OB+Leadership 3

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Leadership
Copyright 2007 – Biz/ed

http://www.bized.co.uk
Meaning of Leadership
• Process of influencing people, understanding their needs and

aspirations, setting goals for them and facilitating them for
goals achievement.
• Leaders create followers by their far sightedness, knowledge
and sensitivity.
eg- Jack Welch of GE.
• As a property leadership is the set of characteristics attributed
to individuals who are perceived to be leaders.
• Three major constituents of leadership are People, Influence
and goals. Thus ability to influence people to achieve certain
goals. People component makes leadership a very important
concept in OB.
• Leadership is an intangible and a charismatic component
which some have and some don’t.
• A good leader is one who can make himself redundant.

Leadership and Management
Manager Leader
• Creating an agenda- • Establishing direction-
Planning and Budgeting. Developing a vision of the
Establishing schedules of future and strategies
activities and timetables. needed to achieve the
• Involving people- vision.
Recruitment, selection and • Aligning people-
staffing the organization Communicating the
structure. organization’s goals to
• Executing plans- Setting employees and identify
standards, control and them with individual goals.
feedback and monitoring • Motivating and inspiring-
• Outcome- Goal Energizing people to
achievement, good overcoming all barriers.
performance, satisfied • Producing change- Dramatic
stakeholders. changes which change the
face of the organization.

Leadership and Power
• Legitimate power- Power granted through the organizational hierarchy. Formal in

nature. All managers have a legitimate power over their subordinates. But merely
legitimate power does not make a manager a leader.Other word for legitimate power
is authority.
• Reward power- Refers to the power to give or withhold rewards. Rewards like
salary hikes, promotions, recognition, praise.Greater the rewards a manager holds
and greater the importance of those for the employees more will be the manager’s
reward power.
• Coercive power- The power to force compliance by means of psychological,

emotional and physical threat. Coercion is limited to disciplinary actions, fines, lay
offs, penalties, written reprimands, firing etc. More the coercive power less the
leader respect.
• Referent power- Referent power is abstract in nature.It is based on identification,

imitation, loyalty and charisma.More the referent power more the status of a leader.
• Expert power- Derived from information and expertise. The more important the
information and lesser the access that people have to it the more the expert power.

Approaches to leadership
• Traits approach (1900-1950s)
1. Based on the assumption that leaders are born not made.

2. Focus was to identify the traits that distinguished leaders from followers.
3. Identification of the characteristics, traits and attributes possessed by leaders.
4. Traits are distinguishing personal characteristics of a person.
5. Motive was that if these set of traits were identified leaders could be identified.
6. But the approach was not successful.
7. Ultimately categorization was done on the basis of physical, personality, ability, task related,
social and social backgrounds traits.
8. Further studies were expanded beyond the confinement of traits.

Approaches to leadership contd..
• Behavioral approach
1. Failure of traits studies led to the study of the behavioral approach
2. Objective was to find out that what are the behavioral patterns of
leaders.
3. How is the behavior of leaders different from that of non leaders.
4. Since behavior can be incorporated through training but traits
cannot.
5. How does the behavior of leaders result in the accomplishment of
the organizational goals.
6. Two major factors of behavioral variables were identified. They
were TASK ORIENTED BEHAVIOR and EMPLOYEE ORIENTED
BEHAVIOR.
7. Three universities were studying these two variables.
8. University of Michigan, Ohio State University and University of
Texas.

Approaches to leadership contd..
• Situational or Contingency approach
1. This model assumes that appropriate leader behavior varies from

situation to situation.
2. Objective here was to identify the key situational factors which

determine appropriate leadership.
3. Avoid situations where you are likely to fail.
4. Match your leadership style with the appropriate situation.
5. Leaders must develop flexibility to change their style according to the
situation.
6. Fred Fiedler’s contingency theory, Hersey and Blanchard’s theory,
Leader member exchange theory and Path goal theory.

University of Michigan
• Researchers were led by Rensis Likert.
• Basically tried to contrast the behaviors of leaders with non leaders by interviewing
managers on one hand and workers on the other.
• Took a one dimensional approach.
• Identified two styles ie Job centered behavior and Employee centered behavior.
• Classified leaders into effective and not effective.
• Job centered leaders pay close attention to the subordinate’s work, explains the
work procedures and are keenly interested in performance so it comes under not
effective leader.
• Employee centered leaders develop cohesive work group ensuring that employees
are satisfied with their jobs. Primary concern is welfare of subordinates. These
leaders tend to be effective.

University of Michigan
• Studied these two types of behavior on the same continuum and devided the
continuum from system 1 to system 4.
• System1- Exploitative-Authoritative (JOB CENTERED)(NOT PARTICIPATIVE)
• System2- Benevolent-Authoritative
• System3- Consultative
• System4- Participative.(EMPLOYEE CENTERED)(HIGHLY PARTICIPATIVE)
• Introduced the concept of participative leadership. Extension in the form of

Management by Objectives.

Ohio State Studies
• Ralph Stogdill developed the LBDQ( Leader Behavior Description Questionnaire).
• They identified two basic leadership behavioral variables or styles i.e.

INITIATING STRUCTURE and CONSIDERATION.
• Leaders using Initiating structure fall under the category of Task oriented
leaders. They set
clear goals, clear lines of authority and responsibility, time to time
monitoring and regular measurement of performance, corrective steps. explicit
schedules of work activities and formal lines of communication.

Ohio State Studies

• Leaders using Consideration fall under the category of people oriented leaders.
• Believe in fostering informal relations. Personal touch in their dealings. Show

concern for the subordinate’s needs and aspirations. Establish warm, friendly
and supportive climate conducive to performance.
• Difference between Ohio and Michigan- unlike Michigan, Ohio analyzed leader
behavior on a two dimensional basis.
• A leader could exhibit varying levels of Initiating structure and Consideration at

the same time.
• Initially it was presumed that a combination of (HI,HC) yields best results but
later on evidence proved that performance depends on the interaction between
behavior and situation.

University of Texas
• Given by Blake and Moutan through the explanation of Managerial

Grid.
• Places every manager according to his behavior at some point on the

grid.
• Two behavioral variables identified were Concern for Production

and Concern for People.
• Concern for Production relates to Initiating structure and Job centered

and Concern for people relates to Consideration and Employee
centered respectively.

Blake and Mouton’s Managerial Grid
• Draws on both studies to assess

leadership style
– “Concern for People” is
Consideration and Employee-
Orientation
– “Concern for Production” is
Initiating Structure and
Production-Orientation
• Style is determined by position on
the graph
• (1,1)- Impoverished management.
(9,1)- Authority compliance.(1,9)-
Country club. (9,9)- Team
management.
E X H I B I T 12-1
© 2009 Prentice-Hall Inc. All rights reserved. 12-13


Managerial Grid
• (1,1)- IMPOVERISHED MANAGEMENT- Absence of management

philosophy. Manager exerts little effort towards interpersonal relations
or achievement of organizational objectives. Eg- Kenneth lay of
Enron
• (9,9)-TEAM MANAGEMENT- Considered the most effective style

where manager and organization members work together to
accomplish the goals. Eg- Herb Kelleher of Southwest Airlines.
• (1,9)- COUNTRY CLUB- Where major focus is on building building

relationships and primary concern is people.But a low focus on tasks
may give questionable results. Eg- Richard Branson of Virgin
Group.
• (9,1)- AUTHORITY COMPLIANCE- Where efficiency of operations is

the dominating factor.Not much importance is attached to
people.Focus on efficiency including elimination of people wherever
necessary. Eg- Stan O Neal of Merryl Lynch, Carly Fiorina of HP.

Approaches to leadership contd...
• Situational Approach
1. This theory believed that leaders are the product of a given situation.
2. Approach was to identify these situational factors which interact to determine

leader behavior.
3. Appropriate leader behavior varies from situation to situation.
4. Fred Fiedler’s LPC Theory.
5. Hersey and Blanchard Theory.
6. Robert House’s Path Goal Theory.
7. Leader member exchange theory.

CONTINGENCY THEORIES
 All Consider the Situation
– Fiedler’s Contingency Model
– Cognitive Resource Theory
– Hersey and Blanchard’s Situational Leadership
Model
– Path Goal Theory
Assumptions underlying the different models:

Fiedler: Leader’s style is fixed
Other’s: Leader’s style can and should be
changed
Fiedler Model
 Leader: Style is Fixed (Task oriented vs. Relationship
oriented)
 Considers Situational Favorableness for Leader
– Leader-member relations
– Task structure
– Position power
 Key Assumption
– Leader must fit situation; options to
accomplish this:
– Select leader to fit situation
– Change situation to fit leader
Fiedler’s Model: The Leader
Assumption: Leader’s Style is Fixed & Can be

Measured by the Least Preferred Co-Worker (LPC)
Questionnaire
Least Preferred Co-Worker (LPC)

Questionnaire
The way in which a leader will
evaluate a co-worker that is not
liked will indicate whether the
leader is task- or relationship-
oriented.
Fiedler’s Model: Defining the Situation
Leader-Member Relations
The degree of confidence, trust, and respect
subordinates have in their leader.
Task Structure
The degree to which the job assignments are
procedurized.
Position Power
Influence derived from one’s formal structural
position in the organization; includes power to
hire, fire, discipline, promote, and give salary
increases.
Findings of the Fiedler Model
Good
Task-Oriented
Performance
Relationship
-Oriented
Poor
Favorable Moderate Unfavorable
Category I II III IV V VI VII VIII

Leader-Member Good Good Good Good Poor Poor Poor Poor
Relations
Task Structure High High Low Low High High Low Low
Position Power Strong Weak Strong Weak Strong Weak Strong Weak
Hersey and Blanchard’s situational theory
• Given by Paul Hersey and Kenneth Blanchard.

• Introduced a new dimension of measuring leader effectiveness ie
follower’s readiness.
• Essence was that leadership style gets influenced by the
characteristics of the group to be led.
• Variables identified were Task behavior and Relationship behavior.
• Regardless of what leader does effectiveness depends on action of the
followers.
• Follower readiness refers to the behavior of followers, their attitude
towards work and willingness to take responsibility.
• Identified highly directive to a Laissez- faire approach.
• Most effective leader behavior depends on the ability and willingness
level of the followers to assume responsibility.
• R1 fits into S1, R2 into S2, R3 into S3 and R4 into S4.


Path goal theory
• Given by Robert House.

• Builds from the Expectancy theory of motivation.
• Leaders to provide information, support and resources to help
followers achieve the goals.
• Help clarify the path and to make valued and desired rewards
available at the workplace.
• Identified two variables- Leader Behavior and Situational factors.
• Leader Behavior- Directive, Supportive, Participative and
Achievement Oriented.
• Situational factors involve: Characteristics of subordinates and
Environmental characteristics.
• Role of leader is to ensure that path to goals is clearly understood.
• Rewards play a very important role.

Path-Goal Model
• Two classes of contingency variables:
– Environmental are outside of employee control
– Subordinate factors are internal to employees

Leader Member Exchange Theory
• LMX Premise:
– Because of time pressures, leaders form a special

relationship with a small group of followers: the “in-group”
– This in-group is trusted and gets more time and attention
from the leader (more “exchanges”)
– All other followers are in the “out-group” and get less of
the leader’s attention and tend to have formal
relationships with the leader (fewer “exchanges”)
– Leaders pick group members early in the relationship
– In group members have higher level of satisfaction and
performance.
– Each leader follower relationship is referred to as the
“vertical dyad”.

LMX Model

Substitutes for leadership
• Leadership has been a concept of a number of researches and

lot of studies.
• Concept of substitutes was introduced because the above

theories did not account for all those situations where
leadership becomes neutral.
• Where the task is structured, where reward structure is pre

determined and rigid, where lines of communications are
absolutely formal, where the followers are able and
competent.

Charismatic Leadership
• Assumes charisma as an individual trait of a leader.
• A form of aura and attraction which inspires support and

acceptance.
• All else being equal someone with more of charismatic

personality is likely to exert more influence on followers.
• Proposed by Robert House in 1977.
• Charismatic leaders have lot of self confidence, firm conviction

in their beliefs and ideals and the strong influence to align the
followers goals with organizational goals.

Transformational Leadership
• Leadership that goes beyond ordinary expectations by

transmitting a sense of mission, stimulating learning experiences
and inspiring new ways of thinking.
• Goes beyond the exchange inducements of desired performance.
• Increasingly becoming important in today’s turbulent business

environment.
• Focused on bringing about transformational changes in

organization by building vision, securing commitment and
empowering people.
• Eg- Carly Fiorina of HP. Restructured the entire firm.

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http://www.bized.co.

Copyright 2007 – Biz/ed

• Process of influencing people, understanding their needs and

Copyright 2007 – Biz/ed

Leadership and Management

Copyright 2007 – Biz/ed

Leadership and Power

• Legitimate power- Power granted through the organizational hierarchy. Formal in

• Coercive power- The power to force compliance by means of psychological,

• Referent power- Referent power is abstract in nature.It is based on identification,

Copyright 2007 – Biz/ed

• Traits approach (1900-1950s)

1. Based on the assumption that leaders are born not made.

Copyright 2007 – Biz/ed

Approaches to leadership contd..

Copyright 2007 – Biz/ed

Approaches to leadership contd..

• Situational or Contingency approach

1. This model assumes that appropriate leader behavior varies from

2. Objective here was to identify the key situational factors which

Copyright 2007 – Biz/ed

• Took a one dimensional approach.

• Classified leaders into effective and not effective.

Copyright 2007 – Biz/ed

• System1- Exploitative-Authoritative (JOB CENTERED)(NOT PARTICIPATIVE)

• System4- Participative.(EMPLOYEE CENTERED)(HIGHLY PARTICIPATIVE)

• Introduced the concept of participative leadership. Extension in the form of

Copyright 2007 – Biz/ed

Ohio State Studies

• Ralph Stogdill developed the LBDQ( Leader Behavior Description Questionnaire).

• They identified two basic leadership behavioral variables or styles i.e.

Copyright 2007 – Biz/ed

Ohio State Studies

• Believe in fostering informal relations. Personal touch in their dealings. Show

• A leader could exhibit varying levels of Initiating structure and Consideration at

Copyright 2007 – Biz/ed

• Given by Blake and Moutan through the explanation of Managerial

• Places every manager according to his behavior at some point on the

• Two behavioral variables identified were Concern for Production

• Concern for Production relates to Initiating structure and Job centered

Copyright 2007 – Biz/ed

Blake and Mouton’s Managerial Grid

• Draws on both studies to assess

© 2009 Prentice-Hall Inc. All rights reserved. 12-13

Copyright 2007 – Biz/ed

• (1,1)- IMPOVERISHED MANAGEMENT- Absence of management

• (9,9)-TEAM MANAGEMENT- Considered the most effective style

• (1,9)- COUNTRY CLUB- Where major focus is on building building

• (9,1)- AUTHORITY COMPLIANCE- Where efficiency of operations is

Copyright 2007 – Biz/ed

Approaches to leadership contd...

2. Approach was to identify these situational factors which interact to determine

3. Appropriate leader behavior varies from situation to situation.

4. Fred Fiedler’s LPC Theory.

5. Hersey and Blanchard Theory.

6. Robert House’s Path Goal Theory.

7. Leader member exchange theory.

Copyright 2007 – Biz/ed

Assumptions underlying the different models:

Assumption: Leader’s Style is Fixed & Can be

Least Preferred Co-Worker (LPC)

Category I II III IV V VI VII VIII

Hersey and Blanchard’s situational theory