Business Essentials 9-1
Thirteenth Edition, Global Edition
Chapter 9
Leadership and
Decision Making
Copyright © 2023 Pearson Education, Ltd
9-2
Introduction
• In this chapter we
– look at the nature of leadership
– describe early approaches to leadership, as well as the
situational perspective accepted today
– examine leadership through the eyes of followers as
well as alternatives to leadership
– describe the important related concept of decision
making
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9-3
Learning Objectives (1 of 2)
9-1 Define leadership and distinguish it from
management.
9-2 Summarize early approaches to the study of
leadership.
9-3 Discuss the concept of situational approaches
to leadership.
9-4 Describe transformational and charismatic
perspectives on leadership.
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9-4
Learning Objectives (2 of 2)
9-5 Identify and discuss leadership substitutes and
neutralizers.
9-6 Discuss leaders as coaches and examine
gender and cross-cultural issues in leadership.
9-7 Describe strategic leadership, ethical
leadership, and virtual leadership.
9-8 Relate leadership to decision making and
discuss both rational and behavioral
perspectives on decision making.
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9-5
The Nature of Leadership
• Leadership
– the processes and behaviors used by someone, such
as a manager, to motivate, inspire, and influence the
behaviors of others
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Distinctions Between Management and 9-6
Leadership
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9-7
Leadership and Power (1 of 2)
• Power
– the ability to affect the behavior of others
• Legitimate Power
– power granted through the organizational hierarchy
• Reward Power
– the power to give or withhold rewards (e.g. salary
increases, bonuses, promotion recommendations,
praise, recognition, and interesting job assignments.)
• Coercive Power
– the power to force compliance by means of
psychological, emotional, or physical threat
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9-8
Leadership and Power (2 of 2)
• Referent Power
– power based on identification, imitation, loyalty, or
charisma
• Expert Power
– power derived from information or expertise
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9-9
Early Approaches to Leadership (1 of 2)
• Trait Approach to Leadership
– focused on identifying the essential traits that
distinguished leaders
– intelligence, dominance, self-confidence, energy,
activity (versus passivity), and knowledge about the job
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9-10
Early Approaches to Leadership (2 of 2)
• Behavioral Approach to Leadership
– focused on determining what behaviors are employed
by leaders
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9-11
Behavioral Approach to Leadership
• Task-Focused Leader • Employee-Focused
Behavior Leader Behavior
– leader behavior – leader behavior
focusing on how tasks focusing on
should be performed in satisfaction, motivation,
order to meet certain and well-being of
goals and to achieve employees
certain performance
standards
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9-12
The Situational Approach to Leadership (1 of 2)
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9-19
The Changing Nature of Leadership (1 of 2)
• Leaders as Coaches
– from directive overseer to mentor
• Gender and Leadership
– understanding the differences and dynamics in the
approaches of women and men to leadership
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9-20
The Changing Nature of Leadership (2 of 2)
• Cross-Cultural Leadership
– effects of an individual’s native culture on his or her
approach to leadership when functioning in another
culture
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9-21
Emerging Issues in Leadership (1 of 2)
• Strategic Leadership
– leader’s ability to understand the complexities of both
the organization and its environment and to lead
change in the organization so as to enhance its
competitiveness
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9-22
Emerging Issues in Leadership (2 of 2)
• Ethical Leadership • Virtual Leadership
– leader behaviors that – leadership in settings
reflect high ethical where leaders and
standards followers interact
– maintain high ethical electronically rather
standards than in face-to-face
– hold others in the settings
organization to the
same standards
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Leadership, Management, and Decision 9-23
Making
• Decision Making
– choosing one alternative from among several options
• Decision-Making Process
– recognizing and defining the nature of a decision
situation, identifying alternatives, choosing the “best”
alternative, and putting it into practice
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9-24
Types of Decisions
• Programmed Decision
– decision that is relatively structured or recurs with
some frequency (or both)
• Nonprogrammed Decision
– Decision that is relatively unstructured and that occurs
with low frequency
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9-25
Decision-Making Conditions (1 of 2)
• State of Certainty
– when the decision maker knows with reasonable
certainty what the alternatives are and what conditions
are associated with each alternative
• State of Risk
– when the availability of each alternative and its
potential payoffs and costs are all associated with
probability estimates
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9-26
Decision-Making Conditions (2 of 2)
• State of Uncertainty
– when the decision maker does not know all the
alternatives, the risks associated with each, or the
likely consequences of each alternative
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9-27
Rational Decision Making (1 of 3)
• Recognizing and defining the decision situation
• Identifying alternatives
• Evaluating alternatives
• Selecting the best alternative
• Implementing the chosen alternative
• Following up and evaluating the results
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9-28
Rational Decision Making (2 of 3)
Step 1: The manager recognizes and defines a decision situation.
Example: A hotel manager sees that customer complaints have
been increasing.
Step 2: The manager identifies alternatives for addressing the
situation.
Example: The hotel manager can hire new staff, offer service
quality training, or leave things as they are.
Step 3: The manager evaluates each of the possible alternatives.
Example: The hotel manager decides leaving things as they are is
unacceptable but that the other two options may work.
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9-29
Rational Decision Making (3 of 3)
Step 4: The manager selects the best alternative.
Example: Hiring new staff is too expensive but the hotel has
unused funds in its training budget.
Step 5: The manager implements the chosen alternative.
Example: A new training program is developed.
Step 6: The manager follows up and evaluates the effects of the
chosen alternative.
Example: After six months the manager notices a significant
decrease in customer complaints.
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Steps in the Rational Decision-Making 9-30
Process
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9-31
Behavioral Aspects of Decision Making (1 of 2)
• Coalition
– an informal alliance of individuals or groups formed to
achieve a common goal
• Intuition
– an innate belief about something, often without
conscious consideration
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9-32
Behavioral Aspects of Decision Making (2 of 2)
• Escalation of Commitment
– condition in which a decision maker becomes so
committed to a course of action that she or he stays
with it even when it appears to have been wrong
• Risk Propensity
– extent to which a decision maker is willing to gamble
when making a decision
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9-33
Applying What You’ve Learned (1 of 2)
9-1 Define leadership and distinguish it from
management.
9-2 Summarize early approaches to the study of
leadership.
9-3 Discuss the concept of situational approaches
to leadership.
9-4 Describe transformational and charismatic
perspectives on leadership.
Copyright © 2023 Pearson Education, Ltd
9-34
Applying What You’ve Learned (2 of 2)
9-5 Identify and discuss leadership substitutes and
neutralizers.
9-6 Discuss leaders as coaches and examine
gender and cross-cultural issues in leadership.
9-7 Describe strategic leadership, ethical
leadership, and virtual leadership.
9-8 Relate leadership to decision making and
discuss both rational and behavioral
perspectives on decision making.
Copyright © 2023 Pearson Education, Ltd
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