1. business and industrial
2. company
3. bankruptcy

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What is Leadership?
-Leadership – the influence that particular individuals exert on the goal achievement of others in an
organizational context
-Effective leadership exerts influence in a way that achieves organizational goals by enhancing
productivity, innovation, satisfaction, and commitment of the workforce
-Strategic leadership – leadership that involves the ability to anticipate, envision, maintain flexibility,
think strategically, and work with others to initiate change that will create a viable future for the
organization
-Strategic leaders can provide an organization with a sustainable competitive advantage by helping their
organizations compete in turbulent and unpredictable environments and by exploiting growth
opportunities
-Any organizational member can exert influence on other members
-The presence of a formal leadership role is no guarantee that there is leadership
Are Leaders Born? The Search for Leadership Traits
Research on Leadership Traits
-Traits – individual characteristics such as physical attributes, intellectual ability, and personality
-Many traits are not associated with whether people become leaders or how effective they are
-Sometimes we think that people are more likely to be a leader or that they are a more effective leader
simply because they possess certain characteristics that we believe re associated with leadership
-Some traits are associated with leadership
-Many firms use personality tests and assessment centres to measure leadership traits when making
hiring and promotion decisions
Limitations of the Trait Approach
-Even though some traits appear to be related to leadership, there are several reasons why the trait
approach is not the best means of understanding and improving leadership
-In many cases, it is difficult to determine whether traits make the leader or whether the opportunity for
leadership produces the traits
-Even if we know that dominance, intelligence, or tallness is associated with effective leadership, we
have few clues about what dominant or intelligent or tall people do to influence other successfully
-As a result, we have little information about how to train and develop leaders and no way to diagnose
failures of leadership
-The most crucial problem of the trait approach to leadership is its failure to take into account the
situation in which leadership occurs
-Traits alone are not sufficient for successful leadership
The Behaviour of Leaders
Consideration and Initiating Structure
-Consideration – the extent to which a leader is approachable and shows personal concern and respect
for employees
-Initiation structure – the degree to which a leader concentrates on group goal attainment
-The structuring leader clearly defines and organizes his or her role and the role of followers, stresses
standard procedures, schedules the work to be done, and assigns employees to particular tasks
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The Consequences of Consideration and Structure
-Consideration and initiating structure both contribute positively to employees’ motivation, job
satisfaction, and leader effectiveness
-Consideration tends to be more strongly related to followed satisfaction, motivation, and leader
effectiveness, while initiating structure is slightly more strongly related to leader job performance and
group performance
-Consider the following:
-When employees are under a high degree of pressure due to deadlines, unclear tasks, or
external threat, initiating structure increases satisfaction and performance
-When the task itself is intrinsically satisfying, the need for high consideration and high structure
is generally reduced
-When the goals and methods of performing the job are very clear and certain, consideration
should promote employee satisfaction, while structure might promote dissatisfaction
-When employees lack knowledge as to how to perform a job, or the job itself has vague goals
or methods, consideration becomes less important, while initiating structure takes on additional
importance
Leader Reward and Punishment Behaviours
-Leader reward behaviour – the leader’s use of compliments, tangible benefits, and deserved special
treatment
-When such rewards are made contingent on performance, employees should perform at a high level
and experience job satisfaction
-Leader punishment behaviour – the leader’s use of reprimands or unfavourable task assignments and
the active withholding of rewards
-Contingent leader reward behaviour was found to be positively related to employees’ perceptions,
attitudes, and behaviours
-Contingent leader punishment behaviour was related to unfavourable outcomes
Situational Theories of Leadership
-The basic premise of situational theories of leadership is that the effectiveness of a leadership style is
contingent on the setting
Fiedler’s Contingency Theory and Cognitive Resource Theory
-Contingency Theory - theory that states that the association between leadership orientation and group
effectiveness is contingent on how favourable the situation is for exerting influence
-Leadership orientation is measured by having leaders describe their least preferred co-worker (LPC)
-The LPC score reveals a personality trait that reflects the leader’s motivational structure
Situational Favourableness
-The contingency party
-It specifies when a particular LPC orientation should contribute most to group effectiveness
-Factors that affect situational favourableness, in order of importance, are the following:
-Leader-member relations – when the relationship between the leader and the group members
is good, the leader is in a favourable situation to exert influence
-Task structure – when the task at hand is highly structures, the leader should be able to exert
considerable influence on the group
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-Position power – the formal authority granted to the leader by the organization to tell others
what to do
-The situation is most favourable for leadership when leader-member relations are good, the task is
structured, and the leader has strong position power
Cognitive Resource Theory
-Cognitive resource theory – a leadership theory that focuses on the conditions in which a leader’s
cognitive resources (intelligence, expertise, and experience) contribute to effective leadership
-The essence of CRT is that the importance of intelligence for leadership effectiveness depends on the
following conditions: the directiveness of the leader, group support or the leader, and the stressfulness
of the situation
-Experience predicts performance in high-stress situations
House’s Path-Goal Theory
-Path-Goal Theory – theory concerned with the situations under which various leader behaviours are
most effective
The Theory
-Such goals might include a promotion, a sense of accomplishment, or a pleasant work climate
-The opportunity to achieve such goals should promote job satisfaction, leader acceptance, and high
effort
-The effective leader forms a connection between employee goals and organizational goals
-To provide job satisfaction and leader acceptance, leader behaviour must be perceived as immediately
satisfying or as leading to future satisfaction
-Leader behaviour that employees see as unnecessary or unhelpful will be resented
Leader Behaviour
-Concerned with four specific kinds of leader behaviour:
-Directive behaviour – directive leaders schedule work, maintain performance standards, and let
employees know what is expected of them
-Supportive behaviour – supportive leaders are friendly, approachable, and concerned with
pleasant interpersonal relationships
-Participative behaviour – Participative leaders consult with employees about work-related
matters and consider their opinions
-Achievement-oriented behaviour – Achievement-oriented leaders encourage employees to
exert high effort and strive for a high level of goal accomplishment
Situational Factors
-Two primary classes of situational factors – employee characteristics and environmental factors
-Different types of employees need or prefer different forms of leadership:
-Ex. Employees who are high need achievers should work well under achievement-oriented leadership
-Ex. Employees who prefer being told what to do should respond best to a directive leadership style
-Leaders might have to tailor their behavior to the needs, abilities, and personalities of individual
employees
-The effectiveness of leadership behaviour depends on the particular work environment
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Participative Leadership: Involving Employees in Decisions
What is Participation?
-Participative leadership – involving employees in making work-related decisions
-Participation involves obtaining employee opinions before making a decision
-The choice of an individual or group participation strategy should be tailored to specific situations
Potential Advantages of Participative Leadership
Motivation
-Participation can increase the motivation of employees
-Participation permits them to contribute to the establishment of work goals and to decide how they
can accomplish these goals
-Participation can increase intrinsic motivation by enriching employees’ jobs
-Participation adds some variety to the job and promotes autonomy by increasing the “area of freedom”
Quality
-Participation enhances quality in at least two ways:
-Two heads are better than one
-High levels of participation often empower employees to take direct action to solve problems
without checking every detail with the boss
-Empowerment gives employees the authority, opportunity, and motivation to take initiative and solve
problems
Acceptance
-Even when participation does not promote motivation or increase the quality of decisions, it can
increase the employees’ acceptance of decisions
-This is especially likely when issues of fairness are involved
Potential Problems of Participative Leadership
Time and Energy
-When a quick decision is needed, participation is not an appropriate leadership strategy
Loss of Power
-Some leaders feel that a participative style will reduce their power and influence
Lack of Receptivity or Knowledge
-Employees might not be receptive to participation
-When the leader is distrusted or when a poor labour climate exists, they might resent “having to do
management’s work”
Vroom and Jago’s Situational Model of Participation
-This model attempt to specify in a practical manner when leaders should use participation and to what
extent they should use it
-For issues involving the entire work group, the following range of behaviours is plausible (A stands for
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autocratic, C for consultative, and G for group, I indicates individual, and II indicates that a group is
involved)
-Refer to pg. 299 for more
In general, the leader’s goal should be to make high-quality decisions to which employees will be
adequately committed without undue delay
-The quality requirement for a problem might be low if it is unlikely that a technically bad decision could
be made or if all feasible alternatives are equal in quality
-The commitment requirement is likely to be high if employees are concerned about which alternative is
chosen or if they will have to actually implement the decision
-The problem is structures when the leader understands the current situation, the desired situation, and
how to get from one to the other
-The Decision Tree:
Quality Requirement: How important is the technical quality of this decision?
Commitment Requirement: How important is subordinate commitment to the decision?
Leader’s Information: Do you have sufficient information to make a high-quality decision?
Problem Structure: Is the problem well structured?
Commitment Probability: If you were to make the decision by yourself, is it reasonably certain that you
subordinate(s) would be committed to the decision?
Goal Congruence: Do subordinates share the organizational goals to be attained in solving the problem?
Subordinate Conflict: Is conflict among subordinates over preferred solutions likely?
Subordinate Information: Do subordinates have sufficient information to make a high-quality decision?
Leader-Member Exchange Theory (LMX)
-Leader-member exchange theory – a theory of leadership that focuses on the quality of the relationship
that develops between a leader and an employee
-Focuses on the dyadic relationship between a leader and an employee
-It is a relationship-based approach to leadership
-Over time and through the course of interactions, different types of relationships develop between
leaders and employees
-As a result, each relationship that a leader develops with an employee will be different and unique
-Effective leadership processes result when leaders and employees develop and maintain high-quality
social exchange relationships
Transactional and Transformational Leadership
-Transactional leadership – leadership that is based on a straightforward exchange relationship between
the leader and the followers
-Involves contingent reward behaviour
-The leader clarifies expectations and established the rewards for meeting them
-Management by exception – leadership that involves the leader taking corrective action on the basis of
results of leader-follower transactions
-They monitor follower behaviour, anticipate problems, and take corrective actions before the
behaviour creates serious problems
-Such leadership is routine, it is directed mainly toward bringing employee behaviour in line with
organizational goals
-Transformational leadership – leadership that provides followers with a new vision that instills true
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commitment
-The leader decisively changes the beliefs and attitudes of followers to correspond to this new vision and
motivates them to achieve performance beyond expectations
-Transformational leaders are usually good at the transactional aspects of clarifying paths to goals and
rewarding good performance
-There are four key dimensions of transformational leader behaviour: intellectual stimulation,
individualized consideration, inspirational motivation, and charisma
Intellectual Stimulation
-People are stimulated to think about problems, issues, and strategies in new ways
-The leader challenges assumptions, takes risks, and solicits followers’ ideas
-Creativity and novelty are at work here
Individualized Consideration
-Involves treating employees as distinct individuals, indicating concern for their needs and personal
development, ands serving as a mentor or coach when appropriate
-The emphasis is a one-on-one attempt to meet the concerns and needs of the individual in question in
the context to the overall goal or mission
Inspirational Motivation
-Involves the communication of visions that are appealing and inspiring to followers
-Leaders with inspirational motivation have a strong vision for the future based on values and ideals
-Leaders stimulate enthusiasm, challenge followers with high standards, communicate optimism about
future goal attainment, and provide meaning for the task at hand
Charisma
-Charisma – the ability to command strong loyalty and devotion from followers and thus have the
potential for strong influence among them
-Charismatic individuals have the potential to have extraordinary influence over others
-Followers come to trust and identify with charismatic leaders and to internalize the values and goals
they hold
-Charisma provides the emotional aspect of transformational leadership
-Prominent traits include self-confidence, dominance, and a strong conviction in one’s beliefs
-Hold high expectation for follower performance while at the same time expressing confidence in
followers’ capabilities
-This enhances the self-esteem of the followers
-Charismatic leadership has been found to be strongly related to follower satisfaction and leadership
effectiveness
-Charisma has a dark side, a side that is revealed when charismatic leaders abuse their strong influence
over others or purely personal reasons
Ethical and Authentic Leadership
-Ethics is a fundamental component of effective leadership
-Ethical leadership – the demonstration of normatively appropriate conduct through personal actions
and interpersonal relationships, and the promotion of such conduct to followers through two-way
communication, reinforcement, and decision making
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-Ethical leaders model what is deemed to be normatively appropriate behaviour, such as honesty,
trustworthiness, fairness, and care
-They reward ethical conduct and discipline those who don’t follow ethical standards
-Things to maintain ethics:
-Communicate a clear and consistent positive ethics message from the top
-Create and embrace opportunities for everyone in the organization to communicate positive
ethics, values and practices
-Ensure consequences for ethical and unethical conduct
Authentic Leadership
-Authentic leadership – a positive form of leadership that involves being true to oneself. Authentic
leaders know and act upon their true values, beliefs, and strengths, and they help others do the same
-There is a consistency between their values, beliefs, and actions
-Authentic leadership consists of four related but distinct dimensions:
-Self-awareness – an understanding of one’s strengths and weaknesses and an awareness of
one’s impact on others
-Relational transparency – presenting of one’s true or authentic self to others and the sharing of
information and expressions of one’s true thoughts and feelings
-Balanced processing – the objective analysis of relevant information before making a decision
an consideration of views that challenge one’s own position
-Internalized moral perspective – the internal moral standards and values that guide one’s
behaviour and decision making. Authentic leaders exhibit behaviour that is consistent with their
internal values and standards
Culture and Global Leadership
-GLOBE found that these belief systems are shared among individuals in common cultures, something
they call culturally endorses implicit leadership theory (CLT)
-The six global leadership dimensions are as follows:
-Charismatic/value based – reflects the ability to inspire, to motivate, and to expect high
performance outcomes from others
-Team oriented – emphasizes team building and implementation of a common purpose or goal
among team members
-Participative – the degree to which managers involve others in making an implementing
decisions
-Humane-oriented – reflects supportive and considerate leadership, but also includes
compassion and generosity
-Autonomous – refers to independent and individualistic leadership
-Self-protective – focuses on ensuring the safety and security of the individual
-Many attributes such as being honest, decisive, motivational, and dynamic are universally desirable
-They also found leadership attributes such as loners, irritable, egocentric, and ruthless to be deemed
ineffective in all GLOBE countries
-Managers need to understand the similarities and differences in what makes someone an effective
leader across cultures if they are to be effective global leaders
Global Leadership
-Global leadership – a set of leadership capabilities required to function effectively in different cultures
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and the ability to cross language, social, economic, and political borders
-The essence of global leadership is the ability to influence people who are not like the leader and come
from different cultural backgrounds
-Global leaders need to have a global mindset, tolerate high levels of ambiguity, and exhibit cultural
adaptability and flexibility
-Global leader have four characteristics:
-Unbridled inquisitiveness – must be able to function effectively in different cultures in which
they are required to learn cross language, social, economic and political borders
-Personal character – consists of an emotional connection to people with different cultures and
uncompromising integrity, and an uncompromising integrity by maintaining high ethical
standards and loyalty to their organization’s values
-Duality – they must be able to manage uncertainty and balance global and local tensions
-Savvy – global leaders understand the conditions they face in different countries and are able
to recognize new market opportunities or their organization’s goods and services
-Global leaders and born and then made
-Becoming an effective global leader requires extensive training
Gender Leadership
-A number of reviews have found that there are some difference in leadership style between men and
women in organizational settings
-One theory holds that women have better social skills, which enable them to successfully manage the
give-and-take that participation required
-Another theory holds women avoid more autocratic styles because they violate gender stereotypes and
lad to negative reactions
-Women leaders were found to be more transformational than men leaders, and they also engaged in
more of the contingent reward behaviours associated with transactional leadership
-Lassez-faire leadership – a style of leadership that involves eh avoidance or absence of leadership
-Glass ceiling – an invisible barrier that prevents women from advancing to senior leadership positions in
organizations
-The barriers women encounter are:
-Vestiges of prejudice – men continue to receive higher wages and faster promotions than
women with equal qualifications at all organizational levels
-Resistance to women’s leadership – men are perceived with having agentic traits, convey
assertion and control. Women are perceived with having communal traits, convey a concern for
the compassionate treatment of others
-Issues or leadership style – Women leaders often struggle to find an appropriate leadership
style that reconciles the communal traits associated with females and the agentic traits
associated with leaders. When women exhibit an agentic style they are criticized or lacking
communal traits, and when they exhibit a communal style they are criticized for not being
agentic enough to be a leader
-Demands of family life
-Underinvestment in social capital – Woman have less time for socializing with colleagues and
developing social networks and often have difficultly breaking in to social networks because
these are predominantly male. As a result, women have less social capital