CHAPTER12
Leadership
LEARNING OBJECTIVES
After studying this chapter, students should be able to:
12-1. Summarize the conclusions of trait theories of leadership.
12-2. Identify the central tenets and main limitations of behavioral theories.
12-3. Contrast contingency theories of leadership.
12-4. Describe the contemporary theories of leadership and their relationship to
foundational theories.
12-5. Discuss the roles of leaders in creating ethical organizations.
12-6. Describe how leaders can have a positive impact on their organizations through
building trust and mentoring.
12-7. Identify the challenges to our understanding of leadership.
INSTRUCTOR RESOURCES
Instructors may wish to use the following resources when presenting this chapter:
Text Exercises
• Career OBjectives: How Can I Get My Boss To Be A Better Leader?
• Myth or Science?: “Top Leaders Feel the Most Stress”
• Personal Inventory Assessments: Ethical Leadership Assessment
• An Ethical Choice: Holding Leaders Ethically Accountable
• Point/Counterpoint: CEOs Start Early
• Questions for Review
• Experiential Exercise: What Is Leadership?
• Ethical Dilemma: Smoking Success
Text Cases
• Case Incident 1: Leadership Mettle Forged in Battle
• Case Incident 2: Leadership by Algorithm
Instructor’s Choice
This section presents an exercise that is NOT found in the student’s textbook. Instructor’s
Choice reinforces the text’s emphasis through various activities. Some Instructor’s Choice
activities are centered on debates, group exercises, Internet research, and student experiences.
Some can be used in class in their entirety, while others require some additional work on the
student’s part. The course instructor may choose to use these at any time throughout the class—
some may be more effective as icebreakers, while some may be used to pull together various
concepts covered in the chapter.
Web Exercises
At the end of each chapter of this Instructor’s Manual, you will find suggested exercises and
ideas for researching OB topics on the Internet. The exercises “Exploring OB Topics on the
Web” are set up so that you can simply photocopy the pages, distribute them to your class, and
make assignments accordingly. You may want to assign the exercises as an out-of-class activity
or as lab activities with your class.
Summary and Implications for Managers
Leadership plays a central part in understanding group behavior, because it’s the leader who
usually directs us toward our goals. Knowing what makes a good leader should thus be valuable
in improving group performance. The Big Five personality framework show strong and
consistent relationships between personality and leadership. The behavioral approach’s major
contribution was narrowing leadership into task-oriented (initiating structure) and
people-oriented (consideration) styles. By considering the situation in which the leader operates,
contingency theories promised to improve on the behavioral approach. Contemporary theories
have made major contributions to our understanding of leadership effectiveness, and studies of
ethics and positive leadership offer exciting promise. Specific implications for managers are
below:
For maximum leadership effectiveness, ensure that your preferences on the initiating
structure and consideration dimensions are a match for your work dynamics and culture.
Hire candidates who exhibit transformational leadership qualities and who have
demonstrated success in working through others to meet a long-term vision. Personality
tests can reveal candidates higher in extraversion, conscientiousness, and openness,
which may indicate leadership readiness.
Hire candidates whom you believe are ethical and trustworthy for management roles and
train current managers in your organization’s ethical standards in order to increase
leadership effectiveness.
Seek to develop trusting relationships with followers, because, as organizations have
become less stable and predictable, strong bonds of trust are replacing bureaucratic rules
in defining expectations and relationships.
Consider investing in leadership training such as formal courses, workshops, rotating job
responsibilities, coaching, and mentoring.
The chapter begins with a discussion about the leadership style of Jack Ma. Charismatic leaders like Jack Ma
possess a “special something” that sets them apart. However, theirs is not the only type of effective leadership. In
this chapter, we’ll look at all types of leaders, and what differentiates leaders from nonleaders. We’ll present trait
theories of leadership. Then, we’ll discuss challenges to the meaning and importance of leadership. But before we
begin, let’s clarify what we mean by the term leadership. We define leadership as the ability to influence a group
toward the achievement of a vision or set of goals. But not all leaders are managers, nor are all managers leaders.
Just because an organization provides its managers with certain formal rights is no assurance they will lead
effectively. Leaders can emerge from within a group as well as by formal appointment. Nonsanctioned leadership—
the ability to influence that arises outside the formal structure of the organization—is often as important, or more
important, than formal influence. Organizations need strong leadership and strong management for optimal
effectiveness. We need leaders to challenge the status quo, create visions of the future, and inspire organizational
members to achieve the visions. We need managers to formulate detailed plans, create efficient organizational
structures, and oversee day-to-day operations.
BRIEF CHAPTER OUTLINE
I. Trait Theories
A. Strong Leaders
1. Trait theories of leadership focus on personal qualities and characteristics.
2. A comprehensive review of the leadership literature, when organized around the Big
Five, has found extraversion to be the most important trait of effective leaders, but it
is more strongly related to the way leaders emerge than to their effectiveness.
3. Leaders who like being around people and are able to assert themselves (extraverted),
who are disciplined and able to keep commitments they make (conscientious), and
who are creative and flexible (open) do have an apparent advantage when it comes to
leadership, suggesting good leaders do have key traits in common.
4. Another trait that may indicate effective leadership is emotional intelligence (EI),
discussed in Chapter 4.
a. A core component of EI is empathy.
5. The link between EI and leadership effectiveness may be worth investigating in
greater detail.
6. Based on the latest findings, we offer two conclusions.
a. First, we can say that traits can predict leadership.
b. Second, traits do a better job predicting the emergence of leaders and the
appearance of leadership than actually distinguishing between effective and
ineffective leaders.
II. Behavioral Theories
A. Introduction
1. Behavioral theories of leadership implied we could train people to be leaders.
B. Ohio State Studies
1. The most comprehensive theories resulted from the Ohio State Studies, which sought
to identify independent dimensions of leader behavior.
2. Beginning with more than a thousand dimensions, the studies narrowed the list to two
that substantially accounted for most of the leadership behavior described by
employees: initiating structure and consideration.
3. Initiating structure is 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.
4. Consideration is the extent to which a person’s job relationships are characterized by
mutual trust, respect for employees’ ideas, and regard for their feelings.
a. A leader high in consideration helps employees with personal problems, is
friendly and approachable, treats all employees as equals, and expresses
appreciation and support.
C. GLOBE Study
1. Some research from the GLOBE study suggests there are international differences in
preference for initiating structure and consideration.
a. Based on the values of Brazilian employees, a U.S. manager leading a team in
Brazil would need to be team-oriented, participative, and humane.
b. Leaders high in consideration would succeed best in this culture.
c. A leader high in initiating structure (relatively task-oriented) will do best and can
make decisions in a relatively autocratic manner.
D. Summary of Trait Theories and Behavioral Theories
1. Leaders who have certain traits and who display culturally appropriate consideration
and structuring behaviors do appear to be more effective.
2. As important as traits and behaviors are in identifying effective or ineffective leaders,
they do not guarantee success. The context matters too.
III. Contingency Theories
A. Introduction
1. Tough-minded leaders seem successful in difficult times, but tend to be dismissed
when the environment improves.
2. Situational factors that influence success or failure need to be explored further.
B. Fiedler Model
1. Introduction
a. The first comprehensive contingency model for leadership was developed by
Fred Fiedler, who proposed that effective group performance depends upon the
proper match between the leader’s style and the degree to which the situation
gives control to the leader.
2. Identifying leadership style
a. Fiedler believed that a key factor in leadership success is the individual’s basic
leadership style. He created the least preferred coworker (LPC) questionnaire
for this purpose.
b. It purports to measure whether a person is task- or relationship-oriented.
c. The questionnaire contains 16 contrasting adjectives (such as pleasant-unpleasant,
efficient-inefficient, open-guarded, supportive-hostile).
d. It asks respondents to describe the one person they least enjoyed working with by
rating him or her on a scale of one-to-eight for each of the 16 sets of contrasting
adjectives.
e. Fiedler assumes that an individual’s leadership style is fixed.
3. Defining the situation
a. Leader-member relations—the degree of confidence, trust, and respect members
have in their leader.
b. Task structure—the degree to which the job assignments are procedural.
c. Position power—the degree of influence a leader has over power variables such
as hiring, firing, discipline, promotions, and salary increases.
d. The next step is to evaluate the situation in terms of these three contingency
variables.
e. Fiedler states the better the leader-member relations, the more highly structured
the job, and the stronger the position power, the more control the leader has.
4. Matching leaders and situations (Exhibit 12-1)
a. Altogether, by mixing the three contingency variables, there are potentially eight
different situations or categories in which leaders could find themselves.
b. The Fiedler model proposes matching them up to achieve maximum leadership
effectiveness.
c. Fiedler concluded that task-oriented leaders tend to perform better in situations
that were very favorable to them and in situations that were very unfavorable.
d. Fiedler would predict that when faced with a category I, II, III, VII, or VIII
situation, task-oriented leaders perform better.
e. Relationship-oriented leaders, however, perform better in moderately favorable
situations—categories IV, V, and VI.
f. Fiedler has condensed these eight situations to three.
g. Given Fiedler’s findings, you would seek to match leaders and situations. Because
Fiedler views an individual’s leadership style as being fixed, there are only two
ways to improve leader effectiveness.
5. Evaluation of Fiedler
a. There is considerable evidence to support at least substantial parts of the model.
b. There are problems and the practical use of the model that need to be addressed.
6. Other contingency theories
a. Situational leadership theory
i. Situational leadership is a contingency theory that focuses on the followers.
ii. Successful leadership is achieved by selecting the right leadership style, which
is contingent on the level of the followers’ readiness.
iii. SLT has an intuitive appeal. Yet, research efforts to test and support the theory
have generally been disappointing.
b. Path-goal theory
i. The theory:
(a) One of the most respected approaches to leadership is the path-goal
theory developed by Robert House.
(b) It is a contingency model of leadership that extracts key elements from
research on initiating structure and consideration and the expectancy
theory of motivation.
ii. According to path–goal theory, whether a leader should be directive or
supportive or should demonstrate some other behavior depends on complex
analysis of the situation.
c. Leader-participation model
i. The final contingency theory we cover argues that the way the leader makes
decisions is as important as what she or he decides.
ii. Leader-participation model relates leadership behavior and participation in
decision making.
iii. Like path–goal theory, it says leader behavior must adjust to reflect the task
structure.
IV. Contemporary Theories of Leadership
A. The leader-member exchange (LMX) theory argues that because of time pressures,
leaders establish a special relationship with a small group of their followers.
B. These individuals make up the in-group—they are trusted, get a disproportionate amount
of the leader’s attention, and are more likely to receive special privileges.
C. The theory proposes that early in the history of the interaction between a leader and a
given follower, the leader implicitly categorizes the follower as an “in” or an “out” and
that relationship is relatively stable over time.
1. How the leader chooses who falls into each category is unclear.
2. The leader does the choosing on the basis of the follower’s characteristics.
3. In groups have similar characteristics. (Exhibit 12-2)
D. The theory and research surrounding it provide substantive evidence that leaders do
differentiate among followers.
V. Charismatic Leadership
A. Introduction
1. View leaders as individuals who inspire followers through their words, ideas, and
behaviors.
B. Charismatic Leadership
1. What is charismatic leadership?
a. According to House’s charismatic leadership theory, followers make attributes
of heroic or extraordinary leadership abilities when they observe certain
behaviors, (Exhibit 12-3)
b. Charismatic leaders have vision, are willing to take personal risk, are sensitive to
followers’ needs, and exhibit extraordinary behaviors.
2. Are charismatic leaders born or made?
a. Individuals are born with traits that make them charismatic.
b. People can learn to be a charismatic leader.
i. First, an individual needs to develop the aura of charisma by maintaining an
optimistic view; using passion as a catalyst for generating enthusiasm; and
communicating with the whole body, not just with words.
ii. Second, an individual draws others in by creating a bond that inspires others
to follow.
iii. Third, the individual brings out the potential in followers by tapping into their
emotions.
3. How charismatic leaders influence followers
a. Articulating an appealing vision.
i. Vision statement
ii. High performance expectations
iii. A new set of values
4. Does effective charismatic leadership depend on the situation?
a. A strong correlation between charismatic leadership and high performance and
satisfaction exists among followers.
5. Does Effective Charismatic Leadership Depend on the Situation?
a. Charisma appears to be most appropriate when the follower’s task has an
ideological component or when the environment involves a high degree of stress
and uncertainty.
b. This may explain why, when charismatic leaders surface, it’s more likely to be in
politics, religion, wartime; or when a business firm is in its infancy or facing a
life-threatening crisis.
c. Another situational factor apparently limiting charisma is level in the
organization.
d. Finally, people are especially receptive to charismatic leadership when they sense
a crisis, when they are under stress, or when they fear for their lives.
6. The dark side of charismatic leadership.
a. Don’t necessarily act in the best interest of their companies.
b. Many have allowed their personal goals to override the goals of the organization.
i. The results at companies such as Enron, Tyco, WorldCom, and HealthSouth
were leaders who recklessly used organizational resources for their personal
benefit and executives who violated laws and ethical boundaries to inflate
stock prices and allow leaders to cash in millions of dollars in stock options.
c. It’s not that charismatic leadership isn’t effective; overall, it is.
C. Transactional and Transformational Leadership
1. Introduction
a. A stream of research has focuses on differentiating transformational and
transactional leaders.
b. Transformational leaders inspire followers to transcend their own self-interests
for the good of the organization. (Exhibit 12-4)
c. Transactional and transformational leadership complement each other.
d. The best leaders are transactional and transformational.
2. Full range of leadership model (Exhibit 12-5)
a. Laissez-faire is the most passive and least effective type.
b. Management by exception is slightly better.
c. Contingent reward leadership can be effective.
d. The remaining four correspond to transformational leadership:
i. Individualized consideration
ii. Intellectual stimulation
iii. Inspirational motivation
iv. Idealized influence
3. How transformational leadership works
a. Organizations with transformational leaders generally have greater
decentralization of responsibility, managers with more propensity to take risks,
and compensation plans geared toward long-term results—all of which facilitate
corporate entrepreneurship.
b. Transformational leaders are more effective because they are more creative, but
also because they encourage those who follow them to be creative, too.
c. Companies with transformational leaders also show greater agreement among top
managers about the organization’s goals, which yields superior organizational
performance.
d. Transformational leaders are able to increase follower self-efficacy, giving the
group a “can do” spirit.
e. Just as vision helps explain how charismatic leadership works, it also explains
part of the effect of transformational leadership.
f. Finally, transformational leadership engenders commitment on the part of
followers and instills greater trust in the leader.
4. Evaluation of transformational leadership
a. Transformational leadership has been impressively supported at diverse job levels
and occupations (school principals, teachers, marine commanders, ministers,
presidents of MBA associations, military cadets, union shop stewards, sales reps).
b. Transformational leadership isn’t equally effective in all situations.
c. Transformational leaders also obtain higher levels of trust, which reduces stress
for followers.
d. In short, transformational leadership works through a number of different
processes.
e. Transformational leadership theory is not perfect. Contingent reward leadership
may not characterize transactional leaders only.
f. In summary, transformational leadership is more strongly correlated than
transactional leadership with lower turnover rates, higher productivity, lower
employee stress and burnout, and higher employee satisfaction. Like charisma, it
can be learned.
g. The GLOBE team concluded “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.”
D. Transformational versus Transactional Leadership
1. When comparing transformational leadership with transactional leadership, research
indicates transformational leadership is more strongly correlated than transactional
leadership with lower turnover rates, higher productivity, lower employee stress and
burnout, and higher employee satisfaction.
2. However, transformational leadership theory is not perfect. The full range of
leadership model shows a clear division between transactional and transformational
leadership that may not fully exist in effective leadership.
3. And contrary to the full range of leadership model, the four I’s of transformational
leadership are not always superior in effectiveness to transactional leadership;
contingent reward leadership, in which leaders dole out rewards as certain goals are
reached by employees, sometimes works as well as transformational leadership.
4. More research is needed, but the general supportable conclusion is that
transformational leadership is desirable and effective, given the right application.
E. Transformational versus Charismatic Leadership
1. Charismatic leadership places somewhat more emphasis on the way leaders
communicate (are they passionate and dynamic?), while transformational leadership
focuses more on what they are communicating (is it a compelling vision?).
2. Still, the theories are more alike than different. At their heart, both focus on the
leader’s ability to inspire followers, and sometimes they do so in the same way.
Because of this, some researchers believe the concepts are somewhat interchangeable.
VI. Responsible Leadership
A. Authentic Leadership
1. Authentic leaders know who they are, what they believe in and value, and act on
those values and beliefs openly and candidly.
2. The result: people come to have faith in them.
3. Recent research indicates that authentic leadership especially when shared among top
management team members, created a positive energizing effect (see affective events
theory in Chapter 4) that heightened firm performance.
B. Ethical Leadership
1. Ethics touches on leadership at a number of junctures.
2. Leaders who treat their followers with fairness, especially by providing honest,
frequent, and accurate information, are seen as more effective.
3. A recent research review found that role modeling by top leaders positively
influenced managers throughout their organizations to behave ethically and fostered a
climate that reinforced group-level ethical conduct.
a. The findings suggest that organizations should invest in ethical leadership training
programs, especially in industries with few ethical regulations.
b. The researchers furthermore advised that ethical leadership training programs to
teach cultural values should be mandated for leaders who take foreign
assignments or manage multicultural work teams.
4. To convey their beliefs, leaders should learn to express their moral convictions in
statements that reflect values shared with their organization’s members.
a. Leaders can build on this foundation of trust to show their character, enhance a
sense of unity, and create buy-in from followers.
5. 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.
6. Efforts have been made to combine ethical and charismatic leadership into an idea of
socialized charismatic leadership.
C. Servant Leadership
1. Scholars have recently considered ethical leadership from a new angle by examining
servant leadership.
2. Because servant leadership focuses on serving the needs of others, research has
focused on its outcomes for the well-being of followers.
3. Servant leadership may be more prevalent and more effective in certain cultures.
VII. Positive Leadership
A. Trust
1. Trust is a psychological state that exists when you agree to make yourself vulnerable
to another because you have positive expectations about how things are going to turn
out.
2. Trust is a primary attribute associated with leadership.
3. When trust is broken, it can have serious adverse effects on a group’s performance.
4. Followers who trust a leader are confident their rights and interests will not be
abused.
5. In a simple contractual exchange of goods and services, your employer is legally
bound to pay you for fulfilling your job description.
a. But today’s rapid reorganizations, diffusion of responsibility, and collaborative
team-based work style mean employment relationships are not stable long-term
contracts with explicit terms.
b. Rather, they are more fundamentally based on trusting relationships than ever
before.
B. The Outcomes of Trust
1. Trust encourages taking risks.
a. Whenever employees decide to deviate from the usual way of doing things, or to
take their supervisors’ word on a new direction, they are taking a risk.
2. Trust facilitates information sharing.
a. One big reason employees fail to express concerns at work is that they don’t feel
psychologically safe revealing their views.
3. Trusting groups are more effective.
a. When a leader sets a trusting tone in a group, members are more willing to help
each other and exert extra effort, which further increases trust.
4. Trust enhances productivity.
a. The bottom-line interest of companies also appears positively influenced by trust.
Employees who trust their supervisors tend to receive higher performance ratings.
C. Trust Development
1. Trust isn’t just about the leader; the characteristics of the followers will also influence
the development of trust.
2. What key characteristics lead us to believe a leader is trustworthy? Evidence has
identified three: integrity, benevolence, and ability. (Exhibit 12-6)
D. Trust Propensity
1. Trust propensity refers to how likely a particular employee is to trust a leader. Some
people are simply more likely to believe others can be trusted.
E. Trust and Culture
1. Does trust look the same in every culture? Using the basic definition of trust,
certainly it does. However, in the work context, trust in an employment relationship
may be built on very different perceptions from culture to culture.
2. In individualistic societies, we might expect that paternalistic leadership will rankle
many employees who prefer not to see themselves as part of a hierarchical family
workgroup.
F. The Role of Time
1. Time is the final ingredient in the recipe for trust. Trust doesn’t happen immediately:
we come to trust people based on observing their behavior over a period of time.
2. Trust can also be won in the ability domain simply by demonstrating competence.
G. Regaining Trust
1. Managers who break the psychological contract with workers, demonstrating they
aren’t trustworthy leaders, will find employees are less satisfied and less committed,
have a higher intent toward turnover, engage in less OCB, and have lower levels of
task performance.
2. Leaders who betray trust are especially likely to be evaluated negatively by followers
if there is already a low level of leader–member exchange.
3. Once it has been violated, trust can be regained, but only in certain situations and
depending on the type of violation.
a. If the cause is lack of ability, it’s usually best to apologize and recognize you
should have done better.
b. When lack of integrity is the problem, apologies don’t do much good.
4. Regardless of the violation, saying nothing or refusing to confirm or deny guilt is
never an effective strategy for regaining trust.
5. Trust can be restored when we observe a consistent pattern of trustworthy behavior by
the transgressor. However, if the transgressor used deception, trust never fully returns,
not even after apologies, promises, or a consistent pattern of trustworthy actions.
H. Mentoring
1. A mentor is a senior employee who sponsors and supports a less-experienced
employee (a protégé).
2. Successful mentors are good teachers. (Exhibit 12-7)
3. The protégé will often be tested with a particularly challenging assignment.
4. If a mentor is not well connected or not a very strong performer, the best mentoring
advice in the world will not be very beneficial.
VIII. Challenges to Our Understanding of Leadership
A. Introduction
1. Much of an organization’s success or failure is due to factors outside the influence of
leadership. In many cases, success or failure is just a matter of being in the right or
wrong place at a given time.
B. Leadership as an Attribution
1. As you may remember from Chapter 6, attribution theory examines how people try to
make sense of cause-and-effect relationships.
2. The attribution theory of leadership says leadership is merely an attribution people
make about other individuals.
3. Attribution theory suggests what’s important is projecting the appearance of being a
leader rather than focusing on actual accomplishments.
C. Substitutes and Neutralizers to Leadership (Exhibit 12-8)
1. Data from numerous studies collectively demonstrate that, in many situations,
whatever actions leaders exhibit are irrelevant.
2. Experience and training are among the substitutes that can replace the need for a
leader’s support or ability to create structure.
3. Neutralizers make it impossible for leader behavior to make any difference to
follower outcomes.
4. Sometimes the difference between substitutes and neutralizers is fuzzy.
D. Online Leadership
1. The questions of how do you lead people who are physically separated from you and
with whom you communicate electronically? These questions need research.
2. Today’s managers and employees are increasingly linked by networks rather than
geographic proximity.
3. We propose that online leaders have to think carefully about what actions they want
their digital messages to initiate.
a. In electronic communication, writing skills are likely to become an extension of
interpersonal skills.
4. Identification-based trust, based on a mutual understanding of each other’s
intentions and appreciation of the other’s wants and desires, is particularly difficult to
achieve without face-to-face interaction.
5. We believe good leadership skills will soon include the ability to communicate
support, trust, and inspiration through electronic communication and to accurately
read emotions in others’ messages.