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Chapter 12
Leadership
Chapter Overview
Leaders can make the difference between success and failure. In this chapter, we’ll look at
Chapter Objectives
After studying this chapter, the student should be able to:
1. Define leadership and contrast leadership and management.
3. Assess contingency theories of leadership by their level of support.
5. Address challenges to the effectiveness of leadership.
6. Assess whether or not charismatic and transformational leadership generalize
across cultures.
Suggested Lecture Outline
I. INTRODUCTION
This chapter examines what it takes to be an effective leader and what differentiates
leaders from non-leaders.
II. WHAT IS LEADERSHIP?
A. Leadership is the ability to influence a group toward the
achievement of a vision or set of goals.
1. The source of this influence may be formal, such as that
provided by managerial rank in an organization.
2. 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.
B. 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.
C. Organizations need strong leadership and strong management for optimal
effectiveness.
1. We need leaders today to challenge the status quo, create visions of the future,
and inspire organizational members to want to achieve the visions.
2. We also need managers to formulate detailed plans, create efficient structures,
and oversee day-to-day operations.
III. TRAIT THEORIES
A. Background.
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1. Trait theories of leadership differentiated leaders from non-leaders by focusing
on personal qualities and characteristics.
2. The Big Five Personality Framework and Trait Theory. When the existing trait
theory research was organized around the Big Five personality framework
(extraversion, agreeableness, conscientiousness, emotional stability, and
openness to experience – see Chapter 5), a clearer picture began to emerge.
1) But leaders need to make sure they’re not too assertive.
2) One study found leaders who scored very high on assertiveness were
less effective than those who were moderately high.
b. Conscientiousness and Openness to Experience. These two Big Five traits
also showed strong and consistent relationships to leadership, although not
as strong as extroversion.
1) One reason is that conscientiousness and extraversion are positively
2) People are more likely to follow someone who is confident she’s going in
the right direction.
c. Agreeableness and Emotional Stability. These last two Big Five traits were
not strongly correlated with leadership.
d. Key Common Traits. Using the Big Five framework, leaders do appear to
have key traits in common: they are extroverted (individuals who like being
3. Emotional Intelligence (EI) and Trait Theory. Another trait that may indicate
effective leadership is emotional intelligence (EI), discussed in Chapter 4.
a. Advocates of EI argue that without it, a person can have outstanding
training, a highly analytical mind, a compelling vision, and an endless supply
of terrific ideas but still not make a great leader.
b. A core component of EI is empathy.
1) Empathetic leaders can sense others’ needs, listen to what followers say
(and don’t say), and read the reactions of others.
c. The link between EI and leadership effectiveness is still much less
investigated than other traits.
1) Some recent research has demonstrated that people high in EI are more
likely to emerge as leaders, even after taking cognitive ability and
personality into account, which helps to answer some of the most
significant criticism of this research.
d. Based on the latest findings, we offer two conclusions.
1) First, traits can predict leadership. Twenty years ago, the evidence
2) Second, traits do a better job predicting the emergence of leaders and
the appearance of leadership than actually distinguishing between
effective and ineffective leaders. The fact that an individual exhibits the
IV. BEHAVIORAL THEORIES
A. Background.
1. As a result of the presumed failures of early trait studies,
researchers from the 1940s through the 1960s began studying behaviors
exhibited by leaders as a means to separate leaders from non-leaders.
B. Behavioral versus Trait Studies. The primary difference between studying
leadership behaviors and traits is that behaviors could be taught.
1. The Ohio State Studies.
a. These studies, started in the late 1940s, attempted to
1) Initiating Structure. This dimension refers to the extent to which a
2) Consideration. This dimension is the extent to which a person is likely to
2. The University of Michigan Studies.
a. Roughly contemporary to the Ohio State studies, this
set of studies had similar research objectives: to locate
b. They also came up with two dimensions of leadership behavior that were
critical:
1) Employee Oriented. Leaders who were employee-oriented were
described as emphasizing interpersonal relations. They took a personal
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2) Production Oriented. These leaders tended to emphasize the technical
3. Study Results. At one time, the results of testing behavioral theories were
thought to be disappointing.
1) However, a more recent review of 160 studies found the followers of
leaders high in consideration were more satisfied with their jobs, were
C. Most of the research on the leadership theories has been conducted in English-
speaking countries. Little is known about how culture might influence their validity.
A recent GLOBE (Global Leadership and Organizational
1. Brazil.
a. Such leaders would need to be team oriented, productive, and humane.
2. France.
a. Leaders are viewed more bureaucratically and are not expected to be
3. China.
a. Both initiating structure and consideration are important.
b. There are status differences between leaders and employees but
D. Summary of Trait Theories and Behavioral Theories. Leaders who have certain
traits and who display consideration and structuring behaviors do appear to be
more effective.
1. Perhaps you’re wondering whether conscientious leaders (trait) are more likely
to be structuring (behavior), and extraverted leaders (trait) to be considerate
(behavior).
a. Unfortunately, we can’t be sure there is a connection. Future research is
needed to integrate these approaches.
2. Some leaders may have the right traits or display the right behaviors and still
fail.
a. And many leaders who leave while their organizations are still successful—
G.E.’s Jack Welch or Procter & Gamble’s A. G. Lafley—have their legacies
clouded by events after their departure.
3. As important as traits and behaviors are in identifying effective or ineffective
leaders, they do not guarantee success.
a. The context matters, too.
V. CONTINGENCY THEORIES
A. Background.
1. While trait and behavioral theories contributed to our
understanding of leadership, predicting leadership success proved to be more
complex than thought so researchers began to focus on situational influences.
B. The Fiedler Contingency Model.
1. One of the first models of this type was developed by Fred
Fiedler.
2. It proposes that effective group performance depends on the proper match
3. Identifying Leadership Style. Fiedler believes a key factor in leadership success
is the individual’s basic leadership style.
a. Fiedler created the Least Preferred Coworker (LPC) questionnaire, which
purports to measure whether a person is task or relationship oriented.
1) High LPC scores indicate a relationship-oriented leader; low LPC scores
indicate a task-oriented one.
3) Fiedler assumed that an individual’s leadership style is fixed.
4) If the situation and style are not optimal, then the situation needs to be
modified or the leader needs to be replaced.
b. Defining the Situation. Fiedler assumes an individual’s leadership style is
fixed. This means if a situation requires a task-oriented leader and the
person in the leadership position is relationship oriented, either the
situation has to be modified or the leader has to be replaced to achieve
optimal effectiveness.
2) Fiedler identified three contingency dimensions that defined the key
situational factors that will determine the appropriate leadership style.
a) Leader-member relations: the degree of confidence, trust, and
3) Evaluate the Situation. The next step is to evaluate the
situation in terms of these three variables.
a) Fiedler states that the better the leader–member relations,
the more highly structured the job, and the stronger the
position power, the more control the leader has.
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b) A very favorable situation (in which the leader has a great deal of
control) might include a payroll manager who is well respected and
whose employees have confidence in her (good leader–member
c) An unfavorable situation might be that of the disliked chairperson
of a volunteer United Way fundraising team. In this job, the leader
has very little control.
b. Matching Leaders and Situations. Combining the three
contingency dimensions yields eight possible situations
in which leaders can find themselves.
a) Task-oriented leaders tend to perform better in
situations that are either very favorable to them
or which are very unfavorable (category I, II, III,
VII, or VIII).
(1) Change the leader to fit the situation. If a group situation rates
highly unfavorable but is currently led by a relationship-
oriented manager, the group’s performance could be improved
under a manager who is task oriented.
(2) Change the situation to fit the leader. This can
be done by restructuring tasks or
2. Evaluation of the Fiedler. Considerable evidence supports
substantial parts of Fiedler’s model.
a. If we use only three categories rather than the original eight, there is ample
evidence to support Fiedler’s conclusions.
VI. LEADER-MEMBER EXCHANGE (LMX) THEORY.
A. Leader–member exchange (LMX) theory argues that, because of
time pressures, leaders establish a special relationship with a
small group of their followers.
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1. These individuals make up the in-group—they are trusted, get a
2. Other followers fall into the out-group.
3. 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.
a. Leaders induce LMX by rewarding those employees with whom they want a
closer linkage and punishing those with whom they do not.
1) But for the LMX relationship to remain intact, the leader and the
follower must invest in the relationship.
b. Just how the leader chooses who falls into each category
is unclear, but there is evidence in-group members have
demographic, attitude, and personality characteristics
similar to those of their leader or a higher level of
competence than out-group members.
c. Leaders and followers of the same gender tend to have closer (higher LMX)
relationships than those of different genders.
4. Research to test LMX theory has been generally supportive, with substantive
evidence that leaders do differentiate among followers;
a. These disparities are far from random; and followers with in-group status
will have higher performance ratings, engage in more helping or
“citizenship” behaviors at work, and report greater satisfaction with their
superior.
b. These positive findings for in-group members shouldn’t be surprising, given
our knowledge of self-fulfilling prophecy (see Chapter 7).
1) Leaders invest their resources with those they expect to perform best.
2) These relationships may be stronger when followers have a more active
role in shaping their own job performance.
a) Research on 287 software developers and 164 supervisors showed
leader–member relationships have a stronger impact on employee
performance and attitudes when employees have higher levels of
autonomy and a more internal locus of control.
VI. CHARISMATIC LEADERSHIP AND TRANSFORMATIONAL LEADERSHIP
A. In this section, we present two contemporary leadership
theories—charismatic leadership and transformational
leadership—which have a common theme: they view leaders as
individuals who inspire followers through their words, ideas, and behaviors.
B. Charismatic Leadership.
1. What Is Charismatic Leadership?
Exhibit 12.2
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endowed with supernatural, superhuman, or at least specifically exceptional
powers or qualities.
1) These are not accessible to the ordinary person and are regarded as of
2) Weber argued that charismatic leadership was one of several ideal types
of authority.
2. House’s Charismatic Leadership Theory.
a. In this theory, followers are believed to make attributions of heroic or
extraordinary leadership abilities when they observe certain behaviors.
b. The charismatic characteristics identified by the research so far are:
2) a willingness to take personal risks to achieve that vision,
4) exhibiting behaviors that are out of the ordinary.
3. Are Charismatic Leaders Born or Made?
a. Individuals are born with traits that make them
charismatic. In fact, studies of identical twins have found
they score similarly on charismatic leadership measures, even if they were
raised in different households and had never met.
b. Personality is also related to charismatic leadership; charismatic leaders are
likely to be extraverted, self-confident, and achievement oriented.
c. Although a small minority thinks charisma is inherited and cannot be
learned, most experts believe individuals can be trained to exhibit
charismatic behaviors.
1) After all, just because we inherit certain tendencies doesn’t mean we
can’t learn to change.
d. One set of authors proposes a three-step process.
1) First, develop an aura of charisma by maintaining an optimistic view;
3) Third, bring out the potential in followers by tapping into their emotions.
e. The approach seems to work, according to researchers who have scripted
undergraduate business students to “play” charismatic.
1) The students were taught to articulate an overarching goal,
communicate high performance expectations, exhibit confidence in the
2) They were also trained to evoke charismatic nonverbal characteristics:
a) They alternated between pacing and sitting on the edges of their
Exhibit 12.3
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noncharismatic leaders.
4. How Charismatic Leaders Influence Followers.
a. Vision. It begins with articulating an appealing vision, a
long-term strategy for attaining a goal by linking the present with a better
future for the organization.
b. Second, a vision is incomplete without an accompanying vision statement, a
formal articulation of an organization’s vision or mission.
2) They then communicate high performance expectations and express
confidence that followers can attain them.
3) This enhances follower self-esteem and self-confidence.
c. Communicate. Next, through words and actions the leader conveys a new set
of values and sets an example for followers to imitate.
2) Charismatic leaders also set a tone of cooperation and mutual support.
d. The Right Behaviors. Finally, the charismatic leader engages in emotion-
5. Does Effective Charismatic Leadership Depend on the Situation?
a. There are strong correlations between charismatic
leadership and high performance and satisfaction among
followers, but such results may be situationally dependent.
1) Charisma appears to be most successful when the follower’s task
2) Additionally, charisma, given its need for a vision, is most often
3) Finally, people are especially receptive to charismatic leadership when
they sense a crisis, when they are under stress, or when they fear for
(1) An individual who lacks self-esteem and questions his or her
6. The Dark Side of Charismatic Leadership.
a. Charismatic business leaders like AIG’s Hank Greenberg,
GE’s Jack Welch, Tyco’s Dennis Kozlowski, Southwest
Airlines’ Herb Kelleher, Disney’s Michael Eisner, and HP’s Carly Fiorina
became celebrities on the order of David Beckham and Madonna.
b. Every company wanted a charismatic CEO, and to attract them boards of
directors gave them unprecedented autonomy and resources—the use of
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2) But the reverse isn’t true. So if you are a good transactional leader but do
3) The best leaders are transactional and transformational.
2. Full Range of Leadership Model. Exhibit 11-5 shows the full
range of leadership model.
a. The first four
1) Laissez-faire is the most passive and therefore least
effective of leader behaviors.
3) Management-by-exception leaders tend to be available only when there
is a problem, which is often too late.
4) Contingent reward leadership can be an effective style of leadership but
will not get employees to go above and beyond the call of duty.
b. Only with the four remaining styles—all aspects of transformational
1) Individualized consideration, intellectual stimulation, inspirational
motivation, and idealized influence all result in extra effort from
c. Based on this model, leaders are generally most effective when they
regularly use each of the four transformational behaviors.
3. How Transformational Leadership Works. There are a
number of reasons why transformational leadership works:
a. Creativity. Transformational leaders are more creative,
and they are more effective because they encourage their followers to be
creative too.
b. Goals. Followers of transformational leaders are more likely to pursue
c. Vision. As with charismatic leadership, vision is important in explaining
4. Evaluation of Transformational Leadership.
a. Transformational leadership has been impressively
supported at various job levels and in disparate
occupations.
1) One recent study of R&D firms found teams whose project leaders
Exhibit 12.5
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