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SENIOR MANAGEMENT

EXPERIENCE ON CHANGE
AND LEADERSHIP
MBA Lecture
23rd June 2012

Sanjeeva Perera
Chief Executive Officer
Sumathi Information Technologies (Pvt.) Ltd

Sumathi Information Technologies


Agenda
1. Organizations, Change and Leadership
2. Brief History of Sumathi Information Technologies
3. Why Organization Change
4. Sumathi Information Technologies @ high growth stage
5. What Changes in Organizations
6. What Changes @ Sumathi Information Technologies
7. Strategy @ Sumathi Information Technologies
8. Products and Services @ Sumathi Information Technologies
9. Resistance to Change
10. Strategies for Communicating Change
11. Leadership
12. Leadership vs. Management
13. Leadership theory
14. Emotional Intelligence
15. Change at IBM

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1. Organizations, Change and Leadership

 Organizations:
 “… systems comprising elements of formal organizational management and
operations as well as elements of the more informal aspects of organizational life.
Organizational systems are conceptualized as operating in three types of
environment – temporal (time-based progressive), external and internal – whose
elements interact with each other to create the ‘triggers’ of change”

(Senior and Swailes, Organizational Change. 2nd edition 2010)

 Individuals interacting in an organized and structured manner in order to achieve


specific aims and objectives.

 However, organizations can be highly complex and do not operate in a vacuum

 The speed of change is continuously getting faster and faster

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Change management

 “…the process of continually renewing an organization’s direction, structure, and


capabilities to serve the ever-changing needs of external and internal customers”
(Moran and Brightman, 2001, p. 11).

 “Against a backdrop of increasing globalization, deregulation, the rapid pace of


technological innovation, a growing knowledge workforce, and shifting social and
demographic trends, few would dispute that the primary task for management today
is the leadership of organizational change” (Graetz, 2000, p. 550).

Video- Fulfillment by Amazon Tour

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2. Brief History of Sumathi Information
Technologies
 Incorporated in 6th April 2001 as member of Sumathi Group with six staff members
 Location : “Sumathi Courts” 499, Galle Road, Colombo 3
 Primary business : Network Infrastructure Solution
 Business Partners : Cisco Premier Partner, Structured Cabling Solutions
 Information System : Quick books Accounting software, In-house develop payroll

 6th April 2002 celebrate it’s first year birthday (Infant stage).

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3. Why Organization Change

 External, environmental pressures for change

 E.g. new technology


 E.g. geopolitical environment

 Internal, organizational pressures for change

 E.g. a new CEO


 E.g. growth cycle

 Forces for stability

 E.g. economic

Video - Story of an EAGLE - Survival Change Management

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 External, environmental pressures for change

Pressure Yes/No(SIT) Description

Fashion Managers imitate practices associated with


Yes
pressures successful organizations

Mandated An organization changes through formally or


No
pressures informally mandated requirements.

Macroeconomic changes (or crises) place


Geopolitical
Yes pressure on organizations to change the way
pressures
they operate.

The Bandaranaike Airport attack was an assault by the Liberation Tigers of


Tamil Eelam (LTTE) on Bandaranaike International Airport, on July 24, 2001.
Sri Lankan economy – negative growth
Did not last for long time

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 External, environmental pressures for change cont’d

Pressure Yes / No (SIT) Description

When current markets begin to decline


Market decline
Yes there is pressure to find newer, more viable
pressures
markets.

The highly intensified rate of business –


including shortened product life cycles and
Hyper-competition
No rapid responses by competitors – produces
pressures
pressure for change at the organizational
level.

In light of recent corporate governance


Reputation and
scandals, the pressure to maintain a good
credibility Yes
reputation and high level of credibility has
pressures
increased.

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 Internal, organizational pressures for change

Pressure Yes / No (SIT) Description


Existing systems and processes in an
Growth pressures Yes organization may no longer be applicable
when the size of the organization increases.
Integration and Integration and creating economies of scale
collaboration Yes can lead to pressure for change in
pressures organizations.
A common organizational identity and the
unified commitment of staff in different
Identity pressures Yes areas/departments of an organization can be
difficult to manage and may encourage
change.

SIT responded to Growth pressures


 Enhanced customer support by introducing help desk and Call reports
 Business process studies were carried out
 Develop process flow charts
 Introduce Sage ACCPAC Accounting and CRM

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 Internal, organizational pressures for change Cont’d

Pressure Yes / No (SIT) Description

Change at the senior management level –


New broom
No particularly of CEO - can often be a catalyst for
pressures
significant changes in an organization.

Power and Power relationships and politicking can


political Yes (SGC) change internal processes and decision
pressures making.

Sumathi Global Consolidated (SGC)


Holding company of Sumathi Information Technologies

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4. Sumathi Information Technologies @ high growth
stage
 New premises for SIT : 9, School Lane,
Colombo 3
 HCL Distributor in 2003
 Product portfolio : Thin client
computers, Terminal servers
 Became a IBM business partner in 2005
 Product portfolio : IBM Servers,
Workstations, desktops , laptops &
software
 Became a Lenovo business partner in 2006
 Product portfolio : Desktops, Laptops,
Authorized warranty service provider
 Radware business partner in 2007
 Product portfolio : ISP Load balancers,
Application accelerators
 HP Corporate business partner in 2009
 Product portfolio : Desktops, Laptops

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4. Sumathi Information Technologies @ high growth
stage Cont’d
Lenovo Exclusive Store

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4. Sumathi Information Technologies @ high growth
stage Cont’d

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4. Sumathi Information Technologies @ high growth
stage Cont’d

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4. Sumathi Information Technologies @ high growth
stage Cont’d

CISCO Award 2007 CISCO Roll of Honour CISCO Top Partner in Sri Lanka for
Best Significant Contribution in Significant Contribution in Commercial Commercial Business – 2004
Commercial Segment Vertical In Sri Lanka – 2007

CISCO Merit Award for CISCO Network Product Merit Award Epson Best Tender Sales
Business in 2006 2005 – D-Link Debug 2007 – Debug

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5. What Changes in Organizations
 Scale of Change:
 First-order change :
 Incremental
 Maintains and develops the organization – adjusting systems, processes, structures, but
not strategies and values
 E.g. continuous and smaller changes to the structure of an organization

 Second – order change : (SIT not gone through )


 Transformational
 Fundamentally changes the way an organization functions
 E.g. downsizing

 Types of Change
 Downsizing
 Does not necessarily lead to increased productivity
 Can be an excessively costly exercise

 Technological Change
 There are a variety of new technologies being used, for example:
 Customer relationship management (CRM) systems
 Enterprise resource planning (ERP)
 Wireless technology
 Business process reengineering (BPR)
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6. What Changes @ Sumathi Information Technologies
 Scale of Change:
 First-order change :
 Sales model

Enterprise Large Medium Small Medium


SOHO
Customers Customers Business Business (SMB)
(Over 50 (Over 5
(Over 250
(Over 3000 (Over 1000 employees) employees) employees)

employees) employees)
Account locking by either
Both Divisions has Simultaneous Access
Solution or Personal
Both Divisions has Simultaneous Access Computer division

SIT Sales Team


Solution Sales Team Personal Computer sales division
Pre Sales Team
Cisco Team, IBM Team, Lenovo, HP, HCL, Structured Cabling
Post Sales Team
Implementation Support team, Warranty Support Team , Maintenance Team

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6. What Changes @ Sumathi Information Technologies
Cont’d
 Scale of Change:
 First-order change :
 SIT Intranet for Customer Account locking for Marketers
 SIT Intranet (https://intranet.sit.lk)

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6. What Changes @ Sumathi Information Technologies
Cont’d
 Scale of Change:
 First-order change :
 Introduce Strategic Competitor Market acquisition sales unit
 Managed Services Unit

 Types of Change :

 Technological Change
 Customer relationship management (CRM) systems
 Automated Helpdesk
 Sage ACCPAC Maintenance Services Module
 Authorized Warranty Support Center (Lenovo, HP)
 ebay Universal Repair Center ( Any brand of Computer )
 www.repair.lk
 Started manufacturing Trigger UPS brand

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7. Strategy @ Sumathi Information Technologies

SIT for last ten years concentrating on IT infrastructure solutions with unique capabilities to
provide unique solutions to our customers with a very simple philosophy.

 New customer entry strategy


Sell printers, PCs, & Servers to new clients who is venturing in to new business.
(non sticky business)

 Accounts growth strategy


Sell structured cabling solutions & Cisco networking solutions. (sticky business)

 Competitor acquisition strategy


Acquire new customers traditionally serve by the competitors by Competitor
acquisition division.

 Customer retention strategy


Providing support services and maintenance.

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http://www.sit.lk

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8. Products and Services @ Sumathi Information
Technologies
Cisco Premier Certified Partner
Express Foundation Specialized Partner System Integrator in Sri Lanka
Select certified partner
Advanced Security Specialized Partner

Authorized Systems Integrator of


Premier Business Partner (Tier 1) Clipsal

Vmware Premier Solution


Premier Business Partner (Tier 1) Provider

Distributor for HCL in Sri Lanka Authorized Sole Distributor


for TRIGGER

Microsoft Infrastructure Partner Digital Stome Distributor in Sri Lanka

Premier Business Partner (Tier 1) Business Partner for Tyco Electronics


in Sri Lanka

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9. Resistance to Change
 Resistance is a very real and common issue that is faced by change managers
during the process of change.

 It can be considered “tridimensional” – made up of three components:


 Affective: how a person feels about change
 Cognitive: what they think about it
 Behavioural: how they act or what they do in the face of change.
o The behavioural response may take active or passive forms.

 Signs of Resistance : Active


• Being critical • Intimidating or threatening
• Finding fault • Manipulating
• Ridiculing (Reduce the • Distorting facts
importance)
• Blocking
• Appealing to fear
• Using facts selectively
• Undermining
• Blaming or accusing
• Starting rumours
• Sabotaging • Arguing
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9. Resistance to Change Cont’d
 Signs of Resistance: Passive
 Agreeing verbally but not following through (“malicious compliance”)
 Failing to implement change
 Procrastinating or dragging one’s feet
 Feigning ignorance
 Withholding information, suggestions, help, or support
 Standing by and allowing change to fail

 Why Changes are Resisted ?


 Dislike of change
 Discomfort with uncertainty
 Perceived negative effects of interests
 Attachment to the organizational culture/identity
 Perceived breach of psychological contract
 Lack of conviction that change is needed
 Lack of clarity as to what is needed
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9. Resistance to Change Cont’d
 Why Changes are Resisted ?
 Belief that the specific change being proposed is inappropriate
 Belief that the timing is wrong
 Excessive change
 Cumulative effects of other changes in one’s life
 Perceived clash with ethics
 Reaction to the experience of previous changes
 Disagreement with the way the change is being managed

 Managing Resistance
A “Situational” Approach:
this proposes six methods for managing resistance that should be chosen
based on contextual factors

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9. Resistance to Change Cont’d (Managing Resistance)

Method Context
Education & Communication resistance is due to lack of information

Participation & Involvement Resistance is a reaction to a sense of


exclusion from the process
Facilitation & Support Resistance is due to anxiety and
uncertainty
Negotiation & Agreement Resistors in a strong position to
undermine the change process
Manipulation & Cooperation Other methods are too time
consuming or resource demanding
Explicit & Implicit Coercion Change recipients have little capacity
to resist; survival of the org. is at risk
without the change

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10. Strategies for Communicating Change
 Communication Process
 The way change is communicated is important to the success of the change program
 The communication process, or mix, includes elements such as content, voice, tone,
message, audience, medium, frequency and consistency.
 Many problems can disturb the process of communication:
 message overload
 message distortion and
 message ambiguity
 Language, Power, Gender & Communication
 Language, power, gender and emotion can impact the communication of change.
 Language reflects and reinforces underlying social and power relationships.
 Gender differences, also affect this process.
Three examples of the difference are:
 Getting credit
 Confidence and boasting
 Asking questions
 how feedback is given and received
 how compliments are exchanged
 whether the communication is direct or indirect

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10. Strategies for Communicating Change Cont’d
 Communication Media: Information Richness and Data Capacity

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10. Strategies for Communicating Change Cont’d
 Nonverbal Communication
(some times called “silent language”)

Video – Nonverbal Communication

 Body Language
Facial expressions
Eyes
Feet
Hands
Posture

 Paralanguage
Voice quality Tone
Volume Speech rate
Pitch Nonfluencies (“ah”, “um”, or “uh”)
Laughing Yawning

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10. Strategies for Communicating Change Cont’d
The ‘less is more’ philosophy
How calibrating relevant information emerges as the key differentiator in decision-
making.

 Too much information kills information

Let’s imagine that some military personnel are installing a radar system with such
a fine resolution that it will enable them to pinpoint the flight paths of migrating
birds. If this data is not filtered out before air-traffic controllers responsible for
monitoring aircraft movements in their national airspace receive the incoming
data, they will be unable to execute their task effectively, and unfriendly aircraft
could easily get confused with the echo cloud generated by birds. What is
crucially important is not so much to acquire information, as to protect oneself
from it, and filter it so as to extract what is essential and relevant to the act of
taking a decision. And the higher up in the hierarchy you go, the more this
decision support information has to be synthesized – even if many more precise
indicators are still available if a detailed analysis needs to be carried out at a later
date.

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10. Strategies for Communicating Change Cont’d
 Communicating Change by Story Telling

The rocks in bucket time management story

Start with a bucket, some big rocks enough to fill it, some small stones, some
sand and water.

Put the big rocks in the bucket - is it full?

Put the small stones in around the big rocks - is it full?

Put the sand in and give it a shake - is it full?

Put the water in. Now it's full.

The point is: unless you put the big rocks in first, you won't get them in at all.
In other words: Plan time-slots for your big issues before anything else, or the
inevitable sand and water issues will fill up your days and you won't fit the big
issues in (a big issue doesn't necessarily have to be a work task - it could be your
child's sports-day, or a holiday).

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10. Strategies for Communicating Change Cont’d
 Communicating Change by Story Telling

the businessman and the fisherman story (ambition, wealth creation, change for
change's sake, purpose of life, work and fulfillment )
A management consultant, on holiday in a African fishing village, watched a little
fishing boat dock at the quayside. Noting the quality of the fish, the consultant
asked the fisherman how long it had taken to catch them.

"Not very long." answered the fisherman.

"Then, why didn't you stay out longer and catch more?" asked the consultant.

The fisherman explained that his small catch was sufficient to meet his needs and
those of his family.

The consultant asked, "But what do you do with the rest of your time?"

"I sleep late, fish a little, play with my children, have an afternoon's rest
under a coconut tree. In the evenings, I go into the community hall
to see my friends, have a few beers, play the drums, and sing a few songs..... I
have a full and happy life." replied the fisherman.
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The consultant ventured, "I have an MBA from Harvard and I can help you...... You
should start by fishing longer every day. You can then sell the extra fish you catch.
With the extra revenue, you can buy a bigger boat. With the extra money the larger
boat will bring, you can buy a second one and a third one and so on until you have a
large fleet. Instead of selling your fish to a middleman, you can negotiate directly with
the processing plants and maybe even open your own plant. You can then leave this
little village and move to a city here or maybe even in the United Kingdom, from
where you can direct your huge enterprise."

"How long would that take?" asked the fisherman.

"Oh, ten, maybe twenty years." replied the consultant.

"And after that?" asked the fisherman.

"After that? That's when it gets really interesting," answered the consultant, laughing,
"When your business gets really big, you can start selling shares in your company and
make millions!"
"Millions? Really? And after that?" pressed the fisherman.

"After that you'll be able to retire, move out to a small village by the sea, sleep
in late every day, spend time with your family, go fishing, take afternoon naps
under a coconut tree, and spend relaxing evenings having's drinks with friends..."
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11. Leadership
 What is the purpose of leadership?
 How does leadership link with change?

 First, leadership is a process that is not specifically a function of the person in charge.
Leadership is a function of individual wills and individual needs, and the result of the
dynamics of collective will organized to meet those various needs. Second,
leadership is a process of adaptation and of evolution; it is a process of dynamic
exchange and the interchanges of value. Leadership is deviation from convention.
Third, leadership is a process of energy, not structure. In this way, leadership is
different from management - managers pursue stability, while leadership is all about
change (Barker, 2001:491).

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11. Leadership

According to another leadership guru Barry Posner, makes the following observations
about the needed change in how business leadership is viewed:

In the past business believed that a leader was like a captain of a ship: cool, calm,
collected. Now, we see that leaders need to be human. They need to be in touch, they
need to be empathetic, and they need to be with people. Leaders need to be a part of
what’s going on, not apart from what’s going on.

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Two types of businesses ( Cool and calm business environment vs. Highly
volatile environment)
Captain of a Ship vs. Rafting on white water
Captain of a ship vs Rafting on white water

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Two types of businesses ( Cool and calm business environment vs. Highly
volatile environment)
Captain of a Ship vs. Rafting on white water

Captain of a ship vs Rafting on white water

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12. Leadership vs. Management

 Is leadership just one of many management skills?


 See Mintzberg’s managerial roles (1979):
- Figurehead
- Leader
- Liaison
- Monitor
- Disseminator
- Spokesperson
- Entrepreneur
- Disturbance handler
- Resource allocator
- Negotiator

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12. Leadership vs. Management Cont’d

 What is the difference between leadership and management?


 Leadership – Management

- Establishing direction – Planning & Budgeting


- Aligning People – Organizing & Staffing
- Motivating & Inspiring – Controlling & Prob. Solving
- Produces Change – Produces a degree of predictability & order

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13. Leadership theory

 Are there different types of leaders?


 If so, how do they differ?
1- Trait
Perspective

4-Transformational
Leadership 2-Behavior
Perspective
Perspective
Perspectives
3-Contingency
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13. Leadership theory Cont’d

 Trait theory: Leaders and born not made.


 Identify traits

 Some traits (Kirkpatrick and Locke, 1991):


- Drive (e.g. ambition, energy, initiative)
- Leadership motivation (socialised and/or personalised)
- Honesty & integrity
- Self-confidence (incl. emotional stability)
- Cognitive ability
- Knowledge of the business
- Could these be different from culture to culture?

 However, is there a link between leadership traits and their success?

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Traditional Theories of Leadership
Group and Exchange Theories of Leadership
Summary Of The Three Domains Of Leadership (Managing Change)

Leader-Based Follower-Based Relationship-Based


What is Appropriate behavior Ability and motivation Trust, respect, and mutual
leadership? of the person in to manage one’s own obligation that generates
leader role performance influence between parties

What Establishing and Empowering, coaching, Building strong relation-


behaviors communicating facilitating, giving up ships with followers;
constitute vision; inspiring, control mutual learning and
leadership? instilling pride accommodation

Advantages Leader as rallying point Makes the most of Accommodates differing


for organization; com- follower capabilities; needs of subordinates;
mon understanding of frees up leaders for can elicit superior work
mission and values; can other responsibilities from different types of
initiate wholesale people
change
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Traditional Theories of Leadership
Group and Exchange Theories of Leadership
Summary Of The Three Domains Of Leadership (Cont’d) (Managing Change)

Leader-Based Follower-Based Relationship-Based


Disadvantages Highly dependent on Highly dependent on Time-consuming; relies
leader; problems if follower initiative on long-term relation-
leader changes or is and ability ship between specific
pursuing inappropriate leaders and members
vision

When Fundamental change; Highly capable and Continuous improvement


appropriate? charismatic leader in task-committed of teamwork; substan-
place; limited diversity followers tial diversity and sta-
among followers bility among followers;
network building

Where most Structured tasks; strong Unstructured tasks; Situation favorability


effective? leader position power; weak position power; for leader between
member acceptance of member nonaccept- two extremes
leader ance of leader

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13. Leadership theory Cont’d
2-Behavior
Perspective

 The Iowa Leadership Studies (1930 by Lippitt and Ralph White)


Autocratic vs. Democratic vs. Laissez-Faire

 The Ohio State Leadership Studies


Initiating Structure vs. Consideration

 The Early Michigan Leadership Studies- human relations approach


(1950s by university of Michigan)
Production Oriented vs. Employee Oriented

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The Iowa Leadership Studies
Autocratic vs. Democratic vs. Laissez-Faire
The question was whether a democratic style of leadership is more effective than
an authoritarian or laissez-faire style.

Study was done using 10-year old boys who were assigned to one of three after
school hobby groups:
Democratic-
Allowed the group to decide who was to perform what task, pick their own partners,
offer feedback
Authoritarian-
Assigned work partners, subjective with praise, decided what was to be done without
boys feedback
Laissez-Faire Style-
Gave the group complete freedom, do whatever they wanted, provided information
only when asked

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The Iowa Leadership Studies
Autocratic vs. Democratic vs. Laissez-Faire
In the study, which style do you think led to greater satisfaction?

Boys subjected to the autocratic leaders reacted in one of the two ways: either
aggressively or apathetically. Both deemed to be reaction to the frustration. The
researchers also pointed out that the apathetic groups exhibited outbursts of
aggression when the autocratic leader left the room.

The laissez-faire leadership climate actually produced the greatest number of


aggressive acts from the group.

The democratically led group fell between the one extremely aggressive group and
the four apathetic groups under the autocratic leader.

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The Ohio State Leadership Studies
Initiating Structure vs. Consideration
This study looked at two independent dimensions of leadership:

Consideration –
Relies on mutual trust, respect for subordinates, and sensitivity to subordinate’s
feelings.

Initiating Structure-
When a leader defines and structures the work that subordinates perform,
working toward successful completion.

Therefore a manager can be:


Highly considerate of subordinates, while lacking a concern for employee production.
May lack concern for employee feelings but is moderately concerned with unit output.
Devoted to both maximizing production (initiating structure) and employee well-being
(consideration).
(This is the ideal style…combines the best of both dimensions)
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Contingency Theory of Leadership
Fiedler’s contingency model of Leadership Effectiveness

This model contained the relationship between leadership style


and the favorableness of the situation.
Situational favorableness was described by Fiedler in terms of
three dimensions.

1. The leader–member relationship


2. The degree of task structure
3. The leader’s position power

Situations are favorable to the leader if all three of these


dimensions are high.

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Contingency Theory of Leadership

Fiedler’s Contingency Model

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Charismatic Leadership
4-Transformational
Perspective
Charismatic Leadership :
– Leading not by virtue of sets of rules and procedures but through creating a
following.
– Changing values
– Person specific

James Burns identified two types of Political leadership:

Transactional and Transformational


The more traditional transactional leadership involves and exchange relationship between
leaders and followers,

but transformational leadership is based more on leaders shifting the values, beliefs, and
needs of their followers.

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14. Emotional Intelligence – achieving your goal through
– Managing one’s own feelings and emotions
– Being sensitive to the needs of others
– Influencing key people
– Balancing one’s own motives and drives with conscientious and ethical behaviour.

Emotional Intelligence in the Workplace


Definition: the capacity for recognizing our own feelings and those of others, for
motivating ourselves, and managing emotions well in ourselves and in our
relationships.
Emotional Intelligence at Work – Video (IQ vs EI)
First Moon Landing 1969 – Video
(Neil Armstrong was the first man to set foot on the moon with his
legendary words "One small step for man, a giant leap for mankind.“)

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15. Change at IBM
– Change at IBM
– An interview with Louis V. GerstnerJr., the former chairman and CEO of IBM,
about his new book "Who Says Elephants Can't Dance?", which tells the story of
his company's revival, etc.

Video - IBM Smarter Planet

Video - An interview with Louis V. GerstnerJr IBM

- Cisco - Change Management Training Video

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Thank You !

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