CARD-MRI Development Institute, Inc.

Module for Business Organization and Management

Course Title CBME 1: BUSINESS ORGANIZATION AND MANAGEMENT

This is an introductory course in management for business and accountancy students
who need to grasp the big picture of management concepts, processes and techniques
as practiced today in business, industry, and government. The students gain a solid
Course
grasp of how effective managers orchestrate human resources and their own energies
Description
to contribute an organization’s successful achievement of its mission and bottom-line
goals.

Expected outcomes that students will achieve and developed

At the end of the course, students are expected to:

 Define leadership and its ingredients
 Describe the trait approaches and charismatic leadership approach and their
limitations
Course Learning
 Discuss various leadership styles based on the use of authority
Outcomes
 Identify the two dimensions of the managerial grid and the resulting extreme
leadership styles
 Distinguish that leadership can be seen as a continuum
 Explain the contingency approach to leadership
 differentiate the path-goal approach to leadership effectiveness
 Distinguish between transactional and transformational leaders
Students prefer to be engaged visually and self-paced learning such as interactive media,
Evidence of
videos and textbooks with an emphasis on useful exhibits, photos, and other visual
Learning/
learning aids. And they prefer content that they can read or digitally access at a time and
Assessment Tools
place of their choosing.
This module covers the following topics:
 What is LEADERSHIP?
 Understanding the different context of charismatic leadership
 The qualities of charismatic leader
Topics (Coverage)  4 Different Types of Leadership Styles
 Two dimensions of the managerial grid and the resulting extreme leadership styles
 Continuum of Leadership Behaviour
 Understanding the contingency theory of leadership
 Path-Goal Model
 Transactional Versus Transformational Leaders
Target This course is offered to the incoming first year students taking up Bachelor of Science in
Participants Entrepreneurship with Specialization in Microfinance.
Learning Time: Module 15
Students may contact teacher for assistance and guidance to the following links:
Means for Email: gonobutchcarlo@gmail.com
Learner Support Messenger: facebook.com/mindpainamelgaul or BUTCH CARLO MULIT GONO
Mobile No.: +639264282731

Summative
For overall assessment of this module, the student will Rubrics/Standards
Assessment
create and discuss their own value chain and will take (for the authentic
(Performance/Produ
long quiz to validate their learning. assessment)
ct)

Course Name: CBME 1 – BUSINESS ORGANIZATION & MANAGEMENT

TOPIC TITLE: DIRECTING: Leadership
TIME ALLOTMENT: Week 15
MODULE #: Module 15 – Lesson 15
Period/Term: Prelim

Module Learning Objectives:

 Define leadership and its ingredients
 Describe the trait approaches and charismatic leadership approach and their limitations
 Discuss various leadership styles based on the use of authority
 Identify the two dimensions of the managerial grid and the resulting extreme leadership styles
 Distinguish that leadership can be seen as a continuum
 Explain the contingency approach to leadership
 differentiate the path-goal approach to leadership effectiveness
 Distinguish between transactional and transformational leaders
Learning Part

Activate Prior
Teaching Methods
Knowledge
Greetings everyone!
Welcome to Module 15 of your course CBME 1: Business Organization and Management

Microfinance Innovation Our objectives for this topic are the following:

 Define leadership and its ingredients

 Describe the trait approaches and charismatic leadership approach and their
limitations
 Discuss various leadership styles based on the use of authority
 Identify the two dimensions of the managerial grid and the resulting extreme
Time Required: leadership styles
10 minutes  Distinguish that leadership can be seen as a continuum
 Explain the contingency approach to leadership
 differentiate the path-goal approach to leadership effectiveness
 Distinguish between transactional and transformational leaders

To start with, let’s have this phrase of Lee Iacocaa:

“Motivation is everything. You can do the work of two people, but you can’t be two people.
Instead you have to inspire the next guy down the line and get him to inspire his people.”
– Lee Iacocca

Acquire New
Teaching Methods
Knowledge
Time Required:
60 inutes
What is Leadership?
Reference: Principles and Application: Management for Filipinos by Dr. CONRADO E. IÑIGO,
Jr. Ph.D, DBE / Principles of Management and Organization by Dr. Pedrito R. Pereda and Dr.
Purisima P. Pereda

Leadership is an important aspect of managing. Indeed as will be made clear in this book, the
ability to lead effectively is one of the keys to being an effective manager. It should also become
clear that understanding the other essentials of managing and doing the entire managerial job
has an important bearing on assuring that a manager will be an effective leader Managers must
exercise all the elements of their role to combine human and material resources to achieve
desired group objectives. The key in doing this is the existence of a clear role and a degree
discretion or authority to support managers' actions. Thus, all managers should become good
leaders.

Leadership is generally defined as the art and science of influencing people so that they
willingly move toward the achievement of the group goals. This concept can be enlarged to
imply not only willingness to work but willingness to work with zeal and confidence. Zeal arid
confidence reflect experience and technical ability. To lead is to guide, conduct, direct, and
proceed. We can say that all managers must be good leaders, but not all leaders could be good
managers.

Leadership is a process of influencing the activities of members of a group in performing their

tasks of goal setting and goal achievement. The ability- to obtain followers and influence them
makes a leader. Generally, influence results when one person presents information in such a
way as to convince the other members of the group that their situation will be improved if they
behave in a certain way. A leader is the person who takes the central role in this interaction by
influencing the behaviour of other members of the group.

UNDERSTANDING THE DIFFERENT CONTEXT OF

CHARISMATIC LEADERSHIP
Reference:https://www.cleverism.com/charismatic-leadership-guide/#:~:text=Charismatic
%20leadership%20is%20another%20trait,personal%20characteristics%20of%20the
%20leader.

Charisma is a trait often associated with leaders and the world is full of examples of people
being described as charismatic leaders. The term charismatic comes from the ancient Greek
word charis, which means grace, kindness and life. Charismatic people are considered as
graceful and virtuous. The idea of using one’s charisma and influence in order to lead is not a
new way of looking at leadership, although the theories around it are rather recent.

In this section, we’ll explore the idea of charismatic leadership through its past and present
contexts.

The Historical Context

The idea of a strong and noble leader, who relies on personal characteristics, has been present
in history. People have attributed and associated great personalities with the ability to rule in a
good manner ever since the dawn of time.

In terms of crafting a proper leadership theory, the two biggest influencing theories behind
charismatic theory have been developed by Max Weber and Robert J. House.

Max Weber’s Charismatic Leadership

The charismatic theory’s driving force is Max Weber’s study on political obligation. The
German sociologist explored the reasons people follow authority and the findings were
published posthumously in 1922 in Economy and Society.
Weber moved away from the classical thinking that authority is achieved through the three
routes:

 Self-interest – You obey for material or economic gain

 Fear – You follow the rules because you don’t want the punishment
 Habit – You obey simply out of the socialization of authority

Instead, Weber thought people follow a leader or a state because they evaluate the authority
and perceive it good, right or just form of power. Therefore, the leader’s legitimacy is subjective
to each subordinate.

Charismatic leadership relies on three components in Weber’s theory. There is the

Psychological Dimension, which refers to the inner qualities of the leader. Weber talks
about the trait being a “gift” of the leader, claiming it could be either a divine trait or a specific
physical or mental state of being. But since charisma to Weber, is value-free and created by the
subordinates’ assumptions, there is no detailed explanation on the origins of charisma.

The second dimension is about the Social Aspect. Charismatic leadership might not stem
purely out of one’s inner being, but have a social source. This could be the cultural influence of
society, family, work or even education. Charisma essentially takes on a traditional form and
legitimizes its source. The impersonal nature of charisma implies that it can be taught,
according to Weber.

Finally, Weber’s theory also has a Relational Dimension between the leader and the
subordinate. According to Weber, charisma is the “affectual relationship between leader and
followers developing as the historical product of the interaction between person and situation”.
A leader has to prove his or her worth and the charisma in order to continue to enjoy
legitimacy. Charismatic leadership is therefore relational because the subordinates can
withdraw their support, leading the leader without legitimacy to rule.

Robert J. House’s Charismatic Leadership

Weber’s ideas of charismatic leadership were theoretical and the conversation that followed
around the topic tended to be speculative in nature. In 1976, Robert J. House published his
working paper A 1976 theory of charismatic leadership, which aimed to move the theory to a
more testable concept. House moved the charismatic leadership theory more towards a
psychological explanation, rather than a sociological or political science theory of power.

House’s main argument was that charismatic leadership is rooted in personal and behavioral
characteristics and the leaders with these qualities can inspire subordinates through
appropriate articulation of the organizational vision. Therefore, it follows the similar notion of
Weber that charismatic leaders don’t receive authority out of fear or financial gain, but out of
emotional excitement.

To communicate the vision to subordinates, charismatic leaders need to showcase high levels of
self-confidence, dominance, influence and strong conviction. Furthermore, certain situational
and organization factors can help boost the leadership’s appearance. These assumptions and
characteristics will be discussed further in the following sections.
The main takeaway from House’s theory is that charismatic leadership should not be defined
solely in terms of the effects it has on followers. Instead, House looked more towards the
behaviors and the situational factors that influence the effectiveness of charismatic leaders.

THE QUALITIES OF CHARISMATIC LEADER

Reference:https://www.cleverism.com/charismatic-leadership-
guide/#:~:text=Charismatic%20leadership%20is%20another%20trait,personal
%20characteristics%20of%20the%20leader.

In 1988, Jay Conger and Rabindra Kanungo published Charismatic Leadership, which outlined
the key characteristics of a charismatic leader. The findings have been repeatedly shown to be
accurate in a number of other similar studies, such as Robert House and Jane Howell’s 1992
paper Personality and Charismatic Leadership.

One thing charismatic leadership emphasizes is the nature of your charisma. While it might
seem charisma is a ‘natural’ quality you either have or don’t have, the reality is that many
charismatic qualities can be learned and reinforced.

#1 Visionary
Martin Luther King dreamt of a society where everyone is equal, Gandhi wanted different
religions to live in peace in India and Sir Winston Churchill wanted the British to stay resilient
during the war. Every charismatic leader has a vision – they are able to look beyond the horizon
and imagine a different way of doing things. Obviously, it doesn’t mean everyone has to
imagine a society-wide change or movement, but you have to have a vision of what you want to
achieve or what you want the organization you lead to accomplish.

Being a visionary means being open to chance and understanding that constant improvement is
required for progress. You need to embark on a road of self-improvement, where you are
constantly looking to expand your skills and learning things beyond your comfort zone. In
addition, you need to listen to other people and understand how their experiences have shaped
them. If you can combine your understanding of the world, with the experiences of others, you
can visualise new solutions and approaches to solving things.

Visionary people are both dreamers and doers. You want to spend enough time thinking about
the world and the problems you face. But you don’t want to be caught daydreaming, while other
people fix the problems.

#2 Articulate
Charismatic people are good communicators. In order to get people on your side – to
understand your vision and to believe in it – you have to be able to share the message loud and
clear. If you aren’t articulate, your subordinates won’t be able to understand what you are
envisioning.

There are two key aspects of articulation in terms of charismatic leadership. First, it simply
means being a better communicator and being able to talk about complex issues to people in a
way they understand. In the business world, the key is to explain the why, the how, and the
when. You need to explain the reason or the vision behind the action, clarify what is needed in
order to get to the objective and ensure people know how fast this all should be accomplished.

But the second aspect of articulation and communication relates to the understanding of your
subordinates. Charismatic leadership requires you to be able to read people and select the right
motivations for inspiring them. Therefore, you need to be able to analyze your audience and
select the right communication style for each occasion.

#3 Sensitive
Charismatic leaders must be sensitive, both in reading people’s emotions and ambitions, but
also in showing them compassion and empathy. As mentioned above, you must be able to sense
the other person’s expectations and needs in order to properly approach them with your vision.
In short, you need to be able to sense the mood and be able to adjust to it.

In addition, you must also show humility and compassion. When you listen to people, you need
to convince them you are there to help and you understand what the person is saying. Even if
you can’t do what the person might want you to do, you need to be able to convince them to
work in a specific way and make them feel like its their best interest as well.

The charismatic leader who can show compassion towards subordinates is the leader that gets
people on his or her side. Since you require subordinates to buy into your vision, you need to
show respect and empathy towards them. People follow leaders who make them feel good and
important, instead of someone who doesn’t listen to them.

#4 Risk-taker
Just as you need to be a visionary, you must be willing to take risks as well. Because you are
trying to obtain a visionary goal, something transformative and different, you won’t have a
paved out road ahead of you. In order to accomplish great things, charismatic leadership
requires you to put yourself on the line.

Risk-taking means two things. First, as a leader, you are accountable for any problems that
might arise. You aren’t afraid to step out of the way if things don’t work out and you won’t try to
place the blame elsewhere.

But in addition, you aren’t afraid of challenges either. You understand that each challenge will
bring about positive things, whether or not you accomplish what you set out to do. You are
ready to give it your best shot because you can see the rewards of accomplishing things, while
realizing failure isn’t the end of the world.

In business, risk-taking isn’t the same as gambling. Risk-takers don’t just rush into things and
hope for the best and neither do charismatic leaders. You understand the importance of
analyzing tasks and the options ahead of you, but you are willing to take calculated risks if the
situation calls for it.

#5 Creative
Finally, charismatic leaders tend to be creative. In order to be more visionary, you naturally
need a healthy dose of creativity. You must be able to think outside of the box in order to create
meaningful change in the organization.

Creativity is further linked to the charismatic leadership’s idea of strong conviction. You need to
be able to speak with conviction – meaning that you need to use creative images, rhetoric and
messaging in order to get others to buy into your vision.

If you’d like to improve your ability to be more creative and to stand out from the crowd, you
should try these five scientifically proven tips (BBC Science):
Change how you do things – Altering your daily routines can help you because more innovative.
Removing distractions – You should try to create an environment around you which doesn’t
have distractions – visual or audio -.
Spend time on mundane tasks – You can spark your creative mind by engaging in tasks, which
require less thinking.
Improvising and taking risks – Risk-taking can boost creativity together with improvisation. If
you can play an instrument or you like drawing, spend some time doing it without an objective
in mind.
Allowing your mind to wander – You shouldn’t be afraid to just sit around and allow your mind
to think freely.

4 Different Types of Leadership Styles

Reference: https://www.yourarticlelibrary.com/business-management/4-different-types-
of-leadership-styles/2550

1. Autocratic or Authoritarian leadership

An autocratic leader centralizes power and decision-making in himself. He gives orders, assigns
tasks and duties without consulting the employees. The leader takes full authority and assumes
full responsibility.

Autocratic leadership is negative, based on threats and punishment. Subordinates act as he

directs. He neither cares for their opinions nor permits them to influence the decision. He
believes that because of his authority he alone can decide what is best in a given situation.

Autocratic leadership is based upon close supervision, clear-cut direction and commanding
order of the superior. It facilitates quick decisions, prompt action and unity of direction. It
depends on a lesser degree of delegation. But too much use of authority might result in strikes
and industrial disputes. It is likely to produce frustration and retard the growth of the capacity
of employees.

This leadership style is less likely to be effective because (i) the new generation is more
independent and less submissive and not amenable to rigid control; (ii) people look for ego
satisfactions from their jobs and (iii) revolution of rising expectations changed the attitude of
the people.

Advantages of autocratic leadership

 It is the speed with which decisions can be made; the leader does not have to obtain
group members’ approval before deciding.

Disadvantages of autocratic leadership

 Autocratic leadership does hurt group morale.
 Members may resent how decisions are made and thus support them in only a minimal
fashion.

Autocratic leadership may be divided into three classes:

(A) The hard-boiled autocrat who relies mainly on negative influences uses the force of fear
and punishment in directing his subordinates towards the organisational goals. This is
likely to result in employees becoming resentful.
 (B) The benevolent autocrat who relies mainly on positive influences uses the reward and
incentives in directing his subordinates towards the organisational goals. By using
praise and pats on the back he secures the loyalty of subordinates who accept his
decisions.
(C) The manipulative autocrat who makes the employees feels that they are participating in
decision-making though the manager himself has taken the decision. McGregor labels
this style as Theory X.

2. Democratic or Participative leadership

Participative or democratic leaders decentralise authority. It is characterised by consultation

with the subordinates and their participation in the formulation of plans and policies. He
encourages participation in decision-making.
He leads the subordinates mainly through persuasion and example rather than fear and force.
Sometimes the leader serves as a moderator of the ideas and suggestions from his group.
McGregor labels this style as Theory Y.

Taylor’s scientific management was based on the inability of the ordinary employees to make
effective decisions about their work. Hence the decision-making power was vested with the
management. But recent studies indicate the need for participation by subordinates. The
modern trend favours sharing the responsibility with the employees.

This will foster enthusiasm in them. The employees feel that management is interested in them
as well as in their ideas and suggestions. They will, therefore, place their suggestions for
improvement.

Advantages for democratic leadership are as follows:

 Higher motivation and improved morale;
 Increased co-operation with the management;
 Improved job performance;
 Reduction of grievances and
 Reduction of absenteeism and employee turnover.

Disadvantages of democratic leadership

 It accounts for slow decisions, diluted accountability for decisions.
 There may be possible compromises that are designed to please everyone but does not
give the best solution.

3. The Laissez-faire or Free-rein leadership

Free-rein leaders avoid power and responsibility. The laissez-faire or non-interfering type of
leader passes on the responsibility for decision-making to his subordinates and takes a
minimum of initiative in administration. He gives no direction and allows the group to
establish its own goals and work out its own problems.

The leader plays only a minor role. His idea is that each member of the group when left to
himself will put forth his best effort and the maximum results can be achieved in this way. The
leader acts as an umpire. But as no direction or control is exercised over the people, the
organisation is likely to flounder.

An experiment conducted among Boy Scout Clubs of the USA in 1940 shows autocratic
leadership is likely to rouse antagonism in the group and produce hostility towards the leader.
In democratic groups, the absence of the leader made little difference, while in autocratic
groups productive work dropped to a minimum, when the leader was out of the room.

Democratic leadership is more likely to win the loyalty of the group. The laissez-faire groups
also developed friendly approaches to the leader as in the democratic group. But suggestions
from the groups were very low and they were also less productive.

Advantages of free rein leadership

 Opportunity for individual development is offered to group members.
 All persons are given a chance to express themselves and to function relatively
independently.
Disadvantages of free rein leadership
 It may result in a lack of group cohesion and unity toward organizational objectives.
 Without a leader, the group may have little direction and a lack of control.
 The result can be inefficiency or even worse, chaos.

4. Paternalistic leadership

Under this management style the leader assumes that his function is fatherly or paternal.
Paternalism means papa knows best. The relationship between the leader and his group is the
same as the relationship between the head of the family and the members of the family. The
leader guides and protects his subordinates as members of his family.

As the head of the family he provides his subordinates with good working conditions and fringe
benefits. It is assumed that workers will work harder out of gratitude. This leadership style was
admirably successful in Japan with her peculiar social background.

This leadership style has still been widely prevalent in small firms in India. However, this
paternalistic approach is unlikely to work with mature adult employees, many of whom do not
like their interests to be looked after by a “godfather.” Instead of gratitude, it might generate
antagonism and resentment in the subordinates.

TWO DIMENSIONS OF THE MANAGERIAL GRID AND THE

RESULTING EXTREME LEADERSHIP STYLES
by R. R. Blake and J. S. Mouton
Reference: https://www.iedunote.com/managerial-grid-model-leadership-styles

The two dimensions of leadership, viz. concern for people on ‘vertical’ axis and concern for
production on the ‘horizontal’ axis have been demonstrated by R. R. Blake and J. S. Mouton in
the form of Managerial Grid Model.

They identified 5 basic leadership styles of practicing managers representing various

combinations of the aforesaid two dimensions as shown in the following figure;

Managerial Grid Model is based on two behavioral dimensions:

Concern for people: This is the degree to which a leader considers the needs of team
members, their interests, and areas of personal development when deciding how best to
accomplish a task.

Concern for production: This is the degree to which a leader emphasizes concrete
objectives, organizational efficiency, and high productivity when deciding how best to
accomplish a task.

As shown in the figure, the model is represented as a grid with concern for production as the X-
axis and concern for people as the Y-axis; each axis ranges from 1 (Low) to 9 (high).

The five resulting leadership styles are as follows:

Video Streaming:
Entitled: Leadership Styles: Blake Mouton Managerial Grid
Link: https://www.youtube.com/watch?v=Vz5hgX2MYbE
Time Duration: 5:11 minutes

1. (1,9) Country Club Style Leadership High People and Low Production
(1,9) Country Club Style Leadership style of leader is most concerned about the needs
and the feelings of members of his or her team. In this environment, the relationship-
oriented manager has a high concern for people but a low concern for production. He
pays much attention to the security and comfort of the employees. He hopes that this
will increase performance He is almost incapable of employing the more punitive,
coercive and legitimate powers. The organization will end up to be a friendly
atmosphere but not necessarily very productive.

The (1,9) boss mainly uses reward power to preserve discipline and to support his
subordinates in accomplishing their goals. Conversely, this manager is virtually
incapable of employing more disciplinary coercive and legitimate powers. This inability
results from his fear that using such powers could jeopardize his relationships. This
inability results from his fear that using such powers could jeopardize his relationships.

Thus, the supervisor seldom attempts to impose his will on other people, preferring to
accept the ideas of others instead of forcing his own.
Employees in this type of work environment go about their day working at their own
pace on projects that they enjoy and with coworkers that they are attracted to.
2. (9,1) Produce or Perish Leadership- High Production and Low People
(9,l) Produce or Perish Leadership management style is characterized by a concern for
production as the only goal. Employees are viewed as obstacles to performance results
unless obedience to the manager’s wishes is explicitly granted. In this style, the
manager is authoritarian or compliance. A task-oriented manager, he has a high
concern for production and a low concern for people.

He finds employee needs unimportant and simply a means to an end. He provides his
employees with money and expects performance back. There is little or no allowance
for cooperation or collaboration. He pressures his employees through rules and
punishments to achieve the company goals. This type of leader is very autocratic, has
strict work rules, policies and procedures, and views punishment as the most effective
means to motivate employees.

3. (1,1) Impoverished Leadership-Low Production and Low People:

(1,1) Impoverished Leadership is a delegate-and-disappear management style and a
lazy approach. The manager shows a low concern for both people and production. He
or she avoids getting into trouble. His main concern is not to be held responsible for
any mistakes.

Managers use this style to preserve job and job seniority, protecting themselves by
avoiding getting into trouble. This leader is mostly ineffective. He or she has neither a
high regard for creating systems for getting the job done nor for creating a work
environment that is satisfying and motivating. A result is a place of disorganization,
dissatisfaction, and disharmony.

4. (5,5) Middle-Of-The-Road Leadership-Medium Production and Medium

People
(5,5) Middle-Of-The-Road Leadership is a kind of realistic medium without ambition.
It is a balanced and compromised style. The manager tries to balance the competing
goals of the company and the needs of the workers. The manager gives some concern to
both people and production, hoping to achieve acceptable performance. He believes
this is the most anyone can do. Consequently, compromises occur where neither the
production nor the people’s needs are fully met. The supervisor views it as the most
practical management technique. It is also an outcome when production and people
issues are seen as in conflict.

The defining characteristic of this style “is not to seek the best position for both
production and people… but to find the position that is in between both, about
halfway.” When dealing with subordinates, the (5,5) manager prefers relaxed and
shared conversations – these allow’ him to slay popularly. Group membership is also
enjoyed as committees allow’ the supervisor to spread the responsibility for decision-
making.

5. (9,9) Team Leadership-High Production and High People

At (9,9) Team Leadership, the manager pays high concern to both people and
production. Motivation is high. This soft style is based on the propositions of Theory Y
of Douglas McGregor. The manager encourages teamwork and commitment among
employees. This style emphasizes making employees feel part of the company-family
and involving them in understanding the organizational purpose and determining
production needs. This method relies heavily on making employees feel they are
 constructive parts of the company. And this will result in a team environment
organization based on trust and respect, which leads to high satisfaction and
motivation and, as a result, high production.

In a (9,9) system the manager strives for sound and imaginative opinions, letting
others partake in the decision making the process. He is not afraid to use ideas that are
divergent from his own, but rather focuses on the value of the ideas. Emotions and
thoughts are used to solve .problems through teamwork because this supervisor is
concerned with arriving only at the best possible solutions.

Continuum of Leadership Behaviour

Reference: https://www.managementstudyguide.com/continuum-leadership-behaviour.htm

Video Streaming:
Entitled:
Link:
Time Duration:

The leadership continuum was originally written in 1958 by Tannenbaum and Schmidt and was
later updated in the year 1973. Their work suggests a continuum of possible leadership behavior
available to a manager and along which many leadership styles may be placed. The continuum
presents a range of action related to the degree of authority used by the manager and to the
area of freedom available to non-managers in arriving at decisions. A broad range of leadership
styles have been depicted on the continuum between two extremes of autocratic and free rein
(See figure 1). The left side shows a style where control is maintained by a manager and the
right side shows the release of control. However, neither extreme is absolute and authority and
freedom are never without their limitations.

The Tannenbaum and Schmidt continuum can be related to McGregor’s supposition of Theory
X and Theory Y. Boss-centered leadership is towards theory X and subordinate-centered
leadership is towards theory Y.

A manager is characterized according to degree of control that is maintained by him. According

to this approach, four main styles of leadership have been identified:

Tells: The manager identifies a problem, chooses a decision, and announces this to
subordinates. The subordinates are not a party to the decision making process and the manager
expects them to implement his decisions as soon as possible.
Sells: The decision is chosen by the manager only but he understands that there will be some
amount of resistance from those faced with the decision and therefore makes efforts to
persuade them to accept it.
Consults: Though the problem is identified by the manager, he does not take a final decision.
The problem is presented to the subordinates and the solutions are suggested by the
subordinates.
Joins: The manager defines the limits within which the decision can be taken by the
subordinates and then makes the final decision along with the subordinates.

UNDERSTANDING THE CONTINGENCY THEORY OF

LEADERSHIP
Reference: https://www.indeed.com/career-advice/career-development/contingency-theory-
of-leadership#:~:text=The%20contingency%20theory%20of%20leadership%20supposes
%20that%20a%20leader%27s%20effectiveness,ineffective%20leader%20in%20another
%20one.

Video Streaming:
Entitled:
Link:
Time Duration:

Effective leadership is one of the most attractive qualities in an employee. There are dozens of
theories that argue which leadership style is best suited for improving team productivity and
maintaining employee morale. The contingency theory of leadership focuses on how specific
situations affect a leader’s effectiveness and how a leader’s ability to adapt can be their most
important tool in the workplace. In this article, we define the contingency theory of leadership
and examine three specific models for how it can be applied in a work environment.

What is the contingency theory of leadership?

The Fiedler Contingency Model was created in the mid-1960s by Fred Fiedler, a
scientist who studied the personality and characteristics of leaders.

The model states that there is no one best style of leadership. Instead, a leader's
effectiveness is based on the situation. This is the result of two factors – "leadership
style" and "situational favorableness" (later called "situational control").
(Reference: https://www.mindtools.com/pages/article/fiedler.htm )

The contingency theory of leadership supposes that a leader’s effectiveness is contingent on

whether or not their leadership style suits a particular situation. According to this theory, an
individual can be an effective leader in one circumstance and an ineffective leader in another
one. To maximize your likelihood of being a productive leader, this theory posits that you
should be able to examine each situation and decide if your leadership style is going to be
effective or not. In most cases, this requires you to be self-aware, objective and adaptable.
Contingency theory of leadership in the workplace
In the workplace, there are dozens of factors that can affect a leader’s effectiveness. These
include things like the size of the team, the scope of a project and the expected delivery date for
a result. Different leaders, each with unique leadership styles, will respond to these variables in
different ways. Contingency theorists would say that no matter how successful a leader is, there
will always be a particular situation that will challenge them. Therefore, leaders must be willing
to acknowledge the fact that their success depends partially on their circumstances in addition
to their personal skills.

To lead their team well, managers and supervisors may need to either adapt their leadership
style to the current situation or delegate some of their leadership responsibilities to a co-
worker.

As an example, we will consider a project manager named Doug. Doug finds it much easier to
communicate in writing rather than in person, so he usually encourages his team by sending
them thoughtful emails at the end of every week. However, there is a new employee in the office
who is not very receptive to written communication. To connect with this employee, Doug will
need to either make an effort to change his method and encourage this employee in person or
he will have to assign this task to the assistant manager.

In this example, Doug is not a chronically-ineffective leader. He is a good leader who is facing
an unexpected challenge. If Doug accepts the fact that he will need to adapt to his situation
instead of trying to force his usual methods, he can still be a highly-productive leader who
encourages his team effectively.

2 Factors of Fiedler’s of Contingency Theory:

Reference: https://www.mindtools.com/pages/article/fiedler.htm

1. Leadership Style
Identifying leadership style is the first step in using the model. Fiedler believed that leadership
style is fixed, and it can be measured using a scale he developed called Least-Preferred Co-
Worker (LPC) Scale (see figure 1).

The scale asks you to think about the person who you've least enjoyed working with. This can be
a person who you've worked with in your job, or in education or training.

You then rate how you feel about this person for each factor, and add up your scores. If your
total score is high, you're likely to be a relationship-orientated leader. If your total score is low,
you're more likely to be task-orientated leader.

Figure 1: Least – Preferred Co-Worker Scale

Unfriendly 1 2 3 4 5 6 7 8 Friendly
Unpleasant 1 2 3 4 5 6 7 8 Pleasant
Rejecting 1 2 3 4 5 6 7 8 Accepting
Tense 1 2 3 4 5 6 7 8 Relaxed
Cold 1 2 3 4 5 6 7 8 Warm
 Boring 1 2 3 4 5 6 7 8 Interesting
Backbiting 1 2 3 4 5 6 7 8 Loyal

Uncooperative 1 2 3 4 5 6 7 8 Cooperative

Hostile 1 2 3 4 5 6 7 8 Supportive

Guarded 1 2 3 4 5 6 7 8 Open

Insincere 1 2 3 4 5 6 7 8 Sincere

Unkind 1 2 3 4 5 6 7 8 Kind

Inconsiderate 1 2 3 4 5 6 7 8 Considerate

Untrustworthy 1 2 3 4 5 6 7 8 Trustworthy

Gloomy 1 2 3 4 5 6 7 8 Cheerful

Quarrelsome 1 2 3 4 5 6 7 8 Harmonious

The model says that task-oriented leaders usually view their LPCs more negatively, resulting in
a lower score. Fiedler called these low LPC-leaders. He said that low LPCs are very effective at
completing tasks. They're quick to organize a group to get tasks and projects done.
Relationship-building is a low priority.

However, relationship-oriented leaders usually view their LPCs more positively, giving them a
higher score. These are high-LPC leaders. High LPCs focus more on personal connections, and
they're good at avoiding and managing conflict. They're better able to make complex decisions.

2. Situational Favourableness
Next, you determine the "situational favorableness" of your particular situation. This depends
on three distinct factors:

 Leader-Member Relations – This is the level of trust and confidence that your team
has in you. A leader who is more trusted and has more influence within the group is in
a more favorable situation than a leader who is not trusted.
 Task Structure – This refers to the type of task you're doing: clear and structured, or
vague and unstructured. Unstructured tasks, or tasks where the team and leader have
little knowledge of how to achieve them, are viewed unfavorably.
 Leader's Position Power – This is the amount of power you have to direct the
group, and provide reward or punishment. The more power you have, the more
favorable your situation. Fiedler identifies power as being either strong or weak.

Path-Goal Model
Reference: https://www.indeed.com/career-advice/career-development/contingency-theory-
of-leadership#:~:text=The%20contingency%20theory%20of%20leadership%20supposes
%20that%20a%20leader%27s%20effectiveness,ineffective%20leader%20in%20another
%20one.
The Path-Goal model is primarily concerned with identifying processes (paths) that will
allow each team member to meet their individual objectives (goals). Leaders who implement
this model adjust their behaviors and expectations to positively affect their team’s productivity.
This goal requires the leader to be extremely flexible in their leadership style. They will have to
find a way to meet each team member’s specific needs to assist them in reaching their daily or
weekly goals.

Path-Goal Leadership Theory

Reference: http://www.nwlink.com/~donclark/leader/lead_path_goal.html

The Path-Goal model is a theory based on specifying a leader's style or behaviour that best fits
the employee and work environment in order to achieve a goal (House, Mitchell, 1974). The
goal is to increase your employees' motivation, empowerment, and satisfaction so they become
productive members of the organization.

Path-Goal is based on Vroom's (1964) expectancy theory in which an individual will act in a
certain way based on the expectation that the act will be followed by a given outcome and on
the attractiveness of that outcome to the individual. The path-goal theory was first introduced
by Martin Evans (1970) and then further developed by House (1971).

The path-goal theory can best be thought of as a process in which leaders select specific
behaviors that are best suited to the employees' needs and the working environment so that
they may best guide the employees through their path in the obtainment of their daily work
activities (goals) (Northouse, 2013).

Leadership styles
The Path-Goal model focuses on improving employee motivation, autonomy and satisfaction to
increase their productivity within an organization. To accomplish this, the model identifies four
different leadership styles. These include:

1. The Directive Clarifying L**eader:** This style is used in situations where the
leader tells employees what is expected of them and instructs them on how to perform
certain tasks. The theory states that this style is the most effective when the employees’
role and task are unstructured or ambiguous.
2. The Achievement-Oriented Leader: This behavior occurs in situations where the
leader sets lofty goals for employees, expects them to perform at a high level and shows
complete confidence in their capabilities. This style is productive in environments that
attract high-achievers, such as hospitals, scientific laboratories and law firms.
3. The Participative Leader: Leaders who use this style consult with their employees
and ask for their input before making decisions. This behavior would be well-received
in a workplace where the employees are personally invested in the outcome and results
of their work.
4. The Supportive Leader: This style focuses on the satisfaction of employees’ needs
and considers their personal preferences. A supportive leader is as concerned with their
employees’ mental health and well-being as they are with their productivity. This style
is suitable for work environments that can be stressful or mentally challenging.
Transactional Versus Transformational Leaders
Reference: https://courses.lumenlearning.com/boundless-management/chapter/types-of-
leaders/#:~:text=Transactional%20leaders%20focuses%20on%20the,behavior%20toward
%20a%20shared%20vision.
 Leadership can be described as transactional or transformational. Transactional leaders focuses
on the role of supervision, organization, and group performance. They are concerned about the
status quo and day-to-day progress toward goals. Transformational leaders work to enhance
the motivation and engagement of followers by directing their behavior toward a shared vision.
While transactional leadership operates within existing boundaries of processes, structures,
and goals, transformational leadership challenges the current state and is change-oriented.

Transactional Leadership
Transactional leadership promotes compliance with existing organizational goals and
performance expectations through supervision and the use of rewards and punishments.
Transactional leaders are task- and outcome-oriented. Especially effective under strict time and
resource constraints and in highly-specified projects, this approach adheres to the status quo
and employs a form of management that pays close attention to how employees perform their
tasks.

Transformational Leadership
Transformational leadership focuses on increasing employee motivation and engagement and
attempts to link employees’ sense of self with organizational values. This leadership style
emphasizes leading by example, so followers can identify with the leader’s vision and values. A
transformational approach focuses on individual strengths and weaknesses of employees and
on enhancing their capabilities and their commitment to organizational goals, often by seeking
their buy-in for decisions.

Comparing Leadership Types

Transactional and transformational leadership exhibit five key differences:

 Transactional leadership reacts to problems as they arise, whereas transformational

leadership is more likely to address issues before they become problematic.
 Transactional leaders work within existing an organizational culture, while
transformational leaders emphasize new ideas and thereby “transform” organizational
culture.
 Transactional leaders reward and punish in traditional ways according to
organizational standards; transformational leaders attempt to achieve positive results
from employees by keeping them invested in projects, leading to an internal, high-
order reward system.
 Transactional leaders appeal to the self-interest of employees who seek out rewards for
themselves, in contrast to transformational leaders, who appeal to group interests and
notions of organizational success.
 Transactional leadership is more akin to the common notions of management, whereas
transformational leadership adheres more closely to what is colloquially referred to as
leadership.

Application of
New Teaching Methods
Knowledge
Time Required:
10 minutes Activity #1: Applying the Fiedler Contingency Model

Step 1: Identify your leadership style

Instruction:
  Think about the person who you've least enjoyed working with, either now or in the
past.
 Rate your experience with this person using the scale in figure 1, above. According to
this model, a higher score means that you're naturally relationship-focused, and a
lower score means that you're naturally task-focused.

Figure 1: Least – Preferred Co-Worker Scale

Unfriendly 1 2 3 4 5 6 7 8 Friendly
Unpleasant 1 2 3 4 5 6 7 8 Pleasant
Rejecting 1 2 3 4 5 6 7 8 Accepting
Tense 1 2 3 4 5 6 7 8 Relaxed
Cold 1 2 3 4 5 6 7 8 Warm
Boring 1 2 3 4 5 6 7 8 Interesting
Backbiting 1 2 3 4 5 6 7 8 Loyal
Uncooperative 1 2 3 4 5 6 7 8 Cooperative
Hostile 1 2 3 4 5 6 7 8 Supportive
Guarded 1 2 3 4 5 6 7 8 Open
Insincere 1 2 3 4 5 6 7 8 Sincere
Unkind 1 2 3 4 5 6 7 8 Kind
Inconsiderate 1 2 3 4 5 6 7 8 Considerate
Untrustworthy 1 2 3 4 5 6 7 8 Trustworthy
Gloomy 1 2 3 4 5 6 7 8 Cheerful
Quarrelsome 1 2 3 4 5 6 7 8 Harmonious

Step 2: Identify your situation

Answer the questions:
 Are leader-member relations good or poor?
______________________________
 Is the task you're doing structured, or is it more unstructured, or do you have
little experience of solving similar problems?
______________________________
 Do you have strong or weak power over your team?
______________________________

Step 3: Determine the most effective leadership style

Figure 2 shows a breakdown of all of the factors we've covered: Leader-Member
Relations, Task Structure, and Leader's Position Power. The final column identifies the
type of leader that Fiedler believed would be most effective in each situation.

Figure 2: Breakdown of Most Effective Leader Style

 Leader – Member Most Effective
Task Structure Leader’s Position
Relations Leader

For instance, imagine that you've just started working at a new company, replacing a much-
loved leader who recently retired. You're leading a team who views you with distrust (so your
Leader-Member Relations are poor). The task you're all doing together is well defined
(structured), and your position of power is high because you're the boss, and you're able to offer
reward or punishment to the group.

The most effective leader in this situation would be high LPC – that is, a leader who can focus
on building relationships first.

Or, imagine that you're leading a team who likes and respects you (so your Leader-Member
relations are good). The project you're working on together is highly creative (unstructured)
and your position of power is high since, again, you're in a management position of strength. In
this situation, a task-focused leadership style would be most effective.

Reflection:
 Explain your Leadership Style result in the Figure 2: Breakdown of Most
Effective Leader Style.

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Assessment of
Teaching Methods
New Knowledge
 Group Activity: Venn Diagram
Instruction: Using the Venn Diagram. Choose a Leader that represents as Transformational and
Transactional in any Political or Business Aspect.

Time Required:
10 minutes

References and Supplementary Materials

Books and Journals

Online Supplementary Reading Materials

Online Instructional Videos