Leadership

1 LEADERSHIP: LEADERS & THEIR ROLE IN ORGANIZATIONS
Leadership is the action of leading employees to achieve goals. It plays an

important role in employee performance and productivity. Learn about how
leaders influence employee behavior in this lesson.
1.1 WHAT IS LEADERSHIP?

Have you ever wondered what the magic is behind a successful organization? In
this lesson, we will uncover the importance of good leadership and the role it
plays in the success of an organization. Leadership is the action of leading
people in an organization towards achieving goals. Leaders do this by influencing
employee behaviors in several ways. A leader sets a clear vision for the
organization, motivates employees, guides employees through the work process
and builds morale.
Leadership involves leading others toward achieving clear

goals.
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1.2 LEADERSHIP IN ORGANIZATIONS

Setting a clear vision means influencing employees to understand and accept
the future state of the organization. A unit of young soldiers may not believe in a
particular mission ordered by their commanding officer. A good leader will
influence the soldiers to perform their duties by explaining the vision and the
importance of their role in the outcome. The soldiers will be more apt to follow.
Motivating employees means to find out enough about the needs and wants of
employees, giving them what they need and providing praise for a job well done.
Being far from home is lonely for a young soldier. A good leader knows this and
will communicate with his unit to learn more about their needs and wants. It may
be as simple as giving the soldiers a sweet treat for their efforts.
When guiding employees, it is important to define their role in the work process
and provide them with tools needed to perform and participate in their efforts
along the way. Some military maneuvers are difficult. Often, orders are to
perform tasks that involve intricate details, like explaining how to dig a tunnel
past enemy lines. A good leader will explain the tasks, provide the digging tools,
direct the work and be available to assist the soldiers if they run into a problem.
Building morale involves pulling everyone together to work towards a common

goal. Let's face it - fighting in a war is stressful. Soldiers are often placed in high-
stress situations. This can cause the unit to lose their focus or, worse yet, shut
down emotionally. A good leader will let the soldiers know how much their work
is appreciated. A simple gesture like throwing an impromptu party to recognize
the unit's small victories can reignite the soldiers' spirits.
1.3 A LEADER'S ROLE

A leader's role in an organization can be formally assigned by his or her position,
like manager or department head, and it can also be informally assumed by an
employee who possesses a certain charisma that attracts others to follow.
A formal leadership role is an officially assigned position given to someone

based on his or her ability to perform the job. It generally involves organizing and
directing people to perform tasks, like the job of commanding officer (CO) in the
military. The CO holds the highest level of authority over his unit. He is in charge
of everything, from deciding how to fight the enemy to overseeing the day-to-day
tasks of his soldiers.
The commanding officer holds the highest level of authority
over his unit.
An informal leadership role is an unofficial role a person takes on based on his or

her charismatic influence over a group of people. A person, based on his or her
personality traits, assumes this role. A soldier with no formal authority may
convince the others to move to safer ground or to use force on the enemy
because he believes this is in their best interest. This emergent leader gains
followers because he builds a good relationship with the other soldiers. They
trust him. They feel confident that the risk in moving locations will pay off for the
unit.
1.4 LESSON SUMMARY

Leadership is the action of leading employees to achieve goals. It plays an
important role in employee performance and productivity. A good leader:
Sets a clear vision by influencing employees to understand and accept the

future state of the organization
Motivates employees by finding out enough about their needs and wants,
giving them what they need and providing praise for a job well done
Guides employees by defining their role in the work process, providing

them with the tools needed to perform and participating in their effort
along the way
Builds morale by pulling everyone together to work towards a common

goal
A leader can take on two different roles. A formal leader is an officially assigned
position given to someone based on his or her ability to perform the job. An
informal leadership takes on an unofficial role, and the role is based on his or her
charismatic influence over a group of people.
1.5 LEARNING OUTCOMES

After watching this lesson, you should be able to:
Describe the role leadership plays in the success of an organization
Identify effective actions for leading employees to achieve goals, including

building morale, guiding employees, motivating employees, and setting a
clear vision
Analyze goal oriented situations to determine effective leadership actions
Compare and contrast formal and informal leadership
2 THE TRANSFORMATIONAL LEADER

Transformational leaders are known for their innovation and influence. In this
video, you'll explore the management styles and traits that contribute to their
success.
2.1 MORE THAN MEETS THE EYE

If you can remember watching Transformers on TV as a child, or perhaps you
have seen some of the newer blockbuster Transformer hit movies in recent years,
you should be familiar with the phrase 'more than meets the eye.' If not, perhaps
the phrase 'don't judge a book by its cover' or 'don't take things at face value' are
more relatable for you. Any of these phrases gets to the idea that our initial
impressions of someone or something may not be completely accurate - that
buried deep below the surface there lies more than what we initially can see.
This is the premise of the transformational leader, who works continuously to
expose the potential of followers and the organization to bring them to the next
level of success.

2.2 THE TRANSFORMATIONAL LEADER

Much like a breath of fresh air, the transformational leader creates enthusiasm
and revitalizes organizations. This enthusiasm is generated in several ways.
First, transformational leaders use what's called idealized influence to
demonstrate to followers that the leader can walk the walk and talk the talk.
Essentially, the transformational leader serves as a role model to followers by
living by the same principles that he or she expects of their followers. The
transformational leader would never expect followers to do something that he or
she would not do themselves.
Second, the transformational leader is also a charismatic leader, who has the
ability to arouse a sense of excitement, motivation and assurance in followers.
Keep in mind while transformational leaders are charismatic, they are not as
narcissistic as pure charismatic leaders can be.
Third, transformational leaders show a genuine concern for the needs and
feelings of their followers through something called individualized consideration.
Examples of individualized consideration include things like mentoring
employees one-on-one, delegating difficult tasks to deserving people and
maintaining a high level of communication with followers. Each follower is
treated as an individual. The transformational leader spends time recognizing
the differences in followers.
Fourth, the transformational leader is intellectually stimulating by encouraging

creativity and innovation when formulating potential solutions to organizational
problems. By allowing the followers to participate in this unrestricted fashion,
the transformational leader is able to stir the imagination of followers in a way
that promotes the prompt identification of problems and high-quality solutions
that are implemented with the full commitment of followers. Given that much of
the transformational leader's time is spent trying to convince followers to
transcend their personal interests for the sake of the larger organization,
idealized influence, charisma, individualized consideration and intellectual
stimulation are essential.
2.3 FOLLOW THE TRANSFORMATIONAL LEADER

While idealized influence, charisma, individualized consideration and intellectual
stimulation certainly pave the way for the transformational leader to gain the
support of followers, much like the Transformers, there is more than meets the
eye when it comes to transformational leadership. What sets the
transformational leader apart from many other leadership styles is the ability to
influence others to follow them through vision, framing and impression
management.
Vision is central to any transformational leader's goal for the reason that before
anyone can follow a leader they need to have an idea of where they are going and
why. The transformational leader will paint the picture of the desirable future for
followers, detailing out their individual role in the process and how they will be
affected by the change in addition to binding the greater group together to work
towards the shared goal.
Framing is used by the transformational leader to provide followers with a game

plan in highly-measureable terms for how they will accomplish their tasks, which
will aid in the achievement of some organizational goal.
Impression management refers to the steps that a transformational leader will

take to control how they are viewed by their followers. Clearly, a leader wants to
be seen as competent, knowledgeable and deserving of their role in the
organization; however, the transformational leader makes a conscious effort to
be transparent and regarded as all of those things and more so that they can
really continue to influence their followers.
In essence, the transformational leader wants to be the 'pick of the litter' by

seeming more attractive and appealing to followers than alternate leaders - they
really want to form a special bond with their followers built on things like trust,
personal integrity and genuine concern for others. At the same time, followers
should quickly be able to tell you what their transformational leader stands for.
Likewise, the followers should know where their leader stands, which is always
right next to them instead of behind them.
Once a leader is seen as charismatic, trustworthy, confident, admirable and

committed to the organization, followers are more than willing to identify with
the leader and their vision. The transformational leader will use contingent
rewards, or rewards based on meeting some established goal, to acknowledge
the efforts of followers when they are aligned with the vision. They also
practice management by exception by providing autonomy to followers and
intervening only when there is a problem. Followers are converted into leaders by
the transformational leader, who empowers them to commit to actions that align
with the vision.
2.4 TRANSFORMATIONAL LEADERS IN TODAY'S

WORKPLACE
In today's workplace, transformational leaders are prolific and perhaps the most
common leadership style across industries. Transformational leaders are
relevant in contemporary business due to their flexible, innovative, inspirational
and change-savvy personas. When it comes to creating and sustaining the
competitive advantage, the transformational leadership style is most effective
due to the ability to transcend the status quo and bring organizations into their
desirable future. To better understand the transformational leader we can look to
several famous examples including: Benjamin Franklin, Henry Ford, Bill Gates,
Walt Disney, Joan of Arc, Jesus, Sam Walton, Phil Jackson, Abraham Lincoln,
Socrates, Jack Welsh, Herb Kelleher and many more.
Famous examples of transformational leaders
2.5 LESSON SUMMARY

Let's review. The transformational leader spends much of their time trying to
convince employees to transcend their personal interests for the sake of the
larger organization. This is accomplished in several ways including: idealized
influence, charisma, individualized consideration and intellectual
stimulation. Idealized influence involves the transformational leader serving as a
role model to followers by living by the same principles that he or she expects of
their followers. Charisma shows the leader's ability to arouse a sense of
excitement, motivation and assurance in followers. Individualized
consideration is used by the transformational leader to show a genuine concern
for the needs and feelings of followers. Finally, the transformational leader
is intellectually stimulating by encouraging creativity and innovation when
formulating potential solutions to organizational problems.
What sets transformational leaders apart from many other leadership styles is
their ability to influence others to follow them through vision, framing and
impression management. Vision is central to any transformational leader's goal
for the reason that before anyone can follow a leader they need to have an idea
of where they are going and why. Framing is used by the transformational leader
to provide followers with a game plan in highly measureable terms for how they
will accomplish their tasks which aid in the achievement of some organizational
goal. Impression management refers to the steps a transformational leader will
take to really try to control how they are viewed by their followers.
Transformational leaders are relevant in contemporary business due to their

flexible, innovative, inspirational and change savvy personas. When it comes to
creating and sustaining the competitive advantage, the transformational
leadership style is most effective due to the ability to transcend the status quo
and bring organizations into their desirable future.
2.6 LESSON OBJECTIVES

After viewing this lesson, you should be able to:
Identify the four techniques use by a transformational leader that convince

followers to transcend their personal interests for the sake of the
organization and explain how each one is applied
Summarize the three influential characteristics that set transformational

leadership styles apart from other leadership styles
Explain why the characteristics of transformational leadership make it the
most effective leadership style
3 THE TRANSACTIONAL LEADER

This lesson describes the characteristics of a transactional leader. Discover
how a transactional leader depends on the concepts of actions and reactions to
motivate, manage and guide employees to success.
3.1 ACTIONS AND REACTIONS

Sir Isaac Newton's third law of motion states that for every action, there is a
reaction. This is quite true when you think about it. For example, when you smile
at a stranger on the street, they, typically, will smile back; when you sneeze
someone responds by saying bless you; pressing the gas pedal of your car
causes you to accelerate; cheating on your spouse can end in a divorce; and
coming in late to work repeatedly might just get you fired. The list goes on and
on, and I'm sure many of you can think of things you have done and the
consequences that resulted.
This action/reaction rule of life is what guides most of our daily behaviors. We
wake up each day and shower so that we don't stink. We go to work so that we
can pay our bills. We eat food and drink fluids so that we can continue to live. We
exercise to stay healthy, spend time with our friends and family to maintain our
relationships and go to sleep at night to ensure we can do it all over again
tomorrow.

3.2 THE TRANSACTIONAL LEADER
Bass reintroduced the concept of transactional leadership

first developed by Weber decades earlier
Much like Newton's third law of motion, transactional leadership runs under the
premise of actions and reactions. The transactional leader, a concept introduced
by Max Weber in 1947 and then reiterated by Bernard Bass in 1981, views
management as a sequence of transactions where the actions of subordinates
result in either a reward or a punishment. The reward or punishment is
contingent upon performance. The assumption is that employees are motivated
by extrinsic rewards, which are things like money, paid time off and other bonus-
type incentives.
Using their authority as a manager, the transactional leader gives orders to

subordinates and expects that the reaction will be adherence to the commands.
Those individuals who do conform to the requests of the transactional leader are
rewarded and anyone who fails to is punished. The expectation that employees
will follow the transactional leader's request is believed to start when a worker
accepts the job at which time a standard is set, and the leader is given authority
based on the chain of command.
Since the leader is higher on the chain of command than the subordinate is, the
employee is expected to follow the orders given by the leader. The transactional
leader's power to direct subordinates comes from their formal authority and
responsibility in the organization.
While this leadership approach might remind you of what it's like to live with your
parents, it is really quite logical. To begin, it clearly defines the roles and
responsibilities of both managers and their employees.
It also promotes a healthy motivation in employees to work diligently towards

organizational goals, knowing that when they do succeed, they will be rewarded.
Likewise, employees are expected to be responsible for their own actions, which
increases accountability throughout the entire organization. To monitor this
accountability, the transactional leader uses management by exception, which
can be either passive or active.
The transactional leader who uses passive management by exception will
monitor the employee's performance closely and intervene only when an
employee is not meeting the expectations, often resulting in a punishment.
Conversely, the transactional leader who uses active management by
exception will monitor employee performance closely, watch for slight deviations
and quickly intervene to take corrective action to prevent further mistakes.
3.3 TAKESHA THE TRANSACTIONAL LEADER

To better understand the transactional leader, let's take a look at the following
example of how TaKesha, the transactional leader, manages her employees at
Supa Sporting Goods, a local retail chain.
It's Monday morning, and TaKesha receives an email from her boss that informs
her of a new product that will be arriving sometime today from the manufacturer.
She also learns that the product will be offered exclusively at Supa Sporting
Goods, and the manufacturer is expecting Supa to do what it takes to get the
product off the shelves and into the hands of the customers as fast as possible.
TaKesha knows she must communicate this information to her employees and
come up with an action plan for how they will sell the new product to customers.
TaKesha has high aspirations for her employees because they learned from the
moment they were hired that what TaKesha wants TaKesha gets. Since she is
their manager and higher on the chain of command, the employees willingly do
whatever it is that TaKesha asks, as long as it does not put them in harm's way.
The employees understand their role in the organization is to follow the
directions of TaKesha due to her formal authority and responsibility in the
organization.
During the Tuesday morning meeting, TaKesha explains the new product to her
employees and provides them with a detailed action plan for how they can go
about selling the new product to Supa's customers. As a transactional leader,
TaKesha is clear on her intentions of her employees to do everything in their
power to sell the new item. To help motivate her staff, TaKesha informs them that
whoever meets their individual sales goals will receive an extra day of paid
vacation, but those who fail to meet their sales goals will be forced to cover the
shift of those who earn the extra vacation day. TaKesha tells her employees that
they are responsible for creating their own promotional activities necessary to
make the sales. Any worker who fails to design an effective sales strategy will
fail at meeting their sales goals and consequently will be held accountable for
that failure. TaKesha practices a passive management by exception and informs
her employees that she will be monitoring their performance on a weekly basis.
Any staff member who does not meet their required sales quota will be asked to
clean the store bathrooms that following week.
3.4 LESSON SUMMARY
Let's review. Much like Newton's third law of motion, transactional
leadership runs under the premise of actions and reactions. The transactional
leader views management as a sequence of transactions where the actions of
subordinates result in either a reward or punishment. Those individuals who do
conform to the requests of the transactional leader are rewarded and anyone
who does not is punished. The authority of the transactional leader is based on
the chain of command where the subordinates are expected to follow the
directions of those who hold higher-level positions in the organization.
The benefits of transactional leadership include:
Clearly defined roles and responsibilities
Healthy motivation to work towards organizational goals
A high level of employee responsibility and accountability
To monitor this accountability, the transactional leader uses management by

exception, which can be either passive or active. The transactional leader who
uses passive management by exception will monitor employee performance
closely and intervene only when an employee is not meeting the expectation,
often resulting in a punishment. Conversely, the transactional leader who uses
an active management by exception will monitor employee performance closely,
watch for slight deviations and quickly intervene to take corrective action to
prevent further mistakes.

Define the premise behind the concept of transactional leadership and

identify the dates and originators of the concept of the transactional
leader
Describe the characteristics of transactional leadership and distinguish

the responsibilities of the participants under this concept
Identify the two types of management by exception and explain how these
two concepts differ when monitoring employee accountability
4 THE SERVANT LEADER
f you've ever had a boss who has taken the blame for one of your errors, he or
she may have been a servant leader. Find out in this lesson all the other
characteristics of a servant leader.
4.1 PHILANTHROPY ISN'T DEAD

Serving others takes a significant amount of self-sacrifice. Not only does it
require one to consider the needs of others, but it oftentimes requires putting
one's own needs on hold. The idea of philanthropy, or having a genuine concern
for the advancement of others, is something that most of us have considered at
some point in our lives. Anytime you thought it would be a good idea to serve
food at a homeless shelter, sign up to build a house with Habitat for Humanity,
donate blood, or drop off used clothes or can goods, you have the intentions of a
true philanthropist. For some of us, helping the less fortunate is a way of being
grateful for the gifts we have received in this life. For others, it is simply the
desire to do something nice for other people. There are even some of us that do
it because they believe putting the needs of others before your own is a true
testament of character and a requirement of being a true leader.

4.2 TO SERVE IS TO LEAD

The concept of servant leadership was first coined by Robert Greenleaf in 1970.
Robert Greenleaf
Greenleaf believed that before anyone can lead, they first need to be a servant.
To be a true leader, one must ensure people's highest priority needs are being
served. For Greenleaf, effective leaders do not lead by power, coercion, or control
- rather they lead through service to those whom they influence by embracing a
high level of moral responsibility.
The servant leader continually strives to help subordinates reach their personal
best by supporting, inspiring, and celebrating their development. However,
subordinates are not the only people the servant leader is concerned with; in
fact, the needs of customers, peer employees, and the community are also
considered.
While any smart businessperson knows the importance of taking care of

customers, providing employees with the tools they need to do their jobs, and
having a high level of social responsibility, a servant leader has a genuine
concern for those with whom they work and provides products or services above
the status quo. The focus of the servant leader is on the growth, development,
and advancement of others, not personal gain, power, money, or status.
The servant leader is like having all of the resources, knowledge, and authority
you need to be successful.
4.3 SHOW ME THE SERVANT

To many of us, the idea of having a servant leader probably sounds a lot like
winning the lottery. Besides, who wouldn't want a boss who cares more about
you than themselves?
Just imagine for a second what it would be like to be lead by someone who:
Spends more time listening than talking
Puts your accomplishments in the spotlight, instead of jockeying for

attention and boasting about how great they are.
Takes the blame when things turn out differently than expected instead of
pointing fingers at the first available person
Willingly shares credit when things do turn out good
Takes the time to get to know your goals
Works to inspire you to achieve them by giving you all the resources you
need to be successful
Makes decisions for the better good instead of their own selfish
motivations.
Servant leaders make sure everyone gets a fair shake in life and is open with
their communication, decisions, ideas, and problems - no matter how challenging
that may be for them. They work hard and push others to do the same. While your
boss might have some of these characteristics, a true servant leader is all of
these things at all times. Just imagine how nice that would be to have someone
like Dr. Martin Luther King Jr., Gandhi, Mother Theresa, or Cesar Chavez as your
leader, and you can begin to see what a true servant leader is all about.
4.4 LESSON SUMMARY

Let's review. Robert Greenleaf created the concept of servant leadership in 1970.
Greenleaf believed that before anyone can lead, they first need to be a servant.
According to Greenleaf, to be a true leader one must ensure the highest priority
needs of employees, customers, and the community are being served. As a true
philanthropist, the servant leader is focused on the growth, development, and
advancement of others and not personal gain, power, money, or status.
The servant leader takes the time to listen to others, takes blame for failure,
shares credit for successes, gets to know personal goals of others, works to
inspire the personal best in others, is open and translucent in their
communication, and makes decisions for the better good instead of their own
selfish motivations making sure everyone gets a fair shake in life. Famous
examples of servant leaders include: Dr. Martin Luther King Jr., Gandhi, Mother
Theresa, and Cesar Chavez.

Explain the philosophy behind servant leadership
Identify who coined the concept of servant leadership and when, and
describe how it is applied as a leadership skill
Identify the characteristics of servant leadership
5 THE LAISSEZ-FAIRE LEADER

This lesson describes the characteristics of the laissez-faire leader. Learn the
characteristic style of this type of leader and what to expect from this
leadership style.
5.1 PARLEZ-VOUS FRANAIS?
French fries, French kiss, French braid, French toast, French door, French
dressing, French manicure...while these phrases might be as close to speaking
French that you will ever get, one actual French phrase that you should know
that relates to management is laissez-faire, or leave it be.

5.2 LAISSEZ-FAIRE LEADERSHIP

French lessons aside, when placed into the context of leadership, the
term laissez-faire depicts a leader who allows subordinates to work on their own.
The laissez-faire leader is the opposite of autocratic leadership, where people
have complete control over their employees, much like a micromanager. Laissez-
faire leaders offer their subordinates autonomy, providing them with all of the
resources and information they need to do their jobs and intervene only by
request or when there is a problem.
This leadership style can be highly intentional but also terribly accidental at the
same time. Essentially, some laissez-faire leaders purposefully work to provide
their followers with freedom to manage their own tasks and deadlines, while
other laissez-faire leaders fail to provide their employees with adequate
leadership and structure, leaving them to fend for themselves.
Effective laissez-faire leaders understand that while they can practice a

more hands-off approach to leadership they still have a high level of
responsibility to their followers. The effective laissez-faire leader still monitors
the performance of their employees and provides them with feedback on a
regular basis. They simply refrain from micromanaging them.
In doing so, the laissez-faire leader is able to promote a higher level of job
satisfaction and productivity as long as the employees themselves are
knowledgeable, experienced self-starters. Monitoring employees is a critical
activity for the laissez-faire leader to identify when subordinates lack the
necessary skills, training, expertise, and motivation to effectively manage
themselves.
5.3 LEON THE LAISSEZ-FAIRE LEADER
To better understand laissez-faire leadership, let's take a look at this example.
Leon is a laissez-faire leader, and he's in charge of the daily operations at his
family's winery. As a laissez-faire leader, Leon prefers to allow his employees to
manage themselves. The laissez-faire style of leadership is most fitting for Leon
because he runs a family business, so the majority of the workers are either
family or have worked at the winery for an extended period of time. Leon knows
each of the employees are skilled and knowledgeable enough to handle their
responsibilities on their own. Leon only needs to check with his staff periodically
to make sure that they are maintaining a high level of productivity in whatever
tasks they are responsible for at the winery.
He also holds bimonthly performance assessment meetings with each individual

employee to evaluate their performance and goals.
Leon is confident that the laissez-faire leadership style works well for his
family's business because he is able to provide each employee with a high level
of autonomy resulting in an increased level of job satisfaction in employees,
making his winery a place where the staff enjoy coming to their jobs each day
and are ready to do whatever it takes to help the winery be a successful
business.
5.4 LESSON SUMMARY

Let's review. Laissez-faire is a French phrase which translates into leave it be.
When placed into the context of leadership, it depicts a leader who allows
subordinates to work on their own. The laissez-faire leader is the opposite of an
autocratic leader in that the laissez-faire leader offers their subordinates
autonomy, providing them with all the resources and information they need to do
their jobs, intervening only by request or when there is a problem. The leadership
style can be intentional, promoting a high level of job satisfaction and
productivity but can also be accidental at the same time. The effective laissez-
faire leader doesn't just ignore their employees; rather they will monitor their
performance and provide them with feedback on a regular basis. Doing so allows
them to identify when subordinates lack the necessary skills, training, expertise,
and motivation to effectively manage themselves.
5.5 LESSON OBJECTIVE

Define the term 'laissez-faire' and describe how it is applied to followers by

a laissez-faire leader
Identify the the two kinds of laissez-faire leadership and describe the
effects of each type
Understand what the effective laissez-faire leader gains by monitoring his

employees and providing them with regular feedback
6 THE PARTICIPATIVE OR DEMOCRATIC LEADER

Explore the approach that a participative or democratic leader takes. In this
lesson, you'll learn about the advantages and the drawbacks associated with
this particular leadership style.
6.1 SHARING IS CARING

Today it seems like people are sharing everything from Facebook posts to
spouses. It's a concept we learned early on when we had to share toys, rooms,
food, even secrets with other kids - even though some of us hated it at the time.
However, some of us enjoyed the process of sharing with others and still do as
adults. And no, I'm not talking about on Facebook or swapping your wife for the
week with another person; I'm referring to managers who share with their
subordinates.

6.2 THE PARTICIPATIVE OR DEMOCRATIC LEADER

Those leaders who take the time to share with their employees and encourage
their participation in the decision making process are accordingly referred to
as participative leaders, or otherwise known as democratic leaders. The two
terms are really one in the same and describe a leader who includes
subordinates in the decision making process by encouraging employees to be
creative, innovative and engaged in projects.
Much like how the United States is a democracy where the citizens are
encouraged to vote on decisions relating to policy and other public affairs, the
democratic leader invites their subordinates to voice their insights and opinions
relating to workplace affairs. In doing so, participative leaders believe that they
gain a higher degree of understanding by including those people who are directly
affected by the decisions being made.
In turn, subordinates are more involved and willing to work towards whatever
decisions are being made due to the vested interest they have as a result of
being a part of the decision making process. Employees tend to have a higher
level of productivity and job satisfaction because they feel valued by their
manager and that what they say or feel actually matters. The democratic leader
essentially empowers the subordinates by recognizing the valuable contributions
they can make during the decision making process. Employees become less
competitive and more cooperative with one another, creating a welcoming
organizational culture that people like to be a part of.
While there are many benefits of participative leadership, it is not without its
drawbacks. Specifically, although it can be argued that two minds are better
than one, it also takes more time to come to a decision.
Therefore, the decision making process can be extremely slow at times under
the democratic leader, but inevitability leads to good results. The question
becomes: is it worth the wait? There are certainly times where speed or
efficiency is essential, making the democratic leadership style ineffective.
Employees might also resent the participative leader who only listens to their
ideas but never implements them. They want to be able to express their ideas
and see them put into action, otherwise it can lead to low motivation, skepticism
and feelings of betrayal. Even worse, the employees might not have the
knowledge, skills or expertise to provide high quality input during decision
making. The participative leadership style is best when implemented in the team
environment where productivity and efficiency take the back seat to quality.
6.3 PABLO THE PARTICIPATIVE LEADER

To better understand the participative leadership style, let's look at the following
example of Pablo the night club manager at Pretty in Pink. As an organization,
Pretty in Pink has a very relaxed and team-based culture. The day-to-day
operations do not change much, however, once a month the owner asks Pablo
and his team to come up with a way to promote the club and set it apart from the
rest of the local clubs in the area. Next month is February and Pablo wants to
decide what promotion or event they will have to promote at the club.
As a participative leader, Pablo does not make decisions alone. Instead, Pablo
calls a meeting with all of his staff so that they can begin to brainstorm some
ideas. Pablo spends time encouraging his employees to be creative, innovative
and engaged in the project. To be sure that everyone feels valued, he asks each
team member to share an idea. And once everyone has been heard, they have a
vote to determine which idea should be selected. This way, Pablo knows that
each team member feels valued and a part of the decision making process, even
if their initial idea is not selected. Once an idea is selected, Pablo asks his team
to choose which area they would like to be responsible for and fills in the gaps
afterwards to ensure that all of the work related to the project is completed on
time. Being a participative leader works for Pablo and his team by encouraging
the right amount of team member involvement to be successful and promote a
high level of job satisfaction.
6.4 LESSON SUMMARY

Let's review. The participative or democratic leader describes a leader who
includes subordinates in the decision making process by encouraging employees
to be creative, innovative and engaged in projects. In doing so, participative
leaders believe that they gain a higher degree of understanding by including
those people who are directly affected by the decisions being made. In turn,
subordinates are also more involved and willing to work towards whatever
decisions are made due to the vested interest they have as a result of being part
of the decision making process. Employees tend to have a higher level of
productivity and job satisfaction because they feel valued by their manager and
what they say and feel actually matters. Employees become less competitive and
more cooperative with one another.
Some of the drawbacks include delayed decision making, employees' resentment

when their ideas are not implemented and a lack of employee knowledge, skills
or expertise to provide high quality input. The participative leadership style is
best when implemented in the team environment where productivity and
efficiency take the back seat to quality.

After watching this lesson, you should be able to describe the participative
leader (or democratic leader) and understand the benefits and drawbacks of this
type of leadership.
7 THE AUTHORITARIAN OR AUTOCRATIC LEADER

If you've ever had to deal with a boss who's a control freak, this lesson on
autocratic leaders may help you see your boss in a new light. Yes, there can be
advantages when one person has complete control over decision making.
7.1 CONTROL FREAKS

'It's my way or the highway.' 'If you want something done right you have to do it
yourself.' 'Anything you can do I can do better.' Perhaps you have heard someone
say one of these phrases before or maybe you have said one of them yourself.
They all encompass this idea of control. Often regarded as control freaks, these
people try to dictate anything and everything in their lives, and sometimes in the
lives of others. They are often perfectionists and demand excellence from
themselves and others. In management, control freaks can really cause anguish
for their followers and often result in micromanagement. They tend to regard
themselves as superior to others and feel that it is necessary for them to
intervene continuously in the works of their subordinates to ensure that things
are completed to their standards. This often leaves subordinates who resent
their leader and regard them as being bossy, controlling, and dictatorial.

7.2 THE AUTHORITARIAN OR AUTOCRATIC LEADER

Control freaks often emerge in the business environment as
the authoritarian or autocratic leader. The two terms are one and the same and
describe a leadership style where managers have complete control over decision
making, which is the opposite of democratic leadership, where subordinates are
encouraged to participate in decision making by providing their opinions,
insights, and suggestions, all of which are not welcomed by the authoritarian
leader. Decisions on things such as what work needs to be done, how that work
will be completed and by whom are made according to what the autocratic
leader believes is best.
Their decisions should not be questioned by followers; rather, they expect them
to take them as the golden rule. Authoritarian leaders are meticulous planners
and expect that their subordinates will trust that they have come to the best
possible decision on their own without needing insight from others. Famous
autocratic leaders include Martha Stewart, Saddam Hussein, Joseph Stalin, and
Howell Raines.
7.3 THE BENEFITS OF THE AUTHORITARIAN OR

AUTOCRATIC LEADER
While some of you might be thinking that you know exactly where you would tell
a boss who practiced this style of leadership to stuff it, you should know that
there are some benefits to autocratic leadership. For example, the authoritarian
leadership style is extremely useful when decisions need to be made quickly.
There are certainly many decisions in business that need to be made on the fly
and without the input of others. This is where the autocratic leader's ability to
make decisions on their own is a valuable asset to an organization.
Additionally, there are projects that mandate strong leadership that is focused
on excellence. Just think back to the last time you worked on a project with your
coworkers that was unorganized and lacked effective leadership; such
circumstances can be extremely frustrating to have to deal with and often result
in the demise of those working on the project. In this type of situation, the
autocratic leader can quickly turn what appears to be a hopeless situation into
one that has structure, guidance and expectations. Likewise, there are certain
decisions that carry a heavy burden, making the authoritarian leader a
welcomed one, allowing subordinates to defer such difficulties to their manager.
Finally, the autocratic leader is especially beneficial during times of crisis,
emergency, or high stress; while everyone else is running around confused from
the chaos, the autocratic leader is calm and busy making necessary decisions to
help get the organization where it needs to go.
7.4 LESSON SUMMARY

Let's review. Control freaks often emerge in the business environment as
the authoritarian or autocratic leader. These leaders have complete control over
decision making and expect their subordinates to trust that they have come to
the best possible decision on their own without needing insight from others.
Their decisions should not be questioned by followers, rather they should be
accepted as the golden rule. Drawbacks of this style of leadership include
causing anguish to their followers, who are often micromanaged, regarding
themselves as superior to others, which causes resentment in followers who
often consider the autocratic leader as bossy, controlling, and dictatorial.
However, the authoritarian leader can also prove useful in situations where
decisions need to be made quickly, during times of crisis, and when excellence is
the expectation, as well as when decisions carry a heavy burden. Famous
autocratic leaders include Martha Stewart, Saddam Hussein, Joseph Stalin, and
Howell Raines.

Define the authoritarian or autocratic leadership style
Explain the drawbacks of the authoritarian leadership style
Understand when an authoritarian leader can be beneficial

8 THE CHARISMATIC LEADER
Have you ever noticed how some people seem to excel at being liked? Those
people have what we call charisma. In this lesson, you'll explore how that
charisma can be applied in a business management setting
8.1 WHAT IS CHARISMA?

Imagine back to when you were in high school for a second. It's gym class, and
your PE instructor has told you that you'll be playing dodge ball. Team captains
have been selected by the instructor and were told to take turns picking
teammates. You remember what that was like sitting there just waiting to be
picked, hoping that you had done enough to prove that you were one of the best
picks. Whether for skill or popularity, the reason didn't matter; you just hoped
that you were one of the first to be selected by either team captain.
A simple fact of life is that we all want to be liked enough to be picked quickly,
and we cringe at the possibility of being the last one chosen. This really applies
to many facets of our lives; as humans we naturally desire to be liked, admired,
and appreciated by others. Some people are better at attracting others, and no,
I'm not talking sexually. Rather, some have what can be considered a magnetic
persona about them that really draws people to them out of pure admiration.
Perhaps you know someone like that. In your personal life it might be the person
you always want to invite out with you or who you trust with your deepest
secrets; in business, it's the person who's able to solicit favors, motivate others,
and close even the most challenging of deals.
There is something special about these people, and it's called charisma.

8.2 THE CHARISMATIC LEADER
Barack Obama is an example of a charismatic leader
One area where people with charisma are especially effective is

leadership. Charismatic leaders use their magnetic personalities and charm to
gather followers. They are dominant, self-confident individuals who hold strong
conviction for their beliefs. The charismatic leader's influence is the result of his
or her referent power.
Essentially, followers admire the charismatic leader because he or she demands

respect, approval, and recognition from subordinates, who in turn want to
emulate the leader, more so because the charismatic leader is an idealized hero.
Think about some of your heroes and why you admire them and want to be just
like them. Subordinates are willing to follow the charismatic leader because of
the way that they are treated by the leader, not because of their formal title or
position in the organization. The charismatic leader will spend time getting to
know each of his or her subordinates, making them feel valued and, at times, one
of the most important employees they have.
Charismatic leaders are able to create a vision of the desired future and
convince followers that they are the ones who will be able to take them to that
future state. The charismatic leader shows each of the followers their optimistic
role in this desired future, making them more than willing to support the leader's
efforts. Followers trust the charismatic leader and quickly succumb to his or her
wishes.
Some famous examples of charismatic leaders in their respective industries

include Ronald Reagan, Barack Obama, Thomas Watson, Alfred Sloan, Steve
Jobs, and Richard Branson.
8.3 THE UGLY SIDE OF CHARISMA

While charisma can be highly desirable leadership attribute, it is also one of the
most dangerous. Charisma is a powerful thing. It can break down barriers and
make even the most impossible circumstances suddenly seem possible. The
charismatic leader is aware of his or her influence on others and, if not properly
motivated, can be a serious problem.
Adolph Hitler used his charisma for evil motives
Think Adolf Hitler: he was an extremely charismatic leader but had very bad
motives. Nevertheless, he was able to create a massive army who carried out his
evil plan.
In the business environment, the charismatic leader whose focus is on him- or

herself, and not on the organization, can have disastrous consequences. Because
subordinates are so willing to follow the charismatic leader, they can be blindly
led into aiding the leader in his or her own personal pursuits for power,
recognition, and advancement long before they realize it. Taking the focus off of
organizational goals and putting it towards the charismatic leader's goals can
cripple an organization in the following ways:
Accountability is diminished
People associate success with the leader, making them highly dependent
on him or her
Decision-making (both large and small) is delayed
The organization loses its ability to be resilient during times of change
Instead of empowering followers, leaders make them dependant on themselves,

often micromanaging tasks and preventing them from taking on even greater
responsibility and accountability in their own jobs. Charismatic leaders are often
regarded as champions of organizational success, but that charm can be both a
blessing and a curse for an organization if motives are misplaced. If you have a
charismatic leader in your organization, or if you practice a charismatic
leadership style, make sure your objectives are pure and put the goals of the
organization before any personal ones. Charismatic leaders who exhibit
appropriate values and use their charisma for the betterment of the organization
serve as good role models for others.
8.4 LESSON SUMMARY

Let's review. Charismatic leaders use their magnetic personalities and charm to
gather followers.
They are dominant, self-confident individuals who hold strong conviction for their
beliefs. The charismatic leader's influence is the result of his or her referent
power. Subordinates are willing to follow the charismatic leader because of the
way they are treated by the leader, not because of their formal title or position in
the organization. Charismatic leaders are also able to create a vision of the
desired future and convince followers that they are the ones who will take them
to that future state.
Charismatic leaders are often regarded as champions of organizational success,

but that charm can be both a blessing and a curse for an organization if motives
are misplaced. Subordinates can be led blindly into aiding the leader in his or her
own personal pursuits for power, recognition, and advancement. Taking the focus
off of organizational goals and putting it towards the charismatic leader's goals
can cripple an organization in the following ways:
Accountability is diminished
People associate success with the leader, making them highly dependent
on him or her
Decision-making (both large and small) is delayed
An organization loses the ability to be resilient during times of change
However, charismatic leaders who exhibit appropriate values and use their
charisma for the betterment of the organization serve as good role models for
others.

After you complete this lesson you'll have a better understanding of charismatic
leaders, their place in business organization, and ways a misguided charismatic
leader can cripple an organization.
9 THE SITUATIONAL LEADER

Discover what makes the situational leader different from other types of
leaders, following the contingency school of management. Learn how
situational leadership is applied in the workplace.
9.1 THE SITUATIONAL LEADER
You like pot-a-to. I like pot-ah-to. You like tom-a-to. I like tom-ah-to. Pot-a-to, pot-
ah-to, tom-a-to, tom-ah-to - who's to say which is right? Depending on your
preference, I am sure you could easily argue one is better than the other, but is
that always true in every situation? The situational leader would suggest not.

9.2 SITUATIONAL LEADERSHIP DEFINED

The situational leader emerged out of the contingency school of management,
which can be summarized as the 'it all depends' approach.
According to situational theorists, there are no universal behaviors or practices

appropriate for all leadership scenarios.
They believe effective leader behaviors differ from situation to situation. A

manager must choose the appropriate management style based on the
leadership situation and the capacity of both the leader and his or her followers.
Consequently, before the situational leader can make decisions, they have to
first assess these factors. The situational leader will then adjust their style to
accommodate any limitations that surround the situation, themselves, and the
subordinates.
9.3 SITUATIONAL LEADER EXAMPLE

To better understand situational leadership, let's take a look at this example.
Sanjay is a head nurse at a small hospital. As a nurse, Sanjay faces high pressure
situations that require him to assess the surrounding circumstances on an
individual basis. For example, when faced with a situation where a patient is
receiving routine treatment, Sanjay can allow his subordinates to participate in
the decision making and even allow them to make decisions on their own.
Because the situation is typical and Sanjay's employees are well trained to
handle it, he can be far more laissez-faire, or give the least possible guidance to
subordinates. However, in a code blue scenario where a patient might be on the
verge of dying, Sanjay must maintain a higher degree of control over the
situation and decision making.
The situation is high risk, and while Sanjay's subordinates may have the
necessary skills to handle the situation on their own, he does not allow room for
error. Sanjay knows that he must offer direction based on what he feels is best
for the patient. There is no time to discuss, collaborate or vote on decisions.
Sanjay must quickly assess the situation for what needs to be done and who the
best people are to do it.
9.4 LESSON SUMMARY

Let's review. Situational theorists believe universal behaviors or practices do not
exist, and effective leaders know how to vary their behaviors from situation to
situation.
The situational leader will assess the leadership situation and the capacity of
both the leader and his or her followers before choosing the appropriate
management style for decision making. A nurse provides a good example of
someone who needs to use situational leadership on a daily basis. The question I
leave you with is how would you handle a leadership role under pressure? Would
you maintain your traditional style, or would you accommodate the limitations
that surround the situation, yourself and your subordinates?

After viewing this lesson, you should be able to define situational leadership, the
school of thought from which it emerges, and explain the factors that are
considered when evaluating leadership scenarios.
10 THE BUREAUCRATIC LEADER

You may hear people complain about the bureaucratic system and how it
processes things slowly, but do you know why? This lesson describes
characteristics of the bureaucratic leader. Learn how bureaucratic leadership
can be used to improve businesses.
Note: For the purposes of this video, the instructor is using the American
pronunciation of Max Weber's name.
10.1 BY THE BOOK

There are certain times that you expect someone to do things 'by the book.' For
example, you want to make sure that your parachute is packed 'by the book'
before you head out to sky dive. Likewise, you want your tattoo artist to follow
your drawing 'by the book.' You might also expect your repairman to fix your
problem 'by the book.'
Truth is, there are a lot of things that we expect people to do 'by the book,' and
for some of us, that means leading others 'by the book.'


10.2 THE BUREAUCRATIC LEADER

Someone who follows a 'by the book' management philosophy is referred to as
a bureaucratic leader, a style that was first developed by Max Weber in 1947.
Following rules, policies and procedures meticulously is what the bureaucratic
leader lives for.
If for some reason the bureaucratic leader runs into a situation where there are
no formal rules, policies or procedures to consult, he or she will seek the advice
from his or her manager. The last thing the bureaucratic leader wants to do is
make a decision without knowing that it is the right one for the organization.
Consequently, decisions are typically slow paced and they ensure adherence to
the principles of the organization by practicing routine methods for problem
solving, as there is no room to explore new ways to solve problems.
Bureaucratic leaders expect their employees to follow the normative regulations

they impose because of their formal role in the organization and the authority
bestowed onto them. The employees who conform to the bureaucratic leader are
often rewarded.
10.3 BUREAUCRATIC LEADERSHIP IN ORGANIZATIONS

Bureaucratic leadership is useful in organizations where there are serious risks,
such as what you would expect at a nuclear power plant, a police station, a bank
or other financial institution that deals with large amounts of money; or when
working with dangerous machinery.
Likewise, bureaucratic leaders are effective in organizations where employees

perform routine tasks - like what you would see at a manufacturing plant.
Whether safety or efficiency is the focus, bureaucratic leaders provide an

apparent and strict leadership style that works to maintain the highest level of
compliance in these types of organizations. Where bureaucratic leadership can
fail is in organizations that must adapt to change and take risks on a regular
basis. Some believe that bureaucratic leaders can stifle creativity, innovation
and flexibility in organizations, preventing the company from reaching its goals.
To help you better understand bureaucratic leadership, let's take a look at this
example. Bob is the head of a manufacturing company called Bikes for Tykes. He
decided early on that quality, efficiency and safety were at the top of his
priorities. To ensure that his employees were on the same page, Bob adopted a
bureaucratic leadership style. Bob believes Bikes for Tykes is the perfect place
for bureaucratic leadership due to the important safety issues surrounding the
assembly of bikes - especially bikes that will be used by children - as well as the
routine nature of assembling the bikes.
As a bureaucratic leader, Bob provides each employee with a standard procedure

for how to perform their task in the bike assembly process. Since the bikes are
put together piece by piece as it moves down the assembly line, Bob can be
confident that by providing each individual station with precise directions on
how to complete their task, each bike will be completed with a high level of
quality and efficiency. If Bob notices any deviation in the standards that he put
into place, he will take corrective actions to bring the process back to where it
needs to be. Those employees who consistently uphold the standard are
rewarded.
10.4 LESSON SUMMARY

Let's review. Bureaucratic leadership was first described by Max Weber in 1947.
Following rules, policies and procedures meticulously is the most defining
characteristic of the bureaucratic leader. Decisions are typically slow paced and
they ensure adherence to the principles of the organization by practicing routine
methods for problem solving.
Bureaucratic leaders expect their employees to follow the normative regulations

they impose because of their formal role in the organization and the authority
bestowed onto them. Those employees who conform to the bureaucratic leader
are often rewarded. Bureaucratic leadership is useful in organizations where
there are serious risks and also when employees perform routine tasks. Where
bureaucratic leadership can fail is in organizations that must adapt to change
and take risks on a regular basis. Some believe that bureaucratic leaders can
stifle creativity, innovation and flexibility in organizations, preventing the
company from reaching its goals. As with all leadership styles, it is up to the
leader to adopt the style that is most fitting for the organization in which he or
she operates.

By the end of this lesson you'll be able to:
Define bureaucratic leadership
Describe the problem that bureaucratic leadership attempts to solve

Understand why bureaucratic leadership is especially important in high
risk industries
Know why bureaucratic leadership fails in businesses that need to adapt

to change and take risks
11 THE BLAKE MOUTON MANAGERIAL GRID: FIVE LEADERSHIP STYLES

Learn about the Blake and Mouton Managerial Grid, which includes five styles
of leadership: impoverished, country club, produce or perish, middle-of-the-road
and team leader. We'll also explore how leadership style is determined by a
manager's degree of concern for people or concern for production.
11.1 THE BLAKE AND MOUTON MANAGERIAL GRID

In this lesson, we will explore the Blake and Mouton Managerial Grid, an
assessment tool used by managers to determine their predominant leadership
style.

11.2 THE TWO BEHAVIOR DIMENSIONS

The x/y axis on the grid consists of two behavior dimensions, concern for people
and concern for production. Concern for people is the degree to which a leader
considers the needs of employees when deciding how tasks or jobs should be
done. This can be personal or professional development.
Concern for production is the degree to which a leader emphasizes objectives

and productivity goals when deciding how tasks or jobs should be done. This can
be rules, policies or performance standards.
11.3 FIVE LEADERSHIP STYLES

The grid is divided into five possible leadership styles:
Country club leader

Impoverished leader
Middle-of-the-road leader
Team leader
Produce or perish leader
Let's look at the behaviors of several different managers to gain a better

understanding of the managerial grid.
11.3.1 Country Club Leader

Dharma manages a few employees at Book Worms Bookstore. She is very
concerned about how employees feel. Dharma often covers shifts to cover for
late or absent employees. She doesn't want to overwork employees. This means
that shelves are not always stacked with the newest novels. Her employees are
very happy at work. In fact, her employees even gave her a mug with the words
'World's Best Boss' printed on it. Dharma is a country club leader.
The country club leader has the most concern for people. This leader assumes
that if employees are happy, they will work hard. This leader's high interest in the
needs and feelings of employees affects productivity. With much of the focus on
employee comfort, this leader finds it difficult to punish an employee. As a result,
the relationship between employee and leader is very casual, like that of friends.
The country club leadership style is plotted at the top-left corner of the grid and
shows the most concern for people but the least concern for production.
11.3.2 Impoverished Leader

Melvin is the manager of night security at MayFlag Appliance Company. He
manages a staff of three security guards. Melvin has no plan for security rounds.
Security guards wander the warehouse without a clear plan. Melvin also has no
plan for employee satisfaction. He does not give compliments or offer assistance
to employees. As a result, Melvin's employees are confused about their job and
find no joy in coming to work. Melvin is an impoverished leader.
The impoverished leader has the least concern for people and for production.
This leader has no system of getting work done, nor is the work environment
satisfying or motivating for employees. This leader's low interest in the work and
the work environment results in disorganized work, dissatisfied employees and a
lack of harmony.
The impoverished leadership style is plotted at the bottom-left corner of the grid
and shows the least concern for production and for people.
11.3.3 Middle-of-the-Road Leader
Brandy is the bar manager at Chip's Cocktail Lounge. Brandy directs the bar staff
to do their jobs and pays them weekly for their services. She does not push them
to upsell drinks or to clean when they are not busy. She does not offer additional
training or opportunities to attend bartending contests or events. Guests get
their drinks on time alright, but no small talk is exchanged. As a result, her
employees are neither satisfied nor dissatisfied with their jobs, and their
performance is average. Brandy is a middle-of-the-road leader.
The middle-of-the-road leader has a balanced concern for both production and
people. This leader settles for average performance from employees. This
leader's balanced interest results in mediocre production and employee
satisfaction.
The middle-of-the-road leadership style is plotted in the center of the grid and
shows balanced concern for production and people.
11.3.4 Team Leader

Trevor is the manager of On-Time Dry Cleaning. Trevor has a staff of five
employees. Trevor requires employees to wash and iron hundreds of shirts a day.
He sets high standards for his employees and rewards them with incentives for
getting the work done on time. He makes sure each of his employees has cold
water to drink while working. He even gives employees breaks throughout the
day. But the wash must get done - and on-time. He accomplishes this by setting
production goals and works with employees to be sure all of their needs are met.
Trevor is a team leader.
The team leader stresses high production and employee satisfaction equally.
This leader stresses high production by employees and believes employees who
are satisfied will be committed to high production. High trust levels on the part
of both the leader and the employee lead to high employee satisfaction and
production.
The team leadership style is plotted at the top-right corner of the grid and
stresses high production from employees.
11.3.5 Produce or Perish Leader

Rolf is the manager of Soopy's Soup Shop. He is a strict manager who directs
every action his employees take. He watches over the employees all the time. He
has been known to send employees who are not performing home for the day. He
has even fired employees who over-salt the soup or pour a little too much into
the cups. When an employee is not feeling well, he demands that they continue
working. Rolf is a produce or perish leader.
The produce or perish leader is authoritarian. This leader stresses production
with little concern for people. This leader does not find the needs of employees
important. Strict rules, policies and procedures are in place. Punishment is
necessary to increase production.
The produce or perish leadership style is plotted at the bottom-right corner of

the grid and stresses high production with little concern for employee
satisfaction.
11.4 LESSON SUMMARY

In summary, the Blake and Mouton Managerial Grid is an x/y-axis grid that
represents the degree to which managers have a concern for production and for
people. The degree to which a manager has concern for either or both
determines the manager's leadership style.
There are five leadership styles represented on the grid.
The country club leadership style is plotted at the top-left corner of the grid and
shows the most concern for people but the least concern for production. This
leadership style assumes that if people are happy in their job, they will naturally
work harder. This leadership style is not very effective for production.
The impoverished leadership style is plotted at the bottom-left corner of the grid
and shows the least concern for production or for people. As a result, production
is low and employees feel no satisfaction in their work.
The middle-of-the-road leadership style is plotted in the center of the grid and
shows balanced concern for production and people. Employees are neither
satisfied nor dissatisfied with their jobs, and their performance is average.
The team leadership style is plotted at the top-right corner of the grid and
stresses high production from employees, with an emphasis on employee
satisfaction.
The produce or perish leadership style is plotted at the bottom-right corner of

the grid and stresses high production with little concern for employee
satisfaction. This leadership style is based on strict rules, policies and
standards. Employee needs are not important. Production will occur when
punishment is threatened.
11.5 LEARNING OUTCOME

After watching this video, you will be able to describe the five leadership styles
represented by the Blake and Mouton Managerial Grid and tell where each style
is found on the grid.
12 PERSONAL POWER: REFERENT AND EXPERT POWER
Managers require different types of power to make things happen in their
organizations. This lesson focuses on the second type of power, known as
personal power. There are two types of personal power that this lesson will
explain, including expert and referent.
12.1 MANAGERIAL POWER

You may recall that power can be defined as a person's ability to influence
others. Effective managers know how to use their power to influence the
behavior of organizational members. A manager obtains his or her power from
both the organization (positional power) and from themselves (personal power).
The key to successful management lies in using a combination of positional
power and personal power. This lesson focuses on the second type of power:
personal power.

12.2 PERSONAL POWER

Personal power is independent from the position a manager holds in an
organization and rests solely in the individual. Things such as a manager's
personality and special knowledge make personal power a useful resource for
managers to use when trying to influence subordinates. Subordinates become
committed to their mangers that hold personal power. There are two main bases
of personal power, which include referent power and expert power.
12.3 REFERENT POWER

Referent power is the result of subordinate respect and adoration for the
manager and is seen when an employee seeks to identify with the manager with
whom they admire. Referent power is commonly seen in charismatic leaders who
are able to invoke a passion for followership due to the leader's magnetic
personality. Subordinates are willing to follow their manager's requests simply
because of the manner in which they deal with and treat subordinates. For
example, Kelly thinks that Jack is a great manager who is easy to talk to and has
always done a good job of treating her like an equal. When Jack asks Kelly to
work overtime, she agrees without hesitation because she has seen Jack stay
late on numerous occasions and she wants to do what she thinks will please
Jack.
Followership is not based on rewards or punishment; rather, it is based on

subordinates' belief that the manager is a good leader because of a charismatic
and caring leadership style.
12.4 EXPERT POWER

Expert power allows a manager to influence the behaviors of subordinates
through their special knowledge, experience or skills relating to the work the
subordinates must perform. Being an expert makes a bold statement to
employees that the manager knows what they are doing and can provide the
necessary direction for how the subordinates can be successful themselves.
Essentially, the manager holds expert power by knowing or understanding how to
do job-related tasks that the subordinates need to know.
For example, now that Kelly has successfully penetrated her market, she wants
to take her sales to the next level by branching into a new market. However, Kelly
has never worked in this market before and understands that it is vastly different
from her usual one. Fortunately for Kelly, this was Jack's market before he was
promoted to a manager, and he has some insider knowledge about how to be a
successful sales person in that market. Because of Jack's expert power, Kelly
will listen to all of the suggestions that Jack offers her, even those that
contradict Kelly's typical sales strategies.
12.5 LESSON SUMMARY

Let's review. Managers require power to make things happen in their
organizations. Power can be defined as a manager's ability to influence others. A
manager obtains his or her power from both the organization (positional power)
and from themselves (personal power). The key to successful management lies in
using a combination of positional power and personal power. This lesson
discussed the second type of power: personal power.
Personal power is independent from the position a manager holds in an

organization and rests solely in the individual in things such as a manager's
personality, experience and special knowledge. There are two main bases of
personal power, which include referent power and expert power. Referent
power is the result of a subordinate's respect and adoration for the manager and
is seen when an employee seeks to identify with the manager with whom they
admire. Expert power allows a manager to influence the behaviors of
subordinates through their special knowledge, experience or skills relating to the
work the subordinates must perform. Essentially, the manager holds expert
power by knowing or understanding how to do job-related tasks that the
subordinates need to know.

Define power for a manager and understand the concept of personal power
List the two main bases of personal power, and describe how each base of
power is expressed
13 POSITIONAL POWER: LEGITIMATE, COERCIVE & REWARD POWER

Managers require different types of power to make things happen in their
organizations. This lesson focuses on positional power. There are three types of
positional power that will be explained in this lesson, including legitimate,
reward and coercive power.
13.1 MANAGERIAL POWER

Managers require power to make things happen in their organizations. Power can
be defined as a manager's ability to influence others. Influence is what managers
have when they use power in such a way that it results in some behavioral
response in others. Effective managers understand how to use their power to
influence organizational members to act according to their wishes and to put
into place processes and procedures that work toward organizational goals. A
and from him or herself (personal power). The key to successful management lies
in using a combination of positional power and personal power. This lesson will
discuss the first of these: positional power.

13.2 POSITIONAL POWER
The most commonly recognized form of power that a manager has is positional
power. Positional power is a result of a manager's position within the
organization. The three main bases of positional power include legitimate power,
reward power and coercive power.
Legitimate power stems from the manager's position in the organization and the
authority that lies in that position. Subordinates acknowledge the legitimate
power that comes from being in a leadership position in an organization. A
manager's employees believe that the manager has the authority to direct their
actions, and they willingly comply with those requests. For example, when Kelly
asks her manager Jack to approve her personal time off, Kelly knows that Jack
has legitimate power to either approve or deny that request. Regardless of Jack's
decision, Kelly must comply.
Reward power is the extent to which a manager can use rewards to influence
others. Managers have power to reward subordinates for their actions when
those behaviors meet or exceed performance expectations. Examples of such
rewards include pay increases or bonuses, promotions, more responsibility and
autonomy, as well as recognition and praise. For example, when Kelly exceeds
her sales quota for the first quarter of the organization's fiscal year, her manager
Jack rewards her with a bonus check for $500 and sends out an e-mail to her
coworkers acknowledging the good job Kelly has done.
Coercive power is the opposite of reward power, and it is used by managers to

punish subordinates for not meeting performance expectations or to deter
subordinates from making decisions that will negatively affect the organization.
Examples of coercive power include things such as reprimanding or criticizing a

subordinate; writing up, demoting or firing an employee; withholding pay
increases or lowering an employee's salary and denying a reward. The manager
may only have enough coercive power to recommend these sanctions to
someone else who has the authority to carry them out, but nevertheless, the
very threat of punishment is usually enough to influence employee behavior. For
example, Jill is a coworker of Kelly who, unlike Kelly, failed to meet her sales
quota last quarter. Jack is fed up with Jill's inability to make sales and wants her
to be transferred to another team or even fired. However, Jack does not have this
authority. He does have the power to recommend Jill's transfer and/or
termination to his boss, who has the authority to carry out the sanction.
It is important to note that subordinates respond differently to the three types of

positional power.
Legitimate power and reward power are thought to be a positive use of power by
subordinates, making them more likely to result in a positive response and
greater compliance. Coercive power, however, can lead to a high degree of
resistance and deliberate disobedience in subordinates who resent the use of
coercive power by managers to influence their behavior.
13.3 LESSON SUMMARY
Let's review. Managers require power to make things happen in their
organizations. Power can be defined as a manager's ability to influence others. A
and from him or herself (personal power). The key to successful management lies
in using a combination of positional power and personal power. This lesson
focused on the first type of power, known as positional power.
Positional power is a result of a manager's position within the organization. The

three main bases of positional power include legitimate power, reward power and
coercive power. Legitimate power stems from the manager's position in the
organization and the authority that lies in that position. Subordinates
acknowledge the legitimate power that comes from being in a leadership
position in an organization. Reward power is the extent to which a manager can
use rewards to influence others. Managers have the power to reward
subordinates for their actions when those behaviors meet or exceed
performance expectations. Coercive power is the opposite of reward power and
is used by managers to punish subordinates for not meeting performance
expectations or to deter subordinates from making decisions that will negatively
affect the organization.

Define power and influence
Identify and describe the three types of positional power
14Fiedler's Contingency Theory & a Leader's Situational Control

Fiedler's contingency theory states that there are three elements that dictate a
leader's situational control. The three elements are task structure,
leader/member relations, and positioning power.
15 Fiedler's Theory
Have you ever wondered why some managers really get to know their employees
and others focus only on getting the job done? Fiedler's contingency theory will
help to explain why managers can behave so differently. Fiedler's contingency
theory contends that there is no one single leadership style that works for all
employees. He recognized that there are situational-contingent factors that
affect a leader's ability to lead. The effectiveness of workers depends on how
good a match exists between the leadership style of the leader and the demands
of the situation. There are two factors that result from this: leadership style and
situation favorableness (or situational control).
16 Preparing for a test?

17 Leadership Style
Leadership style is determined by rating a leader's least preferred co-worker on
the least preferred co-worker (LPC) scale. A leader is asked to rate someone he
or she least liked working with (presently or in the past) on a scale of 1-8 in the
following areas:
Unfriendly/friendly
Uncooperative/cooperative
Hostile/supportive
Guarded/open
The leader tallies up the score. This test is not about how horrible the least
preferred co-worker was to work with. It is about the leader's behavior towards
the co-worker. The leader who scores high is most likely relationship oriented.
These high LPC leaders like to build relationships with employees. They are more
likely to avoid conflict. They also are better equipped to make complex decisions.
The lower-scoring LPC leader is task oriented. This leader is more interested in
assigning duties and getting the work done. This leader does not care much
about building relationships. A high LPC leader is capable of leading a team in a
favorable situation, while a low LPC leader can lead a team in both favorable and
unfavorable situations because the low LPC leader focuses on tasks rather than
on relationships.
The essential element of this theory is that there are different leadership styles
for different situations. The style of leadership is contingent upon the particular
situation. So, if the situation is fast decision making, the high LPC leader fares
well. If the situation is high production, the low LPC leader is better equipped to
handle that because that leader does not care much about whether the
employees like what he or she is doing. Once a leader determines his or her
leadership style, the situational control needed for a particular situation must be
determined.
18 Three Dimensions of Situational

Favorableness
Situation favorableness occurs when the three dimensions - leader-member
relations, task structure, and leader position power - are high.
Leader-member relationships refer to the degree of trust, respect, and

confidence that exists between the leader and the workers. Task structure refers
to the degree to which tasks are clearly explained and structured for
workers. Leader position power refers to the degree to which the leader
possesses inherent power in his or her position.
If employees and the leader have trust, respect, and have confidence in each
other, there are clear and structured tasks, and the leader possesses formal
authority in his position, the situation is considered favorable. Let's look at a few
examples of how each dimension works.
Professor Smart holds several degrees from universities all over the world. He is
the lead professor in the physics department. He has a great reputation for
helping students with tutoring and homework. His students love his class
because he provides a typed agenda for the day, assignment schedule, and
hands-on direction to complete classroom activities. Professor Smart has a high
LPC and is relationship oriented. His classroom environment is situation
favorable.
Low LPC leaders tend to be effective in both favorable and unfavorable

situations, while high LPC leaders tend to be effective in favorable situations.
Joey 'Tin Can' Bruno is a trash-sorting supervisor for Trash Management

Company (TMC). He supervises 30 trash sorters. TMC is a union shop, so Joey
has little autonomy to hire or fire employees. In fact, he cannot even discipline
an employee without a formal hearing. Joey doesn't get to know the guys in his
facility, either. Joey tends to stay in his office during breaks and lunch. While
working, he tends to watch over the guys as they sort trash, often giving strict
direction. Joey has a low LPC and is task oriented. His trash-sorting department
is situation unfavorable.
19 Lesson Summary
In summary, Fiedler's contingency theory argues that there is no one leadership
style. There are situation-contingent factors that determine for a particular
situation. These factors are leadership style and situational favorableness.
Leadership style is determined by rating a leader's least preferred co-worker on
the least preferred co-worker (LPC) scale. A leader is asked to rate someone he
or she least liked working with (presently or in the past) on a scale of 1-8 in the
following areas:
Unfriendly/friendly
Uncooperative/cooperative
Hostile/supportive
Guarded/open
Situation favorableness occurs when the three dimensions - leader-member

relations, task structure, and leader position power - are high.
There are three dimensions of situation favorableness. Leader-member relations

refers to the degree of trust, respect, and confidence that exists between the
leader and the workers. Task structure refers to the degree to which tasks are
clearly explained and structured for workers. Leader position power refers to the
degree to which the leader possesses inherent power in his or her position.
When all three dimensions are high, a leader will be more effective. However,
leaders who ranked a low LPC are effective in both favorable and unfavorable
situations. Leaders who ranked a high LPC are generally effective only in
favorable situations.
20 Learning Outcomes
Explain the leadership styles of Fiedler's contingency theory
Describe the three dimensions of situation favorableness
Utilize the least preferred co-worker scale to identify types of leadership
Identify when leader-member relationships are favorable
21HERSEY-BLANCHARD'S MODEL OF SITUATIONAL LEADERSHIP

Hersey-Blanchard's Model of Situational Leadership assumes that follower
maturity is a major indicator of an employee's readiness to perform work. There
are four leadership styles associated with the model: delegating, participating,
selling and telling.
21.1 SITUATIONAL LEADERSHIP AND FOLLOWER
MATURITY
Hersey-Blanchard's situational leadership contends that leaders must adjust
their leadership style according to the maturity of their 'followers' or employees.
The maturity of the employee directly influences their readiness to work.
As we learn about the readiness factors, let's look at how situational leadership
works in the sales department of Conglom Financial Services, Inc. Conglom
Financial is a large investment firm. The sales team is made up of many
employees with varying abilities and confidence levels. Some employees have a
lot of experience selling investment products like stocks and insurance policies.
Others are enthusiastic about selling but lack experience doing the job. And
there are some employees in between.
Mr. Cash, sales director at Conglom Financial, looks at two factors to determine
the maturity level of his followers (or employees): follower ability and follower
confidence.
Follower ability is the degree to which a follower has the skills and ability to
perform a task. A follower who possesses experience at a particular skill will
need less instruction than one who has little experience. Interns with little
experience in the financial world would need far more instruction than a
seasoned salesperson. When an employee does not possess the skills to perform
a task, he will need plenty of direction.
Follower confidence is the degree to which a follower believes he or she can

perform a particular task. A follower with a high level of confidence will need
less direction than one who feels little confidence in his or her ability to
complete the task. A salesperson with tenure at Conglom has a high level of
confidence, so he needs less direction than a newer salesperson. This employee
is highly motivated, and that makes learning the skill easier.

21.2 THE LEADERSHIP STYLE MATRIX

Leaders must be able to change their leadership style to deal with different
employees possessing various skill levels. The right leadership style for each
employee or group of employees is decided by using a matrix. The matrix is
divided into four sections representing four possible leadership styles:
delegating, participating, selling and telling.
Delegating is necessary when the follower is ready, willing and able to perform a
particular task. This follower has a high level of confidence in his or her ability to
perform. Decisions are turned over to this follower. There is little need to build a
relationship because the follower shows a high level of maturity and can perform
with little to no direct supervision or instruction. This is defined on the matrix as
low-task, low-relationship style.
At Conglom Financial, Mr. Cash uses a delegating style for his most senior
salespeople. These employees have been with the company for many years. They
worked on major sales projects and wrote many insurance policies over the
years. They are given client names and phone numbers and left to do their job
without any further direction or supervision.
Participating is necessary when the follower is able but unwilling to perform a

particular task. The unwillingness is generally due to low confidence in his or her
ability to perform. The leader must participate by sharing ideas with the follower.
There is need to build a relationship because although the follower shows a
medium level of maturity and the ability to perform, he or she needs the extra
coaching from the leader. This is defined as low-task, high-relationship style.
When working with newer salespeople, Mr. Cash uses a participating style. These
workers have been trained but only worked with clients while working with a
more senior salesperson. These newer salespeople are able to open accounts
and sell securities but are concerned that they may do something wrong. Mr.
Cash participates in the sales pitch and offers advice along the way. This
approach eases their jitters, and they are able to sell their services.
Selling is necessary when the follower does not possess the skill or ability to
perform but is confident and willing to learn. The leader must explain the task
and any decisions regarding how to perform the task to this follower. Although
the follower demonstrates medium maturity, there is a need to focus on tasks
and build a relationship with the follower. The leader must persuade this follower
to take direction. A persuasive leader can sell the decisions to the follower.
Training and follow-up are necessary. This is defined on the matrix as high-task,
high-relationship style.
There are a few interns at Conglom Financial who do not have the experience or
training to sell financial services, but they are eager to learn and sell. Mr. Cash
likes to give these employees a chance to learn the business by working directly
with them. He meets with these eager employees to discuss strategies, offer
advice and give direction. He convinces them that they can do it through kind
words of encouragement.
Telling is necessary when the follower does not possess either the ability or the
confidence to perform a particular task. Because of this follower's low maturity,
the leader must provide explicit direction and close supervision at all times.
Sometimes Mr. Cash takes on high school students as interns, and they are just
not as eager and need more than persuading. They also lack work experience.
They arrive at Conglom with no experience and no confidence. This is a bit
trickier for Cash because he has to direct their every move. So, he tells them
exactly what to do and monitors their progress at every step.
21.3 LESSON SUMMARY

Hersey-Blanchard's Model of Situational Leadership states that leaders should
adjust their leadership style based on the maturity of their followers.
There are two factors used to determine the maturity level of followers. Follower
ability is the degree to which a follower possesses the skills and ability to
perform a particular task, and follower confidence is the degree to which a
follower believes in his or her ability to perform a particular task.
Leaders can use any one of four different leadership styles, depending on the
follower's maturity level.
A leader can use a delegating style with followers who possess the skills, ability
and confidence to perform the task. This is a low-task, low-relationship style.
A leader can use a participative style with followers who possess the skills and
ability but lack the confidence to perform the task. This is a low-task, high-
relationship style.
When a follower does not possess the skill or ability but has a high level of
confidence, the leader can take a more persuasive leadership approach - selling.
The leader may use convincing language to explain how to perform the task. This
is a high-task, high-relationship style.
Finally, a follower who has little skills and ability and lacks confidence would
benefit from a telling style. The leader must provide clear direction and
supervision at all times.

Define the four leadership styles of Hersey-Blanchard's Model of

Situational Leadership
Explain the factors that measure follower maturity

Determine effective leadership styles for followers of various maturity
types
22THE PATH-GOAL THEORY AND LEADERSHIP STYLES

Path-Goal is a type of leadership theory that focuses on establishing a clear
path to goal achievement. Leadership styles that are associated with this
theory include: achievement-oriented, directive, participative and supportive
leadership.
22.1 THE PATH TO GOAL ACHIEVEMENT

Robert J. House, founder of Path-Goal theory, believes that a leader's behavior is
contingent to employee satisfaction, employee motivation and employee
performance. Path-Goal theory states that a good leader provides clear
direction, sets high goals, gets involved in goal achievement and supports his
employees. The employees, as a result, will be a more satisfied and productive
team. It also states that employees will accept a leader's direction if the
employee believes that there will be an immediate or future benefit that results
from work.
Robert J. House founded Path-Goal theory.
Let's apply Path-Goal theory to a football team. The team is made up of many
different people, including coaches, players and supporting members. Each
contributes to a different function of the team. Each team member must know
the plays, be encouraged to do their part to win games, feel the coach's
commitment and have the support of others in order to perform at their best.

22.2 PATH-GOAL LEADERSHIP STYLES

There are several different directions a running back can take to get from the 50-
yard line to the end zone. Depending on the circumstance, he may run directly to
the end zone, serpentine from one sideline to the other or charge into a group of
opposing players. Path-Goal leadership styles work in similar ways. Just as there
are different paths to the end zones, there are different paths to leading a team.
There are various leadership styles associated with Path-Goal theory:
Achievement-oriented leadership
Directive leadership
Participative leadership
Supportive leadership
22.2.1 Achievement-Oriented Leadership

In achievement-oriented leadership challenging goals are set, high performance
is expected and management has a high level of confidence in the employee's
ability to achieve the goals. This style of leadership is well suited for
quarterbacks to use on other team members. The coordinator or coach gives the
quarterback a set of goals and plays. The main goal is to win games, but there
are smaller, equally important goals for the execution of plays during a game. The
coordinator provides the quarterback with the playbook and sets the expectation
for performance - all with a high level of confidence that the quarterback can
direct the team to execute the right plays at the right time and win games.
22.2.2 Directive Leadership

The quarterback uses a different leadership style with different players. A
quarterback gives directives by assigning specific plays to the team and to
individuals. Directive leadership involves giving specific advice or directives,
clarifying expectations and assigning tasks to individuals or a group.
During a huddle, the quarterback gives players the directives (or plays) and
manages from the field. An individual player, like a wide receiver, may be
directed to be in a certain area of the field to receive the ball. He may also be
directed where to run with the ball. A group of linebackers may be directed to
tackle certain players on the opposing team. Regardless of the position, each
player must carry out the play according to the quarterback's expectations.
22.2.3 Participative Leadership

The quarterback does not always have the final say. The team is given the
opportunity to participate in play strategies. This is a participative leadership
style. Participative leadership involves sharing information between the manager
and the group to gather input for goal achievement.
When the team gathers in the locker room prior to the game, the head coach,
coordinators, quarterback and players discuss the overall game strategy and
individual plays for the day. Team members provide feedback. The plays are
discussed between members of the group to determine the best possible
strategies for winning the game.
22.2.4 Supportive Leadership

Some players require a more sensitive leadership style simply because of their
position. While all players play hard on the field, some are more prone to injury.
Running backs are especially prone to injuries. Players in this position must be
able to run fast, move out of the way of burly linebackers and make nimble jumps
over piles of downed players.
Supportive leadership is necessary for these players. Managers foster good

relations and show personal concern for the health and well-being of the
individual or group. Coordinators know that running backs have a physically
challenging position. Running backs are often taken out of the game for rest
periods. There is also more than one running back on the field. This reduces the
physical stress on any one running back. Running backs are also given special
massages and even therapies for their leg and shoulder muscles.
22.3 LESSON SUMMARY

Path-Goal theory establishes a clear path to goal achievement. There are various
leadership styles that managers can use to do this:
In achievement-oriented leadership managers set challenging goals, have

high performance expectations and have a high level of confidence in the
employee's ability to achieve the goals.
Directive leadership involves giving specific advice or directives, clarifying

expectations and assigning tasks to individuals or a group.
Managers who use participative leadership share information with the

group to gather input for goal achievement.
Supportive leadership fosters good relations between managers and
employees. Managers exhibit personal concern for the health and well-
being of the individual or the group.

When you're done with this lesson, you should be able to describe and recognize
the styles of leadership defined in the Path-Goal theory, including achievement-
oriented leadership, directive leadership, participative leadership and supportive
leadership.
23MACHIAVELLIANISM IN ORGANIZATIONS: JUSTIFYING THE MEANS BY THE

ENDS
Manipulation can be a powerful tool that is frequently put into practice by
people who have a Machiavellian personality. This lesson describes
characteristics of Machiavellianism in both high and low Machs.
23.1 NICCOLO MACHIAVELLI

Do you remember hearing the name Niccolo Machiavelli while sitting in history
class? Perhaps you associate the term Machiavelli with the idea of being a
master of deceit. You might even think of someone you know who is an
opportunist and think of them as having a Machiavellian personality. Even if you
do not know of Machiavelli, you may have heard of the phrase 'the ends justify
the means.'
Portrait of Niccolo Machiavelli
The reason why we associate the idea of a person manipulating someone else
for personal gain with Niccolo Machiavelli is conceivably due to his most famous
writing: The Prince, a nobleman's guide to the acquisition and use of power. In
this book, Machiavelli details the correlation between manipulation, control and
personal gain. Machiavelli believed that if a choice had to be made between
being loved or being feared, being feared was the better choice.

23.2 MACHIAVELLIANISM IN ORGANIZATIONS

Machiavellianism , often abbreviated Mach, is a personality trait that is
characterized with the use of manipulation to achieve power.
Psychologists have developed a series of instruments called Mach scales to

measure a person's Machiavellian orientation. The continuum spans from being
highly manipulative to being highly submissive.
High Machs are those who would be considered highly manipulative, not easily
persuaded, but persuade others more than low Machs, successful in reaching
their goals and tend to win more. People with a high Mach personality tend to be
calm, unattached, calculated and look for ways to exploit loose structures or
vulnerability in people. High Machs flourish in face-to-face settings where there
are limited rules and structure and when emotions hold little value in goal
achievement. Therefore, high Machs are best matched in professions that reward
their 'do whatever it takes' attitude such as sales or jobs that offer commission
for results.
Low Machs are on the opposite side of the Mach spectrum and are characterized
as being highly submissive. Those individuals with a low Mach orientation are
willing to accept direction imposed on them and thrive in highly structured
situations. Low Machs are less motivated by things such as power, status, money
and competition than high Machs are. Winning is not everything for low Machs;
they operate with a much higher set of ethical standards than their high Mach
counterparts.
Machiavellianism can be both positive and negative in organizations depending

on how it is used. When Machiavellianism is used to increase managerial
effectiveness by providing necessary direction to subordinates to accomplish
organizational goals, it is considered a positive attribute. However, when
Machiavellianism is used for personal gain at the expense of subordinate
or organizational success, it would be considered highly negative.
23.3 MACHIAVELLIAN ORIENTATION IN PRACTICE
To better understand Machiavellian orientation, let's take a look at two different
people: Maria the high Mach and Martin the low Mach.
Maria is a sales representative at Portable Pet Pods. In this past quarter, Maria
has surpassed her sales quota and in many cases outsold her coworkers by 50%.
As with most sales people, what makes Maria successful is how persuasive and
convincing she can be when selling products for Portable Pet Pods. As a high
Mach, Maria approaches each sale with logic, precision and assertiveness so
that she can increase her chances of selling a product to her customers. She
uses manipulation to convince her customers to buy her product line and has
even been known to stretch the truth to make a sale. Maria has been referred to
as a 'cut-throat' salesperson because she is willing to do whatever it takes to
make a sale.
She has even been accused of stealing sales leads from her coworkers. Maria
makes no apologies for her aggressive tactics she uses to earn her spot as the
top-selling representative in the company. The fact that Maria is able to
communicate with her customers in a face-to-face setting only further helps
Maria in using her Machiavellian style. She comes off as confident and relaxed to
her customers who interpret that as her reassurance in the products she is
selling.
Martin is also a sales representative at Portable Pet Pods, but unlike Maria,
Martin is a low Mach. As a low Mach, Martin is guided by ethical considerations
and does not believe that it is necessary to lie or cheat to make sales. Instead,
Martin focuses on the features that each product offers and works to find ways
to match customer needs with particular products. After all, this is the way he
was trained to make sales and as a low Mach, Martin believes in accepting the
direction that was imposed on him. Even when a lead is dropped by one of his
coworkers, Martin makes an effort to pass that customer back to the initial
representative who contacted the customer because he believes it is the right
thing to do and hopes that the favor will be returned someday. Even without all
the aggressive sales tactics that his coworker Maria uses, Martin is still able to
be an effective sales representative.
23.4 LESSON SUMMARY

Let's review. Machiavellianism is a personality trait that is characterized with the
use of manipulation to achieve power. Machiavellianism can be both positive and
negative in organizations depending on how it is used. Psychologists have
developed a series of instruments called Mach scales to measure a person's
Machiavellian orientation. The continuum spans from being highly manipulative
to being highly submissive.
High Machs are those who would be considered highly manipulative, not easily
persuaded but persuade others more than low Machs, successful in reaching
their goals and tend to win more. People with a high Mach personality tend to be
calm, unattached, calculated and look for ways to exploit loose structures and
vulnerability in people. High Machs flourish in face-to-face settings where there
are limited rules and structure and when emotions hold little value in goal
achievement.
Low Machs are on the opposite side of the Mach spectrum and are characterized
as being highly submissive. Those individuals with a low Mach orientation are
willing to accept direction imposed on them and thrive in highly structured
situations. Low Machs are less motivated by things such as power, status, money
and competition than high Machs are. Winning is not everything for low Machs;
they operate with a much higher set of ethical standards than their high Mach
counterpart.

Identify Niccolo Machiavelli and define Machiavellianism
Differentiate between high and low Mach orientations
Explain the pros and cons of both orientations in the workplace
24LEADER-MEMBER EXCHANGE THEORY AND ORGANIZATIONAL BEHAVIOR

As we work with our managers and leaders, we begin to develop a level of trust
between us. The employee trusts the leader will be good and fair, and the leader
also develops trust in the employee's ability to do his job.
24.1 BLENDING OF ROLES

Many of us are lucky enough to have a person we work with that we trust a great
deal. That person that does the work and gets the results we want. Many
managers have that person on their team, and they look to that person for help in
getting all the work done. Many managers do not have to manage that particular
person too closely; they have developed a bond or a trust with that person.
Now, there are also people that we do not trust as much or have as good of a
relationship with. Those individuals are people that work for a manager but with
whom the manager does not feel a connection with or have a sense of
confidence in that they will get the work done the right way.
What we are talking about here is the basis of leader-member exchange theory,
which is a theory that explains how managers develop relationships with team
members. Those relationships can be good relationships or bad ones, so let us
look at what makes up leader-member exchange theory.

24.2 THE PART OF THE THEORY

Several different parts or concepts are present in leader-member exchange
theory. Actually, they kind of work in steps from the first part to the last and
explain or show how the relationship between the employee or the manager is
formed.
Role taking: This is the first step, if you will. In this step, the manager and
the employee meet, and the manager starts to assess the abilities of the
employee.
Role making: In this step, team members begin working on projects, and
the manager begins to see how devoted they are to the work that needs to
be done. Managers expect employees to work hard, be loyal and also be
trustworthy. Thus, during this stage, managers, whether they know it or
not, begin to separate employees into two different groups.
The first group is called the in-group. Very simply, this is the group the manager
trusts. They start to get more challenging roles, and there is more give and take
as it relates to communication. The manager, we could say, trusts the members
in this group and begins to bond with them.
Then, we have the out-group, or the group the manager does not really trust.
Since the manager does not trust the members in this group as much, their work
is less challenging and less critical, and the communication is more directive
than give and take. The manager tells these employees what he or she wants
done, whereas with the in-group, there is more discussion relating to tasks.
And this all leads to routinization. Once all the role taking and role making is
done and in- and out-groups are formed, the teams fall into a routine. They have
established norms they follow and begin to work together more cohesively as
they are now used to not only working together but how the manager wants to
work with them (depending on if they are in the in-group or out-group).
There is an old saying that the whole is the sum of the parts. If that is the case
and each department in a company has the leader-member exchange theory
present, then all those departments roll up to shape the entire company and how
the company runs. That directly impacts organizational behavior. In its most
basic form, the manager is selecting members for in-groups and out-groups, and
those decisions affect how the individual department will run. Each department
doing this then impacts how the company will run and thus affects organizational
behavior.
24.3 LESSON SUMMARY

Leader-member exchange theory is a part of business. Whether we know it or
not, it happens all the time. Think about how long you've worked for your
manager and how the relationship has evolved. Based on what we've discussed
here, are you in the in-group or out-group? The fact is you might not really know,
but this theory is very real and occurs in an ongoing basis.
When you joined the company, you went through the role-taking portion of this
theory, then proceeded to the role-making portion based on your work and how
your manager viewed you. Finally, you fell into a routine with your manager that
shapes your relationship with him or her. If you pay attention to the phases of
this theory and take the time to realize where you are as it relates to the phases,
you could potentially move up the ladder at your organization or fix what you
might perceive as a bad relationship with your boss.

Studying this video lesson could provide you with the capacity to:
Name the two parts of the leader-member exchange theory
Identify the role that this theory plays in the workplace and recognize its
importance
Differentiate between in-group and out-group
Provide the meaning of routinization
25TRAIT THEORIES VS. BEHAVIORAL THEORIES OF LEADERSHIP

There are many different theories on leadership. In this lesson, we will explore
the trait and behavioral theories and explain how they apply to leadership.
25.1 DIFFERENT LEADERSHIP THEORIES
One might think that there is a specific ideology or theory behind what it takes
to be a leader. The truth is there are several different theories that can be
applied to leadership, thus there really are no right or wrong theories, simply
different perspectives. This is much like how someone might look at a painting or
listen to music and have one opinion of it, but another person might view it
differently. While there are many different theories of leadership, two of the most
common are trait theory and behavior theory.
Trait theory of leadership believes that leaders have certain traits that make
them a good leader. On the other hand, the behavioral theory of
leadership believes that leaders behave in one of several different ways.

25.2 TRAIT THEORY

Many people believe that leaders are born, not made. They believe that somehow
they have some innate qualities that make them a good leader. You may even
agree with this perspective, as it's not incorrect. In many ways, these traits have
to be a part of the leader because many believe they are critical to becoming a
good, or even great, leader. These traits cover areas such as communication,
decision making, integrity or even empathy.
Therefore, as you can see, if you have these traits in you and you develop them
as you mature, you can potentially mature into a good leader (based on the trait
theory of leadership). If they are already in you and they have matured, then you
can use them as you lead your team.
Many of these traits are facets of an individual that we look for when we define a
leader. It is open to interpretation, but many of us want a leader that is a good
communicator or one that makes good decisions. Hence, the trait theory of
leadership believes there are specific traits that a leader must have to be a
leader.
Having these traits does not mean you are or will be an effective leader - just
that the trait theory of leadership believes you have to have these traits in order
to even be a leader.
25.3 BEHAVIORAL THEORY
It is easy to be confused when we talk about behavioral theory of leadership, as
some people may think it is how a leader behaves. To some extent, that's true,
but there are specific areas or categories of behavior that are focused on when
discussing the behavioral theory of leadership. Those areas are:
Autocratic leaders: Leaders that exhibit this behavior make decisions

without consulting their teams. The old saying 'it is my way or the highway'
is a good example of this type of leadership behavior. It is not a bad
behavioral aspect, as sometimes there are situations where fast, decisive
decisions need to be made, and an autocratic leader typically makes
those.
Democratic leaders: A democratic leader involves his or her team

members and seeks to get consensus or feedback from his or her team.
This works best when a team is working together and the leader wants or
needs the input of others. For example, a sales manager may ask for
assistance from an engineer in order to make an informed, accurate
decision.
Laissez-faire leaders: This leadership behavior allows the people in the

team to make the decisions. The best situation for this type of leadership
behavior is when a team is very capable of doing the job or jobs that they
need to do. If there is a team of scientists and they know what they have
to do, a laissez-faire leader will stay out of their way.
It's important to note that it is possible for the same leader to exhibit all these
types of behavior traits, depending on the situation. While some leaders fall
exclusively into one of the three categories, many leaders drift between them
depending on the situation.
25.4 COMPARING THESE THEORIES

The main difference between these two theories is traits are not something that
can be taught to a person. While traits can develop over time, we typically
cannot teach someone a specific trait; they have to learn it on their own and let
it develop. In comparison, behaviors can be learned. We learn to behave in public
or not touch a hot stove through experiences and learning.
25.5 LESSON SUMMARY
Leadership theory is unique to the person and the situation, and a leader can
change how they lead by deploying different leadership beliefs at different times.
Many successful leaders have traits that make them who they are and make
them great leaders, but they will also choose different leadership behavior traits
depending on the situation.
There have been leaders that were great communicators and, at the same time,
autocratic. Similarly, there have been leaders that were laissez-faire, but when
the situation called for it, they could be democratic or even autocratic. The
bottom line is leadership is defined by what a leader accomplishes but also how
the leader obtains those accomplishments by the traits and behaviors they
exhibit.

After reviewing this lesson, you should have the ability to:
Describe the trait theory of leadership
Explain the behavioral theory of leadership and describe its categories of

behaviors
Summarize how a leader can exhibit a mixture of behaviors from those

categories
26 INNOVATION IN BUSINESS: IMPORTANCE, TYPES & EXAMPLES

Innovation is everywhere. Learn several key concepts in the study of innovation,
including leading theories, forms of innovation, and its impact on the
competitive market.
26.1 WHAT IS INNOVATION?

Simply stated, innovation is the process of creating something new. The last
century has witnessed explosive innovation with dramatic results. Innovation
makes our lives easier, enhances our productivity, improves our health,
entertains us, and broadens our ability to communicate and connect on a global
scale. Virtually every improvement in the quality of living in the past century can
be traced back to innovation at some level.
Innovation is a broad, diverse, complex, unpredictable, and widely studied force

in business. Hundreds of books, articles, and research papers have been written
by scholars devoted to the study of innovation, its sources, objectives,
trajectories, and lasting impact. Innovation serves as the catalyst for growth in
business and economics. Yet, far more reaching, its impact can transform
virtually any industry from government to education, even the delivery of health
care. Sources of innovation can be found across any business, service line,
organization, or industry.

26.2 TYPES OF INNOVATION

We often think of innovation today in terms of technology. While it's true that
technological innovations in the recent past have been groundbreaking,
innovation can come in many forms. It can be a creative new teaching method to
enhance student engagement. It can be a unique incentive program to reward
high-performing employees, or it can be a process such as lean methodology, a
model which streamlines workflows and eliminates waste to keep costs low
while maintaining quality.
Innovation can be incremental, such as a slight variation on an existing product

formulation, like adding a new color or fragrance, or a groundbreaking product
that revolutionizes an industry - think iPod. Innovation can respond to a clearly
defined problem, or create a complete paradigm shift when the problem itself is
undefined or the path to a solution is unclear.
The benefits of innovation are not limited to new product development. The
models of innovation are just about as numerous as the objectives they are
intended to serve. Innovation can improve almost every aspect of a product or
service life-cycle, from business model innovation to pricing strategies,
marketing, and service delivery. Think of how discount airlines, such as
Southwest, transformed the airline industry with innovative pricing. Amazon.com
transformed e-commerce with its innovative distribution channels, making a
huge array of products available nationwide virtually overnight.
Innovation doesn't always produce something entirely new. Sometimes

innovation makes an existing product or service better. Small entrepreneurial
businesses often develop new products that are components of products that
larger, more established firms manufacture and sell under an established brand
name. Improvements to everyday products, such as DVD players, digital cameras,
and prescription drugs, are not unique to the companies that sell them. Cutting-
edge component parts or pioneering research and development were provided by
smaller firms with innovative ideas. Some small firms have built their entire
business models around developing and producing products that help larger,
well-known companies be more efficient or effective, and ultimately more
competitive.
26.3 HOW DOES INNOVATION HAPPEN?

There are dozens of published theories of innovation. Perhaps the best known is
the concept of creative destruction. Joseph Schumpeter was a renowned
economist who first coined the term. He argued that innovative thinkers develop
new products and technologies that, over time, make obsolete a product or
process that had once dominated its market. The innovation often starts at the
low end of the market with lower priced goods or components of higher-end
products for example, and slowly works up to the higher end, taking market
share from the big players as processes and products improve. Word processors
made typewriters, and often their manufacturers, obsolete.
This is a common theme in the study of innovation. World-renowned innovation

expert Clayton Christensen wrote about similar themes in his bestselling
book The Innovator's Dilemma. He called his theory disruptive innovation, but the
essence is the same. Innovation starts with disrupting the old way of doing
things. At first, the disruption may be too small to be noticed by the established
players. However, as the disruptor continues to improve processes and develop
more complex products or services, the establishment must either take notice or
risk becoming obsolete.
It's a phenomenon that happens all around us, every day, in virtually every
industry. Creative destruction is driven by innovation and led by entrepreneurs
and entrepreneurial thinkers. Some innovation scholars believe that the
entrepreneur as the innovator is the essence of capitalism. Specifically, the
innovator shows that a better product, process, or mode of organization can be
efficient and profitable, and that elevates the entire economy. Better products
drive consumer demand, which, in turn, creates new jobs and new industries that
grow the overall economy.
26.4 IS INNOVATION ALWAYS GOOD?

There is, however, a flip side to these benefits: the process of creative
destruction destroys those organizations and brands who suddenly find their
technologies and systems outmoded and unprofitable. Businesses shut down;
people lose jobs. The automation of many manufacturing processes had a
dramatic impact on the labor market. The era of ubiquitous technology and
information-sharing sometimes comes with a feeling of loss of individual privacy.
The market dynamics of the modern economy, driven in part by rapidly emerging
technology, are changing so quickly that any organization that fails to keep pace
will quickly be made obsolete. In this environment, business leaders constantly
need to question perceptions and assumptions.
Sometimes the old rules don't apply to emerging problems in the face of rapid
innovation, and new rules may not exist yet. Such swift change sometimes
leaves organizations and their managers in the position of continually doing
things they have little experience with or have never done before at all. The
ability to quickly adapt to change may dictate survival or failure in the economy
of innovation. Managing organizational change, including innovation, is now one
of the most critical managerial competencies in any organization.
26.5 LESSON SUMMARY

Let's review. Innovation is everywhere. It can be small and incremental, or
groundbreaking and market changing. Innovation produces new products,
services, processes, industries, and opportunities. Creative destruction slowly
replaces the old way of doing things with new, improved products and systems.
Change is so pervasive in virtually every industry today that those who fail to
respond in time will inevitably be left behind.
27 INSTITUTIONAL ENTREPRENEURSHIP: THEORY & EXAMPLES

How can people change organizations and institutions? In this lesson, we'll
examine institutional entrepreneurship. We'll look at what it is, what
institutional entrepreneurs have in common, and how they differ from
intrapreneurs.
27.1 ENTREPRENEURSHIP & INNOVATION

Let's start with an example. Samir is innovative, creative, and a risk-taker. He
can see solutions to problems that many people might miss. Many people have
told Samir that he thinks like an entrepreneur. But what does that phrase mean?
Put simply, an entrepreneur is a person who creates businesses. Often,

entrepreneurs are visionaries, financial risk-takers, and creative people who see
the world differently from the traditional view. Successful entrepreneurs focus
on innovation and solving problems.
Based on this, Samir sounds a lot like an entrepreneur. But he's not sure that he
wants to start his own business. Does that mean he's out of luck? Will he always
be working at a boring, dead-end job, where he's not able to innovate?
Well, maybe not. To help Samir find his perfect job, let's look at institutional
entrepreneurship, and what it has to do with intrapreneurship.

27.2 INSTITUTIONAL ENTREPRENEURSHIP

Ideally, Samir would love to find a job where he can be innovative, creative, and
can solve as many problems as he can that come his way. But he doesn't really
want to start a business from scratch. So, what can he do?
Institutional entrepreneurship occurs when a person or group of people work to

drastically change an institution, and in the process form a new institution. So,
for example, if Samir thinks that the company that employs him isn't working all
that well, he might try to completely change the institution.
There are several things that institutional entrepreneurs have in common. For
one thing, they think and act strategically. Let's say that Samir wants to
fundamentally change the institution in which he works. He won't want to just go
to the CEO and say, 'Let's get rid of this company and start a new one that's
better.' That probably won't work. But he can make some strategic moves, such
as pointing out legal violations or things that aren't working at the company, and
suggesting incremental improvements.
Another thing that institutional entrepreneurs have in common is that they

gather resources and people in their quest to improve the company. Samir, for
example, might need to get others on his side in his mission to transform the
company. He also might need resources, such as government contacts, money, or
power, to get things done.
Finally, institutional entrepreneurs think outside of the box - and outside the
institution. Most people think of organizations as being organizations, and that's
it. But institutional entrepreneurs can see beyond the existing company to what
a new institution might look like.
27.3 INTRAPRENEURSHIP VS. INSTITUTIONAL

ENTREPRENEURSHIP
Samir likes the sound of being an institutional entrepreneur, but what if he
doesn't think that his company needs to be completely changed? What if he just
wants to make it a little better, a little more innovative?
Intrapreneurs are people who innovate and create within a company that
employs them. Essentially, they act a lot like entrepreneurs, but they still draw a
paycheck. There are definitely some other differences between intrapreneurs
and entrepreneurs, but for this lesson, let's just focus on the fact that an
intrapreneur works for a company, while an entrepreneur works for him- or
herself.
So, how is an intrapreneur different from an institutional entrepreneur? Well, for

one thing, their major goal is different. Intrapreneurship is about being innovative
within the existing organization. Institutional entrepreneurship, on the other
hand, is about being innovative while changing the existing organization.
Let's look at an example. Let's say that Samir believes that his company is okay
as it is. He doesn't want to change the company itself, but there are some things
that could be better. For example, Samir thinks that there is a better way to
approach designing products, or a new way to reward employees for their ideas
and input. Samir might want to try to implement these changes without looking
to fundamentally change the company itself. That would make him an
intrapreneur.
On the other hand, if Samir looked at his company and believed that there was a
problem with the company itself, and that it should be merged with another
company or simply replaced with a better institution, he'd be an institutional
entrepreneur.
27.4 LESSON SUMMARY

Institutional entrepreneurship occurs when a person or group of people work to
drastically change an institution, and in the process form a new institution.
Institutional entrepreneurs think and act strategically by doing things like
presenting research, gather resources and people, and think outside of the box.
Institutional entrepreneurs are similar to intrapreneurs, or people who innovate

and create within a company, unlike entrepreneurs, who simply create their own
businesses. However, intrapreneurs innovate within the structure of an
organization, while institutional entrepreneurs innovate to change a company.

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1 LEADERSHIP: LEADERS & THEIR ROLE IN ORGANIZATIONS

Leadership is the action of leading employees to achieve goals. It plays an

1.1 WHAT IS LEADERSHIP?

Leadership involves leading others toward achieving clear

1.1.1 Preparing for a test?

1.2 LEADERSHIP IN ORGANIZATIONS

Building morale involves pulling everyone together to work towards a common

1.3 A LEADER'S ROLE

A formal leadership role is an officially assigned position given to someone

An informal leadership role is an unofficial role a person takes on based on his or

1.4 LESSON SUMMARY

Sets a clear vision by influencing employees to understand and accept the

Guides employees by defining their role in the work process, providing

Builds morale by pulling everyone together to work towards a common

1.5 LEARNING OUTCOMES

Describe the role leadership plays in the success of an organization

Identify effective actions for leading employees to achieve goals, including

Compare and contrast formal and informal leadership

2 THE TRANSFORMATIONAL LEADER

2.1 MORE THAN MEETS THE EYE

2.1.1 Preparing for a test?

2.2 THE TRANSFORMATIONAL LEADER

Fourth, the transformational leader is intellectually stimulating by encouraging

2.3 FOLLOW THE TRANSFORMATIONAL LEADER

Framing is used by the transformational leader to provide followers with a game

Impression management refers to the steps that a transformational leader will

In essence, the transformational leader wants to be the 'pick of the litter' by

Once a leader is seen as charismatic, trustworthy, confident, admirable and

2.4 TRANSFORMATIONAL LEADERS IN TODAY'S

2.5 LESSON SUMMARY

Transformational leaders are relevant in contemporary business due to their

2.6 LESSON OBJECTIVES

Identify the four techniques use by a transformational leader that convince

Summarize the three influential characteristics that set transformational

3 THE TRANSACTIONAL LEADER

3.1 ACTIONS AND REACTIONS

3.1.1 Preparing for a test?

Bass reintroduced the concept of transactional leadership

Using their authority as a manager, the transactional leader gives orders to

It also promotes a healthy motivation in employees to work diligently towards

3.3 TAKESHA THE TRANSACTIONAL LEADER

The benefits of transactional leadership include:

Clearly defined roles and responsibilities

Healthy motivation to work towards organizational goals

A high level of employee responsibility and accountability

To monitor this accountability, the transactional leader uses management by

3.5 LESSON OBJECTIVES

Define the premise behind the concept of transactional leadership and

Describe the characteristics of transactional leadership and distinguish

4.1 PHILANTHROPY ISN'T DEAD

4.1.1 Preparing for a test?

4.2 TO SERVE IS TO LEAD

While any smart businessperson knows the importance of taking care of

4.3 SHOW ME THE SERVANT

Spends more time listening than talking

Puts your accomplishments in the spotlight, instead of jockeying for

Willingly shares credit when things do turn out good

Takes the time to get to know your goals

4.4 LESSON SUMMARY

4.5 LESSON OBJECTIVES

Explain the philosophy behind servant leadership

Identify the characteristics of servant leadership

5 THE LAISSEZ-FAIRE LEADER

5.1.1 Preparing for a test?