Azeem Dilawar MBA Weekend Course Leadership and change

Q1. What is the difference between in groups and out groups?

DIFFERENCE BETWEEN FORMAL AND INFORMAL GROUPS

Formal vs informal group In an organization, the formation of groups is very natural,

whether it is created by the management or by the members of the organizations
themselves. The most common reason behind the creation of a group is the urge of
people to talk and make their own circle, where they can interact freely, know each
other, work unitedly and accomplish the tasks which are being assigned to them.
Groups are majorly divided into two categories. First one is the formal groups, which
are formed by the organization, to fulfil a task. The other one is an informal group,
formed by the employees as per their likes, interests, and attitudes. So we are going
to discuss the important differences between formal and informal groups in an
organization, in this article. Meaning Groups created by the organization, for the
purpose of accomplishing a specific task are known as Formal Groups. Groups
created by the employees themselves, for their own sake are known as Informal
Groups.

DEFINITION OF FORMAL GROUP

A formal group is a collection of persons, who came together for achieving a

specified goal. They are always created with intent to fulfil some official
requirement. Formation of the group is done by the management. It possesses a
systematic structure, in hierarchical form. In general, the employees of the
organization are divided into groups, and a task is a hand over to each group. In this
way, the task of the group is accomplished along with the fulfilment of
organizational goals. The given are the types of formal groups:

Command groups: The groups that consist of managers and their subordinates.

Committees: The group of people who are appointed by an organization, to resolve

the matters, referred to them are known as Committee. For example Advisory
Committee, Standing Committee, etc.

Task Forces: The group form to carry out a particular task is known as Task Forces.

Definition of Informal Groups

The groups that are created naturally, within the organization, due to social and
psychological forces are known as Informal groups. Under this group, the employees
of the organization, themselves enter into groups, without the approval of the
management to satisfy their social needs on the job. Nobody wants to live in
isolation; people generally create a circle around themselves so that they can
interact and share their feelings, opinions, experiences, information, etc. These
circles are known as informal groups at the workplace. These groups are formed on
the basis of common likes, dislikes, prejudices, contacts, language, interests,
attitudes of the members. It includes interest group and friendship group. The
communication is faster in such groups, as they follow grapevine chain.

There are no defined rules; that applies to the informal group. Moreover, the group
possesses a loose structure. The bond between the members of the group is quite
strong, which can be seen when one of the employees is kicked out of the job and
all co-members his group goes on strike just to support him.

KEY DIFFERENCES BETWEEN FORMAL AND INFORMAL GROUPS

The following are the differences between formal and informal groups:

1.The groups formed by the management of the organization for accomplishing a

specific task are known as Formal Groups. The groups that are formed by the
employees themselves as per their likes and prejudices is known as Informal
Groups.

2.The formal groups are deliberately created by the organization, whereas the
informal groups are established voluntarily.

3.The formal groups are big in size as compared to an informal group. Moreover,
there can be sub-groups in a single formal group.

4.The structure of a formal group is designed in a hierarchical manner while the

informal group lacks structure or say it has no structure.

5.In a formal group, the position of a member defines its importance in the group,
but in an informal group, every member is as important as any other member.

6.In a formal group, the relationship between the members is professional, they
gather just to accomplish the task allotted to them. On the other hand, in an
informal group, there is a personal relationship between members, they share their
opinions, experiences, problems, information with each other.

7.In a formal group, the flow of communication is restricted due to the unity of
command. In contrast to an informal group, the flow of communication stretches in
all directions; there is no such restriction.

CONCLUSION

We generally enter into groups, without knowing that Which kind of group is it? From
the above post, hope you have understood the differences between the two kinds of
group. Sometimes the members of formal groups and informal groups are same.
The basic distinguishing feature between the two is that formal groups are always
formed with an objective, but when an informal group is created, there is no such
kind of intention at all

BASIS FOR FORMAL GROUP INFORMAL GROUP

COMPARISON

Meaning Groups created by the Groups created by the

organization, for the employees themselves, for
purpose of accomplishing their own sake are known
a specific task are known as Informal Groups
as Formal Groups.

Formation Deliberately Voluntarily

Size Large Comparatively small.

Life Depends on the type of Depends on the members

group

Structure Well Defined Ill Defined

Importance is given to Position Person

Relationship Personal Professional Personal

Communication Moves in a defined Stretches in all the

direction directions.

The in-group includes followers with strong social ties to their leader in a supportive
relationship characterized by high mutual trust, respect, loyalty, and influence.
Members of the in-group are invited to participate in important decision making,
are given added responsibility, have greater access to the leader, and experience
greater support and positive influence from the leader. The out-group includes
followers with few or no social ties to their leader, in a strictly task-centered
relationship characterized by low exchange and top-down influence. Members of
the out-group are managed according to the requirements of the employment
contract. They receive little inspiration, encouragement, or recognition

Q2. How do quality leader member exchange relationships influence

follower behavior?

Description
Leader-Member Exchange Theory, also called LMX or Vertical Dyad Linkage Theory,
describes how leaders in groups maintain their position through a series of tacit
exchange agreements with their members.

In-group and out-group

In particular, leaders often have a special relationship with an inner circle of trusted
lieutenants, assistants and advisors, to whom they give high levels of responsibility,
decision influence, and access to resources. This in-group pay for their position.
They work harder, are more committed to task objectives, and share more
administrative duties. They are also expected to be fully committed and loyal to
their leader. The out-group, on the other hand, are given low levels of choice or
influence. This also puts constraints upon the leader. They have to nurture the
relationship with their inner circle whilst balancing giving them power with ensuring
they do not have enough to strike out on their own.

The LMX process

These relationships, if they are going to happen, start very soon after a person joins
the group and follow three stages.

1. Role taking

The member joins the team and the leader assesses their abilities and talents.
Based on this, the leader may offer them opportunities to demonstrate their
capabilities. Another key factor in this stage is the discovery by both parties of how
the other likes to be respected.

2. Role making

In the second phase, the leader and member take part in an unstructured and
informal negotiation whereby a role is created for the member and the often-tacit
promise of benefit and power in return for dedication and loyalty takes place.Trust-
building is very important in this stage, and any felt betrayal, especially by the
leader, can result in the member being relegated to the out-group.

This negotiation includes relationship factors as well as pure work-related ones, and
a member who is similar to the leader in various ways is more likely to succeed. This
perhaps explains why mixed gender relationships regularly are less successful than
same-gender ones (it also affects the seeking of respect in the first stage). The
same effect also applies to cultural and racial differences.

3. ROUTINIZATION
In this phase, a pattern of ongoing social exchange between the leader and the
member becomes established.

SUCCESS FACTORS

Successful members are thus similar in many ways to the leader (which perhaps
explains why many senior teams are all white, male, middle-class and middle-aged).
They work hard at building and sustaining trust and respect. To help this, they are
empathetic, patient, reasonable, sensitive, and are good at seeing the viewpoint of
other people (especially the leader). Aggression, sarcasm and an egocentric view
are keys to the out-group wash-room.The overall quality of the LMX relationship
varies with several factors. Curiously, it is better when the challenge of the job is
extremely high or extremely low. The size of the group, financial resource
availability and the overall workload are also important.

ONWARDS AND UPWARDS

The principle works upwards as well. The leader also gains power by being a
member of their manager's inner circle, which then can then share on downwards.
People at the bottom of an organization with unusual power may get it from an
unbroken chain of circles up to the hierarchy.

When you join a team, work hard to also join the inner circle. Take on more than
your share of administrative and other tasks. Demonstrate unswerving loyalty. See
your leader's point of view. Be reasonable and supportive in your challenges to
them, and pick your moments carefully.As a leader, pick your inner circle with care.
Reward them for their loyalty and hard work, whilst being careful about maintaining
commitment of other people.

DEFENDING

If you want to be an 'ordinary' member of a team, play your part carefully. There will
be others with more power. If you want to lead an equal team, beware of those who
curry favor.

Q3.How does a leader's first impression and perception of a follower

influence the quality of their relationship?

The leader's first impressions of the follower can influence the leader's
behavior toward the follower. A positive relationship is more likely when
the follower is perceived to be competent and dependable, and when the
follower's values and attitudes are similar to those of the leader. A
favorable exchange relationship between the leader and the follower is
said to correlate with more supportive behavior by the leader toward the
follower, less close monitoring, more mentoring, and more involvement
and delegation.

The fundamental premise of the leadermember exchange (LMX) theory is that

leaders relationships with their followers vary in quality. Although LMX
differentiation (i.e., within-group variation in the quality of LMX) is generally
considered a sound leadership practice, its effects on group members work
outcomes remain poorly understood. Drawing on LMX and upper echelons theories,
this study suggests that employees reactions to LMX differentiation depend on the
personal LMX status of employees and the characteristics of the organizational
context. Analyses of multilevel data collected from 502 employees organized into
135 work groups in 34 firms show that the impact of LMX differentiation on work
outcomes is more positive (or less negative) for employees with lower rather than
higher LMX. The findings highlight the importance of organizational boundary
conditions for these interactions: The negative moderation by one's own LMX status
is stronger when top managers decentralize responsibilities to lower hierarchical
levels and weaker when top managers impose a shared vision to guide the
organization.

Founded in 1958, W. L. Gore & Associates has become a modern-day success story
as a uniquely managed, privately owned, family business. Founders Bill and Vieve
Gore set out to create a business where innovation was a way of life and not a by-
product. Today Gore is best known for its Gore-Tex range of high-performance fabrics
and Elixir Strings for guitars. Gore is the leading manufacturer of thousands of
advanced technology products for the medical, electronics, industrial, and fabrics
markets. With annual revenues of $2.5 billion, the company employs approximately
9,000 associates at more than 50 facilities around the world. Terri Kelly replaced
Chuck Carroll as the president and CEO of W. L. Gore & Associates in April 2005.
Gore has repeatedly been named among the "100 Best Companies to Work For," in
the United States by Fortune magazine. In a recent interview, Ms. Kelly was asked
what would be the most distinctive elements of the Gore management model to an
outsider. She listed four factors: "We don't operate in a hierarchy; we try to resist
titles; our associates, who are all owners in the company, self-commit to what they
want to do; and our leaders have positions of authority because they have
followers." According to CEO Kelly, these four attributes enable Gore to maximize
individual potential while cultivating an environment that fosters creativity and also
to operate with high integrity. She is quick to remind everyone that all of Gore's
practices and ways of doing business reflect the innovative and entrepreneurial
spirit of its founders. CEO Kelly attributes Gore's success to its unique culture. How
work is conducted at Gore and how employees relate to one another sets Gore
apart. There are no titles, no bosses and no formal hierarchy. Compensation and
promotion decisions are determined by peer rankings of each other's performance.
To avoid dampening employee creativity, the company has an organizational
structure and culture that goes against conventional wisdom. W.L. Gore &
Associates has been described as not only unmanaged but also unstructured. Bill
Gore (the founder) referred to the company's structure as a "lattice organization."
Gore's lattice structure includes the following features:

Direct lines of communicationperson to person

with no intermediary

No fixed or assigned authority

Sponsors, not bosses

Natural leadership as evidenced by the willingness of

others to follow

Objectives set by those who must "make them happen"

Tasks and functions organized through commitments

Complete avoidance of the hierarchical command and control structure

The lattice structure as described by the people at Gore encourages hands-on

innovation and discourages bureaucratic red tape by involving those closest to a
project in decision making. Instead of a pyramid of bosses and managers, Gore has
a flat organizational structure. There are no chains of command, no predetermined
channels of communication. It sounds very much like a self-managed team at a
much broader scale. Why has Gore achieved such remarkable success? W. L. Gore &
Associates prefers to think of the various people who play key roles in the
organization as being leaders, not managers. While Bill Gore did not believe in
smothering the company in thick layers of formal management, he also knew that
as the company grew, he had to find ways to assist new people and to follow their
progress. Thus, W. L. Gore & Associates came up with its "sponsor" program. The
sponsor program is a dyadic relationship between an incumbent, experienced
employee and a newly hired, inexperienced employee. Before a candidate is hired,
an associate has to agree to be his or her sponsor or what others refer to as a
mentor. The sponsor's role is to take a personal interest in the new associate's
contributions, problems, and goals, acting as both a coach and an advocate. The
sponsor tracks the new associate's progress, offers help and encouragement, points
out weaknesses and suggests ways to correct them, and concentrates on how the
associate might better exploit his or her strengths. Sponsoring is not a short-term
commitment. All associates have sponsors, and many have more than one. When
individuals are hired, at first they are likely to have a sponsor in their immediate
work area. As associates' commitments change or grow, it's normal for them to
acquire additional sponsors. For instance, if they move to a new job in another area
of the company, they typically gain a sponsor there. Sponsors help associates chart
a course in the organization that will offer personal fulfillment while maximizing
their contribution to the enterprise. Leaders emerge naturally by demonstrating
special knowledge, skill, or experience that advances a business objective. An
internal memo describes the three kinds of sponsor- ship and how they might work:

Starting sponsora sponsor who helps a new associate get started on his or her
first job at Gore, or helps a present associate get started on a new job.

Advocate sponsora sponsor who sees to it that the associate being sponsored
gets credit and recognition for contributions and accomplishments.

Compensation sponsora sponsor who sees to it that the associate being

sponsored is fairly paid for contributions to the success of the enterprise. An
associate can perform any one or all three kinds of sponsorship.

Quite frequently, a sponsoring associate is a good friend, and it's not uncommon for
two associates to sponsor each other as advocates. Being an associate is a natural
commitment to four basic principles articulated by Bill Gore and still a key belief of
the company: fairness to each other and everyone we come in contact with;
freedom to encourage, help, and allow other associates to grow in knowledge, skill,
and scope of responsibility; the ability to make one's own commitments and keep
them; and consultation with other associates before undertaking actions that could
affect the reputation of the company. Over the years, W. L. Gore & Associates has
faced a number of unionization drives. The company neither tries to dissuade
associates from attending organizational meetings nor retaliates against associates
who pass out union flyers. However, Bill Gore believes there is no need for third-
party representation under the lattice structure. He asks, "Why would associates
join a union when they own the company? It seems rather absurd." Commitment is
seen as a two-way street at W. L. Gore & Associateswhile associates are expected
to commit to making a contribution to the company's success, the company is
committed to providing a challenging, opportunity-rich work environment, and
reasonable job security. The company tries to avoid laying off associates. If a work
force reduction becomes necessary, the company uses a system of temporary
transfers within a plant or cluster of plants, and requests voluntary layoffs.
According to CEO Kelly, Gore's structure, systems, and culture have continued to
yield impressive results for the company. In the more than 50 years that Gore has
been in business, it has never made a loss.

Q4.What are the characteristics of quality LMX relationship?

High-quality LMX relationships may be influenced by the following three antecedent
factors: (1) Follower attributes Attributes such as commitment, trust, respect,
and loyalty will influence leaders to show support, delegate more, allow followers
more discretion in conducting their work, and engage in open communication with
followers. (2) Leader's perceptions and behavior The leader's first impressions of
a group member's competency plays an important role in defining the quality of the
relationships. (3) Situational factors Factors such as tryouts or tests of a new
employee may be key determinants of a follower's in-group or out-group status.

How can a follower's perception and attributions of a leader influence

their relationship?

It can influence there relationship by showing the follower what needs to be done in
order to influence the relationship, either in an attempt to learn how to improve, or
to gain recognition by the leader either way the follower will have to decide what
the leader looks for in order to achive the desired goals. 6. Describe the inherent
bias of LMX theory and how it can lead to unintended consequences. The bias of
the theory is successful if the leadership builds up core qualities that strengthens
the style in making any project truly successful, so, the bias of the theory rest in
certain consequences if not followed. It is like connecting the dots the skill in
connecting the flow of follower - influencing characteristics in actually having any
affect on others. The leader's first impressions of the follower can influence the
leader's behavior toward the follower. A positive relationship is more likely when
the follower is perceived to be competent and dependable, and when the follower's
values and attitudes are similar to those of the leader. A favorable exchange
relationship between the leader and the follower is said to correlate with more
supportive behavior by the leader toward the follower, less close monitoring, more
mentoring, and more involvement and delegation.