CHAPTER 3 LEADERSHIP THEORIES –

STYLES AND BEHAVIOURS

 Topics

• Meaning of leadership= use of power and influence

• Are leaders born or made? Trait theory vs Behavioral theory
• Leader- Member Exchange Theory (LMX)
• Leader effectiveness vs Trait (theory) – can we generalize over their correlation? (Are
leaders born or made?)
• Leader Decision making Styles
• The time-driven model of leadership - shift focus from leaders style to situations
• Day-to-day Leadership Behaviors - initiating structure vs Consideration
• The life cycle theory of leadership – leaderhip success depends on the readiness of
employees
• Transformational Leadership
• Transactional leadership
 LEARNING GOALS

• What is leadership and what does it mean for a leader to be “effective”?

• What traits and characteristics are related to leader emergence and leader effectiveness?
• What four styles can leaders use to make decisions, and what factors combine to make
these styles more effective in a given situation?
• What two dimensions capture most of the day-to-day leadership behaviors in which
leaders engage?
• How does transformational leadership differ from transactional leadership, and which
behaviors set it apart?
 Lecture Highlights 1

1. Meaning of leadership= use of power and influence

2. Leader- Member Exchange Theory (LMX) : Class Activity - let the students read
about it from the slides and reflect on the following points:
- meaning of LMX
- in-groups vs outgroups
- Two phases of LMX: Role taking phase (communicating expectation) vs.
Role making phase (owning expectation)
- Results of the two phases: Dyadic relationships-
a) high-quality exchange dyad – frequent exchange of information + high level
of trust/respect/obligation….. Sounds like an inner circle!
b) low-quality exchange dyad - limited exchange of information + low level of
trust/respect/obligation
 Lecture Highlights 2
3. Effective vs. not effective leaders – what is the signal for this?
4. Leader effectiveness vs Trait (theory) – can we generalize over their
correlation?
(Are leaders born or made?) vs Behavioural
Theory (experience, education etc makes you a
leader)
5. Leader emergence vs trait(theory) - can we generalize trait (theory)
predicts leader emergence?
 Lecture Highlights 3
6. Leader Decision making Styles
Autocratic – gets no followers opinion
Consultative – gets followers opinion but ultimately
decides him/herself
Facilitative - decides together with followers, his
vote receives no higher value than any other member
Delegative – leader leaves the decision to followers
with certain condtions or ( Autocratic, democratic, and
laissez-faire)
 Reading assignment from the slides
• The time-driven model of leadership: shift focus from leaders style to situations
• Day-to-day Leadership Behaviors: initiating structure vs Consideration
• The life cycle theory of leadership: leaderhip success depends on the readiness of
employees
• Transactional leadership – carrot and stick approach. Based on reward or
punishment/disciplining
• Transformational Leadership - involves inspiring followers to commit to a shared vision.
It is leading by motivating and convincing employees that they can exceeed
expectations.
 Reading Assignment from the PowerPoint notes

• The time-driven model of leadership – states that focus should be on the decision making
situation. The situation dictates the leadership style to use.
•  
• DAY-TO-DAY LEADERSHIP BEHAVIORS – initiating structure (issuing commands and
orders) and Consideration (caring for, supporting and encouraging employees)
•  
• The life cycle theory of leadership (sometimes also called the situational model of leadership)
argues that the optimal combination of initiating structure and consideration or that means successful
leadership depends on the readiness of the employees in the work unit.
•  
 Reading Assignment from the PowerPoint notes -
Transformational Leadearship

Transformational Leadership – encouraging employees to exceed expectations and set

challenging goals
• Dimensions of Transformational leadership
• idealized influence – leading by example
• inspirational motivation – motivating and inspiring others such as through motivational speech to
have bigger ambition and challenging goals
• intellectual stimulation - encouraging employees to be creating and innovative
• individualized consideration – coaching, developing, and mentoring followers/employees
 
 Reading Assignment from the PowerPoint notes – transactional
leadership

• Transactional Leadership - leadership based on rewarding (carrot) or disciplining

(stick)
• Transactional: Passive Management by Exception - the leader waits around
for mistakes and errors, then takes corrective action as necessary.
• Transactional: Active Management by Exception - the leader arranges to monitor
mistakes and errors actively and again takes corrective action when required.
• Transactional: Contingent Reward – the leader provides rewards in exchange for
adequate performance.
 Meaning of Leadership

• What is leadership?
 Leadership
• Leadership is defined as the use of power and influence to direct the activities of
followers toward goal achievement.
• That direction can affect followers’ interpretation of events, the organization of
their work activities, their commitment to key goals, their relationships with other
followers, or their access to cooperation and support from other work units.
• It is also important to be aware that leaders get the power and influence needed
to direct others from various sources (personal/charismatic, positional/authority,
expert/knowledge, etc. )
 Leader–member exchange (LMX) theory

• This contemporary leadership theory argues that, because of time

pressures, leaders establish a special relationship with a small group of
their followers.
• These individuals make up the ingroup they are trusted, get a is
proportionate amount of the leader’s attention, and are more likely to
receive special privileges.
• Other followers fall into the outgroup.
Leader–member exchange (LMX) theory
• The theory proposes that early in the history of the interaction between a
leader and a given follower, the leader implicitly categorizes the follower
as an “in” or an “out” and that relationship is relatively stable over time.
• Leaders induce LMX by rewarding those employees with whom they
want a closer linkage and punishing those with whom they do not. But for
the LMX relationship to remain intact, the leader and the follower must
invest in the relationship.
 The leader–member exchange (LMX)
Theory
• So, the leader–member exchange (LMX) theory is a relationship-based
approach to leadership that focuses on the two-way (dyadic) relationship
between leaders and followers
 The leader–member exchange (LMX)
Theory

• It suggests that leaders develop an exchange with each of their

subordinates, and that the quality of these leader–member exchange
relationships influences subordinates' responsibility, decisions, and access
to resources and performance.
 The leader–member exchange (LMX)
Theory
• Relationships are based on trust and respect and are often emotional
relationships that extend beyond the scope of employment.[
• Leader–member exchange may promote positive employment experiences
and augment organizational effectiveness.
•  It is widely used by many managers and is replacing many of its
predecessors.
 The leader–member exchange (LMX)
Theory: two phases

• Role taking phase, and

• Role making phase
 The leader–member exchange (LMX)
Theory: Role Taking
• The theory argues that new leader–member relationships are typically
marked by a role taking phase, during which a manager describes role
expectations to an employee and the employee attempts to fulfill those
expectations with his or her job behaviors.
• In this period of sampling and experimentation, the leader tries to get a
feel for the talent and motivation levels of the employee.
 The leader–member exchange (LMX)
Theory: Role making phase
• For some employees, that initial role taking phase may eventually be
supplemented by role making, during which the employee’s own
expectations.
• The role making process is marked by a free-flowing exchange in which
the leader offers more opportunities and resources and the employee
contributes more activities and effort.
Results of role taking and role making process

• Over time, the role taking and role making processes result in two general
types of leader– member dyads:

1. high-quality exchange dyad

2. low-quality exchange dyad
 High Quality Exchange Dyads
• High-quality exchange dyad is marked by the frequent exchange of
information, influence, latitude(freedom/autonomy), support, and
attention.

• Those dyads form the leader’s “in-group” and are characterized by higher
levels of mutual trust, respect, and obligation.
 High Quality Exchange Dyads
• The other type is the “low-quality exchange” dyad, marked by a more
limited exchange of information, influence, latitude, support, and
attention.

• Those dyads form the leader’s “outgroup” and are characterized by lower
levels of trust, respect, and obligation.
Leader Member Exchange Theory
Figure 1 Leader Member Exchange Theory
Member (Low quality
exchange - outgroup

Member

(High quality Member (Low quality

exchange – ingroup) exchange - outgroup
Leader

Member
Leader “Ingroups” have:
(High quality exchange – in
Greater mutual trust group)
Greater respect

Higher felt obligation

 Leader Member Exchange Theory

• Generally, just how the leader chooses who falls into

each category is unclear, but there is evidence ingroup
members have demographic, attitude, and personality
characteristics similar to those of their leader or a
higher level of competence than outgroup members
WHY ARE SOME LEADERS MORE
EFFECTIVE THAN OTHERS?

What is leadership effectiveness or effective leadership?

 Effective leadership

• Leader effectiveness is defined as the degree to which

the leader’s actions result in the achievement of the
unit’s goals, the continued commitment of the unit’s
employees, and the development of mutual trust,
respect, and obligation in leader–member dyads.
 Effective leadership vs Trait perspective
• Beginning as far back as 1904, research on leadership has attempted to
answer such questions by looking for particular traits or characteristics of
effective leaders.
• The search for traits and characteristics is consistent with “great person”
theories of leadership that suggest that “leaders are born, not made.” -
AKA the trait theory
 Effective leadership vs Trait perspective
• Early research in this area frequently focused on physical features (e.g.,
gender, height, physical attractiveness, energy level), whereas subsequent
research focused more squarely on personality and ability
• After a century of research, leadership scholars now acknowledge that
there is no generalizable profile of effective leaders from a trait
perspective.
 Trait Theory vs Leader emergence and leader
effectiveness

• Most studies have concluded that traits are more predictive of leader
emergence (i.e., who becomes a leader in the first place) than they are of
leader effectiveness (i.e., how well people actually do in a leadership
role).
Traits and characteristics Related to leader
emergence and leader effectiveness
 LEADER DECISION-MAKING STYLES

Three important points -

• Decision making is one of the most important things leaders do.
• Leaders apply various decision making styles
• There are four decision making styles that leaders apply

AKA Leadership Styles!

Leader Decision Making Styles
 Autocratic style
• With an autocratic style, the leader makes the decision alone without
asking for the opinions or suggestions of the employees in the work unit.
• The employees may provide information that the leader needs but are not
asked to generate or evaluate potential solutions.
• In fact, they may not even be told about the decision that needs to be
made, knowing only that the leader wants information for some reason.
Advantage – quick decisions
 Consultative
style
• With a consultative style, the leader presents the problem to individual
employees or a group of employees, asking
• for their opinions and suggestions before ultimately making the decision
him- or herself.
• With this style, employees do “have a say” in the process, but the ultimate
authority still rests with the leader.
 Facilitative style
• That ultimate authority changes with a facilitative style, in which the
leader presents the problem to a group of employees and seeks consensus
on a solution, making sure that his or her own opinion receives no more
weight than anyone else’s.
• With this style, the leader is more facilitator than decision maker.
 Delegative Style
• With a delegative style, the leader gives an individual employee or a
group of employees the responsibility for making the decision within
some set of specified boundary conditions.
• The leader plays no role in the deliberations unless asked, though he or
she may offer encouragement and provide necessary resources behind the
scenes.
 WHEN ARE THE STYLES MOST EFFECTIVE?

Which decision-making style is best?

• As you may have guessed, there is no one decision-making style that’s

effective across all situations, and all styles have their pluses and minuses.
 Factors to consider in choosing a decision
style
• There are many factors to consider when leaders choose a decision-
making style.
• Research studies have repeatedly shown that allowing employees to
participate in decision making increases their job satisfaction.
• Such participation also helps develop employees’ own decision-making
skills.
 How can leaders effectively manage their
choice of decision-making styles?
• They may apply - The time-driven model of leadership!

• The time-driven model of leadership offers one potential guide. It

suggests that the focus should shift away from autocratic, consultative,
facilitative, and delegative leaders to autocratic, consultative, facilitative,
and delegative situations. (i.e, from leaders to situations)
 The time-driven model of leadership

• The model suggests that seven factors combine to make some decision-
making styles more effective in a given situation and other styles less
effective.
 The time-driven model of leadership – the
seven factors
1. Decision significance
2. Importance of commitment ∙
3. Leader expertise
4. Likelihood of commitment
5. Shared objectives
6. Employee expertise
7. Teamwork skills
 The time-driven model of leadership – the
seven factors
1. Decision significance: Is the decision significant to the success of the project or the organization?
2. Importance of commitment: Is it important that employees “buy in” to the decision? ∙
3. Leader expertise: Does the leader have significant knowledge or expertise regarding the problem?
4. Likelihood of commitment: How likely is it that employees will trust the leader’s decision and commit to
it?
5. Shared objectives: Do employees share and support the same objectives, or do they have an agenda of their
own?
6. Employee expertise: Do the employees have significant knowledge or expertise regarding the problem?
7. Teamwork skills: Do the employees have the ability to work together to solve the problem, or will they
struggle with conflicts or inefficiencies?
 The seven Factors and the four leadership
styles
• Autocratic styles are reserved for decisions that are insignificant or
for which employee commitment is unimportant.
• Go autocratic way when the leader’s expertise is high and the leader is
trusted.
• An autocratic style in these situations should result in an accurate decision
that makes the most efficient use of employees’ time.
 The seven Factors and the four leadership
styles
• Delegative styles should be reserved for
circumstances in which employees have strong
teamwork skills and are not likely to commit
blindly to whatever decision the leader provides.
 The seven Factors and the four leadership
styles
• Deciding between the remaining two styles—
consultative and facilitative—is more nuanced
and requires a more complete consideration of all
seven factors.
 DAY-TO-DAY LEADERSHIP
BEHAVIORS

- Leaving aside how they go about making decisions, what do leaders

do on a day-to-day basis?
- When you think about bosses that you’ve had, what behaviors did
they tend to perform as part of their daily leadership responsibilities?
 DAY-TO-DAY LEADERSHIP
BEHAVIORS

• A series of studies at Ohio State in the 1950s attempted to answer that

question. Working under grants from the Office of Naval Research and the
International Harvester Company, the studies began by generating a list of
all the behaviors leaders engage in—around 1,800 in all.
• Those behaviors were trimmed down to 150 specific examples, then
grouped into several categories, as shown in the next table.
 DAY-TO-DAY LEADERSHIP
BEHAVIORS

• The table reveals that many leaders spend their time engaging in a mix of
initiating, organizing, producing, socializing, integrating, communicating,
recognizing, and representing behaviors
• Although eight categories are easier to remember than 1,800 behaviors,
further analyses suggested that the categories in the table below really boil
down to just two dimensions: initiating structure and consideration
 DAY-TO-DAY LEADERSHIP
BEHAVIORS
• Initiating structure reflects the extent to which the leader defines and
structures the roles of employees in pursuit of goal attainment.
• Leaders who are high on initiating structure play a more active role in directing
group activities and prioritize planning, scheduling, and trying out new ideas.
• They might emphasize the importance of meeting deadlines, describe explicit
standards of performance, ask employees to follow formalized procedures, and
criticize poor work when necessary.
• Initiation structure = offering more and more instruction
 DAY-TO-DAY LEADERSHIP
BEHAVIORS
• Consideration reflects the extent to which leaders create job relationships
characterized by mutual trust, respect for employee ideas, and consideration of
employee feelings.
• Leaders who are high on consideration create a climate of good rapport/relationship
and strong, two-way communication and exhibit a deep concern for the welfare of
employees.
• They might do personal favors for employees, take time to listen to their problems, “go
to bat” (support) for them when needed, and treat them as equals.
Consideration = being caring, supportive of employees and treating them as equal
 DAY-TO-DAY LEADERSHIP
BEHAVIORS
• The three most important habits that determined leader success were all
oriented toward consideration:
1. Meeting regularly with employees,
2. Taking an interest in them personally, and
3. Asking questions rather than always providing answers.
DAY-TO-DAY LEADERSHIP
BEHAVIORS
 The life cycle theory of leadership

• Although initiating structure and consideration tend to be beneficial across

situations, there may be circumstances in which they become more or less
important.
• The life cycle theory of leadership (sometimes also called the
situational model of leadership) argues that the optimal combination of
initiating structure and consideration depends on the readiness of the
employees in the work unit.
The life cycle theory of leadership - Readiness

• Readiness is broadly defined as the degree to which employees have the

ability and the willingness to accomplish their specific tasks.
The life cycle theory of leadership - Readiness
 R1 (Readiness 1)
• R1 refers to a group of employees who are working together for the first time
and are eager to begin, but they lack the experience and confidence needed to
perform their roles.
• Here the optimal combination of leader behaviors is telling—high initiating
structure and low consideration—in which case the leader provides specific
instructions and closely supervises performance.
• The lion’s share of the leader’s attention must be devoted to directing followers
in this situation, because their goals and roles need to be clearly defined.
 R2 (Readiness 2)
• In the R2 stage, the members have begun working together and, as typically
happens, are finding that their work is more difficult than they had anticipated.
• As eagerness turns to dissatisfaction, the optimal combination of leader
behaviors is selling—high initiating structure and high consideration—in
which the leader supplements his or her directing with support and
encouragement to protect the confidence levels of the employees.
• As employees gain more ability, guidance and direction by the leader become
less necessary.
 R3 (Readiness 3)
• At the R3 stage, employees have learned to work together well, though
they still need support and collaboration from the leader to help them
adjust to their more self-managed state of affairs.
• Here participating—low initiating structure and high consideration—
becomes the optimal combination of leader behaviors.
 R4 (Readiness 4)
• Finally, the optimal combination for the R4 readiness level is delegating—
low initiating structure and low consideration—such that the leader turns
responsibility for key behaviors over to the employees.
• Here the leader gives them the proverbial ball and lets them run with it.
• All that’s needed from the leader is some degree of observation and
monitoring to make sure that the group’s efforts stay on track.
 Transformational leadership behaviors
• Class Activity - By describing decision-making styles and day-to-day leader
behaviors, we’ve covered a broad spectrum of what it is that leaders do. Still,
something is missing. Take a small piece of scrap paper and jot down five people
who are famous for their effective leadership. They can come from inside or
outside the business world and can be either living people or historical figures. All
that’s important is that their name be practically synonymous with great leadership.
Once you’ve compiled your list, take a look at the names. Do they appear on your
list because they tend to use the right decision-making styles in the right situations
and engage in effective levels of consideration and initiating structure?
The missing link – motivating employees

• The missing piece of this leadership puzzle is what leaders do to motivate

their employees to perform beyond expectations. This story relates to what
is famously known as Transformational leadership
 Transformational leadership
• Transformational leadership involves inspiring followers to commit to a
shared vision that provides meaning to their work while also serving as a
role model who helps followers develop their own potential and view
problems from new perspectives.
= exceeding expectations and setting challenging goals
 Transformational leadership
• Transformational leaders heighten followers’ awareness of the importance
of certain outcomes while increasing their confidence that those outcomes
can be achieved.
 Transformational leadership
• Transformational leadership is viewed as a more motivational approach
to leadership than other managerial approaches.
Approaches to leadership based on active and
passive dimensions

• The figure below contrasts various approaches to leadership according to

how active or passive they are and, ultimately, how effective they prove
to be.
 laissez-faire
• Laissez-faire (i.e., hands-off) leadership - is the avoidance of leadership
altogether.
• Important actions are delayed, responsibility is ignored, and power and
influence go unutilized.
• One common measure of leadership reflects laissez-faire styles with this
statement: “The leader avoids getting involved when important issues
arise.”
 Transactional Leadership

• Transactional leadership occurs when the leader rewards or disciplines the

follower depending on the adequacy of the follower’s performance.
• Transactional leadership takes three forms:
1. Transactional: Passive Management by Exception
2. Transactional: Active Management by Exception
3. Transactional: Contingent Reward
 Transactional: Passive Management by
Exception

• With passive management-by-exception, the leader waits around for

mistakes and errors, then takes corrective action as necessary.

• “The leader takes no action until complaints are received.”

 Transactional: Active Management by
Exception

• With active management-by-exception, the leader arranges to monitor

mistakes and errors actively and again takes corrective action when
required.

“The leader directs attention toward failures to meet standards.”

 Transactional: Contingent Reward
• Contingent reward represents a more active and effective brand of
transactional leadership, in which the leader attains follower agreement on
what needs to be done using promised or actual rewards in exchange for
adequate performance.
“The leader makes clear what one can expect to receive when
performance goals are achieved”
 Concluding ideas about Transactional
Leadership
• Transactional leadership represents the “carrot-and-stick” approach to
leadership, with management-by-exception providing the “sticks” and
contingent reward supplying the “carrots.”
• Of course, transactional leadership represents the dominant approach to
motivating employees in most organizations, and research suggests that it
can be effective.
 So, which approach is the most
active and effective?
 Answer – Transformational leadership

• Transformational leadership—the most active and effective approach.

• Transformational leadership has the strongest and most beneficial effects
of any of the leadership variables described in this chapter.
• It’s also the leadership approach that’s most universally endorsed across
cultures.
Dimensions of Transformational leadership
These are the specific kinds of actions and behaviors that leaders can utilize to
become more transformational)
1. idealized influence,
2. inspirational motivation,
3. intellectual stimulation, and
4. individualized consideration
They are also known as the Four I’s.
 Idealized influence
• Idealized influence involves behaving in ways that earn the admiration,
trust, and respect of followers, causing followers to want to identify with
and emulate the leader.
• Idealized influence is represented by statements like: “The leader instills
pride in me for being associated with him/her.”
 Inspirational motivation
• Inspirational motivation involves behaving in ways that foster an enthusiasm for
and commitment to a shared vision of the future.
• Inspirational motivation is represented by statements like: “The leader articulates a
compelling vision of the future.”
• At Apple, Steve Jobs was renowned for spinning a “reality distortion field” that
reshaped employees’ views of the current work environment. One Apple employee
explained, “Steve has this power of vision that is almost frightening. When Steve
believes in something, the power of that vision can literally sweep aside any
objections, problems, or whatever. They just cease to exist.”
 Intellectual stimulation
• Intellectual stimulation involves behaving in ways that challenge
followers to be innovative and creative by questioning assumptions and
reframing old situations in new ways

• . Intellectual stimulation is represented by statements like: “The leader

gets others to look at problems from many different angles.”
 Individualized consideration

• Individualized consideration involves behaving in ways that help

followers achieve their potential through coaching, development, and
mentoring.