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CHAPTER 8 LEADERSHIP Slide 2 Learning Objectives After studying this chapter, you should be able to explain: Primary leadership theories and how culture affects them in different settings How culture and the institutional setting of a multinational enterprise may necessitate changes in leadership style An examination of different traits, competencies, and behaviors that leaders require when working with different cultures and strategic situations Slide 3 What is Leadership? Leaders are individuals who significantly affect the thoughts and behaviors of others through persuasion and influence. Leadership involves the ability to inspire the thinking, attitudes, and actions of a variety of individuals and cultures. Leadership involves influencing, motivating, and assisting followers to desired levels of performance. Slide 4 Leadership Theories Can be broadly divided into 4 categories: Trait theories Behavioral theories Contingency theories Implicit theories Slide 5 Leadership Theories Trait theories of leadership Trait theory states that people have underlying traits or characteristics that lead to either superior leader or follower performance. Traits include a leaders knowledge, natural and learned abilities, values, and personality traits. Leaders come in all shapes and sizes, and all races and genders. Slide 6 Leadership theories Trait theories of leadership (cont.) Common personality traits include charisma, confidence, vision for the organization or team, decisiveness, and internal locus of control Internal locus of control refers to whether people feel they can control things themselves or whether forces outside them control their future. Slide 7 Slide 8 Leadership Theories Trait theories of leadership (cont.) Transformational leadership is one type of leadership associated with charisma. Charisma is the ability to inspire or influence others. Example: Adolf Hitler, Benito Mussolini, and Joseph Stalin Charismatic leadership that combines learned skills with the ability to transform an organization in new, substantive ways is called transformational leadership. Transformational leaders are visionary agents with a sense of mission who are capable of motivating their followers to accept new goals and new ways of doing things. Slide 9 Leadership Theories Trait theories of leadership (cont.) Charismatic leaders can transform organizations by defining the need for change, creating new visions, and mobilizing commitment to these visions. Getting followers to transcend their own self- interests and focusing on the needs of their colleagues and the organization. Slide 10 Leadership Theories Trait theories of leadership (cont.) Charismatic leadership has a positive effect both in terms of organizational performance and on follower satisfaction, organizational and team commitment, and organizational identification. Effective transformational leaders articulate a realistic vision of the future that can be shared, stimulate subordinates intellectually, and attend to the differences among subordinates Slide 11 Slide 12 Leadership Theories Trait theories of leadership (cont.) Transformational/charismatic leadership is traditionally contrasted with transactional leadership. A transactional leader is one who recognizes follower needs and tries to ensure that the organization satisfies those needs if employee performance warrants it. Slide 13 Leadership Theories Transactional leadership First introduced by James MacGregor Burns Transactional leaders use extrinsic motivators effectively and also seek to acquire more followers through exchange process Transactional leaders are individuals who exchange rewards for effort and performance and work on a something for something basis. Some argue that transactional leadership is the best approach in dealing with followers in emerging markets where people are poorer and likely to be motivated by what Maslow would refer to as lower- order, material needs, such as money and housing Slide 14 Leadership Theories Can you differentiate transformational from Transactional Leadership? (a). (b). ( c). (d). Slide 15 Leadership Theories Behavioral theories of leadership States that specific, learned behaviors can differentiate leaders from non-leaders or successful leaders from unsuccessful leaders, and these behaviors can be learned. Effective leadership behaviors can be identified and taught to prospective leaders. The initial studies were done at Ohio State University (1950s) and University of Michigan (1960s) to establish the domain of behavioral leadership. Slide 16 Leadership Theories Ohio State/Michigan Studies The two dimensions of leader behavior are task orientation and people orientation. Task orientation behaviors include: Assigning employees to specific tasks. Clarifying their work duties and procedures. Ensuring that they follow company rules. Pushing them to reach their performance capacity. Slide 17 Leadership Theories Behavioral theories of leadership (cont.) People orientation behaviors include: Showing mutual trust and respect for subordinates. Seeking to meet employee needs to build relationships and loyalty to the company. Identifying employee well being to reduce turnover. Both studies argued that leadership behavior could be taught, and stressed the importance of a leader being high on both the task and people dimensions Slide 18 Leadership grid A similar behavioral leadership theory was the Leadership Grid This grid identifies various types of leadership behavior based on two independent dimensions: concern for production and concern for people. The categories are based on a 9 by 9 matrix. Similar to Ohio/Michigan Studies, effective leaders must show high concern for both production and for people, and work to encourage employees to reach their highest levels of achievement Different cultures will find different positions on the leadership grid to be most effective. Leadership Theories Slide 19 Slide 20 Contingency theory A theory in which the type of leadership needed is based on the situation being faced. The two fundamental types of leadership are task orientation and relationship orientation. Leaders must adjust their management style to best handle different situations and to meet employee needs Sometimes leaders may generally be considered a 9,9, but at times must behave as a 9,1. Leadership Theories Slide 21 Contingency theory (cont.) Fiedlers Contingency Theory Two fundamental types of leadership: task orientation and relationship orientation Relationship oriented leaders want to be liked by their subordinates and to get along with them. They are referred to as high-LPC leaders as they describe their LPC (Least Preferred Coworker) in relatively positive terms. Leadership Theories Slide 22 Contingency theory (cont.) Task oriented leaders want their subordinates to perform at high level and accomplish their assigned goals. They are referred to as low-LPC as they describe their LPC in relatively negative terms. Leadership Theories Slide 23 Contingency theory (cont.) The best leadership style is determined by three contingencies: Leader-member relationship - Includes the degree of confidence that followers have in their leader, the loyalty given to the leader, and the leaders appeal. Task structure - The degree to which employees tasks are routine, in contrast to varied tasks. Power inherent in the leadership position - Includes rewards and sanctions available to the position, the leaders formal authority, and the support the leader receives from supervisors and the organization. Leadership Theories Slide 24 International perspective on contingency theory Leaders from different cultures vary in the assumptions they make about how to lead. While deciding the leadership style, managers must consider both the culture in which they are working and the nature of the work environment in which the firm is located. Leadership Theories Slide 25 HerseyBlanchard Situational Leadership theory States that effective leaders must vary their style of leadership based on the employees level of maturity. An employees maturity is determined by job maturity and psychological maturity. Leadership Theories Slide 26 HerseyBlanchard Situational Leadership theory (cont.) The four levels of employee maturity are: Telling employees what to do and how to do. (lowest level) Selling ideas to the employees. Participating with the employees. Delegating to employees. (highest level) Leadership Theories Slide 27 International perspective on the Hersey Blanchard theory Managers moving from a low power-distance country to a higher power-distance country have to alter their style to fit that new environment. Employees in high power countries would expect their bosses to be directive and formal, but would prefer mentoring as they mature. Leadership Theories Slide 28 Path-Goal theory Proposes that the most successful leaders are those who increase subordinate motivation by charting out and clarifying the paths to high performance. Is based on the Expectancy theory of motivation. The four different leadership styles include achievement-oriented, participative, supportive, and directive. Leadership Theories Slide 29 Path-Goal theory (cont.) Achievement oriented - Challenging goals are set and high performance encouraged. Participative leadership - Decision making is based on group consultation with information shared in the group. Supportive leadership - Good relations are maintained with the group and sensitivity to subordinate needs. Directive leadership - Specific advice is given to the group and ground rules are established. Leadership Theories Slide 30 International perspective on the PathGoal theory Achievement oriented leadership is appropriate when the employee is not challenged, tends to be mature, and knows his or her job very well. Directive leadership style is appropriate when the follower has an ambiguous job or may not be ready to work independently. Leadership Theories Slide 31 International perspective on the PathGoal theory (cont.) Participative leadership is appropriate when the employee is using improper procedures or is making poor decisions, and needs help to uncover these problems. Supportive leadership is appropriate when the employees lack self confidence or have gone through a difficult time at work. Leadership Theories Slide 32 VroomYetton theory Focuses on how leaders make business decisions. Is applied using a decision tree. The leader makes decisions in one of five different ways: Autocratic 1Problem is solved using information already available. Autocratic 2Additional information is obtained from group before leader makes decision. Leadership Theories Slide 33 VroomYetton theory The leader makes decisions in one of five different ways (cont.): Consultative 1Leader discusses problem with subordinates individually before making a decision. Consultative 2Problem is discussed with the group before decision is made. Group 2Group makes decision about a problem, with leader simply acting as chair. Leadership Theories Slide 34 International perspective on the Vroom Yetton theory The theory is useful in universalistic societies that have a predilection to low hierarchy and power distance. It may be less useful in societies that are higher in power distance, are more formal, hierarchical, and particularistic. Leadership Theories Slide 35 Slide 36 Coercive leadership style works well in higher power-distance cultures as they are more likely to believe that leaders should act in this way. Authoritative leadership works well in high power-distance situations with strong group relationships. New Views on International Leadership Slide 37 Affiliative leadership is more likely to be successful where there are lower levels of power distance and more focus on individuality. Democratic leadership is associated with low power distance and a strong emphasis on individuality. New Views on International Leadership Slide 38 Pacesetting leaders are preferred in cultures that are very high in masculinity, and these do not work well with higher quality-of-life cultures. The coaching style is most effective when people on the receiving end are supportive of its use. New Views on International Leadership Slide 39 Implicit leadership Recognizes the process by which persons are perceived as leaders and follows the same basic social-cognitive processes that occur in other contexts of perceptions of persons. An individuals implicit theory of leadership refers to beliefs held about leaders characteristics and behaviors. New Views on International Leadership Slide 40 Connecting Leadership and Culture Power distance and leadership Participatory leadership is not suitable for all cultures. Employees in high power-distance cultures expect a manager to act as a strong leader, and become uncomfortable with leaders delegating decisions. In a culture that endorses a more authoritarian style, leader sensitivity might be interpreted as being weak. Slide 41 Connecting Leadership and Culture Power distance and leadership (cont.) In cultures endorsing a more nurturing style, leader sensitivity is likely to prove essential for effective leadership. Lower power-distance societies prefer their leaders to empower and encourage employee participation in decision making. Slide 42 Connecting Leadership and Culture Uncertainty avoidance and leadership Leaders in high uncertainty-avoidance cultures are more directive and rely on rules to help guide their decision making; this is not expected in low uncertainty avoidance cultures. Individualism and leadership A high degree of individualism implies that leaders must allow employees to make decisions about their work. Slide 43 Connecting Leadership and Culture Masculinity and leadership Countries high in masculinity will place emphasis on male leadership, and production along the lines of the 9,1 leader. Countries lower on the masculinity scale could have female leaders, and place more value on relations and quality of life in the company. Slide 44 Overview of Culture and Leadership Potential conflicts can arise when actions are not consistent with the culture. In all cultures, a leader must build trust with followers, have a high degree of integrity, and must be perceived as treating everyone fairly.