ACCA F1 Accountant in Business - 2010 - Study text - Emile Woolf Publishing
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Chapter 7: Management and leadership
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Joins style
A ‘joins’ style of leadership is called a ‘laissez-faire’ style by some management
theorists. With this style, the subordinate is allowed to get on with his work and do
whatever he likes, within established guidelines and constraints.
The potential advantages are high motivation and commitment from subordinates.
The potential problems are that:
Individuals often need guidance from a leader.
Co-ordination between subordinates might be poor.
There is a risk that the actions of subordinates might undermine the authority of
the leader.
The potential risks are too great if the subordinates are insufficiently
knowledgeable and experienced.
Conclusion
Research by an Ashridge College team concluded that:
Subordinates prefer a ‘consults’ style of leadership.
The worst style of leadership is inconsistency in style.
4.8 Likert’s leadership styles
Writing in the 1960s, Rensis Likert identified four different leadership styles.
Leadership style Features of the style
Exploitive
authoritative
The leader has a low concern for people. He uses threats and
other fear-based methods to get others to do what he instructs.
Communication is almost entirely a downward process, from the
leader to the subordinates.
Benevolent
authoritative
The leader is authoritarian, but also shows concern for people.
He is a ‘benevolent dictator’. He uses rewards to encourage
performance. He listens to concerns of people lower down in the
organisation, but he is often told by subordinates what they think
he would like to hear. Most decisions are taken by the leader.
There is not much teamwork among the subordinates.
Consultative
The leader makes a genuine attempt to listen to his subordinates.
He has substantial trust in his subordinates, but not enough to let
them take major decisions (which he takes himself). There is
some two-way vertical communication between leader and
subordinates, and some horizontal communications between
subordinates, with a moderate amount of teamwork and co-
operation.
Participative
The leader engages subordinates in the decision-making process.
He has complete confidence in his subordinates, who feel a
responsibility for the organisation’s goals. People are
psychologically close and work well together. Subordinates
receive economic rewards based on achieving goals that have
been set with their participation.
Likert argued that a participative style of leadership was ideal for the profit-
oriented, human-concerned organisation.
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Theories of leadership: contingency theories
The nature of contingency theory
Fiedler’s contingency model
Hersey and Blanchard: situational leadership theory
Handy’s best fit approach
5 Theories of leadership: contingency theories
5.1 The nature of contingency theory
Contingency theory of leadership is based on the view that the most effective
leadership style in a given situation will depend on the situation. In other words,
the most effective leadership style is ‘contingent upon’ the circumstances of the
situation.
Contingency theories of leadership have been developed by:
Fiedler
Hersey and Blanchard
Handy.
5.2 Fiedler’s contingency model
Fred Fiedler’s contingency theory of leadership was developed from research he
conducted in the 1960s into two leadership styles, and which style was the more
effective. He began by identifying two leadership styles:
task-orientated leadership, and
relationship-orientated leadership.
These styles could be related to Blake’s grid and ‘concern for the task’ and ‘concern
for people’.
Fiedler developed a system for deciding whether a leader was task-orientated or
relationship-orientated, based on getting leaders to reply to a questionnaire about
their ‘least favourite co-worker’.
Having categorised the individuals in his research into one or the other categories of
leader, he then tried to establish which style of leadership was more effective.
He concluded that the effectiveness of a leader depends on:
the leader’s style, and also
the extent to which the work situation gives the leader control and influence.
The work situation depends on three factors:
The relationship between the leader and the subordinates: If the leader is liked
and respected, he is more likely to have the support of his subordinates.
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The structure of the task. If the task is clearly defined, with clear goals, methods
of working and standards of performance, it is more likely that the leader will be
able to exert influence.
The position power of the leader. If the organisation gives power to the leader,
for the purpose of getting the job done, this is likely to increase the influence of
the leader.
For example, the leader may have to be authoritarian in his approach when a quick
decision is needed, or when employees are used to being told what to do.
The work situation can be favourable to the leader, unfavourable to the leader, or
something in between (intermediate favourableness). Fiedler defined a favourable
work situation as:
good relationship between leader and subordinates
a highly-structured task, and
a large amount of position power for the leader.
So which leadership style was most effective? Fiedler found that it seemed to
depend on the circumstances:
When the work situation is favourable, a task-orientated leader is more effective.
When the work situation is unfavourable, a task-orientated leader is also more
effective.
When the work situation is somewhere between favourable and unfavourable
(‘intermediate’), a relationship-orientated leader is more effective.
Fiedler was therefore one of the first management theorists who argued that the
effectiveness of leadership style depends on the circumstances.
He went on to argue that individual leaders are task-orientated or relationship-
orientated by nature, and it is impossible to change them. An organisation should
therefore assess whether a work situation is favourable, unfavourable or in between,
and try to appoint a leader with the more appropriate style for the work situation.
5.3 Hersey and Blanchard: situational leadership theory
Paul Hersey and Kenneth Blanchard (1968) developed another contingency theory
of leadership, which they called situational leadership theory. Like Fiedler’s
contingency theory, their theory states that the most appropriate leadership style
depends on the work situation.
Some of the assumptions in their theory are that:
A leader should adjust his or her leadership style to meet the requirements of the
work situation. Leaders must be able to use any leadership style, and should
switch from one style to another as circumstances require. (In this respect their
views differ from Fiedler’s. Fiedler did not believe that individuals can change
their leadership style, because this is ‘personal’ or ‘natural’ to each individual. It
was therefore necessary to pick an individual as leader who could bring the
most suitable leadership style to the job.)
Subordinates or team members are at different levels of personal development.
Some are more mature psychologically than others and some are more mature
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(experienced and skilled) in the job than others. The appropriate leadership style
depends on the extent to which the subordinates are mature. For the purpose of
their theory, Hersey and Blanchard identified subordinates’ maturity in terms of:
- competence in their job and their ability to undertake successfully the tasks
they are given – job maturity
- confidence in their ability to deal with the challenges of the task
- commitment to the organisation’s goals and commitment to undertake the
task – psychological maturity.
They referred to the maturity of the team members as their ‘functioning
maturity’.
Leaders are involved in:
directive activity – giving guidance and direction: this is similar to ‘concern for
the task’ and can be described as ‘task behaviour’
supportive activity – giving emotional and social support to subordinates: this is
similar to ‘concern for people’ and can be described as ‘relationship behaviour’.
The amount of involvement by leaders in directive activity and supportive activity
can range from low to high. The appropriate level of activity required from an
effective leader varies with the work situation, which in turn depends largely on the
maturity of the subordinates or team members.
Hersey and Blanchard identified four leadership styles, which can be presented in
the form of a 2 x 2 matrix.
The four leadership styles are explained in more detail below, together with the
views of Hersey and Blanchard about which leadership style is most effective for a
given work situation.
Leadership
style
Characteristics Most effective when
subordinates have…
Telling
High task focus, low relationship focus. The
leader defines the roles and tasks of
subordinates and supervises them closely.
Decisions are announced by the leader.
Communication is mainly one-way, from
the leader down to subordinates.
Low competence
High commitment
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Selling
High task focus, high relationship focus.
The leader defines the roles and tasks of
subordinates. He seeks ideas and
suggestions from subordinates, so
communication is two-way. The leader
makes the decisions.
Subordinates may need direction because
they are inexperienced. They also need
support and praise from the leader to build
their self-esteem.
Some competence
Some commitment
Participating
Low task focus, high relationship focus.
The leader delegates some day-to-day
decisions to subordinates (for example,
work scheduling). The leader facilitates and
participates in discussions about other
decisions with subordinates.
Subordinates are competent in their work,
but lack the psychological confidence of
motivation. Some support is necessary from
the leader to boost confidence and
motivation.
High competence
Variable
commitment
Delegating
The leader is involved in discussions about
problem-solving and decision-making, but
control is with the subordinates. The
subordinates decide how and when the
leader will be involved. The subordinates
can do the work themselves with little
supervision or support.
High competence
High commitment
5.4 Handy’s best fit approach
Charles Handy described his contingency approach to leadership styles as a best fit
approach.
There are four factors that influence the effectiveness of a leader:
the leader himself – his personality and character, and also his leadership style
the subordinates – the personalities of the individuals in the group, the
character of the group as a whole, their preferences for a particular leadership
style
the task – what are the objectives of the group’s tasks, what methods of working
are used?
the environment – this factor covers a wide range of possible issues, including
the organisation structure, the culture and norms of the organisation, the
technology of the organisation’s operations and the variety of tasks performed
by subordinates in the group.
Leadership styles range between autocratic and democratic. A leader’s style is not
necessarily one or the other. It can be somewhere in between the two extremes.
The characteristics of the subordinates in a group range between having a low
opinion of themselves (and wanting to be told what to do) and having a high
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opinion of themselves (and so liking challenging work and freedom from
supervision). Most groups are somewhere between these two extremes.
The tasks that are done by a work group can range between all routine and
repetitive tasks at one extreme and all complex work at the other extreme.
Normally, the characteristics of the work is somewhere between these two extremes.
Handy described a ‘best fit’ spectrum, in which the three factors of leader, subordinates
and tasks are placed on a range or spectrum, each between two extremes. He called
these two extremes ‘tight’ and ‘flexible’.
TIGHT
FLEXIBLE
The leader
Prefers an autocratic style Prefers a democratic style
Low opinion of subordinates High regard for subordinates
Dislikes uncertainty
Accepts a reasonable amount of
uncertainty
Subordinates
Low opinion of their own
abilities
High opinion of their own
abilities
Like certainty. Like to be told
what to do
Like challenging work
Prefer autocratic leaders Prefer democratic leaders
See their work as unimportant
The task
The work requires no
initiative. It is routine and
repetitive, and trivial
The work involves important
tasks with a long timescale for
completion and results
Short timescale for completion
Complex work, involving
problem-solving or
decision-making
Handy suggested that in any work situation there is a best fit of leader, subordinates
and task (and environment, which is not on the spectrum). The best fit occurs where
all three items – leader, subordinates and task – are at the same position on the
spectrum.
Whenever there is a mismatch on the spectrum of leader, subordinates and task, and
change will be required to create a new best fit for the altered work situation.
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Leadership qualities
What do leaders do?
Adair’s action-centred leadership
Warren Bennis: leaders as enablers and originators
John Kotter: what leaders really do
Ronald Heifetz: leadership as an activity
6 Leadership qualities
6.1 What do leaders do?
The leadership theories described so far in this chapter have considered leadership
style and which particular style of leadership is the most appropriate. Other writers
on leadership have considered what leaders do, and what makes leadership
different from management. Some of these theories are described in this section.
6.2 Adair’s action-centred leadership
John Adair’s action-centred leadership model is based on the view that effective
leaders need full command of three aspects of leadership:
achieving the task and meeting the demands of the task
managing and maintaining the team or group
managing individuals within the group and meeting the needs of individuals in
the group.
A good leader keeps each of these three elements of leadership in balance. Adair
argued that in any work situation, a leader is faced with problems and issues that
will require the use of the three leadership skills. However, the particular skills that
are needed to deal with any given situation will vary according to its nature. In
other words, the skills required to deal with each problem will depend on the
nature of the problem. An effective leader needs skills in all three areas.
Adair argued that all three aspects of leadership skills can be learned through
training and development.
Sometimes a leader must show one of the leadership skills to deal with a problem,
and sometimes he must show two of the skills or all three skills. The action-centred
leadership model, indicating the skills required by the leader, can therefore be
shown as three overlapping circles, which Adair calls the ‘three circles diagram’.
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The leadership skills required for each of the three areas of leadership are
summarised below.
Achieving the task Managing the team Managing individuals
Define the task and the
objectives/goals
Agree standard of
performance/behaviour
Understand the team
members as individuals
(personality, skills,
needs)
Make the plan for
achieving the task
Establish the culture of
the group
Assist individuals
Identify and acquire the
resources needed
Maintain ethical
standards and discipline
Give support to
individuals
Establish responsibilities
for group members
Resolve conflicts between
group members
Give praise to individuals
Set standards and target
performance standards
Change the balance/
membership of the group
when necessary
Agree individual
responsibilities and
objectives
Establish reporting
systems
Develop the ability of the
team members to work
together
Make use of the strengths
and skills of the
individual
Control actual
performance by
comparison with the
targets
Build team morale.
Motivate the group as a
team
Reward individuals (for
example with more
responsibility or higher
status)
Monitor performance
Develop the collective
skills and maturity of the
group
Train and develop
individual team members
Review on completion of
the task
Facilitate
communications – within
the group and externally
Consult with the group
Give the group feedback
on its performance
Provide group training
The emphasis that a leader gives to each of these skills will obviously vary
according to the situation, but a well-trained and effective leader is able to make use
of the appropriate skills for each situation.
Note: Adair’s 50:50 rule
Adair suggested a 50:50 rule that applies to his thinking about leadership.
Leadership is influential, but effective leadership on its own is not sufficient.
50% of motivation comes from within the individual. The other 50% of
motivation comes from influences outside the individual, including the
influence of the leader.
50% of building a successful team comes from the team members and 50%
comes from the leader of the team
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6.3 Warren Bennis: leaders as enablers and originators
Warren Bennis, writing from the 1980s, made a distinction between managers and
leaders.
The role of the manager is to administer and maintain systems in order.
Managers focus on systems and controls. Their main concern is for the ‘bottom
line’ (short-term profit). He referred to management as transactional leadership,
which is ‘doing things right’.
The function of the leader is to innovate and develop. Leaders focus on people,
not systems. Their main concern is for the longer-term, not the short-term profit
figure. Bennis referred to leadership as transformational leadership, which is
‘doing the right things’.
His comparison of managers and leaders is summarised in the table below.
Managers Leaders
Transactional leadership Transformational leadership
Doing things right Doing the right things
Administer Innovate
Maintain Develop
Focus on systems and structures Focus on people
Reliance on control Inspire trust
Short-range view Long-range perspective
Imitates Originates
Accepts the status quo (no change) Challengers the status quo
Bennis has argued that leaders must get involved if they are to provide leadership.
Here are two quotations from his work, suggesting how leaders should provide
innovation (a ‘vision’) and earn trust from his followers.
‘It’s not a question of giving speeches, sending out memos and hanging
laminated plaques in offices. It’s about living the vision, day in day out –
embodying it – and empowering every other person in the organisation to
implement and execute that vision in everything they do.’
‘Leadership will have to be candid in their communications and show that they
care. They’ve got to be seen to be trustworthy human beings. That’s why I
believe most communication has to be done eyeball to eyeball, rather than in
newsletters or videos or via satellite broadcasts.’
Leadership at all levels
Bennis argued that leadership is needed at all levels in an organisation, and believes
that everyone has the capacity and ability to provide leadership. He is opposed to
the trait theory’ that leadership is a natural talent and that there are ‘born leaders’.
He has argued that the role of the leader is not to be an all-knowing problem-solver
who knows the answer to every problem. Instead, a leader is someone who
stimulates the group, encourages its creativity and maintains an atmosphere or
culture in which the group members can find the solutions to the problems together.
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6.4 John Kotter: what leaders really do
John Kotter also considered what leaders do (His most well-known book is entitled
‘What Leaders Really Do’.) He has argued that leadership is largely concerned with:
anticipating change
dealing with change, and
‘adopting a visionary stance’ – in other words having a vision about what the
organisation is trying to achieve and what it must do to get there.
More change demands more leadership, and Kotter advocated the creation of a
culture of leadership within business organisations.
Like Bennis, Kotter has compared management (transactional leadership) and
leadership (transformational leadership), as follows.
Managers Leaders
Transactional leadership Transformational leadership
Creating the agenda
Planning and budgeting Establishing directions
(Develop a detailed plan
and create a detailed map
of how to achieve planning
targets.)
(Develop a vision for the
organisation, and identify the
direction in which it should
go. Concern with strategy.)
Human relations
aspects
Organise the work and fill
staff in the positions
Align the people with the
vision.
(Decide which individual
best fits each particular
job.)
(There is a communication
problem – getting people to
understand and then believe
in the ‘vision’)
Execution of tasks
Control. Problem-solving
leadership
Motivate and inspire
Outcomes
Produces a degree of
predictability in outcomes
Produces change – often
dramatic
6.5 Ronald Heifetz: leadership as an activity
Heifetz has argued that leadership is an activity, not a personal quality. We often
confuse ‘leadership’ with ‘authority’.
Authority is often seen as the possession of powers based on a formal
management role within an organisation The manager has the right to tell
subordinates what to do, because he is simply exercising his ‘legitimate power’.
Subordinates do what the manager tells them, to avoid dismissal, demotion or
other disciplinary measures.
However, employees may follow an individual, not because of his formal
authority, but because the individual shows leadership qualities. A leader is
someone who has the ability to make sense of situations that are out of the
ordinary, and know how to act in these situations. Leadership of this kind gives
the individual informal authority.