Organizational Behavior Chapter on Leadership Theories and Styles

5-1
Essentials of
Organizational Behavior
13e
Stephen P. Robbins & Timothy A. Judge
Chapter 5
Personality and Values
Copyright ©2016 Pearson Education, Inc.
1
Chapter 12

Leadership
2
After studying this chapter you should be able to:
Contrast leadership and management.
Summarize the conclusions of trait theories of leadership.
Identify the central tenets and main limitations of behavioral
theories.
Assess contingency theories of leadership by their level of
support.
Compare charismatic and transformational leadership.
Describe the roles of ethics and trust in authentic leadership.
Demonstrate the role mentoring plays in our understanding of
leadership.
Address challenges to the effectiveness of leadership.
Describe how organizations can find or create effective leaders.
12-3

3
What Is Leadership?
Leadership: The ability to influence a group toward the
achievement of a vision or a set of goals
Formal or non-sanctioned
Not all leaders are managers
Not all managers are leaders
Successful organizations have strong leadership and strong
management
Leaders inspire and create vision
Managers create plans and oversee day-to-day operations
12-4

Leadership is the ability to influence a group toward the
achievement of goals. A leader does not have to be someone
who holds a formal position or title. Leaders can emerge from a
group and provide vision and motivation to those around them.
They are critical in helping people cope with change by
establishing direction that relates to the vision. In order to
achieve the vision they align resources and inspire workers to
work toward organizational goals.
Management deals with the complexity of the organization and
works with planning, organizing, leading, and controlling to
bring about order and consistency in the organization.
Even though the two roles have different areas of focus, both
are necessary for organizational success.
4
Trait Theories
Trait theories of leadership: focus on personal qualities and
characteristics
Big Five Personality Framework
Extraversion has strongest relation to leadership
Conscientiousness and Openness to Experience also strongly
related to leadership
Agreeableness and Emotional Stability are not correlated with
leadership
Emotional Intelligence is correlated with leadership; however,
this link is under-investigated
12-5

The trait theory of leadership looks at personality, social,
physical, or intellectual traits that differentiate leaders from
non-leaders. Initially this theory was based on studies that
looked at over 80 different traits, which allowed almost
anything to be defined as leadership. A breakthrough occurred
when researchers began to organize the traits into categories,
and this became known as the Big Five Personality Framework
where five groups of traits were found to be consistently present
among leaders.
Some essential leadership traits include extraversion,
conscientiousness, openness , agreeableness, and emotional
intelligence (EI), although the link between EI and leadership
has not been fully explored.
With the many years of research dedicated to the trait theory of
leadership, it is widely accepted that traits do predict
leadership. However, it is more likely that they predict the
emergence of a leader rather than the effectiveness of a leader.
5
Trait Theories
Two conclusions:
Traits can predict leadership
Traits do a better job predicting the emergence of leaders and
the appearance of leadership than distinguishing between

effective and ineffective leaders
12-6
The fact that an individual exhibits the right traits and that
others consider him a leader does not necessarily mean he will
be an effective leader, successful at getting the group to achieve
its goals.
6
Behavioral Theories
Behavioral theories of leadership: we can determine leadership
effectiveness by leader behavior, and perhaps train people to be
leaders
Behaviors can be taught – traits cannot
Leaders are trained – not born
Two key studies of leadership
The Ohio State Studies
The University of Michigan Studies
12-7

The behavioral theories of leadership focus on the premise that
behaviors can be taught and traits cannot, so leaders are trained,
not born.
7
Ohio State Studies
Attempts to organize work, work relationships, and goals
Concern for followers’ comfort, well-being, status, and
satisfaction
12-8
Two key studies in the area of behavioral leadership advanced
our understanding of the theory. The first was done at Ohio
State University. Researchers looked at important dimensions
of leadership behavior and began with over 1000 dimensions.
In the end, the Ohio State studies were able to narrow it down

to two dimensions – initiating structure and consideration.
Initiating structure is when the leader is able to define and
structure their role and that of their employees to work toward
the goals of the organization. Consideration is the ability of
the leader to gain the trust and respect of their followers and to
help them feel appreciated for what they do. Both behaviors
have proven to be very important in an effective leader.
8
Initiating Structure
Consideration
University of Michigan Studies
Emphasize the technical or task aspects of the job: people are
means to an end
Emphasize interpersonal relations and accept individual
differences
12-9

The University of Michigan Studies identified two key
dimensions of leadership behavior as well. They are similar in
nature to the Ohio State findings. However, the University of
Michigan studies classified these behaviors as employee-
oriented, which looks at the interpersonal relationships between
the leader and their followers; and production-oriented, which
focuses on the technical aspect of the job. Again, both are
important for successful leadership.
9
Production
Oriented
Employee
Oriented
Global Implications
GLOBE Leadership Project Results:
Brazil – Leaders are participative and humane
France – Leaders are bureaucratic, task oriented, and autocratic
China - Initiating structure and consideration important: status
differences but participation valued
Charisma and transformational leadership important in all
12-10

The GLOBE study suggests that there are differences across
cultures in preference for initiating structure and consideration.
10
Contingency Theories
Fiedler leadership model: Effective group performance depends
on the proper match between the leader’s style and the degree to
which the situation gives the leader control
12-11
In this theory Fielder is trying to match the leader to the

context. He proposes that leadership style is fixed. So, if the
situation demands a charismatic leader and your current leader
does not exhibit that style, you need to change leaders. This
leadership style can be determined by taking the LPC
questionnaire (least preferred co-worker).
After the leadership style is determined, you can match the
leader to the situation. There are three dimensions to find a
successful match. The first situational factor is the leader-
member relationship; this ties back to our behavioral studies by
looking at the degree of trust and respect employees have for
the leader. The second factor is the amount of structure that is
embedded in job assignments. The last factor is the amount of
influence the leader has over decisions that represent power
such as hiring, firing, and rewards.
In Fiedler’s model you need to find a leader to fit the situation
or change the situation to fit the leader in order to achieve
effective leadership for the organization.
11
Fiedler Leadership Model
Least-Preferred Co-worker (LPC) determines leadership style
(fixed trait)
Relationship oriented
Task oriented
Match leader’s style with degree of situational control
Leader-member relations
Task structure
Position power
12-12

In this theory Fielder is trying to match the leader to the
context. He proposes that leadership style is fixed. So, if the
situation demands a charismatic leader and your current leader
does not exhibit that style, you need to change leaders. This
leadership style can be determined by taking the LPC
questionnaire (least preferred co-worker).
After the leadership style is determined you can match the
leader to the situation. There are three dimensions to find a
successful match. The first situational factor is the leader-
member relationship; this ties back to our behavioral studies by
looking at the degree of trust and respect employees have for
the leader. The second factor is the amount of structure that is
embedded in job assignments. The last factor is the amount of
influence the leader has over decisions that represent power
such as hiring, firing, and rewards.
In Fiedler’s model you need to find a leader to fit the situation
or change the situation to fit the leader in order to achieve
effective leadership for the organization.
12
Matching Leaders to Situations
12-13

This graph helps to visually determine the situational factors
and what type of leader would succeed in this situation. There
are eight possible situations in which leaders can find
themselves in. By matching their LPC score with these eight
different situations a leader can see where they will be most
effective. For example, categories four through six would be
better suited to relationship-oriented leaders because Fielder
proposes that they perform best in moderately favorable
situations.
13
Other Contingency Theories
Situational leadership theory (SLT): successful leadership
depends on selecting the right leadership style contingent on the
followers’ readiness to accomplish a task
Unable and unwilling
Unable but willing
Able but unwilling
Able and willing
12-14

SLT acknowledges the importance of followers and builds on
the logic that leaders can compensate for their limited ability
and motivation.
14
Other Contingency Theories
Path-goal theory: it’s the leader’s job to provide followers with
information, support, or other resources necessary to achieve
goals
Directive leadership yields greater satisfaction when tasks are
ambiguous or stressful
Supportive leadership results in high performance and
satisfaction when tasks are structured
Directive leadership is perceived as redundant by employees
with high ability or experience
12-15

Effective leaders clarify followers’ paths to their work goals
and make the journey easier by reducing roadblocks.
Directive or supportive leadership does matter to followers’
performance, and leaders need to be aware of their important
facilitating role.
The effectiveness of leaders depends to a large degree on their
followers.
15
Charismatic Leadership
Charismatic leadership theory: Attributions of heroic leadership
abilities when followers observe certain behaviors
Vision and articulation
Personal risk-taking
Sensitivity toward followers
Unconventional behaviors
12-16

Charisma comes from the Greek word meaning gift. When
talking about a charismatic leader one will refer to someone
with certain gifts or abilities. A charismatic leader will often
gain followers through personality rather than through power or
authority.
There are four key characteristics that are associated with a
charismatic leader. The leader must have vision, expressed as
an idealized goal. The leader must be willing to take on high
personal risk and engage in self-sacrifice to achieve the vision.
In doing so the leader needs to remain sensitive to the feelings
and needs of their followers. Throughout the process the leader
may be engaging in behaviors that are perceived as counter to
norms, thereby extraordinary.
16
Charismatic Leaders:
Born or Made?
Charisma is partially attributed to genetics and partially to
training and experience
Developing an aura of charisma:
Be optimistic
Be passionately enthusiastic
Commute with body, not just words
Draw others in – inspire others
Tap into emotions – bring out the potential in others
12-17

The charismatic traits are often traits that a leader is born with,
thus continuing the debate whether leaders are born or
developed.
In reality it is a mix of genetics, training, and experience.
Charisma can be created. One way is to develop an aura of
charisma by being optimistic, passionately enthusiastic, and to
communicate with behaviors and words. A leader can also
create charisma by drawing in others through inspiration, as
well as by tapping into the emotions of individuals to bring out
their potential.
17
How Charismatic Leaders Influence Followers
Articulate an appealing vision
Communicate a new set of values
Model behaviors for those values
Express dramatic behavior
12-18

Evidence shows a four-step process can help the charismatic
leader utilize their characteristics to influence their followers.
First, the leader articulates a long-term strategy for achieving a
goal. This strategy should fit the vision and uniqueness of the
organization. Next, the leader needs to formalize that vision by
creating a vision statement. Charismatic leaders will often use
this statement to reinforce the goal and purpose of the
organization. This vision is communicated in a way that
expresses the leader’s excitement and commitment to the goal.
Next, the leader will use his words and actions to communicate
a new set of values for the followers to imitate. Then the
charismatic leader will try to find behaviors that demonstrate
their commitment to the vision. They will choose behaviors
that will help followers “catch” the emotions the leader is
conveying and help achieve buy-in of the followers.
Finally, the charismatic leader engages in emotion-inducing and
often unconventional behavior to demonstrate courage and
conviction about the vision to help the followers “catch” the
vision.
18
Charisma and
Situational Dependency
Charisma is strongly correlated to high performance and
satisfaction
Best used when
Environment is uncertain or stressful
Ideology is involved
Most closely associated with upper-level executives
People are most receptive to charisma when there is a crisis
12-19

Charismatic leaders have been shown to be effective but it often
depends on the context. This leadership style works best in an
environment where it is uncertain, stressful, and where there is
some ideology involved.
It is more closely associated with upper-level executives and
people are most receptive to charismatic actions when there is a
crisis.
19
The Potential Dark Side
of Charismatic Leadership
Some leaders:
Use organizational resources for personal benefit
Remake companies in their own image
Allow self-interest and personal goals to override organization’s
goals
12-20

There is a dark side to charismatic leadership if the leader
misuses their skill set. In the past we have seen situations
where leaders have abused the company resources and used
them for their own benefit. Some leaders with strong charisma
have remade the companies in their own image and left no plans
for succession when they leave.
In many cases the charismatic leader lets their own goals
override those of the organization, thus creating a negative
situation for the organization.
20
Transformational Leadership
12-21
Transactional leaders motivate their follower towards the goals
set by clarifying their roles in the process and what they need to
do to reach the goals set.

Transformational leaders help followers to look at the bigger
picture and commit to the good of the organization, even if it
means setting their own goals aside.
These two approaches are not contradictory in nature; in fact
they can complement each other. Transformational leadership
often is built upon transactional leadership. Good leadership
will incorporate both transactional and transformational
components.
21
Idealized Influence
Role models of
Inspirational Motivation
Provide meaning & challenge
Individualized Consideration
Serve as a coach, guide, or mentor
Intellectual Stimulation
Encourage followers to use creativity and innovation

Involve followers in developing shared vision
Inspire optimism & enthusiasm
Articulate very clear expectations & goals
Trust
Respect
Unselfishness
Integrity
Morality
Ethics
Consistent behavior
Foster a supportive climate for personal growth and
professional development
Stimulate intellectual capacity of followers

Challenge assumptions
Reframe questions
Approach problems in unusual ways
Transactional leaders:
Motivate their followers in the direction of established goals by
clarifying role and task requirements
Transformational leaders:
Inspire followers to transcend their own self-interests for the
good of the organization
12-22

Transactional leaders motivate their follower towards the goals
set by clarifying their roles in the process and what they need to
do to reach the goals set.
Transformational leaders help followers to look at the bigger
picture and commit to the good of the organization, even if it
means setting their own goals aside.
These two approaches are not contradictory in nature; in fact
they can complement each other. Transformational leadership
often is built upon transactional leadership. Good leadership
will incorporate both transactional and transformational
components.
22
Full Range of Leadership Model
12-23

This exhibit shows the full range of the leadership model. The
first four behaviors represent transactional approaches and
begins with the Laissez-Faire approach, which is the most
passive. As a leader progresses on the scale, she moves toward
more active behaviors. The final four behaviors on the model
represent transformational actions. This model shows that as
leaders utilize more transformational behaviors, they become
more effective.
23
Evaluation Of
Transformational leadership:
Is effectively used in various job levels and disparate
occupations
Tends to be more effective in smaller companies
Works better when the leader directly interacts with followers
Can be learned
Transformational leaders:
Are creative and inspire creativity
Create a “can-do” spirit
12-24

Transformational leadership works in a variety of contexts but
tends to be more effective in smaller companies. It does work
better when the leader is more closely connected to the
followers and can understand their situation. The link between
transformational leadership and positive job outcomes is solid.
24
Global Implications
The GLOBE study found that many elements of
transformational leadership are universal
Vision is important in any culture, but how it is formed and
communicated may need to vary by culture
12-25
The GLOBE study links elements of transformational leadership
with effective leadership, regardless of country. According to
the study, various elements of transformational leadership,
including vision, foresight, providing encouragement,

trustworthiness, dynamism, positiveness, and proactiveness are
universal. However, how vision is formed and communicated
can differ across cultures.
25
Transformational vs. Transactional Leadership
Transformational leadership is more strongly correlated with:
Lower turnover
Higher productivity
Lower employee stress and burnout
Higher employee satisfaction
12-26
Research shows that transformational leadership results in many
desirable outcomes. However, contingent reward leadership
sometimes works as well as transformational leadership.
There are a lot of commonalities between transformational
leadership and charismatic leadership, but in general,
charismatic leadership focuses on how leaders communicate
while transformational leadership focuses on what is
communicated.
26

Authentic Leadership:
Ethics and Trust
Authentic leaders know who they are, what they believe in and
value, and act on those values and beliefs openly and candidly
Create trust
Encourage open communication
People have faith in them
12-27
Authentic leadership is a growing area of research. There are
several components that need to be addressed when discussing
authenticity in leadership. First we must look at authentic
leaders. These are leaders who engage in reflection and
understand who they are and what they believe, and bring those
two aspects together in their actions.
Next, authentic leaders are able to create trust with their
followers, and encourage a culture of open communication.
These factors will help to create an authentic leader that people
will follow.
27
Ethics and Leadership
Ethics and leadership intersect at many junctures

Executives set the moral tone for an organization so they must
set and adhere to high ethical values
Leadership is not value free, and the means by which a leader
achieves their goal must be framed by ethics
Socialized charismatic leadership: leadership that conveys
other-centered values by leaders who model ethical conduct
12-28
There is a strong intersection of ethics and leadership. Over the
past several years we have been involved in what many have
called an ethical crisis in the business community. When we
look at leadership, we need to look at more than the results of
the leader. We must also look at the steps the leader took to
achieve those results.
28
Servant Leadership
Servant Leaders: Go beyond their own self-interest and focus on
opportunities to help followers grow and develop
Emphasize persuasion
Effects of servant leadership:
Higher levels of commitment to the supervisor, self-efficacy,
and perceptions of justice

Increased team potency and higher group performance
Higher levels of creative performance
Servant leadership may be more effective in certain cultures
12-29
Servant leaders don’t use power to achieve their goal; instead
they focus on persuading followers. The effects of servant
leadership include higher levels of commitment to the
supervisor, self-efficacy, and perceptions of justice, all of
which are related to organizational citizenship behavior.
Servant leaders increase team potency, which leads to higher
levels of group performance, and also a greater focus on growth
and advancement which leads to higher levels of creative
performance.
This type of leadership may be more prevalent in East Asian
cultures.
29
Trust
12-30

Trust is defined as a state that exists when you agree to make
yourself vulnerable to another because you have a positive
expectation for how things are going to turn out. Over the years
this has been found to be a foundational characteristic of
leadership. When trust is present followers are willing to do as
the leader asks and engage in behaviors that are for the benefit
of the organization. In short, followers will do a lot more for a
leader they trust than for one that does not hold their trust.
Trust is developed over time. The interactions between the
leaders and the followers are part of the development of trust; it
goes both ways. Research has shown that the three main
characteristics of a leader that instill trust are integrity, ability,
and benevolence.
These three characteristics are important in developing trust
between leaders and followers. If followers perceive these
characteristics as strong in their leaders, it will encourage
positive behaviors such as risk taking, information sharing,
group interactions, and productivity.
30
Trust
Taking Risks

Information Sharing
Effective Groups
Enhanced Productivity
Leadership For The Future
Mentor: a senior employee who sponsors and supports a less-
experienced employee, a protégé
Mentoring programs benefit both mentors and protégés
But, informal mentoring is more effective than formal
mentoring
Benefits of mentoring are primarily psychological
12-31

Successful mentors are good teachers. They present ideas
clearly, listen well, and empathize with protégés’ problems.
Mentoring relationships, whether formal or informal, serve
career functions and psychosocial functions.
31
Challenges to the
Leadership Construct
Attribution Theory of Leadership
Performance outcomes are attributed to leaders’ actions
Appearance has more to do with leadership than outcomes
Substitutes and Neutralizers
Organizational variables can neutralize the leader’s influence or
act as substitutes for leadership
Leader becomes irrelevant
12-32
There are many challenges to understanding leadership. The
attribution theory states that it is hard to attribute outcomes to

leadership and that often, leadership is more about performance
than outcomes.
In addition, you can have an extremely effective leader but
organizational variables can neutralize the leader’s ability to
lead and create change, thus rendering the leader as irrelevant.
32
Substitutes for and
Neutralizers of Leadership
12-33
Neutralizers make it impossible for leader behavior to make any
differences to follower outcomes.
33
Finding and Creating Effective Leaders
Selecting Leaders
Review knowledge, skills, and abilities needed
Use personality tests
Consider situation-specific experience
Training Leaders
Maximize leadership-training budget

12-34
How can managers get the most from their leadership-training
budgets?
Leadership training is likely to be more successful with high-
self monitors.
Organizations can teach implementation skills.
We can teach skills such as trust building and mentoring.
Behavioral training through modeling exercises can increase an
individual’s ability to exhibit charismatic leadership qualities.
Leaders should engage in regularly reviewing their leadership
after key organizational events.
Leaders can be trained in transformational leadership skills that
have bottom-line results.
34
Implications for Managers
For maximum leadership effectiveness, ensure that your
preferences on the initiating structure and consideration
dimensions are a match for your work dynamics and culture.
Hire candidates who exhibit transformational leadership
qualities and who have demonstrated success in working
through others to meet a long-term vision.
For management role, hire candidates whom you believe are
ethical and trustworthy; and train managers in your

organization’s ethical standards.
Seek to develop trusting relationships with followers.
Consider investing in leadership training.
12-35
Leadership is a complex function in an organization but
essential for success. Individuals, groups, and organizations all
need leaders and there are many factors that define a successful
leader. Each organization must assess what they need in their
leader in order to be effective.
35
Keep in Mind…
Leaders can influence a group toward the achievement of goals
The best leaders are ethical and authentic in addition to being
charismatic
12-36

It is important to keep in mind that leaders do influence
behavior and they can do so in a way that increases achievement
of goals.
The best leaders are ethical and authentic, although charisma is
valued and coupled with vision, it can be effective in most
environments.
36
Summary
Contrasted leadership and management.
Summarized the conclusions of trait theories of leadership.
Identified the central tenets and main limitations of behavioral
theories.
Assessed contingency theories of leadership by their level of
support.
Compared charismatic leadership and transformational
leadership.
Described the roles of ethics and trust in authentic leadership.
Demonstrated the role mentoring plays in our understanding of
leadership.
…
Running Header: FINANCIAL RISK MANAGEMENT
STRATEGY 1
FINANCIAL RISK MANAGEMENT STRATEGY 4
Financial Risk Management in Kilgore
One with the financial risk management strategy would be to
understand the government financial regulatory policies. The
government regulatory policies may inhibit business success,

and the organization has to embark on an in-depth analysis of
the policies to understand how they operate. Understanding the
operation of the policies create a platform to identify sources of
the threats and formulate an analysis to maximize their business
performance.
For example, research by Katehakis, Melamed, and Shi (2016)
analyses the need to have a balanced flow of cash and
inventories of goods based on the policies. It is an approach to
maximize the value of an organization’s capital. It is easy to
identify internally potential risks that may contribute to
devastating effects.
The entity also needs to focus on external forces that could
affect team performance like economic forces. For instance,
slow economic growth can affect business performance due to
reduced investment capital. Additionally, the global economic
crisis can contribute to low business performance due to
reduced capital to execute business operations (Bailey, Clua-
Losada, Huke, Ribera-Almandoz, & Rogers, 2018). Hence,
identifying how to mitigate against external economic forces
can help the organization formulate a budget to cater for
miscellaneous costs during a crisis. Also, the entity should
focus on investing in innovation and implementing recent
technologies to track financial performance. IT can establish
financial analysis tools to make good decisions about
investment strategies.
Therefore, the firm has a chance to eliminate financial related
threats based on prioritizing risks depending on the severity
(Fraser, Simkins, & Narvaez, 2014). For example, establishing a
strategy to balance the cash flow should be given priority to
eliminate financial complications. The firm should also invest
in adhering to recovery size and regulation, including tax to
eliminate lawsuits which can increase the cost of operations.
Lastly, it would be crucial to establish a way of increasing the
returns by venturing into innovations and recent technologies to
eliminate the stiff competition.

References
Bailey, D. J., Clua-Losada, M., Huke, N., Ribera-Almandoz, O.,
& Rogers, K. (2018). Challenging the age of austerity:
Disruptive agency after the global economic crisis. Comparative
European Politics, 16(1), 9-31.
Fraser, J., Simkins, B., & Narvaez, K. (2014). Implementing
enterprise risk management: Case studies and best practices.
John Wiley & Sons.
Katehakis, M. N., Melamed, B., & Shi, J. (2016). Cash‐flow
based dynamic inventory management. Production and
Operations Management, 25(9), 1558-1575.

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