The entity, or trait, theory of leadership is sometimes referred to as the “Great Man theory of leadership” and argues that leadership is largely an inborn characteristic of a person and therefore is largely inflexible or at least not something that can be easily developed, learned, or acquired.12 In this sense, a person’s capability for leadership is regarded to be fixed. Strict proponents of the entity theory of leadership claim people are either born leaders or born followers: They either have it or don’t. If they do have it, they dictate, command, and control. If they don’t have it, they follow those who do have it. Leadership is largely viewed as unidirectional—from the top down, with leaders imparting truth, wisdom, and directives to those beneath them. Further, trait theories of leadership tend to give leaders too much credit for corporate success and too much blame for failures when, in fact, the leadership skills of the CEO are much less predictive of which companies actually succeed.13

There is overwhelming evidence that environmental and situational factors strongly affect leadership. In fact, a great deal of evidence indicates that leadership has more to do with the environment than one’s own personality.

As we noted in Chapter 4, the task-oriented leader focuses on accomplishing the objectives of the team; the relationship-oriented leader focuses on the process of getting there. A longitudinal survey of national service teams revealed that task-focused leaders effectively minimized team conflict arising from diversity; in contrast, person-focused leaders tended to exacerbate diversity-based conflict.39 Person-focused leaders allow members of their team more freedom in their work, permit team members to use their own judgment in solving problems, and grant members authority. Conversely, task-oriented leaders typically act as the spokesperson of their group, push for more work and higher production, and determine what should be done and how it should be accomplished.40

The transactional versus transformational paradigm views leadership as either a matter of contingent reinforcement of followers or the moving of followers beyond their self-interests for the good of the team, organization, or society.41 Transformational leadership is developmental and usually begins with a transactional approach. At a basic level, leaders and their teams are in an exchange relationship that involves negotiation to establish outcomes and rewards.42 A psychological contract is a person’s belief in mutual obligations between that person and another party, such as an employer or leader.43

In contrast, transactional leadership depends on the leader’s power to reinforce subordinates (team members) for their successful completion of the bargain (task). However, this type of leadership sets up a competitive relationship: “If you limit yourself to transactional leadership of a follower with rewards of carrots for compliance, or punishments with a stick for failure to comply with agreed-on work to be done by the follower, the follower will continue to feel like a jackass.”44

Transformational leaders, in contrast, motivate their teams to work toward goals that go beyond immediate self-interest. Transformational leaders motivate their teams to do more than they originally expected to do as they strive for higher-order outcomes.45 In an investigation of the performance of 118 R&D project teams from five companies, transformational leadership predicted technical quality, schedule performance, and cost performance 1 year later and profitability and speed-to-market 5 years later.46 Because members of teams are interested in intrinsic aspects of their work, they expect their leader to be as well. Moreover, this affects performance. People who are taught skills by an extrinsically motivated leader are less interested in learning and enjoy what they are doing less than people taught by an intrinsically motivated leader, even when the lessons and the learning are identical.47 Perhaps it is for this reason that leaders who are regarded to be most like team members are evaluated to be more effective than leaders who are seen as not very similar to their teams.48 Transformational CEOs are more likely to have goal congruence within their team, which is related to better organizational performance.49

Transformational leaders rely on three behaviors—charisma, intellectual stimulation, and individualized consideration—to produce change.50 Leaders who demonstrate vision develop employees that are adaptive and proactive in response to change.51 Another characteristic of the transformational leader is self-sacrifice. Leaders who self-sacrifice (put aside their own self-interest in the service of the larger organization) generate higher productivity, higher effectiveness, and are seen as more group oriented.52 In the early 1960s, when Warren Buffett was recruiting backers for one of his first investment partnerships, he deposited more than 90 percent of his personal savings into the fund. When Hewlett-Packard hit a downturn in 1970, cofounder Bill Hewlett took the same 10 percent pay cut as the rest of his employees. During the early years at Charles Schwab, whenever the customer-service phone lines got really busy, founder Chuck Schwab answered calls along with everyone else at the company who held a broker’s license.53 Leaders who engage in organizational citizenship behaviors (OCBs) model effective leadership and promote their teams to also display OCBs.54

Transformational leaders have more satisfied subordinates.55 Transformational leaders also predict the collective personality of the team, and in turn, this affects team performance.56 Specifically, transformational leaders create teams that are characterized by collective openness to experience, agreeableness, extraversion, and greater conscientiousness. Transformational leadership has a positive impact on team performance because teams trust their leaders.57

Transformational leadership can have a dark side, such as when a charismatic leader like Jim Jones motivates people to do something that is lethal.58 (For an example of the “dark side” of transformational leadership, see Exhibit 11-3.) Leaders who exhibit antinormative behaviors are judged more positively and given more credit relative to antinormative team members, ex-leaders, and established leaders.59 Moreover, under some conditions, charismatic leaders promote disenchantment among team members. The hypocrisy attribution dynamic refers to the tendency for team members to draw sinister conclusions about a leader’s behavior.60 This can happen when employees are prompted to engage in sense making in strong values-driven organizations.

Another view of leadership focuses on a continuum of behavior ranging from entirely autocratic to purely democratic.61 Also known as vertical leadership (emanating from the top down), this type of leadership stems from an appointed or formal leader of a team, whereas shared leadership is a group process in which leadership is distributed among, and stems from, team members. Autocratic leadership is displayed by leaders who seek sole possession of authority, power, and control, whereas democratic leadership is displayed by leaders who share authority, power, and control with their team. In one investigation, the effectiveness of 71 change management teams in companies was examined as a function of vertical versus shared leadership.62 Team effectiveness was measured 6 months after leadership was assessed and was also measured from the viewpoints of

managers, internal customers, and team members. Shared leadership significantly predicted team effectiveness. (For a summary of several different leadership styles and their representative behaviors, see Exhibit 11-4.) A study of 59 consulting teams revealed that shared leadership emanates from shared purpose, social support, voice, and external coaching. Moreover, shared leadership predicts team performance, as rated by clients.63

Leaders, like anyone, experience moods. And over time, moods can belie a chronic style of leadership. Moods manifest themselves through a leader’s facial, vocal, and postural cues, and team members can accurately ascertain leaders’ moods on the basis of nonverbal cues. Leaders’ moods influence the collective mood of the team and the performance of the team. According to the mood contagion model , leaders transmit their own moods to team members, just as a person with a cold might infect others.64 When leaders are in a positive mood, in comparison to a negative mood, team members experience more positive moods, and groups as a whole are characterized by a more positive affective tone. Moreover, groups with leaders in a positive mood show more coordination and expend less effort than those in a negative mood. For example, the previous chairman and CEO of General Electric, Jack Welch, said, “An upbeat manager with a positive outlook somehow ends up running a team or organization filled with…well, upbeat people with positive outlooks. A sourpuss somehow ends up with an unhappy tribe all his own. Unhappy tribes have a tough time winning. Work can be hard. But your job as leader is to fight the gravitational pull of negativism. That doesn’t mean you sugarcoat the challenges. It does mean you display an energizing, can-do attitude about overcoming them.”65

Like other people, leaders can get angry. What is the effect of leader anger on teamwork? It depends on the team’s epistemic motivation, or the team’s desire to develop a thorough understanding of a situation. Teams with higher epistemic motivation (i.e., a desire to understand) perform better when their leaders display anger, but teams with lower epistemic motivation perform better when the leaders express happiness.66 Leader–team perceptual distance is the difference between a leader and a team and how they perceive things.67 The more disconnect between what the leader sees and what the team sees, the worse the team performance. And, this effect is stronger when the team’s perceptions are more positive than that of the leader.68

People who are dependent on leaders not only tend to evaluate and judge them quite often but also have particular expectations of leaders, or implicit leadership theories (ILTs), about whether a leader is worthy of influence (or LWI).70 ILTs are preconceived ideas that specify what teams expect of their leaders.71 Consequently, if a leader is judged to be an LWI, teams are more willing to be influenced by that leader. Thus, the degree of LWI respect accorded by teams in large part determines the effectiveness of the leader. Given that ILTs drive LWI, it behooves leaders to understand the ILTs that teams hold. The behaviors that people expect of leaders (the ILTs that drive LWI) are somewhat different for appointed versus elected leaders.72 For appointed leaders, being sympathetic (i.e., humorous, caring, interested, truthful, and open to ideas) and taking charge (i.e., responsible, active, determined, influential, aggressive, and in command) are key. For elected leaders, being well dressed (i.e., clean cut), kind, and authoritative are most important. (For a specific list of the characteristics, see Exhibit 11-5.)

Teams’ preference for leaders can depend on a variety of factors other than leader ability. For example, the perceived status of the leader affects the team’s preferences regarding leadership style. Low-status leaders are rated as more effective by their teams when they use a directive style, whereas high-status leaders are viewed as more effective when they use a participative style.73 Moreover, teams whose leaders are viewed more favorably perform better on a complex group task.

Environmental conditions, such as change, uncertainty, and risk affect how people perceive leaders. For example, under conditions of uncertainty, people with high and stable self-esteem show a stronger preference for democratic leadership; however, people with low and unstable self-esteem prefer autocratic leadership.74 Indeed, in uncertain times, groups prefer and support nonprototypical leaders more than prototypical leaders.75

Paradoxically, leaders who express creative ideas may be viewed as having less leadership potential. For example, creative idea expression is negativity related to perceptions of leadership potential.76 Only when people are told to focus on a “charismatic” prototype leader does creative idea generation not hurt judgments of leaders.

One of the most sobering findings about how leaders are evaluated is with regard to gender. Female leaders are judged more harshly than male leaders.77 For example,

women are regarded to be less competent than men, and in group interaction, people give men more opportunities to speak than women.78 People respond more favorably to men who self-promote (boast) than to men who are modest; however, the opposite is true for women.79 In fact, female leaders are devalued when they act in a masculine manner,80 and overt displays of competence and confidence by women can result in rejection, especially from men.81 In a simulated job interview and hiring task, both men and women prefer to hire a man over a woman if the two are equally qualified,82 and men prefer to hire a man even when he is clearly less qualified.83 Even more disconcerting is the credit that people accord females. When people are asked to evaluate male and female members’ contributions to a joint outcome, unless they are given feedback about people’s actual contributions, they devalue the work of females and rate them as less competent, less influential, and less likely to have played a leadership role, even when the contributions were identical for men and women.84 However, when groups are under threat and desire change, they favor female leaders.85

Some of the key determinants that lead to close, trusting relationships between leaders and their teams are the subordinates’ similarity to the leader, their demonstrated competence, and extraversion. For example, early on in a group, team member extraversion and leader agreeableness predict relationship quality, but as the relationship develops, performance is the key predictor.87 Leaders who are treated in a close, connected fashion by their own superiors often develop close relationships with their own subordinates. And, the closer employers believe their own leader’s profile to be to their view of leadership, the better the quality of their LMX.88 That is, the more leaders embody the leadership behaviors that their employees and teams expect of them, the better their relationships. Inclusive leaders reduce turnover in groups, especially diverse groups.89 Leaders who invest in their members and empower them instill better individual performance and better team performance.90 In an investigation of organizations in the People’s Republic of China, the quality of LMX was a key link between transformational leadership and task performance as well as organizational citizenship behaviors.91

Some evidence indicates that LMX increases team member commitment. For example, a large-scale study of multiple organizations revealed that LMX and organizational commitment increases for those employees who identified their supervisor with the organization.92 Another field study of 330 employees in 45 hospitals revealed that high-LMX employees were less likely to leave their organization prior to a succession event, but of the few that experienced a succession event, it was the high-LMX employees who were more likely to leave.93

LMX differentiation is also associated with improved employee and team performance. For example, ethical leadership is related to greater LMX and improved employee performance.94 When leaders and followers have proactive personalities, this enhances LMX and leads to increased job satisfaction, commitment, and better job performance.95 A field study of 184 bank employees working under 42 branch managers found that leaders who had had higher-quality relationships with their bosses and who were more central in their peer networks formed higher-quality relationships with their subordinates.96 Additionally, LMX also drove subordinates’ job satisfaction and turnover intensions. Specifically, those with higher LMX with their superiors had higher job satisfaction, had more positive perceptions of their work environment, and showed a greater willingness to continue to work for the business. Conversely, leaders with lower-quality LMX relationships with their superiors and who were less central in their peer networks perceived they lacked influence and had less access to opportunities and limited resources. Moreover, subordinates with lower LMX had lower job satisfaction, more negative perceptions of their workplace and were more likely to look for other work opportunities.

LMX and the differential treatment it accords are not without its disadvantages. Differential treatment may create an “in-group” among those with whom the leader invests. Inner-circle members (i.e., those who are close to the leader) feel safer in their group and participate more in group discussions; leaders recognize them and give them larger bonuses.97 Unfortunately, leaders call upon inner-circle members more even when they do not possess the expert knowledge. Consequently, team members may grow resentful and view the leader and that subordinate as a subteam or coalition, particularly when other team members do not have a close, trusting relationship with the leader. When leaders treat a certain subordinate in a more distant, impersonal fashion, that subordinate may not be as involved in her task and not perform as well. Differentiated leadership (leaders treating individuals in a group differently) diminish their group’s effectiveness by lowering members’ self-efficacy and group efficacy; group-focused leadership facilitates group identification and collective efficacy, which increases effectiveness.98

When the organizational work climate is low, LMX may have particularly detrimental effects. A study of 276 employees revealed that LMX differentiation was related to more negative work attitudes and coworker relations as well as higher levels of withdrawal behaviors in a low-work climate.99

Power is the capacity to influence; influence is the actual use of power by specific behaviors.103 French and Raven identified six key sources of power that people use in organizations and teams: expert, legitimate, incentive, coercive, informational, and referent power (see Exhibit 11-6, which also includes network power as a key source of

influence in organizations).104 In one investigation, one member of a group was given power over others based on either higher expertise (expert power) or position (legitimate power). They then used either harsh or soft tactics with their team. Power holders who influence using harsh tactics have greater self-evaluations (feelings of superiority), but do not appreciate their team.105 Leaders who use expert power are more liked, more influential, and engender more confidence when they express themselves in a manner congruent with their status, such as using powerful speech.106

In addition to the source of power, a key question concerns how much power to use. Wageman and Mannix identify three patterns of power use by team members:107

• Overuse: The team member uses his or her power (e.g., special status) to exert influence over most aspects of group functioning and to dominate the team. For example, when leaders make an explicit command, team members are more likely to make a deviant decision.108 Similarly, the powerful team member who uses his or her special status to exert influence hinders the group’s effectiveness.109

• Abdication: The team member with power exerts no special influence over the task. This pattern is also dysfunctional, and such teams tend toward mediocre to poor performance because they fail to use the resources that the powerful team member has access to.

• Managing the resource: The powerful team member influences other members only in the specific domain of his or her special resources. This is the most effective use of power. For example, in an investigation of 16 team operating rooms learning to use a new technology for cardiac surgery, a key question is whether team leaders could work together under pressure (i.e., real life and death situations) and successfully use new technology.110 The most effective leaders communicated a motivating rationale and minimized their status differences. This allowed other team members to speak up.

It would seem that leaders would be hypervigilant about their use of power, seeking constant feedback as to the effectiveness of their behaviors. However, the opposite is true. People in positions of power are less motivated to scan their environment or process information. For example, people with more power discount advice from others because they have elevated confidence in their own judgments. Moreover, failure to heed advice results in less accurate judgments.111 People with power are less dependent on others and therefore, less motivated to pay attention to the actions of others. In contrast, people who are powerless (i.e., resource dependent on others) have an incentive to carefully attend to those who are in power. For example, graduate students (who are dependent on professors to obtain their degree) spend an inordinate amount of time recalling and processing behaviors and activities engaged in by faculty members.112 Similarly, those who have more power show more variability in their behaviors—in short, they engage in a broader array of behaviors.113

Power also makes people see the world with “rose-colored glasses”—that is, it makes people focus on more positive, rewarding information and less on negative, threatening information. Powerful people make more optimistic judgments regarding the risks they face in their lives (e.g., health risks) compared with powerless individuals.114 When powerful people interact with others, they are more likely to focus on how much others like them and less likely to focus on others’ negative feelings toward them.115 This tendency to focus on rewards might help explain why powerful people sometimes choose risky strategies in the pursuit of their goals. When contemplating a potential high-risk merger, for example, powerful organizational leaders might focus more on the potential payoffs of the merger and less on the inherent dangers. Powerful leaders may also withhold effort on tasks if they perceive the task as unworthy of leaders.116

Delegation is the handing over of the responsibility and authority required to accomplish a task without relinquishing final accountability. The spirit of task delegation is multifold: to invite others to have a share in the performance of work; to have leaders do other, more important things; and to mentor. This not only serves the interests of the employees, who presumably want to have a greater hand in the work and operations of the company, but also serves the interests of the leader and the organization in creating more efficient uses of time. Many people have a somewhat old-fashioned view of leadership that holds that a leader is responsible not only for creating and defining the vision of the organization but also for handling all of the details, managing all of the personal relationships, and determining the process. Many managers mistakenly think that every task requires their constant attention from beginning to end.

If it is to be effective, leadership requires delegation, and leaders are still accountable for their delegates, as well as for themselves. There are right and wrong ways to delegate that depend on things such as team members’ skill levels and the nature of the work. Exhibit 11-9 outlines guidelines for successful delegation.

The inability to delegate effectively creates two negative consequences for the organization: overloaded executives and underused subordinates. Each of these conditions is associated with work-related stress and burnout—not to mention many forms of underperformance. By giving meaningful responsibility to subordinates, managers give them the opportunity to perform their jobs well, demonstrate ability, experience success, be visible within the organization, develop skills, and experience new challenges.

The idea behind parallel suggestion involvement is to invite employees and team members to make suggestions about organizational procedures and processes. Thus, employees are given opportunities and are actively encouraged to recommend tactics for increasing sales, minimizing production costs, increasing customer satisfaction, and so on. The classic example of parallel suggestion involvement is the suggestion box, which is not even limited to employees—customers can be asked to make recommendations as well. Quality circles also invite workers to share ideas about improving production and products. The parallel suggestion strategy is cost effective; providing a venue to solicit suggestions can be relatively inexpensive, but it can potentially have huge payoffs in terms of improving organizational functioning. Parallel suggestion involvement can significantly reduce turnover and absenteeism because employees who feel that their interests, concerns, and ideas are valued are more motivated. An examination of 23 neonatal intensive care units showed that the extent to which team leaders are inclusive (i.e., minimize status differences and allow members to collaborate in process improvement), teams are more engaged in their work and learn from one another to

improve their performance.121 Pizza chain Lou Malnati’s engages in parallel suggestion in their monthly group meetings for managers. Each meeting is led by a peer, and managers have an open forum to voice any concerns, often regarding topics that would otherwise be unheard and cause tension.122

When using parallel suggestion involvement, it is important to differentially and accurately weigh staff input. Simply stated, team members differ in their ability to contribute to solving a problem. Distributed expertise refers to the fact that team members differ in the amount of knowledge and information that each bring to the problem.123 Until leaders have had an opportunity to gather information they feel is relevant to their determination of each team member’s ability to contribute, they may weigh each person’s input equally. Leaders have difficulty differentially weighting their staff as much as they should and tend to use an equal-weighting strategy.124 Once leaders have had experience with their team, some may have greater influence on the basis of their competence, ability, and willingness to accept extra-role responsibilities.125 In one investigation, 84 leaders of four-person decision-making teams made 63 decisions. Both experience and providing leaders with accurate information about particular members led to greater differentiation and better accuracy in differentiation.126

Job involvement entails restructuring the tasks performed by employees to make them more rewarding, enriching, and, in the case of teams, more autonomous. When people are challenged with interesting tasks, they perform more effectively and creatively. There are a variety of ways by which this may be achieved, such as providing employees with feedback from customers, restructuring tasks so that employees complete a whole and meaningful piece of work, and training employees with new skills and knowledge so that their job scope increases. With job involvement, employees at the lowest levels get new information, power, and skills, and they may be rewarded differently. For example, people may be rewarded for team effort and group-level productivity. Unlike parallel suggestion involvement, job involvement affects the daily work activities of employees. For this reason, job involvement is considerably more costly than parallel suggestion involvement because of the high start-up costs of reconfiguring job descriptions, training, and, in many cases, the physical reconfiguration of the workplace. For example, when Alcoa, Inc., wanted their employees to be more engaged, they surveyed their workforce and then launched a plan in which employees’ personal objectives were realized in new job training. Employee engagement increased 20 percent over 3 years.127

Another example of job involvement occurred after Starbucks CEO Howard Shultz received e-mails from customers about the American economy and subsequently empowered a team to generate ideas and engage change. Within 30 days the team created a prototype for a program that would allow customers to donate $5 or up for wristbands (manufactured in the United States) whose proceeds would in turn fund job-creation programs in hard-hit communities. The activity created a new job description for Starbucks employees.128

The fact that leaders want to move in the direction of participation and empowerment, however, does not mean that this can be done by merely changing their own behavior and style independent of other organizational forces. Leadership style and strategy must be integrated into the organizational context.

Consider two types of organizations: bureaucratic and commitment organizations. Bureaucratic organizations are the traditional, hierarchical style of leadership; information, rewards, knowledge, and power are concentrated at the top of the organization. In the classic bureaucratic organization, teams do not exist or at least are not acknowledged. Furthermore, when they do emerge, they are often ignored, suppressed, contained, or neglected.129 Commitment organizations are at the opposite extreme. Teams are encouraged to form, power is not hierarchical, and the organization has a deliberately flat structure.

Organizational involvement, or the commitment approach, restructures the organization so that employees at the lowest level will have a sense of involvement (commitment) not just in how they do their own jobs (as in the job involvement approach) but also in the performance of the entire organization. Organizational involvement strategies invite employees to contribute to higher-order strategy decisions.+ The McGregor Method and Theory Y are examples of high-involvement strategies in which employees make decisions about work activities, as well as organizational direction.130 Organizational involvement is based on the belief that if employees are going to care about the performance of their organization, they need to know about it, be able to influence it, be rewarded for it, and have the knowledge and skills to contribute to it.

A key difference between parallel suggestion involvement and organizational involvement is that organizational involvement allows employees not only to make recommendations about how to improve organizational functioning but also implement their suggestions. Thus, employees and team members have implementation power . The disadvantage of the organizational involvement strategy is that it is very difficult to know which employee-suggested strategies are worthwhile to implement. At Children’s Medical Center of Dallas, administrators in the supply chain department discovered that by recycling pulse oximeter sensors—devices used to measure a patient’s hemoglobin—the savings averaged $17,000 each quarter. The top management enthusiastically signed off on their idea because the team made such a compelling argument for change.131

Another type of organizational involvement involves top-management teams (TMTs). TMTs, as opposed to individuals, are more likely to represent the wide range of interests of the people and groups in the organization and provide valuable development experiences for its members.132 Leadership via TMTs challenges the traditional view of leadership because it moves away from the image of the leader as autonomous, prophetic, and omniscient and toward the idea that leadership is a team process.

It would seem that empowerment and greater employee participation would be the preferred mode in most companies—certainly, at least, from the view of the employees. However, people like structure, and new employees are often uncomfortable in the absence of clear structures, guidelines, and constraints. For example, newly matriculated MBA students frequently lobby for instructor-assigned, rather than free-forming, study groups. What is the effect of empowerment and the ambiguity it brings to the individual, the team, and the organization?

When an organization removes existing structures to provide empowerment in a more democratic fashion, it may find the ambiguity associated with the new structure uncomfortable and respond by imposing a more controlling and bureaucratic structure than the one it sought to replace. This highly rational but powerfully oppressive bureaucracy is known as the iron cage . 133 Out of a desire for order, people continually rationalize their bureaucratic relationships, making them less negotiated (i.e., less based upon commitment) and more structural.