Traits and Leadership Styles of an Effective Manager

(Term Paper towards the partial fulfillment of the assessment in the subject of General Psychology)

SUBMITTED BY : SUBMITTED TO :

Chinmay Deshmukh (820) Dr. Manisha Mirdha

& Faculty of General Psychology

Sachin Bhandawat (845)

National Law University, Jodhpur

Summer Session

(July - November 2011)

TABLE OF CONTENTS

S NO. CONTENTS PAGE NO.

1. Introduction and Significance of the Topic 4

2. CHAPTER 1

Leadership Styles and their Implications

6

3. CHAPTER 2

Theories of Leadership

11

4. CHAPTER 3

Contemporary Issues in Managerial Leadership

21

5. CHAPTER 4

Case Studies

25

6. Conclusion 27

7. Bibliography 28

2

ACKNOWLEDGMENT

Apart from the efforts put in by us, the success of any project depends largely on the

encouragement and guidelines of many others. We take this opportunity to express our gratitude

to the people who have been instrumental in the successful completion of this project.

We would like to show our deepest gratitude to Dr. Manisha Mirdha, Faculty of General

Psychology for giving us an opportunity to work on this project. Without her encouragement and

guidance this project would not have materialized.

We would also like to thank the library staff of NLU Jodhpur for providing us with all the

essential research material which we required during the course of our project.

This acknowledgement will be incomplete without thanking our parents and friends who always

held our back, their encouragement has been instrumental in motivating us and making this

project a success.

Thanking you all once again,

Chinmay Deshmukh & Sachin Bhandawat

3

INTRODUCTION AND SIGNIFICANCE OF THE TOPIC

Leadership is an integrated part of the management and plays a vital role in managerial

operations. Though, in theory, there are differences between leaders and managers, in real life

organizations there are no distinct leaders, there are only managers. They act in the capacity of

both the leaders as well as managers. Organizations need strong leadership and strong

management for utmost effectiveness. If there is any single factor that differentiates between

successful and unsuccessful organizations, it could be considered dynamic and effective

leadership. Perhaps, it would be a valid assumption to state that the major cause of most business

failures would be ineffective leadership. It is a critical factor that helps an individual or a group

identify its goals and then motivates and assists in achieving the stated goals. Without leadership,

an organization would be only a confusion of people and machines, just as an orchestra without a

conductor would be only musicians and instruments. The orchestra and all other organizations

require leadership to develop their precious assets to the fullest.

In simple layman’s language, a leader is one who leads or guides, one who is in charge

or in command of others. But most management writers agree that “leadership is a process

whereby an individual influences a group of individuals to achieve a common goal in a given

situation”1 It is important to have the element of willingness in the above definition. Motivation

and influencing people to move towards a common goal are all essential elements of

management but the “willingness” of the followers to be led, highlights a special quality that puts

a leader high above others.

Based on these elements of leadership function, the leadership may be defined as:

L= F (f, g, w, s)

Where leadership (L) is a function (f) of

f = followers

1 Peter Guy Northouse, Leadership: Theory and Practice (SAGE Publications India, New Delhi, 4th ed., 2008) P.226

4

g = goals

w = a measure of willingness on the part of subordinates, and

s = a given situation

The leadership process is similar in effect to that of the secret chemical that turns a caterpillar

into a butterfly with all the beauty that was the caterpillar’s potential. Leadership is a catalyst

that transforms potential into reality. Every manager has to act as a leader in his area of

operation. This means he has to guide, instruct, lead and motivate his subordinates so as to use

their skills, efficiency, capacity etc. for the benefit of his organization. He has to influence the

behavior of his subordinates and get the work done through their collective efforts. Leadership

qualities are required in order to conduct various managerial functions effectively. Each and

every group of people engaged in a particular activity needs a leader in order to guide, co-

ordinate and control their efforts. In this sense, leadership is required for the conduct of

economic, social, political or cultural activities. In all cases, leadership is the ultimate act that

identifies, develops, channels and enriches the potential that is already in an organization and its

people. 2

An effective manager is one who has an ability to achieve desired result. Personality

traits and leadership style play a significant role in determining managerial effectiveness. These

styles vary according to the nature and goals of an organization. What makes a manager effective

in one organization, one situation, at one time, can be ineffective in another organization,

situation or time. But some researchers do claim to have identified a range of characteristics and

leadership styles that are common to the more successful managers. In the present project work

we will discuss major theories underlying the most commonly accepted management/leadership

practices and the concepts they are based on.

2 John W. Newstorm & Keith Davis, Organizational behavior human behavior at work, 11th Ed. Tata McGraw-Hill,

2002, p. 163

5

CHAPTER 1

LEADERSHIP STYLES AND THEIR IMPLICATIONS

Leadership style is the typical approach a particular person uses to lead people. The behavior the

leader exhibits during supervision of subordinates is known as leadership style. Style is said to

comprise two distinct elements – the leader’s assumption about subordinates, and the leader’s

actual behavior while interacting with subordinates.

Leadership styles can be divided into four types:

1) Style based on the amount of authority retained by the leader.

2) Styles based on the relative emphasis placed on the task to be performed versus that

placed on the people.

3) Styles based on the assumptions about people made by the leader.

4) Entrepreneurial leadership styles.

1. STYLES BASED ON AUTHORITY RETAINED:

This is the classical approach to classifying the leadership styles. Styles in this approach are

classified depending on how much authority is retained by the leader versus how much is

delegated to the subordinate employees. Generally, it is classified into following three styles.3

A) Authoritarian Style:

This style is also called as autocratic style. It involves retention of full authority by the leader.

Leader decides, decision is passed on to the subordinates, instructions about the implementation

3 Gaurav Akrani , Managerial Leadership - Leader Qualities - Leadership Theories, http://kalyan-

city.blogspot.com, visited on August 2, 2011.

6

of decision are given and the subordinates are expected to do what the leader has told them to do.

Advantage of this leadership style is that tasks are efficiently completed, since there is no

opportunity for the time consuming two-way communication associated with democratic styles.

Also some workers prefer autocratic leadership because they feel secure under his leadership. In

such cases, productivity and morale of the workers tend to be high.

B) Participative style:

There are three related types of participative leaders-

Consultative leaders solicit opinions from groups before discussion but do not feel

obliged to follow the group’s thinking.

Consensual leaders make a decision that reflects the general agreement of group

members in a group discussion.

Democratic leaders delegate full authority to subordinates.

Participative style is highly effective where group comprises competent and motivated members

who want to get involved in making decisions and giving feedback to the leader. It also increases

employees’ feeling of self-worth and satisfaction because leader conveys sense of confidence in

employee judgment. Employee participation in decision making improves the quality of

decisions also there is less resistance to change because those who have developed the solution

usually support its implementation.4

C) Free-rein style:

Also called laissez-faire, free rein leader choose not to adopt a leadership role and actually

abdicates leadership position, generally relinquishing it to someone else in the work group. Free-

rein leadership works effectively when the group is composed of highly committed members.5 It

can be very useful in businesses where creative ideas are important. It can be highly

motivational, as people have control over their working life.6

4 Ibid.5 Stephen P. Robbins, Organizational Behavior (Prentice-Hall of India Private Limited, New-Delhi, 9th edn., 2001),

p. 3316 Vali C., A leadership story, http://www.slideshare.net/awasare/leadership-presentation-971688, visited on 4th

August, 2011

7

2. STYLES BASED ON TASK VERSUS PEOPLE EMPHASIS:

Leadership styles can also be classified on the basis of relative concern the leader places on the

task to be performed vis-à-vis the people performing the task. Depending on the task emphasis or

people emphasis, four combinations are possible.

HIGH

RELATIONSHIP

AND LOW TASK

HIGH TASK AND

HIGH

RELATIONSHIP

LOW TASK AND

LOW

RELATIONSHIP

HIGH TASK AND

LOW RELATIONSHIP

Low High

TASK EMPHASIS

A leader who places greater emphasis on task performance tends to exhibit the following

behaviors:

1. Organizing and defining the roles of the group members.

2. Explaining what activities each has to do and when, where and how tasks are to be

accomplished.

3. Establishing well defined patterns of organization, channels of communication and ways

of task accomplishment.

8

A leader who places greater emphasis on people tries to gain their relationships by exhibiting

such behavior as:

1. Establishing channels of communication

2. Extending psychological support to them

3. Developing mutual trust.

4. Developing empathy for them.

3. STYLES BASED ON ASSUMPTION ABOUT PEOPLE:

Depending on what assumption a leader makes about his or her followers two styles may be

distinguished. This two-way classification is based on McGregor’s famous Theory X and Theory

Y assumptions about people. The assumptions in Theory X and Theory Y are fundamentally

distinct.

Theory X is static, rigid, conservative and pessimistic. It assumes that employees are

inherently lazy, self-centered and indifferent to organizational needs. Theory X leaders are

autocratic. More importance is given to external control imposed by the superior on the

subordinate in the Theory X.7 They distrust people and believe in close supervision and tight

control over the subordinates. A manager, to be effective, has to persuade, punish or reward such

workers in order to achieve organizational goals.

Theory Y is optimistic, dynamic, flexible and progressive. It suggests self direction and the

integration of individual needs with organizational needs. It emphasizes creating opportunities,

removing obstacles, providing guidance and encouraging growth. By using these tools, the

management can integrate individual goals of employees with those of the organization. Theory

Y leaders are participative; they trust subordinates and allow them to participate in decision

making. 8

7 Gaurav Akrani, Douglas McGregor's Theory X & Theory Y - Employee Motivation, http://kalyan-

city.blogspot.com, visited on 29th July, 20118 Jit S. Chandan, Organizational Behavior, (Vikas Publishing House Pvt. Ltd., New Delhi, 2nd Rev. Ed., 1998) P.

339

9

4. ENTREPRENEURSHIP LEADERSHIP STYLE :

Entrepreneur is a person who converts an innovative idea into business. Based on both their

personality characteristics and the circumstances of operating the business, many entrepreneurs

use a similar leadership style. The most notable features of this style are:

Impatience and roughness towards employees because the entrepreneur is always busy.

A heavy task orientation combined with a very direct- approach to giving instructions to

employees.

A charismatic personality that inspires others to want to do business with him or her

despite the impatience.

A much stronger interest in dealing with customers than employees.

A strong dislike for bureaucratic rules and regulations.

Anxiety to consolidate business gains as quickly as possible.

10

CHAPTER 2

THEORIES OF LEADERSHIP

1. TRAIT THEORY

Theories that consider personal qualities and characteristics that differentiate leaders from non

leaders.9 The trait model of leadership is based on the characteristics of many leaders - both

successful and unsuccessful - and is used to predict leadership effectiveness. The resulting lists

of traits are then compared to those of potential leaders to assess their likelihood of success or

failure. The trait theory gives constructive information about leadership. It can be applied by

people at all levels in all types of organizations. A breakthrough occurred when leadership traits

began to revolve around the Big Five personality framework.10 Extraversion, Agreeableness,

Conscientiousness, Emotional Stability and Openness to Experience; these are the Big Five and

research shows that these traits encompass most of the significant variation in human

Personality.11 What became clear was the fact that most of the traits emerging in leadership

reviews can be subsumed under the Big Five and this approach resulted in consistent and strong

support for traits as predictors of leadership.

There is a lot of value in identifying the character traits associated with leadership. It is

even more valuable to identify the character traits that followers look for in a leader. These traits

would be the characteristics of an individual who is most likely to attract followers.12

Successful leaders definitely have interests, abilities, and personality traits that are

different from those of the less effective leaders. Through many researches conducted in the last

three decades of the 20th century, a set of core traits of successful leaders have been identified. 9 Robbins & Judge, Organizational Behavior (Prentice-Hall India, 12th Edition, Pg 403)10 Ilies, Grehardt, T. A. Judge and J.E. Bono, “Personality and Leadership”, Aug 2002, Pg 765- 78011 J. M. Digman, “Personality Structure”, Annual Revies of Psychology, Vol 41 Pg 417-44012 Mark Shead, Leadership Trait Theory

11

These traits are not responsible solely to identify whether a person will be a successful leader or

not, but they are essentially seen as preconditions that endow people with leadership potential.

Advantages of Trait Theory

It is valid as lot of research has validated the foundation and basis of the theory.

It serves as a yardstick against which the leadership traits of an individual can be

assessed.

It gives a detailed knowledge and understanding of the leader element in the leadership

process.

Limitations of Trait Theory

There is bound to be some subjective judgment in determining who is regarded as a

‘good’ or ‘successful’ leader

The list of possible traits tends to be very long. In a research in 1960 80 traits were

identified, but only 5 of these were common to 4 of more of the investigations.13

There is also a disagreement over which traits are the most important for an effective

leader

Implications of Trait Theory

The trait theory gives constructive information about leadership. It can be applied by people at

all levels in all types of organizations. Managers can utilize the information from the theory to

evaluate their position in the organization and to assess how their position can be made stronger

in the organization. They can get an in-depth understanding of their identity and the way they

will affect others in the organization. This theory makes the manager aware of their strengths and

weaknesses and thus they get an understanding of how they can develop their leadership

qualities.

13 J.G. Geier, “A Trait Approach to the Study of Leadership in small Groups”, Journal of Communication, Dec 1967,

Pg 316-323

12

Conclusion

The traits approach gives rise to questions: whether leaders are born or made; and whether

leadership is an art or science. However, these are not mutually exclusive alternatives.

Leadership may be something of an art; it still requires the application of special skills and

techniques. Even if there are certain inborn qualities that make one a good leader, these natural

talents need encouragement and development. Hence, two conclusions can be asserted, First,

Traits can predict leadership and Second, traits do a better job at predicting at predicting the

emergence of leaders and better distinguish between effective and ineffective leaders.14  Even if

there are certain inborn qualities that make one a good leader, these natural talents need

encouragement and development. A person is not born with self-confidence. Self-confidence is

developed, honesty and integrity are a matter of personal choice, motivation to lead comes from

within the individual, and the knowledge of business can be acquired. While cognitive ability has

its origin partly in genes, it still needs to be developed

2. BEHAVIORAL THEORY

Behavioral theories of leadership are based upon the belief that great leaders are made, not born.

Rooted in behaviorism, this leadership theory focuses on the actions of leaders not on mental

qualities or internal states. According to this theory, people can learn to become leaders through

teaching and observation.15 It proposes that specific behavior separates leaders from non

leaders.16 The emphasis of this theory is to study how a leader behaves and this emphasis results

in followers performance and satisfaction.17

There are two important behavioral studies:

1. Ohio State Studies 18

14 Lord, De Vader & Alliger “A Meta Analysis of the Relation between Personality Traits and Leadership

Perceptions” Aug 1968.15 Kendra Cherry, “Leadership Theories”16 Robbins & Judge, Organizational Behavior (Prentice-Hall India, 12th Edition, Pg 403)17 K. Aswathappa, Organizational Behaviour (4th Edn, Pg 329)

13

Ohio State University developed a list of 150 statements from their generated responses that

included 1,800 hundred statements. The list was designed to measure nine different behavioral

leadership dimensions. The resulting questionnaire is now well-known as the LBDQ or the

Leaders Behavior Description Questionnaire.

As part of the study, the LBDQ was administered to various groups of individuals

ranging from college students and their administrators, private companies including military

personnel. One of the primary purposes of the study was to identify common leadership

behaviors. After compiling and analyzing the results, the study led to the conclusion that there

were two groups of behaviors that were strongly correlated. These were defined as:

Consideration (People Oriented behavioral Leaders)

The task concerned leaders are focusing their behaviours on the organizational structure, the

operating procedures (S.O.P.) and they like to keep control. Task-oriented leaders are still

concern with their staff motivation; however it's not their main concern.

Initiating Structure (Task Oriented Leaders)

The people oriented leaders are focusing their behaviors on ensuring that the inner needs of the

people are satisfied. Thus they will seek to motivate their staff through emphasizing the human

relation. People oriented leaders still focus on the task and the results; they just achieve them

through different means

2. University of Michigan Studies

Lead by the famous organizational psychologist, Dr. Rensis Likert, the leadership studies at the

University of Michigan identified three characteristics of effective leadership; two of which were

previously observed in studies that had been conducted at Ohio State University. The study

showed that task- and relationship-oriented behaviors weren't of major significance within the

world of organizational psychology. However it was the third observation that introduced a new

concept, one of participative leadership.

3. Managerial Grid

18 Stogdill & Conns, Leader Behavior: its Description and Measurement, Ohio State Univ, Bureau of Business

Research, 1951

14

The managerial grid model (1964) is a behavioral leadership model developed by Robert R.

Blake and Jane Mouton.19 This model originally identified five different leadership styles based

on the concern for people and the concern for production.

The model is represented as a grid with concern for production as the [x-axis]] and concern for

people as the Y-axis; each axis ranges from 1 (Low) to 9 (High). The resulting leadership styles

are as follows:

19 R.R. Blake & J.S. Mouton, The Managerial Grid, (Houston: Gulf, 1964)

15

The indifferent (previously called impoverished) style (1, 1): evade and elude. In this style,

managers have low concern for both people and production. Managers use this style to

preserve job and job seniority, protecting themselves by avoiding getting into trouble.

The accommodating (previously, country club) style (1, 9): yield and comply. This style has

a high concern for people and a low concern for production. Managers using this style pay

much attention to the security and comfort of the employees, in hopes that this will

increase performance.

The dictatorial (previously, produce or perish) style (9, 1): control and dominate. With a high

concern for production, and a low concern for people, managers using this style find

employee needs unimportant; they provide their employees with money and expect

performance in return. Managers using this style also pressure their employees through rules

and punishments to achieve the company goals

The status quo (previously, middle-of-the-road) style (5,5): balance and compromise.

Managers using this style try to balance between company goals and workers' needs. By

giving some concern to both people and production, managers who use this style hope to

achieve suitable performance but doing so gives away a bit of each concern so that neither

production nor people needs are met.

The sound (previously, team style) (9,9): contribute and commit. In this style, high concern

is paid both to people and production. As suggested by the propositions of Theory Y,

managers choosing to use this style encourage teamwork and commitment among

employees.

3. CONTINGENCY THEORY

16

Contingency theory is a class of behavioral theory that claims that there is no best way to

organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of

action is contingent (dependent) upon the internal and external situation.20

1. FIEDLER’S THEORY

Fiedler’s contingency model postulates that the leader’s effectiveness is based on ‘situational

contingency’ which is a result of interaction of two factors: leadership style and situational

favorableness (later called situational control).21

Least Preferred Co-Worker

Fiedler identified the a Least Preferred Co-Worker scoring for leaders by asking them first to

think of a person with which they worked that they would like least to work with again, and then

to score the person on a range of scales between positive factors (friendly, helpful, cheerful, etc.)

and negative factors (unfriendly, unhelpful, gloomy, etc.). High LPC leaders tend to have close

and positive relationships and act in a supportive way, even prioritizing the relationship before

the task. Low LPC leaders put the task first and will turn to relationships only when they are

satisfied with how the work is going.

Situational Favorableness

According to Fiedler, there is no ideal leader. Both low-LPC (task-oriented) and high-LPC

(relationship-oriented) leaders can be effective if their leadership orientation fits the situation.

The contingency theory allows for predicting the characteristics of the appropriate situations for

effectiveness. Three situational components determine the favorableness of situational control:

1. Leader-Member Relations, referring to the degree of mutual trust, respect and confidence

between the leader and the subordinates.

2. Task Structure, referring to the extent to which group tasks are clear and structured.

3. Leader Position Power, referring to the power inherent in the leader's position itself.22

20 Woodward, J. (1958): Management and Technology. (London: Her Majesty’s Stationary Office.)21 Fiedler, F. E. (1958) Leader Attitudes and Group Effectiveness,( Urbana, IL: University of Illinois Press)22 Robins, Organizational Behavior, (9th Edn, San Diego State University, 2001)

17

In conclusion, it may be stated that Fiedler has clearly made exceptional contribution towards

understanding effective leadership, but his model has been the object of much controversy. Field

studies fall short of providing full support and the model could benefit by including additional

moderating variables. But all in all Fielders’ work continues to be a dominant contingency

theory.

2. PATH- GOAL THEORY

According to the original theory, the manager’s job is viewed as guiding workers to choose the

best paths to reach their goals, as well as the organizational goals. The theory argues that leaders

will have to engage in different types of leadership behavior depending on the nature and the

demands of a particular situation. It is the leader’s job to assist followers in attaining goals and to

provide the direction and support needed to ensure that their goals are compatible with the

organization’s goals.23

A leader’s behavior is acceptable to subordinates when viewed as a source of satisfaction, and

motivational when need satisfaction is contingent on performance, and the leader facilitates,

coaches, and rewards effective performance. The original path-goal theory

identifies achievement-oriented, directive, participative, and supportive leader behaviors:

The directive path-goal clarifying leader behavior refers to situations where the leader

lets followers know what is expected of them and tells them how to perform their tasks.

The theory argues that this behavior has the most positive effect when the subordinates'

role and task demands are ambiguous and intrinsically satisfying.24

The achievement-oriented leader behavior refers to situations where the leader sets

challenging goals for followers, expects them to perform at their highest level, and shows

confidence in their ability to meet this expectation. Occupations in which the

achievement motive were most predominant were technical jobs, sales persons, scientists,

engineers, and entrepreneurs.25

23 House, Robert J. (1971). "A path-goal theory of leader effectiveness". Administrative Science Quarterly24 Mitchell, T.R. & House, Robert J (1974). "Path-goal theory of leadership". Journal of Contemporary Business

18

The participative leader behavior involves leaders consulting with followers and asking

for their suggestions before making a decision. This behavior is predominant when

subordinates are highly personally involved in their work.26

The supportive leader behavior is directed towards the satisfaction of subordinates needs

and preferences. The leader shows concern for the followers’ psychological well

being. This behavior is especially needed in situations in which tasks or relationships are

psychologically or physically distressing.27

Path-goal theory assumes that leaders are flexible and that they can change their style, as

situations require. The theory proposes two contingency variables, such as environment and

follower characteristics, that moderate the leader behavior-outcome relationship. Environment is

outside the control of the follower-task structure, authority system, and work group. 

Environmental factors determine the type of leader behavior required if the follower

outcomes are to be maximized. Follower characteristics are the locus of control, experience, and

perceived ability. Personal characteristics of subordinates determine how the environment and

leader are interpreted. Effective leaders clarify the path to help their followers achieve goals and

make the journey easier by reducing roadblocks and pitfalls.

3. SITUATIONAL LEADERSHIP THEORY28

According to Situational Leadership Theory, as the level of maturity of their followers continues

to increase in terms of accomplishing a specific task, leaders should begin to reduce their task

25 House, Robert J. (1996). "Path-goal theory of leadership: Lessons, legacy, and a reformulated theory".

Leadership Quarterly26 ibid27 ibid28 Hersey, P. and Blanchard, K. H. (1969). Management of Organizational Behavior – Utilizing Human Resources.

New Jersey/Prentice Hall.

19

behavior and increase relationship behavior until the individual or group reaches a moderate

level of maturity. As the individual or group begins to move into an above average level of

maturity, it becomes appropriate for leaders to decrease not only task behavior but also

relationship behavior. Now the individual or group is not only mature in terms of the

performance of the task but is also psychologically mature. Since the individual or group can

provide their own “strokes” and reinforcements, a great deal of socio-emotional support from the

leader is no longer necessary.

The individual or group at this maturity level sees a reduction of close supervision and an

increase in delegation by the leader as a positive indication of trust and confidence. Thus, the

situational leadership theory focuses on the appropriateness or effectiveness of leadership styles

according to the task-relevant maturity of the followers.

Situational leadership is therefore the process of influencing the activities of an individual

or a group in efforts toward goal achievement in a given situation. In essence, leadership

involves accomplishing goals with and through people. Therefore, a leader must be concerned

about tasks and human.

CHAPTER 3

CONTEMPORARY ISSUES IN MANAGERIAL LEADERSHIP

20

1. EMOTIONAL INTELLIGENCE AND MANAGERIAL EFFECTIVENESS 29

Prior research has explored the concept of emotional intelligence, which is the ability both to

know one’s own emotions and to read others’ emotions as well.30 Work by Goleman (1995;

1998) has assessed the link between emotional intelligence and leadership ability. Goleman

researched and analyzed 188 companies (primarily large and global organizations), to determine

the personal capabilities among leaders which appeared to drive outstanding performance within

these organizations, and to what degree they did so.

Personal capabilities were clustered in three categories:

1) Technical skills, such as accounting and engineering;

2) Cognitive skills like analytical reasoning; and

3) Competencies demonstrating emotional intelligence (EI), such as the ability to work with

others and effectiveness in leading change.31

According to Goleman’s research, emotional intelligence proved to be twice as important as

technical skills and cognitive abilities for leadership jobs at all levels of an organization.

Intellect remained a driver of outstanding performance, and cognitive skills such as big picture

thinking and long-term vision were also important, but mainly as “threshold capabilities”: entry-

level requirements for executive positions. Goleman (1998) listed five components of emotional

intelligence that an effective leader exhibits: self-awareness, self-regulation, motivation,

empathy, and social skill.

1. Self-awareness means having a deep understanding of one’s emotions, strengths,

weaknesses, needs, and drives, as well as their effect on others. Characteristics of a self-

aware individual include self-confidence, realistic self-assessment, and a self-

depreciating sense of humor.

29 Stephen P. Robbins, Organizational Behavior (Prentice-Hall of India Private Limited, New-Delhi, 9th edn., 2001),

p. 332.

30 Davies, M., Stankov, L., & Roberts, R. D. (1998), Emotional intelligence: In search of an elusive construct,

Journal of Personality and Social Psychology, 75, 989-1015.31 Ibid.

21

2. Self-regulation is the ability to control or redirect disruptive impulses and moods and the

propensity to suspend judgment--to think before acting. Characteristics include

trustworthiness, integrity, and comfort with ambiguity and openness to change.

3. Motivation, the third component, is defined as a passion to work for reasons that go

beyond money or status, with a propensity to pursue goals with energy and persistence.

Characteristics of a motivated emotionally intelligent leader are strong desire to achieve,

optimism--even in the face of failure--and organizational commitment.

4. Empathy, the fourth component, is the ability to understand the emotional makeup of

other people, with skill in treating people according to their emotional reactions.

Characteristics include service to clients and customers, cross-cultural sensitivity, and

expertise in building and retaining talent.

5. Social skill, the final component of EI, is proficiency in managing relationships and

building networks, with an ability to find common ground and build rapport.

Characteristics include effectiveness in leading change, persuasiveness, and expertise in

building and leading teams.

These recent evidences make a strong case for concluding that Emotional Intelligence (EI) is an

essential element in leadership effectiveness.

2. MORAL LEADERSHIP

Leadership effectiveness needs to address the means that a leader uses in trying to achieve goals

as well as the content of those goals. Leadership is not value free. Before we judge any leader to

be effective, we should consider both the means used by the leader to achieve his or her goals

and the moral content of those goods.32 Ethical leaders must address the content of a leader’s

goals.

Ethics touches leadership at a number of junctures. Transformational leaders, for example, have

been described as fostering moral virtues when they try to change the attitude and behaviors of

32 Doyle, M. E. and Smith, M. K. (2001) ‘Classical leadership’, the encyclopedia of informal education,

http://www.infed.org/leadership/traditional_leadership.htm, visited on 3rd August, 2011

22

followers. Charisma, too, has an ethical component. Unethical leaders are more likely to use their

charisma to enhance power over followers, directed towards self-serving ends. Ethical leaders

are considered to use their charisma in a socially constructive way to serve others.

For example, GE’s Jack Welch is consistently described as a highly effective leader

because he has succeeded in achieving outstanding returns for shareholders. But Welch is also

widely regarded as one of the world’s toughest managers. He is regularly listed high on

Fortune’s annual list of the most hated and reviled executives. Similarly, Bill Gate’s success in

leading Microsoft to domination of the world’s software business has been achieved by means of

an extremely demanding work culture. Microsoft’s culture demands long work hours by

employees and is intolerant of individuals who want to balance work and their personal life.

3. CROSS-CULTURAL LEADERSHIP

National culture is an important situational factor determining which leadership style will be

most effective. National culture affects leadership by way of the follower. Leaders cannot

choose their style at will. They are constrained by the cultural conditions that their followers

have come to expect. Today’s international organizations require leaders who can adjust to

different environments quickly and work with partners and employees of other cultures.33 It

cannot be assumed that a manager who is successful in one country will be successful in

another.34

For examples: 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 infrequently. And Scandinavian and Dutch

leaders who single out individuals with public praise are likely embarrass those individuals

rather than energize them.

33 House, R., Javidan, M., & Dorfman, P. (2001). Project GLOBE: An Introduction. Applied Psychology: An

International Review, http://en.wikipedia.org/wiki/Cross-cultural_leadership, visited on 4th August, 2011

34 Stephen P. Robbins, Organizational Behavior (Prentice-Hall of India Private Limited, New-Delhi, 9th edn., 2001),

p. 335

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Most leadership theories were developed in the United States, using U.S. subjects, so they have

an American bias. They emphasize follower responsibilities rather than rights; assume hedonism

rather than commitment to duty or altruist motivation; assume centrality of work and democratic

value orientation; and stress rationally rather than spirituality, religion, or superstition.

A manipulative or autocratic style is compatible with high power distance countries, like Arab,

Far Eastern and Latin countries, where employees are too afraid to express their doubts and

disagreements with their autocratic and paternalistic bosses. Participative style is likely to be

most effective in low power distance cultures, where employees or subordinates are considered

equal, such as Norway, Denmark, Finland and Sweden.35

An effective leader, in this context, would be one who can promptly adapt to different

environments and work with partners and employees of other cultures.

35 Low vs. High Power Distance, www.ehow.com /facts_7504374_low-vs-high-power-distance.html, visited on 5th August, 2011

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CHAPTER 4

CASE STUDIES

1. LEADERSHIP AT LUFTHANSA: HEINZ RUHNAU

Leadership depends upon the leader, the followers and the situation. Heinz Ruhnau, the CEO at

Lufthansa, has had an interesting career, one that has equipped him for dealing with internal and

external forces.

As a young man, he was an apprentice in electrical tool and die making. He studied

business administration, and after graduation, he became a union official. Later he served in the

senate in Hamburg. The federal Government called on him to serve as state secretary in the

Department of Transportation. In this role, he also was the member of the board of directors of

Lufthansa before taking over as a chief executive officer of the airline.

External factors do have a bearing on Ruhnau’s effectiveness, for the German

government owns about 77 percent of Lufthansa. This means that the leader has to be familiar

with the workings of the government.

An understanding of the internal environment is also essential for leadership. A need for

change is usually recognized by the works force when a company is in severe difficulties. But

how does a leader change an enterprise when it is relatively stressful and employees do not see

an urgent need for change? Lufthansa was quite successful despite an elaborate and inefficient

bureaucracy. How does a leader cope with such a situation? According to Ruhnau, “You can’t

cure a bureaucracy. You have to kill it.”

Ruhnau shook up the company through re-organization, which, in turn, set off a storm.

Specifically, through organizational rearrangements, management was given more decision

power, with fewer requirements of consulting with employees. In Germany, in general,

employees have considerable influence on company policy through worker representation. The

actions by Ruhnau, a former labor leader, shocked some employees and surprised others,

winning him few friends. Yet Ruhnau felt that the increasing competition in the airline industry

demanded a lean organization and fast responses to the changing environment.

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While the reorganization resulted in less consultation with workers, Ruhnau wants to stay

close to them. This is illustrated by his behavior. When he flies, for example, he talks to all flight

attendants and even serves coffee to the crew.

2. LEADERSHIP AT AVON: ANDREA JUNG

Andrea Jung is a chairman and CEO of Avon Products Inc. Jung joined Avon in 1994 after

working for retailers such as Neiman Marcus. Her original Task at Avon was to create a global

brand. She did just that. She integrated and standardized company’s logo, packaging, and ads to

create a uniform image; and she pushed for the current corporate slogan, “The Company for

women”. Based on her success in improving Avon’s marketing focus, the company’s board

appointed her as chairman and CEO in November 1999.

The company that Jung took over was in deep trouble. The day of the “Avon Lady” seemed to be

have passed. Fewer women were signing on as Avon reps and sales were sagging. But after only

4 weeks in her new job Jung had a turn-around plan worked out. Avon would launch an entirely

new line of business, develop blockbuster products, begin selling Avon products in retail stores

and significantly expand international sales. She added 46 percent to Avon’s research and

development budget to get block-busters to market faster. This led to the launching of

Retroactive, and anti-aging skin cream that has become a runaway hit, and new lines of vitamins

and therapy oils. She breathed new life into the ranks of “Avon Ladies”.

To rebuild the company’s sales force, she created a multilevel marketing program that rewards

current sales people for signing up new reps. The number of sales reps is now increasing for the

first time in years. Finally, by aggressively moving into international markets, Avon now gets

almost two-thirds of its $ 6.2 billion in sales from outside the USA.

After 6 years on the job, Jung’s leadership has made a difference in Avon’s performance. Since

Jung took over as CEO, profits have grown by an average of 21.5 percent per year. And Avon’s

stock price has increased 142 percent, compared to a mediocre performance of the S&P-500

stock index over the same time period.

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CONCLUSION

Managerial Leadership plays a central part in understanding group behavior for it is an effective

manager who usually provides the direction towards goal attainment. When it comes to

leadership theories individuals who are ambitious, self confident, hold job-relevant knowledge

and are flexible are more likely to succeed as leaders than individuals without the

abovementioned traits. The behavioral approach’s major contribution was narrowing leadership

into task-oriented and people-oriented styles. A major breakthrough in understanding of

leadership came when there was recognition of the need to develop contingency theories that

included situational factors.

It can be concluded from the discussion of leadership styles:

Firstly, effective leaders don’t use any single style. They adjust their style to the situation. A

variety of factors such as risk, type of business, organizational culture or nature of the task and

the more recently discovered ‘Emotional Intelligence’ determine effectiveness of a leader in a

particular situation. What makes a manager effective in one organization, one situation, at one

time, can be ineffective in another organization, situation or time.

Secondly, effectiveness of leaders is not only determined by the ends but also by the ways

adopted by the manager to achieve the goals.

Thirdly, in today’s dynamic business world, a leader, in order to be effective, needs to adjust

quickly to different environments of different culture.

Leadership and management skills are essential throughout our working life with leaders found

in industry, commerce, sport, and even social settings. The aim is the same wherever they are

found, leading a group towards a common goal or set of stated objectives. Therefore, it is only

through effective leadership that a manager can bring out the best in the employees and in turn

reap benefits for himself and on the larger perspective to the organization as a whole.

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BIBLIOGRAPHY

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