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MGT Unit 7

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Department of Management

College of Business and Economics

Addis Ababa University

Introduction to Management

Yohannes Neda
yohannesneda@gmail.com

Strategic Management 1
Yohannes Neda
Chapter Seven
The Directing /
Leading Function
Chapter Objectives Contents

At the end of this course you will be able to: ✓ Definition of Leaders
✓ Define leadership ✓ Leadership Vs Management
✓ Compare and contrast leadership and ✓ Leadership, Power and Influence
management; ✓ Leadership Styles
✓ Distinguish leadership styles ✓ Theories of Leadership
✓ Explain Theories of leadership ✓ Employee motivation
✓ Describe employee motivation ✓ Organizational Communication
✓ Explain organizational communication

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Definitions
• “Leadership is a process whereby an individual influences a group of individuals
to achieve a common goal”. (Northouse, 2004)
• “Leadership is the influencing process of leaders and followers to achieve
organizational objectives through changes”. (Lussier & Achua, 2004)
• “Leadership is about articulating visions, embodying values, and creating the
environment within which things can be accomplished” (Richards & Engle,
1986)
• “Leadership is the ability of an individual to influence, motivate, and enable
others to contribute toward the effectiveness and success of the organization…”
(House et al., 1999)

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Definitions
• Therefore, Leadership is the function of
➢The Leader
➢The Follower and
➢The Situation
• L= f(L,F,S)

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Leadership Vs Management
• Management and Leadership are not the same
• In deed, managers and leaders share a number of traits.
• Leadership and management are two distinctive and complementary systems of
action…… Both are necessary for success in an increasingly complex and volatile
business environment.
• Strong leadership with weak management is no better, and is sometimes actually
worse, than the reverse.
• Management is about coping with complexity….. Without good management, complex
enterprises tend to become chaotic… Good management brings a degree of order and
consistency….

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Leadership Vs. Management
• Leadership, by contrast, is about coping with change…. More change
always demands more leadership.
• Companies manage complexity by planning and budgeting, by organizing
and staffing, and by controlling and problem solving. By contrast, leading
an organization to constructive change involves setting a direction
(developing a vision of the future and strategies to achieve the vision),
aligning people, and motivating and inspiring them to keep moving in the
right direction.

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Leadership, Power and Influence
• To fully understand leadership, it is necessary to understand power.
• Power is the ability to affect the behavior of others.
• In organizational settings, there are usually five kinds of powers: legitimate,
reward, coercive, referent, and expert power and these powers usually classified
into position power and personal power.
• Accordingly, legitimate, reward and coercive power are related to positional
power and referent and expert power are related to personal power.

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Leadership, Power and Influence
1. Referent power: based on followers’ identification and liking for
the leader.
2. Expert Power: based on the followers’ perceptions of the leader’s
competence and expertise skill.
3. Legitimate Power: associated with having status of formal job
authority.
4. Reward Power: Derived from having the capacity to provide
rewards to others.
5. Coercive Power: Derived from having the capacity to penalize or
punish others.

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Leadership Styles
• There are a number of different 'styles' to leadership that are
based on different assumptions and theories.
• The style that individuals use will be based on a combination
of their beliefs, values and preferences, as well as the
organizational culture and norms which will encourage some
styles and discourage others.

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Leadership Styles
Some of these Styles are:
 Autocratic/Authoritarian
 Democratic/Participative Leadership Style
 Laissez-fair/Free-Rein Leadership Style

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Leadership Styles
Autocratic Leadership Style
• In the autocratic style, the leader takes decisions without consulting with
others.
Autocratic style works when:
• There is no need for input on the decision
• where the motivation of people to carry out subsequent actions would not
be affected whether they were or were not involved in the decision-making.

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Leadership Styles
Democratic Leadership Style
• In the democratic style, the leader involves the people in the decision-
making, although the process for the final decision may vary from the leader
having the final say to them facilitating consensus in the group.
• Democratic decision-making is usually appreciated by the people, especially
if they have been used to autocratic decisions with which they disagreed.
• It can be problematic when there are a wide range of opinions and there is
no clear way of reaching an equitable final decision.

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Leadership Styles
Laissez-Faire Leadership Style
 The laissez-faire style is to minimize the leader's involvement in
decision-making, and hence allowing people to make their own
decisions, although they may still be responsible for the outcome.
Laissez-faire works best when people are:
 capable and motivated in making their own decisions
 where there is no requirement for a central coordination
 Highly skilled

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Theories of Leadership

Trait Theory
Assumptions
• People are born with inherited traits.
• Some traits are particularly suited to leadership.
• People who make good leaders have the right (or sufficient) combination of traits.
Description
• Early research on leadership was based on the psychological focus of the day, which
was of people having inherited characteristics or traits.
• Attention was thus put on discovering these traits, often by studying successful leaders,

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Theories of Leadership

Behavioral Theories
Assumptions
 Leaders can be made, rather than are born.
 Successful leadership is based in definable, learnable behavior.
Description
 Behavioral theories of leadership do not seek inborn traits or capabilities.
Rather, they look at what leaders actually do.
 If success can be defined in terms of describable actions, then it should be
relatively easy for other people to act in the same way. This is easier to teach
and learn then to adopt the more ephemeral (short-lived) 'traits' or 'capabilities'.
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Theories of Leadership

Situational Leadership Theories


Assumptions
• The best action of the leader depends on a range of situational factors.

Description
• Situational leadership has many variants.
• Situational theories focus on adopting different leadership styles according
to the situation and the team members.

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Motivation
• Motivation is the willingness to do something and is conditioned by this action’s
ability to satisfy some need for the individual.
• Need is a physiological or psychological deficiency that makes certain outcomes
appear attractive.
• Motivated employees are in a state of tension. In order to relieve this tension,
they engage in activity. The greater the tension is the greater the activity.
• When employees are working hard at some activity we can conclude they are
driven by a desire to achieve Something (i.e., a goal) they value.
• Remember motivation theories are culture-bound.

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Motivation
To improve motivation:
• Leaders should recognize individual differences among employees
• Match people to jobs and responsibilities
• Use goals
• Individualize rewards whenever possible
• Link rewards to performance
• Check the system for equity

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Theories of Motivation
• Content theories focus on human needs or desires that are internalized
and give impetus to individual behavior.
• Process theories examine employee behavior in terms of job satisfaction
related to perceived rewards (or lack of rewards) that instigate behavior.
• Reinforcement theory explains behavior in terms of consequences learned
from past experiences that teach individuals what to do to avoid pain
and to gain pleasure.

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The Content Theories of Motivation
• The content theories of motivation help us to understand human
needs and how people with different needs may respond to
different work situations
• Needs are the unfulfilled physiological or psychological desire of
an individual.
• Content theories of motivation use individual needs to explain the
behaviors and attitudes of people at work.
• Also called intrinsic

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Maslow’s Theory of Motivation
• In 1943, Maslow wrote five fundamental human needs and their hierarchical
nature.
• Maslow stated that individuals have five needs which he arranged in a hierarchy
from the most basic level to the highest: physiological, safety, belongingness and
love, esteem, and self-actualization.
• The lower the needs in the hierarchy, the more fundamental they are and the
more a person will tend to abandon the higher needs in order to pay attention to
sufficiently meet the lower needs.

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Maslow’s Hierarchy of Needs

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Explanations
Physiological needs are to do with the maintenance of the human body.
Safety needs are about putting a roof over our heads and keeping us from harm.
Belonging needs introduce our tribal nature. If we are helpful and kind, others
want us as friends.
Esteem needs are for a higher position within a group. If people respect us, we
have greater power.
Self-actualization needs are our greatest achievement.

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Maslow’s Hierarchy of Needs

• Include physiological, Higher order needs


safety, and social • Esteem and self-
concerns actualization needs
• Are desires for social • Represent a person’s
and physical well-being desires for
psychological
Lower order needs development and
growth

Yohannes Neda

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Possible Techniques to be Used by Managers
Give employees appropriate salaries, breaks and eating
Physiological Needs opportunities should be given to employees.

Safety/Security Needs Provide the employees job security, safe and hygienic work
environment, and retirement benefits so as to retain them.

Love/Social Needs Encourage teamwork and organize social events.

Appreciate and reward employees on accomplishing and


Self Esteem Needs exceeding their targets, give deserved employee higher job
rank / position in the organization.
Give the employees challenging jobs and growth
Self-Actualization Needs opportunities can be given to employees so that they can
reach the peak.
Yohannes Neda

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How Do These Needs Affect Human
Behavior?
Two principles:
• The deficit principle holds that a satisfied need is
not a motivator of behavior
• The progression principle holds that a need at one
level does not become activated until the next
lower level need is already satisfied

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Herzberg’s Two Factor Theory
The Two factors:
• The satisfier factors
(Motivators) - things
relating to the nature of the
job itself.
• The hygiene (dis-satisfiers)
factors - things relating
more to the work setting

Yohannes Neda

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Herzberg’s Two Factor Theory
Job dissatisfaction Job satisfaction
Influenced by job context, or Influenced by job content, or
hygiene factors motivator factors
 Working conditions  Sense of achievement
 Interpersonal relations  Feelings of recognition
 Organizational policies  Sense of responsibility
 Quality of supervision  Opportunity for advancement
 Base wage or salary  Feelings of personal growth

Rule: Poor job context increases Rule: Good job content


dissatisfaction increases satisfaction

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Herzberg’s Two Factor Theory

• The two factor theory remains a useful reminder that there are two
important aspects of all jobs:
• Job content (intrinsic)-what people do in terms of job tasks, and
• Job context (extrinsic)- the work setting in which they do it.
• Herzberg’s advice to leaders are:
• Always correct poor context to eliminate actual or potential sources
of job dissatisfaction, and
• Be sure to build satisfier factors into job content to maximize
opportunities for job satisfaction.

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Theory X and Theory Y

• McGregor described
Theory X and Theory
Y

• Theory X and theory


Y each represent
different ways in
which leaders view
employees

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Possible Techniques to be Used by Managers

Theory X
• Quite a few organizations use Theory X today.
• Theory X encourages use of tight control and supervision.
• It implies that employees are reluctant to organizational changes.
• Thus, it does not encourage innovation.

Avoid use of this as much as you can!


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Possible Techniques to be Used by Managers
Theory Y
• Create and encourage a work environment which provides opportunities to
employees to take initiative and self-direction.
• Encourage decentralization of authority, teamwork and participative decision
making.
• Search and discover the ways in which an employee can make significant
contributions in an organization.
• Harmonize and match employees’ needs and aspirations with organizational
needs and aspirations.

Focus on this as much as you can!


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Process Theories of Motivation
• Content Theories emphasize people’s perceived needs. In
contrast, process theories emphasize that employees make
decisions about how they will perform at work.
• They are viewed as making conscious and subconscious
evaluations of contemplated actions and the consequences
of those actions. few of the process theories of motivation
are presented below.

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Equity Theory

• Inequities occur whenever people feel that


the rewards received for their work are
unfair compared with the rewards other
persons appear to be getting.
• The comparison points may be coworkers
in the group, workers elsewhere in the
organization, and even persons employed
by other organizations.
• It is hard for an employee to feel motivated
in the workplace if he/she feels they were
treated unfairly.

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Equity Theory

The ways people deal with perceived inequity include the


following:
• Change their work inputs by putting less effort into their jobs.
• Change the rewards received by asking for better treatment.
• Change the comparison points by finding ways to make
things seen better.
• Change the situation by transferring or quitting the job.

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Possible Techniques to be Used by Managers
When people feel fairly treated
they are more likely to be
motivated; when they feel unfairly
treated they are highly prone to
feelings of disaffection and
demotivation.

Focus on fair treatment of


employees!

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Expectancy Theory
• The expectancy theory of motivation asks a
central question:
• what determines the willingness of an individual
to work hard at tasks important to the
organization?
• In response to this question, expectancy
theory suggests that “people will do what they
can do when they want to do it.”
• More specifically, the theory suggests that
the motivation to work depends on the
relationships between the three expectancy
factors.

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Expectancy Theory

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Possible Techniques to be Used by Managers

• The managers can correlate the preferred outcomes to the aimed performance
levels.
• The managers must ensure that the employees can achieve the aimed performance
levels.
• The deserving employees must be rewarded for their exceptional performance.
• The reward system must be fair and just in an organization.
• Organizations must design interesting, dynamic and challenging jobs.

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Goal Setting Theory
 This theory’s basis premise is that task goals can be
highly motivating-if they are properly set and if they are
well managed.
 Goals give direction to people in their work.
 Goals clarify the performance expectations between
a leader and followers, between coworkers, and
across subunits in an organization.

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Goal Setting Theory
The key issues and principles in managing this goals-setting process are:
• Set specific goals: They lead to higher performance than more generally stated
ones, such as “Do your best.”
• Set challenging goals: As long as they are viewed as realistic and attainable, more
difficult goals lead to higher performance than do easy goals.
• Build goal acceptance and commitment: People work harder for goals that they
accept and believe in; they tend to resist goals forced on them.
• Clarify goals priorities: Make sure that expectations are clear as to which goals
should be accomplished first and why.
• Reward goals accomplishment: Don’t let positive accomplishments pass unnoticed;
reward people for doing what they set out to do.

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Reinforcement Theory of Motivation
• Reinforcement theory views human behavior as determined by its environmental
consequences.

• Instead of looking within the individual to explain motivation and behavior, it


focuses on the external environment and the consequences it holds for the
individual.

• The basic premises of the theory are based on the law of effect: Behavior that results
in a pleasant outcome is likely to be repeated; behavior that results in an unpleasant
outcome is not likely to be repeated.

• Reinforcement is the process by which certain types of behaviors are strengthened.


Thus a ‘reinforcer’ is any stimuli that causes certain behavior to be repeated or
inhibited.
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Possible Techniques to be Used by Managers
There are four reinforcement strategies, they are:
• Positive reinforcement: A positive reinforcement is a reward for a
desired behavior.
• Negative Reinforcement: Negative reinforcement is the removal of
an unpleasant consequence following a desired behavior.
• Extinction: Extinction is the withdrawal of positive reward and
removal of all reinforcements following an undesirable
behavior.
• Punishment: punishment is the administration of negative
consequences following an undesirable behavior.

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Meaning of Communication
• Communication is a shared
meaning among two or more
people through verbal and
nonverbal transaction.
• Communication in management
is the sharing, receiving and
understanding of instructions,
concepts, opinions and
information about company
affairs and reacting to such
activities in one way or another.

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Formal Communication
• It occurs through official channels.
• Memos, policies, procedures, and reports of committee meetings are the
example of formal communication.
• In the formal communication we find:
• vertical - upward and downward Communication
• horizontal Communication
• diagonal communication

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Formal Communication Flow

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Informal Communication
• Informal channel consists of the
communication chain and
networks created by friendship and
social association within the work
environment.
• Informal communication grows out
of the social interaction among
people who work together.

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