CH.9: Leadership and Decision Making

Culture

• a broad concept that encompasses both international differences and diversity-based differences

Leader-Member Exchange (LMX) Theory

• approach to leadership that stresses the importance of variable relationships between supervisors and each of their subordinates • each superior-subordinate pair represents a "vertical dyad" • focuses on the differential relationship leaders establish with different subordinates • supervisors establish a special relationship with a small number of trusted subordinates aka the in-group • in-group usually receives special duties requiring responsibility and autonomy + may receive special privileges • subordinates who are not part of the group are called the out-group and receive less of the supervisor's time and attention

Leadership Neutralizer

• factors that may render leader behaviors ineffective • group factors • elements of the job itself • organizational factors

Leadership Characteristics

• manager's value system • confidence in subordinates • personal inclinations • feelings of security • actual behavior

Implementing the Chosen Alternative

• managers should anticipate potential resistance at various stages of the unknown • even when alternatives have been evaluated as precisely as possible, unanticipated consequences are still likely

Decision-Making Process

• recognizing and defining the nature of a decision situation, identifying alternatives, choosing the "best" alternative, and putting it into practice

Gender and Leadership

• understanding the differences and dynamics in the approaches of women and men to leadership • women are more democratic in making decisions • men are more autocratic in making decisions

Types of Decisions

1. programmed 2. nonprogrammed

Charisma

• a form of interpersonal attraction that inspires support and acceptance

Coalition

• an informal alliance of individuals or groups formed to achieve a common goal • a common goal is often a preferred decision alternative • when these coalitions enter the political arena and attempt to persuade lawmakers to make decisions favorable to their interests, they are called lobbyists

Intuition

• an innate belief about something, often without conscious consideration • intuition is based on years of experience and practice in making decisions in similar situations • managers, especially inexperienced ones, shouldn't rely too heavily on intuition

Decision Tree Approach

• approach to leadership that provides decision rules for deciding how much participation to allow • assumes that the same leader may display different leadership styles • concerns itself with subordinate participation in decision-making • assumes that the degree to which subordinates should participate depends on the characteristics of the situation • after evaluating a variety of problem attributes, the leader determines an appropriate decision style that specifies the amount of subordinate participation

Situational Approach to Leadership

• appropriate behavior varies from one situation to another • attempts to identify various forms of leader behavior that results in contingent outcomes and consequences

Elements of Charismatic Leadership

• charismatic leader envision likely future trends and patterns, set high expectations for themselves and for others, and behave in ways that meet or exceed those expectations • charismatic leaders energize others by demonstrating personal excitement, personal confidence, and consistent patters of success • charismatic leaders enable others by supporting them, empathizing with them, and expressing confidence in them

Decision Making

• choosing one alternatives from among several options • effective decision-making requires that the decision maker understand the situation driving the decision • managers make decisions about both problems and opportunities

Transactional Leadership

• comparable to management, it involves routine, regimented activities

Escalation of Commitment

• condition in which a decision maker becomes so committed to a course of action that he/she stays with it even when it appears to have been wrong

Charismatic Leaders

• confidence in their belief • strong need to influence people • communicate high expectations • express confidence in their followers

Participative Leader Behavior

• consults with subordinates • solicits suggestions • allows participation in decision making

Programmed Decision

• decision that is relatively structured or recurs with some frequency (or both) • decisions regarding basic operating systems and procedures and standard organizational transactions can be programmed

Nonprogrammed Decisions

• decision that is relatively unstructured and that occurs with low frequency • factors: - intuition - experience • decisions made by top managers involving strategy and organizational design are nonprogrammed • decisions regarding new facilities, new products, labor contracts, and legal issues are nonprogrammed

Cross-Cultural Leadership

• effects of an individual's culture on his or her approach to leadership when functioning in another culture • plays a growing role in organizations as their workforces become more diverse • collectivism >> group before individual (Japan) • individualism >> individual before group (U.S)

Selecting the Best Alternative

• even though many situations do not lend themselves to objective, mathematical analysis, managers and leaders can develop subjective estimates and weights for choosing an alternative • finding multiple acceptable alternatives may be possible, selecting just one alternative and rejecting all others may not be necessary

Directive Leader Behavior

• expectations • guidance • schedule work

Risk Prosperity

• extent to which a decision maker is willing to gamble when making a decision • cautious managers adhere to the rational model and are conservative in what they do >> they are less likely to make mistakes and infrequently make decisions that lead to big losses • aggressive decision makers and risk takers rely on intuition, reach decisions quickly, and risk big investments >> they are more likely to achieve big success but are also more likely to incur great losses

Behavioral Approach to Leadership

• focused on determining what behaviors are employed by leaders • 2 behaviors - task focused - employee focused • leaders should have a healthy dose of both to increase performance and job satisfaction • experts realized that managers could be trained in these behaviors

Trait Approach to Leadership

• focused on identifying the essential traits that distinguished leaders • intelligence, dominance, self-confidence, energy, activity, knowledge about the job • the list of potential leadership traits quickly became so long that it lose any practical value • the trait approach resurfaces recently but was more focused on a limited set of traits: - emotional and mental intelligence - drive and motivation - honesty and integrity - self-confidence - knowledge - charisma

Supportive Leader Behavior

• friendly • approachable • showing concern • equality

Leaders as Coaches

• from directive overseer to mentor • coaching perspective: - select & train team members - provide general direction - help team get information and resources • mentors: - help less experienced employees learn the ropes - prepare employees to advance within the organization - resolve conflicts and mediate disputes • leader keeps a low profile and lets the group get the work done with little to no direct oversight

Leadership Substitutes

• individual, task, and organizational characteristics that tend to outweigh the need for a leader to initiate or direct employee performance • if certain factors are present, the employee will perform his/her job capably, without the direction of a leader

Task-Focused Leader Behavior

• leader behavior focusing on how tasks should be performed in order to meet certain goals and to achieve certain performance standards

Employee-Focused Leader Behavior

• leader behavior focusing on satisfaction, motivation, and well-being of employees

Ethical Leadership

• leader behaviors that reflect high ethical standards • maintain high ethical standards • holds others in the organization to the same standards

Strategic Leadership

• leader's ability to understand the complexities of both the organization and its environment and to lead change in the organization so as to enhance its competitiveness • to be an effective strategic leader: - managers need to have a thorough & complete understanding of the organization & its external environment - managers need to recognize the firm's current strategic advantages and shortcomings

Virtual Leadership

• leadership in settings where leaders and followers interact electronically rather than in face-to-face settings • leaders should work harder at creating and maintaining relationships with employees

5 Types of Power

• legitimate * • reward * • coercive * • referent • expertise * relatively concrete and grounded in objective facets of organizational life

Following Up and Evaluating the Results

• make sure that the chosen alternative served its purpose • if an alternative is not working: - another previously defined alternative could be adopted - the situation might not have been defined correctly to begin with - the original alternative is appropriate but either has not yet had the time to work or should be implemented differently

Distinctions Between Management and Leadership

• management: planning, organizing, leading, controlling • leadership: agenda setting, aligning, inspiring, monitoring

Evaluating Alternatives

• managers must thoroughly evaluate all the alternatives to increase the chances that the alternative finally chosen will be successful • some alternatives may not be feasible because of: - legal of financial barriers - limited human, material, and information resources

Subordinated Characteristics

• need for independence • readiness to assume responsibility • tolerance for ambiguity • interest in the problem • understanding of goals • knowledge • experience • expectations

Identifying Alternatives

• obvious, standard alternatives • creative, innovative alternatives • the more important the decision, the more attention directed at alternatives • alternative constraints: - legal restrictions - moral and ethical norms - constraints imposed by authority - available technology - economic considerations - unofficial social norms

Referent Power

• power based on identification, imitation, loyalty, or charisma • abstract • followers may react favorably because they identify in some way with a leader who may be like them in personality, background, or attitude • followers might choose to imitate a leader with referent power • referent power may take the form of charisma, an intangible attribute of a leader that inspired loyalty • a manager might have referent power but it is more likely associated with leadership

Expert Power

• power derived from information or expertise • the more important the information and the fewer the people who have access to it, the greater the degree of expert power possessed by the individual • in general, people who are both leaders and managers tend to have a large amount of expert power

Legitimate Power

• power granted through the organizational hierarchy • all managers have legitimate power of their subordinates • authority • some subordinates only follow orders that are strictly within their their job description, otherwise, they refuse or do a poor job >> managers of such employees exercise authority but not leadership

Rational Decision Making

• recognizing and defining the decision situation • identifying alternatives • evaluating alternatives • selecting the best alternative • implementing the chosen alternative • following up and evaluating the results

Recognizing and Defining the Decision Situation

• recognizing that a decision is necessary; some stimulus must initiate the process • to make a decision, the problem must be precisely defined

Achievement-Oriented Leader Behavior

• sets challenging goals • expect high levels of performance • confidence in subordinates' abilities

Power

• the ability to affect the behaviors of others

Coercive Power

• the power to force compliance by means of psychological, emotional, or physical threat • today, coercion is limited to: - verbal and written reprimands - disciplinary layoffs and fines - demotion and termination • some managers use verbal abuse, humiliation, and psychological coercion to manipulate subordinates >> not appropriate managerial behavior • the more punitive elements under a manager's control and the more important they are to subordinates >> more coercive power a manager possesses • the more a manager uses coercive power, the more likely he is to provoke resentment and hostility >> less likely to be seen as a leader

Reward Power

• the power to give or withhold rewards • rewards include: - salary increases and bonuses - promotion recommendations - praise and recognition - interesting job assignments • the greater the number of rewards a manager controls and the more important the rewards are to subordinates, the greater the manager's reward power • if subordinates only value formal organizational rewards provided by the manager >> manager is not a leader • if subordinates appreciate the manager's informal rewards (praise, gratitude) >> manager is exercising leadership

Leadership

• the processes and behaviors used by someone such as a manager to motivate, inspire, and influence the behaviors of others

Transformational Leadership

• the set of abilities that allows a leader to recognize the need for change, to create a vision to guid that change, and to execute the change effectively • initiate ad manage major change • focuses on leading for change rather than leading during a period of stability

Path-Goal Theory

• theory of leadership that is a direct extension of the expectancy theory of motivation • suggests that the primary function of a leader is to make valued/desired rewards available and to clarify the kinds of behavior that will lead to the reward • 4 behaviors: directive supportive, participative, achievement-oriented

Charismatic Leadership

• type of influence based on the leader's personal charisma

Situational Characteristics that Affect Decision Making

• type of organization • group effectiveness • problem itself • time pressures

State of Risk

• when the availability of each alternative and its potential payoffs and costs are all associated with probability estimates • when making decisions under a state of risk, managers must reasonably estimate the probabilities associated with each alternative • decisions are made on the basis of past experience, relevant information, the advice of others, and his or her own judgement

State of Uncertainty

• when the decision maker does not know all the alternatives, the risks associated with each, or the likely consequences of each alternative • stems from the complexity and dynamism of contemporary organizations and their environments • to make effective decisions in these circumstances, managers must acquire as much relevant info as possible and approach the situation from a logical and rational perspective • intuition, judgement, and experience play major roles in decision-making processes under conditions of uncertainty

State of Certainty

• when the decision maker know with reasonable certainty what the alternatives are and what conditions are associated with each alternative • the complexity and turbulence of contemporary business world makes situations if true certainty rare