Leadership Theories and Performance Management - Research Paper Example

managing people through change Table of Contents 0 Introduction 3 2.0 People Management & Leadership 3 2.0 Qualities of a Leader 5 3.0 Leadership Styles in People Management 6 4.0 The Forces Driving the Changes in Leadership 7 5.0 Leadership versus Management 8 6.0 Leadership Theories and Performance Management 10 7. Continuum of Leadership Behavior 11 8.0 Conclusion 12 References 13 1.0 Introduction People management is an area that most organisations recognize as the significant element of their success, but many organisations do not know ways of improving their people management practices. It is clear that people management must have a significant impact on the outcome of a given business's efforts. A business's entire operations are built on the people doing them, and their abilities and enthusiasm have everything to do with the success of these operations. From the innovation floor to the executive offices, the performance of individual employees impacts the organisation's overall performance. However, employees cannot be expected to perform to the highest standard without competent management. Problems such as low employee morale, high turnover rates, and poor performance of job duties can result from inadequate people management. People management, which encompasses both formal performance evaluation and compensation strategies and informal leadership practices and techniques, is one of the determining factors in employee morale and the resulting work quality, as well as determining other factors such as workplace loyalty. 2.0 People Management & Leadership One major constituent of people management is leadership. On leadership's effect on the organization, Goleman remarked, "No matter what leaders set out to do - whether it's creating strategy or mobilizing teams to action - their success depends on how they do it." While there are many approaches to leadership, from Goleman's basis of leadership in primal intelligence to Wren's group dynamics view (Goethals and Sorensen, 3), all hold in common that leadership is one of the most basic elements of successful people management. However, people management practices in isolation are not enough to ensure the success of the firm or even of the management practice - the ideals that are embodied by the people management practice must be embedded in the corporate culture in order for them to be successful. In essence, people management theory argues that if management implements a specified set of employment as well as work practices, it is going to lead to better performance (Boxall and Purcell 47-70). A lot of the practices such as teamwork, redesigned jobs, employee participation, teamwork as well as communication and information sharing - have been shown to improve performance, but not in a consistent manner (Appelbaum et al. 737-775). Although there are various stakeholders in an organization, the chief strategic goal of any business is higher financial performance or maximization of wealth for the shareholders (Becker and Huselid, 53-101). Financial performance of an organization depends to a large extent on effective operational performance. The operational performance of an organization is a function of people, process and technology. 2.0 Qualities of a Leader A leader influences others by his qualities, viz. confidence, communicative ability, awareness of his impact on others as well as perceptions about the situation and his subordinates. The effect of a leader's background experiences, his communication ability, self-awareness, confidence, his perceptions of subordinates, the situation and the self are shown below (Prasad, 2006, p. 264). SOCIAL VALUES ECONOMIC CONDITIONS LEADER STRUCTURE FOLLOWERS POLITICAL CONSIDERATIONS [Source: Taken from, Prasad LM, (2006) Organizational Behavior, Fig 26.1 p 287] All these factors interact together to determine the leader's ability to influence others. 3.0 Leadership Styles in People Management A fundamental question that needs to be addressed in People Management is what style of leadership will facilitate the development of a culture that will engage all stakeholders in a performance management system. This function of leadership can be supported by and executed through a well-designed performance management system. Yukl (1998) writes, "Leadership is a subject that has long excited interest among people. The term connotes images of powerful, dynamic individuals who command victorious armies, direct corporate empires from atop gleaming skyscrapers, or shape the course of nations." ( Yukl 1998) The definition of leadership is dependent on context and can be arbitrary and difficult to define. Morrison, Jones and Fuller define leadership as "...the ability to influence a group toward the achievement of its goals." A more complex definition of leadership is "the pivotal force behind successful organizations and that to create vital and viable organizations leadership is necessary to help organizations develop a new vision of what they can be then mobilize the organizational change toward the new vision." (Bennis & Nanus ). Lippitt adds a different perspective on the definition of leadership. She states, "Leadership can be defined as getting people moving in a direction making a decision and supporting paths they typically wouldn't have selected." (Lippitt) In Lippitt's definition, leadership is not just equated with positional power in an organization. She advocates the responsibility of leadership at all levels of the organization. In support of Lippitt's approach, Yukl defines leadership as, "the process wherein an individual member of a group or organization influences the interpretation of events, the choice of objectives and strategies, the organization of work activities, the motivation of people to achieve the objectives, the maintenance of cooperative relationships, the development of skills and confidence by members, and the enlistment of support and cooperation from people outside the group or organization." (Yukl, 1998) 4.0 The Forces Driving the Changes in Leadership There are a number of social and economic forces driving changes in leadership. Bridges (1994) states "That much sought after, much maligned social entity, a job is vanishing like a species that has outlived its evolutionary time". Second, demographic changes have created a more diverse society. Camevale and Stone state, "Workers in an environment receptive to diversity are empowered to use their full capacity. As a result, they, their work, and the organization as a whole benefit from this." (Camevale and Stone) The significant change is a shift from what was referred to as the baby-boomer generation to the gold collar worker. When demand for talent so outstrips supply, startling salaries, bonuses, and mimosas are just the beginning. - Work is not about paying the rent; it's about self-fulfilment (Munk 65). Stuller states, the need to cultivate and aggressively use those brains is evolving into a business religion." This will become increasingly difficult as there is a growing shortage of skilled labour and it will require strong leadership skills to attract the best individuals to organizations (Lee 28). Once attracted to an organization it will also mean creating a culture where creativity, cooperation and resiliency are the operative words. In summary, the forces driving change in leadership: job changes, diversity issues, increased demand for skilled labour, demographic changes and lack of strong leadership skills are significant and need to be addressed. It is no wonder it is difficult to define what is meant by leadership because the context is constantly changing and demanding new ways. An effective performance management system recognizes these changes and provides a framework for meeting the leadership challenges of a changing workforce. 5.0 Leadership versus Management The differences and similarities between leadership and management continue to be debated in the literature which raises the question: Is performance management a leadership or managerial function' Yukl (1998) agrees that the limitations of looking at leadership and management as mutually exclusive would be providing an incomplete picture, and there is no purpose to be gained by doing so. To do so would create simplistic stereotypes to label people as a manager or a leader when both are needed to be successful. Covey believes that "management and leadership are not mutually exclusive; in fact, it might be said that leadership is the highest component of management" He also relates leadership to right brain thinking and management to left brain thinking. The left brain deals with logic, words, parts and specifics, analysis, sequential thinking, and is time-bound. The right brain works more with emotions, pictures, relationships, synthesis, simultaneous and holistic thinking and is time free. There is a declining need for the traditional manager. The traditional role of managers continually fails to meet the demands of today's leaders because functional experts are no longer required, the under utilization of the intellectual strengths of the worker is changing and because teams of subordinates are acquiring the skills that managers previously had the sole ownership is over. There is no need to devalue the role of the skilled manager but what's called for now is a different kind of manager - more strategic, more collaborative, more facilitative, and more responsive to customers, employees, and organizational imperatives." (Zenger 48) This demand for a new kind of manager or leader as noted above is in keeping with the changes that are evolving with the newer approaches to performance management. It would appear that driving these changes is the transitions oncoming in the workforce that necessitate new ways of working to meet the needs of an evolving new kind of worker. Whether leadership and management are distinctly different or exists as different points on a continuum of management to leadership, it is often difficult in the real work world to say where one begins and the other leaves off. Peter Drucker states: "And as for separating management from leadership, that is nonsense-as much nonsense as separating management from entrepreneurship. Those are part and parcel of the same job. They are different to be sure, but only as different as the right hand from the left or the nose from the mouth. They belong to the same body. (Cited in Galagan, 26) The concept of management and leadership, whether distinct or on a continuum, both have their place in determining the success of a performance management system. Grote identifies six responsibilities in performance management. The responsibilities for observing and documenting performance, updating and revising objectives and performance standards could be thought of as at the managerial end of the continuum. Motivating, coaching, providing developmental experiences and reinforcing behaviour could be thought of as at the leadership end of that continuum. It would be difficult to be definitive about where one starts and the other ends. However, from the foregoing, it would be reasonable to conclude that effective performance management requires that managers can move comfortably throughout the continuum of managerial and leadership behaviours with equal ease. 6.0 Leadership Theories and Performance Management Situational Leadership theory provides a framework for considering the supervisor's role in the overall performance cycle. It attempts to explain a correlation between the time the leader spends on task related versus relationship related behaviour with employees and the readiness level of the direct reports to perform the work. The more confident and capable the direct report is to complete a task or function successfully, the less time the leader has to spend on task and relationship behaviour. As the direct report needs less guidance on the task, there is a period of time when the leader will need to spend more time on the relationship side of development. Eventually with a confident and capable individual, the leader will spend minimal time with the employee unless there is some intervening crisis that will dictate a return to a more supportive role for the leader. (Yukl 272-273) Yukl concludes that research on situational leadership finds very little support for the model because of a number of conceptual weaknesses. He states however, "'the theory has made some positive contributions to our understanding of leadership in dyads. One contribution was an emphasis on flexible, adaptable leader behaviour." (Yukl 272-273) Covey's 'PIPC principle', is similar to situational leadership theory, as they both share a triad of a leader, direct report(s) and the task or production. The PIPC principle is 'You always treat your employees exactly as you want them to treat your best customers." To ensure organizational effectiveness, leaders in organizations need to influence the impact of intervening variables to help employees balance output productivity. Effective performance management systems provide a framework for the ongoing dialogue, planning and priority setting that are necessary if this production capability balance is to be achieved in the day to day activities of the organization. Empowerment explains the groundwork needed to balance the issues of task and relationship to create a culture that supports the individual employee to become self-determined and accountable. The role of a leader is to create a culture that supports the individual employee to become self-determined and accountable within a performance management system. It is also very clear from the literature that the alignment of an organization's culture with its business strategy, work processes and roles, and its human resources strategies, is critical to organizational success today." (Vestal, et al 341) The organization's performance management system can be a powerful tool for achieving this alignment. Transformational leadership appears to have a powerful influence on job satisfaction both directly and indirectly through its influence on a person's intrinsic task motivation (empowerment). Transactional leadership, on the other hand, has no effect on empowerment; although it does have a direct effect on job satisfaction Bass's suggestion that transformational leadership augments the effects of transactional leadership is also resoundingly clear. Passive management by exception is negatively related to job satisfaction and empowerment. 7. Continuum of Leadership Behavior Employee-orientation and task-orientation are not two opposite ends. A manager may become more subordinate-oriented, but his task remains the same of motivating the people to do work efficiently. Every manager has both the orientations in varying degrees. It is also possible that a manager may have other orientations, like social responsibility. The modified form of subordinate and task or boss-oriented leadership is the continuum of leadership1 as shown in fig. SUBORDINATE CENTIRED LEADERSHIP 7. MANAGER LETS SUBORDINATES FUNCTION WITHIN LIMITS DEFINED BY HIM 6. MANAGER DEFINES LIMITSAND ASKS FOR GROUP DECISIONS 5. MANAGER PRESENTS PROBLEMS, SUGGESTIONS AND MAKES DECISIONS 4. MANAGER OFFERS TENTATIVE DECISIONS TO CHANGE 3. MANAGER PRESENTS IDEAS AND INVITES QUESTIONS 2. MANAGER SELLS DECISIONS 1. MANAGER MAKES AND ANNOUNCES DECISIONS BOSS CENTERED LEADERSHIP Fig. Continuum of Leadership 8.0 Conclusion In summary there is no one leadership theory that will provide all the answers to designing, implementing and engaging employees in a performance management system. Theories about appropriate emphasis on task and relationship, flexible leadership behaviors, productivity and capability, empowerment and trust provide dues to what makes a leader successful. Yukl states, "A more promising alternative is to view leadership in terms of several distinct but interrelated influence processes at the dyadic, group and organizational level" (Yukl , 341). From the foregoing, while a diversity of views exists, it can be concluded that the forces for change from outside and within organizations are creating impacts. Workforces are changing in both diversity and in the expectations that are brought to the workplace, thus managers need to be able to move comfortably between transformational and transactional focuses. Morrison et al. state, "'the leader provides followers with a vision and a sense of mission and gains respect, trust, and confidence from followers. Inspirational leaders engage in confidence building of their subordinates, thereby influencing their ability to perform assignments and tasks successfully." (Morrison et al) References Appelbaum, E.,'Bailey, T.,'Berg, P. and Kalleberg, A. Manufacturing Advantage: Why High-Performance Work Systems Pay Off Ithaca, NY: ILR Press, 2000. 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