“Which personal style should managers adopt to ensure success? What is the most effective approach to managing the work of subordinates? These questions have been extensively researched and debated over the last century, and while the general consensus has moved away from ‘command and control’ to management and leadership towards more consultative and participative approaches, there is no single ideal, as the best approach may vary according to circumstances and individual characteristics”
This blog will discuss and address CMI’s point of view above by answering the questions, comparing management and leadership as well as looking into examples from finance industry.
Management VS Leadership
Management and Leadership are distinct concepts, with natural overlap in the skills they require.
Cited by Ratcliffe (2013), Management is a set of process that keeps the organization functioning, through planning, budgeting, staffing, and others.
Drucker, cited by Mullins (2013), divided the job of manager into 5 basic tasks:
- Set Objectives – Determine goals for each objective and the action needed to achieve them
- Organizes – Analyse activities, decision and create structure
- Motivates and Communicates – Create team out of people from various jobs
- Measures – Establish targets and performance measurement for team and organisation
- Develops People – Direct, encourage and train employees
Leadership, on the other hand, is about aligning people to the vision, engage communication, as well as become motivation and inspiration (Ratcliffe, 2013). This statement is also strengthen by Yukl (2010:26) which stated that Leadership is a process of influencing others to understand and agree the shared objectives.
Zalesnik (1992) summarized the difference between Managers and Leaders in below table:
Table 1. The Differences Between Managers and Leaders
|Attitude Toward Goals||Impersonal, Passive outlook
Goals derived from necessities
|Personal, Active Look
Set company’s direction
|Conception of Work||Negotiate and Coerce
Compromise, limit choices
|Fresh approach toward problem
Increase option and ideas
Embrace risk with promising opportunities
|Relations With Others||Minimal emotional involvement, lack of empathy
Focus on process
|Directly related to others, emphatically
Focus on substance of events and decision
|Sense of Self||Perpetuating and strengthening existing institutions
Feel part of organisation
|Struggle to profoundly alter human and economic relationship
Feel separate from organisation
Source: Zalesnik (1992)
However, in the new economy in which value derived from knowledge of people, management and leadership are not easily separated (wsj.com, 2016). In recent arising financial companies scandal such as banking sector in UK, Enron Scandal in 2001, Worldcom scandal in 2002 and Lehman Brother Scandal in 2008, the need for leadership and management interchangeably and make the company run effectively has increased (Ratcliffe, 2013).
Which personal style should managers adopt to ensure success?
The increase in competition has resulted in the distinction of how leaders transform organization. Mullin (2013) suggested two fundamental forms, Transactional Leadership which is based on legitimate authority within organization structure and Transformational Leadership which is based on the ability to empower motivation and commitment among followers and transfer vision, ideas and values. An example of transactional business leader is Lord Alan Sugar who prefers not to intervene his business unless the situation demands and make gradual changes instead of radical one (Michael, 2007). Basuki Tjahja Purnama, former successful businessman and current governor of Jakarta, capital city of Indonesia, is a great example of transformational leader. In his early business career, he became the director of PT Nurindra Ekapersada in Belitong. Through the company, he became the initiator on how the company could contribute to local community, enhance skillful human resources and take care of shareholders. By 2014, he became the first Chinese and Non-Muslim governor in Jakarta. His character, values and persistence in fighting corruption has become inspiration to Jakarta residents, whom formed independent organization, create movement and asked him to run again in future election as governor candidate independently without any political party backings in 2017 (ahok.org, 2016).
Furthermore, Mullins (2013) defined 3 style of managerial leadership toward their subordinate, in which the Authoritarian (or Autocratic) style will have focus of the power in manager, whereas the Democratic Style focus the power in the group as whole. In Laissez-Faire (genuine) style, Manager observe the group performance, makes decision but allow member to have freedom of action. Warren Buffet is an example of successful Laissez-Faire leader in which he gives certain freedom to subsidiaries to operate on their own without supervising and monitoring them and some degrees (berkshirehattaway.com, 2010).
What is the most effective approach to managing the work of subordinates?
There are several approach that can be used by manager in dealing with subordinates, which is described by French and Raven as follow:
- Legitimate Power
The power based on authority, in which the Leader has influence because of their role or position in organisation
- Referent Power
The power based on personal characteristic, reputation and charisma
- Coercive Power
The power based on Leader’s ability to execute punishment toward subordinates
- Reward Power
The power based on leader’s ability to give reward based on subordinates’ compliance
- Expert Power
The power based on Leader’s competencies, knowledge and expertise in certain area
French and Raven Organisational and Personal Power
Source: Adapted by Shafritz et al. 2015
CMI (2013) stated, “There is no single ideal, as the best approach may vary according to circumstances and individual characteristics”.
Based on French and Raven power discussed above, I personally believe that a good leader a leader can exercise each power at the right time and at the right situation to the right people. Based on my previous working experience in Audit firm, I realised how my manager and senior use their power differently toward each subordinates in the same client engagement. A more capable subordinate are given more freedom, whereas the senior will exercise more directive style with coercive power for the less experienced subordinate.
Reflection on Self: Led or Being Led?
I am a person that can lead and be lead by others. My personal leadership style would be democratic style, with supportive and participative behaviour. I would like to approach my subordinates with referent power and reward power. However, depend on my subordinates level of motivation, ability and skills, I could become a more Directive and Autocratic Style.
I prefer to be led by a leader with transformational values, which give inspiration such as John C Bogle, the founder and former CEO of Vanguard Group whom through his value and vision changed Index Mutual Fund industry as well as brought his company to become the largest mutual fund company in the world, with more than $3.4 trillion in global assets. I also prefer leader with Laissez-Faire style, which allow subordinates to grow such as Warren Buffet.
Word Count: 836
Ahok.org. (2016) Siapa Ahok? | Ahok.Org [online] available from <http://ahok.org/tentang-ahok/siapa-ahok/> [12 March 2016]
berkshirehathaway.com. (2010) Berkshire Hathaway Inc. Annual Report 2010 [online]. available from <http://www.berkshirehathaway.com/2010ar/2010ar.pdf> [12 March 2016]
Shafritz, J., Ott, J. and Jang, Y. (2015) Classics Of Organization Theory. 8th edn. Cengage Learning
Michael, A. (2007) Leadership [online]. Topic Gateway Series No 30. available from <http://www.cimaglobal.com/Documents/ImportedDocuments/30_Leadership.pdf> [12 March 2016]
Mullins, L., (2013) Management and Organisational Behaviour, 10th Edn. Harlow: Pearson
Ratcliffe, R. (2013) What’s The Difference Between Leadership And Management? [online] available from <http://www.theguardian.com/careers/difference-between-leadership-management> [9 March 2016]
wsj.com. (2016) What Is The Difference Between Management And Leadership? – Management – WSJ.Com [online] available from <http://guides.wsj.com/management/developing-a-leadership-style/what-is-the-difference-between-management-and-leadership/> [9 March 2016]
Zaleznik, A. (1992) “Managers And Leaders: Are They Different?”. Harvard Business Review [online] available from <http://www.portaldaskalos.net/DasBlog/content/binary/managersandleaders.pdf>