Leadership and its impact on motivation and performance

Introduction There is no ideal definition of leadership. 221 explanations were provided by Bass (2008): he highlighted the fact that any single definition would lack certain features (Van Wart, 2013). In this paper we consider the following interpretations. The first definition states that “leadership is interpersonal influence that is used for directing others in order to achieve certain goals” (Guetzkow, 1961). Hence, effectiveness of a leader can be measured by the level of his followers’ performance and motivation to work.

Leadership can often be confused with management and administration: owever, it is evident that not every administrator (manager) is a leader and vice versa.

Leadership is about power, i. e. eagerness of the followers to follow, whilst administration and management – about authority vested in a person’s position. What is more, management as well as administration is considered in this paper as maintenance activity, whereas leadership mostly deals with change. “Leaders are people who shape the goals, motivations, and actions of others. Frequently they initiate change to reach existing and new goals…

Managing is maintaining efficiently and effectively current organizational arrangements.

While managing well often exhibits leadership skills, the overall function is toward maintenance rather than change” (Bush, 2008). To sum up, orientation on change and informal power are distinctive features of leadership the authors of the paper base their further analysis on. Theoretical concepts Nowadays there are several theories and models produced by a lot of studies, which analyze leadership from different sides such as personal qualities and leadership styles.

The major theoretical concepts can be summarized into 3 groups: trait-based models, situational/contingency models and functional leadership models.

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Trait- based models The trait-based theory implies that a person can only be a leader if he or she is born with a special “gift”, i. e. special characteristics or traits without which a leader would not be able to perform managerial functions effectively. The topic was very popular in the first half of the twentieth century. The researchers tried to find correlation between innate traits and leadership criteria, but the results were inconsistent and unclear.

Mann in 1959 concentrated his study on seven personality characteristics: “intelligence, adjustment, extraversion, dominance, masculinity, conservatism, and ensitivity’ (Zaccaro et al, 1991). However the study made by Mann was not successful because he “found that no trait had a median correlation higher than . 25 with leadership criteria” (Zaccaro et al, 1991). The more fruitful research was made by Digman in 1990, who found a positive correlation between personality and leadership.

Digman evaluated the leader by the following personality parameters: “neuroticism, extraversion, openness to experience, agreeableness, and conscientiousness” (Colbert et al, 2012). However this study still did not answer some questions concerning the relation between leadership and personality. Behavioral models This models focus on the way leaders behave with subordinates. Compared to the previous model, the emphasis was shifted from the leader’s personality to leadership itself.

The model was elaborated by Blake and Mouton (1964) in “The managerial grid”, and was aimed at “improving interpersonal effectiveness and development of leadership skills” (Alvares et al. , 1976). The model implies that a leader’s success is generally based on the concern for production and the concern for people: the combination of both features is the optimal strategy for leadership accomplishment, hich makes subordinates more motivated with their tasks; feel important to the company; clearly understand the goals; achieve the high level of performance. (Alvares et al. 1976) Situational/contingency models In contrast to trait-based model, situational/contingency approaches presume that there is no ideal leadership style and that the most effective style depends on the situation, employees’ attitudes, conditions of work, etc. Leadership style may and should adjust to changes in the situation and only that way it would be effective. In other words, leader has to be flexible. This model encompasses the following pproaches to leadership. Three styles model Kurt Lewin (1890-1897) is told to be the “leading psychologist of his generation” (Burnes et al. 2013). Lewin introduced the so-called “field theory’, which states that individual’s behavior depends on the environment, “field”. He found that three styles prevail in leadership behavior: democratic, authoritarian and laissez- faire style. Authoritarian style is about giving specific tasks and providing employees with direct instructions about how and when they should work, all decisions are made by the leader himself. Democratic style implies that a leader directs the rocess less, rather participating in it, helping subordinates to solve the problem and motivating them.

Laissez-faire leadership is considered to be the most ineffective. The essence of this style is that a leader neither participates in team work, nor encourages employees. Followers are free to choose their own policies and methods, which is supposed to increase their creativity. The results of his studies show that “democratic group” performs best, stimulating creativity from the members and positively affecting productivity. However, the group with authoritarian style is a bit ore productive, but less creative and, what is important, fewer subordinates are satisfied with their Job.

As for laissez-faire group, it is not effective: practically no creativity, poor performance and little satisfaction are observed. Summarizing Kurt Lewin’s findings we may build a table (App. 1) of three styles and its effects on motivation and performance 00b satisfaction is included, though it is out of our analysis scope). However Kurt’s theory was criticized for too narrow approach to leadership styles that ignore various shades between authoritarian and democratic behavior. Leadership continuum model

That is why Tannenbaum and Schmidt offered their Leadership continuum model. The authors concentrated on the problem of combining democratic and authoritative style taking advantage of both approaches. (Tannenbaum et al. , 1973) Tannenbaum and Schmidt introduced the so-called continuum of styles, where styles have different variations from authoritarian to democratic, and can be used by a person in different situations (App. 2). An important benchmark is circled with red color: from here to the right a manager makes decisions only after consulting with the employees.

The authors also mentioned that apart from choosing an appropriate eadership style it is extremely important that your employees understand the “rules of the game”, i. e. the style youVe chosen. Pretending to listen to employees’ opinion while in fact making decisions on your own not only spoils the relationships between an employer and his or her workers but decreases performance and motivation. Fiedler’s contingency model Fiedler’s contingency model (1964) presumes that performance of groups is “contingent upon the interaction of leadership styles and the favorability of the situation for the leader”. Mitchell et al. , 1970) Fiedler proposes that leaders can be ivided into two categories – task-oriented and human-oriented. Effectiveness of the two categories of leadership depends on the task structure and the leader’s position power. For example, task-oriented leaders are more effective in either very easy or very difficult (unstructured) situations. Human-oriented leaders perform best in medium difficulty situations. Path-goal theory The theory was elaborated by Georgopoulos et al. (1957) and House. The model pays particular attention to the subordinates’ expectations. House, 1971) It states that “management is responsible of setting clear goals, clarifying paths for achieving oals, implementing reward systems based on achieving higher performance” (Mulki et al. , 2009). House devised 4 leadership styles depending on the type of work, followers’ characteristics and their expectations: directive, supportive, participative and achievement oriented. 1) Directive style (in case of unstructured, but interesting tasks and inexperienced followers) – clear explanation and guidance on what employees should do. ) Supportive style (when tasks are simple, group cohesion is poor, but workers are experienced) – leader should improve the working atmosphere and support the workers. ) Participative style (unstructured and complex tasks, experienced workers) – leader should consult followers and listen to their opinions. 4) Achievement-oriented style (Unstructured, complex tasks, experienced workers, who think they lack power to accomplish task) – leader should motivate and encourage followers.

Situational model The authors of the situational model (Hersey, Blanchard, 1969) presume that one should choose leadership style only after he/she assessed the employees’ readiness to perform a specific task and adapt leadership styles to changing environment. (Butler et al. 1991) Situational Leadership Theory focuses on two aspects: (1) competence and (2) confidence and commitment. These two may be high or low (App. 3), and leader should make emphasis on either task or relationship aspect depending on the situation.

Four frame model The last model in this group is Bolman and Deal’s four frame model. The researchers introduced four frames which leaders should pay attention to in different circumstances. These are structural, human resource, political and symbolic. Structural frame focuses on setting the goals, clarifying tasks and responsibilities. Human resource frame concentrates on people’s needs, their motivation and interests. Political frame is about resolving conflicts that arise in the organization. Symbolic frame deals with the sense of common goal, teambuilding and inspiration.

A leader should be able to identify the main problems an organization faces and after to choose one or several frames to focus on, changing them after accomplishment of the goal. Otherwise it negatively impacts employees’ performance and motivation. Transactional and transformational leadership theory Transactional style is characterized by providing directions and guidelines, focusing n Job completion. Such leader defines group activities, describes the role each member is expected to assume and sets clear goals; clarifies the link between achievement and reward.

Motivation is limited to formal procedures: bonuses and sanctions. Transformational leadership is “guidance through individualized consideration, intellectual stimulation, inspirational, and idealized influence”. (Choudhary et al. , 2013) Leaders of this style want employees to share common values and orient them towards the company’s goals, create environment of psychological support and friendliness; incorporates employees’ suggestions into the ecision-making process and, thus, influence Job satisfaction and commitment. (Mulki et al. 2009) There are a lot of different opinions concerning which leadership style is more effective and if a person can display different styles. Some scientists have described transformational and transactional leadership styles as two competing approaches to motivating followers or employees: a person can perform either transformational leadership or transactional one, but not the both styles. Other researchers have a different opinion, assuming that these styles are not competing ones, but complementary to each other. Bass et al. 1993) Despite the fact that it is often supposed that outstanding leaders perform both transformational and transactional styles, it seems that transformational leadership can be more effective in a lot of cases. Previous researchers have discovered the evidence of a strong positive correlation between the application of transformational leadership style and the performance of working teams, presidential administrations and business units. (Cameron et al. , 2011) Functional leadership models There are also functional leadership models based on functions a leader must be ble to carry out. Morgeson et al. , 2010) One of the approaches proposes to divide the leadership functions into two phases or stages: transitional and “actional” phase. The transition phase is a “period of time when teams focus on activities related to structuring the team, planning the team’s work, and evaluating the team’s performance”. (Morgeson et al. , 2010) “Actional” phase is consequently “the portion of the team’s performance cycle when the team is focused on activities that directly contribute to accomplishing its goals”. Morgeson et al. , 2010) (App. 4) Both phases re crucial for establishing cooperation within the team and, thus, high level of overall performance. An effective leader should define the phase of company’s development and act accordingly. John Adair’s Action-centered Leadership model. John Adair introduced the three circles diagram, which illustrates three main tasks of a leader (App. 5). 1. Task circle means the need to solve the problem and achieve particular result; 2.

Team circle means that leader must create the working atmosphere, where employees will perceive the goals as “our”; teambuilding; 3. Individual – caring about every worker of the team, trying to satisfy his/her needs. Leadership is effective only when all three functions are combined (the intersection of the circles). Changing salespeople’s performance through leadership The problem Salespeople often work under direct supervision and are under high pressure to produce results: the management style has a strong impact on their performance.

Leaders set an example of appropriate conduct. The study was conducted in a North American subsidiary of an international pharmaceutical company X to analyze the issue (Mulki et al. , 2009). The problem of the company was unethical behavior of salesmen with clients – physicians: 50% lie on sales calls, every third makes nrealistic promises, every fifth imposes products on customers the latter do not need and bribe physicians to get them prescribed to a particular brand of drugs – the behavior which was tacitly approved by senior management as long as sales goals were achieved.

The revealed facts of inappropriate behavior ultimately led to the decline in the overall trust to the company X and the undermined reputation of pharmaceutical companies in general. The challenge Establishment of new company-wide ethical standards is a complicated issue, but existence of such standards is essential for controlling for the overall employees’ erformance, especially nowadays, when firms shift from a traditional office with opportunities of direct supervision to “field offices”, where employees are more independent in their actions.

The industry trade association, PhRMA, issued voluntary industry guidelines for salespeople, which regulate the interaction of salespersons with physicians, directed to 90 large pharmaceutical companies of the U. S. The guidelines were rather strict, and required a strong commitment from senior management to be complied with. To face the challenge, it was decided to implement the path-goal theory and to use the features of leadership style of management tarting from the senior positions of the company.

The aim was essentially to change the company’s ethical standards, incorporating compliance with ethical rules and policies into the salespeople’s system of values. Methodology The survey was conducted to identify leadership styles present in the organization and their impact on Job satisfaction and performance of employees. The employees were asked to measure leadership styles of management with the following 13 items, 9 of which represent considerate leadership, and 4 represent instrumental leadership (App. 6).

The employees were also asked to estimate their satisfaction with upervisor, Job satisfaction, their efforts and Job performance. Results of the analysis showed that over 72% of the variance is explained by two factors – instructional leadership and transformational leadership styles of management. Another random survey of salespeople was conducted 1 year later after the start of the transition to check for the impact of the new rules and standards on employees’ Job satisfaction, efforts and Job performance, as well as to reveal some of their considerations about relationships with clients.

Results While transformational leadership plays a role in establishing good relationships etween management and subordinates and has a significant influence on the employee’s satisfaction with the supervisor, the analysis of implementation of the model to the company X showed that transactional leadership is more successful in setting corporate standards.

It plays the crucial role in this process: a directive leader prescribes the space within which there is still room for decision-making, but the lines which an employee should not cross are clear: this is particularly important for salespeople as they should know that compliance with ethical rules and policies prevails over getting a substantial contract. It is also evident that establishment of these guidelines should not necessarily be the result of a consensus between all the employees, when everybodys views are taken into consideration.

Clarity and established boundaries motivate the salesman to be creative in meeting customers’ needs without feeling uncertainty and vulnerability from the point of view of refusing to comply with the firm’s standards and management disapproval: it enhances subordinates’ trust in management and significantly reduces stress. What is more, customers are more open to new ideas and suggestions from an ethical organization, hich standards are high and clear. The trust, freedom and flexibility enable salespeople to be client oriented and increases the amount of effort employees put in their activities.

This, in turn, creates a sense of “Job accomplishment” (Mulki et al. , 2009) and essentially improves the overall performance. To sum up, the new company-wide standards established in the company X with the help of the path-goal leadership theory and based on the difference between the two styles of leadership, increased the employees’ performance level significantly, improved the client- salesman long-term relationships and brightened the overall image of harmaceutical industry.

Supplier integration in the automotive industry: the impact of buyer-side leadership on motivation among suppliers The problem Due to the shortage of R&D capabilities and basic management skills, domestic suppliers of Chinese automotive industry are not well-developed. As a consequence, the majority of key components are manufactured and imported from other suppliers with operations in China.

However, the foreign suppliers try to integrate as many domestic suppliers as possible because of local production requirements and the specifics of an automotive industry: it is a networked field where it is almost mpossible for an individual firm to possess all the necessary expertise to produce complex machinery. Supplier integration is a complex issue that requires the understanding of the situation from different perspectives.

In our case the problem of creating trust and commitment between buyers and suppliers is analyzed, and how changes of Chinese automotive suppliers’ mindset, competences and motivation to collaborate can be stimulated (Lockstrom et al. , 2010). Here the Hersey and Blanchard’s situational leadership model can be implemented as it takes into account the environment where a manager operates. Methodology In order to collect the data, the number of semi-structured face-to-face voice- recorded 2-hours interviews was conducted with 30 purchasing, quality and general managers from automotive companies, which were then transcribed.

The reliability of the study was further ensured by a detailed case protocol enabling systematic data collection. A detailed script was sent to every participant during a week after the interview for review. This way a high level of dependability and reliability was achieved by researchers. Results Several assumptions can be made about the managers in the industry: first, they ave a positive attitude towards their work in general. Second, they are sure that they influence their suppliers and “make them follow’. Third, the managers demonstrated positive attitude towards combination of operational work and strategic planning.

The study showed that in 23/30 cases (76%) cooperative/transformational leadership style prevailed in their behavior, while assertive/transactional leadership style was used in 27% of cases, and 6% choose empowering style. 27% of respondents tend to change their management style depending on the situation, using the situational eadership model to motivate a supplier when he or she does not live up to a manager’s expectations. As one of the managers put it, “you need a carrot to motivate and a stick to implement” (Lockstrom et al. , 2010).

The first managerial challenge is to stimulate collaborative efforts of suppliers in order to drive supply chain performance, such as cost reduction, quality assurance, delivery reliability etc. (Lockstrom et al. , 2010). The managers actively worked on a personal level to convince suppliers to adopt the formers’ values and beliefs, persuading them to invest in technologies and innovations. Thus, transformational leadership is perceived to influence the supplier’s mindset and commitment, motivate the latter to adapt and collaborate. However, the difficulty in managing production and delivery performance was highlighted.

Despite the willingness to learn and to improve the activity (8 cases), the lack of targets and action plans as well as unstable feedback channels led to worsening of the results. That was one of the reasons why reactive attitude and hierarchical communication are met in 40 and 37% cases, respectively, although the value of personal relationships is high (57%). It was found that in most of the cases concerning production issues the buyer side took the initiative and responsibility for involving domestic suppliers in product development activities. Domestic suppliers tend to be rather reactive than proactive.

Thus, the level of innovations initiated by domestic suppliers is very low. In terms of strategic planning, which includes capacity, demand or product planning, as well as sharing new ideas and setting long- term goals, only 30% of companies shared ideas with domestic suppliers, 13 firms involved domestic suppliers in capacity planning, 8 in demand planning and 9 firms lanned everything collaboratively sharing financial information with domestic suppliers (Lockstrom et al. , 2010). The time of conducting business also matters: among 8 firms which communicated strategic goals, 6 worked with suppliers for more than 10 years.

The respondents of these firms stated the satisfactory level of trust and commitment. Still, it was evident that the “perceived stronger supply chain partner [foreign in this case] usually dictates the activities” (Lockstrom et al. , 2010). Overall, we can see the cooperative leadership style prevails in the majority of cases oncerning personal buyer-supplier relationships: the relationships with Chinese suppliers are built gradually, and the levels of trust and motivation do not heavily rely on contracts.

Still, it is acknowledged by managers that it is extremely hard to motivate the person and ensure high performance level with cooperation and coaching only. The clear goals should be set and action plans elaborated, which require assertiveness of the leader, to “push” the supplier in the preferable direction: “the supplier only learns when it hurts” (Lockstrom et al. , 2010). Conclusion Overall, considering all the different leadership approaches, models and theories, it can be concluded that there is no single most efficient leadership style in terms of motivation and performance.

Different leadership styles should be used depending on situation. For instance, when there is little time to make a decision and where a leader has significantly more experience or expertise than the rest of the team, the transactional leadership style would be more effective, while in a motivated group with a higher level of expertise, the transformational style should be more efficient. The chosen style should be the one that most effectively achieves the goals of the group while considering the interests of its members.

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Appendix Appendix 1 Kurt Lewin’s Three styles model Authoritarian Democratic Laissez-faire Motivation Less High Lowest Performance Highest High Low Satisfaction Less satisfied Satisfied Not satisfied Source: Kurt Lewin’s Field Theory: A Review and Re-evaluation / Burnes B. , Cooke B. // International Journal of Management Reviews – Vol. 1 5(2013) – pp. 408-425 Appendix 2 Continuum of leadership behavior Source: How to choose a leadership pattern / Tannenbaum R. and Schmidt W. H. // Harward Business Review – May-June 1973 – pp. 162-180 Available from: Business Source Complete, Ipswich, MA.

Accessed November 13, 2013 Appendix 3 Situational Leadership Theory Task emphasis Relationship emphasis Low competence, low confidence and commitment High (instructions, directions) Low disregard of emotions) Low competence, high confidence and commitment High (instructions, persuasion) High (encouragement, incentive) High competence, low confidence and commitment Low (consultation) High (involving, teamwork) High competence, high confidence and commitment Low (consultation, delegating responsibility) Low (trust, empowerment) Source: A Preliminary Investigation of the Applicability of Situational Leadership In Other Cultures / Ramkisson A. / International Journal Of Business Strategy [serial online]. – March 2013 – Vol. 13(1) – P. 43-48. – Available from: Business Source Complete, Ipswich, MA. Accessed November 13, 2013.

Appendix 4 Main leadership functions according to the functional leadership model Transitional phase (Stage 1) Action phase (Stage 2) Compose team Monitor team Define mission Manage team boundaries Establish expectations and goals Challenge team Structure and plan Perform team task Train and develop team Solve problems Sensemaking Provide resources Provide feedback Encourage team self-management and support social climate Source: Leadership in Teams: A Functional Approach to Understanding Leadership Structures and Processes. / Morgeson F, DeRue D, Karam E. // Journal Of

Management [serial online]. January 2010;36(1):5-39. ) Appendix 5 John Adair’s Action-centered Leadership model Source: Action-centered Leadership (Second Printing) (Book). // Personnel Psychology [serial online]. September 1980;33(3):674-675. Available from: Business Source Complete, Ipswich, MA. Accessed November 13, 2013. Appendix 6 Scale of leadership styles used for subordinate’s assessment. Source: Critical Role of Leadership on Ethical Climate and Salesperson Behaviors / Mulki, Jay P. , Jaramillo J. F. , Locander W. B. // Journal of Business Ethics – Vol. 86, No. 2 (May, 2009)- pp. 125-141