Objective 8-2 Leadership
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Identify the various leadership styles and traits, and explain how they affect business.
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Are all managers leaders? Famed management researcher and author Peter Drucker once noted that “management is doing things right; leadership is doing the right things.”12 Both leaders and managers strive to motivate people, but they have different scopes. Typically, managers spend their time making sure specific tasks are done well and completed on time. The leadership of a company, on the other hand, is focused on establishing the long-term vision and strategies a company will need to survive and flourish. Truly great leaders are able to be both managers and leaders: They define a vision, foster agreement across the company, and then implement the strategy.
What styles of leadership exist? Many different leadership styles exist, and leaders often employ different styles in a given situation depending on a complex mix of their own personalities, the types of companies they work in and their corporate cultures, and the employees they manage. Table 8.2 lists four of the most common leadership styles:
Democratic
Autocratic
Affiliative (laissez-faire)
Visionary
Table 8.2
Styles of Leadership
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What are democratic and autocratic leaders like? A democratic leader delegates authority and involves employees in the decision-making process. An autocratic leader makes decisions without consulting others.
Consider Henry Chang, who runs the kitchen of a large restaurant. Henry allows his staff to offer opinions as he develops the menu. He also lets them experiment with different recipes and food presentations and features their work on the main menu when possible. The kitchen staff members love working with Henry because he allows them to be creative and innovative. He also encourages them to cultivate the skills they will need to run their own restaurants someday. However, Henry’s restaurant often attracts important political dignitaries and famous entertainers. Sometimes, the restaurant becomes unexpectedly busy. In these circumstances, Henry doesn’t leave anything to chance and dictates exactly what needs to be done and who should do it. Henry knows he might hurt someone’s feelings in the process, but ultimately, his staff trusts him to make the right decisions to obtain the best results for the restaurant.
For the most part, Henry is a democratic leader because he knows that by involving his employees, they become more invested in the process. The trade-off, Henry recognizes, is that his democratic style of leadership requires more time and advanced planning. When such time is not available, Henry must take complete charge. In those instances, he becomes an autocratic leader. A good leader knows that such commanding leadership can be an effective style in certain circumstances when quick decisions need to be made or when it seems as if the group cannot come to a consensus.
John Lasseter, Chief Creative Officer of Pixar and Walt Disney, has been a visionary leader in the field of animation.
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What are affiliative leaders? Some leaders take a more hands-off approach to management and act more as consultants than participants. Affiliative (or laissez-faire) leaders are more advisory in style, encouraging employees to contribute ideas rather than specifically directing their tasks. This style of leadership is often best used with groups and teams. Affiliative leadership implemented properly can give employees a sense of challenge, commitment, and renewed energy as they are left to handle tasks on their own. As businesses continue to reduce the layers of management, affiliative and democratic styles are becoming the leadership styles of choice. However, it is possible for affiliative leaders to lose too much involvement in the group’s processes. If the group or team members feel that management is virtually absent, the members may choose actions and strategies that are easy and not in line with the goals of a company.
What makes a leader a visionary? Visionary leaders are able to inspire others, believe in their own vision, and move people toward a shared dream. John Lasseter was an animator in Disney’s computer animation department when George Lucas’s company Lucasfilm opened a computer animation division. Intrigued by the advances in technology he saw in use at Lucasfilm, Lasseter left Disney in 1984 to spend a month at Industrial Light and Magic (ILM), a division of Lucasfilm. The division was later purchased by Steve Jobs and became its own company, Pixar. Lasseter is currently Pixar’s chief creative officer. He has assembled a uniquely creative group of employees who have produced animated-film classics such as Toy Story, The Incredibles, and Frozen.
As a visionary leader, Lasseter had to create the special environment giving creative people the freedom to be inventive but also the structure to meet the deadlines required to produce a multimillion-dollar film on schedule. His leadership came into play in the production of Toy Story. At that time, Pixar had never produced anything longer than a short, five-minute film. It wasn’t clear whether the company could actually produce a full-length film. Toy Story was being produced and distributed by Disney (in a partnership with Pixar), which called a meeting to see a segment of the film to check its quality. Lasseter remembers the meeting: “I was pretty much embarrassed by what was on the screen. I had made it. I directed everybody to do this … but it was a story filled with the most unhappy, mean people.” Disney wanted to shut down production and fire the staff. But Lasseter negotiated a two-week reprieve and returned to lead his team of cowriters and animators. “Let’s make the movie we wanted to make,” he told them, and the story took on a gentler, sweeter tone. The team had to work nonstop during the two-week reprieve, with the threat of massive layoffs hanging over their heads. The ending of the story is well known: Toy Story went on to achieve $190 million in domestic box office receipts, and Lasseter earned an Honorary Oscar for the achievement.13
Traits of Leadership
What are the traits of great leaders? As illustrated in Figure 8.3, the best leaders share some common traits:
Great leaders challenge the process by not always accepting conventional beliefs and practices as the only way to accomplish tasks. Leaders are not afraid to alter their methods or plans if the situation calls for change. They continually brainstorm for solutions to problems and more effective ways of reaching goals.
Great leaders inspire a shared vision and motivate people to care about the mission and goals of an organization. Leaders influence in a positive and moral way (rather than in a selfish and destructive way) and garner trust, respect, and commitment to the vision.
Great leaders model the way by serving as a living example of the ideals they are asking their employees to emulate. Leaders have a good handle on their businesses and industries. They are willing to admit mistakes and constantly seek more information to make informed and reasoned decisions. Good leaders base their decisions on facts. They are well organized and detail oriented and through their speech and action choices set the ethical tone for their firms.
Great leaders exhibit emotional intelligence. Most successful leaders possess a high degree of emotional intelligence—the ability to understand both one’s own and others’ emotions. It is a term for a set of skills that includes self-awareness, self-management, social awareness, and relationship management. Leaders can use their awareness of others’ emotional states to inspire people to feel more positive and connect with others by being honest and open about their own ideals, concerns, and goals. In working with these types of leaders, people tend to feel secure and free to explore and share their creative ideas.
Great leaders enable others to act by giving people access to information and empowering them to perform to their fullest potential.14 Leaders need to achieve and have high energy levels. However, successful leaders also delegate authority and responsibility to others so they are successful as well.
Figure 8.3
Traits of Effective Leadership
These traits are essential to effective leadership and are common to most good leaders.
Are there systems for measuring leadership potential? There are many personality tests that can provide information to assess people’s leadership potential and improve their leadership skills. Popular personality assessments include the Big Five, the Cattell 16 PF, and the Thematic Apperception Test. Although no one personality test is recognized as the perfect tool, all of them strive to provide us with a better understanding of the traits that are the foundation of successful leadership.
Leadership and Corporate Culture
How does the leadership style of a firm’s managers affect the work environment? The collection of values, norms, and behavior shared by managers and workers in a firm defines the character, or corporate culture, of an organization. What style of dress is appropriate at work, the work environment itself, rules for getting ahead and being promoted, what is valued, who is valued, and even what kind of work–life balance is expected are all aspects of a firm’s corporate culture. Typically, this information isn’t written down anywhere. Instead, it is communicated via an attitude of “this is how we do things here.” Employees aren’t explicitly told how to behave, but nonetheless they generally conform to the norms of the corporate culture. This is why it is important that your personal goals and style match the corporate culture of the organization you choose to work for.
Masataka Shimizu, formerly the president of the Tokyo Electric Power Company, kneels and bows in apology to the people who had to evacuate the Fukushima region after the company experienced a power plant disaster there following an earthquake and tsunami.
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In a corporation in which the culture is not well defined—or, even worse, one that supports questionable behavior—problems result. This was the case for the natural gas giant Enron. A significant lack of control and poor ethical behavior on the part of the firm’s top managers resulted in an accounting scandal at the firm. The scandal came to light in 2001, and the company later collapsed. On the other hand, when the corporate culture is strong and all employees accept the culture as their own, they are motivated to maintain it and monitor their own behavior.
How does a leader establish corporate culture? Tony Hsieh of Zappos.com, the online shoe giant, is a powerful example of how a leader can establish corporate culture. Hsieh started Zappos at a time when selling a product like shoes online was thought to be impossible. But he was sure top-notch customer service could make selling shoes on the Internet a successful venture. In his book Delivering Happiness: A Path to Profits, Passion and Purpose, he explains how first establishing a corporate culture naturally led to the customer service levels he wanted, the profits he wanted, and the purpose he wanted in his life and the lives of his employees. Hsieh and the two other founders hold the company to a set of core values that evoke a combination of a focus on customer service combined with a sense of fun and adventure.
The corporate culture of Zappos shines through, even in the hiring process. For example, value 10 is “Be Humble.” Candidates are picked up from the airport with a Zappos shuttle bus. Later, the bus driver is interviewed to see how the candidates treated the driver. The interview starts before the candidates realize it! The first requirement of a successful applicant is that they are considered a “culture fit,” a match to the values of the company. Zappos is looking for employees who are willing to bring some personality to the office, not hide behind what they think is expected of them. One week after they have been hired, employees are offered $2,000 to leave Zappos if they don’t think the company is right for them.17
What does all this focus on building a corporate culture do for the company? Zappos has become a company with a “higher purpose of vision that is more than just about money or profits or being No. 1 in the market,” describes Hsieh.18 Along the way, the staff has become renowned for outstanding customer service, being friendly, and even spending hours on the phone with a single caller if needed. That has translated into more than $1 billion in annual sales for Zappos.