Chapter 17

1. Chapter 17 Leadership

2. What Would You Do?Leadership: Dealing with Tragedy • Sandler O’Neill & Partners, L.P. is Investment banking firm located in World Trade Center on September 11 • Top leaders are lost in the tragedy • Can new leadership help the firm survive this catastrophic event?

3. Learning ObjectivesWhat Is Leadership? • explain whatleadership is • describe who leaders are and what effective leaders do After discussing this section, you should be able to:

4. Leadership Leaders versus Managers Substitutes for Leadership

5. Managers versus Leaders Managers Leaders • Do things right • Status quo • Short-term • Means • Builders • Problem solving • Do the right thing • Change • Long-term • Ends • Architects • Inspiring & motivating Adapted from Exhibit 17.1

6. Substitutes for Leadership: Do Leaders Always Matter? • Leadership substitutes • subordinate, task, or organizational characteristics that make leaders redundant or unnecessary • professional orientation, intrinsically satisfying work, cohesive work group, etc. • Leadership neutralizers • subordinate, task, or organizational characteristics that interfere with a leader’s actions • subordinate skills, abilities, unambiguous and routing tasks, intrinsically satisfying work, rewards not controlled by supervisor, etc. • Leaders don’t always matter

7. Leadership Substitutes & Neutralizers Adapted from Exhibit 17.2

8. Leadership Traits Who Leaders Are and What Leaders Do Leadership Behavior

9. Drive Leadership Traits Desire to Lead Self- confidence Honesty/ Integrity Knowledge of the Business Emotional Stability Cognitive Ability

10. What Really Works? Traits & Perceptions of Leadership Effectiveness Intelligence 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 75% Dominance 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 57% Extroversion 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 63%

11. What Really Works? (cont’d) Charisma & Leadership Effectiveness Performance & Charisma 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 72% Charisma & Perceived Leader Effectiveness 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 89% Charisma & Leader Satisfaction 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Probability of success 90%

12. Leadership Behaviors • Initiating structure • clarifies follower roles and duties • job-centered or concern for production • Consideration • creating a supportive environment • employee-centered or concern for people

13. 9 1,9 Country Club Management Team Management 9,9 8 7 Middle of the 6 5,5 5 Road 4 3 2 Impoverished Management Authority-Compliance 1,1 9,1 1 1 2 3 4 5 6 7 8 9 Blake/Mouton Leadership Grid Concern for People Concern for Production Adapted from Exhibit 17.4

14. Learning ObjectivesSituational Leadership • explain Fiedler’s contingency theory. • describe how path-goal theory works. • explain the normative decision theory After discussing this section, you should be able to:

15. Putting Leaders in the Right Situation: Fiedler’s Contingency Theory Leadership Style: Least Preferred Co-worker Situational Favorableness Matching Leadership Styles to Situations

16. Fiedler’s Contingency Theory Group Performance Situational Favorableness = Leadership Style Adapted from Exhibit 17.5

17. Leadership Style: Least Preferred Co-Worker • Leadership style is the way a leader generally behaves toward followers • seen as stable and difficult to change • Style is measured by the Least Preferred Co-worker scale (LPC) • relationship-oriented • task-oriented

18. Situational Favorableness • How a particular situation affects a leader’s ability to lead • Three factors • Leader-member relations • Task structure • Position power

19. Situational Favorableness Adapted From Exhibit 17.7

20. Matching Leadership Styles to Situations Task- Oriented Leaders Good Relationship- Oriented Leaders Poor Adapted From Exhibit 17.8

21. Adapting Leader Behavior: Path-Goal Theory Four Leadership Styles Subordinate and Environmental Contingencies

22. Subordinate Contingencies • Perceived Ability • Locus of Control • Experience • Environmental Contingencies • Task Structure • Formal Authority System • Primary Work Group Path-Goal Theory • Leadership Styles • Directive • Supportive • Participative • Achievement-Oriented • Outcomes • Subordinate Satisfaction • Subordinate Performance Adapted From Figure 17.10

23. Leadership Styles • Directive • clarifying expectations and guidelines • Supportive • being friendly and approachable • Participative • allowing input on decisions • Achievement-Oriented • setting challenging goals

24. Subordinate Perceived ability Locus of control Experience Environmental Task structure Formal authority system Primary work group Subordinate & Environmental Contingencies

25. When to Use Each of the Four Leadership Styles Adapted from Exhibit 17.11

26. Adapting Leader Behavior: Normative Decision Theory Decision Styles Decision Quality and Acceptance

27. Decision Styles Style Explanation AI - Autocratic Solve the problem yourself using the information you have. AII - Less autocratic Obtain the needed information from workers; then solve the problem yourself. Workers provide information but not alternatives. C1- Consultative Share the problem with workers individually (but not as a group), seeking suggestions & possible alternatives. Solve the problem yourself. CII - More consultative Share the problem with workers as a group, seeking suggestions & possible alternatives. Solve yourself. GII - Group decision Share the problem with workers as a group, seeking suggestions & possible alternatives. Attempt to reach a consensus & be willing to accept & implement the workers’ solution. Adapted from Exhibit 17.12

28. Decision Quality and Acceptance • Using the right amount of employee participation: • improves decision quality • improves acceptance • Decision tree helps leader identify optimal level of participation

29. Quality Rule If the quality of the decision is important, then don't use an autocratic decision style Leader Information Rule If the quality of the decision is important, and if the leader doesn't have enough information to make the decision on his or her own, then don't use an autocratic decision style Subordinate Information Rule If the quality of the decision is important, and if the subordinates don't have enough information to make the decision themselves, then don't use a group decision style Decision Rules to Increase Decision Quality

30. Decision Rules to Increase Decision Quality (cont’d) • Goal Congruence Rule • If the quality of the decision is important, and subordinates' goals are different from the organization's goals, then don't use a group decision style • Problem Structure Rule • If the quality of the decision is important, the leader doesn't have enough information to make the decision on his or her own, and the problem is unstructured, then don't use an autocratic decision style

31. Decision Rules to Increase Decision Acceptance • Commitment Probability Rule • If having subordinates accept and commit to the decision is important, then don't use an autocratic decision style • Subordinate Conflict Rule • If having subordinates accept the decision is important and critical to successful implementation and subordinates are likely to disagree or end up in conflict over the decision, then don't use an autocratic or consultative decision style

32. Decision Rules to Increase Decision Acceptance (cont’d) • Commitment Requirement Rule • If having subordinates accept the decision is absolutely required for successful implementation and subordinates share the organization's goals, then don't use an autocratic or consultative style

33. Learning ObjectivesStrategic Leadership • explain how visionary leadership (i.e. charismatic and transformational leadership) helps leaders achieve strategic leadership. After discussing this section, you should be able to:

34. Visionary Leadership Charismatic Leadership Transformational Leadership

35. Charismatic Leadership • Creates an exceptionally strong relationship between leader and follower • Lead by: • articulating a clear vision, based on values • role modeling values • communicating high performance expectations • displaying confidence in followers

36. Been There, Done That Richard Branson: Charisma without Hot Air • Content employees produce happy customers • Keeps offices at 50 people • Encourages and rewards risk taking and creativity

37. Types of Charismatic Leaders • Ethical Charismatics • provide developmental opportunities • open to positive and negative feedback • recognize others’ contributions • share information • concerned with the interests of the group • Unethical Charismatics • control and manipulate followers • only want positive feedback • motivated by self-interest

38. Charismatic Leader Behaviors Ethical Charismatics Power is used to serve others Exercising Power Followers help develop the vision Creating the vision Communicating with followers Two-way communication Accepting feedback Open to feedback Stimulating followers Want followers to think and to questions the status quo Developing followers Focus on developing followers Living by moral standards Three virtues: courage, sense of fairness, integrity Ethical and Unethical Charismatics

39. Charismatic Leader Behaviors Unethical Charismatics Power is used to dominate others Exercising Power Vision comes solely from the leader Creating the vision Communicating with followers One-way communication, not open to input from others Accepting feedback Prefer yes-men, punish candid feedback Stimulating followers Don’t want followers to think, prefer uncritical acceptance of own ideas Developing followers Insensitive to followers’ needs Living by moral standards Follow standards only if they satisfy immediate self interests Ethical and Unethical Charismatics

40. Transformational Leadership • Generates awareness and acceptance of group’s purpose and mission • Gets employees to see beyond their own needs and self-interest • Goes beyond charismatic leadership • Different than transactional leadership

41. Transformational Leadership Components • Charismatic leadership/idealized influence • Inspirational motivation • Intellectual stimulation • Individualized consideration

42. What Really Happened?Leadership: Dealing with Tragedy • Deceased employees’ families • given pay check for the rest of the year • insurance coverage for five years • Jimmy Dunne became manager and provided leadership that led to strong financial recovery • developed new skills in negoti- ation, calmness, patience, sup- port, while maintaining strong business focus