.,
vision setter, motivator and taskmaster) also had little impact on firms'
financial performance. These findings thus challenged traditional
thinking which held that leaders and higher executives hold key to a
firm’s success (e.g. Hambrick & Mason, 1984). In addition, well-cited
studies in the 1980's indicated that leadership was important to the
success of a firm. Weiner and Mahoney (1981) showed that leadership
accounted for about 40 percent of variation in a firm’s performance
(profitability and stock prices) that was not explained by non-
leadership factors.

A possible explanation for such inconsistent results is a flaw in an

assumption underlying these studies. These studies theorize that good
leaders and strong leadership are associated with good firm
performance whereas poor leaders and weak leadership are associated
with poor firm performance. This implicitly assumes that the absence
of factors causing poor organizational performance (weak leadership)
will lead to good firm performance, and the absence of factors leading
to good firm performance (strong leadership) will result in poor firm
performance, given the nature of linear relationship between two
variables.

From an external control perspective, various situational factors affect

firm performance. Hannan and Freeman (1977) noted that
organizations are subject to various inertial pressures generated from
both internal structural arrangements (such as prior investment costs,
political constraints and organizational norms) and environmental
constraints (such as legal barriers, environmental uncertainty and
legitimacy claims). These constraints may limit the influence of
individual leaders on firm performance. Moreover, the availability and
demand for requisite resources from the external environment, the
ongoing and sometimes unpredictable offensive and defensive
strategies of competitors, and the bargaining power of customers,
suppliers and strategic alliance partners can threaten an organization's
long-term survivability and prosperity, despite the leadership efforts of
senior management (Pfeffer & Salancik, 1978; Porter, 1980). However,
from higher echelons’ perspectives; leaders and top managers, by
setting organizational goals, formulating and implementing
organizational strategies (Mintzberg, 1973, 1981), are at heart of
organizations (Hambrick & Mason, 1984), and hence organizational
leadership plays major role in shaping organizational outcomes. Since
the arguments from both contextualist and upper echelons’
perspectives seem logically sound, Charnchai Tangpong & Michael
D.Michalaisin proposed that Organizational leadership is a mere
hygiene factor i.e. while Organizational leadership is a necessary
function in organizations, it is an insufficient source of long-term firm
success. In effect, they concluded that while lack of proper leadership
leads to below average performance of a firm; a strong organizational
leadership will not necessarily be associated with the superior
performance of a firm.

CASE I – PERFECT PIZZERIA

Introduction
Perfect Pizzeria is a large franchise chain which employs mainly college students, almost
all of whom work part-time. The manager’s bonus depends on his ability to plan the
quantity of food accurately and to reduce the percentage of unsold or damaged food.
Many of the employees indulge in taking free food from the outlet beyond their allotted
quota. Also, the employees’ mistakes are ignored by the night manager, which means the
establishment takes the loss and the bonus of the manager is affected. Reduction of the
free food eligibility by the manager did not alleviate the situation, and a lot of employees
quit, were dismissed, or remained discontent. A large turnover rate resulted in the
manager going beyond his supervisory role for two months and involving himself in
actual food preparation activities, further disrupting operations. Having reduced the
percentage, he earned the bonus for those months, but soon the wastage of food again
increased. The manager took a drastic step of removing all benefits, and threatened to
take a lie detector test and terminate all culprits. However, since the employees knew that
almost all were guilty, they were unperturbed and the wastage percentage reached an all
time high.

Major sources of dissatisfaction of college student employees

• Low wages (below minimum wage) resulting in employees compensating through
extra free food consumption
• No proactive efforts by manager to alleviate the problems
• Manager interfering in routine operations and disagreeing on the way in which a
particular function is performed
• Feeling of exploitation since manager was taking advantage of fact that
employees had lack of other opportunities
 • Dissatisfied with confrontational approach of lie detector method

Problems due to inappropriate systems

• No systematic criteria for being a manager or becoming a manager trainee, hence
the appropriate people with the requisite skills might not be chosen
• No formalized training period for manager, hence possibility of underdeveloped
managerial skills
• College education not required for managerial position, which may lead to low
understanding of complex organizational issues
• Night managers are chosen for their ability to perform duties of regular
employees, and do not command respect since they receive same pay as regular
employees and are of similar age. They are not able to prevent extra consumption
of food by employees when their seniors are absent.
• Lack of promotion opportunities for managers unless they invest in the business,
leading to a lack of motivation to work hard for promotion
• All employees, except the manager, are employed part-time, hence decreased
amount of loyalty towards the organization

Problems due to inappropriate managerial action

• Did not consider the deficient monitoring mechanisms in the system while
implementing the first measure of increasing the eligibility hours of work
• Did not make proactive efforts to alleviate the problems by talking to the
employees regarding the issues facing them
• Allowed loss of key personnel, which was costly to the business and required
increased efforts in training and supervision of inexperienced workers
• Involved himself in routine employee activities rather than supervising effectively
• Undertook drastic step of removing all benefits despite an already low
compensation
• Created feeling of distrust with employees by implementing the lie detector idea
 • Concentrated just on results, not on how to do it in a way that makes the
organization a great place to work

Leadership style of manager

The manager seems to be following a directive leadership style where he lets the
subordinates know what is expected of them, schedules work to be done, and maintains
definitive standards of performance for subordinates. He is inclined more towards an
initiating-structure behavior where he clearly defines the leader-subordinate roles, and
determines the methods for accomplishing the group’s tasks. However, he displays very
poor consideration behavior since he is ignorant of the subordinates’ feelings and ideas,
and lacks trust in them. Thus, correspondingly, he seems to be much more task-motivated
and is not relationship motivated.

Our solution
The situation seems to be such that the leader-member relations are pretty bad. However,
the task structure seems to be structured and the leadership position power is high. This
points towards a moderately favorable situation under the LPC theory of leadership, thus
demanding a person-oriented behavior. Since the manager’s task oriented approach is a
mismatch with this demand, the situation needs to be changed through job engineering,
i.e. he needs to spend time with subordinates to improve leader-member relations so that
situation is amenable for his task-oriented behavior. Thus, the manager should
communicate to the employees the reasons for the drastic actions taken, and the impact
on profitability of the organization. In addition, he should ask for feedback, address their
grievances and offer appropriates solutions to build their trust.
Since only the manager’s compensation is linked to the low percentage wastage, the other
employees do not seem to be concerned about this performance aspect. Since pay is an
extremely motivational factor for these college students, small financial rewards can be
given to those who help the most towards the accomplishment of this objective. In
addition, they can be considered for promotion to night managers. The night managers
should be given slightly elevated status over the regular employees including higher
compensation, so they feel the sense of responsibility and are able to earn the respect of
their subordinates. In addition they could be offered permanent jobs so they are more
attuned to the organizational goals and strive to achieve them.

CASE II – SAVITHA DESHPANDE

Introduction
Savita Deshpande, a manager of software systems, handles a team of 18 which could be
divided almost equally among those who consistently performed above standard and
those whose work was late and/or done poorly. Ranked high on task orientation and low
on employee orientation in a leadership questionnaire, she made efforts to increase her
employee-oriented behavior, especially towards the low performing group, to improve
her team performance. However, this move made no difference to the underperforming
members, but many high performers showed drastic drop in the quality and quantity of
work. The reason for this failure has to be evaluated.

Savita’s experience at the management training program

There was a mismatch between her perception of being a people oriented person, and the
actual score on the leadership questionnaire, which showed that although she scored high
on task orientation, she was very low on employee orientation. This means that she is
focused on getting results, but does not make an effort to develop friendly relations with
subordinates or avoid conflict with them. Being told by the speaker that a high score on
both parameters is desirable, she thought of improving this factor in order to boost the
performance of her subordinates.

Reasons for Savita’s failed attempt

Savita was very task oriented person, so she may not have been able to carry this sudden
shift to a people-oriented approach in a convincing manner, since it is difficult to change
leadership traits in a short span of time. The employees may not have considered this a
genuine effort on her part to improve, but may have perceived some ulterior motives for
this move. She focused on the personal lives of the employees instead of focusing on
their ideas and opinions in the professional scenario, which therefore defeated the
purpose of increasing their performance. On the other hand, the excessive emphasis on
the lower performing employees may have de-motivated the high performing group, and
hence led to a deterioration of their performance.

Suggested changes in Savita’s behavior

She should not try to go overboard with the employee oriented approach and should be
moderate in her approach. If she changes her approach slowly but steadily, the employees
would be more receptive to her efforts and perceive it as a genuine effort to take their
ideas and suggestions into account. The participatory approach towards the lower
performing employees would help them to raise their standards and be more motivated
towards achieving their goals. She should not interfere in their personal lives unless they
themselves approach her with a problem, and limit her support to the work setting. While
a lower amount of employee orientation is needed for the higher performing employees,
they should not be neglected. They should be given freedom and responsibility, and high
performance should be recognized.

REFERENCES

• Leadership as an Organizational hygiene factor, Charnchai Tangpong, Steven

Karau & Michael D. Michalisin
• www.managementhelp.org/mgmnt/leader.htm
• www.1000ventures.com/business_guide/ crosscuttings/leadership_main.html
• www.nwlink.com/~donclark/leader/leadcon.html