Management of Business Unit 1

Leadership

Prepared by Miss Wynter

What is
Leadership?
A leader is anyone who
influences others. While the
definition of leadership varies, the
term is commonly defined as the
process of influencing people
towards a specific or common
goal.
Leadership, cont'd.
• For leadership to be effective, the leader must have some form of influence or
power over the people being led. ‘Power’ is defined as having the potential or
capability to influence the actions of others. Leaders get their power from a
few sources including:
• Reward power – this is associated with the distribution of rewards to
employees. These rewards can be monetary or non-monetary and can be used
to alter or influence employees’ behaviour.
• Coercive power – this is where the leader exercises control over employees and
the activities that take place in the organisation. As the leader is in control,
he/she has the ability to mete out whatever punishment or sanction is
necessary to correct the mishap.
 Leadership, cont'd.
• Legitimate power – power here comes from the belief that the leader
has the right, by virtue of his/her position, to give orders and
instructions. For example, in the classroom, the students are expected
to adhere to the teacher’s instruction by virtue of his/her position.
• Expert power – this stems from the ability and knowledge of the leader.
Employees believe that the individual has significant knowledge and
skills in the area involved and so power is accorded to him.
• Referent power – this source of power is largely based on the qualities
of the leader. These characteristics help the leader to earn the respect
of the subordinates who also emulate his/her behaviour.
Leadership •Several theorists focus on
leadership in the organisation.
Theories Some of their views are similar,
while others are very different.
•We will be focusing on
McGregor’s Theory X and Theory
Y, and the Trait Theory.
Theory X & Y
Theory X and Theory Y
• In the 1960s, Douglas McGregor made his mark
on research into leadership and motivation.
• He proposed two theories on how employees’
level of motivation may be affected by the
leadership style of management. He called
these theories ‘Theory X’ and ‘Theory Y’.
• Douglas McGregor suggested that managers will
adopt one of the two styles, depending on their
beliefs and views of the employees.
• Managers who still hold the traditional view of
management were referred to as Theory X while
those who held a more humanistic view were
referred to as Theory Y managers .
Theory X
• McGregor states that the Theory X manager assumes
that:
• There is an inherit dislike for work in the average human and
they will seek to avoid work if possible.
• As a result of the first assumption, workers must be coerced,
controlled, directed or threatened to get them to work.
• People possess little ambition and will avoid responsibility
and so they prefer to be directed.
• Being self-centred, the average person will not be concerned
about the goals of the organisation.
 Theory X, Cont'd.

• Managers who hold Theory X assumptions about their employees are

likely to have autocratic traits.
• They believe that organization's objectives will be achieved through
coercion, discipline and penalties.
• Theory X managers are of the view that money and security are people's
main motivation to work. As a result, firms under such management will
depend largely on money and benefits to satisfy employees' needs.
Theory Y
• McGregor states that the Theory Y manager assumes that:
• People do not inherently dislike work but instead work is as natural as play or
rest.
• Employees will exercise self-direction and self-control as they seek to fulfil the
firm’s objectives.
• People will seek responsibility under the proper working conditions.
• People possess the skills, imagination, ingenuity and creativity needed to solve
the organisation’s problems.
• The intellectual potential of humans is only partially being utilised.
 Theory Y, Cont'd.
• Managers who hold Theory Y assumptions about
their employees are likely to be democratic.
• They usually believe that the organisation's objectives will be
achieved through involvement of employees in decision
making.
The Trait Theory
The Trait Theory
• The trait approach to leadership seeks to identify the characteristics of
leaders and how these characteristics affect effectiveness.
• Its main assumption is that effective leaders are born not made.
• In its early days after inception this theory was sometimes referred to as the
'great man' theory which suggests that individuals are different in terms of
their traits.
The Trait Theory, Cont’d.
• A 'trait' is defined as a distinguishing feature in character, appearance
or habit from which an individual's personality is formed and can be
identified.
• Traits are often used to distinguish leaders from non-leaders.
 Categories Physiological (appearance, height and
weight)
of Traits Demographic (age, education and
socio-economic background)
• The traits identified may range Social (sociability and
from different categories, cooperativeness)
including:
Personality (self-confidence and
aggressiveness)
Intellectual (intelligence, decisiveness,
judgement and knowledge).
 Trait Theory Core Traits
Some of the core traits that a good leader should possess:
• A drive to achieve – there should be a high level of effort, ambition, energy and initiative
• Motivated leader – possessing an intense desire to influence others to reach common goals
• Honesty and integrity – the leader should be trustworthy and reliable
• High level of self-confidence
• Strong cognitive ability – should be able to exercise good judgement and possess strong
analytical abilities and conceptual skills
• Knowledgeable – must be conversant with the industry and the technicality of the type of
business
• Possess good social skills and flexibility
• Display emotional maturity
 Advantages & Disadvantages of Trait Theory
Advantages of Trait Theory • It is used as a yardstick to assess an individual’s leadership traits
• It outlines, in a detailed way, the leader (individual) element in the
process of leadership
• The basis of the theory has been validated by several other pieces
of research.

Disadvantages Trait Theory • It lends itself to subjectivity

• The traits of successful leaders tend to run to a very long list
• Equating physical traits, such as height and weight, may not be the
best tool for measuring effective leadership
• The traits that are needed for one organisation may be very
different from those needed for another
• In several cases, the trait needed depends on the situation in which
the leader is leading. Therefore, the is no uniformity.
LEADERSHIP STYLES
 Leadership Styles- Democratic
• Democratic or participative - The democratic leadership style is one where the
leader allows employees to share their ideas and suggestions and participate
in the decision-making process.
• This leader delegates authority to subordinates but retains ultimate
responsibility.
• The leader may seek employees’ views prior to a decision being made or
may share the decision and then try to convince workers that it was the
correct one.
 Leadership Styles- Laissez-faire
• Laissez-faire- This is the most liberal of all the leadership styles. The
leader is seen as the representative of the group of people being led and
acts on their behalf.
• The leader is mostly responsible for setting the business objectives,
which should be unambiguous. The subordinates are given autonomy
to carry out their own activities and make decisions as far as possible
in order to achieve the objectives.
• The success of this style of leadership often depends on the level of
competence, skill and reliability of the employees. Since workers are
given the chance to carry out their own work, this type of leadership
often leads to a high level of motivation.
 Leadership Styles- Transformational

• A leader using the transformational leadership style seeks to inspire his/her

subordinates to achieve a shared goal or objective. The transformational
leader is well involved in the day-to-day activities of the firm and communicates
well with subordinates.
• This style of leadership involves the delegation of responsibility to subordinates
rather than ‘leading from the front’.
 Leadership Styles- Transformational, Cont’d.

• The transformational leadership style is highlighted by the following:

• Stimulation of subordinates to be creative and to develop innovative ways
to solve problems.
• The transformational leader gives individualized attention to subordinates
and allows for one-on-one conversation.
• Transformational leaders are motivators as they are able to influence
subordinates to reach their full potential
• This type of leader is able to garner trust and respect from subordinates
• Promotes intelligence and rationality.
FACTORS INFLUENCING THE CHOICE OF
LEADERSHIP STYLE
 Factors Influencing The Choice Of
Leadership Style, Cont’d.
• Different leaders practice different leadership styles. However, the extent to which a particular
style of leadership is utilized may depend on a number of factors, among them being:
• Time pressures – the length of time available for the completion of a project will determine
the style of leadership that is employed by the leader. Where there is challenge in terms of
the time available, the leader tends to make all the decisions instead of consulting with
the employees.
• Organizational culture – over time, the employees of the organization will develop a certain
lifestyle and culture. An organization with a warm culture tends to have a more
participative leadership style where employees and management trust each other and
consultation is the norm.
 Factors Influencing The Choice Of
Leadership Style, Cont’d.

• Staff size (span of control) – leaders in very large firms may find it difficult to consult
employees on every decision. In order to maintain underlying standards, management may
have to make decisions itself.
• Attitude of subordinates – some employees prefer to be led rather than sharing in decision
making. This could be as a result of low self-esteem, past experiences or their personality
types.
• Skill level of the labour force – the leader should be aware of the ability and skill level of
the labour force. A highly skilled labour force can be trusted to share ideas and make
suggestions which, if implemented, may lead to success. These employees are more likely
to work on their own to accomplish the objectives of the firm.
 Factors Influencing The Choice Of
Leadership Style, Cont’d.

• Personality of the leader – this is perhaps one of the most difficult factors to correct. It is
based on the innate or learned traits of the leader. Some leaders have autocratic
tendencies and hence will not utilize any other leadership style.
• The nature of the task – in practice, not all decisions that are made can go through
consultation. The leader may have to make a drastic decision based on its urgency.
There are also times when a leader has to make a unilateral decision because of its
nature and the impact it is expected to have on the organization.
LEADERSHIP ROLES
 Leadership Roles

• Guidance- A leader is often seen as a guide and subordinates look to the

leader to provide guidance on how to complete a task.
• Direction- A leader should be able to provide his/her subordinates with a
sense of direction. There must be a clear view of where the organization
is going and how it plans to get there.
• Counselling- It is almost inevitable for employees of an organization to
have conflicts and concerns that they need to offload. With this in mind,
the leader has to play the role of counsellor.
 Leadership Roles, Cont;’d.

• Coaching ‘Coaching’- is defined as the process of training

and providing employees with the necessary knowledge and
tools to carry out their job responsibilities effectively. In the
organization, the leader has to play the role of coach as
he/she is expected to train and equip employees for the task
at hand.
• Inspiration of others- It is very interesting how some people
influence others to do wrong, knowing the consequences of
their actions. However, a leader plays an integral role in the
lives of his/her followers – that is, the role of inspiration. The
leader should be able to inspire subordinates to work
assiduously to complete the given task.
INFORMAL LEADERSHIP
 Informal Leadership

• An informal leader is a person who does not have

formal authority in the firm but who has been able
to inspire and motivate his/her peers to achieve a
desire or set of goals. These leaders are often
charismatic and influential and often get others to
follow them.
• Such leaders are particularly important to firms
even though their contribution is often
unrecognized by management.
 Informal Leadership Roles

• The role of the informal leader may include, but is

not limited to, the following:
• Motivating and inspiring peers and team
members to achieve the stated objectives
• Being the driver of a business concept ‘on the
ground’ to achieve positive results
• Bridging the communication gap between
management and employees Offering
mentorship and support for others.
Informal Leadership – Advantages

• Can motivate the workforce, which could

eventually improve productivity
• Tends to improve the employees’ social
relationships, thus building self-esteem
• Suggestions from informal leaders could
be implemented by management since
they are the ones ‘on the ground’
• Informal leaders often know how to get
the work out and so can be used to
communicate directly with employees.
 Informal Leadership – Disadvantages

• The informal leader could use his/her

influence to resist changes in the firm
• Could result in employees being ill
informed about matters within the
organization.
The End.