Essential Concepts and Applications

Essential Concepts and Applications

le a

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Leadership and Trust

CHAPTER

11.1

Define leader

and leadership.

Compare and

contrast early

leadership theories.

11.2

Describe modern views of leadership and the issues facing today’s

leaders.

11.4

Discuss trust as the

essence of

leadership.

11.5

11.3

Describe the

four major contingency leadership theories.

p.294 p.305

p.311

p.298

p.294

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Employees First It might seem kind of strange to be talking about putting employees first in a chapter on leadership. However, at HCL Technologies, the “employee first” philosophy has helped catapult the company from peripheral player to center stage in the intensely competitive IT industry.1

HCL Technologies is headquartered in the world’s largest democracy, so it’s quite fitting that the Noida, India–based company is attempting a radical experiment in workplace democracy. CEO Vineet Nayar is committed to creating a company where the job of company leaders is to enable people to find their own destiny by gravitating to their strengths. His goals for the

“Employee First” program include creating a unique employee experience, inverting the

organizational structure, and increasing transparency. The workplace reforms the company implemented involved better communication with the CEO and a pay scheme that gives workers more job

security. A major part of the workplace changes was this pay scheme, which the company referred to as “trust pay.” Unlike the standard IT industry practice of having 30 percent of its engineers’ pay variable (that is, dependent on performance), the company decided to pay higher fixed salaries that included all of what would have been the variable component—essentially trusting

that employees would deliver performance meriting that pay. These changes have helped the company grow and, more importantly, become a talent

magnet. (The company’s attrition rate dropped to below 15 percent.) And in 2008, HCL won an award for its innovative workforce

management approaches. How does Nayar view leadership? Although he believes

that the command-and-control dictatorship approach is the easiest management style, he also thinks it’s not the most productive. In his corporate democracy, employees can write a “trouble ticket” on anyone in the company. Anyone with trouble tickets has to respond, just as if it was a customer who had problems and needed some response. Nayar also believes that leaders should be open to criticism. He volunteered to share the information from his 360-degree performance feedback for all employees to see. One year,

his team of 81 managers who rated him gave him a 3.6 out of 5 for how well he keeps projects running on schedule, one

of his lowest scores—and everyone at HCL was able to see the score. Nayar’s scores, along with ratings for the company’s top 20 managers, are published on the company’s intranet for any

employee to see. Employees also can see their own supervisor’s scores. Although a lot of people said he was crazy for publicizing

managers’“grades” and communicating his own weaknesses, Nayar believed that it was a good way to increase his accountability as a leader to his employees. Such an environment requires a lot of trust between leaders and followers.

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11.1

Define leader

and leadership.

Compare and

contrast early

leadership theories.

11.2

294

Vineet Nayar is a good example of what it takes to be an effective leader in today’s organi-

zations. He has created a workplace environment in which employees feel like they’re heard

and trusted. It’s important for managers in all organizations to be seen as effective leaders.

Why is leadership so important? Because it’s the leaders in organizations who make things

happen. But what makes leaders different from nonleaders? What’s the most appropriate

style of leadership? What makes leaders effective? These are just some of the topics we’re

going to address in this chapter.

Who Are Leaders, and What Is Leadership? Let’s begin by clarifying who leaders are and what leadership is. Our definition of a leader is someone who can influence others and who has managerial authority. Leadership is a process of leading a group and influencing that group to achieve its goals. It’s what leaders do.

Are all managers leaders? Because leading is one of the four manage- ment functions, yes, ideally, all managers should be leaders. Thus, we’re going

to study leaders and leadership from a managerial perspective.2 However, even though we’re looking at these from a managerial perspective, we’re aware that

groups often have informal leaders who emerge. Although these informal leaders may be able to influence others, they have not been the focus of most leadership research and are not the types of leaders we’re studying in this chapter.

Leaders and leadership, like motivation, are organizational behavior topics that have been researched a lot. Most of that research has been aimed at answering the question: “What is an effective leader?” We’ll begin our study of leadership by looking at some early leadership theories that attempted to answer that question.

What Do Early Leadership Theories Tell Us About Leadership? People have been interested in leadership since they started coming together in groups to accomplish goals. However, it wasn’t until the early part of the twentieth century that researchers actually began to study it. These early

leadership theories focused on the leader (trait theories) and how the leader interacted with his or her group members (behavioral theories).

What Traits Do Leaders Have? Ask the average person on the street what comes to mind when he or she thinks of leadership. You’re likely to get a list of qualities such as intelligence, charisma, decisiveness, enthusiasm, strength, bravery, integrity, and self-confidence. These responses represent, in essence, trait theories of leadership. The search for traits or characteristics that differentiate leaders from nonleaders dominated early leadership research efforts. If the concept of traits were valid, all leaders would have to possess specific characteristics.

However, despite the best efforts of researchers, it proved impossible to identify a set of traits that would always differentiate a leader (the person) from a nonleader. Maybe it was a bit optimistic to think that there could be consistent and unique traits that would apply universally to all effective leaders, no matter whether they were in charge of Toyota Motor Corporation, the Moscow Ballet, the country of Brazil, a local collegiate chapter of Alpha Chi Omega, or Ted’s Malibu Surf Shop. However, later attempts to identify traits consistently associated with leadership (the process, not the person) were more successful. The seven traits shown to be associated with effective leadership are described briefly in Exhibit 11-1.3

Researchers eventually recognized that traits alone were not sufficient for identifying effective leaders since explanations based solely on traits ignored the interactions of leaders

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leader Someone who can influence others and who has managerial authority.

trait theories of leadership Theories that isolate characteristics (traits) that differentiate leaders from nonleaders.

leadership The process of leading a group and influencing that group to achieve its goals.

CHAPTER 11 | LEADERSHIP AND TRUST 295

and their group members as well as situational factors. Possessing the appropriate traits only made it more likely that an individual would be an effective leader. Therefore, leadership research from the late 1940s to the mid-1960s concentrated on the preferred behavioral styles that leaders demonstrated. Researchers wondered whether there was something unique in what effective leaders did—in other words, in their behavior.

What Behaviors Do Leaders Exhibit? It was hoped that the behavioral theories of leadership approach would provide more definitive answers about the nature of leadership, and if successful, also have practical implications quite different from those of the trait approach. If trait research had been successful, it would have provided a basis for selecting the right people to assume formal leadership positions in organizations. In contrast, if behavioral studies were to turn up critical behavioral determinants of leadership, people could be trained to be leaders, which is precisely the premise behind management development programs.

A number of studies looked at behavioral styles. We’ll briefly review three of the most popular: Kurt Lewin’s studies at the University of Iowa, the Ohio State studies, and the University of Michigan studies. Then we’ll see how the concepts developed in those studies were used in a grid created for appraising leadership styles.

WHAT DID THE UNIVERSITY OF IOWA STUDIES TELL US ABOUT LEADERSHIP BEHAVIOR? One of the first studies of leadership behavior was done by Kurt Lewin and his associates at the University of Iowa.4 In their studies, the researchers explored three leadership behaviors or styles: autocratic, democratic, and laissez-faire. An autocratic style is that of a leader who typically tends to centralize authority, dictate work methods, make unilateral decisions, and limit employee participation. A leader with a democratic style tends to involve employees

1. Drive. Leaders exhibit a high effort level. They have a relatively high desire for achievement, they are ambitious, they have a lot of energy, they are tirelessly persistent in their activities, and they show initiative.

2. Desire to lead. Leaders have a strong desire to influence and lead others. They demonstrate the willingness to take responsibility.

3. Honesty and integrity. Leaders build trusting relationships with followers by being truthful or nondeceitful and by showing high consistency between word and deed.

4. Self-confidence. Followers look to leaders for an absence of self-doubt. Leaders, therefore, need to show self-confidence in order to convince followers of the rightness of their goals and decisions.

5. Intelligence. Leaders need to be intelligent enough to gather, synthesize, and interpret large amounts of information, and they need to be able to create visions, solve problems, and make correct decisions.

6. Job-relevant knowledge. Effective leaders have a high degree of knowledge about the company, industry, and technical matters. In-depth knowledge allows leaders to make well-informed deci- sions and to understand the implications of those decisions.

7. Extraversion. Leaders are energetic, lively people. They are sociable, assertive, and rarely silent or withdrawn.

Sources: Based on S. A. Kirkpatrick and E. A. Locke, “Leadership: Do Traits Really Matter?” Academy of Management Executive (May 1991), pp. 48–60; and T. A. Judge, J. E. Bono, R. Ilies, and M. W. Gerhardt, “Personality and Leadership: A Qualitative and Quantitative Review,” Journal of Applied Psychology (August 2002), pp. 765–80.

EXHIBIT 11-1 Traits Associated with Leadership

behavioral theories of leadership Theories that isolate behaviors that differentiate effective leaders from ineffective leaders.

autocratic style A leader who centralizes authority, dictates work methods, makes unilateral decisions, and limits employee participation.

democratic style A leader who involves employees in decision making, delegates authority, encourages participation in deciding work methods, and uses feedback to coach employees.

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296 PART FOUR | LEADING

Democratic-participatory style describes the leadership of Francisco Gonzalez, chairman and CEO of BBVA, a global banking group based in Spain. Gonzalez involves employees in decision making and promotes teamwork as the key to generating customer value. With BBVA continuing its global expansion, the company needs to fill a growing number of management positions. It identifies managerial talent whose style is participatory by using a survey that allows employees to evaluate each other based on work habits, assuring that future leaders are democratic rather than autocratic.Gonzalez is shown here at a BBVA technology event during a presentation of the bank’s strategic innovation and transformation plan.

in decision making, delegates authority, encourages participation in deciding work methods and goals, and uses feedback as an opportunity to coach employees. The democratic style can be further classified in two ways: consultative and participative. A democratic-consultative leader seeks input and hears the concerns and issues of employees but makes the final decision him- or herself. In this capacity, the democratic-consultative leader is using the input as an information-seeking exercise. A democratic-participative leader often allows employees to have a say in what’s decided. Here, decisions are made by the group, with the leader providing one input to that group. Finally, the laissez-faire style generally gives his or her employees complete freedom to make decisions and to complete their work in whatever way they see fit. A laissez-faire leader might simply provide necessary materials and answer questions.

Lewin and his associates wondered which one of the three leadership styles was most effective. On the basis of their studies of leaders from boys’ clubs, they concluded that the laissez-faire style was ineffective on every performance criterion when compared with both democratic and autocratic styles. Quantity of work done was equal in groups with demo- cratic and autocratic leaders, but work quality and group satisfaction were higher in democratic groups. The results suggest that a democratic leadership style could contribute to both good quantity and high quality of work.

Later studies of autocratic and democratic styles of leadership showed mixed results. For example, democratic leadership styles sometimes produced higher performance levels than au- tocratic styles, but at other times they produced group performance that was lower than or equal to that of autocratic styles. Nonetheless, more consistent results were generated when a meas- ure of employee satisfaction was used.

Group members’ satisfaction levels were generally higher under a democratic leader than under an autocratic one.5 Did this finding mean that managers should always exhibit a democratic style of leadership? Two researchers, Robert Tannenbaum and Warren Schmidt, attempted to provide that answer.6

Tannenbaum and Schmidt developed a continuum of leader behaviors (see Exhibit 11-2). The continuum illustrates that a range of leadership behaviors, all the way from boss centered (autocratic) on the left side of the model to employee centered (laissez-faire) on the right side of the model, is possible. In deciding which leader behavior from the continuum to use, Tannenbaum and Schmidt proposed that managers look at forces within themselves (such as comfort level with the chosen leadership style), forces within the employees (such as readi- ness to assume responsibility), and forces within the situation (such as time pressures). They suggested that managers should move toward more employee-centered styles in the long run because such behavior would increase employees’ motivation, decision quality, teamwork, morale, and development.

This dual nature of leader behaviors—that is, focusing on the work to be done and focusing on the employees—is also a key characteristic of the Ohio State and University of Michigan studies.

WHAT DID THE OHIO STATE STUDIES SHOW? The most comprehensive and replicated of the behavioral theories resulted from research that began at Ohio State University in the late 1940s.7 These studies sought to identify independent dimensions of leader behavior. Beginning with more than 1,000 dimensions, the researchers eventually narrowed the list down to two categories that accounted for most of the leadership behavior described by employees. They called these two dimensions initiating structure and consideration.

Initiating structure refers to the extent to which a leader is likely to define and structure his or her role and those of employees in the search for goal attainment. It includes behavior that attempts to organize work, work relationships, and goals. For example, the leader who is characterized as high in initiating structure assigns group members to particular tasks, expects workers to maintain definite standards of performance, and emphasizes meeting deadlines.

Consideration is defined as the extent to which a leader has job relationships charac- terized by mutual trust and respect for employees’ ideas and feelings. A leader who is high

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CHAPTER 11 | LEADERSHIP AND TRUST 297

Manager makes

decision and announces it

Manager “sells”

decision

Manager presents ideas and

invites questions

Manager presents tentative decision

subject to change

Manager defines limits;

asks group to make decision

Manager presents problem,

gets suggestions,

makes decision

Manager permits

employees to function

within defined limits

Autocratic Participative

Consultative Democratic

Laissez-faire

Use of authority by the manager

Area of freedom for employees

Boss-centered leadership

Employee-centered leadership

EXHIBIT 11-2 Continuum of Leader Behavior

in consideration helps employees with personal problems, is friendly and approachable, and treats all employees as equals. He or she shows concern for his or her followers’ comfort, well-being, status, and satisfaction.

Extensive research based on these definitions found that a leader who is high in initiat- ing structure and consideration (a high-high leader) achieved high employee performance and satisfaction more frequently than one who rated low on either consideration, initiating struc- ture, or both. However, the high-high style did not always yield positive results. For example, leader behavior characterized as high on initiating structure led to greater rates of grievances, absenteeism, and turnover, and lower levels of job satisfaction for workers performing routine tasks. Other studies found that high consideration was negatively related to performance rat- ings of the leader by his or her manager. In conclusion, the Ohio State studies suggested that the high-high style generally produced positive outcomes, but enough exceptions were found to indicate that situational factors needed to be integrated into the theory.

HOW DID THE UNIVERSITY OF MICHIGAN STUDIES DIFFER? Leadership studies undertak- en at the University of Michigan’s Survey Research Center, at about the same time as those being done at Ohio State, had similar research objectives: to locate the behavioral character- istics of leaders that were related to performance effectiveness. The Michigan group also

laissez-faire style A leader who generally gives employees complete freedom to make decisions and to complete their work however they see fit.

initiating structure The extent to which a leader defines and structures his or her role and the roles of employees to attain goals.

consideration The extent to which a leader has job relationships characterized by mutual trust, respect for employees’ ideas, and regard for their feelings.

Source: Adapted and reprinted by permission of the Harvard Business Review. An exhibit from “How to Choose a Leadership Pattern,” by R. Tannenbaum and W. Schmidt, May–June 1973. Copyright© 1973 by the President and Fellows of Harvard College; all rights reserved.

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298 PART FOUR | LEADING

From the Past to the Present• • Both the Ohio State and Michigan studies have added a lot to our understanding of effective leadership.8 Prior to the completion of these studies, it was widely thought by researchers and practicing managers that one style of lead- ership was good and another bad. However, as the research showed, both leader behavior dimensions—job-centered and employee-centered in the Michigan studies, and initiat- ing structure and consideration in the Ohio State studies— are necessary for effective leadership. That dual focus of “what” a leader does still holds today. Leaders are expected

to focus on both the task and on the people he or she is leading. Even the later contingency leadership theories used the people/task distinction to define a leader’s style. Finally, these early behavioral studies were important for the “systematic methodology they introduced and the increased awareness they generated concerning the importance of leader behavior.” Although the behavioral theories may not have been the final chapter in the book on leadership, they “served as a springboard for the leadership research that followed.”

11.3

Describe the

four major contingency leadership theories.

came up with two dimensions of leadership behavior, which they labeled employee oriented and production oriented.9 Leaders who were employee oriented emphasized interpersonal relations; they took a personal interest in the needs of their employees and accepted individual differences among members. Leaders who were production oriented, in contrast, tended to emphasize the technical or task aspects of the job, were concerned mainly with accomplishing their group’s tasks, and regarded group members as a means to that end.

The conclusions of the Michigan researchers strongly favored leaders who were employee oriented. Employee-oriented leaders were associated with higher group produc- tivity and higher job satisfaction. Production-oriented leaders were associated with lower group productivity and lower worker satisfaction.

WHAT IS THE MANAGERIAL GRID? The behavioral dimensions from these early leadership studies provided the basis for the development of a two-dimensional grid for appraising leadership styles. This managerial grid used the behavioral dimensions “concern for people” and “concern for production” and evaluated a leader’s use of these behaviors, ranking them on a scale from 1 (low) to 9 (high).10 Although the grid (shown in Exhibit 11-3) had 81 potential categories into which a leader’s behavioral style might fall, only five styles were named: impoverished management (1,1), task management (9,1), middle-of-the-road management (5,5), country club management (1,9), and team management (9,9). Of these five styles, the researchers concluded that managers performed best when using a 9,9 style. Unfortunately, the grid offered no answers to the question of what made a manager an effective leader; it only provided a framework for conceptualizing leadership style. In fact, there’s little substan- tive evidence to support the conclusion that a 9,9 style is most effective in all situations.11

Leadership researchers were discovering that predicting leadership success involved something more complex than isolating a few leader traits or preferable behaviors. They began looking at situational influences. Specifically, which leadership styles might be suitable in different situations and what were these different situations?

What Do the Contingency Theories of Leadership Tell Us? “The corporate world is filled with stories of leaders who failed to achieve greatness because they failed to understand the context they were working in . . .”12 In this section we examine four contingency theories—

Fiedler, Hersey-Blanchard, leader-participation, and path-goal. Each looks at defining leadership style and the situation, and attempts to answer

the if-then contingencies (that is, if this is the context or situation, then this is the best leadership style to use).

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CHAPTER 11 | LEADERSHIP AND TRUST 299

What Was the First Comprehensive Contingency Model? The first comprehensive contingency model for leadership was developed by Fred Fiedler.13

The Fiedler contingency model proposed that effective group performance depended upon properly matching the leader’s style and the amount of control and influence in the situation. The model was based on the premise that a certain leadership style would be most effective in different types of situations. The keys were (1) define those leadership styles and the different types of situations and then (2) identify the appropriate combinations of style and situation.

Fiedler proposed that a key factor in leadership success was an individual’s basic leader- ship style, either task oriented or relationship oriented. To measure a leader’s style, Fiedler developed the least-preferred co-worker (LPC) questionnaire. This questionnaire contained 18 pairs of contrasting adjectives—for example, pleasant–unpleasant, cold–warm, boring– interesting, or friendly–unfriendly. Respondents were asked to think of all the coworkers they had ever had and to describe that one person they least enjoyed working with by rating him or

managerial grid A two-dimensional grid for appraising leadership styles.

employee oriented A leader who emphasizes the people aspects.

production oriented A leader who emphasizes the technical or task aspects.

Fiedler contingency model Leadership theory that proposes that effective group performance depends on the proper match between a leader’s style and the degree to which the situation allowed the leader to control and influence.

least-preferred co-worker (LPC) questionnaire A questionnaire that measures whether a leader was task or relationship oriented.

1 2 3 4 5 6 7 8 9

Concern for Production

1

2

3

4

5

6

7

8

9

C o n c e rn

f o r

P e o p le

(1,9) Country Club Management Thoughtful attention to needs of people for satisfying relationship leads to a comfortable, friendly organization atmosphere and work tempo.

(9,9) Team Management Work accomplished is from committed people; interdependence through a “common stake” in organization purpose leads to relationships of trust and respect.

(5,5) Middle of the Road Management Adequate organization performance is possible through balancing the necessity to get out work with maintaining morale of people at a satisfactory level.

(1,1) Impoverished Management Exertion of minimum effort to get required work done is appropriate to sustain organization membership.

(9,1) Task Management Efficiency in operations results from arranging conditions of work in such a way that human elements interfere to a minimum degree.

EXHIBIT 11-3 The Managerial Grid

Source: Adapted and reprinted by permission of the Harvard Business Review. An exhibit from “Breakthrough in Organization Development,” by R. R. Blake, J. A. Mouton, L. B. Barnes, and L. E. Greine, November–December 1964, p. 136. Copyright© 1964 by the President and Fellows of Harvard College; all rights reserved.

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300 PART FOUR | LEADING

I II III IV V VI VII VIII

Good Good Good Good Poor Poor Poor Poor

High High High HighLow Low Low Low

Strong Weak Strong Weak Strong Weak Strong Weak

Category

Leader–member relations

Task structure

Position power

Good

Poor Favorable Moderate Unfavorable

Performance Task oriented

Relationship oriented

Highly Favorable Moderate

Highly Unfavorable

EXHIBIT 11-4 The Fiedler Model

her on a scale of 1 to 8 for each of the sets of adjectives (the 8 always described the positive adjective out of the pair and the 1 always described the negative adjective out of the pair).

If the leader described the least preferred coworker in relatively positive terms (in other words, a “high” LPC score—a score of 64 or above), then the respondent was primarily interested in good personal relations with coworkers and the style would be described as relationship oriented. In contrast, if you saw the least preferred coworker in relatively unfavorable terms (a low LPC score—a score of 57 or below), you were primarily interested in productivity and getting the job done; thus, your style would be labeled as task oriented. Fiedler did acknowledge that a small number of people might fall in between these two extremes and not have a cut-and-dried leadership style. One other important point is that Fiedler assumed a person’s leadership style was fixed regardless of the situation. In other words, if you were a relationship-oriented leader, you’d always be one, and the same for task-oriented.

After an individual’s leadership style had been assessed through the LPC, it was time to evaluate the situation in order to be able to match the leader with the situation. Fiedler’s research uncovered three contingency dimensions that defined the key situational factors in leader effectiveness. These were:

� Leader-member relations: the degree of confidence, trust, and respect employees had for their leader; rated as either good or poor.

� Task structure: the degree to which job assignments were formalized and structured; rated as either high or low.

� Position power: the degree of influence a leader had over activities such as hiring, firing, discipline, promotions, and salary increases; rated as either strong or weak.

Each leadership situation was evaluated in terms of these three contingency variables, which when combined produced eight possible situations that were either favorable or unfavorable for the leader. (See the bottom of the chart in Exhibit 11-4). Situations I, II, and III were classified as highly favorable for the leader. Situations IV, V, and VI were moderately favorable for the leader. And situations VII and VIII were described as highly unfavorable for the leader.

Once Fiedler had described the leader variables and the situational variables, he had every- thing he needed to define the specific contingencies for leadership effectiveness. To do so, he studied 1,200 groups where he compared relationship-oriented versus task-oriented leader- ship styles in each of the eight situational categories. He concluded that task-oriented leaders

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situational leadership theory (SLT) A leadership contingency theory that focuses on followers’ readiness.

performed better in very favorable situations and in very unfavorable situations. (See the top of Exhibit 11-4 where performance is shown on the vertical axis and situation favorableness is shown on the horizontal axis.) On the other hand, relationship-oriented leaders performed better in moderately favorable situations.

Because Fiedler treated an individual’s leadership style as fixed, there were only two ways to improve leader effectiveness. First, you could bring in a new leader whose style better fit the situation. For instance, if the group situation was highly unfavorable but was led by a relationship-oriented leader, the group’s perform- ance could be improved by replacing that person with a task-oriented leader. The second alternative was to change the situation to fit the leader. This could be done by restructuring tasks; by increasing or decreasing the power that the leader had over factors such as salary increases, promotions, and disciplinary actions; or by improving the leader-member relations.

Research testing the overall validity of Fiedler’s model has shown considerable evi- dence to support the model.14 However, his theory wasn’t without criticisms. The major one is that it’s probably unrealistic to assume that a person can’t change his or her leadership style to fit the situation. Effective leaders can, and do, change their styles. Another is that the LPC wasn’t very practical. Finally, the situation variables were difficult to assess.15 Despite its shortcomings, the Fiedler model showed that effective leadership style needed to reflect situational factors.

How Do Followers’ Willingness and Ability Influence Leaders? Paul Hersey and Ken Blanchard developed a leadership theory that has gained a strong following among management development specialists.16 This model, called situational leadership theory (SLT), is a contingency theory that focuses on followers’ readiness. Before we proceed, there are two points we need to clarify: Why a leadership theory focuses on the followers, and what is meant by the term readiness.

The emphasis on the followers in leadership effectiveness reflects the reality that it is the followers who accept or reject the leader. Regardless of what the leader does, the group’s effectiveness depends on the actions of the followers. This is an important dimension that has been overlooked or underemphasized in most leadership theories. And readiness, as defined by Hersey and Blanchard, refers to the extent to which people have the ability and willingness to accomplish a specific task.

SLT uses the same two leadership dimensions that Fiedler identified: task and relation- ship behaviors. However, Hersey and Blanchard go a step further by considering each as either high or low and then combining them into four specific leadership styles described as follows:

� Telling (high task–low relationship): The leader defines roles and tells people what, how, when, and where to do various tasks.

� Selling (high task–high relationship): The leader provides both directive and supportive behavior.

� Participating (low task–high relationship): The leader and followers share in decision making; the main role of the leader is facilitating and communicating.

� Delegating (low task–low relationship): The leader provides little direction or support.

CHAPTER 11 | LEADERSHIP AND TRUST 301

Once successful as a general interest magazine, Reader’s Digest has steadily lost readers, advertising revenues, and profits since the 1990s. The three women shown here were hired by the magazine’s publishers to lead a change in the magazine’s direction from a general-interest format aimed at a broad audience to a narrower reader base that holds conservative social values. Leading the change are, from left, Eva Dillon, president of the magazine, related books, and Web sites division; Peggy Northrop, U.S. editor- in-chief; and Mary Berner, president and chief executive of Reader’s Digest Association. According to Fiedler’s contingency model, the success of these leaders depends on the match between their leadership style and the influences of their situation.

readiness The extent to which people have the ability and willingness to accomplish a specific task.IS

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302 PART FOUR | LEADING

percent of organizations haven’t thought about tai- loring leadership develop-

ment activities to accommodate managerial diversity.

percent of workers want a leader who can create a shared vision.

percent of women prefer a female boss; only 13 percent of men do.

percent of companies have a defined set of qualities they look for when hiring leaders.

percent of company leaders report they’ve used a lead- ership coach or mentor.

The final component in the model is the four stages of follower readiness:

� R1: People are both unable and unwilling to take responsibility for doing something. Followers aren’t competent or confident.

� R2: People are unable but willing to do the necessary job tasks. Followers are motivated but lack the appropriate skills.

� R3: People are able but unwilling to do what the leader wants. Followers are competent, but don’t want to do something.

� R4: People are both able and willing to do what is asked of them.

SLT essentially views the leader-follower relationship as like that of a parent and a child. Just as a parent needs to relinquish control when a child becomes more mature and responsible, so, too, should leaders. As followers reach higher levels of readiness, the leader responds not only by decreasing control over their activities but also decreasing relationship behaviors. The SLT says if followers are at R1 (unable and unwilling to do a task), the leader needs to use the telling style and give clear and specific directions; if followers are at R2 (unable and willing), the leader needs to use the selling style and display high task orientation to compensate for the followers’ lack of ability and high relationship orientation to get followers to “buy into” the leader’s desires; if followers are at R3 (able and unwilling), the leader needs to use the partic- ipating style to gain their support; and if employees are at R4 (both able and willing), the leader doesn’t need to do much and should use the delegating style.

SLT has intuitive appeal. It acknowledges the importance of followers and builds on the logic that leaders can compensate for ability and motivational limitations in their followers. However, research efforts to test and support the theory generally have been disappointing.18

Possible explanations include internal inconsistencies in the model as well as problems with research methodology. Despite its appeal and wide popularity, we have to be cautious about any enthusiastic endorsement of SLT.

How Participative Should a Leader Be? Back in 1973, Victor Vroom and Phillip Yetton developed a leader-participation model that related leadership behavior and participation to decision making.19 Recognizing that task structures have varying demands for routine and nonroutine activities, these researchers argued that leader behavior must adjust to reflect the task structure. Vroom and Yetton’s model was normative. That is, it provided a sequential set of rules to be followed in determining the form and amount of participation in decision making in different types of situations. The model was a decision tree incorporating seven contingencies (whose relevance could be identified by making yes or no choices) and five alternative leadership styles.

More recent work by Vroom and Arthur Jago has revised that model.20 The new model retains the same five alternative leadership styles but expands the contingency variables to twelve— from the leader’s making the decision completely by himself or herself to sharing the problem with the group and developing a consensus decision. These variables are listed in Exhibit 11-5.

percent of their time is what senior executives are believed to spend on leadership devel-

opment activities.

25

percent of global organiza- tions say they have a process in place to identify potential

leaders.

54

44

72 23 68 51

1. Importance of the decision 2. Importance of obtaining follower commitment to the decision 3. Whether the leader has sufficient information to make a good decision 4. How well structured the problem is 5. Whether an autocratic decision would receive follower commitment 6. Whether followers “buy into” the organization’s goals 7. Whether there is likely to be conflict among followers over solution alternatives 8. Whether followers have the necessary information to make a good decision 9. Time constraints on the leader that may limit follower involvement

10. Whether costs to bring geographically dispersed members together are justified 11. Importance to the leader of minimizing the time it takes to make the decision 12. Importance of using participation as a tool for developing follower decision skills

Source: S. P. Robbins and T. A. Judge, Organizational Behavior 13th ed. (Upper Saddle River, NJ: Prentice Hall, 2009), p. 400.

EXHIBIT 11-5 Contingency Variables in the Revised Leader-Participation Model

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leader-participation model A leadership contingency theory that’s based on a sequential set of rules for determining how much participation a leader uses in decision making according to different types of situations.

path-goal theory A leadership theory that says the leader’s job is to assist followers in attaining their goals and to provide direction or support needed to ensure that their goals are compatible with the organization’s or group’s goals.

Shelley Roberts, managing director of Tiger Airways, is an achievement- oriented leader. She accepted the challenging goal of guiding the Singapore-based budget airline through an expansion in Australia, a market dominated by the established Qantas Airlines. Roberts earned a reputation as a high achiever through successful senior leadership positions in both airline and airport management. She was a senior executive at Britain’s low-budget EasyJet airline when it entered the European market and successfully competed against carriers like British Airways. In this photo, Roberts and the West Tigers’ rugby club members pull a plane out of its hanger during the launch of the Tiger Airways new route between Melbourne and Sydney.

Research on the original leader-participation model was encouraging.21 But, unfor- tunately, the model is far too complex for the typical manager to use regularly. In fact, Vroom and Jago have developed a computer program to guide managers through all the decision branches in the revised model. Although we obviously can’t do justice to this model’s sophistication in this discussion, it has provided us with some solid, empirically supported insights into key contingency variables related to leadership effectiveness. Moreover, the leader-participation model confirms that leadership research should be directed at the situation rather than at the person. That is, it probably makes more sense to talk about autocratic and participative situations than autocratic and participative leaders. As House does in his path-goal theory (discussed next), Vroom, Yetton, and Jago argue against the notion that leader behavior is inflexible. The leader-participation model assumes that the leader can adapt his or her style to different situations.22

How Do Leaders Help Followers? Currently, one of the most respected approaches to understanding leadership is path-goal theory, which states that the leader’s job is to assist followers in attaining their goals and to provide direction or support needed to ensure that their goals are compatible with the goals of the group or organization. Developed by Robert House, path-goal theory takes key elements from the expectancy theory of motivation (see Chapter 10).23 The term path-goal is derived from the belief that effective leaders clarify the path to help their followers get from where they are to the achievement of their work goals and make the journey along the path easier by reducing roadblocks and pitfalls.

House identified four leadership behaviors:

� Directive leader: Lets subordinates know what’s expected of them, schedules work to be done, and gives specific guidance on how to accomplish tasks.

� Supportive leader: Shows concern for the needs of followers and is friendly. � Participative leader: Consults with group members and uses their suggestions before

making a decision. � Achievement oriented leader: Sets challenging goals and expects followers to perform

at their highest level.

In contrast to Fiedler’s view that a leader couldn’t change his or her behavior, House assumed that lead- ers are flex- ible and can display any or all of these leadership styles depending on the situation.

As Exhibit 11-6 illustrates, path-goal theory proposes two situational or contin- gency variables that moderate the leadership behavior- outcome relationship: those in the environment that are outside the control of the follower (factors including task structure, formal authority system, and the work group) and those that are part of the personal characteristics of the follower (including locus of control, experience, and perceived ability). Environmental factors determine the type of leader behavior required if subordinate outcomes are to be maximized; personal

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304 PART FOUR | LEADING

characteristics of the follower determine how the environment and leader behavior are inter- preted. The theory proposes that a leader’s behavior won’t be effective if it’s redundant with what the environmental structure is providing or is incongruent with follower characteristics. For example, some predictions from path-goal theory are:

� Directive leadership leads to greater satisfaction when tasks are ambiguous or stressful than when they are highly structured and well laid out. The followers aren’t sure what to do, so the leader needs to give them some direction.

� Supportive leadership results in high employee performance and satisfaction when subordinates are performing structured tasks. In this situation, the leader only needs to support followers, not tell them what to do.

� Directive leadership is likely to be perceived as redundant among subordinates with high perceived ability or with considerable experience. These followers are quite capable so they don’t need a leader to tell them what to do.

� The clearer and more bureaucratic the formal authority relationships, the more leaders should exhibit supportive behavior and deemphasize directive behavior. The organiza- tional situation has provided the structure as far as what is expected of followers, so the leader’s role is simply to support.

� Directive leadership will lead to higher employee satisfaction when there is substantive conflict within a work group. In this situation, the followers need a leader who will take charge.

� Subordinates with an internal locus of control will be more satisfied with a participative style. Because these followers believe that they control what happens to them, they prefer to participate in decisions.

� Subordinates with an external locus of control will be more satisfied with a directive style. These followers believe that what happens to them is a result of the external environment so they would prefer a leader who tells them what to do.

� Achievement-oriented leadership will increase subordinates’ expectancies that effort will lead to high performance when tasks are ambiguously structured. By setting challenging goals, followers know what the expectations are.

• Locus of control • Experience • Perceived ability

• Task structure • Formal authority system • Work group

• Directive • Supportive • Participative • Achievement oriented

• Performance • Satisfaction

Leader behavior

Environmental contingency factors

Outcomes

Employee contingency factors

EXHIBIT 11-6 Path-Goal Model

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Describe modern views of leadership and the issues facing today’s

leaders.

11.4

CHAPTER 11 | LEADERSHIP AND TRUST 305

transformational leaders Leaders who stimulate and inspire (transform) followers to achieve extraordinary outcomes.

transactional leaders Leaders who lead primarily by using social exchanges (or transactions).

Research on the path-goal model is generally encouraging. Although not every study has found support, the majority of the evidence supports the logic underlying the theory.24

In summary, an employee’s performance and satisfaction are likely to be positively influ- enced when the leader chooses a leadership style that compensates for shortcomings in either the employee or the work setting. However, if the leader spends time explaining tasks that are already clear or when the employee has the ability and experience to handle them without interference, the employee is likely to see such directive behavior as redundant or even insulting.

What Is Leadership Like Today? What are the latest views of leadership and what issues do today’s leaders have to deal with? In this section, we’re going to look at three contemporary views of leadership: transformational-transactional leadership, charismatic- visionary leadership, and team leadership. In addition, we’ll discuss some issues that leaders have to face in leading effectively in today’s environment.

What Do the Three Contemporary Views of Leadership Tell Us? Remember our discussion at the beginning of this chapter where we said that leadership studies have long had the goal of describing what it takes to be an effective leader. That goal hasn’t changed! Even the contemporary views of leadership are interested in answer- ing that question. These views of leadership have a common theme: leaders who inspire and support followers.

HOW DO TRANSACTIONAL LEADERS DIFFER FROM TRANSFORMATIONAL LEADERS? Many early leadership theories viewed leaders as transactional leaders; that is, leaders who lead primarily by using social exchanges (or transactions).Transactional leaders guide or motivate followers to work toward established goals by exchanging rewards for their productivity.25

But there’s another type of leader—a transformational leader—who stimulates and inspires (transforms) followers to achieve extraordinary outcomes. Examples include Jim Goodnight of SAS Institute and Andrea Jung of Avon. They pay attention to the concerns and developmental needs of individual followers; they change followers’ awareness of issues by helping those followers look at old problems in new ways; and they are able to excite, arouse, and inspire followers to exert extra effort to achieve group goals.

Transactional and transformational leadership shouldn’t be viewed as opposing approaches to getting things done.26 Transformational leadership develops from transactional leadership. It produces levels of employee effort and performance that go beyond what would occur with a transactional approach alone. Moreover, transformational leadership is more than charisma since the transformational leader attempts to instill in followers the ability to question not only established views but those views held by the leader.27

The evidence supporting the superiority of transformational leadership over transactional leadership is overwhelmingly impressive. For instance, studies that looked at managers in different settings, including the military and business, found that transformational leaders were evaluated as more effective, higher performers, more promotable than their transac- tional counterparts, and more interpersonally sensitive.28 In addition, evidence indicates that transformational leadership is strongly correlated with lower turnover rates and higher levels of productivity, employee satisfaction, creativity, goal attainment, and follower well-being.29

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306 PART FOUR | LEADING

HOW DO CHARISMATIC LEADERSHIP AND VISIONARY LEADERSHIP DIFFER? Jeff Bezos, founder and CEO of Amazon.com, is a person who exudes energy, enthusiasm, and drive.30 He’s fun-loving (his legendary laugh has been described as a flock of Canadian geese on nitrous oxide), but has pursued his vision for Amazon.com with serious intensity and has demon- strated an ability to inspire his employees through the ups and downs of a rapidly growing company. Bezos is what we call a charismatic leader— that is, an enthusiastic, self-confident leader whose personality and actions influence people to behave in certain ways.

Several authors have attempted to identify personal characteristics of the charismatic leader.31 The most comprehensive analysis identified five such characteristics: they have a vision, the ability to articulate that vision, willing- ness to take risks to achieve that vision, sensitivity to both environmental constraints and follower needs, and behaviors that are out of the ordinary.32

There’s an increasing body of evidence that shows impressive correla- tions between charismatic leadership and high performance and satisfaction among followers.33 Although one study found that charismatic CEOs had no impact on subsequent organizational performance, charisma is still believed to be a desirable leadership quality.34

If charisma is desirable, can people learn to be charismatic leaders? Or are charismatic leaders born with their qualities? Although a small number of experts still think that charisma can’t be learned, most believe that individuals can be trained to exhibit charismatic behaviors.35 For example, researchers have succeeded in teaching undergraduate students to “be” charismatic. How? They were taught to articulate a far- reaching goal, communicate high performance expectations, exhibit confidence in the ability of subordinates to meet those expectations, and empathize with the needs of their subordinates; they learned to project a powerful, confident, and dynamic presence; and they practiced using a captivating and engaging voice tone. The researchers also trained the student leaders to use charismatic nonverbal behaviors including leaning toward the follower when communicating, maintaining direct eye contact, and having a relaxed pos- ture and animated facial expressions. In groups with these “trained” charismatic leaders, members had higher task performance, higher task adjustment, and better adjustment to the leader and to the group than did group members who worked in groups led by non- charismatic leaders.

One last thing we should say about charismatic leadership is that it may not always be necessary to achieve high levels of employee performance. It may be most appropriate when the follower’s task has an ideological purpose or when the environment involves a high degree of stress and uncertainty.36 This may explain why, when charismatic leaders surface, it’s more likely to be in politics, religion, or wartime; or when a business firm is starting up or facing a survival crisis. For example, Martin Luther King Jr. used his charisma to bring about social equality through nonviolent means; and Steve Jobs achieved unwavering loyalty and commitment from Apple’s technical staff in the early 1980s by articulating a vision of personal computers that would dramatically change the way people lived.

Although the term vision is often linked with charismatic leadership, visionary leader- ship is different since it’s the ability to create and articulate a realistic, credible, and attrac- tive vision of the future that improves upon the present situation.37 This vision, if properly selected and implemented, is so energizing that it “in effect jump-starts the future by calling forth the skills, talents, and resources to make it happen.”38

An organization’s vision should offer clear and compelling imagery that taps into people’s emotions and inspires enthusiasm to pursue the organization’s goals. It should be able to generate possibilities that are inspirational and unique and offer new ways of doing things that are clearly better for the organization and its members. Visions that are clearly articulated and have powerful imagery are easily grasped and accepted. For instance, Michael Dell created a vision of a business that sells and delivers customized PCs directly to customers in less than a week. The late Mary Kay Ash’s vision of women as entrepreneurs selling products that improved their self-image gave impetus to her cos- metics company, Mary Kay Cosmetics.

Amazon.com founder and CEO Jeff Bezos is a charismatic leader who has the energy, optimism, enthusiasm, confidence, and drive to set and pursue goals for risky new ventures and to inspire his employees to work hard to achieve them. Starting his company in 1994 with the vision of providing consumers with the service of an online bookstore, Bezos has built Amazon into the largest retailer on the Web. He reinvented the company by introducing a product innovation, the Kindle electronic reader, that began with his long-term vision of “every book, ever printed, in any language, all available in less than 60 seconds.”

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CHAPTER 11 | LEADERSHIP AND TRUST 307

WHAT ABOUT LEADERS AND TEAMS? Because leadership is increasingly taking place within a team context and more organ- izations are using work teams, the role of the leader in guiding team members has become increasingly important. The role of team leader is different from the traditional leadership role, as J. D. Bryant, a supervisor at Texas Instruments’ Forest Lane plant in Dallas, discovered.39 One day he was contentedly overseeing a staff of 15 circuit board assemblers. The next day he was told that the company was going to use employee teams and he was to become a “facilitator.” He said, “I’m supposed to teach the teams everything I know and then let them make their own decisions.” Confused about his new role, he admitted, “There was no clear plan on what I was supposed to do.” What is involved in being a team leader?

Many leaders are not equipped to handle the change to employee teams. As one consultant noted, “Even the most capa- ble managers have trouble making the transition because all the command-and-control type things they were encouraged to do before are no longer appropriate. There’s no reason to have any skill or sense of this.”40 This same consultant estimated that “probably 15 percent of managers are natural team leaders; another 15 percent could never lead a team because it runs counter to their personality—that is, they’re unable to sublimate their dominating style for the good of the team. Then there’s that huge group in the middle: Team leadership doesn’t come natu- rally to them, but they can learn it.”41

The challenge for many managers is learning how to become an effective team leader. They have to learn skills such as patiently sharing information, being able to trust others and to give up authority, and under- standing when to intervene. And effective team leaders have mastered the difficult balancing act of knowing when to leave their teams alone and when to get involved. New team leaders may try to retain too much control at a time when team members need more autonomy, or they may abandon their teams at times when the teams need support and help.42

One study looking at organizations that had reorganized themselves around employee teams found certain common responsibilities of all leaders. These included coaching, facilitating, handling disciplinary problems, reviewing team and individual performance, training, and communication.43 However, a more meaningful way to describe the team leader’s job is to focus on two priorities: (1) managing the team’s external boundary and (2) facilitating the team process.44 These priorities entail four specific leadership roles as shown in Exhibit 11-7.

What Issues Do Today’s Leaders Face? It’s not easy being a chief information officer (CIO) today. As the person responsible for managing a company’s information technology activities, there are a lot of external and internal pressures. Technology continues to change rapidly—almost daily, it sometimes seems. Business costs continue to rise. Rob Carter, CIO of FedEx, is on the hot seat facing such challenges.45 He’s responsible for all the computer and communication systems that provide around-the-clock and around-the-globe support for FedEx’s products and services. If anything goes wrong, you know who takes the heat. However, Carter has been an effective leader in this seemingly chaotic environment.

charismatic leaders Enthusiastic, self-confident leaders whose personalities and actions influence people to behave in certain ways.

Right orWrong?

The definition of “friend” on social networking sites such as Facebook and MySpace is so broad that even strangers may tag you. But it doesn’t feel weird because nothing really changes when a stranger does this. However, what if your boss, who isn’t much older than you are, asks you to be a friend on these sites? What then? What are the implications if you refuse the offer? What are the implications if you accept? What ethical issues might arise because of this? What would you do?

visionary leadership The ability to create and articulate a realistic, credible, and attractive vision of the future that improves on the present situation.IS

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308 PART FOUR | LEADING

Leading effectively in today’s environment is unlikely to involve such challenges for most leaders. However, twenty-first-century leaders do face some important leader- ship issues. In this section, we look at these issues including empowering employees, cross-cultural leadership, and emotional intelligence and leadership. We’ll also look at gender differences in leadership in the “Managing Diversity” box.

WHY DO LEADERS NEED TO EMPOWER EMPLOYEES? As we’ve described in different places throughout the text, managers are increasingly leading by not leading; that is, by empowering their employees. Empowerment involves increasing the decision-making dis- cretion of workers. Millions of individual employees and employee teams are making the key operating decisions that directly affect their work. They’re developing budgets, schedul- ing workloads, controlling inventories, solving quality problems, and engaging in similar activities that until very recently were viewed exclusively as part of the manager’s job.46 For instance, at The Container Store, any employee who gets a customer request has permission to take care of it. The company’s cochairman Garret Boone says, “Everybody we hire, we hire as a leader. Anybody in our store can take an action that you might think of typically being a manager’s action.”47

One reason more companies are empowering employees is the need for quick deci- sions by those people who are most knowledgeable about the issues—often those at lower organizational levels. If organizations want to successfully compete in a dynamic global economy, employees have to be able to make decisions and implement changes quickly. Another reason is that organizational downsizings left many managers with larger spans of control. In order to cope with the increased work demands, managers had to empower their people. Although empowerment is not a universal answer, it can be beneficial when employees have the knowledge, skills, and experience to do their jobs competently.

Technology also has contributed to the increases in employee empowerment. Managers face unique challenges in leading empowered employees who aren’t physically present in the workplace as the “Technology and the Manager’s Job” box discusses.

DOES NATIONAL CULTURE AFFECT LEADERSHIP? One general conclusion that surfaces from leadership research is that effective leaders do not use a single style. They adjust their style to the situation. Although not mentioned explicitly, national culture is certainly an important situational variable in determining which leadership style will be most effective. What works in China isn’t likely to be effective in France or Canada. For instance, one study of Asian leadership styles revealed that Asian managers preferred leaders who were competent decision makers, effective communicators, and supportive of employees.48

National culture affects leadership style because it influences how followers will respond. Leaders can’t (and shouldn’t) just choose their styles randomly. They’re constrained by the cultural conditions their followers have come to expect. Exhibit 11-8 provides some findings from selected examples of cross-cultural leadership studies.

Effective Team Leadership

Roles

Coaches Liaisons with

external constituents

Conflict managers Troubleshooters

EXHIBIT 11-7 Team Leader Roles

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VIRTUAL LEADERSHIP

How do you lead people who are physi-cally separated from you and withwhom your interactions are primarily written digital communications?49 That’s the

challenge of being a virtual leader. And unfor-

tunately, leadership research has been

directed mostly at face-to-face and verbal sit-

uations. But we can’t ignore the reality that

today’s managers and their employees are

increasingly being linked by technology rather

than by geographic proximity. So what guid-

ance can be provided to leaders who must

inspire and motivate dispersed employees?

It’s easy to soften harsh words in face-

to-face communication with nonverbal action.

A smile or a comforting gesture can go a long

way in lessening the blow behind strong

words like disappointed, unsatisfactory,

inadequate, or below expectations. That non-

verbal component doesn’t exist in online

interactions. The structure of words in a dig-

ital communication also has the power to

motivate or demotivate the receiver. A man-

ager who inadvertently sends a message in

short phrases or in ALL CAPS may get a very

different response than if the message had

been sent in full sentences using appropriate

punctuation.

To be an effective virtual leader, man-

agers must recognize that they have choices

in the words and structure of their digital

communications. They also need to develop

the skill of “reading between the lines” in the

messages they receive. It’s important to try

and decipher the emotional content of a

message as well as the written content. Also,

virtual leaders need to think carefully about

what actions they want their digital mes-

sages to initiate. Be clear about what’s

expected and follow up on messages.

For an increasing number of managers,

good interpersonal skills may include the

abilities to communicate support and leader-

ship through digital communication and to

read emotions in others’ messages. In this

“new world” of communication, writing skills

are likely to become an extension of interper-

sonal skills.

empowerment The act of increasing the decision-making discretion of workers.

� Korean leaders are expected to be paternalistic toward employees.

� Arab leaders who show kindness or generosity without being asked to do so are seen by other Arabs as weak.

� Japanese leaders are expected to be humble and speak frequently.

� Scandinavian and Dutch leaders who single out individuals with public praise are likely to embarrass, not energize, those individuals.

� Effective leaders in Malaysia are expected to show compassion while using more of an autocratic than a participative style.

� Effective German leaders are characterized by high performance orientation, low compassion, low self-protection, low team orientation, high autonomy, and high participation.

Sources: Based on J. C. Kennedy, “Leadership in Malaysia: Traditional Values, International Outlook,” Academy of Management Executive (August 2002), pp. 15–17; F. C. Brodbeck, M. Frese, and M. Javidan, “Leadership Made in Germany: Low on Compassion, High on Performance,” Academy of Management Executive (February 2002), pp. 16–29; M. F. Peterson and J. G. Hunt, “International Perspectives on International Leadership,” Leadership Quarterly (Fall 1997), pp. 203–31; R. J. House and R. N. Aditya, “The Social Scientific Study of Leadership: Quo Vadis?” Journal of Management 23, no. 3 (1997), p. 463; and R. J. House, “Leadership in the Twenty-First Century,” in A. Howard (ed.), The Changing Nature of Work (San Francisco: Jossey-Bass, 1995), p. 442.

EXHIBIT 11-8 Cross-Cultural Leadership

Because most leadership theories were developed in the United States, they have an American bias. They emphasize follower responsibilities rather than rights; assume self- gratification rather than commitment to duty or altruistic motivation; assume centrality of work and democratic value orientation; and stress rationality rather than spirituality, religion, or superstition.50 However, the GLOBE research program, which we first

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introduced in Chapter 2, is the most extensive and comprehensive cross-cultural study of leadership ever undertaken. The GLOBE study has found that there are some universal aspects to leadership. Specifically, a number of elements of transformational leadership appear to be associated with effective leadership regardless of what country the leader is in.51

These include vision, foresight, providing encouragement, trustworthiness, dynamism, positiveness, and proactiveness. The results led two members of the GLOBE team to con- clude that “effective business leaders in any country are expected by their subordinates to provide a powerful and proactive vision to guide the company into the future, strong motivational skills to stimulate all employees to fulfill the vision, and excellent planning skills to assist in implementing the vision.”52 Some people suggest that the universal appeal of these transformational leader characteristics is due to the pressures toward common technologies and management practices, as a result of global competitiveness and multinational influences.

HOW DOES EMOTIONAL INTELLIGENCE AFFECT LEADERSHIP? We introduced emotional intelligence (EI) in our discussion of emotions in Chapter 8. We revisit the topic here because of recent studies indicating that EI—more than IQ, expertise, or any other single factor—is the best predictor of who will emerge as a leader.53

As we said in our earlier discussion of trait research, leaders need basic intelligence and job-relevant knowledge. But IQ and technical skills are “threshold capabilities.” They’re necessary but not sufficient requirements for leadership. It’s the possession of the five components of emotional intelligence—self-awareness, self-management, self- motivation, empathy, and social skills—that allows an individual to become a star per- former. Without EI, a person can have outstanding training, a highly analytical mind, a long-term vision, and an endless supply of terrific ideas but still not make a great leader, especially as individuals move up in an organization. The evidence indicates that the higher the rank of a person considered to be a star performer, the more that EI capabilities surface as the reason for his or her effectiveness. Specifically, when star performers were compared with average ones in senior management positions, nearly 90 percent of the difference in their effectiveness was attributable to EI factors rather than basic intelligence.

Interestingly, it’s been pointed out that the maturing of Rudolph Giuliani’s leadership effectiveness closely followed the development of his emotional intelligence. For the better part of the eight years he was mayor of New York, Giuliani ruled with an iron fist. He talked tough, picked fights, and demanded results. The result was a city that was cleaner, safer, and better governed—but also more polarized. Critics called Giuliani a tin-eared tyrant. In the eyes of many, something important was missing from his leadership. That something, his critics acknowledged, emerged as the World Trade Center collapsed. It was a newfound

Ken Chenault, CEO of American Express, is a leader with high emotional intelligence. Since joining the company in 1981, he has emerged as a star performer in a job that demands interacting with employees, customers, and political leaders throughout the world. Chenault is described as achievement oriented, open to discussion, respectful, ethical, and trustworthy. Mentally tough, he welcomes constructive confrontation but is humble and conducts himself in a respectful and quietly assured manner. In this photo Chenault visits with Ruth Simmons, president of Brown University, during an event that honored both of them as two of America’s best leaders.

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MANAGING DIVERSITY | Do Men and Women Lead Differently?

Are there gender differences in leadership styles? Are men more effective leaders, or does that honor belong to women? Even asking those questions is certain to evoke reactions on both sides of the debate.54

The evidence indicates that the two sexes are more alike than different in the ways they lead. Much of this similarity is based on the fact that leaders, regardless of gender, perform similar activities in influencing others. That’s their job, and the two sexes do it equally well. The same holds true in other professions. For instance, although the stereotypical nurse is a woman, men are equally effective and successful in this career.

Saying the sexes are more alike than different still means the two are not exactly the same. The most common differ- ence lies in leadership styles. Women tend to use a more democratic style. They encourage participation of their followers and are willing to share their positional power with others. In addition, women tend to influence others best through their ability to be charmingly influential. Men, on the other hand, tend to typically use a task-centered leadership

style. This approach includes directing activities of others and relying on their positional power to control the organization’s activities. But surprisingly, even this difference is blurred. All things considered, when a woman is a leader in a traditionally male-dominated job (such as that of a police officer), she tends to lead in a manner that is more task centered.

Further compounding this issue are the changing roles of leaders in today’s organizations. With an increased emphasis on teams, employee involvement, and interper- sonal skills, democratic leadership styles are more in demand. Leaders need to be more sensitive to their followers’ needs and more open in their communications; they need to build more trusting relationships. And many of these factors are behaviors that women have typically grown up developing.

So what do you think? Is there a difference between the sexes in terms of leadership styles? Do men or women make better leaders? Would you prefer to work for a man or a woman? What’s your opinion?

Discuss trust as the

essence of

leadership.

11.5

compassion to complement his command: a mix of resolve, empathy, and inspiration that brought comfort to millions.55 It’s likely that Giuliani’s emotional capacities and compassion for others were stimulated by a series of personal hardships—including prostate cancer and the highly visible breakup of his marriage—both of which had taken place less than a year before the terrorist attacks on the World Trade Center.56

EI has been shown to be positively related to job performance at all levels. But it appears to be especially relevant in jobs that demand a high degree of social interaction. And of course, that’s what leadership is all about. Great leaders demonstrate their EI by exhibiting all five of its key components—self-awareness, self-management, self-motivation, empathy, and social skills (see p. 222).

The recent evidence makes a strong case for concluding that EI is an essential element in leadership effectiveness.57 As such, it could be added to the list of traits associated with leadership that we described earlier in the chapter. EI may be something that comes easier for women leaders particularly. The “Managing Diversity” box looks more closely at the role of gender and leadership.

Why Is Trust the Essence of Leadership? Trust, or lack of trust, is an increasingly important issue in today’s organi- zations.58 In today’s uncertain environment, leaders need to build, or even rebuild, trust and credibility. Before we can discuss ways leaders can do that, we have to know what trust and credibility are and why they’re so important.

The main component of credibility is honesty. Surveys show that hon- esty is consistently singled out as the number one characteristic of admired leaders. “Honesty is absolutely essential to leadership. If people are going to follow someone willingly, whether it be into battle or into the boardroom, they first want to assure themselves that the person is worthy of their trust.”59 In addition to being honest, credible leaders are competent and inspiring. They are personally able to effectively communicate their confidence and enthusiasm. Thus, followers judge a leader’s credibility in terms of his or her honesty, competence, and ability to inspire.

credibility The degree to which followers perceive someone as honest, competent, and able to inspire.IS

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Trust is closely entwined with the concept of credibility, and, in fact, the terms are often used interchangeably. Trust is defined as the belief in the integrity, character, and ability of a leader. Followers who trust a leader are willing to be vulnerable to the leader’s actions because they are confident that their rights and interests will not be abused.60

Research has identified five dimensions that make up the concept of trust:61

� Integrity: honesty and truthfulness � Competence: technical and interpersonal knowledge and skills � Consistency: reliability, predictability, and good judgment in handling situations � Loyalty: willingness to protect a person, physically and emotionally � Openness: willingness to share ideas and information freely

Of these five dimensions, integrity seems to be the most critical when someone assesses another’s trustworthiness.62 Both integrity and competence were seen in our earlier discus- sion of leadership traits found to be consistently associated with leadership.

Workplace changes have reinforced why such leadership qualities are important. For instance, trends of employee empowerment and self-managed work teams have reduced many of the traditional control mechanisms used to monitor employees. If a work team is free to schedule its own work, evaluate its own performance, and even make its own hiring decisions, trust becomes critical. Employees have to trust managers to treat them fairly, and managers have to trust employees to conscientiously fulfill their responsibilities.

Also, leaders have to increasingly lead others who may not be in their immediate work group or even may be physically separated—members of cross-functional or virtual teams, individuals who work for suppliers or customers, and perhaps even people who represent other organizations through strategic alliances. These situations don’t allow leaders the luxury of falling back on their formal positions for influence. Many of these relationships, in fact, are fluid and fleeting. So the ability to quickly develop trust and sustain that trust is crucial to the success of the relationship.

Why is it important that followers trust their leaders? Research has shown that trust in leadership is significantly related to positive job outcomes including job performance, organizational citizenship behavior, job satisfaction, and organizational commitment.63

Given the importance of trust to effective leadership, how can leaders build trust? The “Developing Your Trust-Building Skill” box looks at ways to develop trust-building skills.

Now, more than ever, managerial and leadership effectiveness depends on the ability to gain the trust of followers.64 Downsizing, corporate financial misrepresentations, and the increased use of temporary employees have undermined employees’ trust in their leaders and shaken the confidence of investors, suppliers, and customers. A survey found that only 39 percent of U.S. employees and 51 percent of Canadian employees trusted their executive

leaders.65 Today’s leaders are faced with the challenge of rebuilding and restoring trust with employees and with other important organizational stakeholders.

A Final Thought Regarding Leadership Despite the belief that some leadership style will always be effective regardless of the situation, leadership may not always be important! Research indicates that, in some situations, any behaviors a leader exhibits are irrelevant. In other words, certain individual, job, and organizational variables can act as “substitutes for leadership,” negating the influence of the leader.66

For instance, follower characteristics such as experi- ence, training, professional orientation, or need for inde- pendence can neutralize the effect of leadership. These characteristics can replace the employee’s need for a

312 PART FOUR | LEADING

As a vital component of effective leadership, trust includes the five key dimensions of integrity, competence, consistency, loyalty, and openness. Indra Nooyi, CEO and chair of PepsiCo, scores high on all these dimensions, which have contributed to her high job performance and career success. Since joining the company in 1994 as a senior vice president of strategy and development, Nooyi has earned the trust of top managers as she helped them make tough decisions that moved the company away from fast food to focusing on beverages and packaged food. Nooyi is shown here leading a meeting with other top executives at company headquarters in Purchase, New York.

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CHAPTER 11 | LEADERSHIP AND TRUST 313

trust The belief in the integrity, character, and ability of a leader.

Developing Your Skill About the Skill Given the importance trust plays in the leadership equa- tion, today’s leaders should actively seek to build trust with their followers. Here are some suggestions for achieving that goal.67

Steps in Practicing the Skill 1 Practice openness. Mistrust comes as much from

what people don’t know as from what they do know. Openness leads to confidence and trust. So keep people informed; make clear the criteria on how decisions are made; explain the rationale for your decisions; be candid about problems; and fully disclose relevant information.

2 Be fair. Before making decisions or taking actions, consider how others will perceive them in terms of objectivity and fairness. Give credit where credit is due; be objective and impartial in performance appraisals; and pay attention to equity perceptions in reward distributions.

3 Speak your feelings. Leaders who convey only hard facts come across as cold and distant. When you share your feelings, others will see you as real and human. They will know who you are and their respect for you will increase.

4 Tell the truth. If honesty is critical to credibility, you must be perceived as someone who tells the truth. Fol- lowers are more tolerant of being told something they “don’t want to hear” than of finding out that their leader lied to them.

5 Be consistent. People want predictability. Mistrust comes from not knowing what to expect. Take the time to think about your values and beliefs. Then let them consistently guide your decisions. When you know your central purpose, your actions will follow accordingly, and you will project a consistency that earns trust.

6 Fulfill your promises. Trust requires that people be- lieve that you’re dependable. So you need to keep your word. Promises made must be promises kept.

7 Maintain confidences. You trust those whom you be- lieve to be discrete and whom you can rely on. If peo- ple make themselves vulnerable by telling you something in confidence, they need to feel assured that you won’t discuss it with others or betray that confi- dence. If people perceive you as someone who leaks personal confidences or someone who can’t be de- pended on, you won’t be perceived as trustworthy.

8 Demonstrate confidence. Develop the admiration and respect of others by demonstrating technical and professional ability. Pay particular attention to devel- oping and displaying your communication, negotiat- ing, and other interpersonal skills.

Practicing the Skill You’re a new manager. Your predecessor, who was popular and who is still with your firm, concealed from your team how far behind they are on their goals this quarter. As a result, your team members are looking forward to a promised day off that they’re not entitled to and will not be getting.

It’s your job to tell them the bad news. How will you do it?

leader’s support or ability to create structure and reduce task ambiguity. Similarly, jobs that are inherently unambiguous and routine or that are intrinsically satisfying may place fewer demands on the leadership variable. Finally, such organizational characteristics as explicit formalized goals, rigid rules and procedures, or cohesive work groups can substitute for formal leadership.

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ApplicationsReview and

Chapter Summary 11.1 Define leader and leadership. A leader is

someone who can influence others and who has managerial authority. Leadership is a process of lead- ing a group and influencing that group to achieve its goals. Managers should be leaders because leading is one of the four management functions.

11.2 Compare and contrast early leadership theories. Early attempts to define leader traits were unsuccessful although later attempts found seven traits associated with leadership.

The University of Iowa studies explored three leadership styles. The only conclusion was that group members were more satisfied under a democratic leader than under an autocratic one. The Ohio State studies identified two dimensions of leader behavior—initiating structure and consideration. A leader high in both those dimensions at times achieved high group task perform- ance and high group member satisfaction, but not always. The University of Michigan studies looked at employee-oriented leaders and production-oriented leaders. They concluded that leaders who were em- ployee oriented could get high group productivity and high group member satisfaction. The managerial grid looked at leaders’ concern for production and concern for people and identified five leader styles. Although it suggested that a leader who was high in concern for production and high in concern for people was the best, there was no substantive evidence for that conclusion.

As the behavioral studies showed, a leader’s behavior has a dual nature: a focus on the task and a focus on the people.

11.3 Describe the four major contingency leadership theories. Fiedler’s model attempted to define the best style to use in particular situations. He measured leader style—relationship oriented or task oriented— using the least-preferred co-worker questionnaire. Fiedler also assumed a leader’s style was fixed. He measured three contingency dimensions: leader- member relations, task structure, and position power. The model suggests that task-oriented leaders per- formed best in very favorable and very unfavorable situations, and relationship-oriented leaders per- formed best in moderately favorable situations.

Hersey and Blanchard’s situational leadership theory focused on followers’ readiness. They identi- fied four leadership styles: telling (high task–low relationship), selling (high task–high relationship), participating (low task–high relationship), and delegating (low task–low relationship). They also identified four stages of readiness: unable and unwilling (use telling style); unable but willing

(use selling style); able but unwilling (use participa- tive style); and able and willing (use delegating style).

The leader-participation model relates leadership behavior and participation to decision making. It uses a decision tree format with seven contingencies and five alternative leadership styles.

The path-goal model developed by Robert House identified four leadership behaviors: directive, supportive, participative, and achievement-oriented. He assumes that a leader can and should be able to use any of these styles. The two situational contin- gency variables were found in the environment and in the follower. Essentially the path-goal model says that a leader should provide direction and support as needed; that is, structure the path so the followers can achieve goals.

11.4 Describe modern views of leadership and the issues facing today’s leaders. A transactional leader exchanges rewards for productivity where a transfor- mational leader stimulates and inspires followers to achieve goals.

A charismatic leader is an enthusiastic and self- confident leader whose personality and actions influ- ence people to behave in certain ways. People can learn to be charismatic. A visionary leader is able to create and articulate a realistic, credible, and attractive vision of the future.

A team leader has two priorities: manage the team’s external boundary and facilitate the team process. Four leader roles are involved: liaison with external constituencies, troubleshooter, conflict manager, and coach.

The issues facing leaders today include employee empowerment, national culture, and emotional intelli- gence. As employees are empowered, the leader’s role tends to be one of not leading. As leaders adjust their style to the situation, one of the most important situational characteristics is national culture. Finally, EI is proving to be an essential element in leadership effectiveness.

11.5 Discuss trust as the essence of leadership. The five dimensions of trust include integrity, competence, consistency, loyalty, and truthfulness. Integrity refers to one’s honesty and truthfulness. Competence involves an individual’s technical and interpersonal knowledge and skills. Consistency relates to an individual’s relia- bility, predictability, and good judgment in handling situations. Loyalty is an individual’s willingness to pro- tect and save face for another person. Openness means that you can rely on the individual to give you the whole truth.

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CHAPTER 11 | LEADERSHIP AND TRUST 315

To check your understanding of learning outcomes 11.1 – 11.5 , go to

mymanagementlab.com and try the chapter questions.

Understanding the Chapter

1. Discuss the strengths and weaknesses of the trait theory.

2. What would a manager need to know to use Fiedler’s contingency model? Be specific.

3. Do you think that most managers in real life use a contingency approach to increase their leadership effectiveness? Discuss.

4. “All managers should be leaders, but not all leaders should be managers.” Do you agree or disagree with this statement? Support your position.

5. Do you think trust evolves out of an individual’s personal characteristics or out of specific situations? Explain.

6. Do followers make a difference in whether a leader is effective? Discuss.

7. Research how organizations can develop effective leaders and write a short report explaining your findings.

8. When might leaders be irrelevant?

Understanding Yourself

Do Others See Me as Trustworthy? Effective leaders have built a trusting relationship between themselves and those they seek to lead. This instrument provides you with insights into how trustworthy others are likely to perceive you.

INSTRUMENT For each of the nine statements, respond using one of these answers:

1 = Strongly disagree

2 = Disagree

3 = Slightly disagree

4 = Neither agree nor disagree

5 = Slightly agree

6 = Agree

7 = Strongly agree

I am seen as someone who:

1. Is reliable. 1 2 3 4 5 6 7 2. Is always honest. 1 2 3 4 5 6 7 3. Succeeds by stepping on other people. 1 2 3 4 5 6 7 4. Tries to get the upper hand. 1 2 3 4 5 6 7 5. Takes advantage of others’ problems. 1 2 3 4 5 6 7 6. Keeps my word. 1 2 3 4 5 6 7 7. Doesn’t mislead others. 1 2 3 4 5 6 7 8. Tries to get out of my commitments. 1 2 3 4 5 6 7 9. Takes advantage of people who are vulnerable. 1 2 3 4 5 6 7

SCORING KEY To calculate your trustworthiness score, add up responses to items 1, 2, 6, and 7. For the other five items, reverse the score (7 becomes 1, 6 becomes 2, etc.). Add up the total.

ANALYSIS AND INTERPRETATION Your total trustworthiness score will range between 9 and 63. The higher your score, the more you’re perceived as a person who can be trusted. Scores of 45 or higher suggest others are likely to perceive you as trustworthy; while scores below 27 suggest that people will not see you as someone who can be trusted.

If you want to build trust with others, look at the behaviors this instrument measures. Then think about what you can do to improve your score on each. Examples might include being more open, speaking your feelings, giving generous credit to others, telling the truth, showing fairness and consistency, following through on promises and commitments, and maintaining confidences.

Source: Based on P. Bromiley and L. Cummings, “The Organizational Trust Inventory,” in R. M. Kramer and T. R. Tyler (eds.), Trust in Organizations (Thousand Oaks, CA: Sage, 1996), pp. 328–29.

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316 PART FOUR | LEADING

FYIA (For Your Immediate Action)

Preferred Bank Card, Inc.

To: Pat Muenks, VP Employee Relations From: Jan Plemmons, Customer Service Director

Subject: Leadership Training

I agree completely with your recommendation that we need a leadership training

program for our customer service team leaders. These leaders struggle with keeping

our customer service reps focused on our goal of providing timely, accurate, and

friendly service to our bank card holders who call in with questions or complaints.

Can you put together a one-page proposal that describes the leadership topics you

think should be covered? Also, give me some suggestions for how we might present the

information in a way that would be interesting. We need to get started on this immediately,

so please get this report to me by early next week.

This fictionalized company and message were created for educational purposes only. It is not meant to reflect positively or negatively on management practices by any company that may share this name.

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CASE APPLICATION

317

How important are excellent leaders toorganizations? If you were to ask3M CEO George Buckley, he’d say extremely important. But he’d also say that excellent leaders don’t just pop up out of nowhere. A company has to cultivate leaders who have the skills and abilities to help it survive and thrive. And like a successful baseball team with strong performance statistics that has a player development plan in place, 3M has its own farm system. Except its farm system is designed to develop company leaders.

3M’s leadership development program is so effective that in 2009 Chief Executive magazine and Hay Consulting Group named the company the best at developing future leaders. What is 3M’s leadership program all about? About eight years ago, the company’s former CEO (Jim McNerney, who is now Boeing’s CEO) and his top team spent 18 months developing a new leadership model for the company. After numerous brainstorming sessions and much heated debate, the group finally agreed on six “leadership attributes” that they believed were essential for the company to become skilled at executing strategy and being accountable. Those six attributes included the ability to “chart the course; energize and inspire others; demonstrate ethics, integrity, and compliance; deliver results; raise the bar; and innovate resourcefully.” And now under Buckley’s guidance, the company is continuing and reinforcing its pursuit of leadership excellence with these six attributes.

When asked about his views on leadership, Buckley said that he believes there is a difference between leaders and managers. “A leader is as much about inspiration as anything else. A manager is more about process.” He believes that the key to developing leaders is to focus on those things that can be developed— like strategic thinking. Buckley also believes that leaders should not be promoted up and through the organi- zation too quickly. They need time to experience failures and what it takes to rebuild.

Finally, when asked about his own leadership style. Buckley responded that, “The absolutely best way for me to be successful is to have people working for me who are better. Having that kind of emotional self-confidence is vital to leaders. You build respect in those people because you admire what they do. Having built respect, you build trust. However hokey it sounds, it works.” And it must be working as the company was named the number one most admired company in the medical and other precision equipment division of Fortune’s most admired ranking for 2009.

Discussion Questions

1. What do you think about Buckley’s statement that leaders and managers differ? Do you agree? Why or why not?

2. What leadership models/theories/issues do you see in this case? List and describe.

3. Take each of the six leadership attributes that the company feels is important. Explain what you think each one involves. Then discuss how those attributes might be developed and measured.

4. What did this case teach you about leadership?

Sources: J. Kerr and R. Albright, “Finding and Cultivating Finishers,” Leadership Excellence (July 2009), p. 20; D. Jones, “3M CEO Emphasizes Importance of Leaders,” USA Today, May 18, 2009, p. 4B; G. Colvin, “World’s Most Admired Companies 2009,” Fortune, March 16, 2009, pp. 75+; and M. C. Mankins and R. Steele, “Turning Great Strategy into Great Performance,” Harvard Business Review (July/August 2005), pp. 64–72.

GROWING LEADERS

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