Question: Drawing on four Theories of Leadership (Not including Trait or Behavioural Theories

of Leadership), discuss the effect of leadership on individual and organisational outcomes.

Leadership is the ability to influence a group towards the achievement of goals (Robbins).

Leadership may be formal or informal, in other words some people in an organisation assume

leadership because of authority delegated by their position in the firm, the prime example being

managers. However not all leaders in a firm are managers, some individuals have the ability to

influence peers to achieve outcomes outside the formal structure of the firm. For instance leaders

may emerge from a group or team in the organisation and this individual may have the capability

to influence others thereby influencing organisational outcomes. Several theories of leadership

are existence, this essay will focus on four of these theories including the Fiedler Model,

Situational Leadership Theory, Leader-Member Exchange Theory and Path-Goal Theory.

The Fiedler Model was one of the first comprehensive contingency models. Its

main rationale is that effective groups depend upon a proper match between a leader’s style of

interacting with subordinates and the degree to which the situation gives control to the leader.

Therefore according to this model a key aspect in leadership success is the individual’s basic

leadership style. Hence if leadership effectiveness is to be measured leadership style must be

identified. For this Fiedler created the Least Preferred Co-worker (LPC) questionnaire, this

questionnaire measured an individual’s tendency towards task orientation or relationship

orientation. The scale used various contradicting descriptions of people such as:

Efficient vs inefficient, open vs guarded, unpleasant vs pleasant, these adjectives were to be

given a rank on a scale of 1-8. Individuals were then asked to rank the employee they least

enjoyed working with based on these adjectives. Fiedler rationalized that if a person rated the

employee they least enjoyed working with in favourable terms (High LPC score) they were a

relationship-oriented manager whereas if rated in unfavourable terms (Low LPC score) it is

likely that that person is concerned with performance and therefore a task-oriented manager. It

should be noted that Fiedler classified individuals as either task-oriented or relationship-oriented,

he did not account for individuals who did not rank employees as either high or low but mid-

scale therefore they fall out of the theory’s predictions. Therefore Fiedler assumes leadership

style in individuals is not variable, hence in situations there is usually one best fit in terms of

leadership style. Thus if there is a conflict in leadership style and the situation one factor must be

altered (the style or the situation) in order to be effective. Therefore another fundamental factor

in Fiedler’s model is assessing the situation, as it is necessary to match the leader with the

situation. He outlines three situational factors that determine leadership effectiveness these

include:

1. Leader-member relations, this is the degree of trust, respect and confidence members

have for the leader.

2. Task Structure, this is the degree to which job tasks are structured

3. Position Power, this is the degree of influence a leader has over variables such as salary,

hiring, firing, discipline, promotions and so on

Based on these contingency variables the situation could be evaluated, subsequently matching

leaders with the situation based on results. Because there are 3 contingency variables, there are 8

possible outcomes in the model however this was later cut to three. Task-oriented leaders

perform best in situations of high and low control, while relationship-oriented leaders perform

best in moderate control situations. Therefore to conclude there are only two ways in which to

improve a leader’s effectiveness, either change the leader to fit the situation or change the

situation to suit the leader. It is clear that if there is a mismatch between leadership style and the

situation organisational performance will decline as well as individual performance. This will be

because of incompatibility between the leader’s style and the member’s attitude to leaders based

on the situation. Thus in order to improve organisational performance and employee satisfaction

the leadership style must always match the situation or vice versa.

Another theory of leadership is Hersey and Blanchard’s Situational Theory also termed

Situational Leadership Theory (SLT). This is a contingency theory that focuses on the

followers. Successful leadership is achieved by selecting the right leadership style, which is

contingent on the level of the followers “readiness.” Readiness refers to the extent to which

people have the ability and willingness to accomplish a specific task. The SLT theory places an

emphasis on the dimension of followers as it relates to leadership, it is an aspect often

overlooked since any accomplishment of the leader is dependent on his follower’s effectiveness.

Thus it emphasizes the fact that it is the followers who either accept or reject the leader. SLT

dictates that as followers become more mature and competent control should be relinquished,

similar to the relationship between parent and child. The model outlines four leadership styles

ranging from highly directive to highly laissez-faire. These specific leadership styles will now be

listed along with the characteristics of each:

1. Telling

Characterized by one way communication

Leader defines the roles of the individual or group and provides strict outlines on

how to perform tasks.

2. Selling

Leader still provides the direction on how tasks should be accomplished, however

uses two-way communication to interact with group.

The leader sells his leadership through persuasion and support so members buy

into the process.

Therefore the selling leadership style uses both task –orientation and relationship

orientation to influence individuals

3. Participating

Shared decision making on how tasks should be accomplished, hence the leader is

less directive on how tasks should be performed.

Maintains high relationship behaviour. (Relationship-orientation)

4. Delegating

Leader is still involved in decisions however the process and responsibility is

passed on to the individual or group. Leader stays involved to monitor progress.

Additionally similar to Fiedler’s Model, Situational Leadership Theory deems these leadership

styles appropriate on a situational basis. The situations in SLT theory are based on readiness to

task behaviour. “Readiness” is classified into four maturity levels:

1. M1 – unable and unwilling

2. M2- Unable and wiling

3. M3- Able and unwilling

4. M4- Able and willing

The theory outlines guideless or suitable leadership styles based on the maturity levels above:

1. M1 – A telling style is recommended, leader needs to give clear and specific directions as

workers at this level require direction and clear instructions to get tasks done.

2. M2- A selling style is recommended, leader needs to display high task-orientation and

relationship orientation to guide willing workers that lack competency in the task.

3. M3- A participating style is recommended, leader needs to provide support and

participation to drive unwilling workers.

4. M4 – A delegating style is recommended, workers are competent and only slight

involvement is required by the leader.

To evaluate, SLT builds on the logic that leaders can compensate for ability and motivational

limitations of their followers. However like Fiedler’s theory this can only be done by making

adjustments to the leadership style or the situation. It suggests that leaders can influence

organisational outcomes by applying certain methods based on the attitudes, behaviours and

actions of leaders to increase their motivation and productivity. Some followers need to be

told exactly what to do while others only need slight guidance and so on. Incompatibilities

between leader and situation could worsen the situation and lead to further demotivation and

unproductivity. For instance a participative leadership style combined with followers who are

at Maturity level 1 (Unable and Unwilling) would result in very little productivity as these

workers require clear guidelines on how to achieve a task.

The Leader-Member Exchange Theory is based on the fact that leaders do not treat each

individual the same way. It rationalizes that, leaders create in-groups and out-groups, and

subordinates within the in-group status will have higher performance ratings, less turnover,

and greater satisfaction with their superior. Research shows that the “in” or “out” relationship

is relatively stable over time, evidence suggests that leaders chooses who is in the “in” group

based on competency, attitude and personality traits which are similar to the leader himself.

Studies into this theory indeed show that members of the in-group have higher performance

ratings, lower turnover intentions, greater satisfaction with their superiors and higher overall

satisfaction than the out-group. This contingency theory is closely related to the concept os

self-fulfilling prophesy as leaders invest the most resources with those individuals they

expect to perform best, in addition preferential treatment and the general feeling of being

thought of as highly competent inspires individuals which reaps the reward of fulfilling that

prophesy . In other words by inspiring confidence in particular individuals through leader

belief it is returned in the productivity and high performance by these individuals. Therefore

according to the Leader-Member Exchange Theory performance, satisfaction and motivation

are all factors influenced by leader’s attitude towards followers. Individuals who are in the

group thought of highly by the leader will receive preferential treatment and these individuals

are likely as a result to be highly motivated, have lower turnover intentions, satisfied with

their leader and the job itself and consequently be highly productive. On the other hand

workers who are not in the in-group will not feel the confidence of the manager as much as

those in the in-group as a result they will be less productive, satisfied and motivated.

However it does not suggest that these followers will be demotivated, this may depend on the

individual and their attitude to being in the out-group.

The fourth theory analysed is the Path-Goal Theory which was developed by

Robert House. The theory states that a leader’s behaviour is contingent to the satisfaction,

motivation and performance of his subordinates. The leaders engages in behaviours that

complement subordinates abilities and compensates for deficiencies. The term path-goal is

derived from the belief that effective leaders clarify the path to help their followers and to

reduce roadblocks. There are also 4 leadership behaviours in the path-goal theory, the

directive leader, the supportive leader, the participative leader and the achievement-oriented

leader. The directive leader gives specific directions on how tasks are to be performed. The

supportive leader is friendly and shows concern for the needs of followers. The participative

leader consults with followers and uses their suggestions before making a decision. Finally

the achievement-oriented leader sets challenging goals and expects followers to perform at

their highest level. One key assumption of the path-goal theory is that leaders are flexible and

can adjust behaviours to suit the situation, this contradicts the Fiedler Model. The path-goal

theory outline two contingency variables which determine the situation:

1. Environmental contingency factors

Task structure

Formal authority system

Work group

2. Subordinate contingency factors

Locus of control

Experience

Perceived ability

Environmental factors determine the type of leader behaviour required to complement the

members to maximise outcomes of performance and satisfaction whereas Subordinate factors or

personal factors determine how the leader’s behaviour will be interpreted by members along with

the environment. Like Fiedler’s Theory and Situational Theory the situation must be matched

with the appropriate leadership style in order to achieve desired outcomes of satisfaction and

performance. For example Supportive leadership results in high employee performance and

satisfaction when employees are performing structured tasks. Leadership behaviour that is

incompatible with environmental factors and employee characteristics will be ineffective and

may result in decreased performance and satisfaction. For example directive leadership will have

a negative effect on employees who have a strong perceived ability in themselves and may lead

to dissatisfaction and decreased performance as these individuals may view this style as

insulting. Thus leaders must adjust their leadership style to compensate for characteristics that

may be lacking or already present in either the employee or work setting in order to achieve

maximum performance.