PB301 BUSINESS MANAGEMENT

CHAPTER

LEADERSHIP

CONCEPT OF LEADERSHIP
1) Leadership refers to the way managers give instruction to their
subordinates and influence them to perform important tasks.
2) Leadership also refers to the ability to influence other people in
the organization in order to create an environment that motivates
employees to work in a comfortable situation in achieving
organizational goals.
3) Leading has three main branches:
a) Leadership
b) Motivation
c) Communication

DEFINATION OF
LEADERSHIP
Stogdill

defined leadership as a process of leading

and influencing team members in job-related
activities.
Leadership is the ability or capability of an
individual to influence others in order to act in the
manner desire of a leader in achieving the set goals
or is a process of leading the behaviour of others
towards completing an objective.

LEADERSHIP SKILLS
Leader are required to have several leadership
skill.

Leadership skills include cooperating with

others,understanding values, using their inner
sense, understanding themselves, and having a
foresight.

LEADERSHIP
Trait Approach
The trait approach concentrates on characteristics that differentiate
leaders from non-leaders.
Leaders are individuals who can influence others and posses
authority.
Effective leaders exhibit several traits in them as follows:
Leadership Motivation
Desire to Lead
Honest and posses high integrity
Confidence
Intelligen
Knowlageable

Behavioural Appraoch
The behavioural approach emphasizes leadership function and
leadership styles. Studies on leadership style focuses on task-oriented
leadership, authoritarian leadership or centralization, and democratic
leadership.
Studies have shown that the effectiveness of each leadership style
depends on the organizations conditions such as power, subordinates,
and the working environment.
Leadership Style
Refers to the way leaders influence their team members.
There are three main leadership style such as:
Authoritarian or dictator leadership style
Democratic or participative leadership style
Laissez-faire or free from leadership style
Leaders usually practise more than one leadership style to influence
their team members.

Democratic or Participative Leadership Style

This leadership style is human relations-oriented whereby all
employees are encouraged to provide their views before final
decision is made.
Authoritarion or Dictator Leadership Style
Involves leaders who make decisions and act on the decision
individually. Followers or subordinates do not involve directly in
when the decision making process and their views are not taken
into consideration when the dicision is made.
Laissez-Faire or Free From Leadership Style
This leadership style will give freedom and autonomy to their
subordinates to make decision and act on it without referring to
the leaders.
Leaders have little control or influence on their subordinates.

MANAGERIAL GRID THEORY

According to Robert Blake and Jane Mouton, there are two
dimension that can be use to explain a leadership style such as
human elements and production elements.
The production element refers to the supervisors attitude
towards the quality of products produced.
The human element refers to the degree of employees
contribution towards achieving goals, maintaining self
respect, and forming good relationship.

Emphasis on human elements

Blake and Mouton Managerial

Grid
9

1, 9

9, 9

8
7
6
5

5, 5

4
3

Low

1, 1

Low

9, 1
2

Emphasis on production elements

High

The emphasis on production elements can be seen from the

supervisors attitude towards the following aspects:
Quality of the dicisions taken
Work prosedures
Quality of services by employees
Work efficiency
Reserch creativity
Total output
The emphasis on human elements covers the following espacts:
Degree of personal commitment towards the achivement of
goals
Maintain employees self respect
Responsibilities are given base on trust, and not base on
loyalty
Provide a good working environment and fecilities
Maintain personal relationship

Impoverished or
Poor Management
Style (1, 1)
Middle-of-theRoad
Management
Style (5, 5)

Team
Management
or Democratic
Style (9, 9)

FIVE
LEADERSHIP
SYLES BASE
ON BLAKE AND
MOUTON
MANAGERIAL
GRID
Country Club
Autorityor Confortable
Compliance
Management
Management
Style (1,9)
Style (9, 1)

LIKERD MANAGEMENT
SYSTEM

Likerd combined the basic management styles that are joboriented with employees in four levels of an effective
management modal.

System 1: Explotative-Authoritative

System 2: Benevolent-Authoritative

System 3: Consultative

System 4: Practicipative

Contigency/Situational Approach

This approach identifies various factors that can influence

leaders behaviours.

The Contingency approach concentrates on the following two

aspects:
The most important factor that influences a leaders
behaviour in different situation.
The most effective leadership style that should be practised
in defferent situation.

Two important contingency models are the Fiedler Contingency

Model by Fred Fiedler and Leadership Situational Model by
Hersey and Blanchard.

FIELDLE CONTINGENCY MODEL

Fiedler Contingency Model stated that the success of leadership style
depend on matching the leaders style with the condition of a situation.
According to this theory, there are three main factors that must be
considered in matching the leadership styles with suitable situations as
follows:
Leader-member relations
Task structure
Leader position power
The above three factors can be arranged according to eight categories
as depicted in next slide. Managers must try to match the leadership
style which encourage tolerance, passiveness, and thoughtfulness with
situations that require moderate power and influence. Meanwhile,
active leadership style that promotes the control of tasks and structures
must be matched with extreme situations whereby leaders have too
little influence and power.

The Fiedler Contingency

Model
Gentle,
passive, and a
considerate
leadership

Leaders are motivated by

the best relationship
performance
LPC

An active
leadership and
promotes
control of
tasks and
structure

Leaders are motivated

by the best task
performance
Low

Leader-member relations
Task Structure
Leader position power

Good
structure

Hig
h
LPC = least preferred co-worker

Low

Bad

unstructure
High

Low

structure
High

Low

unstructure
High

Low

SITUATIONAL LEADERSHIP
THEORY
According to this leadership theory, the leadership style practised by
managers is influence by the maturity level of subordinates, behaviour
towards tasks, and behaviour towards relationship in the organization.
Hersey and Blanchard explained that the followers maturity, that is
their desire towards achievement, willingness to accept
responsibilities, ability to perform task, and working experience can
influence the leadership style in an organization.
The managers relationship with their subordinates will change
according to the four phases in the life cycle. Managers are require to
change their leadership style in each phase.
The Situational Leadership Theory is formed based on the relationship
between subordinates maturity level, behaviour towards tasks, and
behaviour towards relationship, as shown in the next slide

Hersey and Blancards Situational

Leadership Modal
High

Phase Three
(Participating)

Phase Two
(Selling)

Relationship
Behaviour
Phase Four Phase One
(Delegating) (Informing)
Low
Low
Mature

Task Behaviour
Subordinates Maturity

High
Immature

PATH GOAL THEORY

The path goal theory was established by Robert House and

Martin J. Evens. In this theory, leaders are a sourse of reward and
this theory predicts how different rewards and leadership styles
influence motivation, performance, and employee satisfaction.

The leaders ability to give rewards and explain to employee on

what they have to do obtain these rewards is the most important
way of how managers determine the existence of goals that need
to be achived and the paths that need to be taken to obtain those
goals.

MOTIVATION
Motivation is pushing factor for individuals to act or perform a
certain task. Motivation can be define as anything that cause,
channels, and strengthens human behaviour in order to get a
desire product or achieve a goal.
The motivational theory have two important approaches as
follows:
1) Content Approach
This approach explains motivation, emphasizing the inner
characteristics of human beings. This approach focuses on
the importance of understanding and fulfilling human needs.
2) Process Approach
This approach explains motivation, emphasizing the
individuals motivation level

Motivation is important due to several reasons as follows:

a) Motivation will produce productive employees. Highly
motivated employees will demonstrate higher productivity
compared to those with low motivation.
b) High motivation will emphasize quality. Highly motivated
employees will emphasize good work quality.
c) Motivation also can bring good alternative results. Highly
motivated employees will always search for best alternatives
to do their jobs in order to increase quality and productivity.

The variables in the motivation theory can be divided into

several aspects:
a) Individual differences
b) Job characteristics
c) Organizational practices

CONTENT APPROACH
According to this approach, employees are motivated to
fulfil their inner desires in order to fulfil self-satisfaction.
Usually, managers will face difficulties in motivating
employee due to several reasons:
a) Individual needs are different in terms of their value
and motivation, and this will change with time.
b) Ways to change individual needs to become actions
are different from one individual to another.
c) Individuals do not always act consistently according
to their needs and wants, therefore to motivate each
individual might be different.
d) Individuals actions taken to fulfil their needs or face
their weaknesses are different. Individuals with high
safety needs might be frustrated and will not try
again if their failed to achieve their goals.

MASLOWS HIERARCHY OF
NEEDS THEORY

In 1954, Abraham Maslow published his theory based on

basic human needs.

Maslow used the hierarchy concept in a pyramid form to rank

human needs, starting with the fastest and primitive needs to
the highest and most complex needs.

Maslows hierarchy of needs is illustrated in the next slide.

Maslows Hierarchy of Needs

Self- actualization Need
Esteem Need
Social Need
Safety Need
Physiological Need

METHODS TO FULFIL EMPLOYEE NEEDS

BASED ON MASLOWS HIERARCHY OF NEEDS
Need

Methods

Selfactualizatio
n

Provide challenging assingments.

Provide feedback on performance.
Provide personal support and encourage employee
participation in goal-setting process.
Encourage employee participation in the decision
making.

Esteem

Identify and give publicity to employees who

have exhibited good performance.
Divide assignments according to employees
level of skills.
Provide opportunities for employees to get

Need

Methods

Social

Encourage employee participation in social

activities.
Encourage cooperation among employees in
groups.
Provide group assingnments.

Safety

Create safety rules at the workplace.

Emphasize work and employee safety.
Reduce employee turnover.
Provide additional welfare benefits
employees.

to

Physiological Implement a fair salary or wage system.

Create a comfortable working environment with
lights, air conditioners, furniture, and fixtures.

HERZBERGS TWO THEORY

At the end of the 1950s, Herzberg and his colleagues conducted a
study on the attitudes of a group of employees. This group
comprised of 200 accountants and engineers.
From their results of their study, Herzberg summarized that
satisfaction and dissatisfaction among employees are determined
by two main factors.
Factors that influence dissatisfaction are know as hygiene factors,
while factors that influence satisfaction are know as motivation
factors.
Hygiene factors are related to the working environment, while
motivation factors are related to the jobs characteristics. The next
slide as shows the elements that form the motivation and hygiene
factors.

MOTIVATION AND HYGIENE FACTORS

Satisfaction

Dissatisfaction

Motivation Factors
Achievement
Responsibilities
Recognition
Career development
Challenging and creative
work
Personal development

Company policies and

administration
Supervision
Interpersonal
relationship
Salaries and employee
benefits
Job safety
Working condition
Work status

COMPARISON BETWEEN MASLOWS

HIERARCHY OF NEEDS THEORY AND
HERZBERGS TWO FACTOR THEORY
Maslows
Hierarchy of
Needs Theory

Factors

Self-actualization
need
Motivation
Social and
esteem need
Safety need
Physiology need

Herzbergs Two Factor

Theory
Challenging jobs,
achievements, growth, and
responsibilities.
Career development and
status recognition.

Working condition and job

Hygiene Factor safety.
Salaries, financial rewards,
and personal welfare.

THEORY X AND THEORY Y

Douglas McGregor indentified two set of assumptions,

Theory X and Theory Y that are related to motivation
in human.
Theory X involves the negative assumptions of humans.
It is usually used by managers to handle their work.
Theory Y represents the positive assumptions of
humans

PROCESS APPROACH

The process approach emphasizes how and why individuals

show certain behaviours to fulfil their personal goals.

In the process approach, needs are one of the elements which

influence how an individual behaves.

The motivation theories that are formed based on the process

approach are:
a) Expectancy Theory
b) Equity Theory
c) Reinforcement Theory

Expectancy Theory
The Expectancy Theory is most comprehensive motivation theory
introduced by Victor Vroom. This theory is based on the premise that
the need for acknowledgement will determine human behaviour.
Equity Theory
This theory was introduced by J. Stacy Adams. It concentrates on
individuals view of how fairly have been treated in the organization.
Any unfairness identified by employees will cause changes in the
employees behaviour.
Reinforcement Theory
This theory was introduced by B. F. Skinner. This theory explains
how individuals past experiences influence the behaviour of
individuals. He believed that behaviour is connected to results. In
other words, an individuals past actions can influence his future
actions.

COMMUNICATION
DEFINISI OF COMMUNICATION
Communication involves the transfer of information between
two parties, the receiver and the sender.
According to Bernard, communication is define as a process
of exchanging ideas, opinions, and information that have
certain objectives and are presented personally or nonpersonally through the use of symbols or signals with the
objective of achieving organizational goal.
Based on the definition, several conclusions can made
regarding communication as follows:
Communication is a process
Communication is an interaction and a transaction
Communication can happen intentionally or
unintentionally

THE COMMUNICATION PROCESS

1) Basic Communication Process
Sender

Message

Receiver

2) Complex Communication Process

Sender

Encoding

Decoding

Barriers/Disturbance

Feedback

Receiver

COMMUNICATION METHODS
1) Verbal Communication
Occurs when sender and receive shares information using
dialogue, through talking or chatting.
2) Non-verbal Communication

refers to communication that uses words and signal.

Communication that uses words are in written form (for
example, letters and report), while communication that uses
signal are body language, facial expression, eye contact and
tone of voice.

DISTURBANCE AND BARRIERS IN

THE COMMUNICATION PROCESS
Barriers in form of the internal factors are as follows:
Individuals emotion or perception during the communication
process
Using unsuitable channel
Semantic factors
Inconsistency between verbal and non verbal communication
Barriers that are created from the environment are as follows:
Different power and status
Different goals
Lack of formal channel in a organization
Psychology and economic factors

EXTERNAL BARRIERS IN COMMUNICATION

PROCESS
Communication
Barriers
Individual
barriers

Method

Emotional and
perception

The sender or receive should

develop their active listening
skills and feeling of empathy.

Unsuitable
communication
channel

Sender should be wise in

selecting the appropriate
communication cannel for the
message to be delivered.

Semantic factors

The sender and receive must

always try to develop an
understanding to overcome
language and symbols
problems.

Communication
Barriers
Individual
barriers

Inconsistency
between verbal
and non-verbal
communication

Environment Different status

barriers
and power

Method
An individual must mix and be
friendly with their colleagues.

Managers should trustworthiness

and create an open working
environment.

Difference goals Managers must create a formal

communication cannel for all
management levels.
Lack of
communication
cannel

The organization must ensure that

communication cannels are
increased.

EFFECTIVE COMMUNICATION PRINCIPLES

The roles of a sender in ensuring an effective communication
process are as follows:
Usage of clear words or sentences and language that is
understandable.
Usage of attractive delivery styles which attract the receivers
attention and interest.
Delivery of message is sincere with an open heart.
The roles of a receiver in ensuring an effective communication
process are follows:
Full concentration to what the sender want to deliver.
Suitable feedback is given, for example asking questions if the
delivered message is not understood.
Listen with patience and empathy
Listening skills are one of the most important skills a leader need.

FORMS OF FORMAL COMMUNICATION

1) TOP TO BOTTOM COMMUNICATION
Manager

Employee 1

Employee 2

Employee 3

Employee 4

2) BOTTOM TO TOP COMMUNICATION

Manager

Employee 1

Employee 2

Employee 3

Employee 4

3) HORIZONTAL COMMUNICATION
General Manager

Production
Manager

Finance
Manager

Marketing
Manager

Human
Resource
Manager

Employee 1

Employee 2

Employee 3

Employee 4

4) CROSS COMMUNICATION
General Manager

Production
Manager

Finance
Manager

Supervisor

Supervisor

Marketing
Manager

Supervisor

Human Resource
Manager

Supervisor

INFORMAL COMMUNICATION
GOSSIP individual seek and inform others about the random
information they receive. Gossip involves spreading interesting
information that is not related to work.
SINGLE STRAND single strand involves communication irrelevant
information that is not related to anything. Information is not stated in
black and white.
PROBABILITY the sender will inform anyone he meets randomly.
The receiver will also inform anyone he sees randomly and the
communication continues. The information delivered is usually not
important but interesting.
CLUSTER the first individual will inform a second individual, and the
second individual will then pass the same information to certain
individuals in an organization. The receiver believes that the sender
will obtain important information related to work matters.