2.3. Leadership and Management

Leadership and Management

Key functions of Management

In 1916, a French coal mine director named Henri Fayol wrote a book entitled “Administration Industrielle et Generale,” which set forth five distinct functions of managing that Fayol insisted were applicable in any industry. In the 1950’s, management textbooks began to incorporate some of Fayol’s ideas into their content. The process school of management was born and, today, management courses still use many of Fayol’s ideas to teach management to business students. Fayol originally set forth five management functions, but management book authors have condensed them to four: planning, organizing, leading and controlling. The fifth function was staffing.

Planning

Planning involves deciding where to take a company and selecting steps to get there. It first requires managers to be aware of challenges facing their businesses, and it then it requires managers to forecast future business and economic conditions. They then formulate objectives to reach by certain deadlines and decide on steps to reach them. They re-evaluate their plans as conditions change and make adjustments as necessary. Planning helps allocate resources and reduce waste as well.

Organizing

Managers organize by bringing together physical, human and financial resources to achieve objectives. They identify activities to be accomplished, classify activities, assign activities to groups or individuals, create responsibility and delegate authority. They then coordinate the relationships of responsibility and authority.

Leading

Leading requires managers to motivate employees to achieve business objectives and goals. It requires the use of authority to achieve those ends as well as the ability to communicate effectively. Effective leaders are students of human personalities, motivation and communication. They can influence their personnel to view situations from their perspectives. Leading also involves supervision of employees and their work.

Controlling

Controlling is a function of management that involves measuring achievement against established objectives and goals. It also requires managers to be able to identify sources of deviation from successful accomplishment and to provide a corrective course of action. Managers first establish objectives and goals, then measure achievement of them, identify anything that is keeping the company from achieving them, and provide means of correction if necessary. Controlling does not necessarily involve achieving only monetary goals and objectives. It can also relate to non-tangible goals and objectives like meeting a production quota or reducing customer complaints by a certain amount.

Task 1: We are going to watch the video below on Fayol's 4 functions of management - construct 1 x 5 table under each heading and as we watch the video the presenter will breakdown the sub-functions within each function; copy these down into your tables

Task 2: How would you describe the management style of Stephanie Lo Bo-yue, and Victor Li?

Management versus leadership

Blake and Mouton’s Managerial Grid

The Blake-Mouton Managerial Grid was published in 1964, and it highlights the best leadership style to use, based on your concern for your people and your concern for production/tasks. Blake and Mouton identified two functions:

1. The task function or concern for production.
2. The relationship function or concern for people

With a people-oriented leadership style, you focus on organizing, supporting, and developing your team members. This participatory style encourages good teamwork and creative collaboration.

With task-oriented leadership, you focus on getting the job done. You define the work and the roles required, put structures in place, and plan, organize, and monitor work.

According to this model, the best leadership style to use is one that has both a high concern for people and a high concern for the task – it argues that you should aim for both, rather than trying to offset one against the other. Clearly, this is an important idea!

Task 3: Question on Management Theory

When J was promoted to be the new Sales and Marketing Manager for Company L, after working there in different capacities over the last ten years, it was a popular choice among her co-employees. J was always a good team player and enjoyed helping individuals. However, in the six months since her promotion, although staff morale has never been higher, sales have dropped and targets have not been met.

J is now under pressure from senior management to improve the level of performance of the sales and marketing team which she leads. It has been suggested to J, by a senior manager, that her management style has not been as effective as it could be, and that she needs to change her approach to leadership, paying more attention to the task. J disagrees and claims that it is outside factors that are to blame for the poor performance, rather than her leadership style.

Compare and contrast J's current style of management with the one it is suggested she should adopt. You should support your answer

Tannenbaum and Schmidt’s Leadership Continuum

The leadership continuum is the graphical representation of the trade-off between a manager’s use of authority and the freedom that subordinates experience as the leadership style varies from boss-centred to subordinate-centred.

According to Tannenbaum and Schmidt’s Leadership Continuum, a manager may engage in a more participative leadership style when subordinates:

• Seek independence and freedom of action.
• Are well educated and experienced in performing their jobs
• Seek responsibility in decision-making.
• Expect a participative leadership style
• Understand and are committed to the objectives of the organisation.

If these conditions do not exist the manager may need to adopt a more autocratic/boss-centred leadership style.

The most effective managers are flexible enough to select a leadership style that fits their needs as well as the needs of subordinates and the situation.

Task 4: Disaster at the bakery

The fire at the bakery was a disaster for T & S Provisions Ltd. Eli Tarranto, the chief executive, had been the first one to be called by the fire services officer, at 3 a.m. ‘The whole building is up in flames – we have not been able to save anything,’ he had shouted down the phone. The next day, as Eli waited for his staff to turn up for work outside the burnt-out bakery, he was starting to form a plan. He had already contacted his friend who owned a small competing bakery and the estate agent from whom he had bought the land for the bakery four years ago. The bakery owner agreed to allow Eli to use one of his spare ovens if he sent his own workers to operate it. This would give him about 50% of his normal capacity. The estate agent suggested that Eli rent an empty depot on the other side of town for three months. He thought it would take around two weeks to have this equipped as a temporary bakery.

When workers started to arrive, Eli gave them clear instructions. They were shocked by the state of the building, but they seemed willing to help in this crisis. Six of them were sent to the friend’s bakery to start organising production. Two were sent to the estate agent to pick up keys for the depot and had instructions to start cleaning the premises. The remaining three workers were to help Eli salvage what he could from the office records of the burnt-out building. Before this could start, Eli telephoned all of his major customers – he did not leave it to his sales manager – to explain the extent of the problem and to promise that some production would be back on stream as soon as possible. He then contacted suppliers to inform them of the disaster, to reduce order sizes and give them the new, temporary address for deliveries.

Questions

1 Identify the management roles that Eli seems to have demonstrated in this case. [4]

2 What leadership style did Eli seem to be employing in the case? Explain your answer. [3]

3 Discuss whether this was the appropriate style of management to apply in this situation. [8]

Source: Business and Management for the IB Diploma

Leadership

Leadership involves the influencing of others through the personality or actions of the individual. The definition is therefore people related.

Styles of Leadership

1: Autocratic Style: an autocratic leader is a leader who tells subordinates what to do and expects to be obeyed without question.

2: Participative Style: a participative leader is a leader who involves subordinates in decision-making but may retain the final authority in making decisions.

3: Democratic Style: a democratic leader is a person who tries to do what the majority of subordinates desire.

4: Laissez-faire: a laissez-faire leader is a leader who is uninvolved in the work of the unit i.e. lets group members make all the decisions.

Elon Musk's leadership style - https://www.cnbc.com/2018/05/03/ex-google-exec-kim-scott-top-leadership-traits-of-tesla-ceo-elon-musk.html

5. Situational Leadership

Situational leadership is a leadership style that has been developed and studied by Kenneth Blanchard and Paul Hersey. Situational leadership refers to when the leader or manager of an organization must adjust his style to fit the development level of the followers he is trying to influence. With situational leadership, it is up to the leader to change his style, not the follower to adapt to the leader’s style. In situational leadership, the style may change continually to meet the needs of others in the organization based on the situation.

Hersey and Blanchard’s Situational Leadership Theory

This theory is based on the notion that the notion that the most effective leadership style varies according to the level of readiness of the followers and the demands of the situation.

The key concept of this theory is the level of task-relevant readiness of the followers. Readiness is defined as:

• Desire for achievement
• Willingness and ability to accept responsibility.
• Education or experience and skills relevant to the particular task.

As the task-relevant readiness level of followers increases, the manager should reduce task behaviour and increase relationship behaviour.

Task 5: Note down the positive and negative aspects of these five leadership styles; autocratic, paternalistic, democratic, laissez-faire and situational. You can access this site - https://blog.hubspot.com/marketing/leadership-styles but also do your own inquiry.

Goleman’s Six Leadership Styles

1. Directive

· Gives demands and calls for full compliance

· Style can appear cold and distant but also soften employee fears

· Prepares the ground for something new, impetus for trend reversal and shows problem employees how to reach their limits

· Short-term effective

2. Pace-setting leader

· Paces tasks and gives exciting targets

· Challenges low performers

· Expects maximum performance and initiatives

· Leads to excessive demands

· If necessary, will roll up sleeves and attend to the situation itself

· In the short-term the leader improves the peformance of of a motivated and competent team

· Long-term – can be tiring

3. Democractic leader

· Good when the situation is sub-optimal

· Leader creates harmony in the workplace and involves employees

· If it doesn’t work, there is a lot of listening for very small return

· Works well when there is a demand for acceptance (employee buy-in)

· Good way to get a fast and valuable input from employees

4. Affiliative leader

· Organisation (employees) reach their full potential with the help of others

· The affiliative leader supports harmony and communication within the company

· Extremely suited for stressful phases

· Good for eliminating rifts in the team and improving motivation

· Improves the working atmosphere and establishes basis for better performance

5. Coaching Leader

· Leader gives individual attention to each employee and knows what is best for each employee; helps employees recognize strengths and weaknesses

· Gains employees’ trust and earns their fierce loyalty

· Positive atmosphere is perfect if employees’ needs are to be developed.

6. Visionary leader

· He creates a plan and allows employees to participate

· Motivates, shares knowledge openly and lets employees develop

· Best style if new strategy needs to be pursued – strong emphasis on positive atmosphere

Goleman’s prescriptions on Leadership

· Best leader would use a combination of visionary, affiliative, participatory (democratic) and coaching styles. Should only use the other two when absolutely necessary.

Task 6: Le Menu

Le Menu is a catering company, which was founded in 2003 by brothers Oscar and Pierre Decaux. The business specialises in providing high-quality catering for corporate hospitality and private clients. This is a high-pressure operation. A client company will, for example, hire Le Menu to cater for 200 guests at a race meeting. This will involve setting up a mobile kitchen at the racecourse the day before the event and then producing 200 five- course meals, along with canapés and drinks on the day. Apart from Oscar and Pierre the business has four other permanent staff including a head chef, an assistant chef, an administrative assistant and a driver. When Le Menu is catering a large function, such as the racecourse event, it hires temporary staff from an agency. Some of the temporary staff will have regularly worked for Le Menu, but often there will be new staff as well.

Oscar is a tough, direct manager, who tells workers exactly what he wants and then expects them always to meet his high standards. If not, he is quick to let them know; he has a reputation for dismissing temporary workers part way through an event. Pierre is much calmer, preferring to consult with his staff. While Oscar takes the lead during events, Pierre is more involved with strategy. Pierre will, for example, work with Le Menu’s chefs on the type of food to prepare for an event.

Le Menu currently faces two major problems:

^● It struggles to recruit agency staff because temporary workers do not like Oscar’s management.

^● The company often overspends on food at its catering events.

Questions

1. Explain the types of leadership style Pierre and Oscar most closely represent. [6]

2 Analyse the possible reasons why Le Menu overspends on food. [6]

3 Discuss the advantages and disadvantages to Le Menu of Oscar’s style of leadership. [8]

Source: Business and Management for the IB Diploma

Task 7: Question on Leadership styles and multi-skilled workers

Z Company is a long established and locally based family run engineering business but was recently taken over by GN Holdings. As a traditionally family run business, relationships between managers and factory workers were very strong. Over the years this led to a contented workforce with a strong sense of loyalty towards the family that owned the business. There was a willingness to do whatever was asked of them if it was seen to be in the best interests of the company. In the past this has been tested to the full when, at various times, workers have agreed to take a pay cut, or work longer hours when the survival of the company was threatened. In return workers have always been well cared for, enjoying excellent working conditions and a generous pension on retirement.

The last owner, A, was a particularly charismatic figure who many of the workers knew as a boy growing up during the time when his father was still running the business. As a student he worked alongside many of those he was later to manage in the factory. He had been at the head of the company himself for over ten years and was responsible for introducing a number of key changes in recent years in order to modernise the business. In every case he had the full backing and cooperation of the employees and under his leadership the business began to thrive.

Unfortunately, and quite unexpectedly, A was forced to step down as leader due to ill health, and with no family able to take over the running of the business A had to take the decision to sell it to GN Holdings. The upheaval came at a particularly difficult time for the company which had just won a major export contract that would necessitate a significant increase in output.

GN Holdings wasted no time in installing its own management team in Z Company. However, the approach of the new management has not gone down well since it has adopted what could be termed an autocratic/authoritarian approach. It has told workers that there will be changes in how their work is organised. One significant change will be the introduction of multi-skilled teams, which will mean changes to individual job roles.

Workers are generally feeling unhappy and are also sceptical about the proposed changes whilst production for the export contract is now behind schedule.

(a) Discuss why an autocratic/authoritarian style of leadership adopted by the new management team is not effective in Z Company and what approach could be introduced to improve the situation in Z Company. Your answer should make reference to relevant theory.

(b) Discuss the benefits of team working that GN Holdings could mention in order to gain the support of Z Company workers to its proposal to introduce multi-skilled teams.

How ethical and cultural differences may influence leadership and management styles in an organisation

Leadership and Ethics

People get their cues for ethical behaviours from leaders. Therefore, leadership characteristics and style will influence the level of ethical behaviours employees demonstrate. Being ethical is related to being perceived as a leader, and ethical leaders create a more satisfied workforce. More contemporary approaches such as servant leadership and authentic leadership explicitly recognize the importance of ethics for leadership effectiveness. Some leadership traits seem to be universal. Visionary, team-oriented, and to a lesser extent participative leadership seem to be the preferred styles around the world. However, traits such as how confident leaders should be and whether they should sacrifice themselves for the good of employees and many others are culturally dependent. Even for universal styles such as charismatic and supportive leadership, how leaders achieve charisma and supportiveness seems to be culturally dependent.

Ways Leadership Can Positively Affect Culture

People are inspired by vision. They want to follow a leader who shows concerns and values that are important to them. A positive leader will inspire 100 percent effort from everybody. Here are some signs of a good leader and how the leader affects the culture:

• Visionaries and strategic thinkers: A boss tells you what to do, while a leader inspires you to want to do it. Leaders who lay out a vision that people buy into and a strategy that they understand will create a culture of engagement. People know where the organization is headed, how it will get there and their role in helping achieve the vision.
• Ethics that support values: People look at what you do and not what you say. Values are words, ethics are actions. When leaders demonstrate values through their actions, they lead by example and create an ethical culture.
• Empowerment: There are three requirements for: responsibility, accountability and authority. Leaders, who empower people to make decisions that affect their lives, give them the authority to act and make them take responsibility for consequences create leadership on all levels of the organization. Micromanaging means people are not entrusted to be leaders and very little gets done because all decisions need to be made by one person.

The real measurement of leadership is the culture it creates. In future articles, we will explore how to build each of these points to create a positive and powerful culture.

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