Chapter 2 - Leadership Theories and Styles

2.1 Leadership Styles

No matter what their traits or skills, leaders carry out their roles in a wide variety of
styles. Some leaders are autocratic. Others are democratic. Some are participatory, and
others are hands off. Often, the leadership style depends on the situation, including where
the organization is in its life cycle.
The following are common leadership styles:
Autocratic. The manager makes all the decisions and dominates team members. This
approach generally results in passive resistance from team members and requires
continual pressure and direction from the leader in order to get things done. Generally,
his/her approach is not a good way to get the best performance from a team. However,
this style may be appropriate when urgent action is necessary or when subordinates
actually prefer this style.
Participative. The manager involves the subordinates in decision making by consulting
team members (while still maintaining control), which encourages employee ownership
for the decisions. A good participative leader encourages participation and delegates
wisely, but never loses sight of the fact that he or she bears the crucial responsibility of
leadership. The leader values group discussions and input from team members; he or she
maximizes the members’ strong points in order to obtain the best performance from the
entire team. The participative leader motivates team members by empowering them to
direct themselves; he or she guides them with a loose rein. The downside, however, is
that a participative leader may be seen as unsure, and team members may feel that
everything is a matter for group discussion and decision.
Laissez-faire (also called free-rein). In this hands-off approach, the leader encourages
team members to function independently and work out their problems by themselves,
although he or she is available for advice and assistance. The leader usually has little
control over team members, leaving them to sort out their roles and tackle their work
assignments without personally participating in these processes. In general, this approach
leaves the team floundering with little direction or motivation. Laissez-faire is usually
only appropriate when the team is highly motivated and skilled, and has a history of
producing excellent work.
Many experts believe that overall leadership style depends largely on a manager’s beliefs,
values, and assumptions. How managers approach the following three elements—
motivation, decision making, and task orientation—affect their leadership styles:
Motivation. Leaders influence others to reach goals through their approaches to
motivation. They can use either positive or negative motivation. A positive style uses
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praise, recognition, and rewards, and increases employee security and responsibility. A
negative style uses punishment, penalties, potential job loss, suspension, threats, and
reprimands.
Decision making. The second element of a manager’s leadership style is the degree of
decision authority the manager grants employees— ranging from no involvement to
group decision making.
Task and employee orientation. The final element of leadership style is the manager’s
perspective on the most effective way to get the work done. Managers who favor task
orientation emphasize getting work done by using better methods or equipment,
controlling the work environment, assigning and organizing work, and monitoring
performance. Managers who favor employee orientation emphasize getting work done
through meeting the human needs of subordinates.
Teamwork, positive relationships, trust, and problem solving are the major focuses of the
employee-oriented manager. Keep in mind that managers may exhibit both task and
employee orientations to some degree.

Leadership theories
Transition in Leadership Theories
The leadership literature is voluminous, and much of it is confusing and contradictory. In
order to make our way through this “forest,” we’ll consider a number of approaches to
explaining what makes an effective leader. We begin with the search to find universal
personality traits that leaders had to some greater degree than nonleaders. A second
approach tried to explain leadership in terms of the behavior that a person engaged in.
Both approaches have been described as “false starts,” based on their erroneous and
oversimplified conception of leadership. A third looked to contingency models to explain
the inadequacies of previous leadership theories in reconciling and bringing together the
diversity of research findings.
In this chapter, we present the contributions and limitations of the trait, behavioral, and
contingency approaches to leadership, introduce some of the more recent advances in
leadership, review a number of contemporary issues related to applying leadership
concepts, and conclude by considering the value of the leadership literature for practicing
managers.

Early Leadership Theories

People have been interested in leadership since they started coming together in groups to
accomplish goals. However, it wasn’t until the early part of the twentieth century that
researchers actually began to study leadership. These early leadership theories focused on

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the leader (leadership trait theories) and how the leader interacted with his or her group
members (leadership behavior theories).

1. Trait Theory
When Margaret Thatcher was prime minister of Great Britain, she was regularly singled
out for her leadership. She was described in terms such as confident, iron-willed,
determined, and decisive. These terms are traits and, whether Thatcher’s advocates and
critics recognized it at the time, when they described her in such terms they became trait-
theorist supporters.

The search for personality, social, physical, or intellectual attributes that would describe
leaders and differentiate them from nonleaders goes back to the 1930s and research done
by psychologists. Research efforts at isolating leadership traits resulted in a number of
dead ends. For instance, a review of 20 different studies identified nearly 80 leadership
traits, but only five of these traits were common to four or more of the investigations. If
the search was intended to identify a set of traits that would always differentiate leaders
from followers and effective from ineffective leaders, the search failed. Perhaps it was a
bit optimistic to believe that there could be consistent and unique traits that would apply
universally to all effective leaders, no matter whether they were in charge of the public
organizations, religious institutions, businesses, or non-governmental organizations.

If, however, the search was intended to identify traits that were consistently associated
with leadership, the results can be interpreted in a more impressive light. For example,
six traits on which leaders tend to differ from nonleaders are ambition and energy, the
desire to lead, honesty and integrity, self-confidence, intelligence, and job-relevant
knowledge. Additionally, recent research provides strong evidence that people who are
high self-monitors—that is, are highly flexible in adjusting their behavior in different
situations— are much more likely to emerge as leaders in groups than low self-monitors.
Overall, the cumulative findings from more than half a century of research lead us to
conclude that some traits increase the likelihood of success as a leader, but none of the
traits guarantee success.
Why hasn’t the trait approach proven more successful in explaining leadership? We can
suggest at least four reasons. It overlooks the needs of followers, it generally fails to
clarify the relative importance of various traits, it doesn’t separate cause from effect (for
example, are leaders self-confident or does success as a leader build self-confidence?),
and it ignores situational factors. These limitations have led researchers to look in other
directions. Although there has been some resurgent interest in traits during the past
decade, a major movement away from traits began as early as the 1940s. Leadership

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research from the late 1940s through the mid-1960s emphasized the preferred behavioral
styles that leaders demonstrated.
Early efforts to understand leadership success focused on the leader’s personal
characteristics or traits. Traits are the distinguishing personal characteristics of a leader,
such as intelligence, values, self-confidence, and appearance. The early research focused
on leaders who had achieved a level of greatness and, hence, was referred to as the Great
Man approach. The idea was relatively simple: Find out what made these people great,
and select future leaders who exhibited the same traits or could be trained to develop
them. Generally, early research found a weak relationship between personal traits and
leader success.

In recent years, there has been a resurgence of interest in examining leadership traits. In
addition to personality traits, physical, social, and work-related characteristics of leaders
have been studied. The following are a summary of the physical, social, and personal
leadership characteristics that have received the greatest research support. However, these
characteristics do not stand alone. The appropriateness of a trait or set of traits depends
on the leadership situation. The same traits do not apply to every organization or
situation.
Physical characteristics
Energy
Physical stamina
Intelligence and ability
Intelligence, cognitive ability
Knowledge
Judgment, decisiveness
Personality
Self-confidence
Honesty and integrity
Enthusiasm
Desire to lead
Independence
Social characteristics
Sociability, interpersonal skills
Cooperativeness
Ability to enlist cooperation
Tact, diplomatic
Work-related characteristics
Achievement drive, desire to excel
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 Conscientiousness in pursuit of goals
Persistence against obstacles, tenacity
Social Background
Education
Mobility

2. Behavioral Leadership Theories

The inability to define effective leadership based solely on traits led to an interest in
looking at the behavior of leaders and how it might contribute to leadership success or
failure. Perhaps any leader can adopt the correct behavior with appropriate training.
Behavioral theories of leadership are theories proposing that specific behaviors
differentiate leaders from nonleaders. If the behavioral approach to leadership were
successful, it would have implications quite different from those of the trait approach. If
trait research had been successful, it would have provided a basis for selecting the “right”
persons to assume formal positions in groups and organizations requiring leadership. In
contrast, if behavioral studies were to turn up critical behavioral determinants of
leadership, we could train people to be leaders. The difference between trait and
behavioral theories, in terms of application, lies in their underlying assumptions. If trait
theories were valid, then leadership is basically inborn: You either have it or you don’t.
On the other hand, if there were specific behaviors that identified leaders, then we could
teach leadership—we could design programs that implanted these behavioral patterns in
individuals who desired to be effective leaders. This was surely a more exciting avenue,
for it meant that the supply of leaders could be expanded. If training worked, we could
have an infinite supply of effective leaders.

Two basic leadership behaviors that have been identified as important for leadership are
task-oriented behavior and people-oriented behavior. These two metacategories, or
broadly defined behavior categories, have been found to be applicable to effective
leadership in various situations and time periods. Though these are not the only important
leadership behaviors, concern for tasks and for people must be shown at some reasonable
level. Thus, many approaches to understanding leadership use these metacategories as a
basis for study and comparison. Important research programs on leadership behavior
were conducted at The Ohio State University, the University of Michigan, and the
University of Texas.

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 1. Ohio State Studies
Researchers at The Ohio State University surveyed leaders to study hundreds of
dimensions of leader behavior. They identified two major behaviors, called consideration
and initiating structure.
Consideration falls in the category of people-oriented behavior and is the extent to
which the leader is mindful of subordinates, respects their ideas and feelings, and
establishes mutual trust. Considerate leaders are friendly, provide open communication,
develop teamwork, and are oriented toward their subordinates’ welfare.
Initiating structure is the degree of task behavior, that is, the extent to which the leader
is task oriented and directs subordinate work activities toward goal attainment. Leaders
with this style typically give instructions, spend time planning, emphasize deadlines, and
provide explicit schedules of work activities. Consideration and initiating structure are
independent of each other, which means that a leader with a high degree of consideration
may be high or low on initiating structure. A leader may have any of four styles: high
initiating structure–low consideration, high initiating structure–high consideration, low
initiating structure–low consideration, or low initiating structure–high consideration. The
Ohio State research found that the high consideration–high initiating structure style
achieved better performance and greater satisfaction than the other leader styles.

However, new research has found that the high-high style is not necessarily the best.
These studies indicate that effective leaders may be high on consideration and low on
initiating structure or low on consideration and high on initiating structure, depending on
the situation.
2. Michigan Studies
Studies at the University of Michigan at about the same time took a different approach by
comparing the behavior of effective and ineffective supervisors. The most effective
supervisors were those who focused on the subordinates’ human needs to “build effective
work groups with high performance goals.” The Michigan researchers used the term
“employee-centered leaders” for leaders who established high performance goals and
displayed supportive behavior toward subordinates. The less-effective leaders were called
job-centered leaders; these tended to be less concerned with goal achievement and human
needs in favor of meeting schedules, keeping costs low, and achieving production
efficiency.
3. The Leadership Grid
Blake and Mouton of the University of Texas proposed a two-dimensional leadership
theory called the leadership grid that builds on the work of The Ohio State and
Michigan studies. The two-dimensional model and five of its seven major management
styles are depicted in the following figure. Each axis on the grid is a nine-point scale,
with 1 meaning low concern and 9 high concern. Team management (9,9) often is
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considered the most effective style and is recommended for managers because
organization members work together to accomplish tasks. Country club management
(socialite) (1,9) occurs when primary emphasis is given to people rather than to work
outputs. Authority compliance management (authoritarian) (9,1) occurs when efficiency
in operations is the dominant orientation. Middle-of-the-road management (5,5) reflects a
moderate amount of concern for people and production. Impoverished management (1,1)
means the absence of a management philosophy; managers exert little effort toward
interpersonal relationships or work accomplishment.

Consider these examples:

The leadership style of Almaz Tesfahun is characterized by high concern for tasks and
production (task-oriented behavior) and low-to-moderate concern for people (people-
oriented behavior). Alemu Bekele, in contrast, is high on concern for people and
moderate on concern for production. Both leaders may be successful though they display
different leadership styles because of their different situations. The next group of theories
builds on the leader-follower relationship of behavioral approaches to explore how
organizational situations affect the leader’s approach.

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 4. Scandinavian Studies
The three behavioral approaches we’ve just reviewed were essentially developed between
the late 1940s and early 1960s. These approaches evolved during a time when the world
was a far more stable and predictable place. In the belief that these studies fail to capture
the more dynamic realities of today, researchers in Finland and Sweden have been
reassessing whether there are only two dimensions that capture the essence of leadership
behavior.18 Their basic premise is that in a changing world, effective leaders would
exhibit development-oriented behavior. These are leaders who value experimentation,
seek new ideas, and generate and implement change

For instance, these Scandinavian researchers reviewed the original Ohio State data. They
found that the Ohio State people included development items such as “pushes new ways
of doing things,” “originates new approaches to problems,” and “encourages members to
start new activities.” But these items, at the time, didn’t explain much toward effective
leadership. It could be, the Scandinavian researchers proposed, that this was because
developing new ideas and implementing change were not critical in those days. In today’s
dynamic environment, this may no longer be true. So, the Scandinavian researchers have
been conducting new studies looking to see if there is a third dimension—development
orientation—that is related to leader effectiveness.

The early evidence is positive. Using samples of leaders in Finland and Sweden, the
researchers have found strong support for development-oriented leader behavior as a
separate and independent dimension. That is, the previous behavioral approaches that
focused in on only two behaviors may not appropriately capture leadership in the 1990s.
Moreover, while initial conclusions need to be guarded without more confirming
evidence, it also appears that leaders who demonstrate development-oriented behavior
have more satisfied subordinates and are seen as more competent by those subordinates

Summary of Behavioral Theories

We’ve described the most important attempts to explain leadership in terms of the
behavior exhibited by the leader. In general, they’ve had modest success in identifying
consistent relationships between patterns of leadership behavior and group performance.
What seems to be missing is consideration of the situational factors that influence
success or failure. For example, Robert Crandall and Herb Kelleher have both been
effective leaders of airlines, yet their styles are almost diametrically opposed. How can
that be? The answer is that American and Southwest are very different companies,
operating in different markets with very different labor forces. The behavioral theories

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fail to take this into account. Jesse Jackson is certainly an effective leader of black causes
in the 1990s, but would his style have been equally effective in the 1890s? Probably not!
Situations change and leadership styles need to change with them. Unfortunately, the
behavioral approaches don’t recognize changes in situations.

3. Contingency Leadership Theories

It became increasingly clear to those who were studying the leadership phenomenon that
predicting leadership success was more complex than isolating a few traits or preferable
behaviors. The failure to obtain consistent results led to a focus on situational influences.
The relationship between leadership style and effectiveness suggested that under
condition a, style x would be appropriate, while style y would be more suitable for
condition b, and style z for condition c. But what were the conditions a, b, c, and so
forth? It was one thing to say that leadership effectiveness was dependent on the situation
and another to be able to isolate those situational conditions.
There has been no shortage of studies attempting to isolate critical situational factors that
affect leadership effectiveness. For instance, popular moderating variables used in the
development of contingency theories include the degree of structure in the task being
performed, the quality of leader–member relations, the leader’s position power,
subordinates’ role clarity, group norms, information availability, subordinate acceptance
of leader’s decisions, and subordinate maturity. Several approaches to isolating key
situational variables have proven more successful than others and, as a result, have
gained wider recognition. We shall consider five of these: the Fiedler model, Hersey and
Blanchard’s situational theory, leader-member exchange theory, and the path-goal and
leader-participation models.

1. Fiedler Model
The first comprehensive contingency model for leadership was developed by Fred
Fiedler. The Fiedler contingency model proposes that effective group performance
depends upon the proper match between the leader’s style of interacting with his or her
subordinates and the degree to which the situation gives control and influence to the
leader. Fiedler developed an instrument, which he called the least preferred co-worker
(LPC) questionnaire that purports to measure whether a person is task or relationship
oriented. Furthermore, he isolated three situational criteria—leader member relations,
task structure, and position power—that he believes can be manipulated so as to create
the proper match with the behavioral orientation of the leader. In a sense, the Fiedler
model is an outgrowth of trait theory, since the LPC questionnaire is a simple
psychological test. However, Fiedler goes significantly beyond trait and behavioral
approaches by attempting to isolate situations, relating his personality measure to his
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situational classification, and then predicting leadership effectiveness as a function of the
two. This description of the Fiedler model is somewhat abstract. Let’s now look at the
model more closely.
IDENTIFYING LEADERSHIP STYLE Fiedler believes a key factor in leadership
success is the individual’s basic leadership style. So he begins by trying to find out what
that basic style is. Fiedler created the LPC questionnaire for this purpose. It contains 16
contrasting adjectives (such as pleasant – unpleasant, efficient – inefficient, open–
guarded, supportive – hostile). The questionnaire then asks respondents to think of all the
co-workers they have ever had and to describe the one person they least enjoyed working
with by rating him or her on a scale of 1 to 8 for each of the 16 sets of contrasting
adjectives. Fiedler believes that based on the respondents’ answers to this LPC
questionnaire, he can determine their basic leadership style. If the least preferred co-
worker is described in relatively positive terms (a high LPC score), then the respondent is
primarily interested in good personal relations with this co-worker. That is, if you
essentially describe the person you are least able to work with in favorable terms, Fiedler
would label you relationship oriented. In contrast, if the least preferred co-worker is seen
in relatively unfavorable terms (a low LPC score), the respondent is primarily interested
in productivity and thus would be labeled task oriented. About 16 percent of respondents
score in the middle range. Such individuals cannot be classified as either relationship
oriented or task oriented and thus fall outside the theory’s predictions. The rest of our
discussion, therefore, relates to the 84 percent who score in either the high or low range
of the LPC.
Fiedler assumes that an individual’s leadership style is fixed. As we’ll show in a moment,
this is important because it means that if a situation requires a task-oriented leader and
the person in that leadership position is relationship oriented, either the situation has to be
modified or the leader removed and replaced if optimum effectiveness is to be achieved.
Fiedler argues that leadership style is innate to a person—you can’t change your style to
fit changing situations!
DEFINING THE SITUATION After an individual’s basic leadership style has been
assessed through the LPC, it is necessary to match the leader with the situation. Fiedler
has identified three contingency dimensions that, he argues, define the key situational
factors that determine leadership effectiveness. These are leader –member relations,
task structure, and position power. They are defined as follows:
1. Leader – member relations: The degree of confidence, trust, and respect subordinates
has in their leader.
2. Task structure: The degree to which the job assignments are procedurized (that is,
structured or unstructured)

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3. Position power: The degree of influence a leader has over power variables such as
hiring, firing, discipline, promotions, and salary increases.
The next step in the Fiedler model is to evaluate the situation in terms of these three
contingency variables. Leader – member relations are either good or poor, task structure
is either high or low, and position power is either strong or weak.
Fiedler states the better the leader-member relations, the more highly structured the job,
and the stronger the position power, the more control or influence the leader has. For
example, a very favorable situation (where the leader would have a great deal of control)
might involve a payroll manager who is well respected and whose subordinates have
confidence in her (good leader – member relations), where the activities to be done—
such as wage computation, check writing, report filing—are specific and clear (high task
structure), and the job provides considerable freedom for her to reward and punish her
subordinates (strong position power). On the other hand, an unfavorable situation might
be the disliked chairperson of a voluntary United Way fund-raising team. In this job, the
leader has very little control. Altogether, by mixing the three contingency variables, there
are potentially eight different situations or categories in which leaders could find
themselves.

MATCHING LEADERS AND SITUATIONS With knowledge of an individual’s LPC

and an assessment of the three contingency variables, the Fiedler model proposes
matching them up to achieve maximum leadership effectiveness. Based on Fiedler’s
study of over 1,200 groups, in which he compared relationship-versus task-oriented
leadership styles in each of the eight situational categories, he concluded that task-
oriented leaders tend to perform better in situations that were very favorable to them and
in situations that were very unfavorable.
Given Fiedler’s findings, how would you apply them? You would seek to match leaders
and situations. Individuals’ LPC scores would determine the type of situation for which
they were best suited. That “situation” would be defined by evaluating the three
contingency factors of leader – member relations, task structure, and position power. But
remember that Fiedler views an individual’s leadership style as being fixed. Therefore,
there are really only two ways in which to improve leader effectiveness.
First, you can change the leader to fit the situation—as in a baseball game, a manager can
reach into the bullpen and put in a right-handed pitcher or a left-handed pitcher,
depending on the situational characteristics of the hitter. So, for example, if a group
situation rates as highly unfavorable but is currently led by a relationship-oriented
manager, the group’s performance could be improved by replacing that manager with one
who is task oriented.

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The second alternative would be to change the situation to fit the leader. That could be
done by restructuring tasks or increasing or decreasing the power that the leader has to
control factors such as salary increases, promotions, and disciplinary actions. To
illustrate, assume a task-oriented leader is in a category IV situation. If this leader could
increase his or her position power, then the leader would be operating in category III and
the leader – situation match would be compatible for high group performance.

EVALUATION As a whole, reviews of the major studies undertaken to test the overall
validity of the Fiedler model lead to a generally positive conclusion. That is, there is
considerable evidence to support at least substantial parts of the model. But additional
variables are probably needed if an improved model is to fill in some of the remaining
gaps. Moreover, there are problems with the LPC and the practical use of the model that
need to be addressed. For instance, the logic underlying the LPC is not well understood
and studies have shown that respondents’ LPC scores are not stable. Also, the
contingency variables are complex and difficult for practitioners to assess. It’s often
difficult in practice to determine how good the leader-member relations are, how
structured the task is, and how much position power the leader has.

2. Hersey and Blanchard’s Situational Theory

Paul Hersey and Ken Blanchard have developed a leadership model that has gained a
strong following among management development specialists. This model—called
situational leadership theory—has been used as a major training device at such Fortune
500 companies as BankAmerica, Caterpillar, IBM, Mobil Oil, and Xerox; it has also been
widely accepted in all the military services. Although the theory has undergone limited
evaluation to test its validity, we include it here because of its wide acceptance and its
strong intuitive appeal.
Situational leadership is a contingency theory that focuses on the followers. Successful
leadership is achieved by selecting the right leadership style, which Hersey and
Blanchard argue is contingent on the level of the followers’ readiness. Before we
proceed, we should clarify two points: Why focus on the followers? What is meant by the
term readiness? The emphasis on the followers in leadership effectiveness reflects the
reality that it is the followers who accept or reject the leader. Regardless of what the
leader does, effectiveness depends on the actions of his or her followers. This is an
important dimension that has been overlooked or underemphasized in most leadership
theories. The term readiness, as defined by Hersey and Blanchard, refers to the extent to
which people have the ability and willingness to accomplish a specific task. Situational
leadership uses the same two leadership dimensions that Fiedler identified: task and
relationship behaviors. However, Hersey and Blanchard go a step further by considering

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each as either high or low and then combining them into four specific leader behaviors:
telling, selling, participating, and delegating. They are described as follows:
Telling (high task – low relationship). The leader defines roles and tells people what,
how, when, and where to do various tasks. It emphasizes directive behavior.
Selling (high task– high relationship). The leader provides both directive behavior and
supportive behavior.
Participating (low task– high relationship). The leader and follower share in decision
making, with the main role of the leader being facilitating and communicating.
Delegating (low task– low relationship). The leader provides little direction or support.

The final component in Hersey and Blanchard’s theory is defining four stages of follower
readiness:
R1. People are both unable and either unwilling or too insecure to take responsibility to
do something. They are neither competent nor confident.
R2. People are unable but willing to do the necessary job tasks. They are motivated but
currently lack the appropriate skills.
R3. People are able but unwilling or too apprehensive to do what the leader wants.
R4. People are both able and willing to do what is asked of them.

As followers reach high levels of readiness, the leader responds by not only continuing
to decrease control over activities, but also by continuing to decrease relationship
behavior as well. At stage R1, followers need clear and specific directions. At stage R2,
both high-task and high-relationship behavior is needed. The high-task behavior
compensates for the followers’ lack of ability, and the high-relationship behavior tries to
get the followers psychologically to “buy into” the leader’s desires. R3 represents
motivational problems that are best solved by a supportive, nondirective, participative
style. Finally, at stage R4, the leader doesn’t have to do much because followers are both
willing and able to take responsibility.
The astute reader might have noticed the high similarity between Hersey and Blanchard’s
four leadership styles and the four extreme “corners” in the Managerial Grid. The telling
style equates to the 9,1 leader; selling equals 9,9; participating is equivalent to 1,9; and
delegating is the same as the 1,1 leader. Is situational leadership, then, merely the
Managerial Grid with one major difference— the replacement of the 9,9 (“one style for
all occasions”) contention with the recommendation that the “right” style should align
with the readiness of the followers? Hersey and Blanchard say “No!” They contend that
the grid emphasizes concern for production and people, which are attitudinal dimensions.
Situational leadership, in contrast, emphasizes task and relationship behavior.

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In spite of Hersey and Blanchard’s claim, this is a pretty minute differentiation.
Understanding of the situational leadership theory is probably enhanced by considering it
as a fairly direct adaptation of the grid framework to reflect four stages of follower
readiness. Finally, we come to the critical question: Is there scientific evidence to support
situational leadership theory? As noted earlier, the theory has received little attention
from researchers, but on the basis of the research to date, conclusions must be guarded.
Some researchers provide partial support for the theory, while others find no support for
its assumptions. As a result, any enthusiastic endorsement should be cautioned against.

3. Leader–Member Exchange Theory

For the most part, the leadership theories we’ve covered to this point have largely
assumed that leaders treat all their subordinates in the same manner. But think about your
experiences in groups. Did you notice that leaders often act very differently toward
different subordinates? Did the leader tend to have favorites who made up his or her “in-
group”? If you answered “Yes” to both these questions, you’re acknowledging what
George Graen and his associates have observed which creates the foundation for their
leader–member exchange theory.
The leader-member exchange (LMX) theory argues that because of time pressures,
leaders establish a special relationship with a small group of their subordinates. These
individuals make up the in-group—they are trusted, get a disproportionate amount of the
leader’s attention, and are more likely to receive special privileges. Other subordinates
fall into the out-group. They get less of the leader’s time, fewer of the preferred rewards
that the leader controls, and have superior–subordinate relations based on formal
authority interactions.

The theory proposes that early in the history of the interaction between a leader and a
given subordinate, the leader implicitly categorizes the subordinate as an “in” or an “out”
and that relationship is relatively stable over time. Just precisely how the leader chooses
who falls into each category is unclear, but there is evidence that leaders tend to choose
in-group members because they have personal characteristics (for example, age, gender,
attitudes) that are similar to the leader, a higher level of competence than outgroup
members, and/or an extroverted personality. LMX theory predicts that subordinates with
in-group status will have higher performance ratings, less turnover, and greater
satisfaction with their superiors.
Research to test LMX theory has been generally supportive. More specifically, the theory
and research surrounding it provide substantive evidence that leaders do differentiate
among subordinates, that these disparities are far from random, and that in-group and out-
group status is related to employee performance and satisfaction.

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 4. Path-Goal Theory
Currently, one of the most respected approaches to leadership is the path-goal theory.
Developed by Robert House, path-goal theory is a contingency model of leadership that
extracts key elements from the Ohio State leadership research on initiating structure and
consideration and the expectancy theory of motivation. The essence of the theory is that
it’s the leader’s job to assist followers in attaining their goals and to provide the
necessary direction and/or support to ensure that their goals are compatible with the
overall objectives of the group or organization. The term pathgoal is derived from the
belief that effective leaders clarify the path to help their followers get from where they
are to the achievement of their work goals and make the journey along the path easier by
reducing roadblocks and pitfalls.
According to path-goal theory, a leader’s behavior is acceptable to subordinates to the
degree that it is viewed by them as an immediate source of satisfaction or as a means of
future satisfaction. A leader’s behavior is motivational to the degree that it (1) makes
subordinate need satisfaction contingent on effective performance and (2) provides the
coaching, guidance, support, and rewards that are necessary for effective performance.
To test these statements, House identified four leadership behaviors. The directive leader
lets subordinates know what is expected of them, schedules work to be done, and gives
specific guidance as to how to accomplish tasks. This closely parallels the Ohio State
dimension of initiating structure. The supportive leader is friendly and shows concern for
the needs of subordinates. This is essentially synonymous with the Ohio State dimension
of consideration. The participative leader consults with subordinates and uses their
suggestions before making a decision. The achievement-oriented leader sets challenging
goals and expects subordinates to perform at their highest level. In contrast to Fiedler’s
view of a leader’s behavior, House assumes that leaders are flexible. Path-goal theory
implies that the same leader can display any or all of these behaviors depending on the
situation.
Path-goal theory proposes two classes of situational or contingency variables that
moderate the leadership behavior – outcome relationship—those in the environment that
are outside the control of the subordinate (task structure, the formal authority system, and
the work group) and those that are part of the personal characteristics of the subordinate
(locus of control, experience, and perceived ability). Environmental factors determine the
type of leader behavior required as a complement if subordinate outcomes are to be
maximized, while personal characteristics of the subordinate determine how the
environment and leader behavior are interpreted. So the theory proposes that leader
behavior will be ineffective when it is redundant with sources of environmental structure
or incongruent with subordinate characteristics.

pg. 15
The following are some examples of hypotheses that have evolved out of path-goal
theory:
 Directive leadership leads to greater satisfaction when tasks are ambiguous or
stressful than when they are highly structured and well laid out.
 Supportive leadership results in high employee performance and satisfaction
when subordinates are performing structured tasks.
 Directive leadership is likely to be perceived as redundant among subordinates
with high perceived ability or with considerable experience.
 The more clear and bureaucratic the formal authority relationships, the more
leaders should exhibit supportive behavior and deemphasize directive behavior.
 Directive leadership will lead to higher employee satisfaction when there is
substantive conflict within a work group.
 Subordinates with an internal locus of control (those who believe they control
their own destiny) will be more satisfied with a participative style.
 Subordinates with an external locus of control will be more satisfied with a
directive style.
 Achievement-oriented leadership will increase subordinates’ expectancies that
effort will lead to high performance when tasks are ambiguously structured.

Research to validate hypotheses such as these is generally encouraging. The evidence

supports the logic underlying the theory. That is, employee performance and satisfaction
are likely to be positively influenced when the leader compensates for things lacking in
either the employee or the work setting. However, the leader who spends time explaining
tasks when those tasks are already clear or when the employee has the ability and
experience to handle them without interference is likely to be ineffective because the
employee will see such directive behavior as redundant or even insulting.

What does the future hold for path-goal theory? Its framework has been tested and
appears to have moderate to high empirical support. We can, however, expect to see more
research focused on refining and extending the theory by incorporating additional
moderating variables.

5. Leader-Participation Model
Back in 1973, Victor Vroom and Phillip Yetton developed a leader-participation model
that related leadership behavior and participation to decision making. Recognizing that
task structures have varying demands for routine and nonroutine activities, these
researchers argued that leader behavior must adjust to reflect the task structure. Vroom
and Yetton’s model was normative—it provided a sequential set of rules that should be
followed for deter- mining the form and amount of participation desirable in decision

pg. 16
making, as dictated by different types of situations. The model was a complex decision
tree incorporating seven contingencies (whose relevance could be identified by making
“Yes” or “No” choices) and five alternative leadership styles.
More recent work by Vroom and Arthur Jago has resulted in a revision of this model.44
The new model retains the same five alternative leadership styles but expands the
contingency variables to twelve, ten of which are answered along a five-point scale.
Exhibit 10-6 lists the twelve variables. The model assumes that any of five behaviors may
be feasible in a given situation—Autocratic I (AI), Autocratic II (AII), Consultative I
(CI), Consultative II (CII), and Group II (GII):
 AI. You solve the problem or make a decision yourself using whatever facts you
have at hand.
 AII. You obtain the necessary information from subordinates and then decide on
the solution to the problem yourself. You may or may not tell them about the
nature of the situation you face. You seek only relevant facts from them, not their
advice or counsel.
 CI. You share the problem with relevant subordinates one-on-one, getting their
ideas and suggestions. However, the final decision is yours alone.
 CII. You share the problem with your subordinates as a group, collectively
obtaining their ideas and suggestions. Then you make the decision that may or
may not reflect your subordinates’ influence.
 GII. You share the problem with your subordinates as a group. Your goal is to
help the group concur on a decision. Your ideas are not given any greater weight
than those of others, Vroom and Jago have developed a computer program that
cuts through the complexity of the new model. But managers can still use decision
trees to select their leader style if there are no shades of gray (that is, when the
status of a variable is clear-cut so that a “Yes” or “No” response will be accurate),
there are no critically severe time constraints, and subordinates are not
geographically dispersed.
The leader-participation model confirms that leadership research should be directed at the
situation rather than the person. It probably makes more sense to talk about autocratic and
participative situations than about autocratic and participative leaders. As did House in
his path-goal theory, Vroom, Yetton, and Jago argue against the notion that leader
behavior is inflexible. The leader-participation model assumes that the leader can adjust
his or her style to different situations.
Whether we should adjust the situation to fit the person or fix the person to fit the
situation is an important issue. The answer is probably that it depends on the leader—
specifically, on whether that person rates high or low on self-monitoring. As we know,
individuals differ in their behavioral flexibility. Some people show considerable ability to
pg. 17
adjust their behavior to external, situational factors; they are adaptable. Others, however,
exhibit high levels of consistency regardless of the situation. High self-monitors are
generally able to adjust their leadership style to suit changing situations.
Looking for Common Ground: What Does It All Mean?

The topic of leadership certainly doesn’t lack for theories. But from an overview
perspective, what does it all mean? Let’s try to identify commonalities among the
leadership theories and attempt to determine what, if any, practical value the theories
hold for application to organizations.

Careful examination discloses that the concepts of “task” and “people”—often expressed
in more elaborate terms that hold substantially the same meaning—permeate most of the
theories. The task dimension is called just that by Fiedler, but it goes by the name of
“initiating structure” for the Ohio State group, “directive leadership” by path-goal
supporters, “production orientation” by the Michigan researchers, and “concern for
production” by Blake and Mouton. The people dimension gets similar treatment, going
under such aliases as “consideration,” “employee-oriented,” “supportive,” or
“relationship-oriented” leadership. With the obvious exception posed by the
Scandinavian studies, leadership behavior tends to be reduced to two dimensions—task
and people—but researchers continue to differ as to whether the orientations are two ends
of a single continuum (you could be high on one or the other but not both) or two
independent dimensions (you could be high or low on both).

Although one well-known scholar argues that virtually every theory has also “wrestled
with the question of how much a leader should share power with subordinates in decision
making,” there is far less support for this contention. The situational leadership theory
and the leader-participation model address this issue, but the task–people dichotomy
appears to be far more encompassing.

Leadership theorists don’t agree on the issue of whether a leader’s style is fixed or
flexible. For example, Fiedler takes the former position, while Vroom, Yetton, and Jago
argue for the latter. As previously noted, our position is that both are probably right—it
depends on the leader’s personality. High self-monitors are more likely to adjust their
leadership style to changing situations than are low self-monitors.50 So the need to adjust
the situation to the leader in order to improve the leader–situation match seems to be
necessary only with low self-monitoring individuals.

How should we interpret the findings presented so far in this chapter? Some traits have
proved, over time, to be modest predictors of leadership effectiveness. But knowing that a
pg. 18
manager possesses intelligence, ambition, self-confidence, or the like would by no means
assure us that his or her subordinates would be productive and satisfied employees. The
ability of these traits to predict leadership success is just not that strong.
The early task–people approaches (such as the Ohio State, Michigan, and Managerial
Grid theories) also offer us little substance. The strongest statement one can make based
on these theories is that leaders who rate high in people orientation should end up with
satisfied employees. The research is too mixed to make predictions regarding employee
productivity or the effect of a task orientation on productivity and satisfaction. The most
important contribution of the Fiedler model may well be that it initiated a more rigorous
search to identify contingency variables in leadership. While this model is no longer at
the cutting edge of leadership theories, several of the situational variables that Fiedler
originally identified continue to surface in more recent contingency theories.

Hersey and Blanchard’s situational leadership theory is straightforward, intuitively

appealing, and important for its explicit recognition that the subordinate’s ability and
motivation are critical to the leader’s success. Yet, in spite of its wide acceptance by
practitioners, the mixed empirical support renders the theory, at least at this time, more
speculative than substantive. Leader–member exchange theory looks at leadership from a
different angle. It focuses on in-groups and out-groups. Given the impressive evidence
that in-group employees have higher performance and satisfaction than out-group
members, the theory provides valuable insight for predicting leader effect as long as we
know whether an employee is an “in” or an “out.”

Studies testing the original Vroom-Yetton version of the leader participation model were
supportive. Given that the revised Vroom Jago version is a sophisticated extension of the
original model, we should expect it to be even better. But the complexity of the model is
a major limitation to its usage. With five styles and twelve contingency variables, it is
difficult to use as a day-to-day guide for practicing managers. Still, leadership and
decision making are complex issues requiring a complex process. To hope for some easy
but valid model may be wishful thinking. The important conclusion here seems to be that
where we find leaders who follow the model, we should expect also to find productive
and satisfied employees.

Finally, the path-goal model provides a framework for explaining and predicting
leadership effectiveness that has developed a solid, empirical foundation. It recognizes
that a leader’s success depends on adjusting his or her style to the environment the leader
is placed in, as well as to the individual characteristics of followers. In a limited way,
path-goal theory validates contingency variables in other leadership theories. For
example, its emphasis on task structure is consistent with the Fiedler contingency model

pg. 19
and Vroom and Jago’s leader-participation model (remember their question: Is the
problem well structured?). Path-goal theory’s recognition of individual characteristics is
also consistent with Hersey and Blanchard’s focus on the experience and ability of
followers.

The Most Recent Approaches to Leadership

We conclude our review of leadership theories by presenting four more recent

approaches to the subject. These are an attribution theory of leadership,
charismatic leadership, transactional versus transformational leadership, and
visionary leadership. If there is one theme to the approaches in this section, it is
that they all deemphasize theoretical complexity and look at leadership more the
way the average “person on the street” views the subject.

1. Attribution Theory of Leadership

Attribution theory has also been used to help explain the perception of leadership.
Attribution theory, as you remember, deals with people trying to make sense out of
cause-effect relationships. When something happens, they want to attribute it to
something. In the context of leadership, attribution theory says that leadership is merely
an attribution that people make about other individuals. Using the attribution framework,
researchers have found that people characterize leaders as having such traits as
intelligence, outgoing personality, strong verbal skills, aggressiveness, understanding,
and industriousness. Similarly, the high-high leader (high on both initiating structure and
consideration) has been found to be consistent with attributions of what makes a good
leader. That is, regardless of the situation, a high-high leadership style tends to be
perceived as best. At the organizational level, the attribution framework accounts for the
conditions under which people use leadership to explain organizational outcomes. Those
conditions are extremes in organizational performance.

When an organization has either extremely negative or extremely positive performance,

people are prone to make leadership attributions to explain the performance. This helps to
account for the vulnerability of CEOs when their organizations suffer a major financial
setback, regardless of whether or not they had much to do with it. It also accounts for
why these CEOs tend to be given credit for extremely positive financial results—again,
regardless of how much or how little they contributed.

One of the more interesting themes in the attribution theory of leadership literature is the
perception that effective leaders are generally considered consistent or unwavering in
pg. 20
their decisions.56 That is, one of the explanations for why Ronald Reagan (during his
first term as president) was perceived as a leader was that he was fully committed,
steadfast, and consistent in the decisions he made and the goals he set. It can also help
explain some of the criticism targeted at President Bill Clinton. He is seen by many as
“wishy-washy” on the issues and as continually changing his mind.

2. Charismatic Leadership Theory

Charismatic leadership theory is an extension of attribution theory. It says that followers

make attributions of heroic or extraordinary leadership abilities when they observe
certain behaviors. Studies on charismatic leadership have, for the most part, been directed
at identifying those behaviors that differentiate charismatic leaders from their
noncharismatic counterparts. Some examples of individuals frequently cited as being
charismatic leaders include John F. Kennedy, Martin Luther King, Jr., Walt Disney, Mary
Kay Ash (founder of Mary Kay Cosmetics), Ross Perot, Steve Jobs (co-founder of Apple
Computer), Ted Turner, Lee Iacocca (former chairman of Chrysler), Jan Carlzon
(chairman of SAS Airlines), and General Norman Schwarzkopf.

Several authors have attempted to identify personal characteristics of the charismatic

leader. Robert House (of path-goal fame) identified three: extremely high confidence,
dominance, and strong convictions in his or her beliefs.58 Warren Bennis, after studying
90 of the most effective and successful leaders in the United States, found that they had
four common competencies: They had a compelling vision or sense of purpose; they
could communicate that vision in clear terms that their followers could readily identify
with; they demonstrated consistency and focus in the pursuit of their vision; and they
knew their own strengths and capitalized on them.59 The most comprehensive analysis,
however, has been completed by Conger and Kanungo at McGill University. Among
their conclusions, they propose that charismatic leaders have an idealized goal that they
want to achieve, a strong personal commitment to their goal, are perceived as
unconventional, are assertive and self-confident, and are perceived as agents of radical
change rather than managers of the status quo.

Attention has recently been focused on trying to determine how charismatic leaders
actually influence followers. The process begins by the leader articulating an appealing
vision. This vision provides a sense of continuity for followers by linking the present
with a better future for the organization. The leader then communicates high performance
expectations and expresses confidence that followers can attain them. This enhances
follower self-esteem and self-confidence. Next, the leader conveys, through words and
actions, a new set of values and, by his or her behavior, sets an example for followers to

pg. 21
imitate. Finally, the charismatic leader makes self-sacrifices and engages in
unconventional behavior to demonstrate courage and convictions about the vision.
What can we say about the charismatic leader’s effect on his or her followers? There is an
increasing body of research that shows impressive correlations between charismatic
leadership and high performance and satisfaction among followers. People working for
charismatic leaders are motivated to exert extra work effort and, because they like their
leader, express greater satisfaction.

If charisma is desirable, can people learn to be charismatic leaders? Or are charismatic

leaders born with their qualities? While a small minority still think, charisma cannot be
learned, most experts believe that individuals can be trained to exhibit charismatic
behaviors and can thus enjoy the benefits that accrue to being labeled “a charismatic
leader.” For instance, one set of authors proposes that a person can learn to become
charismatic by following a three-step process.

First, an individual need to develop the aura of charisma by maintaining an optimistic

view; using passion as a catalyst for generating enthusiasm; and communicating with the
whole body, not just with words. Second, an individual draw other in by creating a bond
that inspires others to follow. And third, the individual brings out the potential in
followers by tapping into their emotions.

This approach seems to work as evidenced by researchers who’ve succeeded in actually

scripting undergraduate business students to “play” charismatic. The students were taught
to articulate an over arching goal, communicate high performance expectations, exhibit
confidence in the ability of subordinates to meet these expectations, and empathize with
the needs of their subordinates; they learned to project a powerful, confident, and
dynamic presence; and they practiced using a captivating and engaging voice tone. To
further capture the dynamics and energy of charisma, the leaders were trained to evoke
charismatic nonverbal characteristics: They alternated between pacing and sitting on the
edges of their desks, leaned toward the subordinate, maintained direct eye contact, and
had relaxed postures and animated facial expressions. These researchers found that these
students could learn how to project charisma. Moreover, subordinates of these leaders
had higher task performance, task adjustment, and adjustment to the leader and to the
group than did subordinates who worked under groups led by noncharismatic leaders.

One last word on this topic: Charismatic leadership may not always be needed to achieve
high levels of employee performance. It may be most appropriate when the follower’s
task has an ideological component. This may explain why, when charismatic leaders
surface, it is more likely to be in politics, religion, wartime, or when a business firm is

pg. 22
introducing a radically new product or facing a life-threatening crisis. Such conditions
tend to involve ideological concerns. Franklin D. Roosevelt offered a vision to get
Americans out of the Great Depression. Steve Jobs achieved unwavering loyalty and
commitment from the technical staff he oversaw at Apple Computer during the late 1970s
and early 1980s by articulating a vision of personal computers that would dramatically
change the way people lived. General “Stormin Norman” Schwarzkopf’s blunt,
passionate style, absolute confidence in his troops, and a vision of total victory over Iraq
made him a hero in the free world following Operation Desert Storm in 1991.
Charismatic leaders, in fact, may become a liability to an organization once the crisis and
need for dramatic change subside. Why? Because then the charismatic leader’s
overwhelming self-confidence often becomes a liability. He or she is unable to listen to
others, becomes uncomfortable when challenged by aggressive subordinates, and begins
to hold an unjustifiable belief in his or her “rightness” on issues. Philippe Kahn’s
charismatic style, for instance, was an asset during the years of rapid growth of software-
database company Borland International. But Borland’s CEO became a liability as the
company matured. His dictatorial style, arrogance, and reckless decision making have put
the company’s future in jeopardy.

Key Characteristics of Charismatic Leaders

1. Self-confidence. They have complete confidence in their judgment and ability.

2. A vision. This is an idealized goal that proposes a future better than the status
quo. The greater the disparity between this idealized goal and the status quo, the
more likely that followers will attribute extraordinary vision to the leader.
3. Ability to articulate the vision. They are able to clarify and state the vision in
terms that are understandable to others. This articulation demonstrates an
understanding of the followers’ needs and, hence, acts as a motivating force.
4. Strong convictions about the vision. Charismatic leaders are perceived as being
strongly committed, and willing to take on high personal risk, incur high costs,
and engage in self-sacrifice to achieve their vision.
5. Behavior that is out of the ordinary. Those with charisma engage in behavior that
is perceived as being novel, unconventional, and counter to norms. When
successful, these behaviors evoke surprise and admiration in followers.
6. Perceived as being a change agent. Charismatic leaders are perceived as agents of
radical change rather than as caretakers of the status quo.
7. Environment sensitivity. These leaders are able to make realistic assessments of
the environmental constraints and resources needed to bring about change.

pg. 23
 3. Transactional vs. Transformational Leadership

The final stream of research we’ll touch on is the recent interest in differentiating
transformational leaders from transactional leaders.69 As you’ll see, because
transformational leaders are also charismatic, there is some overlap between this
topic and our previous discussion of charismatic leadership. Most of the leadership
theories presented in this chapter—for instance, the Ohio State studies, Fiedler’s
model, path-goal theory, and the leader-participation model—have concerned
transactional leaders. These kinds of leaders guide or motivate their followers in
the direction of established goals by clarifying role and task requirements. There is
also another type of leader who inspires followers to transcend their own self-
interests for the good of the organization, and who is capable of having a profound
and extraordinary effect on his or her followers. These are transformational leaders
like Leslie Wexner of The Limited retail chain and Jack Welch at General Electric.
They pay attention to the concerns and developmental needs of individual
followers; they change followers’ awareness of issues by helping them to look at
old problems in new ways; and they are able to excite, arouse, and inspire
followers to put out extra effort to achieve group goals.

Transactional and transformational leadership should not, however, be viewed as

opposing approaches to getting things done. Transformational leadership is built
on top of transactional leadership—it produces levels of subordinate effort and
performance that go beyond what would occur with a transactional approach
alone. Moreover, transformational leadership is more than charisma. “The purely
charismatic [leader] may want followers to adopt the charismatic’s world view and
go no further; the transformational leader will attempt to instill in followers the
ability to question not only established views but eventually those established by
the leader.”

The evidence supporting the superiority of transformational leadership over the

transactional variety is overwhelmingly impressive. For instance, a number of
studies with U.S., Canadian, and German military officers found, at every level,
that transformational leaders were evaluated as more effective than their
transactional counterparts. And managers at Federal Express who were rated by
their followers as exhibiting more transformational leadership were evaluated by
their immediate supervisors as higher performers and more promotable.73 In
pg. 24
summary, the overall evidence indicates that transformational leadership is more
strongly correlated than transactional leadership with lower turnover rates, higher
productivity, and higher employee satisfaction.

Characteristics of Transactional and Transformational Leaders

Transactional Leader

Contingent Reward: Contracts exchange of rewards for effort, promises rewards for good
performance, recognizes accomplishments.
Management by Exception (active): Watches and searches for deviations from rules and
standards, takes corrective action.
Management by Exception (passive): Intervenes only if standards are not met.
Laissez-Faire: Abdicates responsibilities, avoids making decisions.

Transformational Leader
Charisma: Provides vision and sense of mission, instills pride, gains respect and trust.
Inspiration: Communicates high expectations, uses symbols to focus efforts, expresses
important purposes in simple ways.
Intellectual Stimulation: Promotes intelligence, rationality, and careful problem solving.
Individualized Consideration: Gives personal attention, treats each employee
individually, coaches, advises.

4. Visionary Leadership

The term vision recurred throughout our discussion of charismatic leadership, but
visionary leadership goes beyond charisma. In this section, we review recent
revelations about the importance of visionary leadership Visionary leadership is
the ability to create and articulate a realistic, credible, attractive vision of the
future for an organization or organizational unit that grows out of and improves
upon the present. This vision, if properly selected and implemented, is so
energizing that it “in effect jump-starts the future by calling forth the skills, talents,
and resources to make it happen.”

pg. 25
A review of various definitions finds that a vision differs from other forms of
direction setting in several ways: “A vision has clear and compelling imagery that
offers an innovative way to improve, which recognizes and draws on traditions,
and connects to actions that people can take to realize change. Vision taps people’s
emotions and energy. Properly articulated, a vision creates the enthusiasm that
people have for sporting events and other leisure time activities, bringing the
energy and commitment to the workplace.”

The case in favor of visionary leadership has been made by many writers. For
instance: “the 21st-century organization virtually demands visionary leadership. It
cannot function without it, for an organization driven by accelerating technological
change, staffed by a diverse, multicultural mix of highly intelligent knowledge
workers, facing global complexity, a vast kaleidoscope of individual customer
needs, and the incessant demands of multiple constituencies would simply self-
destruct without a common sense of direction.” Another argues that vision is “the
glue that binds individuals into a group with a common goal . . . when shared by
employees, [it] can keep an entire company moving forward in face of difficulties,
enabling and inspiring leaders and employees alike.”

A survey of 1,500 senior leaders, 870 of them CEOs from 20 different countries,
additionally attests to the growing importance of visionary leadership.80 The
leaders were asked to describe the key traits or talents desirable for a CEO in the
year 2000. The dominant characteristic most frequently mentioned was that the
CEO must convey a “strong sense of vision.” Ninety-eight percent rated this trait
as “most important.” Another study contrasted 18 visionary companies with 18
comparable nonvisionary firms over a 65-year period. The visionary companies
were found to have outperformed the comparison group by six times on standard
financial criteria and their stocks outperformed the general market by 15 times.

The key properties of a vision seem to be inspirational possibilities that are value
centered, realizable, with superior imagery and articulation. Visions should be able
to create possibilities that are inspirational, unique, and offer a new order that can
produce organizational distinction. A vision is likely to fail if it doesn’t offer a
view of the future that is clearly and demonstrably better for the organization and
its members. Desirable visions fit the times and circumstances and reflect the
uniqueness of the organization. People in the organization must also believe that

pg. 26
the vision is attainable. It should be perceived as challenging yet doable. Visions
that have clear articulation and powerful imagery are more easily grasped and
accepted.

What do visions look like? They’re typically easier to talk about than to actually
create, but here are a few examples: “To be the single source software provider to
the financial services industry.” “To be the leading African American owned
promotional and public relations firm in the USA.” “To become the most customer
responsive producer of automobile interior trim in North America.”

Here are some additional organization-specific examples. Walt Disney single-

handedly reinvented the idea of an amusement park when he described his vision
of Disneyland in the early 1950s. Rupert Murdoch was one of the first people to
see the future of the communication industry by combining entertainment and
media. Through his News Corporation, Murdoch has successfully integrated a
broadcast network, television stations, movie studio, publishing, and global
satellite distribution. Mary Kay Ash’s vision of women as entrepreneurs selling
products that improved their self-image gave impetus to her cosmetics company.
Scandinavian Airlines CEO, Jan Carlzon, used the notion of “50,000 daily
moments of truth” to depict the emphasis to be placed on customer service.
Carlzon wanted every employee to ensure that each “moment of truth”—those
instances where customers come into contact with employees—would be a
positive experience for SAS customers. H. Wayne Huizenga, who began picking
up garbage with a beat-up old truck, envisioned potential in waste disposal and
built Waste Management (now WMX). Then Huizenga bought into a small Dallas
video-store chain, saw the future was in big stores, and turned the small chain into
Blockbuster Video (now part of Viacom). Steve Jobs created a vision for Apple
Computer, which energized employees around the idea of not just building
computers but dramatically changing the world. Charles Schwab is currently
attempting to redefine financial services by combining discount prices with
comprehensive offerings.

What skills do visionary leaders exhibit? Once the vision is identified, these
leaders appear to have three qualities that are related to effectiveness in their
visionary roles. First is the ability to explain the vision to others. The leader

pg. 27
needs to make the vision clear in terms of required actions and aims through clear
oral and written communication. The best vision is likely to be ineffective if the
leader isn’t a strong communicator. Ronald Reagan—the so-called “great
communicator”—used his years of acting experience to help him articulate a
simple vision for his presidency: a return to a happier and more prosperous times
through less government, lower taxes, and a strong military.

The second skill needed is to be able to express the vision not just verbally but
through the leader’s behavior. This requires behaving in ways that continually
convey and reinforce the vision. Herb Kelleher at Southwest Airlines lives and
breathes his commitment to customer service. He’s famous within the company
for jumping in, when needed, to help check in passengers, load baggage, fill in for
flight attendants or do anything else to make the customer’s experience more
pleasant.

The third skill is being able to extend the vision to different leadership contexts.
This is the ability to sequence activities so the vision can be applied in a variety of
situations. For instance, the vision has to be as meaningful to the people in
accounting as to those in marketing, and to employees in Addis Ababa as well as
in Tokyo.

Contemporary Issues in Leadership

Do men and women rely on different leadership styles? If so, is one style
inherently superior to the other? What unique demands do teams place on leaders?
How is the current popularity of empowerment affecting the way managers lead?
Since leaders aren’t leaders unless they have followers, what can managers do to
make employees more effective followers? How does national culture affect the
choice of leadership style? Is there a biological basis for leadership? Is there a
moral dimension to leadership? In this section, we briefly address these seven
contemporary issues in leadership.

1. Gender: Do Males and Females Lead Differently?

[[

An extensive review of the literature suggests two conclusions regarding gender

and leadership.86 First, the similarities between men and women tend to outweigh
the differences. Second, what differences there are seem to be that women fall
pg. 28
back on a more democratic leadership style, while men feel more comfortable with
a directive style. The similarities among men and women leaders shouldn’t be
completely surprising. Almost all the studies looking at this issue have used
managerial positions as being synonymous with leadership. As such, gender
differences apparent in the general population don’t tend to be as evident because
of career self-selection and organization selection. Just like people who choose
careers in law enforcement or civil engineering have a lot in common, individuals
who choose managerial careers also tend to have commonalities.

People with traits associated with leadership—such as intelligence, confidence,

and sociability—are more likely to be perceived as leaders and encouraged to
pursue careers where they can exert leadership. This is true regardless of gender.
Similarly, organizations tend to recruit and promote people into leadership
positions who project leadership attributes. The result is that, regardless of gender,
those who achieve formal leadership positions in organizations tend to be more
alike than different.

Despite the previous conclusion, studies indicate some differences in the inherent
leadership styles between women and men. Women tend to adopt a more
democratic leadership style. They encourage participation, share power and
information, and attempt to enhance followers’ self-worth. They prefer to lead
through inclusion and rely on their charisma, expertise, contacts, and interpersonal
skills to influence others. Men, on the other hand, are more likely to use a directive
command-and-control style. They rely on the formal authority of their position for
their influence base. However, consistent with our first conclusion, these findings
need to be qualified. The tendency for female leaders to be more democratic than
males declines when women are in male-dominated jobs. Apparently, group norms
and masculine stereotypes of leaders override personal preferences so that women
abandon their feminine styles in such jobs and act more autocratically.

Given that men have historically held the great majority of leadership positions in
organizations, it’s tempting to assume that the existence of the noted differences
between men and women would automatically work to favor men. It doesn’t. In
today’s organizations, flexibility, teamwork, trust, and information sharing are
replacing rigid structures, competitive individualism, control, and secrecy. The
best managers listen, motivate, and provide support to their people. And many
women seem to do those things better than men. As a specific example, the
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expanded use of cross-functional teams in organizations means that effective
managers must become skillful negotiators. The leadership styles women typically
use can make them better at negotiating, as they are less likely to focus on wins,
losses, and competition, as do men. They tend to treat negotiations in the context
of a continuing relationship—trying hard to make the other party a winner in its
own and other’s eyes.

2. Providing Team Leadership

Leadership is increasingly taking place within a team context. As teams grow in

popularity, the role of the leader in guiding team members takes on heightened
importance.87 And the role of team leader is different from the traditional
leadership role performed by first-line supervisors. J.D. Bryant, a supervisor at
Texas Instruments’ Forest Lane plant in Dallas, found that out. 88 One day he was
happily overseeing a staff of 15 circuit-board assemblers. The next day he was
informed the company was moving to teams and that he was to become a
“facilitator.” “I’m supposed to teach the teams everything I know and then let
them make their own decisions,” he said. Confused about his new role, he
admitted “there was no clear plan on what I was supposed to do.” In this section,
we consider the challenge of being a team leader, review the new roles that team
leaders take on, and offer some tips on how to increase the likelihood that you can
perform effectively in this position.

Many leaders are not equipped to handle the change to teams. As one prominent
consultant noted, “even the most capable managers have trouble making the
transition because all the command-and-control type things they were encouraged
to do before are no longer appropriate. There’s no reason to have any skill or sense
of this.”89 This same consultant estimated that “probably 15 percent of managers
are natural team leaders; another 15 percent could never lead a team because it
runs counter to their personality. [They’re unable to sublimate their dominating
style for the good of the team.] Then there’s that huge group in the middle: Team
leadership doesn’t come naturally to them, but they can learn it.”

The challenge for most managers, then, is to learn how to become an effective
team leader. They have to learn skills such as the patience to share information, to
trust others, to give up authority, and understanding when to intervene. Effective

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leaders have mastered the difficult balancing act of knowing when to leave their
teams alone and when to intercede. New team leaders may try to retain too much
control at a time when team members need more autonomy, or they may abandon
their teams at times when the teams need support and help.

A recent study of 20 organizations that had reorganized themselves around teams

found certain common responsibilities that all leaders had to assume. These
included coaching, facilitating, handling disciplinary problems, reviewing
team/individual performance, training, and communication. Many of these
responsibilities apply to managers in general. A more meaningful way to describe
the team leader’s job is to focus on two priorities: managing the team’s external
boundary and facilitating the team process.

We’ve broken these priorities down into four specific roles.

First, team leaders are liaisons with external constituencies. These include upper
management, other internal teams, customers, and suppliers. The leader represents
the team to other constituencies, secures needed resources, clarifies others’
expectations of the team, gathers information from the outside, and shares this
information with team members.

Second, team leaders are troubleshooters. When the team has problems, and asks
for assistance, team leaders sit in on meetings and
help try to resolve the problems. This rarely relates to technical or operation issues
because the team members typically know more about the tasks being done than
does the team leader. Where the leader is most likely to contribute is by asking
penetrating questions, helping the team talk through problems, and by getting
needed resources from external constituencies. For instance, when a team in an
aerospace firm found itself short-handed, its team leader took responsibility for
getting more staff. He presented the team’s case to upper management and got the
approval through the company’s human resources department.

Third, team leaders are conflict managers. When disagreements surface, they help
process the conflict. What’s the source of the conflict? Who is involved? What are
the issues? What resolution options are available? What are the advantages and
disadvantages of each? By getting team members to address questions such as
these, the leader minimizes the disruptive aspects of intrateam conflicts.

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Finally, team leaders are coaches. They clarify expectations and roles, teach, offer
support, cheerlead, and whatever else is necessary to help team members improve
their work performance.

3. Leading Through Empowerment

An important trend has developed over the past decade that has immense
implications for leadership. That trend is for managers to embrace empowerment.
More specifically, managers are being advised that effective leaders share power
and responsibility with their employees. The empowering leader’s role is to show
trust, provide vision, remove performance-blocking barriers, offer encouragement,
motivate, and coach employees. The list of companies that have jumped on the
“empowerment bandwagon” includes such world-famous corporations as General
Electric, Intel, Ford, Saturn, Scandinavian Airline Systems, Harley-Davidson,
Goodyear, and Conrail. Many have introduced empowerment as part of their
corporatewide efforts in implementing total quality management. Does this
wholesale embracing of shared leadership strike you as a bit strange, given the
attention that has been focused on contingency approaches to leadership? If it
doesn’t, it should. Why? Because empowerment proponents are essentially
advocating a noncontingent approach to leadership. Directive, task-oriented,
autocratic leadership is out, and empowerment is in.

The problem with the current empowerment movement is that it ignores the extent
to which leadership can be shared and the conditions facilitating the success of
shared leadership. Because of factors such as downsizing, higher employee skills,
commitment of organizations to continuous training, implementation of total
quality management programs, and introduction of self-managed teams, there
seems to be no doubt that an increasing number of situations call for a more
empowering approach to leadership. But not all situations! Blanket acceptance of
empowerment, or any universal approach to leadership, is inconsistent with the
best and most current evidence we have on the subject.

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What about Followership?

When someone was once asked what it took to be a great leader, he responded: Great
followers! While the response may have seemed sarcastic, it has some truth. We have
long known that many managers can’t lead a horse to water. But, then again, many
subordinates can’t follow a parade. Only recently have we begun to recognize that in
addition to having leaders who can lead, successful organizations need followers who can
follow. In fact, it’s probably fair to say that all organizations have far more followers than
leaders, so ineffective followers may be more of a handicap to an organization than
ineffective leaders.

What qualities do effective followers have? One writer focuses on four.

1. They manage themselves well. They are able to think for themselves. They can
work independently and without close supervision.
2. They are committed to a purpose outside themselves. Effective followers are
committed to something—a cause, a product, a work team, an organization, an
idea—in addition to the care of their own lives. Most people like working with
colleagues who are emotionally, as well as physically, committed to their work.
3. They build their competence and focus their efforts for maximum impact.
Effective followers master skills that will be useful to their organizations, and
they hold higher performance standards than their job or work group requires.
4. They are courageous, honest, and credible. Effective followers establish
themselves as independent, critical thinkers whose knowledge and judgment can
be trusted. They hold high ethical standards, give credit where credit is due, and
aren’t afraid to own up to their mistakes.

National Culture as an Added Contingency Variable

One general conclusion that surfaces from our discussion of leadership is that effective
leaders don’t use any single style. They adjust their style to the situation. While not
mentioned explicitly in any of the theories we presented, certainly national culture is an
important situational factor determining which leadership style will be most effective. We
propose that you consider it as another contingency variable. It can help explain, for
instance, why executives at the highly successful Asia Department Store in central China
blatantly brag about practicing “heartless” management, require new
employees to undergo two to four weeks of military training with units of the People’s
Liberation Army in order to increase their obedience, and conduct the store’s in-house

pg. 33
training sessions in a public place where employees can openly suffer embarrassment
from their mistakes.

National culture affects leadership style by way of the subordinate. Leaders cannot
choose their styles at will. They are constrained by the cultural conditions that their
subordinates have come to expect. For example, a manipulative or autocratic style is
compatible with high power distance, and we find high power distance scores in Arab,
Far Eastern, and Latin countries. Power distance rankings should also be good indicators
of employee willingness to accept participative leadership. Participation is likely to be
most effective in such low power distance cultures as exist in Norway, Finland, Denmark,
and Sweden. Not incidentally, this may explain (a) why a number of leadership theories
(the more obvious being ones like the University of Michigan behavioral studies and the
leader-participation model) implicitly favor the use of a participative or people-oriented
style; (b) the emergence of development oriented leader behavior found by Scandinavian
researchers; and (c) the recent enthusiasm in North America with empowerment.

Remember that most leadership theories were developed by North Americans, using
North American subjects; and the United States, Canada, and Scandinavian countries all
rate below average on power distance.

Is There a Biological Basis for Leadership?

Is it possible that leader behavior lies in the body’s hormones and in the brain’s
neurotransmitters? While this may take the study of leadership out of the behavioral
laboratory and into the chemistry lab, there is increasing evidence indicating that
leadership has biological roots.

A growing body of research suggests that the best leaders are not necessarily the
smartest, strongest, or most aggressive of a group but rather those who are most
proficient at handling social interactions. That finding isn’t particularly surprising.
However, the researchers have found that effective leaders possess a unique biochemical
mixture of hormones and brain chemistry that helps them build social alliances and cope
with stress.

Two chemicals—serotonin and testosterone—have received most of the attention.

Increased levels of the former appear to improve sociability and control aggression.
Higher levels of the latter increase competitive drive. Studies with monkeys find that (1)
dominant monkeys—the leaders (whether male or female)—have a higher level of
serotonin than do their subordinates; and (2) when that leader is removed from the group,
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the new leader that takes charge shows a marked increase in levels of serotonin.
Researchers believe that high levels of serotonin promote leadership by controlling
aggressive and antisocial impulses, as well as reducing overreaction to petty or irrelevant
stresses. The direction of causation, however, isn’t clear: High levels of serotonin may
stimulate leadership and/or leadership may result in a rise in serotonin.

Testosterone also seems to play a role in leadership. Studies with baboons find that
leaders experience a sudden rise in testosterone levels when legitimate threats appear. In
subordinates, the level of testosterone goes down during a crisis. But enough about
monkeys. How about humans? A study in a college fraternity found males in the highest
leadership positions had the highest level of serotonin. Researchers have also found that
testosterone levels rise in top tennis players before competitive matches. The high levels
seem to make the tennis players more assertive and motivated to win. It’s been found that
testosterone also rises after status-enhancing achievements such as winning a promotion
or earning a degree, and women in professional jobs have higher levels of the hormone.

The step from laboratory to workplace isn’t as far as you might think. For instance, the
highly popular antidepressant Prozac (its sales now exceeds $2 billion a year and its
manufacturer estimates that more than 21 million people worldwide have used it) is one
of a new class of drugs called serotonin reuptake inhibitors. It zeros in on one
neurotransmitter, serotonin, lifting mood and lessening anxiety by keeping pools of the
chemical available in the brain for nerve cells to use and reuse. Prozac raises serotonin
and improves the sociability of its users. Additionally, patches—similar to those worn by
people trying to quit smoking—are now available to help them increase testosterone
levels. While we certainly aren’t suggesting that individuals turn to pills or patches as a
means to increase their leadership opportunities, the possibilities are nevertheless thought
provoking.

Is There a Moral Dimension to Leadership?

The topic of leadership and ethics has surprisingly received little attention. Only very
recently have ethicists and leadership researchers begun to consider the ethical
implications in leadership. Why now? One reason may be the growing general interest in
ethics throughout the field of management. Another reason may
be the discovery by probing biographers that many of our past leaders—such as Martin
Luther King, Jr., John F. Kennedy, and Franklin D. Roosevelt—suffered from ethical
shortcomings. Regardless, no contemporary discussion of leadership is complete without
addressing its ethical dimension.

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Ethics touches on leadership at a number of junctures. Transformational leaders, for
instance, have been described by one authority as fostering moral virtue when they try to
change the attitudes and behaviors of followers.104 Charisma, too, has an ethical
component. Unethical leaders are more likely to use their charisma to enhance power
over followers, directed toward self-serving ends. Ethical leaders are considered to use
their charisma in a socially constructive way to serve others. There is also the issue of
abuse of power by leaders, for example, when they give themselves large salaries and
bonuses while, at the same time, they seek to cut costs by laying off long-time
employees. And, of course, the topic of trust explicitly deals with honesty and integrity in
leadership.

Leadership effectiveness needs to address the means that a leader uses in trying to
achieve goals as well as the content of those goals. GE’s Jack Welch, for instance, is
consistently described as a highly effective leader because he has succeeded in achieving
out standing returns for shareholders. But Welch is also widely regarded as one of the
world’s toughest managers. He is regularly listed high on Fortune’s annual list of the
most hated and reviled executives. Similarly, Bill Gates’s success in leading Microsoft to
domination of the world’s software business has been achieved by means of an extremely
demanding work culture. Microsoft’s culture demands long work hours by employees
and is intolerant of individuals who want to balance work and their personal life.
Additionally, ethical leadership must address the content of a leader’s goals. Are the
changes that the leader seeks for the organization morally acceptable? Is a business leader
effective if he or she builds an organization’s success by selling products that damage the
health of its users? This question might be asked of tobacco executives. Or is a
military leader successful by winning a war that should not have been fought in the first
place?

Leadership is not value free. Before we judge any leader to be effective, we should
consider both the means used by the leader to achieve his or her goals and the moral
content of those goals.

Summary and Implications for Managers

Leadership plays a central part in understanding group behavior, for it’s the leader who
usually provides the direction toward goal attainment. Therefore, a more accurate
predictive capability should be valuable in improving group performance. In this chapter,
we described a transition in approaches to the study of leadership—from the simple trait
orientation to increasingly complex and sophisticated transactional models, such as path-
goal and leader-participation models. With the increase in complexity has also come an
increase in our ability to explain and predict behavior.
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A major breakthrough in our understanding of leadership came when we recognized the
need to include situational factors. Recent efforts have moved beyond mere recognition
toward specific attempts to isolate these situational variables. We can expect further
progress to be made with leadership models, but in the last decade, we have taken several
large steps—large enough that we now can make moderately effective predictions as to
who can best lead a group and explain under what conditions a given approach (such as
task oriented or people oriented) is likely to lead to high employee performance and
satisfaction.

In addition, the study of leadership has expanded to include more heroic and visionary
approaches to leadership. As we learn more about the personal characteristics that
followers attribute to charismatic and transformational leaders, and about the conditions
that facilitate their emergence, we should be better able to predict when followers will
exhibit extraordinary commitment and loyalty to their leaders and to those leaders’ goals.

Finally, we addressed a number of contemporary issues in leadership. We learned, for

instance, that male and female leadership styles tend to be more alike than different, but
that women’s propensity to rely on shared leadership is more in line with organizational
needs in the 1990s than the directive style often preferred by men.

Effective team leaders were found to perform four roles: They act as liaisons with
external constituencies, they are troubleshooters, they manage conflict, and they coach
team members. Empowered leadership was shown to be increasingly popular, but
managers should not assume that empowering employees is the ideal leadership style for
all occasions. Also, consistent with the contingency approach, managers should be sure to
consider national culture as an important variable in choosing a leadership style. On a
more controversial note, recent evidence on the link between biology and leadership
suggests that the subject of leadership is not the sole province of psychologists and
sociologists. In the future, improved understanding of the leadership phenomena
may increasingly come from chemists or pharmacologists. Finally, we propose that
leadership is not value free. So we should look at the moral content of a leader’s goals
and the means he or she uses to achieve those goals

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