Lecture 5

Leadership, management styles and

organizational culture

1
 Outline
I. Leadership and management styles
II. Organizational culture
III. Factors influencing organizational culture

2
 I. Leadership & management styles

1. Continuum of leadership styles (Tanneenbaum

& Schmidt)
2. Likert’s systems 1-4
3. McGregor’s theory X & Y

3
 1. Continuum of leadership styles (Tanneenbaum & Schmidt)

• There are many possible ways of describing leadership style.

One of the best-known works on leadership style is that by
Tannenbaum and Schmidt (see Figure 1).
• Originally written in 1958 and updated in 1973, their work
suggests a continuum of possible leadership behavior available
to a manager/leader.
• The continuum presents a range of action related to the degree
of authority used by the leader and to the area of freedom
available to non-leaders in arriving at decisions.
• Neither extreme of the continuum is absolute as there is always
some limitation on authority and on freedom.

4
 1. Continuum of leadership styles
(cont.)

Figure 1: Tannenbaum and Schmidt Continuum of Leadership (Drew, 2019)

5
 1. Continuum of leadership styles (cont.)

Tannenbaum and Schmidt suggest three factors/forces of particular importance

in deciding what types of leadership are practicable and desirable:
• Forces in the leader. The leader’s behavior will be influenced by personality,
background, knowledge and experiences. These internal forces include
value-systems, confidence in subordinates, leadership inclinations, feelings
of security in an uncertain situation.
• Forces in the subordinate. Subordinates are influenced by many personality
variables and individual set of expectations about relationships with the
leader. Characteristics of the subordinate include the need for
independence, readiness to assume responsibility, tolerance for ambiguity,
knowledge and experience to deal with the problem.
• Forces in the situation. The leader’s behavior will be influenced by the
general situation and environmental pressures. Characteristics in the
situation include type and size of organization, group effectiveness, nature of
the problem, pressure of time.
6
 1. Continuum of leadership styles (cont.)

• Three key steps in the leadership process in this

model:

Identify Identify Make a

Problems Solutions Decision

• As we move through the continuum, the control over

these three steps transfers from the leader to the
team.
• The table on the next slide provides a summary
outlining who controls the steps in the leadership
process for each style.
7
 1. Continuum of leadership styles (cont.)

Problem: Solutions: Decision:

Control over Identifying Control over Control over
the Problem Identifying Solutions Final Decision
1. Leader Tells Leader Leader Leader
2. Leader Sells Leader Leader Leader
3. Leader Suggests Leader Leader Leader
4. Leader Consults Leader Team Leader
5. Leader Joins Leader Team Team
6. Leader Delegates Leader Team Team
7. Leader Abdicates Team Team Team

Table 1: Levels of Control in the Leadership Continuum (Drew, 2019)

8
 2. Likert’s systems 1-4
• Rensis Likert and his associates studied the patterns and styles
of managers for three decades at the University of Michigan,
USA, and identified a four-fold model of management systems.
• The model was developed on the basis of a questionnaire
administered to managers in over 200 organizations and
research into the performance characteristics of different types
of organizations.
• His four systems are designed to highlight various organizational
dynamics and characteristics built around interactions between
individuals. Notably, the systems explore various soft
management/leadership skills such as trust-building and their
effects on the broader dynamic of the organization itself.

9
 2. Likert’s systems 1-4 (cont.)

The four Likert’s systems are:

• System 1 – Exploitive authoritative.
Decisions are imposed on subordinates, motivation is
based on threats, there is very little teamwork or
communication; responsibility is centered at the top of
the organizational hierarchy.

• System 2 – Benevolent authoritative.

There is a condescending form of leadership,
motivation is based on a system of rewards, there is
only limited teamwork or communication; there is
responsibility at managerial levels but not at lower
levels of the organizational hierarchy.

10
 2. Likert’s systems 1-4 (cont.)

The four Likert’s systems are:

• System3–Consultative.
Leadership involves some trust in subordinates,
motivation is based on rewards but also some
involvement, there is a fair degree of teamwork, and
communication takes place vertically and horizontally;
responsibility for achieving the goals of the
organization is spread more widely throughout the
hierarchy.
• System 4 – Participative/Democratic. Leadership
involves trust and confidence in subordinates,
motivation is based on rewards for achievement of
agreed goals, there is participation and a high degree
of teamwork and communication; responsibility for
achieving the goals of the organization is widespread
throughout all levels of the hierarchy.

11
 2. Likert’s systems 1-4 (cont.)

Figure 2: Likert’s Four Styles of Leadership (Likert, 1967)

12
 2. Likert’s systems 1-4 (cont.)
Key findings of the theory:
• The nearer the behavioral characteristics of an organization
approach System 4, the more likely this will lead to long-term
improvement in staff turnover and high productivity, low scrap, low
costs and high earnings.
• Likert sets out three fundamental concepts of System 4
management. These are the use of:
– the principle of supportive relationships among members of the
organization and in particular between superior and
subordinate;
– group decision-making and group methods of organization and
supervision; and
– high performance aspirations for all members of the
organization.
13
 3. McGregor’s theory X & Y
• In 1960, Douglas McGregor formulated Theory X and
Theory Y suggesting two aspects of human behavior at
work, or in other words, two different views of individuals
(employees):
– one of which is negative, called as Theory X
– the other is positive, so called as Theory Y.
• According to McGregor, the perception of managers on the
nature of individuals is based on various assumptions.
Theory X gives importance to supervision, while theory Y
stresses on rewards and recognition.

14
 3. McGregor’s theory X & Y (cont.)

Figure 3: Comparison of theory X & theory Y

(Businessballs, 2021)

15
 3. McGregor’s theory X & Y (cont.)
• Theory X assumptions
Theory X represents the carrot-and-stick assumptions on which
traditional organizations are based:
– the average person is lazy and has an inherent dislike of work;
– most people must be coerced,
controlled, directed and threatened with
punishment if the organization is to
achieve its objectives;
– the average person avoids responsibility,
prefers to be directed, lacks ambition
and values security most of all; and
– motivation occurs only at the
physiological and security levels.
16
 3. McGregor’s theory X & Y (cont.)
• Theory Y assumptions
At the other extreme is Theory Y based on the central principle of the integration of
individual and organizational goals. Theory Y assumptions are:
– for most people work is as natural as play or rest;
– people will exercise self-direction and self-control in the service of objectives
to which they are committed;
– commitment to objectives is a function of rewards associated with their
–achievement;
given the right conditions, the average worker can
learn to accept and to seek responsibility;
– the capacity for creativity in solving organizational
problems is distributed widely in the population;
– the intellectual potential of the average person is
only partially utilized;
– motivation occurs at the affiliation, esteem and self-
actualization levels as well as at the physiological and
security levels.
17
 3. McGregor’s theory X & Y (cont.)
• Demands of the situation
In practice, the actual style of leadership/management behavior adopted will be
influenced by the demands of the situation.
– Where the job offers a high degree of intrinsic satisfaction or involves a variety of
tasks, an element of problem-solving and the exercise of initiative, or where
output is difficult to measure in quantitative terms, an informal, participative
style (Theory Y approach) would seem to be more effective.
– However, even if a manager has a basic belief in Theory Y assumptions, there
may be occasions when it is necessary, or more appropriate, to adopt a Theory
X approach. This approach may be indicated in emergency situations, or where
shortage of time or other overriding factors demand the use of authority in
directing actions to the tasks in hand.
• For example, in the hustle, heat and noise of a busy hotel kitchen preparing
fresh meals for a large banquet, with many tasks to be coordinated over very
short time scales, it seems to be recognized that a Theory X style of
management is most appropriate. In such circumstances this style of
management appears often to be accepted by the kitchen staff.
18
 II. Organizational culture
1. What is organizational culture?
2. Types of organizational culture
3. Importance of organizational culture

19
 1. What is organizational culture?

There are numerous scholarly definitions and opinions in

defining culture in the context of organization:
• Schein (1985) depicts organizational culture as the set of
values, beliefs, and assumptions shared by the members of
the organization.
• Atkinson (1990) explains organizational culture as
reflecting the underlying assumptions about the way work
is performed; what is ‘acceptable and not acceptable’; and
what behavior and actions are encouraged and
discouraged

20
 2. Types of organizational culture

• There are a number of ways to classify different types of organizational

culture. Two common classifications are those by Handy and by Deal and
Kennedy.

Figure 4: Comparison of
theory X & theory Y
(Businessballs, 2021)

• Every organization will have its own unique culture and most large
businesses are likely to be something of a mix of cultures. Different people
enjoy working in different types of organization culture and they are more
likely to be happy and satisfied at work if their attributes and personalities
are consistent with the culture of that part of the organization in which they
are employed.
21
 2. Types of organizational culture (cont.)

a. Charles Handy’s 4 types

Figure 5: Handy’s 4 Types of Culture

(Accounting College, 2021)
22
 2. Types of organizational culture (cont.)

b. Deal & Kennedy’s four generic types of culture

From an examination of hundreds of business organizations and their
environments, Deal and Kennedy categorize corporate cultures
according to two determining factors in the marketplace:
– the degree of risk
associated with the
organization's activities;
and Figure 6: Deal &
Kennedy
– the speed at which Corporate
Culture
organizations and their (MindTools,
2021)
employees receive
feedback on the success
of decisions or strategies.

23
 2. Types of organizational culture (cont.)
• Tough-guy, macho culture
– An organization of individualists who frequently take high risks and
receive quick feedback on the right or wrong of their actions. Financial
stakes are high and there is a focus on speed.
– E.g. police departments, surgeons, construction, cosmetics, management
consulting and the entertainment industry.
• Work-hard/play-hard culture
– The culture is characterized by fun and action where employees take few
risks, all with quick feedback. Organizations tend to be highly dynamic
and the primary value centers on customers and their needs. There is a
high level of relatively low-risk activity.
– E.g. sales organizations such as estate agents, mass consumer companies
such as McDonald’s, retail stores.

24
 2. Types of organizational culture (cont.)
• Bet-your-company culture
– Where there are large-stake decisions with a high risk but slow feedback so
that it may be years before employees know if decisions were successful.
– E.g. oil companies, investment banks, architectural firms and the military.
The focus is on the future and the importance of investing in it. There is a
sense of deliberateness throughout the organization typified by the ritual of
the business meeting.
• Process culture
– A low-risk, slow-feedback culture where employees find difficulty in
measuring what they do.
– E.g. insurance companies, financial services and the civil service. The
individual financial stakes are low and employees get very little feedback on
their effectiveness. Their memos and reports seem to disappear into a void.
Lack of feedback forces employees to focus on how they do something, not
what they do.

25
 3. Importance of organizational culture

Over recent times, competitive organizations have given a good

deal of importance to the maintenance of a healthy culture as it:
• Creates a corporate identity
• Creates greater employee engagement, commitment to organizational
goals and objectives
• Guides employees in terms of acceptable behaviors and attitudes
• Creates social stability with associated emotional security, decrease
staff turnover
• Determines the work ethics, serves as a yardstick for evaluating and
correcting deviant behaviors and for rewarding desired behaviors
• Is a barrier to mergers and acquisitions

26
 III. Factors influencing culture

• The culture and structure of an organization develop over time and in

response to a complex set of factors. We can, however, identify a
number of key influences that are likely to play an important role in
the development of any corporate culture.

Size Location
The
Strategy environment

Business
nature Management
& Leadership

Organization Digital
History
al culture technologies

Figure 7: Influencing factors on organizational culture

(Coursebook, p.569)
27
 III. Factors influencing culture (cont.)

1. History
– The reason (mission), and manner in which, the organization was
originally formed, its age, and the philosophy, vision and values of its
owners and first senior managers will affect culture.
2. Nature of business & its primary function
– This includes the range and quality of products and services provided,
the importance of reputation and the type of customers. The primary
function of the organization will determine the nature of the
technological processes and methods of undertaking work, which in
turn also affect structure and culture.
3. Strategy
– The combination of objectives and resultant strategies will influence
culture, and may itself be influenced by changes in culture.

28
 III. Factors influencing culture (cont.)

4. Size
– Usually larger organizations have more formalized structures and cultures.
Increased size is likely to result in separate departments and possibly split-
site operations
5. Location
– Geographical location and physical characteristics can have a major
influence on culture. E.g. whether an organization is located in a quiet rural
location or a busy city center can influence the types of customers and the
staff employed.
6. The environment
– In order to be effective, the organization must be responsive
to external environmental influences. For example, if the organization
operates within a dynamic environment it requires a structure and culture
that are sensitive and readily adaptable to change.

29
 III. Factors influencing culture (cont.)

7. Management and leadership

– Top executives can have considerable influence on the nature
of corporate culture. For examples:

Sir Richard Anita Roddick

Branson (Founder of The Body Shop)
(Founder of “My passionate belief is that
Virgin Group) business can be fun, it can
“Adventure as a be conducted with love and
culture” a powerful force for good”.

Louis Gerstner
(formerly Harriet Green
Chairman & CEO (formerly CEO of Thomas
of IBM) Cook Group)
“The thing I “Stand up for what you
have learned at believe with strength and
IBM is that grace and the barriers will
culture is begin to fall away”.
everything”.

30
 III. Factors influencing culture (cont.)

8. Digital technologies
Technology and technological change (esp. digital technologies) have an
impact on those in the workplace in several ways:
• It influences the specific design of each member’s pattern of work,
affecting the skills exercisable and the overall quality of jobs.
• Technologies affect the degree of control that workers can exercise
within their jobs. There is a fertile, unresolved debate over whether
centralization and closer control of workers or decentralization and
democratization of technology in the workplace is the dominant trend.
• It changes the relationship between:
– organizations and those who perform the work of the organization.
– organizations and external customers or users in further ways that have
implications for the structure and reputation of organizations.

31
 III. Factors influencing culture (cont.)

8. Digital technologies
Technology and technological change (esp. digital technologies) have
an impact on those in the workplace and the organizational culture in
several ways:
• It affects where the ‘workplace’ is located.
• It affects the nature of social interactions between workers,
particularly in cases where those working on a project are doing so
from different places.
• It can influence the pace and intensity of work.
• It impacts on leadership and management attitudes and behaviors:
– Flexibility to direct and navigate business through disruptive innovation
– Empowering virtual teams and communities
– Agility to balance improving efficiency while promoting innovation
32
 Class activity

Group discussion activity (Course book, p.

366)
• Read the case study ”Transformational change” by
Harriet Green, CEO of Thomas Group
• Discuss the answers to the questions at the end of
the case

33
 Essential readings

• Chapter 13: Technology in the workplace

Chapter 15: Organizational culture and change
Mullins, L. J. (2019) Organizational Behavior in the Workplace
12th Ed. Harlow: Pearson
This lecture is related to Learning Outcome 2 of the course.

34