Explain how the concepts from Locke's goal setting theory can be incorporated into Vroom's
expectancy theory. Explain how the concepts in Adams' equity theory can be incorporated into
Your initial post should be at least 250 words in length. Support your claims with examples from
required material(s) and properly cite the reference.
The Leading Function
After completing this chapter, you should be able to:
• Discuss the functions of leading through the use of power, leadership, and motivation.
• Apply theories of leadership to various management circumstances.
• Motivate employees to achieve at high levels.
One fundamental goal of effective leadership involves obtaining extraordinary results from ordinary people. Leading, in a business context, consists of all activities undertaken to help people achieve the highest level of performance. This chapter presents three main topics related to
1. The use of power
The process of leading integrates these three concepts into a series of coordinated activities
designed to achieve higher levels of performance. In addition, Chapter 6 examines the roles that
teams and groups play in leading, along with ideas related to communication at the individual
and system-wide levels.
Leadership entails influencing behaviors in organizations. Effective leaders influence behaviors
in positive ways. Ineffective leaders also influence behavior, but they do not achieve desirable
results. Leadership takes place at all levels in many organizations. Leadership as a concept can be
interpreted in various ways. To different individuals, leadership can be exhibited as vision, enthusiasm, trust, courage, passion, coaching, developing others, intensity, love, and even serving as a
parent figure. Effective leaders use every tool at their disposal to help others achieve their goals,
as we will see in this chapter.
Leading Versus Managing
The terms leading and managing are often used interchangeably; however, there are differences.
Harvard Business School professor John Kotter (2001) suggests that one is not better than the
other, but rather that the two concepts are actually complementary. He suggested two differences
between leading and managing:
1. Managing is about coping with complexity.
2. Leadership is about coping with change.
Managing as Coping With Complexity
Management is necessary because without it, organizations may become riddled with chaos.
Indeed, a company without effective management is destined to fail. One significant reason managers are necessary to a company is that those in management processes deal with complexity
throughout the organization in vital ways:
• Managers do what needs to be done through planning and budgeting.
• Managers provide people to accomplish organizational agendas through organizing and
• Managers help ensure that people can do their jobs through control processes and problem
Planning and budgeting activities take care of what needs to be done. These activities establish
goals for the future, prescribe methods to achieve those goals, and provide the resources necessary
MANAGEMENT IN PR AC TICE
Aetna’s John Rowe: Transformational Leadership
You have probably heard that “one person can make a difference.” In the case of Aetna Insurance,
the “one person” was John Rowe, who took the reins of the company in a time of crisis. When
Rowe arrived, Aetna was losing $1 million per day. Five years later, the same company enjoyed profits of over $1.4 billion.
As a health and medical insurance company, Aetna had gotten into trouble due to poor relationships with every key group served by the company. A series of doctors and health care providers
had become so disenchanted with the firm that they filed a class action lawsuit over unsavory billing practices. The problems quickly extended to patients and plan sponsors. Eventually, company
employees became demoralized.
Rowe began by distinguishing between management
and leadership. He believed that to operate effectively,
a leader had to be self-aware and know his or her
strengths and weaknesses. In his own case, Rowe was
self-confident enough to select people with complementary talents and expertise. He also had to remove
nearly 75% of the former staff.
Rowe’s leadership style began with a strategic vision to
rebuild the organization by rebuilding relationships. He
knew it would take time.
To improve relations with physicians, Rowe went against
a great deal of advice and quickly settled the lawsuits
related to billing practices. He was highly criticized due
to the already existing cash problems in the company,
but the effort paid off.
Victoria Arocho/Associated Press
▲▲John Rowe was able to restore
trust between Aetna and health care
The next step was to rebuild relationships with Aetna’s
customers. Rowe established tactics to deliver highquality insurance and supporting services. He redirected
employees toward the culture that had built the company in the first place. That culture was based on integrity and protection of the company’s customers.
To return to the core culture, Rowe relied on constant communication. As he put it, “A company
cannot communicate too much. If I’d done the managerial tasks, I wouldn’t have been out communicating.” The outcome from his efforts was that Fortune magazine gave Aetna the Turnaround
of the Year Award. John Rowe has moved on from Aetna, but the sound principles he established
through his transformational style of leadership continued to pay dividends well beyond his tenure
with the company (Katzenbach Partners, 2006; Clow & Baack, 2010, pp. 395–396).
1. How was John Rowe distinguishing between managing and leading?
2. Rowe began by fixing relationships with outside groups and then worked on those within the
firm. Was this a risky approach? Explain your reasoning.
3. Explain why you think this style of leadership would or would not be effective in all types of
to accomplish them. Planning focuses employees on the future and gives them a stronger sense of
direction, because they know how their efforts fit into the overall design of the company.
Organizing and staffing are the functions that carry out the process of finding people to accomplish organizational agendas. Management accomplishes its plans and goals through effective
organizing and staffing. Creating organizational structures and hiring qualified people to fill the
needed roles are key parts of management.
Ensuring that people do their jobs occurs through controlling and problem solving. To reach
organizational goals, managers monitor results by comparing the plan in detail and by producing
reports, holding meetings, and using other reporting mechanisms. They then identify and solve
problems as they arise.
Leading as Coping With Change
As the business world continues to change, grow, and evolve, it is no longer enough to conduct
business the way it has always been done. Many changes are often needed for organizations to
survive and grow in an ever-increasing, competitive global market. Making necessary changes
even when they involve difficult decisions is at the very heart of leadership. Kotter (2001) identified three ways that leaders deal with change. Note the subtle differences between managing
complexities and coping with change:
1. Do what needs to be done by providing direction.
2. Provide the people to accomplish organizational agendas by aligning people.
3. Ensure that people do their jobs by motivating and inspiring them.
Leaders provide the direction in order to do what needs to be done. Leaders set the stage for positive change by providing direction. Top-level leaders and managers develop a vision for the future
of the organization in conjunction with strategies for realizing the needed changes.
Providing the people to accomplish organizational agendas is the result of a leader’s ability to
align people. While managers focus on organizing and staffing people, leaders focus more on
aligning people. Leaders communicate a new direction to people to help in understanding the
vision and to build the necessary change agents that will help realize the vision.
Leaders ensure that people do their jobs by motivating and inspiring them. While managers
concentrate their efforts on controlling and problem solving, leaders focus on trying to achieve
their vision by motivating and inspiring. They tap into employees’ values and emotions. Leaders
attempt to keep people moving the change initiative forward despite the obstacles that arise.
Managers hold the legitimate power that we will look at next. It comes from the positions they
hold within their organizations. Possessing this power allows them to hire, fire, reward, and punish. Many managers plan, organize, and control, but they do not necessarily have to exhibit the
characteristics required to be leaders.
Some view the leadership function as being more visionary than that of management. Leaders
inspire others, provide necessary emotional support, and work to rally employees around a common goal or vision. Leaders also create a vision and strategic objectives for the organization,
while managers are tasked with implementing the vision and strategic objectives.
Ideally, a person in a managerial role has both management skills and leadership skills.
Organizations count on both skill sets to accomplish objectives and continue operations.
Leading as Ethical Role Models
Beyond Kotter’s conceptualizations that leaders cope with complexity as well as with change,
one important dimension remains: Leaders either serve, or fail to serve, as ethical role models in
organizations. Leaders hold the responsibility of balancing the interests of a variety of stakeholders and constituents, including investors, employees, suppliers, customers, and even rival organizations. Various writers have noted the relationships between leadership with regard to ethical
role modeling as opposed to leadership as a political force or tool. In ethical role modeling, the
leader seeks to foster good citizenship in those who follow by example and to assist followers in
achieving their goals (Kacmar, 2011). In leadership as a political force, the leader seeks to achieve
his or her own personal ends, even at the expense of followers and others (Neubert et al., 2009).
The case can be made that ethical activities constitute the primary element of a leader’s set of tasks.
Those who fail in their ethical responsibilities can
have a negative impact on the organization for
many years. Those who build an ethical climate
help foster circumstances in which both individuals and the overall organization can achieve longterm success.
Leadership and Power
One significant part of leadership presents a key
challenge: the exercise of power in the context of a
business. Almost everyone has encountered someone who is “into power” and exerts it at any opportunity. These people generate resentment, which
inhibits their ability to lead. Thus, to have a more
complete understanding of leadership, we need to
examine the concept of power. Power is control over
formal and informal means of influence. Within
organizations, leaders may use five sources of power,
or means of influence: legitimate, reward, coercive,
expert, and referent power (French & Raven, 1959).
Courtesy Everett Collection
▲▲Charismatic leaders like Martin Luther King Jr.
might be said to possess a great deal of referent
Legitimate power arises from an individual’s formal position in an organization. Managers hold
legitimate power over their employees due to their positions in the organizational hierarchy.
Those at the highest rank (CEO and vice presidents) possess the greatest degree of legitimate
power. The major factor with legitimate power, regarding its impact on a leader’s effectiveness, is
how the manager uses it. Some seek to achieve organizational goals while others try to demonstrate personal authority, which can be counterproductive to their ability to lead.
Power rests with those who can influence behavior by promising or providing rewards. Managers
possess reward power that results from their authority to reward employees. Organizational
rewards range from praise to pay raises and from recognition to promotions. One way a manager
can reward an employee is with a simple and sincere thank-you. Reward power also has informal sources. Someone who lets you in on key organizational gossip is also using reward power.
Informal groups reward people by including them in group activities. The individual who decides
who is and is not included in a formal or informal group’s activities has access to reward power.
The ability to influence behavior by threatening or punishing creates coercive power. Managers
possess the coercive power that results from the ability to punish employees through verbal or
written reprimands, demotions, or even termination. Some organizations also allow managers
to fine or suspend subordinates. Coercive power can easily be misused. Managers who are constantly negative and punishing quickly produce resentment and ill will among employees.
The informal side of coercive power can be equally damaging. Any person who can make a
coworker the butt of jokes or harass someone through intimidation exerts coercive power. Part of
being an effective leader includes eliminating this type of coercive activity on the job. Remember
that those who engage in negative coercive power often experience a backlash from coworkers
and supervisors. No one likes being bullied, whether on the job or elsewhere.
Some workers are able to influence behavior due to their expertise. Expert power emerges from
specialized information or expertise, which can take different forms. Knowing answers to questions can make you appear to be an expert. One person who can possess expert power is an
administrative assistant, especially if that individual has been in the position a long time and
knows all the necessary contacts. Expert power can also stem from having specialized knowledge
such as medical or technology expertise. Informal power also results from expertise when people
see someone as a role model or mentor.
Referent power results from a person’s attributes. This type of power characterizes strong, visionary leaders who are able to influence their followers by their personality, attitudes, and behaviors.
Referent power can lead to being promoted through the formal organization or to becoming an
informal leader among peers. Being well liked by others creates referent power, even at the lowest
ranks in an organization.
In summary, legitimate power has only a formal side. The other four kinds of power—reward,
coercive, expert, and referent—have both formal and informal sources and uses. An important
part of leadership involves influencing the behaviors of other people. Power can be used to lead
others to get things done. It is the ability to make things happen for the good of the group.
Other Sources of Power
Additional sources of power have been identified by various authors:
French and Raven: legitimate, reward, coercive, expertise, referent
The Aston Group: closeness to production
J. D. Thompson: boundary spanning
Others: control over policy making; control over funding decisions; control over
The Aston Group (Hickson, Hinings, Lee, Schneck, & Pennings, 1971) suggests that any person
or group with control over the production process possesses a great deal of power. This viewpoint explains the power labor unions hold due to the ability to employ tactics such as strikes
and work slowdowns that can inhibit the production process. It also suggests that support staff
positions not directly related to the production process (such as janitorial) will have substantially
J. D. Thompson (1967) argues that anyone who serves as a go-between has boundary-spanning
power. Someone who bargains with other organizations, including suppliers, retail outlets, and
the government, has power by translating the uncertainty that has been created by external
forces. When the government investigates a business practice, the person dealing with governmental authorities has power. Boundary spanning also takes place across internal boundaries.
Mediators who negotiate between union leaders and management have power because they have
access to both sides. Also, a manager who resolves differences between internal departments
holds boundary-spanning power by having access to information from both sides of the dispute.
Control over policies, funding, and status symbols also generates power. These factors influence
the conduct of work and employee jobs. Individuals with control over them can exert power.
Effective leaders use that power wisely. The use of power may be found in various leadership theories. In the next section, the ability of a leader to build positive relationships with subordinates
through the effective use of power is implied by some of the modern theories that have become
popular in the academic and professional worlds.
5.2 Leadership Theories
The ability to lead has been observed and
reported on for centuries. Many ancient
writings tell tales of leaders who served
in battle, commanded nations, or taught
religious ideas. More recently, researchers
seeking to identify leader characteristics,
as well as develop programs to train leaders
and improve their skills, have studied leadership. Four main categories of leadership
theories have appeared in the literature
1. Trait theories
2. Behavioral theories
3. Situational theories
4. Transformational theories
Justin Hayworth/Associated Press
▲▲Donald Trump supports the concept of universal leadership.
He believes that an individual who is a successful business
leader will also be a successful political leader.
Early in the study of leadership, two prevailing assumptions seemed to dominate thinking about
leadership. The first assumption was that the ability to lead is universal. In practical terms, this
means writers assumed that a person who was a successful business entrepreneur would be
equally successful as the leader of a major, established corporation, or as a military general, or
as a governor or governmental leader. In essence, leadership becomes transferrable across situations. Notice that such an assumption still exists today. Donald Trump, successful businessman,
sought to become president of the United States without any prior governmental experience, as
did Herman Cain, former CEO of Godfather’s Pizza. Both presented the idea that success in the
world of business would transfer to effective leadership of a government. In an earlier generation, military generals—such as President Eisenhower in the 1950s—were often considered to be
potential governmental leaders. War heroes Wesley Clark and John McCain also sought political
office based on military achievements.
The second assumption builds from the first: If the ability to lead is universal, then all successful
leaders must have things in common. Those “things” were assumed to be leader traits and characteristics. This line of thinking became known as the great man theory of leadership. Research
could then be dedicated to discover the common traits and characteristics of all great leaders
(notice that being male would be one trait), because the theory was built on the assumption that
great men, or great leaders, were born that way.
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