Leadership

Business A2 · Human resource management. The idea in plain words, the rules to remember, the mistake to avoid and a worked example, written and checked by Mega Lecture.

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The idea

Leadership is setting a direction and inspiring people to work towards the objectives of the business. Leaders are found at every level: directors set long-term strategy and answer to shareholders, managers run departments, supervisors direct day-to-day work, and worker representatives put employees' views to management.

Five theories try to explain what makes a leader effective. Trait theory looks at personal qualities, behavioural theory at what leaders do, contingency theory at the fit between style and situation, power and influence theory at where a leader's power comes from, and transformational theory at vision and inspiration.

Goleman adds emotional intelligence: understanding and managing your own emotions and those of other people. He names four competencies, two about yourself and two about others.

Rules to remember

Trait theory: effective leaders share personal qualities such as confidence, intelligence and determination. Weakness: different situations need different qualities, and many can be learned.
Behavioural theory: leadership is a pattern of behaviour (for example, concern for the task and concern for people), so it can be learned.
Contingency theory: there is no single best style; the best style depends on the situation, the task and the people.
Power and influence theory, five sources of power: legitimate (position), reward, coercive (punishment), expert (knowledge), referent (being admired and respected).
Transformational leadership: the leader inspires staff with a vision, challenges old methods and wins commitment to major change.
Goleman's four competencies: self-awareness (knowing your own emotions), self-management (controlling them), social awareness (understanding other people's emotions; empathy), social skills (managing relationships: persuading, resolving conflict, building teams).

Common mistake

Students confuse self-awareness with self-management, and social awareness with social skills. Awareness is recognising an emotion; management and skills are doing something about it. Decide first whether the emotion is the manager's own or someone else's.

Worked example

A team leader has no formal power to reward or punish and is not the technical expert in the team. Staff still follow her willingly because they admire her and want her approval. Which source of power is this?

It is not legitimate, reward or coercive power: these come from position and the ability to reward or punish, which she does not use.
It is not expert power: she is not followed for her specialist knowledge.
Staff follow because of personal admiration and respect, which is referent power.

Answer: Referent power.

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