.I CHAPTER / THENATURE IMPORTANCE AND OF LEADERSHIP eventually became Bcc.

The companyhas grown from a two-person srarrup to a staff of fiftpeight with thousands of. software customers in all fifty states, employees fon Runsrrom,s at mailing Puerto Rico, and Canada. Ij5: ]1r,."d. sottware design firm describe the SZ_year_oldas a Runstrom says, ,,For any business, f kind and understanding manager, don,t care . read.y to pitch in what you're doing, you,ve got to treat employees as at any level-even helping his staff stu#.rrrrilop.r. if they're your own customers." Bcc,s Software,s "I rhink we had iust moved in and we didn,t have facilities.were designed ,. to give employees muri_rrm ttrngs ser up. We didn't have tables. I remember sit_ personal space. Runstrom also advocates flexible ting on the floor. There were about ten ofus just stufG r,vorking schedules and organizes golf tournaments ing. He over) sat down, and worked Cght Aorrg -carne fot and trips to amusemenr parks. yd 1rs," saysJames Mann, Bcc Software lric. p..ri_ Pnl"n:es "The culture here at Bcc is a rr.ry op"r, environ_ customer sy.pporr. can rememu"., ,"ipo., ment, very flexible environment. people 9.^?:a: sayng, ,That,s "l tecnmclan here appear a great thing to see., It was to be happy. Customer support, foi example, a great opportunity. We were able to you sit down with Jon can have a turnover rate ofsay 50 to 60 p.r.irrt, and and talk with him and have fim and loke around.,, at this point we,re at zero percent. No one has left Runstrom's down-to.-earth ma.rag.ment rtyle, this department in a year," saysMann. which has helped maintain a 2 p.r.errt"turnov.r rate says he's ,,r.rr". t..r, a top_down kind m. t":, O5.U"rttat BccSodwar., p"rJy due i, ro of^ 1""*19boss. "Those things in my mind ,r.r,., :I-.r, nts degree industrialpsychology. also Jid *o.L, in It stemsfrom never do work, never will work., He ad.dsthat flexhis.humblingexperience turrrrltirrg in * irrfur_"tio., ibility is fundamental to good management, and that technology srartup some twenty_rii,y.*, ago that you have to trust people.l As a former ROTC scholar and six_year naly officer, the CEO and president ofBcc Softrvare, Inc. might be expected to be somewhat of a drill sergeant at

of topics to be TT -:n11a5te1ization Jon Runstrom roucheson many leadership I coveredin this book, including the ideasthat caringr""a"rrr,rrp can makea dif_ l ferencein an organization'sJ,r...rr, ,n", a successful leaderworks well with his or her team, and that many are . our "r..ar.-ii"aers introductory chapter begins with. an "iribl;;;;proachable .*ptu.r"tio, of what leadersirrp and is is not. we then examinehow leaders make a aiil..n.., the variousroles they play, and the major satisfactions and frusrrations they experience. The .h;;;r- arsoincludes an explanation how readingthis book ani of doi'ngthe various qtizzesandexercises will enhanceyour own leadeiship skills. It .o".roa", with a air*Jo' of ,,follower_ ship"-giving leadersgo'odmaterial to work wrth.

The Meaning of Leadership
You will read about ma11 effegtive organizationar leadersthroughout this text. The common characteristic t-hese of leaders their ability to inspire*?r-rl-,rru," ir othersto worthwhile goars.Thus we can a.n r. t."o."rhip *'trr. uuitity to inspire confii:T:* and dence supportamongthe peoplewho areneeded tJ achieve organizationar goals.2 A Google searchof articles and books 533 m'rion entries.In all thoseentries,leade.rship "b";;;;..rhtp";f;*, hasprobably b..r, a.fio.d i., -"ry ways. -- --^l Frere are several other representative definitions'of leadership:

OF THEMEANING LEADERSHIP 3 t r-(:)\\ n trom h--eieht si& I rrin- statesI don't care emrlor-eesas 's Sols-are's rs nar-imum ;ates flerible tLr'arnamen6 p;:rs. per enr-irone here appear x.i:-irple, t'ou peicentr'and | r:'1e has left p-.iori'n kind rer .iid l-ork, ild-. lhat flexrn:. and that through communication toward goal attainment € Interpersonalinfluence.d.irected with directions m Theinfluential increment over and above mechanical compliance and orders tr An act that causesothers to act or respond in a shared direction mTheartofinfluencingpeoplebypersuasionorexampletofollowalineof action in {a Theprincipal dynamic force that motivates and coordinates the organization th. u..o-plishment of its objectives3 quarterback w A willingness to take the blame (as defined by legendary football loe Montana)a Amajorpointaboutleadershipisthatitisnotfoundonlyamongpeopleinhighand can be pract.u.t poritions. Leadership is neeied at all levels in an organization to a formal leadership position' ticed to some extent .u.n by a person not assigned might take the initiative to For example, working a, a i.r.tio' accountant) a person more careful about what they classifi,as suggest ro management thai they need to be exercising leadership is a true sale.An extreme example of the importance of workers involvement in Roadway Express, Inc' Aftei implementing a program 9f gllloVee that if Roadway is to productivity improvement, RoaJway management concluded less than 5 percent in a good io-p.a. in an industry in which n"i profit margins are jg,OOO employeesmust be a leader's y.ur, .rr".y one of its ' even more rare at ifr. aUitity to lead others effectively is a rare quality. It becomes of such positions requires the highest livels in an organization becausethe complexity in search of new leaderunr,".*g. of leadership"sldlls.This is one reason that firms " It is also why companies n-ow ship seek6ut a select group of brand-name executives.6 .-phn,i,.leadership,traininganddevelopmenttocreateanewsupplyofleaders throuehout the fi.rm.

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parent-takes responship as the opposite of p"r.ntittg (in which.one person-the child). Partnership occurs when control slUitity fo, ttr" welfare tf .n. oihe.-th. away from authoritarianism shifts from the leader to the group member, in a move 'ZFour things are necessary for a valid partnerand toward shared decision iaking ship to exist: every.level is responsible for l. Exchange oJ'pw"pose.Ina partnership, every worker at people at many levels' the defining vision and ,rulo.,. Through diaiogue with leader helps articulate a widely accepted vision' a contrary opinion will be 2. A ri.ght ti say ru0.The belief inut peopl. who express can lose an argument porrirh.d runs contrary to a partnership' Rather, a person but never a voice.

4

CHAPTER /THE NATURE IMPORTANCE 1 AND OFLEADERSHIP 3 ' Joint accountab'ility. rn lpartnership, each person is responsible fbr outcomes and the current situation. In practice, this means that each person takes personal accountability for rhe successand failure of the organir"tioiJ.rrrit. . 4' Absolwtehonesty.In a partnership, not telling the tiuth to one *oth.. is an act of betrayal. power is distri-buted, people are more likely to ten the truth ,lvhen becausethey feel lessmlnerable.8 Block's conception of leadership as a partnership is an ideal to strive toward. Empowerment and team buildingjt*o -ujo, topr.. in this book-support the idea of a partnership. Looking at leadership as a partnership is also important becauseit is linked to an optimistic view of group members, refeired to as siewardship theory. This theory depicts group members (or.followers) as being collectivists, pro-organizational, and trustworthy.e A collectivist is a person who is more concerned about t_hewelfare of the group than about his or her personal welfare. FIave you met many colrectivists in the workplacel

with group members major successfactor for the three top positions _is.-a in large organizations. James Kouzes ura nur.y posner conducted an online sur_ vey asking respondents to indicate, among other questions, which would be more essential to business successin fiu. y.urrlrociar siills or Internet sk1ls. seventy_ two percent indicated so_cial skills, and 2g percent Internet skills. The authors concluded that the web of peopre matrers more than the web of technology.l0 (yet a person who lacks Interner skills may not have ,rr. r" be in a posit: manage relationships-) Building "fp"r*;;; relationshipst *itr, plopre is such an 1^": of leadership that the theme will be introducei at various points #ffitg,:art

ftni::: the leaderand the peopre beingled. ":jr.:lt::**,*:-o,nasizes Research indicates ,n* n"rlt"*?":TTnl tionships

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6

CHAPTER 1 /THENATUREAND IMPoRTANCELEADERSHIP oF managers themselves, or be supported by effective managers. A germane example is the inspirational entrepreneur who is so preoccupied witlimotirr"?ng captivating customers that he or she neglects internal administrati"on. "-plor;;;; As a result, costs skyrocket beyond income, and such matters as funding the employee pension plan and paylng bills and taxes on time are overlooked. in short,'the difference between leadership and management is one of emphasis. Effective lead.ersalso manage, and effective managers also lead.

The lmpact of Leadershipon organizationalperformance
An assumption underlying the study of leadership is that leaders affect organizational performance. Boards of directors;the highest-level executives of an Jrganization-make the same.assumption. A frequent antidote to major organizational problems is to replace the leader in the hope that the newly appointed leader will reverseperformance problems. Here we will review so-e of the evidence and opin_ ion, pro and con, about the ability of leaders to affect organizational performairce. The r eader_inAction profile provides a positive example Jf th. i-portance of erTective leadership.

British raincoat maker, far off the radar screensof the fashion world. Today, Burberry,s turnaround is legendary, and its tartan bedecks everwhins from hats to luggage to bikinis, in a riot of colori from pink to blue to purple. Most notably, Burberry has been able to sustain its new momentum, consistently posting gains in an industry nororious for passing trends and fickle consumers. The company has had five straieht years of annual sales increases, with annual iiolumes of about $1.2 billion (626 pounds sterling). The Bronx-born Ms. Bravo, 53, began as a cos_ metics and fragrance buyer at Macy,s before jump_ ing to the now defunct upscaleretailer, I. Masnin. where she rose ro chairman and CEO. In 1952, she was named president of Saks Fifth Avenue-

hen Rose Marie Bravo took over as which she ran for five years until leaving to join chief executiveof Burberry Group plc London-based Burberry. She sat down with Tlte in 1997, the company was a staid Wall Sn"eet Jow.nal to talk about how she plans to
keep Burberry flourishing without dilutlns the brand's exclusiveimage. Excerpts showing Biavo,s leadership practice and attitudes follow: WS|: How do you keep the brand hot and fresh season after season when fashion always changesf Bravo: This is the biggest quesrion facing any brand, whether it is Coca-Cola or Mercedes Benz. Constant creativity and innovation are required. You just can never stop. Our new motto at Burberry is we never stop designing. And creativity doesn,t just come from the designers. For example, we did an ad campaign . they did flashes of color, literally thrown onto

THEIMPACT LEADERSHIP ORGANIZATIONAL OF ON PERFORMANCE

and white picture. It almost looked like hnt had spilled color onto the photograph. b looked ar it and said, this should be scarves. m-E ,lid a q'hole series of scarves that became heqsellers. This idea came from our fadvertisnmng. aeencv. ndeascan come from the salesfloor, the mar_ kdng departmtnt, even from accountants, trclie\ e ir or not. So keeping that open attitude rhrr r-ou can get an idea that can be a business nlra from just about an),rvhere is important. It is not just the ownership of one p.rron o. rrro people. FSf: \\hat do you do specifically to motivate and inspire peoplef Gravo: We like management to visit the stores, ralk to the salespeople.pe ople at whatever level rhev are working have a point of view and have something to say that is worth listening to. We m- to set an agenda throughout the company n-here everyone's opinion counts, and it's nice to be asked. WS|: Star designers have become more common today. But it sounds like you believe in a team approach. Bravo: Some people like a lot of confrontation. I don't. I like people to get along. I like to have everybody contribute. But I don't necessarily believe in consensus,becausethen you can end up with mediocrity. WSJ: For examplel Bravo: The plaid shopping bag. Everybody wanted to go neutral-solid beige or black. I felt instinctively, it was too subtle. In fact, we could have the only shopping bag that didn,t

have a logo on it, and we didn't have to write our name across ir. I called Geraldine Stutz, the retired head of Henri Bendel (the New York specialty retailer famous for its brown striped bags). I said, ..We need to do a shop_ ping bag, what do you thinkf" She said, "Come on, it has to be plaid.', Bravo offers five lessonsfor rebuilding and sus_ taining a hot brand: I Lesson I: Don't rest on your laurels-reinvent yourself every day and never stop thinking of new ways to wow the customer. r Lesson 2: Maintain riour core customer while pursuing a new one. I Lesson 3: Don't worry about where a new idea comes from. Execution is the key. I Lesson 4: Don't rely on a formula. lust because something works for one company doesn,t mean it will work for another. I Lesson 5: Surround yourself with great people. It's all about teamwork.

q ,FI I | 9 I I
l. In what way does Bravo bring technical expertise to her leadership positionl 2. In what way does Bravo emphasize listening to workers in her leadership approachf
SOURCE: Excerpted from Sally Beatty; ,.plotting plaid,s Future: Burberry's Rose Marie Bravo Designs Ways io Keep Brand and Still Exclusive,,' Tl.teWall Street Jowrnal, Siptember 9r9yi"g 9,20.04, pp. Bl, 88. Copyright 20O4by Dow Jones& Co., Inc. Reprinted with permission of Dow lones & Co. Inc. in the format Textbook via Copy.ight ClearanceCenter.

The idea that leaders actually influence organizational performance and morale is so plausible that there is not an abundance ol research ani opinion that deals with this issue' (Nor do we have loads of studies dernonstrating thaisleeping reduces fatigue.) F{ere we look at a sample of the existing research anJ opinion.^

8

CHAPTER /THE NATUREAND 1 IMPORTANCE LEADERSHIP OF A team of researchersinvestigated the impact of transactional (routine) and charismatic (inspirational) leadership on financial performance.r2 The i.s.ar.he^ analyzed. 2r0 surveys completed managers from I3r Fortane 500 firms. Trans_ .by.senior actional and charismatic leadership styles i.r"r. *."rrrred with a leadership question_ naire. Each participant was asked io thirrL about the cEo of his or her company and rate that individual on the leadership scale . Because an uncertain environment often makes having a strong leader -or. i-po.tant, participants arso completed a ques_ tionnaire that measured perceived. environmental uncertainty. organizational per_ formance was meas rred as net profit margin (NpM), .o-put.d as net income divided by net sales. The performiance data were gathered frorn public information about the companies. The results of the study disclosed that (1) transactional leadership was not significantly related to performan ce, (2) charismatic leadership showed a slight positive relationship with performance, and (3) when the environm.rrt i, orr..rtain, charismatic leadership is more strongly related to performance. In another study, a group of res"*.h"r, anaryzed.2O0management techniques as employed by 150 companies over ten years. The aspect of thJstudy evaluating the effects of leadership found that cEos influence l5 p....nt of the total variance (influencing factors) in a company's profitability or totaf return to shareholders. The same study also found that the industry in which a company operates also accounts for 15 percent of the variance in profitability. So the choice of a cEo leader is as important as the choice of whether to remain in the same ind.ustry or enter a different one.r3 In addition to tangible evidence that leadership makes a difference, the perception of these differences is arso meaningful. An understanding ;.:.;.rceptions derives from attribution theory, the thJory of how we explain "f the cauJesof events. Gary Yuld explains that organizations are iomplex social systems of patterned interactions among people. In their efforts to understand (and simplifr) irgu.rirutiorral events, people interpret these events in simple human_terms. one especially strong and prevalent approach is to attribut. .",rolity to leaders. They are as heroes and heroines who determtT ,h: fates of their "i*.a organizations.la The extraordinary success of southwest Airlines co. during the 1990s is thus attributed to Herb I(elleher, its flamboyant chief executive. IGlleher initiated no-frills, low-cost air service and built -lo-p.orors southwest into a highry profitable airrine. (ultimately, .r.* modeled after Southwest, such as JitBlue Airrines, took away some of soutri-.rt,, profitabil_ ity.) Most organizational successesare attributed to heroic leaders-according ro attribution theory.

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and is not necessary) Substitute s for Leadership At times competent leadership in the work situafactors incompetent leadership can be counterbalanced by certain to the perthese circumstances) leadership itself is of little consequence tion. Under formanceandsatisfactionofteammembers.Accordingtothisviewpoint,many are factors in the work org*irutlons have substitutes for leadership. such substitutes perform,-making the leader's environment that provide guidance and incentives to substitutes: closely knit role almost sop.rflrrour.tt Figo.. I-1 shows four leadership norms' teams, intrinsii satisfaction, computer technology, and professional w4ren members of a cohesive, higily clowly lenit tenrwsof highty traiyted.i.nd.ipid.wnls. may require almost no leadership to accomtruini group are foculedott a goal, they who direct trafplish thJir task. Serreralresea.chLrshave studied air traffic controllers jet fighters on a nuclear aircraft carrier' fic into San Francisco and pilots who land leadership is seemingly With such groups, directive (decisive and task-oriented) groups rely more on each other than unimportani When danger is tire highest, these on a leader. who are engaged in work they find strongly self-motiInn insi,csntisfa.cti,0n.Employees Part of the reason is vating, or intrinsically ,"drfylng, require a minimum of leadership. The worker may require litthut t. task itself grabs the workeris attention and energy. information technology tle leadership as long as the task is proceeding smoottrly. Many computer professionals, fums provide a minimum of leadership and management to latest computer virus' *ho m"y be totally absorbed in such tasks as combating the monitoring and comCvrllputei' technology.some companies today use computer-aided of the supervisor's leadership functions' The puter netlvorking to take over many for certain tasks are .o-p.ra., provides productivity and quality data, and directions detection and goal lettinq are incorpoentered into the inlbrmation system. E r.r-t "rtot some tor asslstance) rated into some interaction systems.Instead of asking a supervisor from other workers' (we could for assistance employees use the computer network to ask than to lead workers') *grr. L.r. that the .o-poa.. is being used to control radrer often require professi.onnl n4rl,tcs.workers who incorporate strong professional norms professional a:coY:lof supervision and leadership. A group of certified u -irri-odo an honest job of audittanrs may not neeldvisionary leadership to inspire them to ine the books of a client or advising against tax fraud'

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.I CHAPTER / THENATURE IMPORTANCE LEADERSHIP AND OF Although the leadership substitute concept has some merit, it reflects naivet6 about the role of organizational leadership. Bass notes that self-management by groups and individuals requires delegation by a higher authority. In addition, higherranking managers provide guidance, encouragem.r.t, urrd support.r6 More recent researchstudy suggeststhat the theory of substitutes for leadership may be flawed and that_leadership does indeed have an impact on group effective-_ ness. A team of researchersconducted a study of forty-nine organizations with at least 50 employees and two levels of management. The sa-p[ consisted of 940 employees and 156 leaders. Measures of substitutes for leadeiship were similar to the information presented above, such as ,,I am a member of a professional group whose standards and values guide me in my work." In short, th. stody ,ogf.rt.i that "leadership matters." The likeability of the leader anj whether the leader provides rewards for good performance were found to be the major correlates of performance.lT Leader lrrelevance According to the theorizing of Jeffrey pfeffer, leadership is irrelevant to most organizational outcomes. Rather, it is the ,itoutron that must be carefully analyzed. Pfeffer argues that factors outside the leader's control have a larger impact on businessoutcomes than do leadership actions.r8 During the late 1990s and early 2000s cell phone^ownership surged throughout the world,-with g0 percent of adults in the United States owning cell phones. The sales boom in this electronic equipment could be better attributed to an outside force than to inspirational leadership within telecommunications companies. Another aspect of the leader irrelevance argument is that high-level leaders have unilateral control over only a few resources. Furthermore, thJ leader,s control of these resources is limited by obligations to stakeholders like consumers and stockholders' Finally' firms tend to choose new organizational leaders whose values are compatible with those of the firm. The leaders therefore act in ways similar to previous leaders. Jim Collins, who has extensively researcheclhow companies endure and how they shift from average to superior performance, also doubts the relevarice of leadership. According to his earlier research, corporate leaders are slavesof much lurg., orgri_ zational forces. Collins makes the analogy of children holding a pair of ribbons inside a coach and imagining they are driving the horse . It is not the leader's personality that makes a difference; more important is the organization's personality. For exampre, Collins notes that /ack Welch was the product rather than tie producer of GE,s successduring his long reign.le The leader irrelevance argument would have greater practical value if it were recast as a lead'er constraint theory, which would hold that leaders are constrained in what they can do but still have plenty of room to influence others. C.omplexity Theory Similar to the pessimistic outlook of leader irrelevance is the perspective of cowplexity theo't'y, which holds that organizations are complex systems that cannot be explained by the usual rules of nature. Leaders and man_ agers can do little to alteithe.orrrr. of the complex organizational system. The same view holds that forces outside the leader oi -urug.r's control determine a company's fate. Managers cannot predict which business strategies or product

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CHAPTER /THE NATUREAND 1 IMPORTANCE LEADERSHIP OF 3' Negotiator. part of almost any manager's job description is trying to make dears with others for needed resources.Researchers have identifi.dthr.. specificnegotiating activities: a. bargaininc\"iq superiorsfor funds, facilities,equipment, or ofrrer forms of suppon b' bargaining with other units in the organiration for the use of staff, facilities, equipment, or other forms of support c. bargaining with suppriers and v.njo., for services,schedules, and delivery times 4. conch and' rwotivator. An efrective read.ertakes the time to coach and modvate team members. This role includes four specific behaviors: a. informally recognizing team members, achievements b' providing team members with feedback concerning inefrective performance . team members are informed of ,t.pJthat.u., i_pror," their per_ ffXH:.rhat t rewards and punishments to encoLrrage and sustain good peril*r"T.rJting 5 ' Teanabuitd'er' A key aspect of a leader's role is to build an effective team. Activities contributing to this role include: a. ensuring that team members are recognized for their accomplishments, such as through letters ofappreciation . b' initiating activities that contribute to group morale, such as giving parties and sponsoring sports teams c. holding periodic staffmeetings to encourage team members to talk about their accomplishments, problems, and concerns 6' Teatn Ttlayer. Related to dre team-builder role is that of the team player. Three behaviors ofteam players are: a. displaying appropriate personal conduct b. cooperating with otheiunits in the organizatton c' displaying loyalty to superiors by supiorting their plans and decisions fully 7 ' Technical problew soher. rt is. particularly important for supervisors and middle managers to help team members solve ie.htrl."t problemsl Two activities contributing to this role are: a. serving as a technical expert or adviser b. performing individuar contributor tasks on a regular basis, such as making sares calls or repairing machinery B' Entreprenewr. Nthoughnot serf--emproyed, managers who work in rarge organiza_ tions have some responsibility for suggesting innovative ideas or furthering the businessaspectsof the firm. Thr.. .nlripreneurial leadership role actiyities are: a' reading trade pubrications and professionar journals to keep up with what is happening in the industry and profession . b' talking with customers or otheri in the organ izationto keep aware of changing needs and requirements c. getting involved in situations outside the 'nit that could suggest ways of improving the unit's performance, such as visiting other firms, attending pro_ fessional meetings or trade ,ho*s, and participating in educational programs

ROLES LEADERSHP

15

engage in strategic planning' "t:"ttlTlt::^d 9. Strntegic plnntcer' lbp-level managers the strateglcthe org-anization' Carrying out by input from others throughout strategic leadership' Specific activities planner role enables dre manager to practile involved in this role include: for the organization a. setting a vision and direction environment the firm deal with the external i. napiig policies .. ft.ipi"! develop organizational leader roles of a manager is bat the managerial A common thread in the leadership Rev'iew Hnrt,ord' Bwsirues oah..r. An analysisln the in some way inspires o, irno.r.., concludedthatthemostbasicrolefor.o,po,*.l.ud.,,istoreleasethelrumanspirit tlratmakesinitiatrve,creativity,andentrepre,'.o''r'ippossible.22Animportantpractical leadership' For example) a team .* implication i, tn"t ,,'"r.1!..r1. .*rVf"u.i "t.r.iri by explainto the fum's thrust for quality leader can make an i-plrt"r-rt contribution Skilllist' Leadership a mailing

in ing to team members'ffi;;ffiL.Grit"titns roles' insightsinto the variousleadership I Building Exercise r fiorrrd., additional affects leadership how nl.riring of leadership, up to this poirrt*"tuue described.t-r. You have leaders' by and the many n.riui",i.rcarriedout performance, organizational role' We to**a occupyingthe leadership had an opporturutyto exploreyour attirudet informanon about leadership' ;;; fu.Jh;. personalize

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16

CHAPTER /THE NATURE IMPORTANCE LEADERSHIP 1 AND OF

about. Questrom emphasized rhat the companycare ro the broad middle marrs ket,.wherethe bulk of consumers are found. Penney'snationalpresencet good a catalog,and an online business also assets. are But analysts Morningstar.com at were particuJarly harshabout the problems facing Penneyand Quesrrom: .,The company'sproblems are nothing short of humongous, and include an ineffi-

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I- spend time thinking about gerring this company in order. lV1eat diffe rence does it make if it's 100 or l0 or 20) What's meaningful to me is whether our stores are current. I wo_uldlij<ethis_companyto be successftrl its on l00th anniversary. I've only been here a few -onrhr, and I seea very loyal bur an unhappy group ofpeople. Questrom said the only way to boost morale was to start making money again. lr.ofit would tal<ecare of the stock price as well. Since ttre mid-lqq0s, the retailer had lost cusromers to discounr chains such as Target and WalMart and to moderare-priced erailers,ncluding Kohl's ana 5la Navy, as r i they had expanded nationwide. Becoming profitable was going to be painful because would mean change. Questrom said. To offer comperitive prices.to it

needed more competitive a cost st-rucrure, which *.:"t.::lrili i;ff"t
Penney'sdepartment sroreshad to have rhe right assortmenrof mer- J.Cchandise at competitive prices. The only way to do that was to centralize the buying decisions.Headquarterswould pick and deliver the merchandise, and store pers.onnel wortld focus on running the stores. Questrom said that J.C. Pennevfell behind its competitorswhen it did not centralizesooner.It was no longei ef'ficientto have I,150 stores each making rhar many decisionsabout merchandise. wasslow,expensive, It and confusingro the customers.It a-[so pre vented tJle company from developinga national message. Questrom said that some of'the immediacyof having vendors luocldng on y_ourdoor every day was lost when the company moved to Dallas from New York in 1988. "We have to be awareof what's happeningin the fashionworld and bring that to middle Americaar grearvalues."'He.oiride.ed addinf offices

18

AND OF 1 CHAPTER /THE NATURE IMPORTANCE LEADERSHIP

of and Frustrations Being a Leader 1 The Satisfactions
The term lend,erhas a positive connotation for most people. To be called a leader is generally better than to be called a follower or a subordinate. (The term follower hx virtually disappeared in organizations, and the term swbord,inntehas fallen out of favor. The preferred term for a person who reports to a leader or manager is team Researchers,however, continue to use the terms or rnewber,group rwerwber, assoc'iote. swbord,inateandfollower for technical purposes.) Yet being a leader, such as a team leader, vice president, or COO (chief operating officer), does not always bring personal satisfaction. Some leadership jobs are more fun than others, such as being the group with cheerflrl team members. leader of a successfi.rl Becausemost of you are contemplating becoming a leader or moving further into a leadership role, it is worthwhile to examine some of the potential satisfactions and frustrations many people find in being an organizational leader.

The types of satisfactions that you might obtain from being a formal leader depend on your particular leadership position. Factors such as the amount of money you are paid and the type of people in your group influence your satisfaction. There are seven sources ofsatisfaction that leaders often experience. l. A feeli,ng of power and. prestige. Being a leader automatically grants you some power. Prestige is forthcoming because many people think highly of people who are leaders. In some organizations, top-Ievel leaders are addressedas Mr., Mrs., or Ms., whereas lower-ranking people are referred to by their surnames. Yet many leaders encourage others to call them by their first name. 2. A cbwnceto belp othersgrow and' d'evehp.A leader works direcdy with people, often teaching them job skills, serving as a mentor, and listening to personal problems. Part of a leader's job is to help other people become managers and leaders. A leader often feels as much of a "people helper" as does a human resource manager or a counselor. 3. High imcowe. Leaders, in general, receive higher Pay than team members, and executive leaders in major business corporations typically earn several million dollars per year. A handfirl of business executives receive compensation of over $100 million per year. If money is an important motivator or satisfier, being a leader has a built-in satisfaction. In some situations a team leader earns virtually the same amount of money as other team members. Occupying a leadership position, however, is a starting point on the path to high-paying leadership positions. A 4. Respectand stwtws. leader frequendy receives respect from group members. IIe or she also enjoys a higher status than people who are not occupying a leadership role. Status accompanies being appointed to a leadership position on or off the job. \4hen an individual's personal qualifications match the position, his or her status is even higher. 5 . Good. opportwnitiesfor ndvnncernent. Once you become a leader, your advancement opportunities increase. Obtaining a leadership position is a vital first step for career advancement in many organizations. Staff or individual contributor positions help

A OFBEING LEADER 19 AND THESATISFACTIONS FRUSTRATIONS execudvesrise through a broaden a person's professional experience, but most managerial Path. a leader is that you receive 6. Afeetng of "being iru on, things.A side benefit of being as a manager you are invited to attend more inside information. For instance) information not passed management meetings. In those meetings you are given such tidbit might be plans for expansion or ulorrg"to individual clntributors. One downsizing. A leader is often in the posi7. An opportwnity to control lnuney and. other resharces. budget and authorize expenses. Even tion of helping to prepare u i"purt-".tt knowing that your judgment though yo.t .unno, spend this money personall5 some satisfaction. Many leaders in on financial matters is trusted does provide budgets of several million both private and public organizations control annual dollars.

as a supervisor, adminAbout one out of ten people in the work force is classified of these people is-a t11e leader' Yet the probistrator, or manager. Xoa .u"ry one portions of their job' lems these people experience ofa.n ,a.- from the leadership role becauseof the frusMany individual contributors refuse to accept a leadership Theie frustrations include the following: trations they have seen leaders endure. owrt,iwe. People in leadership jobs are usually expected |, Too rnwch unc\mpensa,ted' hours are calle'd casual to work longer hours than other employees. Such unpaid spend ab_outfi{tyovertime. ?eople in organizational leadership positions ln5atty demands' this figure can five hours pe, w..k *oiking. During peak periods of peak surge to eightY hours Per week' zhrnd,ncha.ilt would take severalpages to list all the potential problems 2. Tbi rnany the validity of Murphy's law: leaders face. Being a leader is a good way to discover ,,If anything .* go *org, it -ili." A leader is subject to a batch of problems involvposition is a source of ing people and thrngs- tri*y p.opte find that a leadership stress,and many managers experience burnout' 3,Noteruowgbnwthor'ityt0ca'rryowtrespons'ibility.Peop|einmanagerialpositions over which they have complain"repeatedly ih"t th"yi.. held responsible for things with an ill-performing Iittle control. As a ieader, you might be expected to work p"iott to fire him.or h^er'Or you might be expected team member' y., yoo tu.t ttt" no authority to become to produce higir-quality service with too small a staff and fully staffed. general colin Powell says, As 4. Loneliness. Secretary of State and former five-star ,,Command is lonely.'; The higher you rise as a leader, the lonelier you will be people in whom you can in a certain ,e.,.re. i""dership limits the number of negative feelings about your employer to a confide. It is awkward to confide one group member to team member. It is equally awkward io complain about feel lonely becausethey miss being another. Some people in leadership positions "one of the gang." people. hmalor frustration facing a leader is the numS. Too **ry priblr*, i.nvolvi.ng The lower your leadership ber of human resource pio'Ut..nt requiring action.

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20

CHAPTER /THE NATUREAND 1 IMPORTANCE LEADERSHIP OF position, the more such problems you face. For example, the office supervisor spends more time de aling with problem employees than does the chief information officer. 6. Too wouchotgnn'izationnlpolitics. People at all levels of an organizatton, from the office assistantto the chairperson of the board) must be aware of political factors. Yet you can avoid politics more easily as an indMdual contributor than you can a.s a leader. As a leader you have to engage in political byplay from three directions: below, sideways, and upward. Political tactics such as forming alliances and coalitions are a necessarypart of a leader's role. Another troublesome aspect of organizational politics is that there are people lurking to take you our of the game, particularly if you are changing the status quo. These enemies within might attack you directly in an attempt to shift the issue to your character and style and avoid discussing the changes you are amempring to implement. or, your superiors might divert you from your goals by keeping you overwhelmed with the details of your change effort.23 In addition, backstabbers may agree with you in person but badmouth you to others. 7 . Tbepurswit of conflictitcggoals. A major challenge leaders face is to navigate among conflicting goals. The central theme of these dilemmas is attempting to granr orhers the authority to act independently, yet srill getting them aligned or pulling together for a common purpose.24Many of the topics relating to these conflicting goals are discussed at later points in the text.

college.hmco.com/pic/ o xNowrnDGB BANr(: A table of thesedilemmasasidentified by a group of @ dubrin5e bank executives be found online in the I(nowledge can

Bank sectionof the webiite

for this text.
8' Being perceited' as wrcetbical,especiallyif yow are q, cltlpll/nte execwtiye.The many corporate financial scandalsmade public in recent years have led to extreme perceptions that CEOs, in particular, are dishonest, unethical, and almost criminal in their behavior. Even if95 percent ofcorporate leadersare honest and.devoted to their constituents, the leader still has to deal with the possibility of being perceived as dishonest.

for Leadership 1 A Framework Understanding
L

Many different theories and explanations of leadership have been developed because ofthe interest in leadership as a practice and as a researchtopic. Severalattempts have been made to integrate the large number of leadership theories into one comprehensive framework.2s The framework presented here focuses on the maior sets ofvariables that influence leadership effectiveness. The basic assumption underlying the framework can be expressedin terms of a simple formula with a profound meaning: L: f ( 1 ,B m , s )

The formula means that the leadership process is a function of the leader, group members (or followers), and other situational variables.26In other words, leadership does not exist in the abstract but takes into account factors related to the leader, ttre person or persons being led, and a variety of forces in the environment. A charismatic

LEADERSHIP 21 FOR A FRAMEWORK UNDERSTANDING

Leadership for FtcuREt-z A Framework Understanding

Inc. of by O Today! StephenP Robbins, 1997.Reprinted permission Prentice-Hall, by Managing Source: N.J. River, Upper Saddle

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and visionary leader might be just what a troubled organization needs to help it Yet a group of part-time telemarketers might need a more achieveworld-class success. direct and focused type of leader to help them when their telephone calls mosdy meet with abrupt rejection from the people solicited. The m-odel presented in Figure l-2 extends this situational perspective.2T According to this model, leadership can best be understood by examining its key variables: leader characteristics and traits, leader behavior and style, group member characteristics, and the internal and external environment. At the right side of the framework, leadership effectiveness refers to attaining desirable outcomes such as productivity, quality, and satisfaction in a given situation. Whether or not the leader is effective depends on the four sets of variables in the box. Beginning at the top of the circle, lead.er chnracteristics nnd' traits tefers to the inner qualities, such as self-confidence and problem-solving ability, that help a leader function effectively in many situations. Lead,erbehavior and' stylerefers to the activities engaged in by the leader, including his or her characteristic approach, that relate to his or her effectiveness.A leader who frequendy coachesgroup members and practices participative leadership, for example, might be effective in many circumstances. Growp wetmber chnracteristics refers to attributes of the group members that could have a blaring on how effective the leadership attempt will be. Intelligent and wellmotivated group members, for example, help the leader do an outstanding job. The internal aid, exiernal entironwent also influences leadership effectiveness.A leader in a culturally diverse environment, for example, will need to have multicultural skills to be effective. All of the topics in this text fit somewhere into this model, and the fit will be more obvious at some places than at others. Table l-2, on the following page' outlines how the elements of the leadership model line up with chapters in the text'

22

cHAprER /THE NATURE tMpoRTANcE LEADERSHTp 1 AND oF

Relationship BetweenChapterTopicsand the Framework for Understanding Leadership
Leadercharacteristics and traits Chapter2, "liaits, Motives, and Characteristics Leaders" of Chapter3, "Charismatic Tiansformational and Leadershio,, Chapter6, "Leadership Ethicsand SocialResponsibility,, Chapter11, "Creativity, Innovation, Leadership,, and

Chapter "Communication Conflict 12, and Resolution Skills"
Leaderbehavior and style chapter 4, "Leadership Behaviors, Attitudes, and styles', Chapter6, "Leadership Ethicsand SocialResponsibilitv" Chapter8, "lnfluence Tacticsof Leaders" Chapter9, "Developing Teamwork"

Group member characteristics
Internal and external environment

Chapter5, "Contingency Situational and Leadership" Chapter10, "Motlvation and CoachingSkills" Chapter13, "Strategic Leadership and Knowledge Chapter14, "lnternational Culturally and Diverse Aspects of Leadershio" 7, "Power,Politics, and Leadershio" Chapter15, "Leadership Development Succession,, and

The arrows connecting the four sets of variables in Figure l-2 suggest a reciprocal influence among them. Some of these linkages are stronger than others. The most pronounced linkage is that a leader's characteristics and traits will typically influence the leader's style. If a given individual is extroverted, warm, and caring, it will be natural for him or her to adopt a people-oriented leadership style. enoth., li.rkug. is that the group members' characteristics might influence the leader's style. If the members are capable and self-sufficient, the leader is likely to choose a leadership style that grants freedom to the group. rt will be easier for the leader to empowei these people. A final linkage is that the internal and external environment can influenci or mediate the leader's traits to some extent. In an environment in which creativity and risk taking are fostered, leaders are more likely to give expression to their tendencies toward creative problem solving and risk taliing.

in I SkillDevelopment Leadership
t-

Leadership skills are in high demand. Executives seeking candidates for high-level management jobs list leadership skills as the top attributes they want. After these come industry-specific experience and functionaly'echnical expertise.2s Leadership skills are also sought in candidates for entry-level professional positions. Although students of leadership will find this information encouraging, developing leadership

IN SKILLDEVELOPMENTLEADERSHIP

23

skills is more complex than developing a structured skill such as sending photos over thc Internet. Nevertheless, 1rs1 can develop leadership skiils by studying this text, rvhich follows a general learning model: L Conceptwnlknowled.ge and. behnyiot,nl gui,delines. Each chapter in this text presents useful information about leadership, including a section titled "Guidelines for Action and Skill Development." 2. Conceptual oruforwation d,etnonsh,ated exawples and. brtef descriptionsof lead.ers by in action. Much can be learned by reading about hor.v effective (or ineffective) Ieadersoperate. 3. Experiential exercises. The text provides an opportunity for practice and personalization through cases)role plays, and self-assessment quizzes. Selfquizzes are emphasizedhere becausethey are an effective method of helping )rou personalize dre information, thereby linking conceptlralinfbrmation to yourself. For example, in ),ou will read about the importance of asserti\reness leadershipand also complete an assertil'eness quiz. 4. Feed.back shill wti.lizatiow, or perfotrwance,frow others.Feedback exercisesappear on at severalplacesin the text. Implementing some of the skills outside of the classroom will provide additional opportunities for feedback. 5. Pr"act'ice noturnl settings. just implied, skill development requires active prac im As tice. A given skill has to be practiced many times in natural settings befbre it becomes integrated comfortably into a leader's mode of operation. A basic principle of learning is that practice is necessarl, develop and improve skills. Supto pose, for example, that you read about giving advice in the form of qucstions, as described in Chapter 10. If you practice this skill at least six times in live settings, you will probably have acquired an important new skill for coaching others. Leadership Skill-Building Exercise 1-2 gives you the opportunity to begin developing your leadership skills systematically

IVIYLEADERSHIPPORTF0L|0

i2.'liii:,ii:,.;:::

Here, we asl< you to begin developinga leadership porrficlio that will be a pers o n a ld o c u m e t c l f ' y o r r lre a d e r s h i c a p a b i l i t i ea n d e x p e r i e n c e sn e a c hc h a p t e r . n p s I. we wiU recommerrdnerv entries firr 1'our portfolio. At the same time, you are e n c o u r a g e d o u s e y o u r i m a g i n a t i o ni n d c t c r m i n i n gr v h a tc o n s t i t u t e s s u i t a b l e r a addition to your leadership portfolio. We suggestyou begin your portfolio with a personalmissionstatemcntthat explains the type of ieadership )rou plan to practice. An example might be, "1 intcnd to become r well-respected corporate profussional. kcy mcmber of a a happy and healthl'familv, and a contributor to my communiry. i aspircro lead many people toward constructiveactivit-ies." Include your job resumd in yorrr portfolio. and devote a specialsection to leadership These expcriexperiences. encescan he frorn the job. courmuniry and religiousacrivit-ies. sports. lSee and L e a d e r s h i p e l f - A s s e s s r n e nu i z I - 2 . ) S Qt

24

CHAPTER /THE NATURE IMPORTANCE LEADERSHIP 1 AND OF

THELEADERSHIP EXPERIENCE AUDIT
Readers this book vary consid.erably, their leade of in rship, managerial, and supervisory experience. Yet even readerswho have not yer occupied, r"i-"11."1., ship position may hcve had at leasra rasreof, being a leader.Use the following any possible teadership e*peri.nJ., y", ,,-,ighih;;;J;;: ::::,:l': ::,':*

lt

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INTERTRFTATIoN The more experiences you checked,the more leadership.*p..i* you alreadyhave under your belt. Leadership experience ofany rype ca'be valuablein

cEOs vrie ina a ry :H::? ;:$:T::nT,::: ;:,T:i ::j,':':,ffioj: HT;:';,'*n

MEMBER GROUP AN BEING EFFECTIVE FOLLOWERSHIP:

25

Exercisethat @ O XNOWf,3DGE BANK: contains a LeadershipSkill-Building into the multidimensionalnature of effectivegroup mem*ill giu. you more insight bership.

: Being an Effective GrouP Member
To be an effective leader, one needs good followers. Leaders cannot exist without followers.2efu we mentioned at the outset of this book, the wordfollowerssuffers from political incorrectness, yet it is a neutral term as used by leadership researchers'Most tf the topics in our study of leadership are aimed at inspiring, motivating' and influencing grorrp -.mbers to want to achieve organizational goals' It is also valuable, ho*evei to focus on two key aspects of being an effective group member: the personal characteristics of productive followers and the importance of collaboration between leaders and followers.

As observed by Robert E. Kelley, effective followers share four essential qualities:3o L Self-rnnnagewent. The key to being a good follower is to think for oneself and to work well without close supervision. Effective group members see themselves as being as capable as their leaders. 2. Coirwitrnent.Effecnve followers are committed to something beyond themselves, be it a cause, product, department, organization, idea, or value. To a committed group membei, the leader facilitates progress toward achievi,ng a goal. Z."Co*ptterce nnd.focws. Effective followers build their competence and focus their efforts for maximum impact. Competence centers on mastering skills that will be useful to the organization. Irss effective group members rarely take the initiative to engage in training and development' 4. Courage. Effective follo*... establish themselves as independent, critical thinkers and fight for what they believe is right. A good follower, for example, might challenge the company's policy of taking ninety days to make good on accounts puyuUt., or of iecruiting key people almost exclusively from people with demoof graphic characteristics similar to those_ top management' The above list is illustrative, since almost any positive human quality would contribute directly or indirectly to being an effective group member or follower. Another way of framing the qualities of effective followers is to say that such followers display the personal characteristics and qualities of leaders. Although leaders cannot b. e"p..t.d to change the personalities of group members, they can take steps to .rr.orr."g" the above qualities. Interventions such as coaching, empower-Jrt, ,rrpportive communication, and frequent feedback would support effective followership.

26

IMPORTANCE LEADERSHIP OF 1 CHAPTER /THE NATUREAND

A key role for followers is to collaborate with leadersin achieving organizational fu described by leadership guru Warren Bennis, the postbureaucratic organization type of organization that came after the bureaucratic era, such as team-based zations) requires a new kind of alliance between leaders and the led. \44ren highleaders do not make all of the decisions but solicit input from knowledgeable members, leaders and followers work together more closely. In the words of Today's organizations are evolving into federations of networks, clusters, crossad functional teams,temporary systems, hoc task forces,Iattices,modules, matricesalmost arything but pyramids with their obsolete TOPdown leadership. The new leader will encouragehealthy dissent and values those followers courageousenough to saynoA related ooint here is that the new leader and the led are close allies. Great leaders are made by great groups) every organizational member to contribute energy and talent to help leaders carrv out their roles successfullY.

lc€

Summary
Leadership is the ability to inspire confidence in and support among the people who are needed to achieve organizational goals. Leading is a major part of a manager'sjob, but a manager also plans, organizes, and controls. Leadership is said to deal with change, inspiration, motivation, and influence. In contrast) management deals more with maintaining equilibrium and the status quo. An important current development is to regard leadership as a longterm relationship, or partnership, between leaders and group members. Many people attribute organizational performance to leadership actions. Some research evidence supports this .widely accepted view. Others argue that certain factors in the work environment, called substitutes for leadership, make the leader's role almost superfluous. Among these factors are closely knit teams of highly trained workers, intrinsic satisfaction with work, computer technology, and piofessional norms. Another antileadership argument is that the leader is irrelevant in most organizational outcomes because the situation is more important and the leader has unilateral control over only a few resources. Moreover, since new leaders are chosen whose values are compatible with those of the firm, those values actually are more important.

cottege.hmco.com/pic/dubrin5" # argues that leaders and manComplexity theory agers can do litde to alter the course of the complex organizational system. The system, rather than the leader, dictates that all companies ultimately die. Examining the roles carried out by leaders contributes to an understanding of the leadership function. Nine such leadership roles are the figurehead, spokesperson, negotiator, coach and motivator, team builder, team player, technical problem solver) entrepreneur, and strategic planner. An important implication of these roles is that managers at every level can exert leadership. Leadership positions often are satisfiiing because they offer such things as power) prestige, the opportunity to help others, high income, and the opportunity to control resources. At other times being a leader carries with it a number of frustrations, such as insufficient authority, having to deal with human problems, and too much organizational politics. The leader also has the difficult task of balancing workers' need to be independent with their need to commit to a common purpose . The framework for understanding leadership presented here is based on the idea that the leadership process is a function of the leader, group members, and other situational variables. According

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r*-r.lel. leadership can best be understood by immng. key variables: leader characteristics and irs b.a'ler behavior and style, group member s-tics, and the internal and external enviLeadership effectiveness is dependent on -.ersof variables. iership skills can be developed by following a learning model that involves acquiring con- knos'ledge, reading examples, doing experi-

DISCUSSION AND QUESTIONS ACTIVITIES 27 ential exercises, obtaining feedback, and practicing in natural settings. To be an effective leader, one needs good followers wit-h characteristics such as self-management, commitment, competence and focus, and courage. A key role for followers is to collaborate with leaders in achieving organizational goals. The postbureaucratic organization requires a new kind of alliance between leaders and the led.

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Key Terms
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Attribution theory Substitutes leadership for Leadership efTectiveness

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1i,*a amounts of information have been gathered described in this text. Then choose the formulation leaders and leadership, and many different .urrtr.'ut that seems best to fit the leadership situation you llc;*lership theories have been developed. Many lead- face. For example, if you are leading a team) review ::ship research findings and theories are confusing . the information about team leadership. Typically i:'J contradictory. Nevertheless, from this thicket of an effective leader needs to combine several lead-^:brmation emerge many useful leadership concepts ership approaches to meet the demands of a given r:d techniques to guide you toward becoming a situation. For instance, a leader might need to :ore effective leader. combine creative problem solving and emotional As you work toward leadership effectiveness, support to members to help the team rebound irst be familiar with the approaches to leadership from a crisis.

and Questions Activities 1 Discussion t_
l. S/hat forces in the environment or in sociery have led to the surge in interest in the subject of leadership in recent yearsl 2. In recentyears, there have been dozens offinancial scandalsinvolving business executives (such as the problems at Enron and Global Crossing). What impact has this information had on your interest in becoming, or remaining, a leader in a business setting) 3. Give an example of how you have exerted leadership on or off the job in a situation in which you did not have a formal leadership position. Explain why you describe your activity as leadership. 4. Vl/hat would a boss of yours have to do to demonstrate that he or she is an effective leader and an effective managerl 5. Identify a business or sports leader who you think is highly effective. Present your observations to the class. 6. Based on an informal survey many people who were voted "the most likely to succeed" in their high school yearbooks became leaderslater on in their career. How can you explain this findingl

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cHAprER /THE NATURE tMpoRTANcE LEADERSHTp 1 AND oF 9. S4rich of the nine leadership roles do r-m you are the most suited for at this stage careerfExplain your reasoning. 10. In what way might being an effectire help prepare a person for becoming an leaderl

7 . Mter reading this chapter, do you believe that a person who is not a "born leader" still has a good chance of becoming an effective leaderf Explain. 8. Top-level leadersof major businesscorporarions receive some of the highest compensation packages in the work force. lVhy are businessleaders paid so much)

way, Inc. announced that it is.retre.atingfrom the consumer electronics world and returnrng to its original mission of marketing ilrson; t"T8:T;t;r, objective is to fix our core-business,,, sals W^aV.n5 lnouye, who recently assumedtlre R. role of chief executive."People talk about multit11kinS, but in real life you have ro focus on one rime.' Inouye saysthat new dealswith $l"S "t, PC retailers. Best Buy Co., Inc. and CompU.SA Inc.; as well as a greater Focuson fast-growrng should the money-tosin[ .attow ::j:_b"rk .PCs, company ro earn consisrent profits beginning next year. 'id;. is a huge gamble for Gateway,which . has relied on consumer electronics-,o prop up profit^margins at its once rhriving pC bus,ncss. But Gateway'sconsumer electronicssalesnever ov.ercamethe drag fiom irs pC business,which still accounted for 72 percent of its revenue last year. Cateway losr a cumulative $2.4 billion in the

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revive Gateway by applying rhe same approachthar he successfully usedto rurn PC maker eMachines, Inc., which acquired in 2004. There, he slashed consolidating component suppliers,

qualiry and fiJling retail orders on rime.
time of its acquisirion,eMachinesemplolod I38 workers bur was consistentlv profitabh had $l billion in annual sales. So far at Gateway. Inouye has closed rhr 188 of its .loss-plaguedGateway CoLrntrrand outsourced manufacturing and service.Gateway will continue to market related products via the lnternet and sales,in addition to managing its neq.dea.b big retailers. The changeswere made with rwo lofn' mind: (l) eventuallyro unseat HewlettCo. as the leading sel.ler home pCs, and I of becomea $10 billion business the next ilr

"I don't think it's a big strerc[* tL. _y.* CEO insists.
Yet Gateway's new direction represens I

$6.1 billion. Waitt plunged into consumer electroni Gateway has suffered four failed resffucturings Gateway'sbusiness victim fell to price u'arsi . in the past three years,all under the auspices of by Dell Inc. and Hewletr-packard former chief executive Ted Waitt, who itepped (HP). Like Dell, Gateway was founded as a down as CEO in 20.04. This ri-e nro'und, seller. But by the mid-l990s, the compam Inouye, a veteran retailing execudve, hopes to Iaunched its own chain of showrooms to

years, to biltion plete rurnaround from just four years ago. li::** a one-yearls. :"1.'^ 9i".pp:d. $3.4 trom high of

LEADERSHIP PROBLEM CASE B l ::. products and provide soFtware trainine :::lrs., Over time, those Gateway Cornr! s :::olphed.intosales computersand high_ of - : . r u m e l ' e l e c t r o n i cB . t G a t e w a y a sn e v e r su w : , make its retail outlers profita'ble,and as : c plummeted the expense of the stores --J roo steepto mailltain. -. rre's plan now calls for expanding U.S. =- :nd overseas saies achieve ieastt irilliou ro at

29

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uslomer PCs and kphone als s-ith eoals fui Pickard d 2;to three to :h..' the ia comr- u'hen nics as i ignited Dmpany a Crect ur.. had denon-

Inouye saysfhat Garewayalreadysurpasses Hp . rn customer satislaction surveysand its new low_ overhead approach will allow it ro profitablv undercurrhe much bigger pC and printei makerin the retail marker.He expecrs besrHp ro bv erabl bing an "over 50 percenr..shareof the U.j. ietail sales soon as the first quarrer of 2005. as Hp cur_ rently holds a 60 percenrshareof rerailsales. com_ q-::_i----once highestin the industry the at 26 oer_ paredwirh Gateway's percent 30 share. *_ : of revenuc-to below Dell.s 9.5 percenr. L-;:-=ri now employsabout I,800 workers. lv down Q U E S T I O N S r :: i,500 when Inouye rook ovcr. Much of the . ". cr headcount comesfrom closingthe Gateway ..lnirv stores. lnoul,e explains that lower :.:.cn\es will allow the company to be profitable :--'n uirh thin margrnsof abour B percenr. Famouslyfrugal. Inouye neverspendsmore than :t tor lunch, buys the cheapest grs for his cer, and d urirrg Gateway'stransition I _-_r\ been known to clip coupons for staples such as 4. \4ftar leadershipchallengcs lace lnouve as he :',rp His fiatherwas a tomato nnd peaj Farmer in to impleme'r turnaroun<l his iuba Ciry California. An uncanny abiliry oF to .*o"., ilffJ ier hnancial details from opcradrg reports earned rnouye the luckname ,,Wayne Man,', after the nLrman calculatorin the film Rain Man. His talentsand quirks not withsrandinq. some husrness analysts chara*erize the CEO'silrrl ,o rnc. rn rhe formarTerrbookvia Copyrighr Ciearance ttusplace HP as quixotic (far_tetched,1. The shift ::il:i"t

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drive lor homelesspeople jn her hometown for threeconsecutive umlners. o Lee believed s S that her Girl Scourrroop at age.l l, p . . r ; a . n i o f t h c . s e x p e r i e n c e sn a d d i d o n e i, to her formal edu_ . t h e , A s i a n S t u d e n r A s s o c i a r i o nil n l r i g h s c h o o l . catron, were preparing her to be a corporate a n d t h e c a p t a i no f h e r . s o c c e t e a m i n i o t h r h i g h leader. Ar college Lee majored in iuformation school and college. She also orgrnizecl , fooa s y s t e m s a n d b u s i n e s s a d m i n i s t r a t i o n ' (continucrrt

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30

cHAprER / THE 1 NATURE tMpoRTANcE LEADERSHTp AND oF

's L e e f i r s t p o s i t i o n i r r i r r d t r s t r rr ra s a h u s i n c s s her nov employer. At the outsetl she reminde: r n a l v s t n t I m c d i u n r - s i z ec o n s u l t i r r gf i r r n t l r a t h e r n c u l n a n a g e rl r r d l e r n r l c a d c r l h a t s l r c 1.1... h e l p c dc l i e r r r sn r p l e r n e n [ a r g c - s c . r sllc t c m ss r r c h t b r r e . i t h c m a r r r g e r i a lr o u t c t o r - c r r r a i r r i ni g : i t . s n r s e u r c l p r i s c o f i r r a r e . h e e x p l a i n e d o l r c l t e r r r r t c c h n i c , plo s i r i o r rA J i o ' s i r r n o n r h s f h a r d n o r * . s S t r . o l e a d e rr t t h e o r r l s e tt h . r t s h c n . r n t c d t o b e p l l c c d Lec looked fornald ro her firsr ficrmal per-lb:oD a rnJllirgelncnttt'rrcl(rJtlter Lllxlt rr tcchrrical n r J l r c e v i r l u . l r i o r r . c l t e l m l e a d e ri-n l b r - m e d r c : c H l t r a c kb e c r u s e h ee s p i l c dt o h c c o m i n ga c o r p o r a f c t l r a r l r c r p e r f b l m a n c c r . r sl r c f t e rt h a u a r c r a g c . u : s r h exccutivc. Lee's term leirder explained, .,Jen, I s h o r t o [ o u t s t e r r d i n g L e e a s l < e ld r r n e r p l . r n a t i o : . o I t n o n l o r r l r c i n a h u r r l ' t o g e r a l r c a d L o r so f c a p a of rrhv her perfonnarlce \vas not considered out. ble peoplelre looltirrgro r-[irnb tlre ladder.. tou Brrr s t r n d i n g . h ei u l b r r n e d r c r r e a ml e r d c ra r r dr n a n S l f i r s t h n c t o b u i l d v o u r c x l . e eb 1 p r o r i n g t h a t v o u a g e r , " l r r e c d r n o u t s t r l t d i l l g r a t i n g t o h c l p m . r arcan outstandirrgn.rlvst." a l c h i c r c n r l g o a l o l ' b c c o r n i r r g, r l c . r d e r i r r o L r : L c e r h o u g h t . " l r l o o l < s i l < er h e c o l n p . r n \ n ) x ) ' a ' n m n a n \ / l . r r e e da l i t t l c c o n l i n c i r r gr h l t I ' m l e . r d e r s h im a t e p The manager replied, "Our performancc evalr i a l , s o I ' n r g o i r r g r o d i g i r r a u d p c r f . o r ml i l < ea uations are based orr yepl contribution to the s t a r . "A r t l L c c d i d d i g i n . m t r c h r o r h c p l e a s t r r o l ' companv. We care much lcss about r.vriting pere l r c r c l i c n t s ,h e r t c l m l c r d c r , . r n d l r e r c o r r o r l < c r - s . fbrmance evaluations to help a senior business H e r f i r s t l b r r p c r f o r r r r a r r cle p r a i s l l s n . c r e o u t - r r u a l y ' s t e r i c l r h e r c r r e c r g o r l s . B e s i d e s , p r Jcrr. s t a r r d i n gv e r t h e c ( ) r n p a n ) a s s t i l l n o t r . c r r d t o V o r . r ' \ c r t d c , n v n l 1 ' O r rp o i n t e r r o r r g hb t l u t r r a n t i n s I p r u m o t c J c n t o e t e l m l c r d e r p o s i t i o r r L e e ' st c a r n t o b e a l e r . l c r i r r o u r f i r ' m .L c t v o u r p e r l o r m a r r c c . l e a d c r e r p l a i n c d , " B o b l t h e r c r r n l c a d c r ' sn r a r r - s p e r l < b r i r s e l t . " f a g e r l a r r d I b o r h a g r e er h a t 1 ' o r r r e c l c , i n g n o u r a a Thrt cveuing.fcrr rnet rr ith her fiancc.Kenrrerlr. j s t a n d i r r go b , b u t p r o m ( ) t i o n \; r r eh a r d t o c o r n cb v to discuss dilemnr.r.. "The problem, I(err.is rhar hcr i r r o r r r c o n r p c n v t h c s e d a v s . T h c c o r n p . r r r yi s t h c v d o n ' t g c t i r . I ' n t l c . r d c r s h im a r e r i a la n d t h e r p . s h r i n l < i n g n o r e t h x n c x p r r r d i n g ,s o t r l l < sr b o u t . l o n ' t s c ei t r c t . I ' m p e r f b r m i n g v e l lr n d l c t r i n gm r l r p r o n l o t i o na r e a l i t r l cf u r i l el i g h r r r o r r . " irrtenriorrs i<norr but mr strafcg)' bc rr, isn't rr.or.l<ing. L e c d e c i d c dr h a t i r r , r o r r Jrd l < e k r n g r i n r el o b e Tlrc companl is rnissirrg on .r golderropi)orrua I our p r o r n o t e dt ( ) t r t m l c l d c r o r m a n a g c ri . h c r p r c s - rrirv bv ltot n I Putlilg me or1r hst lca.icrsljprracl<. c n t c o m p e l l \ , s o s l r e h e g r n r o r l u i c t l y l o o l <l b r . r h a l e t o c o r r r r r c cr h e m o f t h e i r e n . o ri n j u d g m e r r t , " i n e r ' rp o s i t i o ni r r l r c r t i c l d . H e r j o h h t r n t p r o c e e c l e d K c n n e t h .l h u r r r . r rrre s ( ) r r r cs p e c i . r l i s r e p l i e t l , c t, m o l c s r ri f i l v t h r r r s h e a r r r i c i p ; r t e d . h r o r r g h a " l ' m l i s t e r r i n go v o u . a n d I u a n t t o g i v e T t 1'orr s p o r t sc l t r b c o n t a c t .L e e n a s g r . a r r t e ld l o h i n t e r - g o o d a d ri c e . L c r m e b c o b j c c t i v el r e r ed c s p i r e h e r r i e r r w i t h a p a r r n e r i n I l a r g e r c , r n s r r l t i n g i n n I . r c tt h l t I l o v e v o u . W l r i r rh a v cy o u d o r r c l a r e l l t o f offcring simillr serliccs.AJicr r scr.ies ficrrrinter- p l o v c t o r i r e c o m p l r r \ t h r t v o u a r e l e a d e r s h i p of r i e n s , L e e u a s l r i r e d a s e s c n i o r b u s i n e s s n a l v s t n r a c l ir l i " a t p c r f i c r m i n gr v o r l t o n a s ) ' s t e l n i r n i l e rt o t h c o r . l c s s h e l r a d l - c c r ru o r k i l r g r v i r h l ' o r n r o v e a r s . u r i n g Q U E S T I O N S D h c r i r r t c l v i e r v s ,e c e m p h . r s i z ch e r g o d o f o c c r r - l . W h o h r s t h e p r o b l c n r e r c : e n L d h o r . r h cc o u s u l r f p f i n g a l e a d e r s l r ip o s i r i o ra ss o o n l s L h cc o r r r p r n l ' p r irrgfirrnirr tlucsrion) h e l i c r e dr h l t s h c r v r r s e a d r 'f i r r s r r c ha r o l c . H e r 2 . W h a t l d r i c c c r n l o u o f l e r r Jcn to help hcr f i r s t c l i e n t . r s s i g r r m e u r , , th e l l . i r r g t e a l n o l ' c o n as r i r r c r c a s c e r c h a r r e c s f o c c t r p y i n ga f o r . m a l h o s u l t u r t si r r s t r i la s f r t e i n c o m c r a x c r l l c e n f c r ' . l c r d e r s h i p o s i t i o ni r r t h e c o m p r n rI p A l t c r . r o n c - m o n l l t - l o n qo t . i c n t r t i o r r n d t r . . t i n - . 3 .W h . r r i s o r r r e v a l u a t i o r r l ' t h e a d r . i c c o I(err l i n g p r o g r ' . r n r . e c r v a s e r l b r m i u gL l i l l a b l er o r k r t L p r offereciJcrri

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