BUSINESS LEAD

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SYLLABUS

Leading as a function of management, leading concept: meaning & definition

Leadership and vision, leadership traits, classic leadership styles

Leaders behaviour- Likert’s four systems, Managerial Grid

Overlapping role of leader and managers Organization context of communication, Directions

of communication, channels of communication, barriers of communication

Motivation and rewards, Rewards and performance Hierarchy of need theory and two factory theory.

Integrated model of motivation

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LEADERSHIP MEANING :

One of the managerial functions. Leadership is both process and property As a process: it focuses on what leaders

actually do? It is use of influencing power to shape

group or organizational goals Motivating others behaviour toward the

achievement of those goals Helping in defining group or organizational

culture

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As a property: it is the set of characteristics attributed to individuals who are perceived to be leaders

So, leader is someone who can influence others and who has managerial authority.

Leadership is what leaders do, the process of influencing group to achieve goals

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DEFINITION George Terry, “ leadership is the activity of

influencing people to strive willingly for mutual objectives”

Peter Drucker, “leadership is the lifting of man’s vision to higher sights, the raising of man’s performance to higher standards, the building of man’s personality beyond its normal limitations”

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raLEADERSHIP AND VISION

Leaders must have vision. They share a dream and direction that other people want to share and follow.

Leadership vision goes beyond your written organizational mission statement and your vision statement

For leaders vision is not just a dream, it is a reality that has yet to come into existence. It gives a leader purpose, his devotion to inspire others.

vika

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raLEADERS VS MANAGERS Are all managers are leaders? Yes, as leading is one of the 4 managerial

functions manager should be leader.

Leaders ManagersInnovate AdministerDevelop MaintainInspire ControlLong term view Short term viewAsk what and why Ask how and whenOriginate InitiateDo the right things Do the things rightHave followers Have subordinates

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LEADERSHIP TRAIT

Trait – personal qualities and characteristics There are certain personal qualities and

characteristics which are essential to be a successful leader

Based on these traits or qualities, some philosophers say, leaders are born and not made

This approach regarded as one of the earliest approaches to leadership and termed as Trait Approach or Trait Theory

Trait approach involves analyzing personal, physiological and physical traits of strong leaders

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Traits might include: Intelligence Assertiveness Above average height Good vocabulary Attractiveness Self confidence Integrity- do what you say, don’t compromise

for temptations like money, greediness etc Creativity to solve problems Initiative

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CRITICISM FOR TRAIT APPROACH

Leaders are both born and made

Leadership qualities can be developed

Can’t recognize that one successful leader has got these many traits

Based on the situation or conditions traits may vary, or leaders may tend to show varied traits

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CLASSIC LEADERSHIP STYLES

Behavioural pattern which a leader shows while influencing followers is termed as leadership style

Based on the degree of use of power, 3 styles can be identified;

Autocratic/ Authoritarian/ Directive Style

Participative/Democratic/Consultative Style

Laissez Faire/Free Rein Style

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raAUTOCRATIC/ AUTHORITARIAN/ DIRECTIVE STYLE Decision making power is centralized and

rests with leader Leader exercises close supervision over

followers and uses rewards and punishment to influence followers behaviourMerits Demerits

Enables quick decision makingStrict disciplineMotivation through rewards and punishment

No participation from followersCreates conflicts, stress among followersLow moraleLess satisfaction from followers side

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PARTICIPATIVE/DEMOCRATIC/CONSULTATIVE STYLE

Leader allows followers participation while taking decision

This style considers common interest of both leader and followers

Increases followers morale

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LAISSEZ FAIRE/FREE REIN STYLE

Leader does not lead and avoids power Complete freedom is given to followers Decision making power rests with followers Leaders may give advice if followers need

any help No control over followers

Demerits: Lack of control and discipline Fails if followers are not matured May lead to confusion, chaos

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LEADERS BEHAVIOUR

After the trait approach, thinkers to overcome limitations of the trait approach, started focusing on understanding leaders behaviour.

Instead of studying what leaders have, what are their qualities. Thinkers focused on how they behave and behaviour patterns in situations.

Under this approach we have to study:

Likert’s Four Systems and Managerial Grid

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LIKERT’S FOUR SYSTEMS

Likert and his associates of the University of Michigan, USA, have conducted studies on Leadership styles and patterns in number of organizations

Likert developed 4 systems/models known as Systems of Management

These systems have been developed based on the 6 elements which are related to management process;

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raCharacteristics System 1 System 2 System 3 System 4

Exploitative Authoritative Style

Benevolent Authoritative Style

Consultative Authoritative Style

Democratic Participative style

Trust in subordinates None To some extent

Substantial, justifiable

Complete trust on subordinates

Motivation Fear and threatRewards and punishment

Rewards, punishment and involvement

Group participation and involvement

CommunicationVery limited and downward Limited

Fairly widespread ans sometimes upward

Widespread and both downward and upward

Personal Interaction/knowing people Very limited Limited Moderate Intensive

Decision making Centralized Mostly centralized

Some participation is allowed

Fully participative method

Type of control Centralized Mostly centralizedModerate delegation

Extensive delegation

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EXPLOITATIVE AUTHORITATIVE STYLE Management uses fear and threats;

communication is top down with most decisions taken at the top; superiors and subordinates are distant.

BENEVOLENT AUTHORITATIVE STYLE Management uses rewards; information

flowing upward is restricted to what management wants to hear and whilst policy decisions come from the top some prescribed decisions may be delegated to lower levels, superiors expect subservience lower down.

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raCONSULTATIVE AUTHORITATIVE STYLE Management offers rewards, occasional

punishments; big decisions come from the top whilst there is some wider decision making involvement in details and communication is downward whilst critical upward communication is cautious.

DEMOCRATIC PARTICIPATIVE STYLE Management encourage group participation

and involvement in setting high performance goals with some economic rewards; communication flows in all directions and is open and frank with decision making through group processes with each group linked to others by persons who are members of more than one group called linking pins; and subordinates and superiors are close. The result is high productivity and better industrial relations

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CONCLUSION

System 1 is very poorSystem 4 is the ideal style, and

an organization can adopt it.

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raMANAGERIAL GRID Developed by Robert Blake and Jane Mouton,

psychologists at the University of Texas Used a chart called Managerial Grid to

describe leaders style. They identified 5 styles and used the terms

concern for people and concern for production

These 2 dimensions are plotted on a 9 point scale on 2 separate axis.

Concern for people is shown on vertical axis, concern for production is shown on horizontal axis.

Managerial Grid: A grid of two leadership behaviours – concern for people and concern for production – which resulted in 5 different leadership styles.

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LEADERSHIP STYLES IN MANAGERIAL GRID

1. Task Management or Authority Compliance [9,1]:Management shows maximum concern for production and least concern for people

2. Country Club Management [1,9]Reverse of task management, where management shows more concern for people and least concern for production

3. Impoverished Management [1,1]Management shows least concern for both production and people. Leader thinks that minimum effort is sufficient to get the work done and won’t focuses on followers and results.

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CONTD…

4. Team Management [9,9]Shows concern for both people and production. Focuses on synergy concept 1+1 = 3. Through committed people work accomplishment. Focus on people task related morale.

5. Middle of the Road Style [5,5]Management shows a balanced concern for people and production. Neither too much production is expected, nor too much concern for people is expressed.

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CONCLUSION

According to Blake and Mouton, Team Management [9,9] is the ideal one. Because here results are achieved through focusing on people. High concern for both will be seen. This can be achieved based on active participation

But there is no one best leadership style under all conditions. So leaders have to select the style based on the situations and followers.

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OVERLAPPING ROLES OF LEADERSHIP & MANAGEMENT

Leadership is an important element in an organization as it plays a role of creating and shaping organizational culture and setting a direction for the progress of the organization. Without this management has no role or cause for existence

Management on the other hand, through systematic arrangements and processes, gives way for effective leadership development at every level in the organization

When an executive is doing planning, organizing, controlling he is managing, when he is guiding, motivating and influencing others behaviour, he is leading

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CONTD..

Leadership is a function of looking, thinking and bringing change in the organization.

Management is a function of ensuring order and consistency in the organization

Leadership and management are inseparable aspects of an organization.

The effectiveness of one is dependent on the effective performance of the other.

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COMMUNICATION

The word communication has been derived from the Latin word “communist” means COMMON.

Communication means exchange of ideas, facts, opinion, information and understanding between two or more persons

Communication need not be in written or spoken words

It may happen through symbols, actions, gestures etc

So it is the process of transmitting information from one person to another

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DEFINITION

Allen, “ Communication is sum of all the things one person does when he wants to create understanding in the mind of another. It is a bridge of minds. It involves a systematic and continuous process of telling, listening and understanding”

George Terry, “ Communication is an exchange of facts, ideas, opinions or emotions, by two or more persons”.

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COMMUNICATION PROCESS

Sender

Feedback

Encode Medium Decode

Receiver

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DIRECTIONS OF COMMUNICATION IN ORGANIZATION

Upward communication Downward communication Lateral or horizontal communication Diagonal or crosswise communication Inward communication Outward communication

Vertical communication

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VERTICAL COMMUNICATION

Marketing Manager

Marketing Supervisor

Downward Communication

UpwardCommunication

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LATERAL OR HORIZONTAL COMMUNICATION

Marketing Manager

Production Manager

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CROSSWISE OR DIAGONAL COMMUNICATION

Marketing Manager

TrainingSupervisor

Training Manager

Marketing Supervisor

Communication between persons at different levels who have no direct reporting relationshipsCommunication between marketing manager and training supervisor regarding training few employees of marketing department

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INWARD AND OUTWARD COMMUNICATION

All information received by the organization from external agencies – Inward Communication

All information send by organization to external organizations- Outward Communication

External Agencies are; Other organizations Government Suppliers Customers Competitors Shareholders Media

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raOrganization

External Agencies

External Agencies

Com

munica

tion

Com

munica

tion

Contd..

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raINWARD COMMUNICATION MAY BE IN THE FORM OF

Letters Emails Offers Orders Requests Suggestions Complaints Notices Feedbacks etc

OUTWARD COMMUNICATION MAY BE IN THE FORM OF

Letters to other companies

Emails Offers to

customers Ads Media interaction Negotiations Tenders Telephones etc

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raCHANNELS OF COMMUNICATION

Channel or medium is the point through which the communication passes

Channels can be Formal or informal.

Informal Channel Communication flows informally. This type of channel exists in informal

organization structure Example: communication flows between

marketing supervisor, accountant and training manager.

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raFORMAL CHANNEL

Communication flows orderly, in a timely and accurate manner.

Communication passes through officially recognized positions

M D

Top Mgt

Middle level Mgt

Front line Mgt

Employees

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BARRIERS TO COMMUNICATION

Individual barriers Conflicting signals: difference in what

one says and what he does Lack of reliable information sources Lack of interest to communicate Poor listening skills

Overcoming Individual Barriers Develop good listening skill Encourage two way communication

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Organizational Barriers Semantics : Misinterpretation of words,

same word having different meaning Noise Language differences

Overcoming Organizational Barriers Have proper follow up Reduce factors which causes noise Regulate information flow Be aware of language and meaning

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MOTIVATION, REWARDS, PERFORMANCEMOTIVATION:

Every organization must Attract competent people and retain them

with it Allow people to perform task for which they

are hired Stimulate people to go beyond themselves in

their work

Thus if an organization wants to be effective, it has to address the challenges involved in influencing people behaviour or their desires.

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Basic principle is that: performance of an individual depends on his or her ability backed by motivation

So Performance = f [ ability x motivation] Ability : refers to skill and competence of the

person to complete the task Motivation : is the persons desire to complete

the task

Organization becomes successful when a person has both ability or skill and desire to complete the task

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DEFINITION

Griffin, “motivation in simple terms refers to the set of forces that causes people to behave in certain ways”

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IMPORTANCE OF EMPLOYEE MOTIVATION

A challenging element in an organization:

Individual performance is generally determined by 3 things; Work environment [resources needed to do the job], Ability [capability/ skills to do the job] and motivation [desire to do the job].

If an employee faces resources problem, manager can provide it, if he lacks ability, manager can train him, but if motivation is the problem, manager’s task will become more challenging.

That’s what we say, motivation is a challenging task in an organization.

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Effective use of resources: effective and efficient use of resources depends upon ability and desire of employees. Highly motivated people make optimum utilization of resources

Achievement of organizational goals

Reduction in employee turnover and absenteeism

Healthy relationship among managers and subordinates

IMPORTANCE OF EMPLOYEE MOTIVATION CONTD….

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REWARD

Expectation for the work People join organization expecting better

rewards Providing rewards is considered as one of the

motivational strategies Rewards can be in monitory or non monitory

terms Monitory rewards: salary, incentives,

commission, bonus given in cash Non monitory rewards : gifts, facilities,

coupons etc

vika

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raREWARD SYSTEMS TO MOTIVATE PERFORMANCE OR PERFORMANCE BASED REWARD SYSTEM

Rewards are determined on the basis of performance. Performance can be

Individual performance Group performance Organizational performance

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INDIVIDUAL REWARDS

Individual performance is considered while providing rewards.

Rewards can be Piece rate: pay to units produced

Commission : sales people for actual sales done

Merit pay: individual performance or skills are considered

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GROUP REWARDS

Rewards based on group or team performance

Gain sharing: gain achieved by reducing the cost or producing more will be shared among group members

Bonus: profit will be given as bonus

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ORGANIZATIONAL REWARDS

Whole organization’s performance will be considered

Employee Stock Ownership Plans: ESOP –employees will get company shares & dividends

Profit sharing: profit earned will be distributed to all employees

Balanced Score Card: employees are given bonus for improved performance in four key areas: Financial performance, customer satisfaction, internal process improvement, learning and innovation.

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MOTIVATIONAL THEORIESMASLOW'S NEED HIERARCHY THEORY Abraham Maslow, a human relationist

developed this theory Maslow argued that people are

motivated to satisfy 5 need levels These 5 need levels constitute a

hierarchy An individual is motivated first to

satisfy his/ her basic needs Once he is satisfied with basic needs,

he will move to next need level This process continues till he reaches

the self actualization level

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MASLOW’S NEED HIERARCHY

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MERITS

Theory presents motivation as a constantly changing force

Simple to understand

DEMERITS

People from different countries or background have different hierarchy of needs

Hierarchy of needs does not exist in the same order. Example: person satisfying his esteem needs can not forget to satisfy his basic need i.e., food

This is not a theory of work motivation. Maslow himself is not intended to relate these needs to work place

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HERZBERG’S TWO FACTOR THEORY / TWO FACTORY THEORY OF MOTIVATION Herzberg developed the two factor theory by

interviewing 200 accountants and engineers He asked them about two occasions: When they felt extremely good or when they had

been satisfied or motivated about their job When they felt extremely bad or when they had

been dissatisfied or demotivated about their job Surprisingly he found that, the absence of certain

job factors tend to make workers dissatisfaction. But the presence of these factors does not produce high level of motivation. They merely help to avoid dissatisfaction

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CONTD…

Example: a person might identify “ low pay” as a dissatisfaction factor. But he would not necessarily mention “high pay” as a cause of satisfaction. Instead factors like recognition, rewards etc were cited as motivational or satisfaction factors

Herzberg called the factors influencing the satisfaction level of employees as Motivation factors

Factors which cause dissatisfaction as Hygiene or Maintenance Factors.

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raCONTD… The two factor theory suggests that peoples’

satisfaction and dissatisfaction are influenced by two independent sets of factors – motivation factors and hygiene/ maintenance factors

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INTEGRATED MODEL OF MOTIVATION

This theory integrates various motivational theories to have a better model of motivation

In this theory inputs are taken from

Maslow’s need hierarchy theory Reinforcement theory Equity theory Expectancy theory

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raINTEGRATED MODEL

Motivation

Goal Oriented

Work EffortPersistence

Work Performanc

eRewards

Satisfaction with

Rewards

Individual Ability

Organization Support

ReinforcementDominant

needs

Perceived equity & value of rewards

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