Role of Leadership in the Management of Organizations

Role of Leadership in the Management of Organizations

In the present competitive environment, the organizations are facing dynamic and fast moving conditions such as the technological up-gradations, rapid social changes, growing change in customer requirements, globalization, and economic changes.  In fact, in the present day environment, ‘nothing is permanent but the change is permanent’. Today, change has become important for organizations for the success as well as for the competitive advantage. Without change, the organization is to lose their competitive edge in the market and cannot thrive easily.

The present day environment is a volatile, uncertain, complex, and ambiguous environment. In such an environment, leadership qualities are needed in the organization to deal with the multi-faceted issues which confront the organization. Leadership qualities are needed not only to understand and learn the issues confronting the organization but also to find the solutions and to make the organization adapt these solutions. These activities are needed to be done while simultaneously performing the normal duties.

The concept of leadership for a long time has attracted the attention of the general public. Since early times, the focus was concentrated to the diplomats, generals, philosophers, thinkers, or artists and the like. With the development of industry, transport, trade and finance, the concept of leadership is also now frequently associated with the economic activities and the functioning of organizations.

Leadership can be defined as the process by which the activities of the organizational employees are directed towards achieving the task. This definition has four meanings. First, leadership involves other people such as employees (subordinates) or followers. With their willingness to accept guidance and direction of leaders, employees make it possible to define the status of the leader, and the process of leadership. When there are no other people, all the qualities of leadership as a manager are not significant. Second, leadership means unequal distribution of power between leaders and the employees. However, employees are not powerless. They can influence the activity of the organization in different ways. The third element of leadership is the ability of using different forms of power in different ways to influence the behaviour of the employees. Leaders can influence the employees to make sacrifices at the personal level for the good of the organization.  The fourth element is the combination of the previous three elements. At the same time, this element confirms that the leadership is the issue of values.

Leadership is a kind of power where one person has the ability to influence or change the values, beliefs, behaviour and attitudes of another person. A person with strong leadership ability is to be a good example or role model to the employees, since the leader who is able to effectively achieve some good result or achievement gains the trust and admiration of their employees, and inadvertently changes their values, beliefs, behaviour and attitudes. The leaders who possess strong leadership have the strength to influence others to achieve the goals and objectives of the organization.

There is another way to define a leader who has strong leadership. A leader is more than someone who is a widely recognized individual or who possesses organizational authority. A characteristic of effective leaders is that they give a clear direction to the employees, and also lead the employees to commit to their jobs and to work as a group to achieve the organizational goal and objectives. This also tells that good leaders normally have a clear vision for the organization and hence can easily identify the problems and obstacles which presently stand between them and the goal and objectives of the organization. In this way, they are able to effectively and efficiently bring about the necessary reforms which take the organization into the future while keeping abreast with contemporary changes in the industry.

Leadership is a process where leaders use their skills and knowledge to lead and take a group of employees in the desired direction which is relevant to the organizational goal and objectives.  Also, an effective leader who has strong leadership skills is required to have in possession certain characteristic, such as, passion, consistency, trust, and vision since only leaders who own these characteristics are able to build trust in the employees.

The basic principles of leadership include direction, relations, and engagement of both brain hemispheres. Direction is the most important for leadership and means following a given direction to achieve the goal. Relations are important element of leadership and mean influencing other people and establishing relationships which allows for achieving the goals. Engaging both hemispheres means extensive use of the brain leading to reasonable and intuitive problem solving. The above principles are translated into three basic components of effective leadership which are (i) establishing the course of action and communicating it to an organizational unit (team or individuals), (ii) establishing effective relationships between leaders and their subordinates (in order to encourage the subordinates to engage in the actions), and (iii) using both brain hemispheres simultaneously in order to stimulate logical thinking as well as intuition, emotions, and creativity.

Leaders can be forced to move away from the concept of management structure and the ideas of decentralized leadership, preventing the flexibility to make changes to the organization and assume risk in order to discover new efficiencies. The organization can slip back into a zero-defects mentality, in which leaders cannot make mistakes without the possibility of career ending repercussions. Another factor is advances in technology which allow senior leaders to influence or micro-manage, subordinate organizations, diminishing their uniqueness and flexibility as an organization. The combination of career-oriented, risk aversion with this micro-management reduces the ability of the organization to grow, change, or be innovative. At a time of down trend and resource constraints, leaders are to take the appropriate measures to prevent the organization from slipping back into a culture of control and processes. It is the individual leaders who are to prevent the organization from slipping back into a top down, zero-defects organization. This is the organizational leadership development challenge.

Every organization is facing today a complex social environment of confrontation, miscommunication, manipulation, hostility, and conflict. The organizations are also being faced with the problem of the inter-relationships of the employees which affect the work which is being done, the goals which are set, and the decisions which are being made. Without effective leadership, employees of the organization frequently degenerate quickly into argument and conflict, since each employee sees things in different ways and leans toward different solutions.

Leadership is like the inner workings of a computer. It is a complex set of relationships, systems, and processes which are fully mastered by only few. It is a process by which one person influences the thoughts, attitudes, and behaviours of others. Leadership set a direction for the employees. It helps the employees to see what lies ahead. It helps them visualize what can be achieved. It encourages and inspires them. Without leadership a group of employees quickly degenerates into argument and conflict, since they see things in different ways and lean toward different solutions. Leadership helps to point them in the same direction and harness jointly the efforts. Leadership is the ability to get the employees to do something significant which they are not doing otherwise. It energizes the employees toward the organizational goal.

The organization is considered to be effective if it finds the right balance between the demands of the shareholders, customers, local community, and the needs of the employees. The leadership quality plays a key role in the orientation and direction of the organization which set the vision and mission of the organization and others follow it. Leadership has significant impact on strategic management process. Especially it not only helps to determine the vision and mission of the organization, but also facilitates the organization to execute effective strategies to achieve that vision. An appropriate leadership style influences and ensures the prosperity and the economic growth of both the organization and the employees.

Leadership and management are two different aspects, management is more like the traditional way of managing organization, in which the organizational management has complete control of the organization, and single handedly establish a direction and direct the employees to do the work in accordance to the management instructions and plans. On the other hand, leadership is when the leader guides the employees towards the organizational goals, all the while trying to communicate and motivate the employees in order to make sure that the employees are in the right position to use their talents and commit to their jobs. Leadership strategies also change according to the prevailing trends when necessary, unlike management which merely follows the old, traditional rules.

Leaders help guide the employees (individuals, and groups and entire organization) in establishing goals and support them in actions taken to achieve the goals. Organization expects managers to be leaders, but not all managers show leadership behaviours, although leadership communication can be produced by every employee of the organization and combined with management communication and managerial skills, can lead to the organizational success.

Effective leaders tend to share the several traits. These traits include (i) intelligence which is the ability to integrate and interpret information, (ii) creativity which means that the leader is to be innovative and original in their thinking, (iii) self-confidence which means that the leaders are to trust in themselves and have confidence in their abilities, (iv) drive which constitutes a high level of energy, initiative, and tenaciousness, (iv) task-relevant knowledge which mean that a leader is to have knowledge of what it takes to make the work successful, (v) credibility which means that a leader is to be honest, trustworthy, predictable, and dependable, (vi) motivation which means a leader is to take pleasure in influencing others to achieve shared goals, and (vii) flexibility which means that a leader is to adapt to fit the needs of followers and demands of situations. A well-known Chinese proverb says that the wise adapt themselves to the circumstances, as water moulds itself to the pitcher.

The motivation and the abilities of the leaders affect their decisions in a given situation. The leaders are normally grouped into four styles of leadership namely (i) delegating, (ii) supporting, (iii) coaching, and (iv) directing (Fig 1). Each of these leadership styles can be effective, depending on the development level of the individual or people, a leader is leading. Hence, the leadership is not only dependent on the skills and abilities of the leader but it is also heavily dependent on the abilities and attitudes of the followers.

Fig 1 The four styles of leadership

The organizational management process is shown in Fig 2. Management and leadership both are important functions in the organization. But they have different purposes and they seek to obtain different outcomes. Around half a decade back, Kurt Lewin has stated that ‘every organization structures itself is to accomplish its goals in a way which is in tune with or responsive to its environment’. Once the efficiency of the organization is established, employees go about simply maintaining the system, assuming that the environment stays the same. Management is the main focus since it keeps the organization going well with little change. But in reality this does not happen and the environment in which the organization functions is always changing. Hence, there is a need for the organization to think more in terms of leadership. Leaders begin to think what really is going on in the organization, how do the organization become relevant even when the environment is unfavourable, how do the organization  fulfill its goals in the changing environment, and how to make the employees think that what is being done is meaningful.

Fig 2 Organizational management process

Leadership seeks to bring the organization more in line with the realities of the environment, which frequently necessitates changing the very structures, resources, and relationships. The behaviours associated with the management and leadership differs. Management is getting people to do what needs to be done. Leadership is getting people to want and do what needs to be done. While the tasks and functions of management and leadership are unique, there is a link between them.

It is clear that different problems need different solutions at different times. Further, rather than being mutually exclusive, the two competencies of management and leadership are interdependent. They are linked by processes. For example, once a leader articulates the intended direction, plans are to be put in place to provide concrete ways to move in that direction. The leader is to align the people with a vision. Also, the leader is to motivate and inspire employees to overcome the challenges which the management processes of controlling and measuring have uncovered.

It is not really possible to think about control in an organization which has very few well-defined goals and technology and has substantial participant involvement in the affairs of the organization. Success in organization needs a balance of both leadership and management. Both the elements of the management and leadership are necessary to forge a successful organization. Both the leadership and management are equally important. Strong leadership with weak management is no better, and sometimes actually worse, than the opposite. The challenge is to achieve a balance of strong leadership and strong management. Leaders manage and managers lead, but the two activities are not synonymous. Management functions can potentially provide leadership while the leadership activities can contribute to managing. Nevertheless, some managers do not lead, and some leaders do not manage.

An appropriate balance of leadership and management is needed to successfully operate the organization. Even leaders are to appreciate the value of control, conservation of resources, and analysis of operations and outcomes. They are also likely to know when these management functions are to be put to effective use. Yet they are to balance this appreciation with vision, communication, risk taking, and optimism, particularly in creating a new work environment or changing management philosophies.

Normally management function in the organization is overemphasized. Irrespective of time as well as position, leaders are able to contribute significantly in the way how the organization carries out its activities. Leadership which has effective strategies can work as the fundamental basis for fruitfully employing the strategic management process. Leaders who follow strategies are able to expedite the growth of suitable strategic activities, and they specify the ways to enforce them. These actions work as gateways to higher-average outcomes and strategic competitiveness. Leaders are fully conscious about the requirement to chalk out the plan strategically for the future of the organization and take part in the effective enactment regarding these well-planned schemes.

Normally leaders in the organization provide the vision. They strategically think, plan, and administrate the operational activities. Further, they try to fit organization according to the requirement of the situation. Leaders spread energy and boost the morale by spirit. They develop the relationships with all the stakeholders. And most importantly they ensure teaching and learning in the organization. They are responsible to direct the subordinates to perform the organizational tasks effectively. It can be said that strategic leadership is a process which transforms an organization into a successful organization by proper strategies. It is the responsibility of the leaders to motivate and inspire the employees to work jointly as a team so that organizational vision can be translated into reality.

In the organization, efficient leaders carry out the common tasks of the strategy making and execution process. They develop a strategic vision and mission, set goals and objectives, make the strategies, execute them and then evaluate the performance. In the present day environment, the achievement of attaining the strategic organizational objectives, directing the organizations for the sake of viable development, and being competitive globally in different sectors has put new requirements before the organizations. These new requirements have brought several challenges which have specified the roles of leadership, and these roles are able to differentiate significantly in terms of organizational performance. The crucial are those roles of leadership which needs to be acted on. Leadership demands to specify new avenues for the organizations.

Authoritarian and democratic leadership

The two ends of the spectrum of leadership style range from a focus on implementing specific tasks to a focus on the dynamics of human relationships. Leaders who focus primarily on getting specific tasks accomplished can be described as authoritarian and those who stress the development of interpersonal relationships can be viewed as democratic leaders. Some leaders are able to incorporate both styles of leadership behaviour, depending upon which is appropriate to the situation. Leaders develop their particular primary style over time from experience, education, and training. However, a domineering leadership style can stifle the responsiveness of the organization. Too much power-sharing, on the other hand, can create confusion or lack of direction.

Authoritarian leaders are all about ‘control’ and managing the completion of tasks. They frequently approach situations with the attitude which other people are innately unwilling to get involved and are basically unreliable. They tend to use their power to dominate their followers. In the authoritarian style, majority of the policies are determined by the leader. Decision-making for the authoritarian leaders are normally autocratic. This means there is no input from others until after the decision is made. This frequently results in the lack of creative solutions to the problems, which can ultimately hurt the performance of the organization.

Authoritarian style typically involves a focus on tasks, in which leaders are likely to organize and define the roles of the followers. This needs explaining which activities each is to do and when, where, and how tasks are to be accomplished. The authoritarian leader in an organization tends to spend more time on management issues than on interpersonal relationships.

Authoritarian leadership is very effective in those situations in which people have a high level of trust in the organization, when the task is straight forward, when a decision needs to be made quickly, and when the leader is given responsibility for directing action. A danger in authoritarian leadership is the tendency toward negative motivation such as using threats, coercion, and other non-reinforcing means to achieve results. This can create a culture of crisis in the organization, with the leader as either oppressor or rescuer or both.

As situations in an organization become more complex, it becomes increasingly difficult for leaders to achieve their goals by using formal authority alone. As it is known, control is not a sustainable and effective way to approach working with other people. Leaders are expected to find ways of obtaining the highest level of productivity from those they lead, and using control is likely to have the opposite effect of that which is desired. The leaders increasingly need to build alliances with those on whom they are ultimately dependent, otherwise employees lose their motivation to excel and can even quit for finding a more favourable work environment.

The democratic style is at the other end of the leadership spectrum. It assumes that the power of leaders is granted by the group they are to lead, and that people can be basically self-directed and creative if they are motivated to do so. Hence, the democratic style of leadership tends to be more participative and policies evolve from group discussion and from a group decision-making process. By sharing decision-making and other responsibilities, the group is more likely to make full use of all the potential of its members, and individual self-esteem tends to increase. Besides, when the members participate in making the decisions which affect them, they have a clear picture of the goals of the group, and have a recognized part to play in helping the group reach those goals. There is a higher level of cohesion and commitment to the process in the group. However, when everything is a matter of group discussion and decision, not much room for leadership is left.

The value of a cooperative effort is not to be minimized. Many believe that the wave of the future in management and leadership is individual empowerment, which recognizes the abilities which the individuals possess and what they can and will do when involved. With shared leadership, an increased sense of ‘ownership’ of plans and ideas by all members exists, and the process becomes more enjoyable.

Democratic leaders are more likely to develop and maintain personal relationships between themselves and members of their group by opening up improved channels of communication, providing ‘psychological strokes’, facilitating change in the behaviour of the group, and demonstrating change in themselves. These leaders are more likely to ‘inspire’ change than to ‘impose’ change. It is said that good leaders inspire people to have confidence in them while great leaders inspire people to have confidence in themselves. ‘Coaches’ or team-builders are examples of this democratic style. Democratic leadership tends to work best in situations where group members are skilled and eager to share their knowledge. The flow of work in the organization needs to allow plenty of time to allow people to contribute, develop plans, and then decide on the best course of action.

Historically, effective leadership has incorporated elements of both styles. The most effective leader adopts the style most productive in a given situation. For example, if the situation calls for quick decisions and fast mobilization of resources, a more authoritarian style can be called for and appreciated by followers. However, even authoritarianism which is appropriate to the situation is unlikely to be successful if an atmosphere of group participation has not been previously developed using more democratic means.

Leadership quality plays as a key role in order to form and enforce a strategy. It works as a linkage which associates the heart of the organization with its body. The leaders are responsible for encouraging the organization to become successful, and this success comes out of making effective decisions for the formulation of strategies and their enactment. If the strategies are not enacted with perfection, even good strategies become insignificant. When there is dearth of leadership skills then lower than 50 % of the strategies formulated get enacted. Leaders show the directions for the path of the performance and the ways to move on the path. Broadly, leaders have the responsibilities for offering the vision, and then taking recourse of strategies. They are to chalk out plan, and oversee the implementations of the plans.  Moreover, they are to make the attempt to suit his organization in harmony with the needs of the circumstances. Leaders disseminate energy boosting activities and increase the morale and the spirit of the employees. The leaders perform the following roles.

Cause process – Leaders are people who are able to recognize good ideas, to support them and are willing to accept the challenges to implement these ideas. In short, leaders are those which encourage innovation processes at the same time they are ready to embrace innovation.

Inspire the desired vision – Besides the fact that leaders have a vision, it is important that they are the people who enthusiastically take all necessary actions through which they inspire the employees with vision.

Allow others to act – Leadership involves team effort. Exemplary leaders provide support and assist those who are to implement the work.

Model the path – Leaders set an example and gain loyalty through simple examples of everyday behaviour which creates momentum and progress. Leader models way through personal example and dedication to performance.

Encourages the heart – The introduction of emotions which allow the creation of ‘winning atmosphere’ is characteristics of leadership. Hence, leaders celebrate victory and encourage self-esteem.

The six constitutions of leadership are (i) story, (ii) audience, (iii) organization, (iv) embodiment, (v) addressing, (vi) skills. In case of story, the leader is to have a central story or message. It is to be effective in a large and heterogeneous group. In crises, the story has to be fast, which has the effect of simplification of the central messages. Audience is to be there for the story, since, even the most eloquent story is ineffective in the absence of the audience. In case of organization, at the beginning, the leader addresses the audience directly and achieves initial success. For steady leadership, the institution based on the organizational basis is needed. In case of embodiment, the creator of the story is in some sense to be the embodiment of its stories. This does not mean, He has to be a saint, but not to contradict its basic message. In case of addressing, most creative leaders address indirectly through symbolic product which is created, while most of the political leaders address the audience directly. Direct addressing is riskier, but can be efficient and effective, especially in the short term. In case of skills, only those who attain a high degree of expert knowledge in their work and credibility in its life have a chance to be successful as leaders. Direct leaders normally have a lack of technical knowledge, while the indirect power of leaders is based on their knowledge about specific things.

The leader is one who can lead the organization in the present day turbulent environment, the one who successfully copes with the changes. Hence, leadership and changes are synonymous with the organizational leadership. It is not necessary to become a leader, one is to be a superman, Also, a leader is not born, but one becomes leader because of education along with the existence of a pre-disposition. The key to a good leader is in the relationship with people, the emotional role of the leader is important. Mainly, the tasks of a leader are consideration of the situation, and taking the action.

Comparison of leadership and management

Both leading and managing are crucial to the success of an effective organization. In fact, one must manage effectively in order to be able to lead. Management and leadership are different but both are important. The challenges faced by modern organizations include the full reality of management and the commitment to modern management towards the attractive vision. The popular definition of the difference between a leader and manager is that the leaders are doing the right things, and the managers do things right. Although popular, this definition is certainly not sufficient and complete, since it assumes that the positions of leaders and managers are at the opposite sides, but that certainly is not the case in organizations, given that any organizational environment needs the work of leader and manager. They are not competitive but complementary. Organization needs both, in order to prosper.

Strong leadership and weak management and vice versa, can easily lead the organization at risk. The consequences of strong leadership and weak management in a complex organization are (i) strong long-term vision with no short-term planning and budgeting, (ii) almost cult culture in the organization without a lot of the specialization, the structure and rules, and (iii) inspired employees who rarely or never use the control systems and solving problems discipline. The situation in these organizations frequently goes beyond control. When there is no respect of the limits of work, approved budgets and promises given to the customers, the real threat to the organization grow.

The consequences of a strong management and a poor leadership in a complex organization are (i) insisting on short-term period, details, eliminating the risk, and ordinary rationality, with small focus on the long term, large scale strategies which involve risks, as well as human values, (ii) a strong focus on specialization, the work is much more important than the employees while they are to obey the rules, with a minimal insisting on the integration, alignment and personal involvement of people, and (iii) control and prediction are in the foreground, growth, training and inspiration are not. The situation in these organizations is a rigid, non-innovative, and hence the organization is unable to cope with changes in the market or technology. If the organization has a strong market position, it loses it with the change.

Tab 1 Typical responsibilities of management and leadership
Sl. No.ManagementLeadership
1Implementing tactical actionsCreating new visions and goals
2Detailed budgetingEstablishing organizational financial targets
3Measuring and reporting performanceDeciding what needs measuring and reporting
4Applying rules and policiesMaking new rules and policies
5Implementing disciplinary rulesMaking disciplinary rules
6Organizing people and tasks within the organizationDeciding structures, hierarchies, and workgroups
7Recruiting people for jobsCreating new job roles
8Checking and managing ethics and moralsEstablishing ethical and moral positions
9Developing peopleDeveloping the organization
11PlanningVisualizing and visioning
12Improving productivity and efficiencyConceiving new opportunities
13Motivating and encouraging othersInspiring and empowering others
14Delegating and trainingPlanning and organizing succession

 The role of power in leadership

Power has been defined as the ability to influence the actions of others, which means that leadership can be viewed as the effective use of power. Leaders are people who have and use power. While an individual can exert power without being a leader, an individual cannot be a leader without having some level of power. In the present day environment, organizational leaders tend to shy away from the word ‘power’, frequently prefer to talk about ‘empowerment’. Some people have a strong negative reaction when talking about power since the word is frequently associated with negative applications, such as manipulation, abuse, or harassment.

However, power is not necessarily a negative concept. Power, like conflict, exists in all human interactions and is not always bad. It is how power and conflict are used and managed. When power is used in an ethical and purposeful way, there is nothing wrong about it. In that light, a dictionary definition of power is the ‘ability to act or produce an effect’. Power is really just a capacity. It is the capacity to influence other people and the strength and courage to accomplish something. It turns out that power, when applied appropriately, is exactly what it takes to promote action and make positive change happen. Continuing this thought, power is the vital energy to make choices and decisions. Without some measure of power, managers or leaders find it difficult to manage the work of their subordinates, thereby negatively impacting the productivity of the organization. While an individual can exert power without being a leader, an individual cannot be a leader without having some level of power.

One of the explanations why employees accept the influence of leaders consists of the fact that the leader has the power. The power can be explained as the ability to do things the way one want to do it. The role of power in leadership is very important since it implies that there is unequal distribution of power between leaders and the followers. Leadership power basically fall into two broad categories, namely, (i) positional power, and (ii) personal power. There are six different elements of power namely (i) reward power, (ii) coercive power, (iii) legitimate power, (iv) the power of control over the information, (v) the reference power, and (vi) the expert power.

The above resources can be systematized into two large groups. One consists of those sources where the power is based on position, and the things which the managers can do for others, such as the reward power, coercion power, and legitimate power. The other three sources of power are based on the personality of leaders. Stimulation encourages employees to work, for better results, with greater responsibility and obligations. There are many ways by which leaders can increase their power. Some of them are image building, using and developing a coalition of associations with powerful individuals, and the orientation towards individuals who are more susceptible to power, etc.

Regardless of the type of power, the amount of power or influence a leader has is related to a number of factors, which include (i) personal qualities (appearance, age, family background, reputation, special skills, and communication abilities), (ii) control of or access to such resources as jobs, wealth, property, services, businesses, and prestige, (iii) leaders reputation in their field and their technical expertise, (iv) leaders ability to get things done, (v) the cumulative influence growing out of all the positions or offices held, and (vi) leaders optimistic and positive nature (a positive self-image).

If leaders acknowledge and understand the power that they possess, the result is a greater sense of control over one’s job, one’s tasks, and one’s choices. The only way in which anyone can lead is to restore to the belief in his own guidance. Once people learn what their points of power are, it is possible to expand them. They are not stuck with the power they have, instead they have the capacity to learn new bases of power. A leader is to use power wisely and justly, or it can become a liability rather than an asset. It only takes one incompetent act to result in an immediate loss of power. Good leaders work to build their sources of power and use their powers to influence others in the organization so that goals can be met and visions achieved.

Leadership can be (i) charismatic leadership, (ii) transactional leadership, (iii) transformational leadership, (iv) servant leadership, and (v) situational leadership.

Charismatic leader is able to articulate a compelling vision which responds to the needs and aspirations of the followers. Through their relationship with the charismatic leader, the followers gain feelings of power and build their self-esteem. Charismatic leaders are generally very skilled communicators. They tend to be individuals who are both verbally eloquent, but also able to communicate to followers on a deep, and emotional level. Charismatic leadership can also create dependency among followers. This can cause followers to assume that the leader has all the answers, and so followers take less responsibility for themselves and for important initiatives.

Transactional leadership assumes that people are motivated primarily by reward and punishment. This style is related to the autocratic style. The belief is that employees perform their best when the chain of command is definite and clear, and that reward or punishment is contingent upon performance. The transactional leader is more a manager than a leader, and is highly focused in getting tasks done, providing very clear direction, and overseeing productivity in detail. The leader tends to think inside the box when solving organizational problems. The concern is with the work process, rather than with forward-thinking ideas. Rules, procedures, and standards are essential for the transactional leader. This type of leader tends to carefully monitor and micro-manage the subordinate’s work, making corrections throughout the process. When a subordinate fails to meet expectations, the next step is frequently a penalty or punishment. A major downside of the transactional style is that it does not consider other potential factors which can influence outcomes and hence affect leadership effectiveness.

Transformational leadership grows out of the assumption that people follow a leader who inspires and motivates them. In this leadership style, the leader motivates and inspires by developing a compelling vision, selling that vision, and focusing on developing relationships with followers as a teacher, mentor, and coach.  The transformational leader has a basic focus on transforming the organization and, quite possibly, their followers. Transformational leaders are the result of significant and continuous learning and relationship building. They engage subordinates by spending a great deal of time building trust and demonstrating a high level of personal integrity. The ultimate goal is to ‘transform’ the goals, vision, and sense of purpose of the followers, moulding them into a cohesive team. This leadership style tends to help motivate followers to be loyal and dedicated employees, with the goal also of helping every member of the group to be successful.

Servant leadership represents a philosophy in which leaders focus on increased service to others rather than on increasing their own power. The goal is to enhance the growth of individuals in the organization and increase teamwork and personal involvement. Servant leaders are givers, not takers. They are those leaders who invest themselves in enabling others, in helping them be and do their best. At the very heart of servant-leadership is the genuine desire to serve others for the common good. The goal of the servant leader is to help people, not just to make them happy. In servant-leadership, self-interest gives way to collective human development. What distinguishes servant-leaders from others is not the quality of the decisions they make, but how they exercise their responsibility and whom they consult in reaching these decisions.

The situational leadership uses ‘styles’ of leadership which align with the task-versus-people orientation. In case of situational leadership most appropriate action or behaviour of the leader depends on the situation and on the followers. The effectiveness of a leader depends on whether his followers accept or reject him, as well as to the extent to which the followers have the ability and willingness to accomplish a specific task. The key words are acceptance and readiness.

The best type of leadership is determined by the specific situation, and that no one style of leadership is appropriate for all given workplace situations. Effective leaders are to be aware of where they are with a specific follower, and where that follower is in his own stage of leadership development. For example, giving an employee too much or too little direction can have a negative impact on their performance and their development as leaders. Hence, identifying the leadership style in the organization is ideally to take into careful consideration the specific task, the complexity of the organization, and qualifications of the employees. A variety of leadership styles can be needed to lead different groups, such as the employees, the directors, the customers, and the volunteer groups associated with the organization etc. Also, the use of a particular leadership style with a particular person can depend on the situation of that person at a particular time. This leads to the concept / theory of situational leadership. The model of situational leadership is shown in Fig 3.

Fig 3 Model of situational leadership

Action- and results-oriented leadership

Leadership is action, not position. Leaders are proactive, not reactive. Getting things done and producing positive results is their mantra. People cannot be leaders if they are standing still or if they are content with things as they are. Productive leaders are an example to the people they lead, and their high level of productivity sets the standard for the rest of the organization. It is the desire of effective leaders to convert the mission and vision of their organization into action. Following through on initiatives and promises is their consistent behavior. Also, the approach of facilitative leaders involves convincing people that something can be done to achieve the desired results, not telling them what to do nor doing the work for them.

On the other hand, observing a failure to act is likely to make good leaders upset. They do not accept the response that ‘the things have never done in that way before’. They also have a hard time accepting the reality that the vast majority of people in the society are reactive and avoid taking risks. This tends to eliminate the leadership potential of reactive people, who only work on what someone else requires them to do. This frequently leads to overlooking important tasks or putting them off in favour of more urgent lesser tasks. In Tab 2 assessing results oriented leadership in the organization is given.

Tab2  Assessing results-oriented leadership in the organization
Results-orientedCreates own measures of excellenceImproves personal performanceContributes to work unit successContributes to organizational success
Knowing what results are important; focusing resources to achieve themUses own specific methods of measuring outcomes against a standard of excellence that exceeds established standards or expectationsMakes specific changes in work methods and skills to improve personal performance and organizational resultsImprovement processes within the unit for the greater good of the organization. Commits significant resources to improve performance while taking action to minimize risksDemonstrates a clear understanding of all the factors affecting improvement of results within the organization. Analyzes all options. Initiates actions to optimize resources for the achievement of improved results
Administrative supportProfessionalManagers

The present day leadership challenges

In the present day globalized society, leaders are faced with the challenges of a changed environment and with completely new and important issues of leadership. Some of these issues relate primarily to the leadership in the areas in which completely different culture, gender differences in leadership, online leadership, empowerment of employees, etc. cross each other.

Development of trust – Leaders in the present day environment are faced with an increasing effort to develop confidence with their subordinates to effectively perform the task. Trust is defined as the belief in the integrity, character and leadership ability. The followers who believe leader are vulnerable when it comes to actions of the leader since they believe their rights and interests are not to be abused. There are five dimensions which make up the concept of trust namely (i) integrity which consists of honesty and sincerity, (ii) competence which consists of professional and inter-personal skills and knowledge, (iii) consistency which constitutes reliability, predictability and good assessment when it comes to managing the situation, (iv) loyalty which is the desire to protect people, physically and emotionally, and (v) openness which is the desire to share ideas and information freely.

Moral leadership – Leadership is not free of value system so moral leadership includes means the leader is using in an attempt to achieve the objectives and content of these goals. One of the main reasons for the ethical implications of leadership is the growing interest in ethics in all areas of management. Many corporate financial scandals have greatly contributed to the issue of ethics put into focus the issues of management and leadership. Hence, before assessing whether a leader is effective, it is necessary to consider the moral code of its objectives and means used to achieve the goals.

Leadership online – The most common problems which arise in the provision of online leadership are communication, management of performance, and confidence. In a virtual environment, leaders need to learn new communication skills to be effective. In order to convey online leadership effectively, managers are to understand that they have choices when it comes to words, structure, tone and style of their digital communications, and be willing to express emotions.

An important aspect of leadership is the online performance management, by definition, facilitating and encouraging. It is therefore important to ensure that all virtual team members understand the goals of the team, their responsibilities in achieving these goals and how to evaluate the achievement of goals. While these are important responsibilities of leaders valid for all situations, they are particularly important in a virtual working environment with no direct interaction that transmits expectations or points to problems related to performance. The biggest challenge regarding online leadership is a matter of trust, since virtually leadership provides numerous opportunities for the violation of trust.

Authorizing employees – In the present day organizations, there is the increasingly common phenomenon in terms of authorizing employees. Hence, leaders, in addition to power and authority, transfer a portion of responsibility to employees. One of the main reasons for the transfer of the mode of liability is a more frequent need to make decisions quickly, and those people, who know most about certain issues – frequently to those at lower organizational levels, can do this in the best way. If the organizations need to compete successfully in a dynamic global economy, they are to be able to make decisions and make changes quickly.

Cross-cultural leadership – The effective leaders do not use only one style. They adapt their style to a particular situation, and the local culture is certainly an important variable in determining the component, which is the most effective style of leadership in present day organizations. Local culture of the area of the organization affects leadership style since it affects how followers are going to react, and hence leaders cannot randomly choose their own style. The present day leaders are mainly expected to learn the local culture of the area where they are located.

Differences in gender and leadership – The number of women in managerial positions are now increasing, and many are taking the positions of senior management. Due to the increasing influence of the tendency of women to high positions, in recent years a number of studies on gender and leadership styles have been conducted. The general conclusion is that men and women really apply different styles. Specifically, women tend to implement more democratic and participative style. Women encourages participation, share power and information, strengthen self-evaluation of followers. They guide through inclusion and rely on their charisma, expertise, contacts, and interpersonal skills to influence others. Women tend to apply transformational leadership to transform others through the transformation of self-interest in the organizational goals. Men are more inclined to use commanding and control style. They rely on the formal position of authority when it is necessary to influence someone.

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