You are on page 1of 15

Leadership Style and Organisational Performance, Do They Relate?

Executive Summary Researchers view leadership as a process of influencing people to facilitate the movement of a group of people toward a common or shared goal. There are four main schools of leadership: trait approach, behavioural approach, situational approach and contemporary theories. These theories supplied a quantum of different leadership styles that attempt to articulate what effective leadership is. The paper aims at assessing the perception that management and leadership style can impact positively on the performance of an organisation. The paper refers to behavioural and situational theories because (1) they are the main sources of leadership styles, and (2) situational theories are a development of behavioural theories that criticised and addressed their limitations. Behavioural theories focus on leaders behaviours. These theories provided four leadership styles: Directive, consultative, Participative and Delegative leadership. Behavioural theories gained acceptance over trait theories because they look at what leaders actually do and suggest leaders are not born but can be made. But the evidence is mixed on the relationship between leadership style and organisational performance. They dont guarantee leaders success as it lacks factors of followers characteristics and situational context. Situational theories argue that there is no one best way effective across all situations, and there are situational moderating variables that affect leaders behaviours. They have been criticised for defining situational moderator variables ambiguously and for their unrealistic assumptions of leaders ability to recognise followers and situation characteristics. The four frames of Bolman and Deal articulate a practical view of leadership effectiveness. The structural, human resources, political, and symbolic frames provide important possibilities for leadership, but each by itself is incomplete. Using the four frames collectively allow leaders to reframe complexity by looking at it from multiple lenses.

Main Findings Both management and leadership are important to organisational success. There is no one best way to leadership style across all situations. Leadership is a complicated process in which variables of leader, follower, situation, communications, technology, culture, structure, etc. interact. The four frames of Bolman and Deal offer a practical solution to embrace a systemic view of organisational complexities. Conclusion The study and evidence supports the notion that leadership can impact positively on organisational performance if practiced in a holistic way giving concern to all variables of leaders, followers, situation, culture, environment, technology, structure, organisational frames, organisational life-cycle, in addition to any other variables that might be identified in future.

Leadership Style and Organisational Performance, Do They Relate?

he past decade has seen a significant interest in the leadership phenomenon

that took several directions. The interest in leadership is associated with the idea that successful organisations require leadership. Researchers and practitioners debated on this phenomenon and supplied different thoughts and viewpoints to the world of management and organisational behaviour. Despite the general agreement about its importance, there is still little agreement on what leadership actually is or how it originates. Research associate leadership with the process of influencing people, and common to all leadership definitions is the notion that leaders are individuals who, by their actions, facilitate the movement of a group of people toward a common or shared goal (Robbins, 2000). Researchers also emphasise leadership as process, not position, which distinguishes leadership from management. Such distinction between leadership and management has similarly attracted much debate. Some argue that leadership differs fundamentally from management where leaders and managers have totally different personalities. Others argue that leadership and management are closely related to each other in the sense that effective managers are effective leaders and vise versa, and that leadership is one function of management. However, many has drawn the distinction between leadership and management by associating leadership with risk-taking, innovation, dynamic, creativity, change, inspiration and vision, while associating management with efficiency, planning, administering, paperwork, control, procedures, regulations and consistency. They also think of leaders as doing the right things while think of managers as doing things right. Despite the thought difference, leadership and management are both important since organisations typically need both functions performed well in order to be successful (Hughes et al, 2009). Recognising the complexity and importance of leadership, researchers responded by providing many perspectives, theories and paradigms that attempt to identify the types

of successful leaders and the factors that determine leadership effectiveness. These schools of thought have evolved over the years, took several directions and enriched the leadership literature. But the literature focuses around four schools of thought namely the trait approach, behavioural approach, situational approach and contemporary theories. The trait approach assumes leaders are born not made and that a group of traits are positively associated with leadership such as intelligence, self-confidence, initiative, and persistence. However, further studies concluded that no combination of traits would guarantee leadership effectiveness. The next generation is behavioural theories which focus on leaders behaviours and assume that effective leaders are common in their behaviour modes as they exhibit different leadership styles depending on their dominant orientation towards tasks or relationships. This approach was mainly criticised for the unclear relationship between leadership style and performance, as well as ignoring situational context by praising the leader perspective (Bryman, 1992). The limitations found in previous studies resulted in the situational approach which assumes there is no best one way across all situations and leaders make their behaviours contingent to variables concerned with followers, task and situation. The assumption that leaders can identify the characteristics of followers and situation is challenged in the sense that different leaders may hold different assumptions regarding the followers and the situation, which affect the accuracy of the leader actions. More recent studies provided the leadership literature with contemporary theories. These theories reject the idea that followers are unchanged or part of a situation, but view followers as counterpart to the leader and seek positive transformation, dynamic relationships, and relational association with followers. However, it is criticised for retrieving the one best way leadership behaviours or traits that ignores the context situation, as well as for the ambiguity surrounding the process of establishing and maintaining good relationships with followers (Beyer, 1999). The important outcome of these theories is the quantum of different leadership styles that attempt to articulate what effective leadership is. Real life provides many

examples of leaders who lead their organisations with a certain leadership style. In the world of computer, Bill Gates of Microsoft employs a participative style involving employees in decision making. His motivating attitude and openness to new ideas drives Microsofts success. On the other hand, Steve Jobs of APPLE with his autocratic style centralises authority and never involve employees in decision making. His arrogance and failure in motivating employees hinder APPLEs success. Such examples raise an important question: can leadership styles positively impact organisational performance? This paper attempts to answer the question above. The purpose is to critically assess the perception that management and leadership style can impact positively on the performance of an organisation. In doing so, the paper examines different leadership styles and their impact on organisational performance. The paper refers to behavioural and situational theories because (1) they are the main sources of different leadership styles, and (2) situational theories are a development of behavioural theories that criticised and addressed their limitations. In the following paragraphs, the paper briefly explains the behavioural approach to leadership and investigates its associated leadership styles impact on organisational performance. The paper next analyses situational theories and their implications on the notion of leadership style. Towards the end, the paper briefly refers to Bolman and Deal four organisational frames in an attempt to articulate a comprehensive approach to effective leadership. Finally, the paper concludes with findings and results. Early developments of leadership styles originated from different studies related to behavioural theories. These theories focus on leaders behaviours and assume effective leaders exhibit common behavioural modes and leadership styles according to their predominant orientation towards tasks or relationships. Started with Hawthorne studies, a close link between management style and employee attitudes was found. Likert and Michigan studies later suggested that employee-centred leaders are generally perceived as better than task-centred leaders. An important development in the leadership domain is the results of Ohio State leadership studies which concluded that there are two distinctive dimensions of leadership: initiating structure emphasising job and task, and consideration

concerning people and interpersonal relationships. This two-factor model provided the basis for later researches on leadership, and the outcome was a famous matrix that provided four leadership styles: Directive, consultative, Participative and Delegative leadership. As the name suggests, directive leaders set goals and identify problems for which they find solutions and decide who does what work. They give specific directions, announce decisions, and closely supervise and evaluate employees performance. Alternatively, in addition to setting goals and identifying problems, consultative leaders develop plans and announce decisions but only implement them after consulting employees, hearing their opinions and ideas, and how they feel about them. Praising employees efforts, continuous direction and evaluation also characterise consultative leaders. Participative leaders involve employees in problem-solving, goal-setting, and decision-making process. They provide support, ideas and resources whenever needed and share responsibility for decision-making with employees. They listen to and guide employees as they make decisions and evaluate their performance with them. On the other hand, delegative leaders identify problems and set goals with employees, make suggestions and decisions, but leave employees to decide their own course of action. They accept employees decisions but monitor their performance, allow them to evaluate their own work, and to take responsibility and credit for their work. Further developments of behavioural theories resulted in many new insights such as the managerial grid which created eighty-one different positions in which leadership style may fall refer to appendix I. Updated studies also found that there is a third style that effective leaders exhibit in addition to task and people dimensions. This is development-oriented behaviour characterized by experimentation, originating new approaches to problems, pushing new ways of doing things, and encouraging change. (Robbins, 2000). Behavioural theories gained acceptance over trait theories because they look at what leaders actually do and suggest leaders are not born but can be made. They also suggest that successful leadership is based on definable, learnable behaviour. Thus behavioural theory can be easily developed via correlating performance outcomes,

whether success or failure, with certain leadership behaviours. Therefore, a key research issue is the effect of the two behavioural dimensions on organisational performance. There are many studies that confirmed a positive relationship between leadership style and organisational performance. In general, these studies suggested that task-oriented behaviour is linked to employee performance while relation-oriented behaviour is linked to employee satisfaction. The argument is that relation-oriented behaviour moderates the relationship between task-oriented behaviour and performance. It is also argued that the two behavioural dimensions have additive effects on performance, and leaders who concerns for both tasks and relations are more effective (Liu & Liu, 2006). Research provided several examples of how leadership style positively impact organisational performance. For example, Sally Jewell, CEO of Recreational Equipment, Inc., is an employee-oriented leader. During her tenure as CEO, Jewell has turned a struggling company into one with record sales. But she credits REIs success to the work of employees, stating that she doesnt believe in hero CEOs. Jewell respects each employees contribution to the company and includes in her leadership people who are very different from herself. Described as a leader high in consideration, she listens to employees ideas and empowers them in performing their jobs (Robbins and Judge, 2009). Despite the popularity of behavioural theories, the evidence is mixed on the relationship between leadership style and organisational performance. In general terms, strong people-focus might result in high job satisfaction, but not always it is the case. Likewise, strong task-focus often leads to high productivity, but it also leads to greater amount of grievances, absenteeism, turnover, and lower job satisfaction. This fact was supported by a study of Schriesheim and Murphy (1976) who suggested that task-focus leadership without personal attention to employees might have negative effects on satisfaction and performance (Liu & Liu, 2006). In essence, behavioural theories dont guarantee leaders success as it lacks factors of followers characteristics and situational context.

An important driver of situational context is organisational culture that heavily influences leadership style but ignored by behavioural theories. For instance, strong people-focus leaders operating within an organisational culture that emphasises aggressiveness, end results, and ignores the importance of people are rated negatively by superiors and cant survive the long-term. Some leaders may display the right behaviour and still fail. For example, former Hewlett-Packard CEO Carly Fiorina seemed to have the right stuff but still was ousted after HP failed to perform up to expectations. Robbins (2000) made an important observation that challenges behavioural theories which is the fact that leaders do not necessarily have a fixed leadership style that cant be changed. Rather it depends on the leaders level of self-monitoring. People differ in their behavioural flexibility as some show considerable ability to adjust their behaviour to external situational factors and are adaptable, while others are consistent in their behaviour regardless of the situation. The limitations of behavioural theories paved the way to the development of situational theories which provided a more comprehensive picture of leadership effectiveness. Situational theories argue that there is no one best way effective across all situations, and there are situational moderating variables that affect leaders behaviours. The main representatives of situational theories are contingency theory (Fiedler, 1967), path-goal theory (House and Mitchell, 1974), and situational theory (Hersey and Blanchard, 1982). Fiedlers contingency model assumes that leaders behaviours are consistent and less flexible, and that leadership effectiveness depends on selecting the right leader for the right situation, or changing the situation to fit the particular leaders style. The factors influencing leaders selection and/or situation modification are: leader-member relations, task structure, and position power. Path-goal theory assumes that leadership styles vary not only with different subordinates but also with the same subordinates in different situations. The nature of the task -whether it is structured or unstructuredand the extent of direction provided by the leader impact followers satisfaction and motivation to achieve the desired goals.

Situational theory emphasise leadership flexibility where leaders should understand employees job and psychological maturity, in addition to task characteristic, in order to adapt and alter their styles accordingly. The outcome of the research on situational theory provided four leadership styles: delegating, participating, selling, and telling. These leadership styles share some common characteristics with the behavioural theories leadership styles identified earlier as they are also contingent to the level of task or people orientation of leaders. The difference is that situational theory added the maturity of employees as a life-cycle component that seems logical. There are many more studies on situational theories that provided the literature with more insights on leadership. For example the Leader Decision Theory by Vroom & Yetton (1973) - provides decision rules for leaders based upon three leadership styles: autocratic, consultative, and participative, and the Leader Substitutes Theory by Kerr (1977) - challenges the impact of leader behaviours on organisational outcomes where leader substitutes or neutralisers may offset or enhance the leaders influence on a group according to subordinate, task and organisational characteristics. Despite the differences in the emphases of their basic arguments, situational theories share some common points. They all contain situational moderating variables and assume leaders ability to assess key follower and situational factors. They also assume that leaders make their behaviours contingent on the followers and the situation. The important achievement of situational theories is their conceptualisation of leadership as an interpersonal process, concerned with followers, task, and situational variables rather than the leaders perspective only. Therefore, from a situational point of view, it is difficult to predict the success of a leader based on traits or behaviours; rather it is a more complex process. There are many examples of leaders who succeeded in specific situations but not survived the long-term. For example, Home Depot hired Robert Nardelli as a CEO when the company believed that he is the right person to improve the companys performance. Under his leadership, Home Depots profits, sales, and number of stores doubled. But shareholders criticized his leadership because he failed to improve the companys stock price. After leaving Home Depot, Nardelli was hired as the right person to revitalize Chrysler based on his turnaround expertise. Similarly, the former CEO of Warnaco, Linda Wachner, gained a lot of admire when she took over the

struggling company and lead it out of the gloom, but she was ousted after she had successfully transformed Warnaco. Predicting the effectiveness of those thoughminded leaders as CEOs illustrates the premise of situational theories that leadership effectiveness is dependent on situational influences (Robbins and Judge, 2009). Situational theories gained a lot of success, but also face some challenging weaknesses that limit their implications. The core of these theories is the situational moderator variables, but these variables are defined ambiguously. It is unclear how subordinates maturity develops through combining commitment with competence as argued by Hersey and Blanchard situational theory. For example, if directive managers give unwilling and unable subordinates high direction and low support, what would cause their motivation to improve? Furthermore, task structure and task complexity have been also defined and measured ambiguously and in different ways. Consequently, generating specific and testable hypotheses are hard to achieve (Liu & Liu, 2006). Situational theories assume leaders ability to recognise followers and situation characteristics but such an assumption is unrealistic. Different leaders in the same situation may conclude distinctively towards followers knowledge, maturity, leaderfollower relationships, and the degree of task structure or role ambiguity experienced by followers. Therefore, leaders reactions towards followers are not necessarily accurate and leaders might exhibit different actions in response to the same situation. Situational theories also treat leadership as a passive process that should fit the followers and the situation (Liu & Liu, 2006). Another important limitation of situational theories, as well as other theories, is they ignore the followers personal disparity and assume leaders use a homogeneous style with all their subordinates, i.e. treat all followers in the same way. Reviewing the theories mentioned in this paper will uncover an astonishing limitation common to all. Non of the theories considered how levels of stress, organisational culture and climate, working conditions, technology, economic conditions, or types of organizational design affect the leadership process (Huges et al, 2009). Furthermore, none has linked leadership to organisational life-cycle, or articulated a leadership lifecycle perspective. However, a study of Bolman and Deal (1984) made an important

contribution in understanding the relationship between management, leadership and organisational culture and structure, for which the paper examines next. Bolman and Deal researched organisational behaviour and provided a comprehensive framework of four perspectives which they named organisational frames. These frames can be thought of as approaches towards a better understanding of organisations and how they behave combining theory with practice. Bolman and Deal focus on both management and leadership. The framework is deeply rooted to organizational culture and structure. The four frames are structural, human resources, political, and symbolic refer to appendix II. The four frames implication on leadership is a distinct .leadership style associated with each frame Structural leadership is associated with defining clear goals, assigning specific roles for subordinates, and coordinating specific activities with specific policies, procedures, and chains of command. This frame can be used to organise and structure groups and teams to get results and fit an organisations environment and technology. Human resources leadership focuses on employees feelings and relationships, and views organisation as a catalyst to meet human needs via facilitation and empowerment. This frame is used to align organizational and human needs to build .positive interpersonal and group dynamics Political leadership emphasise individual and group interests where leaders advocate and negotiate between different interest groups for scarce resources, and build power centres by networking and negotiating compromises. This frame can be used to cope with power and conflict, build suitable coalitions and hone political connections, and deal with both internal and external politics. Symbolic leadership uses symbols, culture, stories and history to influence behaviour and inspire a shared organisational mission. The goal of this frame is to shape a culture that gives a purpose and meaning to employees, provides organisational drama .for internal and external audiences, and build team spirit through ceremony and story

Each frame provides important possibilities for leadership, but each by itself is incomplete. The frames provide aspects for both management and leadership. Using the four frames collectively allow leaders to reframe complexity by looking at it from multiple lenses to gain clarity, balanced view, new options and make a difference. This allows a systemic view to complexities. They reinforce the notion that both management and leadership are important to organisational success. Wise leaders understand their strengths and weaknesses and build on their strengths to expand them by combining multiple frames into a comprehensive approach to leadership in order to provide effective leadership to their organisations in all four modes: structural, human resources, political, and symbolic (Bolman and Deal, 2008). Throughout the paper, an investigation of the relationship between leadership styles and organizational performance was conducted. The purpose of the paper was to critically assess the perception that management and leadership style can impact positively on the performance of an organisation. The paper briefly explained the behavioural approach to leadership and investigated its associated leadership styles impact on organisational performance. The paper analysed situational theories and their implications on the notion of leadership style. Finally, the paper referred to Bolman and Deal four organisational frames in an attempt to articulate a comprehensive approach to effective leadership. The paper found that despite the thought differences, management and leadership are both important to organisational success as Bolman and Deal argue. Reviewing all leadership theories and models, there is no one comprehensive theory without limitations. Different leadership styles have evolved with the evolution of theories but much evidence proves that there is no one best way to leadership style across all situations. Rather it is a complicated process in which variables of leader, follower, situation, communications, technology, culture, structure, etc. interact to provide a challenge to leadership. The paper also found that the four frames of Bolman and Deal offer a practical solution to embrace a systemic view of organisational complexities. They provide ample possibilities for managers and leaders to gain comprehensive insights towards effective leadership by using multiple lenses that amplifies clarity and understanding

of issues. Reframing leadership approach cover the limitations found in leadership theories and close the gabs identified. The outcome of such observations is the reassurance that leadership can impact positively on organisational performance provided that it is practiced in a holistic way giving concern to all variables of leaders, followers, situation, culture, environment, technology, structure, organisational frames, organisational life-cycle, in addition to any other variables that might be identified in future. A closing note, theories of leadership evolved and still evolving challenging the old and promising the future. There are many challenges facing managers and leaders in an extremely competitive environment that requires distinctive qualities in order to survive the game. Flexibility and adaptability are key success factors in todays business environment giving the growing number of cross-culture activities. Future entails many surprises and it is the right time to think of how e-leaders might behave.

References 1. Bernardin, H. J., (2007), Human Resource Management. ISBN: 0071254137. New York: McGraw-Hill. 2. Beyer, J. M., (1999), Taming and promoting charisma to change organizations, Leadership Quarterly, 10(2), 307-330 3. 4. Bolman, L. J. & Deal, T. E., (2008), Reframing Organizations. ISBN: (2010), Managing People in Organisations. ISBN:

5. Bryman, A., (1992), Charisma and Leadership in Organizations. London: SAGE. 6. Hughes, R. L., Ginnett, R. C., Curphy, G. J., (2009), Leadership. ISBN: 9780071263597. New York: McGraw-Hill. 7. Jing, F. F., & Avery, G. C., (2008), Missing Links In Understanding The Relationship Between Leadership And Organizational Performance [online] Available from: http://www.cluteinstituteonlinejournals.com/PDFs/956.pdf. [Accessed: 21st May 2010] 8. Liu, J. & Liu, X., (2006). A Critical Review of Leadership Research Development [online] Available from: www.ccsenet.org/journal/index.php/ijbm/article/view/2873 [Accessed: 21st May 2010] 9. Robbins, S. P., (2000), Managing Today. ISBN: 0130116726. New Jersey: Prentice Hall. 10. Robbins, S. P. & Judge, T. A., (2009), Organizational Behavior. ISBN: 9780132079648. New Jersey: Pearson Education.

Appendixes Managerial grid Bolman and Deal four frames

Bolman and Deal researched organisational behaviour and provided a comprehensive framework of four perspectives which they named organisational frames. The first frame is structural approach to organisations which emphasise the architecture of organisation such as the design of units and subunits, rules and roles, goals and policies. The second frame is human resources approach which focuses on understanding people, their strengths and weaknesses, reason and emotion, desires and fears. The third frame is political approach that views organizations as a competing field for scarce resources, conflicting interests, and battles for power and gain. The forth frame is symbolic approach that emphasis issues of meaning and faith, and at the heart of it are ritual, ceremony, play, story, and culture (Bolman and Deal, 2008). The four frames serves as filters for sorting essence from trivia, maps that aid navigation, and tools for solving problems and getting things done (Bolman and Deal, 2008). Using frames is actually matching situational clues with a well-learned mental framework in order to sense and find out the way from the complexity surrounding everyday life. According to Bolman and Deal (2008), leaders do not act independently; they both influence and are influenced by their constituents. Using the four frames collectively allow leaders to reframe complexity by looking at it from multiple lenses to gain clarity, balanced view, new options and make a difference.

Reflection