Leadership is the process by which a person exerts influence over other people and inspires, motivates, and directs

their
activities to help achieve group or organizational goals.
The person who exerts such influence is a leader.

When leaders are effective, the influence they exert over others helps a group or an organization achieve its performance
goals.

When leaders are ineffective, their influence does not contribute to, and often detracts from, goal attainment.

Personal Leadership Style

and Managerial Tasks
A manager’s personal leadership style—that is, the specific ways in which a manager chooses to influence other people—
shapes how that manager approaches planning, organizing, and controlling (the other principal tasks of managing).

Managers at all levels and in all kinds of organizations have their own personal leadership styles, which determine not
only how they lead their subordinates but also how they perform the other management tasks.
Leadership Styles across Cultures
Some evidence suggests that leadership styles vary not only among individuals but also among
countries or cultures. Some research indicates that European managers tend to be more humanistic,
or people-oriented, than both Japanese and American managers.

The collectivistic culture in Japan places prime emphasis on the group rather than the individual, so the
importance of individuals’ own personalities, needs, and desires is minimized. Organizations in the United
States tend to be very profit-oriented and thus tend to downplay the importance of individual
employees’ needs and desires.

Many countries in Europe have a more individualistic perspective than Japan and a more humanistic perspective
than the United States, and this may result in some European managers’ being more people-oriented than their
Japanese or American counterparts.

European managers, for example, tend to be reluctant to lay off employees, and when a layoff is absolutely
necessary, they take careful steps to make it as painless as possible.39
Power: The Key to Leadership
No matter what one’s leadership style, a key component of effective leadership is found in the power the leader
has to affect other people’s behavior and to get them to act in certain ways.

There are several types of power: legitimate, reward, coercive, expert, and referent power.
Effective leaders take steps to ensure that they have sufficient levels of each type and that they use their power in
beneficial ways.

LEGITIMATE POWER Legitimate power is the authority a manager has by virtue of his or her position in an
organization’s hierarchy. Personal leadership style often influences how a manager exercises legitimate power.

Take the case of Carol Loray, who is a first-line manager in a greeting card company and leads a group of 15 artists
and designers. Loray has the legitimate power to hire new employees, assign projects to the artists and designers,
monitör their work, and appraise their performance.

She uses this power effectively. She always makes sure her project assignments match the interests of her
subordinates as much as possible so they will enjoy their work. She monitors their work to make sure they are on
track but does not engage in close supervision, which can hamper creativity.

She makes sure her performance appraisals are developmental, providing concrete advice for areas where
improvements could be made. Recently, Loray negotiated with her manager to increase her legitimate
power so she can now initiate and develop proposals for new card lines.
REWARD POWER Reward power is the ability of a manager to give or withhold tangible rewards (pay raises, bonuses,
choice job assignments) and intangible rewards (verbal praise, a pat on the back, respect).

As you learned in Chapter 13, members of an organization are motivated to perform at a high level by a variety of
rewards. Being able to give or withhold rewards based on performance is a major source of power, which allows
managers to have a highly motivated workforce. Managers of salespeople in retail organizations, like Neiman, Marcus,
Nordstrom, and Macy’s, and in car dealerships such as Mazda, Ford, and Volvo often use their reward power to motivate
their subordinates. Subordinates in organizations such as these often receive commissions on whatever they sell and
rewards for the quality of their customer service, which motivate them to do the best they can.
COERCIVE POWER Coercive power is the ability of a manager to punish others. Punishment can range from verbal
reprimands to reductions in pay or working hours to actual dismissal.

In the previous chapter we discussed how punishment can have negative side effects, such as resentment and
retaliation, and should be used only when necessary (for example, to curtail a dangerous behavior).

Managers who rely heavily on coercive power tend to be ineffective as leaders and sometimes even get fired
themselves. William J. Fife is one example;
he was fired from his position as CEO of Giddings and Lewis Inc., a manufacturer of factory
equipment, because of his overreliance on coercive power.

In meetings Fife often verbally criticized, attacked, and embarrassed top managers. Realizing how destructive Fife’s
use of punishment was for them and the company, these managers complained to the board of directors,
who, after careful consideration of the issues, asked Fife to resign.4
EXPERT POWER Expert power is based on the special knowledge, skills, and expertise that a leader possesses. The nature
of expert power varies, depending on the leader’s level in the hierarchy. First-level and middle managers often have
technical expertise relevant to the tasks their subordinates perform. Their expert power gives them considerable
influence over subordinates.

Carol Loray has expert power: She is an artist herself and has drawn and designed some of her company’s top-selling
greeting cards. Marc Benioff, in “A Manager’s Challenge,” has expert power from his knowledge and expertise in the
software industry, acquired over 35 years. As indicated in the accompanying “Manager as a Person” feature,
managers with expert power nonetheless need to recognize that they are not always right and
seek and encourage input from others.

REFERENT POWER Referent power is more informal than the other kinds of power. Referent power is a function of the
personal characteristics of a leader; it is the power that comes from subordinates’ and coworkers’ respect, admiration,
and loyalty.

Leaders who are likable and whom subordinates wish to use as a role model are especially likely to possess referent
power, as is true of Marc Benioff in “A Manager’s Challenge.”
Empowerment: An Ingredient in Modern Management
More and more managers today are incorporating into their personal leadership styles an aspect that at first glance seems
to be the opposite of being a leader. In Chapter 1 we described how empowerment—the process of giving employees at
all levels the authority to make decisions, be responsible for their outcomes, improve quality, and cut costs—is becoming
increasingly popular in organizations.

When leaders empower their subordinates, the subordinates typically take over some responsibilities and authority that
used to reşide with the leader or manager, such as the right to reject parts that do not meet quality standards,
the right to check one’s own work, and the right to schedule work activities.

Empowered subordinates are given the power to make some decisions that their leaders or supervisors used to make.

Empowerment might seem to be the opposite of effective leadership because managers are allowing subordinates to take
a more active role in leading themselves. In actuality, however, empowerment can contribute to effective leadership for
several reasons:

• Empowerment increases a manager’s ability to get things done because the manager has
the support and help of subordinates who may have special knowledge of work tasks.

• Empowerment often increases workers’ involvement, motivation, and commitment; and

this helps ensure that they are working toward organizational goals.

• Empowerment gives managers more time to concentrate on their pressing concerns

because they spend less time on day-to-day supervision.
Leading is such an important process in all organizations—nonprofit organizations, government agencies, and schools, as
well as for-profit corporations—that it has been researched for decades. Early approaches
to leadership, called the trait model and the behavior model, sought to determine what effective leaders are like as
people and what they do that makes them so effective.

The Trait Model

The trait model of leadership focused on identifying the personal characteristics that cause effective leadership.
Researchers thought effective leaders must have certain personal qualities that set them apart from ineffective leaders and
from people who never become leaders.

Decades of research (beginning in the 1930s) and hundreds of studies indicate that certain personal characteristics do
appear to be associated with effective leadership.

Notice that although this model is called the “trait” model, some of the personal characteristics that it identifies are not
personality traits per se but, rather, are concerned with a leader’s skills, abilities, knowledge, and expertise. As “A
The Behavior Model
After extensive study in the 1940s and 1950s, researchers at The Ohio State University identified two basic kinds of
leader behaviors that many leaders in the United States, Germany, and other countries engaged in to influence
their subordinates: consideration and initiating structure.58

CONSIDERATION Leaders engage in consideration when they show their subordinates that they trust, respect, and
care about them. Managers who truly look out for the well-being of their subordinates, and do what they can to
help subordinates feel good and enjoy their work, perform consideration behaviors.

At Costco Wholesale Corporation, cofounder and director Jim Senegal believes that consideration not only is an
ethical imperative but also makes good business sense,59 as indicated in the accompanying “Management Insight”
feature.
INITIATING STRUCTURE Leaders engage in initiating structure when they take steps to make sure that work gets done,
subordinates perform their jobs acceptably, and the organization is efficient and effective. Assigning tasks to individuals
or work groups, letting subordinates know what is expected of them, deciding how work should be done, making
schedules, encouraging adherence to rules and regulations, and motivating subordinates to do
a good job are all examples of initiating structure.77
Leadership researchers have identified leader behaviors similar to consideration and initiating
structure.

Researchers at the University of Michigan, for example, identified two categories of leadership behaviors, employee-
centered behaviors and job-oriented behaviors, that correspond roughly to consideration and initiating structure,
respectively.78
Models of leadership popular with consultants also tend to zero in on these two kinds of behaviors.

For example, Robert Blake and Jane Mouton’s Managerial Grid focuses on concern for people
(similar to consideration) and concern for production (similar to initiating structure). Blake and Mouton advise that
effective leadership often requires both a high level of concern for people and a high level of concern for production.79
As another example, Paul Hersey and Kenneth Blanchard’s model focuses on supportive behaviors (similar to
consideration) and task-oriented behaviors (similar to initiating structure). According to Hersey and Blanchard,
leaders need to consider the nature of their subordinates when trying to determine the extent to which they should
perform these two behaviors.80
You might expect that effective leaders and managers would perform both kinds of behaviors,
but research has found that this is not necessarily the case. The relationship between
performance of consideration and initiating-structure behaviors and leader effectiveness is
not clear-cut. Some leaders are effective even when they do not perform consideration or
initiating-structure behaviors, and some leaders are ineffective even when they perform
both kinds of behaviors. Like the trait model of leadership, the behavior model alone cannot
explain leader effectiveness. Realizing this, researchers began building more complicated
models of leadership, focused not only on the leader and what he or she does but also on the
situation or context in which leadership occurs.
Contingency models of leadership take into account the situation, or context, within which leadership occurs.

According to contingency models, whether or not a manager is an effective leader is the result of the interplay
among what the manager is like, what he or she does, and the situation in which leadership takes place.

Contingency models propose that whether a leader who possesses certain traits or performs certain behaviors is
effective depends on, or is contingent on, the situation, or context. In this section we discuss three prominent
contingency models developed to shed light on what makes managers effective leaders: Fred Fiedler’s contingency
model, Robert House’s path–goal theory, and the leader substitutes model.

As you will see, these leadership models are complementary; each focuses on a somewhat different aspect of
effective leadership in organizations.
Fiedler’s Contingency Model
Fred E. Fiedler was among the first leadership researchers to acknowledge that effective leadership is contingent on,
or depends on, the characteristics of the leader and of the situation.

Fiedler’s contingency model helps explain why a manager may be an effective leader in one situation and ineffective
in another; it also suggests which kinds of managers are likely to be most effective in which situations.81
LEADER STYLE As with the trait approach, Fiedler hypothesized that personal characteristics can influence leader
effectiveness. He used the term leader style to refer to a manager’scharacteristic approach to leadership and identi
fied two basic leader styles: relationship oriented and task-oriented. All managers can be described as having one of
these styles.

Relationship-oriented leaders are primarily concerned with developing good relationships with their subordinates
and being liked by them. Relationship-oriented managers focus on having high-quality interpersonal relationships
with subordinates. This does not mean, however, that the job does not get done when such leaders are at the helm.
But it does mean that the quality of interpersonal relationships with subordinates is a prime concern for relationship-
oriented leaders.

Task-oriented leaders are primarily concerned with ensuring that subordinates perform at a high level and focus on
task accomplishment. While task-oriented leaders also may be concerned about having good interpersonal
relationships with their subordinates, task accomplishment is their prime concern.
SITUATIONAL CHARACTERISTICS According to Fiedler, leadership style is an enduring characteristic; managers
cannot change their style, nor can they adopt different styles in different kinds of situations. With this in mind,
Fiedler identified three situational characteristics that are important determinants of how favorable a
situation is for leading: leader– member relations, task structure, and position power. When a situation is
favorable for leading, it is relatively easy for a manager to influence subordinates so they perform at a high
level and contribute to organizational efficiency and effectiveness. In a situation unfavorable
for leading, it is much more difficult for a manager to exert influence.

LEADER–MEMBER RELATIONS The first situational characteristic Fiedler described, leader–member relations,
is the extent to which followers like, trust, and are loyal to their leader. Situations are more favorable for
leading when leader–member relations are good.

TASK STRUCTURE The second situational characteristic Fiedler described, task structure, is the extent to which
the work to be performed is clear-cut so that a leader’s subordinates know what needs to be accomplished
and how to go about doing it. When task structure is high, the situation is favorable for leading. When task
structure is low, goals may be vague, subordinates may be unsure of what they should be doing or how they
should do it, and the situation is unfavorable for leading.
POSITION POWER The third situational characteristic Fiedler described, position power, is the amount of legitimate,
reward, and coercive power a leader has by virtue of his or her position in an organization. Leadership situations are
more favorable for leading when position power is strong.

COMBINING LEADER STYLE AND THE SITUATION By considering all possible combinations of good and poor leader–
member relations, high and low task structure, and strong and weak position power, Fiedler identified eight
leadership situations, which vary in their favorability for leading (see Figure 14.2).

PUTTING THE CONTINGENCY MODEL INTO PRACTICE Recall that according to Fiedler, leader style is an enduring
characteristic that managers cannot change. This suggests that for managers to be effective, either managers need to
be placed in leadership situations that fit their style or situations need to be changed to suit the managers. Situations
can be changed, for example, by giving a manager more position power or by taking steps to increase
task structure, such as by clarifying goals.
House’s Path–Goal Theory
In what he called path–goal theory, leadership researcher Robert House focused on what leaders can do to motivate
their subordinates to achieve group and organizational goals.85

The premise of path–goal theory is that effective leaders motivate subordinates to achieve goals by
(1) clearly identifying the outcomes that subordinates are trying to obtain from the workplace
(2) rewarding subordinates with these outcomes for high performance and the attainment of work goals,
(3) clarifying for subordinates the paths leading to the attainment of work goals.

Path–goal theory is a contingency model because it proposes that the steps managers should take to motivate
subordinates depend on both the nature of the subordinates and the type of work they do.

Path–goal theory identifies four kinds of leadership behaviors that motivate subordinates:
• Directive behaviors are similar to initiating structure and include setting goals, assigning tasks, showing subordinates
how to complete tasks, and taking concrete steps to improve performance.

• Supportive behaviors are similar to consideration and include expressing concern for subordinates and looking out for
their best interests.

• Participative behaviors give subordinates a say in matters and decisions that affect them.
• Achievement-oriented behaviors motivate subordinates to perform at the highest level possible by, for example, setting
challenging goals, expecting that they be met, and believing in subordinates’ capabilities.
The Leader Substitutes Model
The leader substitutes model suggests that leadership is sometimes unnecessary because substitutes for
leadership are present.

A leadership substitute is something that acts in place of the influence of a leader and makes leadership
unnecessary. This model suggests that under certain conditions managers do not have to play a leadership role—
members of an organization sometimes can perform at a high level without a manager exerting influence over
them.86
The leader substitutes model is a contingency model because it suggests that in some situations leadership
is unnecessary.
Transformational leadership occurs when managers change (or transform) their subordinates
in three important ways:94
1. Transformational managers make subordinates aware of how important their jobs are for the organization and how
necessary it is for them to perform those jobs as best they can so the organization can attain its goals. At T-Mobile,
Nokes visited call centers, conducted focus groups, and had town hall meetings to find out what employees and
customers were unhappy with and what steps she could take to improve matters.95
Her philosophy was that when employees are satisfied with their jobs and view their work as important, they are much
more likely to provide high-quality customer service. She made employees aware of how important their jobs were by
the many steps she took to improve their working conditions, ranging from providing them with their own workspaces to
substantially raising their salaries.96
She emphasized the importance of providing excellent customer service by periodically asking employees what was
working well and what was not working well, asking them what steps could be taken to improve problem areas,
and taking actions to ensure that employees were able to provide excellent customer service.

Nokes also instituted a performance measurement system to track performance in key areas such as quality of service
and speed of problem resolution.97 She sincerely told employees, “You are No. 1, and the customer is why.”98
2. Transformational managers make their subordinates aware of the subordinates’ own needs for personal growth,
development, and accomplishment. Nokes made T-Mobile’s employees aware of their own needs in this regard by
transforming training and development at T-Mobile and increasing opportunities for promotions to more responsible
positions. Employees now spend over 130 hours per year in training and development

3. Transformational managers motivate their subordinates to work for the good of the organization as a whole, not
just for their own personal gain or benefit. Nokes emphasized that employees should focus on what matters to
customers, coworkers, and T-Mobile as a whole. She let employees know that when they were unnecessarily absent
from their jobs, they were not doing right by their coworkers. And she emphasized the need to try to resolve
customer problems in a single phone call so customers can get on with their busy lives.1

Being a Charismatic Leader

Transformational managers such as Nokes are charismatic leaders. They have a vision of how good things could be
in their work groups and organizations that is in contrast with the status quo. Their vision usually entails dramatic
improvements in group and organizational performance as a result of changes in the organization’s structure,
culture, strategy, decision making, and other critical processes and factors. This vision paves the way for gaining a
competitive advantage.
Stimulating Subordinates Intellectually
Transformational managers openly share information with their subordinates so they are aware of problems and the
need for change. The manager causes subordinates to view problems in their groups and throughout the organization
from a different perspective, consistent with the manager’s vision. Whereas in the past subordinates might not have
been aware of some problems, may have viewed problems as a “management issue” beyond their concern, or may
have viewed problems as insurmountable, the transformational manager’s intellectual stimulation leads subordinates
to view problems as challenges that they can and will meet and conquer. The manager engages and empowers
subordinates to take personal responsibility for helping to solve problems, as did Nokes at T-Mobile.10
Engaging in Developmental Consideration
When managers engage in developmental consideration, they not only perform the consideration
behaviors described earlier, such as demonstrating true concern for the well-being of
subordinates, but also go one step further.

The manager goes out of his or her way to support and encourage subordinates, giving them opportunities
to enhance their skills and capabilities and to grow and excel on the job.103 As mentioned earlier, Nokes did
this in numerous ways.

In fact, after she first met with employees in a call center in Albuquerque, New Mexico, Karen Viola, the
manager of the call center, said, “Everyone came out crying.

The people said that they had never felt so inspired in their lives, and that they had never met with any
leader at that level who [they felt] cared.”104
The Distinction between Transformational
and Transactional Leadership
Transformational leadership is often contrasted with transactional leadership. In transactional leadership, managers
use their reward and coercive powers to encourage high performance.

When managers reward high performers, reprimand or otherwise punish low performers, and motivate
subordinates by reinforcing desired behaviors and extinguishing or punishing undesired ones, they are engaging in
transactional leadership.105 Managers who effectively influence their subordinates to achieve goals, yet do not seem
to be making the kind of dramatic changes that are part of transformational leadership, are engaging in
transactional leadership.
 The increasing number of women entering the ranks of management, as well as the problems some women
face in their efforts to be hired as managers or promoted into management positions, has prompted
researchers to explore the relationship between gender and leadership.

Although there are relatively more women in management positions today than there were 10 years ago,
there are still relatively few women in top management and, in some organizations, even in middle
management.

Do the moods and emotions leaders experience on the job influence their behavior and effectiveness as
leaders? Research suggests this is likely to be the case. For example, one study found that when store
managers experienced positive moods at work, salespeople in their stores provided high-quality
customer service and were less likely to quit.119
Another study found that groups whose leaders experienced positive moods had better coordination,
whereas groups whose leaders experienced negative moods exerted more effort; members of groups
with leaders in positive moods also tended to experience more positive moods themselves; and
members of groups with leaders in negative moods tended to experience more negative moods.12