Posted by: moosemark | March 2, 2011

Leadership Styles And Its Affect On Corporate Culture

The Case for Culture

In the competitive world of innovation and new technology, metrics are vital to assess success (Wyld & Maurin, 2009). Daily newspapers, blogs, and reports are filled with the latest gadgets and products to meet ever-increasing market needs. As Thomas Friedman (2007) states in his book The World is Flat “individuals can compete globally, then it means that individuals – just like companies – must also innovate to success”.

Companies like Google, Microsoft, Pixar, Apple, and others are constantly striving to innovate and capture market. New products are introduced to the market daily on a global scale. The pace of innovation and new technologies increases yearly (Dervitsiotis, 2010).  As innovation increases globally it creates new markets and transforms industries (Sood & Tellis, 2009).  In todays economy it has never been as important to innovate (Wyld & Maurin, 2009) in order to thrive and develop new market changing products.

Pixar is known as a creative company that has pushed the envelope of digital animation (Norton & Joseph Pine Ii, 2009).  According to Ed Catmull, president and co-founder of Pixar Animation Studios (2008) he realized that it was not only alright to hire someone smarter than him, but it was beneficial. By giving employees the power to be creative, they innovated the animation industry (Catmull, 2008).

One of the organizational tools Catmull initiated at Pixar was to create an innovative culture of open communication where team members are more comfortable and apt to help and give feedback (Catmull, 2008).  According to agile development the open communication and constant feedback from team members increases innovation (May, 2010).

Creation of Organizational Culture

According to Robbins and Judge (2011) “organizational culture refers to a system of shared meaning held by members that distinguishes the organization from other organizations.” It is the characteristics that define who the organization is. It is a list of their organizational personality traits where the aggregate of the individual employee personality traits define the organizational traits (Min-Huei, 2004).  Since each culture is an aggregate of the individual employees, each organizational culture is unique.

Most organizational cultures are created by the founding members of the organization (Gagliardi, 1986). When an organization grows, management looks outside to bring in new employees. It is during those interviews that managers tend to be more comfortable with the interviewees that have similar and like opinions to their own (Van den Steen, 2010). It is the theory of shared belief that cause a manager to select a candidate whose choices and decisions most likely reflect their own. Since choices are often measured on a value scale, they are skewed to reflect the personality of the person grading and evaluating the decisions (Judge & Cable, 1997). In essence the organizational culture tends to repeat and maintain itself as new employees are selected based on strong managerial personalities.

Leadership Defined

Leadership is complex. It is not something easily defined, nor can it be explained by simple gimmicks (Kotter, 1988) or parlor tricks. According to Peter Northouse (2010) “Leadership is a process whereby an individual influences a group of individuals to achieve a common goal”.  Based on this definition leadership can be described as what you do and how you do it to affect change.  According to James M. Kouzes and Barry Z. Posner,

Leadership development is self-development…The quest for leadership is first an inner quest to discover who you are. Through self-development comes the confidence needed to lead. Self-confidence is really awareness of faith in your own powers. These powers become clear and strong as you work to identify and develop them (Kouzes & Posner, 2007, p. 344).

Based on the framework of self-awareness and self-development the more talents are identified, the greater the organizational potential (Clifton & Harter, 2003). It is in this self-centric environment that leadership and culture are created.  According to Kouzes and Posner (2007) everyone in the organization can be a leader regardless of position or title. It is the leaders who create culture (Schein, 2010). Therefore, culture is the aggregate of all members of an organization.

Leadership Styles

Since the beginning of time man has been trying to figure out what leadership characteristics make the best leader. Over the years several styles have been defined to help better clarify the impact of a leaders style within an organization.  With how quickly the world is changing, in order to remain competitive in the work environment it is vital to understand the framework of leadership and how the differing styles affect the cultural impacts of the organization (van Eeden, Cilliers, & van Deventer, 2008).

Style Approach

One of the researchers at the forefront of leadership studies was Ralph M. Stogdill.  While at Ohio State University, Stogdill (1957) along with Alvin E. Coons, studied leadership vociferously and postulated that there are two primary elements of leadership:

1)    Initiating structure, which deals with task behavior.

2)    Consideration for workers, which concerns relationships.

Robert S. Blake and Jane S. Mouton further clarified (1967) their previous research from 6 years previous that leadership conduct should be viewed in a three-dimensional plane rather than the previously defined two-dimensional plane.  According to Blake there are three definitive planes; 1) the horizontal axis focuses on production; 2) the vertical axis deals with concern for people; and 3) the “thickness or depth of a given style” (Blake & Mouton, 1967). Similar in nature to Stogdill’s definition of leadership, Blake and Mouton enhanced the current thought with the added dimension.  Figure 1 depicts the three-dimensional managerial grid as represented by Blake and Mouton.

The managerial grid is based on a set of coordinates. In the lower left corner (1,1) the style has the least concern for people and production. The upper left corner (1,9) has high concern for people, but low concern to production. The lower right corner (9,1) has high concern for production, but low concern to people.  The upper right corner (9,9) has both a high concern for people and production. In the middle (5,5) it is a “middle-of-the-road” style that seeks balance of production and people (Blake & Mouton, 1966). Each of these styles can be used to motivate and control “others by showing interest and using praise, or negatively, criticizing and using punishment” (Blake & Mouton, 1966).  According to Blake (1966) a careless or even controlling manipulative manager can change the culture and tempo of the organization by utilizing and understanding the different styles indicated on the Grid.

Figure 1. The Three-Dimensional Managerial (Leadership) Grid (Blake & Mouton, 1967)

Three Major Leadership Styles

Although there are several theories and styles of leadership, there are three styles that have been studied and considered the major leadership styles: 1) laissez-faire, 2) transactional, and 3) transformational (Avolio, 2011Bass & Stogdill, 1990Zagorsek, Dimovski, & Skerlavaj, 2009). The three major leadership styles can be considered on a continuum where the least people concerned style is laissez-faire, and the transformational is designed to help employees achieve their goals (Antonakis, Avolio, & Sivasubramaniam, 2003).  Although the studies have focused primarily on leadership traits, it is believed that the more effective leaders have a combination of the three styles as depicted by Bass (van Eeden, et al., 2008).

Bernard Bass and Bruce Avolio developed the Multifactor Leadership Questionnaire (MLQ and MLQ 5X) to measure where along the leadership continuum a leader resides as it relates to employee satisfaction.

Laissez-faire Leadership

The term laissez-faire in French literally means to let people do as they choose (Merriam-Webster Inc., 2005).  This style of non-leadership has not been studied as fervently as other leadership styles, but it is an active method of leading nevertheless (Skogstad, Einarsen, Torsheim, Aasland, & Hetland, 2007).  Bernard M. Bass and Bruce J. Avolio (1990) have defined laissez-faire leadership as:

“the absence of leadership, the avoidance of intervention, or both. With Laissez-faire (Avoiding) leadership, there are generally neither transactions nor agreements with followers. Decisions are often delayed; feedback, rewards, and involvement are absent; and there is no attempt to motivate followers or to recognize and satisfy their needs” (p. 20).

This form of leadership can be destructive to the organizational culture.  Anders Skogstadet al., (2007) state that the laissez-faire leader creates an environment that elicits increased employee role stressors, role conflict and ambiguity, high conflict, and bullying techniques. The overall impact of this leadership type is a detriment to the organizational culture as a whole.

One form of non-leadership is leading by bullying (Skogstad, et al., 2007).  Julian Burkeet al., (2005) state that leaders “who are abusive, aggressive, or punitive are a clear source of stress for individuals in the workplace” (p. 99).

Figure 2. Path diagram of leadership style affect on employees. Adapted from “The Destructiveness of Laissez-Faire Leadership Behavior,” by Skogstad, A., Einarsen, S. l., Torsheim, T. r., Aasland, M. S., & Hetland, H. (2007), Journal of Occupational Health Psychology, 12(1), 80-92. doi: 10.1037/1076-8998.12.1.80

Transactional Leadership

Transactional leadership is rooted in the belief that “leaders exchange promises of rewards and benefits to subordinates for the subordinates’ fulfillment of agreements with the leader” (Bass & Stogdill, 1990, p. 53).  The leadership style is one in which the leader does not individualize employee needs, nor do they focus on employee development (Northouse, 2010).  Rather, employees are rewarded based on performance (Sarros, Gray, & Densten, 2002).

There are three main styles of transactional leadership: contingent reward, active management-by-exception, and passive management by exception (Northouse, 2010;Sarros, et al., 2002).

Contingent reward is based on a set of goals and deliverables. As an employee achieves their goals, their reward is contingent on how well they met or exceeded the stated goals.  Contingent goals could be set based on piece-rate work, or longer term goals.  A key to employee success is to set realistic goals that both the employee and leader agree upon (Hollander, 1978).

Management-by-exception is either active or passive. In this style the leader only acts, or manages, when there is an issue or behavior that needs correcting or commending. Leonard Reber, the head of a drafting department at a manufacturing firm is an example of this leadership style:

“He assigns projects to each of his people, with instructions to come to him if they have any problems. And they do. But he never goes to them, or hears from them when no problems arise” (Bensahel, 1975).

Although this tends to be successful in curbing improper behavior or techniques, it does not recognize those in the organization that are exceeding expectations.

Active management-by-exception is conceptualized by a manager who scours reports, or listens for actions that are not within policy, then approaches the employee with changes.  The swiftness of corrective action based on open, fair communication is good, appropriate, and helps change culture by eliciting open dialog (Connors & Smith, 1999;Patterson, 2002).

Passive management-by-exception tends to materialize in a manner that is not upfront and immediate. This style is apparent when a manager does not say anything to the employee until a yearly review (Northouse, 2010) and can be damaging in the long run. According to Bass (1990) the passive approach is a “prescription for mediocrity”.

Both of these styles, active and passive, although can be effective, also have risks associated.  When management-by-exception is exercised it can create a culture that is based on negative feedback and in turn lowers employee morale (Bensahel, 1975). Transactional leaders also do not appear to be concerned with the emotional needs of their employees (Bass, 1990).

Transformational Leadership

To transform is to change and morph an entity into something different.  Bass (1990) expressed that transformational leadership:

“occurs when leaders broaden and elevate the interests of their employees, when they generate awareness and acceptance of the purposes and mission of the group, and when they stir their employees to look beyond their own self-interest for the good of the group”.

This leadership style tends to focus on the organizational objectives by building employee commitment (Stone, Russell, & Patterson, 2004Yukl, 2002).  Based on the research of James MacGregor Burns (Burns, 1978), and then later Bernard M. Bass (Bass, 1990Bass & Avolio, 19901994Bass & U.S. Army Research Institute for the Behavioral and Social Sciences., 1996Northouse, 2010van Eeden, et al., 2008) there are several traits that comprise transformational leadership: idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration. It is a combination of these factors that create transformational leadership.

Idealized influence is also known as charisma (Bass, 1990) and is at the heart of this leadership style. Bass believed that:

“Transformational leadership can be learned, and it can – and should – be the subject of management training and development. Research has shown that leaders at all levels can be trained to be charismatic in both verbal and nonverbal performance” (Bass, 1990).

When employees “respect, admire, and trust the leader” (van Eeden, et al., 2008) they are more apt to follow the leaders directives and requests.  The leaders become role models that employees desire to follow and thus have a higher degree of trust in their leaders (Stone, et al., 2004).  Change brings about fear, anxiety, and frustration. Employees must trust their leader so as to be comforted during the elements of change (Kotter, 1996).

Idealized influence leaders also have the ability to have employees feel part of the organization, and thus cultural development, by having a shared vision (Jung & Avolio, 2000).  When leaders listen to their employees and followers, and are enthusiastically encouraging them to be successful in the vision, the organization will be more effective.  In The Leadership Challenge, Kouzes and Posner (2007) postulate that it is imperative to enlist others as they appeal to common ideals and animate the vision.

“Successfully engaging in these two essentials can produce very powerful results. In our research we found that when leaders effectively communicate a vision – whether it’s to one person, a small group, or a large organization – constituents report significantly higher levels of job satisfaction, motivation, commitment, loyalty, team spirit, productivity, and profitability” (p. 133).

The inspirational motivator is able to stimulate excitement through a shared vision and motivation (Northouse, 2010Stone, et al., 2004van Eeden, et al., 2008). Like a motivational speaker, the leader elicits an emotional bond between the leader, employees, and the organization.  Through various communication methods, including written correspondence, one-on-one chats, team meetings, or company wide presentations, leaders communicate their vision, goals, and expectations (van Eeden, et al., 2008).

Through these inspirational communications the leader builds relationships which create cultural bonds (Stone, et al., 2004).  Communication isn’t just important inside the organization. According to Kouzes and Posner (2007):

“leaders who are dedicated to getting extraordinary things done are open to receiving ideas from anyone and anywhere…Because they never turn their backs on what is happening outside the boundaries of their organizations, exemplary leaders are not caught by surprise when the waves of change roll in” (pp. 181-182).

Those leaders who communicate well, and elicit an emotional response from their employees foster enthusiasm throughout the organization by shifting values of all parties toward a common goal (Stone, et al., 2004).

The intellectual stimulation factor of transformational leaders “stimulate their followers’ efforts to be innovative and creative by questioning assumptions, refraining problems, and approaching old situations in new ways” (Bass, 1998, pp. 5-6).  It is in this constant search of innovation, both individual and organizationally, that leaders encourage people to stretch and grow (Kouzes & Posner, 2007).

This type of leadership inspires employees to think outside of the box and search for new ways of doing business and solving problems.  Intellectual stimulation promotes intelligence, rationality, and careful problem solving (Bass, 1990).  When employees make mistakes the leader should not publically criticize to punish (Bass, 1990Stone, et al., 2004).  Instead the leader solicits and encourages employees to be creative, which builds organizational community in solving problems (Bass, 1998).

Employees, and leaders, are encouraged to question process on the path towards greater innovation.

“Questioning the status quo is not only for leaders.  Effective leaders create a climate in which others feel comfortable doing the same.  If your organization is going to be the best it can be, everyone has to feel comfortable in speaking up and taking the initiative” (Kouzes & Posner, 2007, p. 186).

Employees who do this should not be made to feel ashamed or punished if their ideas do not match with the leaders preconceived ideas or processes (Bass, 19901998Bass & Riggio, 2006).

The final aspect of transformational leadership is that of individualized consideration. In this factor the leader acts as a coach and mentor to the individual employee (Northouse, 2010).  By doing this the leader encourages individuals to achieve and grow (Avolio & Bass, 2002) through constant communication, listening, and feedback (Bass, 1998;Connors & Smith, 1999).

During the coaching phase the leader may delegate tasks (not to be confused with transactional leadership) that cause the employee to grow and be challenged (Bass, 1998;Northouse, 2010).  Edgar H. Schein described this phenomenon as learning:

“A paradox of learning leadership is that the leader must be able not only to lead but also to listen, to involve the group in achieving its own insights into its cultural dilemmas, and to be genuinely participative in his or her approach to learning and change…The leader must recognize that, in the end, cognitive redefinition must occur inside the heads of many members of the organization, and that will happen only if they are actively involved in the process” (Schein, 2010, pp. 382-383).

It is the individuals who make of the organization and its culture.  When the leader sets the precedence and expectation, by creating a culture of openness and transformation, the organization will grow through higher levels of motivation (van Eeden, et al., 2008).

Leaders who utilized transformational leadership tend to have employees and followers who trust and respect their leaders and therefor are willing to follow and yield power to them(Stone, et al., 2004).  Studies have suggested that leaders who exercise transformational leadership are perceived to be more effective than the leaders who only demonstrate transactional leadership (Lowe & Galen Kroeck, 1996Northouse, 2010).

Functional Attributes Accompanying Attributes
1) Idealized influence/charisma Vision
Trust
Respect
Risk-sharing 

Integrity

Modeling

2) Inspirational motivation Commitment to goals
Communication
Enthusiasm
3) Intellectual stimulation Rationality
Problem solving
4) Individualized consideration Personal attention
Mentoring
Listening
Empowerment

Table 1. Transformational Leadership Attributes. Adapted from Stone, A. G., Russell, R. F., & Patterson, K. (2004). Transformational versus servant leadership: A difference in leader focus. Leadership & Organization Development Journal, 25(4), 349-361.

Servant Leadership

Similar in nature to transformational leadership, servant leadership focuses on strengthening employees and followers.  Introduced by Robert K. Greenleaf (1977) this form of leadership believes that a leader is only in their respective position to serve those he or she leads.  As a leader focuses on developing people rather than profits, organizational goals will be achieved (Stone, et al., 2004).

“Chasing profits is peripheral; the real point of business is to serve as one of the institutions through which society develops and exercises the capacity for constructive action” (Harvey, 2001, pp. 38-39). In other words, businesses exist to develop people and societal solutions.  Since leaders are focused so heavily on employee development, employees and followers tend to have a higher trust in the leader (Stone, et al., 2004).

Servant leadership and transformational leadership are similar in many facets and leader attributes. Table 2 lists some of the attributes of a servant leader.

Functional Attributes Accompanying Attributes
Vision Communication
Honesty, integrity Credibility
Trust Competence
Service Stewardship
Modeling Visibility
Pioneering Influence
Persuasion
Appreciation of others Listening
Encouragement
Empowerment Teaching
Delegation

Table 2. Servant Leadership Attributes. Adapted from Stone, A. G., Russell, R. F., & Patterson, K. (2004). Transformational versus servant leadership: A difference in leader focus. Leadership & Organization Development Journal, 25(4), 349-361.

Although transformational leadership and servant leadership are similar in many aspects, their main difference is the focus of the leader (Stone, et al., 2004).  Greenleaf (1977) believes that the purpose of the leader is to serve the followers, develop their talents, and help them to become future servants.  The transformational leader is focused on developing the organization (Stone, et al., 2004).  Both are follower centric, and both tend to have organizational cultures built around trust and innovation.

Culture by Leadership

The creation of organizational culture is based on and defined by the leadership styles of the organization.

“The connection between culture and leadership is clearest in organizational cultures and microcultures.  What we end up calling a culture in such systems is usually the result of the embedding of what a founder or leader has imposed on a group that has worked out” (Schein, 2010).

Simply stated, culture is based on the tone and style of leadership.  Each leadership style, every decision, and every person affects organizational culture.

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