Management/Leadership Styles (Encyclopedia of Business and Finance)
MANAGEMENT VS. LEADERSHIP
Leading should not be considered the same as managing. Business leaders who do not understand the difference between the functions/roles of leading and managing are quite likely to misinterpret how they should carry out their duties to meet organizational goals. While some managers are high-quality leaders, others only manage resources and don't lead their subordinates. Leadership is one of the four primary activities that are used to influence others. As such, it is a subcategory of the management concept that focuses mainly on behavioral issues and opportunities. Managing is more comprehensive than leading. It involves dealing with resource issues as well as behavioral factors. Generally speaking, not all managers are necessarily leaders, yet the most effective managers, over the long term, are leaders.
Leadership is the process of guiding the behavior of others toward an organization's goals. Guiding, in this context, means causing individuals to behave in a particular manner or to follow a specific set of instructions. Ideally, the behavior exhibited is perfectly aligned with such factors as organizational goals, culture, policies, procedures, and job specifications. The main goal of leadership is to get things done through other people, making it one of the main activities that can enhance the management system. It is accomplished to a great degree through the use of effective communication. Because leadership is a prerequisite for business success, to be a successful business manager one must have a solid understanding of what leadership includes. Indeed, such issues as the increased capabilities afforded by enhanced communication technology and the rise of international business have made leadership even more important in today's business environment. The following sections describe the major theories underlying the most commonly accepted management/leadership practices and the concepts they are based on.
In today's business environment, possessing management skills is no longer sufficient to be successful. Contemporary business practices require that managers have knowledge and experience regarding the differences between management and leading and how both activities must be integrated for business success. Commonly, businesspeople believe that a manager makes sure tasks and duties are completed, while a leader is sensitive to the needs of people and what they need to be exceptional employees. Integrating these concepts allows business managers to apply logic and analytical skills to business activities and tactics while being sensitive to and working with workers as individuals with needs and desires related to their work and careers.
LEADERSHIP BASED ON TRAITS
The trait theory of leadership is based on research which implies that the abilities and dispositions necessary to make a good leader are inborn, not capable of being developed over time. The central thrust of this research is to describe leadership as accurately and analytically as possible. The reasoning is that a description of the full spectrum of managerial leadership traits would make it possible to easily identify individuals who possess them. An organization could then hire only those individuals who possess these traits and thus be assured of always having high-quality leaders.
Current management thoughts, however, suggests that leadership ability cannot be explained by an individual's inherited characteristics. To the contrary, business analysts believe that individuals can learn to be good or even exceptional leaders. Thousands of employees each year complete training to improve their leadership skills. Corporations and not-for-profit organizations continue to do this as an investment, which pays dividends.
IDENTIFYING LEADERSHIP BEHAVIORS
Since trait theory proved not to be aligned with leadership skill, researchers have analyzed other angles to explain leadership success or failure. Rather than looking at the traits successful leaders supposedly should possess, researchers began to investigate what good leaders really do. This behavioral approach was concerned with analyzing how a manager completed a task and whether the manager focused on such interpersonal skills as providing moral support and recognizing employees for their successes. Based on these research efforts, leaders can be accurately described by either their job-centered behavior or their employee-centered behavior, since this research indicated two primary dimensions of leader behavior: a work dimension (structure behavior/job-centered behavior) and a people dimension (consideration behavior/employee-centered behavior).
WHICH LEADERSHIP STYLES ARE MOST EFFECTIVE?
Caution should be exercised when considering what style of leadership is best. Research suggests that no single leadership style can be generalized as being most effective. Organizational situations are so complex that one particular leadership style may be successful in one situation but totally ineffective in another.
Contingency theory, as applied to management/leadership, focuses on what managers do in practice. Because this theory suggests that how a manager operates and makes decisions depends upon, or is contingent upon, a set of circumstances, it is centered on situational analysis. Using contingency theory, managers read situations with an "if-then" mentality: If this situational attribute is present, then there is an appropriate response that a manager should make. This theory takes into consideration human resources and their interaction with business operations. Managers may take different courses of action to get the same result based on differences in situational characteristics. In general, contingency theory suggests that a business leader needs to outline the conditions or situations in which various management methods have the best chance of success. This theory thus runs directly counter to trait theory, discussed earlier. Some of the challenges to successfully using contingency theory are the need to accurately analyze an actual situation, then to choose the appropriate strategies and tactics, and finally to implement these strategies and tactics.
Managers encounter a variety of leadership situations during the course of their daily activities, each of which may require them to use leadership styles that vary considerably, depending on the situation. In using the contingency model, factors of major concern are leader-member relations, task structure, and the position power of the leader. The leader has to analyze these factors to determine the most appropriate style of response for meeting overall work-unit and organizational goals. Leader-member relations refer to the ongoing degree to which subordinates accept an individual leader or group of leaders. Task structure refers to the degree to which tasks are clearly or poorly defined. Position power is the extent to which a leader or group of leaders has control over the work process, rewards, and punishment. Taking these factors into consideration, leaders can adjust their style to best match the context of their decision making and leadership. For those leaders who have a breadth of leadership styles, knowing when to change styles gives them the tools to successfully deal with the varying nature of business decision making. For those leaders who have a limited repertoire of leadership styles, they and their superiors can use this information to better match work situations with the styles that a specific leader possesses.
Within this continuum, or range, of leadership behaviors, each type of behavior also relates to the degree of authority the manager can display, and inversly, to the level of freedom that is made available to workers. On one end of this continuum, business leaders exert a high level of control and allow little employee autonomy; on the opposite end, leaders exert very little control, instead allowing workers considerable autonomy and self-direction. Thus leadership behavior as it progresses across the continuum reflects a gradual change from autocratic to democratic leadership.
In today's business environment there are more complicated contexts and relationships within which managers and subordinates must work than existed in previous eras. And as contexts and relationships become increasingly complicated, it becomes significantly more difficult for leaders to determine how to lead. In addition, there are major societal and organizational forces that cause confusion about how to lead.
THEORY X AND THEORY Y
Based on the work of psychologists, organizational theorists, and human relations specialists in the 1960s and 1970s, two distinct assumptions, called Theory X and Theory Y, evolved about why and how people work for others. Theory X posits that people do not like to work and will avoid doing so if the opportunity presents itself. Because of this, most people need to be coerced into completing their required job duties and punished if they don't complete the quantity of work assigned at the level of quality required. Again, because of their dislike for work, most people do not want responsibility, prefer to be directed by others, and have little ambition; all they want is job security.
With an almost completely opposite perspective, Theory Y posits that people like to work and see it as a natural event in their lives. Therefore, punishment and threats are not the only means of motivating them to complete work assignments. People are willing to work hard for an organization; indeed, they will use self-direction and control to work toward goals that are understandable and communicated clearly. In this theory of human behavior and motivation, people are seen as seekers of learning and responsibility who are capable of and willing to be engaged with creative problem-solving activities that will help the organization reach its goals. According to Theory Y, leaders need to develop ways to expand the capabilities of their workers so that the organization can benefit from this significant potential resource.
Although Theory Y has much to offer and is widely followed, many organizations still use a variety of policies and practices that are based on Theory X principles. A further development in explaining human work behavior and then adjusting management/leadership practices to it is Theory Z.
Probably the most prominent of the theories and practices coming from Japan is the Theory Z approach, which combines typical practices from the United States and Japan into a comprehensive system of management/leadership. This system includes the following principles of best management/leadership practice:
- Seek to establish a long-term employment culture within the organization.
- Use collective decision making as much as possible.
- Increase and reinforce the importance of individual responsibility.
- Establish a slow and long-term process for evaluation and promotion.
- Employ implicit, informal control that utilizes explicit, formal measures/tools of performance.
- Institute and use moderately specialized job descriptions and career paths.
- Develop policies and practices that support a holistic concern for and support of the individual both at work and at home (as regards family issues).
Theory Z has had a marked impact on the manner in which companies are led today. Theory Z strategies have been instrumental in building stronger working relationships between subordinates and their leaders because of the increased level of worker participation in decision making as well as leaders' higher level of concern for their subordinates.
Business researchers at the University of Texas have developed a two-dimensional grid theory to explain a leadership style based on a person's (1) concern for production and (2) concern for people. Each axis on the grid is a 9-point scale, with 1 meaning low concern and 9 meaning high concern. "Team" managers, often considered the most effective leaders, have strong concern both for the people who work for them and for the output of the group/unit. "Country club" managers are significantly more concerned about their subordinates than about production output. "Authority-compliance" managers, in contrast, are singularly focused on meeting production goals. "Middle-of-the-road" managers attempt to balance people and production concerns in a moderate fashion. And, finally, "impoverished" managers tend to be virtually bankrupt in both categories, usually not knowing much or caring much about either. Grid analysis can be quite useful in helping to determine managers' strengths, weak points, areas where they might best be utilized, and types of staff development they might need to progress.
PATH-GOAL LEADERSHIP THEORY
In path-goal leadership theory, the key strategy of the leader is to make desirable and achievable rewards available to employees. These rewards are directly related to achieving organizational goals. Basically, the manager articulates the objectives (the goal) to be accomplished and how these can and should be completed (the path) to earn rewards. This theory encourages managers to facilitate job performance by showing employees how their work behaviors directly affect their receiving desired rewards.
SYSTEMS THEORY AND THE LEADERSHIP/MANAGEMENT FUNCTION
A system is a group of interrelated and dependent components that function holistically to meet common goals. Systems theory suggests that organizations operate much like the human biological system, having to deal with entropy, support synergy, and subsystem interdependence. The law of entropy states that there are limited resources available and that as they are used/consumed, their beneficial features are dispersed and are not available to the same degree as they were originally. The other two considerations in a systems approach are the achievement of synergy, or the creation of a total value greater than the value of separate parts, and of subsystem interdependence or the linkage of components in such a way that synergy can take place.
In the effort to enhance system performance, managers/leaders must consider the openness and responsiveness of their business organization and the external environment in which it operates. In this environment, leaders must consider the four major features of business system theory: inputs, organizational features, outputs, and feedback. The inputs for most systems include human labor, information, hard goods, and financing. Organizational features include the work process, management functions, and production or service technology. Outputs include employee satisfaction, products or services, customer and supplier relationships, and profits/losses. In guiding a unit or the whole organization, business leaders need to consider features of their organization's system as it interacts with and responds to customers, suppliers, competitors, and government agencies.
Transformational leadership inspires organizational success by dramatically affecting workers' attitudes about what an organization should be as well as their basic values, such as trust, fairness, and reliability. Transformational leadership, which is similar to charismatic or inspirational leadership, creates in workers a sense of ownership of the organization, encourages new ways of solving problems and promotes lifelong learning for all members of the organization. Although the topic of transformational leadership is both appealing and exciting, more research is needed to develop insights regarding how one becomes a successful transformational leader.
Of all the skills that a manager/leader needs, none is more important than managing the conflicts that inevitably arise in any organization. Conflicts can arise between members in the same work unit, between the work group and its leader, between group leaders, and between different work groups. Some of the most common causes of conflict are communications breakdowns, personality clashes, power and status differences, goal discrepancies, disputed authority boundaries, and allocation of resources.
The following processes are among those usually suggested to eliminate, reduce, and prevent conflict:
- Focus on the facts of the matter; avoid unsupported assertions and issues of personality.
- Develop a list of all possible resolutions of the conflict that will allow the adversarial parties to view the issue from a different perspective.
- Maintain a balance of power and accessibility while addressing the conflict.
- Seek a realistic resolution; never force a consensus, but don't get bogged down in a never-ending debate to achieve one.
- Focus on the larger goals/mission of the organization.
- Engage in bargaining/negotiating to identify options to address the conflict.
- If needed, use a third party to mediate the differences. Bringing in an outside person can add objectivity and reduce personality issues.
- Facilitate accurate communications to reduce rumors and to increase the common understanding of the facts and issues.
There is a widely accepted model for understanding how individuals approach situations involving conflict resolution. This model is two dimensional. On one axis is the dimension of cooperativeness; on the other, the dimension of assertiveness. As discussed earlier, effective leaders vary their style to meet the needs of a specific situation. Hence, during a conflict situation in which time is a critical concern, an assertive style is needed to resolve the conflict so that time is not lost during a drawn-out negotiation process. Oppositely, when harmony is critical, especially when relationships are new or in their early stages, a collaborative and cooperative approach to conflict resolution is needed. This model for conflict resolution fits well with and supports the notion of contingency and situational leadership.
JAPANESE MANAGEMENT/LEADERSHIP METHODS
In the decades since the end of World War II, business leaders around the world have marveled at the ability of Japanese managers to motivate and successfully lead their subordinates to levels of outstanding performance in terms of both the quantity and quality of production. Therefore, Japanese approaches to management and leadership have been studied intensely to find similarities and differences between local practices and theirs. Among the approaches that have been cited as contributing to Japanese success are the following:
- Japanese corporations make the effort to hire employees for a lifetime, rather than a shorter period of time. This helps workers to feel a close relationship with the organization and helps build employee ownership of the organization's success.
- Employees are elevated to a level of organizational status equivalent to that of management by leveling the playing field with regard to dress, benefit packages, support services/amenities, restrooms, stock ownership plans, and so forth.
- Employees are shown that they are valued and a critical part of the company. This is done by having ceremonies to honor employees, providing housing at nominal cost to employees, having facilities for social activities that are sponsored by the organization, offering competitive salaries, and so forth.
- A significant effort is made to build positive and strong working relationships between leaders and their subordinates. This includes making sure that leaders take time to get to know their employees and become cognizant of their main concerns. Such a relationship can have a marked impact on the extent to which employees value the organization and their leaders.
- There is collective responsibility for the success of the organization. Individual accountability is downplayed to the climate that prevails in U.S. organizations.
- Implied control mechanisms are based on cultural values and responsibility.
- Nonspecialized career pathways are typical. Employees work in a number of job categories over the course of their tenure so that they can gain a broader sense of the nature of all the work that is done in the organization.
- There is a holistic concern for the welfare of every employee. Organizations and their leaders take the time to assist employees with personal issues and work opportunities.
- The Japanese are generally concerned with how the company performs and how individual work groups perform rather than how an individual performs. Therefore, incentives for individuals are less likely to be effective than incentives associated with the performance of a work group or of a whole unit. In addition, Japanese leaders and workers focus much less on monetary rewards than on esteem and social rewards.
Another major development in the manufacturing and handling of goods was developed in Japan. This development was kanban, or what we know as the just-in-time (JIT) inventory and materials handling system. In this system managers/leaders locate high-quality suppliers within a short distance of their operations. They also establish specific quality standards and delivery requirements, as well as materials handling procedures, that these suppliers are contractually obligated to adhere to.
Although these techniques have proven to be successful in Japan, attempts to duplicate them in another culture may have disappointing results. The importance of cultural mores cannot be underestimated. What may work in Japan, France, or the United States may not work anywhere else simply because of cultural factors. Yet Japanese management/leadership principles have taught managers around the world to consider new approaches in order to achieve the higher standards of organizational effectiveness necessary in today's global economy. Business leaders around the world are examining their practices in light of the success that the Japanese and others have had in the areas of strategy building, organizational development, group/team cooperation, and establishing competitive advantage.