BUSINESS MANAGEMENT BUT111C The Nature of Leadership Week 21

1. BUSINESS MANAGEMENT BUT111CThe Nature of LeadershipWeek 21

2. Leadership • Among all the ideas and writings about leadership, three aspects stand out – people, influence and goals. • Leadership occurs among people, involves the use of influence, and is used to attain organisational goals (Daft and Marcic, 2012). • Leadership is the process of influencingemployees to work toward the achievement of organisational goals (Lussier 2009). • Leadership is based on interpersonal relationships, not administrative activities and directives (Hellriegel et al 2008). • Leaders have a substantive effecton an organisation’s overall performance. • Leadership should be considered at an organisational level- rather than individual CEO - level. • Leadership approaches need to evolve as the needs of organisations change. • A significant influence on leadership styles in recent years is the growing turbulence and uncertainty of the macro-environment (Daft and Marcic, 2012).

3. Leaders vs managers? • People tend to use the terms manager and leader interchangeably. However, managers are not necessarily strong leaders. • Some managers are not leaders because they do not have the ability to influence others. • Management is broader in scope than leadership – leadership is only one of the four functions of management. • There are also good leaders who are not good managers, such as people holding informal authority. Many employees experience working in situations where one of their peers had more influence in the department than the manager. • A primary distinction between management and leadership is that management promotes stability and order within an existing organisational structure while leadership promotes vision and change. • Leadership means questioning the status quo so that outdated, unproductive, or socially irresponsible norms can be replaced to meet new organisational challenges. • Leadership cannot replace management – it should be in addition to management. • Good management is needed to help the organisation meet current commitments, while good leadership is needed to move the organisation into the future (Daft and Marcic, 2012).

4. Leadership trait theory (Ghiselli Study) • Supervisory ability • Able to get the job done through others • Need for occupational achievement • Seeking responsibility • Having the motivation to work hard to achieve • Intelligence • Able to use good judgment & clear reasoning • Decisiveness • Able to solve problems and make competent decisions • Self-assurance / confidence • Viewing themselves as capable of solving problems • Initiative • Self-starter: able to get the job done with a minimum of supervision Traits: Distinguishing natural personal characteristics Strengths: Natural talents and abilities that have been supported and reinforced with learned knowledge and skills. Effective leadership Notabout having the “right” traits – but rather about finding the strengths that one can best exemplify and apply as a leader. (Daft and Marcic, 2012).

5. Leadership development • On-the-job learning • Taking on jobs or projects that include leadership responsibilities • Formal assessment & training • Leadership development programmes • Ongoing assessment to improve effectiveness as a leader • 360 degree feedback • Coaching & mentoring • Senior colleagues provide advice and act as role models • Can guide on the styles of leadership favoured in the organisation • Gaining off-the-job leadership experience • Taking on leadership roles in community and social organisations • Volunteering to make leadership contributions in religious and charity organisations

6. Theory X and Theory Y • Assumptions and beliefs about individuals and how to motivate them often influence a leader’s behaviour. Theory X Managers Theory Y Managers • Assume that employees basically dislikehaving to work and will perform well only if closely managed. • Employees need direction wherever possible. • Managers must coerce employees to get them to do effective work. • Assume that people basically like to work and do not need close supervision. • Employees that are committed to the organisation’s goals will exercise self-management. • Employees will accept and even seek responsibility at work, wanting to make a positive contribution.

7. Two approaches to leadership TRANSACTIONAL LEADERSHIP TRANSFORMATIONAL LEADERSHIP • Leadership style based on leading by exchange. • Transactional leaders often excel at the management functions by stressing the impersonal aspects of performance, such as plans, schedules and budgets. • Transactional leadership is important to all organisations, but leading change requires a different approach (Daft and Marcic, 2012). • Promotes compliance ! • Leadership style based on leading by motivating. • Significantly transform organisations as they bring about changes in mission, strategy, structure & culture. • They also bring about innovations in processes, products and services. • Inspire followers to believe not just in the leader personally but in their own potential to imagine and create a better future for the organisation.

8. Transformational leadership • Leadership style that brings about continuous learning, innovation & change through leading by motivating. • Transformational leaders provide extraordinary motivation by appealing to follower’s ideals and moral values and inspiring them to think about problems in new ways(Hellriegel et al 2008). • Many charismatic leaders are also transformational leaders but charismatic leaders are not transformational leaders unless they inspire continuous innovative change. • Transformational leadership has been shown to contribute to leader effectiveness, leader and follower satisfaction, improved follower efforts and better overall organisational performance. • Transformational leaders are typically positively engaged with the world around them and accomplish change by building networks of positive personal relationships (Daft and Marcic, 2012).

9. Behaviours of transformational leaders VISION FRAMING IMPRESSION MANAGEMENT • Transformational leaders have an ability to create a vision that binds people around a strong sense of common purpose. • Transformational leadership motivates through identification with the leader’s vision – pulling rather than pushing others on (Warren Bennis) • Transformational leaders convey not just the value of their vision but an unshakeable belief that the organisation – their followers – are able to realise it. • Followers of transformational leaders tend to demonstrate unquestioning loyalty and obedience. • Framingis a process whereby leaders define the group’s purpose in significant or meaningful terms. • Employees work with a sense that they are making a differencein the community, society or even the world. • The group’s purpose is defined in terms of thecore valuesof the organisation. • Transformational leaders are often able to frame their vision in a way that gives employees anew purpose for working. • Impression management is the attempt to control the impressions that subordinates (and stakeholders outside the organisation) form about the leader. • Transformational leaders are able to align their vision with their person through effective impression management. • This is achieved through a strong communication competency and ensuring that their behaviour lives their values and supports the declared vision.

10. Contemporary leadership concepts • 1. Level 5 Leadership: Leadership that is characterised by an almost complete lack of ego (humility), coupled with a fierce resolve / will to do what is best for the organisation (Collins, 2002). • 2. Servant leadership: A servant leader transcends self-interest to serve others and the organisation. Servant leaders operate on two levels: for the fulfillment of their subordinates’ goals and needs and for the realisation of the larger purpose or mission of their organisation. • 3. Authentic leadership: Leadership by individuals who know and understand themselves, who espouse and act consistently with higher order ethical values, and who empower and inspire others with their openness and authenticity. Inspire trust and commitment. In followers • 4. Interactive leadership: Leaders that favour a consensual and collaborative process, exerting influence that derives from relationships rather than position and formal authority.

11. Research on women in leadership • Research indicates that women’s style of leadership is (1) typically different from most men’s leadership styles and (2) is particularly well suited to today’s organisations (Daft and Marcic, 2012). • Using data from actual performance evaluations, one study found that when rated by peers, subordinates and bosses, female managers scored significantly higher than men did abilities such as motivating others, fostering communication, the production of high-quality work and listening to others (Sharpe, 2000). • A recent study of leaders and their followers in businesses, universities, and government agencies found that women were rated higher on social and emotional skills, which are crucial skills for both emotional intelligence and interactive leadership (Groves, 2005). • A 2009 review of thousands of 360-degree performance evaluations revealed that women outshone men in almost every leadership dimension measured – with the one exception that women leaders were often rated as “less visionary” (Ibarra and Otilia, 2009).

12. Types of leadership power • Power is “the potential ability to influence the behaviour of others” (Daft and Marcic, 2012). The power available does not need to be used – often the perception of power is enough to influence others. • Leaders use power to get things done in organisations. Leadership and power therefore go hand-in-hand. To influence others, leaders need to exercise some form of power. • Employees are not influenced without a reason – the reason often is the power that a leader exerts over them. Without some form of power, managers are not able to achieve organisational objectives. • Generally, power in organisations is allocated to those who get results and have good interpersonal skills.

13. Types of leadership power • French & Raven 1959 developed a framework for understanding the forms of power used by leaders in influencing followers. • Identified five types of leadership power: • Legitimate power • Coercive power • Referent power • Reward power • Expert power • Effective leaders may find it necessary to use more than one type of power at different times and for different occasions.

14. 1. Legitimate power • Definition: Influence based on the leader’s formal position in the organisation’s hierarchy. Employees feel that they ought to do what the boss says because of the position that they hold. • Access to resources, information and key decision makers gives some leaders legitimate power in influencing events; as well as passing on information and rewards to subordinates. • Such leaders are often described as having “clout” or political influence within an organisation. Legitimate power can: • Get a good job for a talented employee • Obtain approval for expenditures beyond the budget • Provide easy access to top people in the company • Ensure early awareness of important decisions and policy shifts Pinky Moholi Koos Bekker

15. 2. Coercive power • Definition: Influence based on fear and punishment. • Coercive power is less effective than a legitimate, reward or referent power because punishment is less effective as a motivator. • Coercive power may be appropriate when enforcing rules. • Punishment may take the form of: • Less desirable work assignments • Verbal reprimands or written warnings • Demotions, suspensions or terminations • Humiliation, criticism • Limiting chances of promotion • Employees may respond to coercion by exhibiting negative behaviour (such as falsifying performance reports) rather than improving their performance. “Change before you have to…” – Jack Welch

16. 3. Referent power • Definition: Influence based on followers personally identifying with the leader. Followers tend to like, admire and want to emulate their leader. • Leaders who have admirable personal characteristics, charisma, and an excellent reputation often possess referent power. • Referent power sometimes used by people with no positional powerin organisations – using requests rather than orders. • Referent power can be gained in organisations by developing interpersonal skills and developing the confidencethat other employees have in you. Nelson Mandela Winston Churchill

17. 4. Reward power • Definition: Influence based on the leader’s ability to bestow rewards on other people. Leaders using reward power let people know what is in it for them by creating win-win situations. • Employees act on the supervisor’s request because they believe that their behaviours will be rewarded. To increase their reward power, managers must be in a position to evaluate employees’ performance and determine their raises and promotions. • Rewards may take many forms, including: • Praise, attention • Recognition • Favourable job assignments • Preferred vacation schedules • Promotions • Salary increases Bill Gates

18. 5. Expert power • Definition: Influence based on specialised knowledge & skill regarding the tasks being performed is regarded as expert power. • When someone is a true expert, others go along with their recommendations because of his or her superior knowledge. • The fewer people who possess certain expertise in an organisation, the more power the individual who does have it gains. • Followers as well as leaders can possess expert power. Being an expert makes employees depend on you and employees with expert power are often promoted to management positions. Warren Buffet Steve Jobs

19. Using power effectively • Legitimate power is effective when a manager simply requires an employee to perform a task that is within the employee’s capabilities and job description. • Coercive power may be effective to get employees to comply with rules but, in general, when leaders threaten to punish the response from subordinates is often angry and negative. • Referent power usually leads to high levels of performance, hence effective leaders are likely to rely on expert, referent and reward power, using legitimate and coercive power only minimally.

20. How subordinates respond to the use of leadership power • Leadership matters, but without effective followers no organisation can survive. Leaders can develop an understanding of their followers and create the conditions that help them to be most effective (Daft and Marcic, 2012) • The leader’s use of different types of power can lead to three distinct types of behaviour in followers: • Commitment Committed subordinates are enthusiastic about meeting their leader’s expectations and strive to do so. • Compliance Subordinates who merely comply with their leader’s requests will do only what has to be done – usually without much enthusiasm. • Resistance Subordinates may appear to respond to their leader’s requests while not actively doing so or even intentionally delaying or sabotaging plans.

21. Tutorial group exercise To what extent to you believe that the types of power used by an individual leader reveal a great deal about why others follow that particular leader? As a group will need to identify the two theoretical approaches you believe are most useful to managers operating in SA - and which two are the least useful • Legitimate power? • Coercive power? • Referent power? • Reward power? • Expert power? Due: 3 October 2012

22. The types of power used by a leader reveals a great deal about why others follow that individual leader Why others follow this type of leader Legitimate Power Followers Coercise Power Followers Referent Power Followers Reward Power Followers Expert Power Followers