Blog 3: The Most Effective Leadership & Management Styles & Approaches

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”

(CMI 2013).

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:

  1. Set Objectives – Determine goals for each objective and the action needed to achieve them
  2. Organizes – Analyse activities, decision and create structure
  3. Motivates and Communicates – Create team out of people from various jobs
  4. Measures – Establish targets and performance measurement for team and organisation
  5. 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

  Managers 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

Avoid risk

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:

  1. Legitimate Power

The power based on authority, in which the Leader has influence because of their role or position in organisation

  1. Referent Power

The power based on personal characteristic, reputation and charisma

  1. Coercive Power

The power based on Leader’s ability to execute punishment toward subordinates

  1. Reward Power

The power based on leader’s ability to give reward based on subordinates’ compliance

  1. Expert Power

The power based on Leader’s competencies, knowledge and expertise in certain area

 

French and Raven Organisational and Personal Power

Screen Shot 2016-03-12 at 15.21.59

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

Reference: 

Ahok.org. (2016) Siapa Ahok? | Ahok.Org [online] available from <http://ahok.org/tentang-ahok/siapa-ahok/&gt; [12 March 2016]

berkshirehathaway.com. (2010) Berkshire Hathaway Inc. Annual Report 2010 [online]. available from <http://www.berkshirehathaway.com/2010ar/2010ar.pdf&gt; [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&gt; [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&gt; [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/&gt; [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&gt;

8 thoughts on “Blog 3: The Most Effective Leadership & Management Styles & Approaches

    1. Hi Afdhal,
      Coercive power is associated with a person’s position and authority, in which the subordinates perceive the leader or manager is able to bring unpleasant consequences for those who did not comply with expectation, regulation, instruction or direction from the leader. The impact of the power is temporary, and tend to create negative feelings and attitudes among the subordinates. One of the most prominent example I would say is Kim Jong-Un, the current supreme leader of North Korea who display strong legitimate and coercive power in ruling the country.
      In business perspective, Larry Ellison, CEO of Oracle, admits that he sometimes use coercive power to get employees to do what he wants.

      Like

  1. Hi Olga, good perspectives on leadership styles. How would employees approach a bad leader? Meaning how are they supposed to change the leader’s leading style? Thank you

    Like

    1. Hi Calvin,
      Once again, I believe that communication is the key. If the employee is not comfortable with the leader’s style, the employee could speak up to the leader instead of being silent. Moreover, the employee could learn about the leader’s preferences and learn how to identify the leader’s motive.
      Despite the bad leader, one of the most essential keys to effective teamwork is through discipline of self in respond to leader and teammates functionally, rather than personally.
      The employee also should not let leader’s bad style to become an excuse of bad behaviour, but instead the employee could set example and keep mind to focus on top performance.

      Like

  2. Hi Olga,
    as from your previous work experience, do u think coercive power works better for less experienced subordinates? Don’t you think it might demotivate the person?

    Like

    1. Hi Lisa,
      I think it’s back again to the subordinates personality. That’s why it’s important for a leader to understand what motivates the subordinate to be able to work effectively. Based on my own experience, coercive power does work when applied to certain extent, as long as it’s applied correctly

      Like

  3. Hi Olga, such an interesting discussion of comparing leadership and management.
    I completely agree with you, although we prefer democratic style, we also have to be able to change our leadership style depending on the team’s circumstances.

    Liked by 1 person

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