Chapter 8

LEADERSHIP

 Introduction
 Understanding Leadership Concept
 Leadership: Meaning
 Some Important Definitions of Leadership
 Features of Leadership
 Leadership Qualities
 How to be an Effective Leader?
 Theories of Leadership
 Trait Theory
o Shortcomings/ Limitations/ inadequacies/
Criticisms of Trait Theory of Leadership
 Behavioural Theory
o The Studies under the Behavioural Theories
of Leadership
 Situational Theory
 Contingency Theory
 Leadership Styles
 Autocratic or Authoritarian Style of Leadership
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 Democratic or consultative/participative style of
leadership
 Free Rein or Laissez-Faire Style of Leadership
 Leadership (Leader) and Management (Manager):
Distinguishing Features
 Skills Required of a Leader
 Various skills
 Leadership – a mutual influence process
 Leadership and Power
 Leadership
 Power
 Relationship between Leadership and Power
 Organizational power
 Definitions of power given by eminent thinkers
 Sources of power in organizations
 Example of Effective Organisational Leadership in
India
 Caselet on leadership

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§ 8.1 Introduction
§ 8.1.1 Understanding Leadership Concept
 Leadership is an integral part of management and it is an important
aspect of managing also. It is to be kept in mind that leadership is not
an attribute of business alone. Leadership is applied in the social,
political, religious, government, university, army, hospital, church,
family and other organizations where people work in groups.
 The essence of management is integration of human and other
resources in a manner that it leads to effective performance. All these
resources are made available to those who leads or manages.
 The leader is the most important person of an organization. He is the
biggest asset of the organization which is not reflected in the annual
Balance Sheet.
 The success and failure of an organization very much depends upon
the leader. On the basis of this assumption, it could be stated that the
major cause of most business failure would be ineffective leadership.
 That is why Peter Drucker has pointed out – managers (the leaders of
the organization are the basic and scarest resource of any business
enterprise.

§ 8.1.2 Leadership: Meaning

 Leadership is an art of influencing, motivating and directing men and
or women in such a way so as to obtain their willing obedience,
confidence, respect, active co-operation and sincere participation in
order to accomplish a task or a mission.
 In other words, leadership is a dynamic art of influencing others to the
extent of making them to do. It is the art of making the subordinates
work with utmost confidence towards the attainment of organizational
objectives. Managers who possess this quality can be called leaders.
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 According to James Cribbin leadership is “a process of influence on

a group in a particular situation at a given point of time and in specific
set of circumstances that stimulates people to strive willingly to attain
organizational objectives…….”

§ 8.1.3 Some Important Definitions of Leadership

 G R. Terry defines Leadership as “the relationship in which one
person or the Leader, influences others to work together willingly on
related tasks to attain that which the leader desires.”
 According to Louis A. Allen, “A Leader is one who guides and directs
other people. A leader gives the efforts of his followers a direction and
purpose by influencing their behavior.”
 Chester Barnard viewed leadership as the quality of the behavior of
individuals whereby they guide people or their activities in organizing
efforts.

§ 8.1.4 Features of Leadership

 Leaders have followers or lead, but they may not have authority to
manage like managers.
 Leadership can be of any group, organized or even unorganized.
 Leadership is the ability of a person to influence others to work
toward group goals and objectives.
 Leadership pre-supposes the existence of a group of followers and
leadership is the ability of influencing people to strive willingly
for mutual objectives
 The ultimate aim of a leader is to satisfy the needs and aspirations
of his followers or the lead.
 Leadership may be formal or informal.
 Leadership is not an attribute of business alone. Leadership
function may emerge anywhere, where people work in groups, like
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in the government, in trade unions, in clubs, in hospitals, in
students union, etc.

§ 8.1.5 Leadership Qualities

 There may be a longer or shorter lists of leadership qualities which a
leader have to be acquired. But no leader can perhaps, have all the
qualities in him. It has also been observed that many successful leaders
in the history have been neurotic, humourless, narrow-minded, unjust
and authoritarian.
 However, some of the most essential and desirable qualities have been
stated below which are required not only for managing ‘Corporates’
but also leading / managing the social, political, religious and other
organizations.

Qualities are:
1. A Leader must have Vision:
 Vision is a guiding purpose which propels a leader forward. The leader
knows where he/she stands and where he/she likes to go. So, leaders’
vision serves as a bacon and nothing can stand in the way.

2. A Leader must be a Good Planner & an Effective Organizer:

 Leaders in every organization must clearly perceive and understand
the goals of the organization and determine how to make them a
reality. It is the leader who chalks out a course of action.
 In order to put its plan into action, a leader is to organize all the
resources, human and material in order to provide the organization
everything useful to its functioning.
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3. A Leader must be a Good Motivator:
 Motivation is a powerful instrument in the hands of the leaders for
inspiring and creating the ‘will to work’ among the followers. While
motivating, leaders job will be:
i) development of potentialities,
ii) to create enthusiasm,
iii) to create atmosphere to make them participate,
iv) to guide them properly towards achieving goals,
v) to treat them with human dignity,
vi) response for their problems and needs, and
vii) strive for better working conditions and environment.

4. A leader must be a Good Communicator:

 A leader must be a good communicator. A leader is to make sure that
those he leads comprehend his vision and understand his expectations.
 While communicating with the followers the leader should have:
i) ability to talk effectively,
ii) ability to write clearly ,
iii) ability to convey ideas precisely,
iv) ability to understand the language of the followers,
v) ability to listen attentively,
vi) ability to remove misunderstanding, and
vii) ability to remove tensions.

5. A Leader must have Self-Confidence:

 Self–confidence closely relates to self-esteem. The leader who is not
self-confident and does not feel good about himself would not be able
to lead his followers for long.

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6. A Leader must be a Good Listener:
 A good leader is to encourage his followers to use their own minds and
develop their own minds and develop their own problem-solving
skills. A good leader can do this by listening to the ideas and opinions
of his followers. No one can develop a good leadership quality unless
he is a good listener.

7. A Leader must be Enthusiastic:

 Enthusiasm attracts followers and a enthusiastic leader is one whom
followers look forward to being around. Enthusiastic leader is always
proactive who marches toward achievement of his goals.

8. A Leader must be an Intuitive and a Good Decision Maker:

 A good leader must have his intuitive powers and be able to make
accurate predictions and take right decisions at right time and right
place.

9. A Leader must have High Energy Level:

 Research findings show that there is a direct co-relation between
physical fitness and high energy, yet it is experienced that good
leaders, even in very difficult situations, can call on their energy for
making things happen.

10. A Leader must have Intelligence:

 Leaders leading the organization must have somewhat higher
intelligence than their followers. So, the leaders should have the ––
i) ability to analyze complicated relationship,
ii) ability to synthesis,
iii) ability to abstractionise,
iv) ability to comprehend (to know central idea),
v) ability to read personality, and
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vi) ability to read the consequences of both present and future of his
decisions and actions.

11. A Leader must have Social Maturity and Breadth:

 Leaders are to be emotionally matured so that they are neither crushed
by defeat nor overjoyed by victory. Leaders, normally, must have ––
i) high frustration tolerance,
ii) minimum prejudice and hostility towards others,
iii) consistency of behavior for being a true man, in the eyes of
followers,
iv) competency for assessing the socio-cultural and economic needs
of followers.

12. A Leader must have Human Relations Attitude:

 Successful leaders realize that they get the job done through people
and therefore they should develop ––
i) knowledge of human relations,
ii) develop “human-touch’ approach,
iii) treat followers with human dignity and mutual respect,
iv) healthy respect for followers, and
v) social understanding.

13. A Leader must be sensitive:

 A good leader assumes the self-worth of his followers. Therefore, a
leader must not humiliate his followers.

14. A Leader must have Mental Toughness and Emotional Stability:

 Leader must have the mental toughness and emotional stability to look
at things the way they really are.

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15. A Leaders must be Introspective:
 Leaders must admit their weakness and failures without blaming
others. They must look at themselves and face their failures.
Introspection will help them to examine their positions.

§ 8.1.6 How to be an Effective Leader?

 Many leaders are seen in every sphere of human activity. Some are
self-styled leaders, some are leaders of the situation, and some are
real leaders. There are leaders who are effective even in all
adversities to come.
 Many researchers have conducted research to evaluate the real
characteristics of an effective leader. One of the renowned
researchers Korman, has identified two of such researches. The first
one is on the characteristics of this of effective leader independent of
different situational variables, and the second one is about the
characteristics of effective leader which may change with the changes
in the environment.

Then How to be an Effective Leader

 There are personal traits and personal characteristics that facilitates to
be an effective Leader.
 The inborn natural characteristics like.
i) initiative
ii) diligence
iii) intelligence
iv) Self-confidence, and
v) affability etc can be considered as personal traits which help
leader to be effective
 Personal characteristics like:
i) authoritarian attitude
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ii) boldness
iii) diligence
iv) knowledge
v) temperament
vi) patience
vii) kindness,
viii) charity, and
ix) love, etc can also be considered as qualities of an effective
leader.

 E. E. Ghiselli, a renowned behavioural scientist has studied eight

personality traits and five motivational traits which help a person
to be on effective leader.

 According to Ghiselli, the eight personality traits are:

i) intelligence of a generally verbal and symbolic nature
ii) initiative
iii) supervisory ability,
iv) self-assurance
v) affinity for workers
vi) decisiveness
vii) masculinity or femininity and
viii) Maturity

 Accenting to Ghiselli, five motivational traits are

i) need for occupational achievement
ii) need for self actualization
iii) need for power over others
iv) need for high financial reward, and
v) need for job security.

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 However, a successful leader is to posses qualities like self-

confidence, assertiveness, high aspiration, highly verbal persuasive
skills, qualities like cognitive skills and regards for subordinates.

§ 8.2 Theories of Leadership

 A number of different leadership theories with different approaches
have been advanced with a view to understanding and studying
leadership.
 Many a research has been carried on by eminent behavioral scientists
as to find out – what makes a leader effective? The research studies
could not give any conclusive answer to the questions like whether (i)
his success is because of his personality, (ii) his success is because of
his behaviour, (iii) his success is because of the situational variables,
(iv) his success is because of the types of followers he has, or (v) his
success is because of combination personality, behaviour situational
variables, types of followers he has.
 Though the researchers through their researches could not give any
satisfactory answers to the questions involved in the area of leadership,
yet these research studies have resulted in various approach or theories
on leadership.
 There are four important theories of leadership which attempt to
discuss the effectiveness of leadership.
The theories are:
A. Trait Theory,
B. Behavioural theory,
C. Situational Theory and
D. Contingency Theory.
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§ 8.2.1 Trait Theory

 Trait theory is the traditional theory of leadership. This theory is based
on the premise, assumption or the hypothesis that, the persons having
certain traits could become successful leaders.
 According to this school of thoughts, leadership is generally thought in
terms of personal quality, rather than an organizations functions and it
holds that a leader is supposed to posses certain traits to gain position
of leadership which makes him distinct from his followers.
 The various research studies, conducted by eminent behavioural
scientists, show wide variations in leadership traits.
 Some supporters of trait theory (‘Great Man’ Theory) suggest that,
these traits are inborn and leaders are the persons born to lead and no
amount of education and experience could change one’s fate in respect
to leadership. This theory assumes that personal traits have a major
role on leadership results, quality of leader is central and other
variables are relatively less important.
 The other school of thought of the Trait Theory believes that
leadership traits can be identified and developed to transform the
people into good leaders through acquiring of knowledge and on
training, while some supporters of trait theory believed that training
individuals to assume leadership roles was not possible and such
training may be of help only to those who had the inborn leadership
traits.

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Various researchers views on Leadership Traits:

Many researchers have given their views on the type of traits of a leader.
They are:

Physical and nervous energy,

Sense of purpose and discretion,
Enthusiasm,
Technical mastery,
Decisiveness,
Intelligence and faith,
Physical and constitutional factors (height, physic, health and appearance etc.)
Dominance,
Alertness, cheerfulness and expressiveness,
Leadership Traits

Supervisory ability,
Self-actualizing,
Sociability,
Initiative, ambition and persistence,
Sympathy, empathy,
Emotional stability, and
Human relations skill, etc

Conclusion:
 The Trait Theory could not produce clear results because it could not
consider the whole gamut of leadership environment, while situational
variables have also a major role to play. A person may prove himself
as a very successful leader in one situation due to some ‘traits’, but the
same person may prove himself as a very unsuccessful leader in
another situation. Thus, Trait Theory is not free from limitations or
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shortcomings; as a result, the trait approach to leadership has been
severely criticized by many.

§ 8.2.1.1 Shortcomings/ Limitations/ inadequacies/

Criticisms of Trait Theory of Leadership:
 Inconsistencies found in the trait theory of leadership give rise to a
logical criticism against this theory.
 Although hundreds of traits, if not more, have been identified to be the
leadership traits, but no consistent pattern has emerged out of these
research studies.
 The Trait Theory does not consider the whole gamut of environment
of leadership, of which ‘trait’ may be one factor.
 It was evident by various study conducted by various researchers that
there can not be generalization of traits for a successful leader.
 This theory failed to explain leadership failures in many cases, in spite
of the presence of the required traits. Not all leaders possess all traits
and many ordinary people may posses most or all of these traits.
 The trait theory failed to asses the impact of the situational variables –
the leader, the lead and the situation. A person may prove himself as a
very successful leader in one situation due to some ‘traits’, but the
same person may prove himself as a very unsuccessful leader in
another situation.
 Though there are a number of tests for measuring the personality traits,
no definite conclusion could be made on this.
 The researchers of the trait theory failed to identify a unique set of
traits that would always differentiate leaders from the lead and
inefficient leaders.
 According to this school of thought leadership is generally thought in
terms of personal quality. But leadership ought to be looked beyond
personal qualities and traits of the individual.
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§ 8.2.2 Behavioural Theory
 Behavioural theory is based on premise, assumption or the
hypothesis that leadership is shown by a person’s acts more than by
his traits. Behavioural theory of leadership wanted to determine how
various kinds of specific behaviour of leaders affect the performance
and satisfaction of their followers or the lead.
 The main objective of the Ohio State University studies – a
constituent of Behavioural theory, was identification of the major
dimensions of leaders and also investigation of the effect of behaviour
of the leader on the overall performance and satisfaction of the
employees at work.
 University of Michigan studies, another constituent of
Behavioural theory, tried to determine the pattern of leadership
behaviour that results in effective group performance.
 Another aspect of Behavioural theory of leadership is the
‘Managerial Grid’ developed by R. R. Blake and J.S. Mouton, which
describe managerial styles by combining ‘task orientation’ and
‘relationship orientation’.
 Even though, a leader is to posses and use three types of skills –
Technical skill, human relations skill and conceptual skill for
leading his followers, yet, behaviour of a leader/manager will make
him a good leader and consequently, he would be able to raise the
level of morale of the led/team members/followers, and when the
behaviour of the leader is opposite, the lead/team members or the
followers would discard him as a leader.
 The behavioural theory of leadership includes the following
studies:
i) Ohio State Studies
ii) University Of Michigan Studies
iii) Blake And Mouton’s Managerial Grid, And
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iv) Likert’s 4-System Management
§ 8.2.2.1 The Studies under the Behavioural Theories
of Leadership
i) Ohio State University Studies
 In-depth studies into the Behavioral theories of leadership have
been conducted at the Ohio State University in the late 1940s.
 The objective behind the Ohio State University studies was (i)
identification of the major dimensions of leadership and (ii) the effect
of leader behaviour on employee performance and satisfaction.
 The researchers of the Ohio State studies identified four primary
styles of leadership. The researchers also identified two leadership
dimensions out of leader behaviour in a varied situation. The two
leadership dimensions are (A) Consideration and (B) Initiating
structure.

A) Consideration
 It refers to the leader behaviour that can be characterized by the
concern for the needs of the members of the work group, rapport
between the leader and the lead, concern for the followers, well-being
and comfort, mutual warmth and trust, encouraging two-way
communication, participative management, respect for the
subordinates’ ideas and regard for their feelings.

B) Initiating Structure
 It refers to the leader behaviour that can be characterized by defining
the leader-follower roles, assigning tasks to them, providing a
favourable work environment and getting things done i.e.
organizational goals, by the follower or the lead.
 Here, the leader, within a structure, organizes, co-ordinates and
supervises the activities/tasks assigned to the work group and the work

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group know what is to be done, how it is to be done and what is
expected from them.

Diagram Showing Consideration Behaviour and Initiating Structure

Behaviour:
High
Consideration behaviour
Low

Initiating structure behaviour

Low High

The Focal Point of the Study

 The Ohio Studies indicate that –
i) A leader does not necessarily have to rate both on
consideration behaviour and initiating structure behaviour;
ii) A leader may be high on consideration behaviour and low on
initiating structure behaviour; and equally,
iii) A leader may be high on initiating structure behaviour and low
on consideration behaviour; and in all situations –
iv) A leader can mange to lead the lead (followers, work-groups)
successfully.

Findings of the Ohio State University Studies

 The leaders high on both consideration behaviour and initiating
structure behaviour tended to achieve high performance and
satisfactions level of the subordinates, than the leaders who are low on
either initiating structure behaviour, consideration behaviour, or low
on both the consideration and initiating structure behaviour;
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 Leaders on high initiating structure behaviour generate greater rates of

employee turn over, absenteeism and grievances and also lower levels
of job satisfaction.

ii) University of Michigan Studies

 The University of Michigan studies on leadership were initiated and
conducted at the University of Michigan’s Survey Research Centre by
the Michigan research group, at about the same period when the Ohio
State University studies were conducted.
 The main objective of the Michigan studies was to identify the pattern
of leadership behaviours that are related to measures of performance
effectiveness of the lead or subordinates/followers.
 The Michigan researchers identified two basic dimensions of leader
behaviour and termed them as “Employee-Centred” leadership and
“Job or Production – Centred” leadership.
 The Employee – Centred leadership behaviour is characterized by the
leader behaviour that attempts to build effective work groups with
high performance goals, emphasizes interpersonal relations, cares for
the personal interest of the work group and gets the tasks
accomplished with a human-touch, i.e. paying attention to the human
aspects of the work group.
 The job or production centred leadership behaviour is characterized by
the leader behaviour that tends to emphasize the production/job
aspects of the concern, sets rigid work procedures and standards for
the group, and where the main concern of the leader is to accomplish
the assigned tasks and not paying any attention to the human side of
the concern/organization, but considering the members of the group as
a means to that end.

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Diagram showing a production – centred and employee – centred
leadership continuum
Production Employee –
Or Centred
Task-Centred Leadership
Leadership

Findings of the University of Michigan Studies

 The findings of the Michigan studies reveal that Production – Centred
and Employee – Centred leadership behaviors are of two separate
behavioural dimensions and are presumed to be at opposite ends of a
single dimension.
 If a leader is high on production/task orientation, he will definitely be
low on Employee-Centred behaviour, again;
 If a leader is high on Employee – orientation, he will be low on
production/task centred behaviour.
 In conclusion, the production – centred leader behaviour measured the
task or work orientation, and the employee – centered leader behaviour
measured employee/people orientation.

iii) Blake and Mouton’s Managerial Grid

 Robert R. Blake and Jane S. Mouton have developed a two-
dimensional view of leadership styles through a graphic depiction,
which they propose it as ‘Managerial Grid’.
 The Managerial Grid is one of the most widely known approaches of
leadership styles and has been used as a means of Managerial Training
through out the world and also for identifying various combinations of
leadership styles.
 The Managerial Grid is built on two axis, one representing the
‘concern for people’ and the other the ‘concern for production’
(task).
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 The horizontal as well as the vertical axis are treated as a scale from 1
to 9.
 The grid, as shown below, has nine (9) possible positions along each
axis, creating eighty-one (81) different positions in which the leader’s
style may fall.
 However, Blake and Mouton, through their Managerial Grid, have
identified five coordinates (leadership styles) based upon the factors –
‘concern for people’ and ‘concern for production’ (task) which is
found in organizations.

The diagram of the Managerial Grid

High
CONCERN FOR PEOPLE

Low
High
Low

CONCERN FOR PRODUCTION

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Description of the Diagram on Managerial Grid
The description of the five types of leadership, as shown in the coordinates
of the above diagram, is given as follows:
Coordinates (1.1): “Impoverished Management”
 Under (1.1) leadership style, a leader/Manager exerts minimum
influence on his followers/group members. He shows minimum
amount of concern for both ‘people’ and ‘production’. The leader
abdicates his role as leader and he exercises his authority only to avoid
pressure from top. Such a leader really does not manage or lead his
group at all. He has minimum involvement in the mission, purpose
and objective of the organization as well as its people.

Coordinates (1.9): “Country Club Management”

 Under (1.9) leadership style, the leaders/managers are totally person-
oriented. Here, leader shows maximum concern for the cause of the
people satisfaction which is supported by human relations approach.
Leaders develop a close and friendly relationships with the
subordinates, provide comfortable organization atmosphere. Such
leaders care little for task, and even in case of any conflict between
production (work output) and people satisfaction, the leader stands for
the people satisfaction.

Coordinates (9.1): “Task Management”

 Under (9.1) leadership style, the organization people are considered as
mere instruments of production – that is people are the only means to
an end. Such leaders/managers have a very high degree of production
concern and a very low degree of people concern. The ultimate
objective of such leaders are to develop an efficient operation without
concerning for people.
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Coordinates (5.5): “Middle-of-the-Road Management”
 Under (5.5) leadership style, leaders seek to have the balance between
‘concern for people’ and ‘concern for production’. To such leaders,
‘people concern’ and ‘production concern’ are equally important. Such
leaders stand firm in the matter of concern for production (output) and
also stand fair in the matter of concern for the people. Thus, the (5.5)
leadership orientation puts due emphasis on both the production
concern and the concern for the organization people. As a result, such
leaders attain medium output (production) applying medium level of
motivation and morale.

Coordinates (9.9): “Team Management”

 Under (9.9) leadership style, leaders try to combine the organizational
goals with the individual goals. Such leaders try to integrate a
maximum degree of concern for production with the maximum degree
of concern for the people. The primary objective of such leadership is
to establish an organizational climate that fosters group cohession,
participation, feeling of commitment, creativity and team-sprit, so that
the capacities and capabilities of the organizational people may be
utilized to the fullest extent towards organizational purposes. Lastly,
such leaders believe that the organizational people have complex
needs and desires which are to be met in the work place for attaining
and maintaining a desired level of production (output) in the long term
basis.

Conclusion
 The Managerial Grid as proposed by Robert R. Blake and Jane S.
Mouton is a useful mechanism available to a leader/manager for
classifying and identifying his own leadership/managerial styles.

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 Blake and Mouton have identified five coordinates that exposes

various styles of leadership behaviour. A leader/manager can cultivate
a particular style of behaviour that may help and equip him to be a
successful leader/manager, through regular practice.
 Out of the five coordinates (1.1), (1.9) , (9.1), (5.5) and (9.9) as
developed by Blake and Mouton, the coordinates (9.9) ‘Team
Management’ is the ideal approach to leadership, as this style of
leadership demonstrates ‘high degree of concern for the people’ and
also ‘high degree of concern for the production’ (output). Such
leaders are the ‘leader in true sense’ and real managers, as they
possess the ability to intrigate the organizational goals with the
individual goals.

iv) Likert’s 4 – Systems Management

 Professor Rensis Likert, an internationally famous psychologist,
along with his associates, have studied for a long time at the
University of Michigan, U.S.A., for understanding the patterns and
styles of managers/leaders and eventually have developed certain
approaches towards leadership behaviour.
 Rensis Likert and his associates have devised a continuum of 4-
systems of management incorporating the basic style categories of
‘task orientation’ and ‘people orientation’.
 In terms of leadership styles, Likert’s 4-systems of management may
be categorized as under:
System 1: Exploitative – Authoritative,
System 2: Benevolent – Authoritative,
System 3: Consultative, and
System 4: Participative – Group.
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The Features of 4 – Systems Management

The features of the Likert’s 4 – systems management are presented below:
 System I: Exploitative – Authoritative
Under this system, leaders/managers have no confidence and trust in their
subordinates or lead. Managers set standards and methods of performance,
without consulting their subordinates, and failure to meet the managers
standards and goals results in threats or punishment. As managers make
all work-related decisions alone, subordinates do not feel free to discuss
about the job-performance with their managers. It is rare that managers
seek ideas and opinions from subordinates in problem- solving matters.

 System 2: Benevolent – Authoritative

Under this system, though managers set standards and methods of
performance, the subordinates have some freedom to comment on the
standards and methods. The managers have some confidence and trust in
subordinates. The subordinates do not feel very free to discuss on the
work-related issues with their managers/superiors. But sometimes,
managers seek ideas and opinions of the subordinates in problem-solving
matters. The subordinates, who are able to meet or execute the standards
of performance set by the managers, may be rewarded accordingly.

 System 3: Consultative
Under this system, managers set standards and methods of performance
after proper discussion and consultation with their subordinates.
Subordinates feel free to discuss on the work-related issues with their
managers. Usually, managers seek opinions and ideas from the
subordinates and try to make constructive use of the opinions and ideas of
the subordinates. Managers have substantial, but not complete, confidence

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and trust to the subordinates. The subordinates are motivated not by the
threat of punishment but by rewards.

 System 4 : Participative – Group

Under this system, once the organizational goals are established, the work-
group set standards and methods of performance. In case, managers
formally take any decision on work-related issues, they do so by taking
opinions and suggestions of the group-members. Managers have fullest
confidence and trust in their subordinates and they, in all cases, seek
opinions and ideas from subordinates about work-related matters and also
try to make constructive use of their suggestions, ideas and opinions.
Accordingly, subordinates also feel completely free to open dialogue with
their managers on work-related issues. The followers of this system of
management motivate their subordinates not by punitive measures but
by economic rewards, feelings of worth and importance.

Conclusion
 Though Professor Rensis Likert has developed four systems of
management in terms of leadership styles, he found that the
practitioners of the system – 4 (Participative – Group) achieved
greatest success as leaders.
 Professor Likert, through his extensive research findings, observed
that the departments and the organizations which were steered by the
system 4 approach and philosophy were more productive because of
the presence of the principle of supportive relationships between the
manager and manages.

§ 8.2.3 Situational Theory

 The situational theory of leadership is based on the
assumption/premise/or hypothesis that the leadership behaviour and
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style of leading in one setting may be completely different from the
leadership behaviour and style of leading in another setting.
 This theory believes that leadership pattern is the product of
situation or environment at a particular time span and that same pattern
of leadership behaviour need not be equally effective at a different
time span and different situations.
 The studies under situational theory indicate that certain
situational variables, with change of situation, affect the performance
of leadership.

Below given are the situation variables and its effects on the performance
of leadership:
Situational Variables Effect on the performance of leader
i) Cultural Environment Leadership is directed to influence the
behaviour of followers in the context of
culture
ii) Job Difference When a leader is effective and successful in
one job situation, may be unsuccessful in
another job situation.
iii) Differences Variety of factors like personality
between individuals characteristics, interest, motivation, age,
education, experience, etc., make a person
as a leader in one situation and a lead
(follower) in another situation
iv) Differences in As the organizations differ in size,
organizations ownership pattern, objectives, philosophy,
etc., similarly, the patterns and styles of the
leader may be different in different
organizational context.

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§ 8.2.4 Contingency Theory

 The contingency theory of leadership is based on the premise,
assumption or hypothesis that the most effective pattern of behaviour
for leadership depends upon some contingent factors and hence this
theory is named as contingency theory.
 This theory postulates that the leadership pattern is determined by
certain contingencies like:
i) Existence of forces in the leader – that is, his own value
system, capacity to lead, confidence level in his followers and
power of tolerance, etc.
ii) Existence of forces in the followers or the lead – that is,
willingness of the followers or lead to work, interest in job,
acceptance of responsibility and sharing organizational objectives
and goals, etc, and
iii) Existence of forces lying in the situation – that is, the pattern
of the organization, the structure of the organization, the corporate
mission of the organization, group effectiveness, time constraints,
organizational limitations and style of management, etc.
 Thus, leadership behaviour is exposed in combination of some
contingent factors. As a result, an effective leader must have to take
into consideration of the extent of various contingent forces lying in
the total environment and thus determine his behaviour in a particular
situational and time frame.
The contingency theory of leadership includes the following studies:
1. F. E. Fiedler’s Contingency Theory,
2. Path-Goal Theory of Robert House and Terence R.
Mitchell,
3. Life-cycle theory of Paul Hersey and Kenneth Blanchard,
and,
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4. Tannenbaum and Schmidt continuum by Robert
Tannenbaum and Warren H. Schmidt.

§ 8.2.4.1 Studies under the Contingency Theory of

Leadership
1. F. E. Fiedler’s Contingency Theory
 Fred E. Fiedler and his associates of the University of Illinois have
developed a comprehensive ‘Contingency Theory of Leadership’.
 Fiedler’s contingency model of leadership is based on the assumption
that effectiveness of leadership does not depend only on the attributes
of their personalities, but also depends on the ability of the leader to
act within various situational variables and the interactions between
the leaders and the lead.
 In the opinion of Fiedler, ‘the group performance will be contingent
upon the appropriate matching of leadership style and also the degree
of favourableness of the group situation for the leader’.
 On the basis of his studies, Fiedler has identified three critical
dimensions of favourableness of the leadership situations. These three
dimensions of favourableness of the leadership situations are –
(1) Position power,
(2) Task structure, and
(3) Leader – Member Relations.

The dimensions of favourableness of the leadership situations are

discussed below:
1. Position Power: This refers to the legitimate power arising from the
organizational authority which comprises formal power and reward power.
The situation would be more favourable to a leader where and when he
enjoys greater power as well as greater control over his subordinates.

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2. Task Structure: When organizational tasks are well structured, well
defined and the plans, policies, rules and procedures are clearly stated and
understood, it contributes to a favourable situation to a leader in terms of
influencing and controlling the behaviour of the subordinates. On the
other hand, when organizational tasks are unstructured, it reflects to an
unfavourable situation to a leader in terms of influencing and controlling
the behaviour of the subordinates.

3. Leader – Member Relations: The leader’s power to influence and

control the subordinates would be high, in case the relationship between
the leader and the lead is relatively good with mutual trust and openness.
On the other hand, the leader’s power to influence and control would be
lesser, in case the relationship is poor or strained. The former situation
contributes a favourable situation to the leader and later situation reflects
an unfavourable situation to the leader.

How situational favourableness is determined?

 Situational favourableness is determined by the combination of the
three critical dimensions of favourableness of the leadership situation.
These are (1) Position Power (2) Task Structure and (3) Leader-
Member Relations.
 The most favourable situation occurs to the leader, when and where
the leader holds strong position power, the task is highly structured
and the leader has a good leader-member relations.
 On the other hand, a less favourable situation occurs, when and where
the leaders position power is weak, the task is unstructured and the
Leader -Member relations are not positive.

Conclusion
 Fiedler’s contingency model postulates that there is no one best way
available to a leader for effectively leading.
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 Effective leadership style depends on the situational variables. A

particular style of leadership may be more effective in one situation
and if the situation changes or differs, the same style of leadership may
be ineffective.
§ 8.3 Leadership Styles
 Leadership style is the pattern of behaviour which a leader exhibits
and/or applies to influence and get things done through his followers
or lead to attain the organizational objectives and goals.
 Basically, leadership styles or the patterns of behaviour of leaders
are based on some dimensions – like, power and authority dimension,
orientation dimension, motivational dimension, situational dimension
and followers or lead dimension.
 Over the years, the researchers, thinkers and writers over the globe
have identified different styles of leadership. The frequently
mentioned styles of leadership are:
1. Autocratic or Authoritarian style of leadership
2. Democratic or Consultative / Participative style of leadership
3. Free-rein or laissez-Faire Style of Leadership
The above three styles of leadership are the classical approach to
leadership styles.

§ 8.3.1 Autocratic or Authoritarian Style of

Leadership
 The name ‘autocratic’ or ‘authoritarian’ indicates that the leader
retains full authority and power and exercises his command, control
and domination over his followers or lead.
 Being influenced by this style, the leader issues instructions,
orders and directives to his followers without caring for consultation
and taking opinions and views from his followers.

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 Such a leader maintains negative attitude in his relations with his

followers and believes in the carrot and the stick approach of
motivating his followers or lead, that is, by rewards and threats of
punishment.
 An autocratic leader gets things done through his followers by
virtue of his sole authority and power, fear of deprivation, threats and
punishment

Features or characteristics of Autocratic/Authoritarian style of

leadership
 Retains full authority and power, exercises his command,
control and domination over his followers;
 Issues instructions, orders and directives without caring
for consultation and taking opinions and views from his followers;
 The followers or lead can not utter the word ‘No’ or Why’
to any propositions of the leader;
 ‘I’ style of leadership;
 Followers are expected to do what the leader has told them
to do;
 Prefers ‘one-way’ communication only;
 Keeps decision making in himself;
 Believes in ‘the carrot and the stick’ approach of
motivating the followers – by rewards or threat of punishment; and
 Emphasizes production and productivity.

Advantages and disadvantages of autocratic or authoritarian style

Advantages
 This style may be effective when the followers are untrained,
illiterate, unorganized and undisciplined.
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 The autocratic style of leadership is effective for leading or

controlling ‘X’ type of people in the organization, who (i) lack
integrity (ii) are fundamentally lazy and desire to work as little as
possible (iii) avoid responsibility (iv) prefer to be directed by others
and (v) are indifferent to organizational needs and goals, etc.
 For handling/managing ‘X’ type of people or followers – they
have to be persuaded and pushed into performance and move to work
through autocratic or authoritarian style of leadership.

Disadvantages
 As the autocratic style is considered as the hard approach, it results
in employee dissatisfaction, absenteeism and higher labour turnover.
 This style of leadership demoralizes the followers, lowers the
quality of performance as well as retards individual and organizational
growth.
 A fear psychosis prevails in the entire organization, as a result the
followers develop a sense of insecurity, frustration, and low morale.
 This style of leadership has a dehumanizing effect on the
followers/employees which generate antagonism amongst them.
 This style of leadership will be ineffective when the followers are
trained, literate, organized, disciplined and knowledgeable and the
accomplishment of task calls for cooperative spirit and team-work
approach.

§ 8.3.2 Democratic or Consultative/Participative Style

of Leadership
 In case of democratic/consultative or participative style, a mental
and emotional involvement of the leader takes place which helps the
leader to lead his followers/subordinates/lead with a friendliness of
spirits.

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 The follower of such a style becomes delicate-hearted, warm, soft

and cares for his followers.
 This style allows the followers to participate in the decision-
making process and encourages the followers to demonstrate interest,
initiative, drive, imagination and creativity for enriching the plans and
programmes of the organization.
 Such a leader does not dominate his followers but gets things done
through followers by persuasion and warmth of heart.

Features or characteristics of democratic/consultative or participative

styles of leadership
 A mental and emotional involvement of the leader takes place;
 The leader leads his followers with a friendliness of spirits;
 The leader is delicate-hearted, soft, warmth and caring for his
followers;
 Decision making is participative and not unilateral;
 Encourages followers to demonstrate interest, initiative, drive,
imagination and creativity;
 No domination over followers but getting things done through
followers by persuasion and warmth of heart;
 ‘WE’ style of leadership;
 Emphasizes satisfaction of psychic wants;
 Encourages two-way communication; and
 Attaches high importance to both task and people.
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Advantages and Disadvantages of Democratic/Consultative/Participative
style of leadership
Advantages
 The democratic/consultative or
participative style of leadership is based on the positive assumption
about human beings.
 As due importance is given to the ideas,
thoughts, initiative and creativity of the followers, they develop a
sense of self-esteem and it acts also as a motivation to the followers.
 This style of leadership delivers to the
followers a deep sense of belongingness.
 Such a type of leadership induces
confidence, cooperation, loyalty amongst the followers and results in
high moral and employee productivity.

Disadvantages
 Participative style of leadership may not
be effective when the followers are untrained, unorganized, illiterate
and undisciplined.
 On the other hand, this style is more
effective when the followers are trained, organized, literate and
disciplined, but such an environment may not be found in all
organizations.
 Participative style rests heavily on
motivating followers by offering non-financial incentives like
appreciation, recognition, prestige and status, etc. But in practice, it is
examined that the followers are more motivated by financial incentives
than non-financial.
 Such a style of leadership cannot
contribute a good result when the span of management or supervision
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gets wider and decision-making is delegated to a wider scale. In such
a situation, co-ordination, harmonization and integration of decision-
making becomes very difficult.

§ 8.3.3 Free Rein or Laissez-Faire Style of Leadership

 The name ‘free-rein’ or ‘laissez-faire’ style indicates a situation where
a leader does not attempt to intervene or regulate or control over the
group members for achieving organizational goals.
 Such a leadership style allows the group members to operate entirely
on its own resulting complete group or individual freedom in
organizational decision-making.
 A free-rein leader entirely depends on his followers/group members in
establishing their own goals.
 Under this style of leadership, the leader remains passive, delegates
authority to his followers or lead or group members, instead of
directing or leading and controlling them.
 A free-rein leader exists simply as a contact person or a liaison man
within his group members and supplies the necessary resources and
information to them for accomplishing their tasks.

Features or Characteristics of Free Rein or Laissez-Faire Style of

Leadership
 Leader allows the group members to operate entirely on its own;
 Allows complete group or individual freedom in organizational
decision-making;
 Leader entirely depends on his group members in establishing their
own goals;
 Leader remains passive only, delegates authority to the group
members for achieving organizational goals;
 No direction, control and leading from the leader himself;
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 Exists ‘you’ style of leadership.

Advantages and Disadvantages of Free Rein or Laissez-Faire Style

Advantages
 This style of leadership may be effective where group members are
highly committed to the organizational tasks;
 This style may work where the group members are highly educated,
aware of their roles, duties and responsibilities and possess necessary
skills for accomplishing organizational tasks without directions,
supervision, intervention and control by the leader.

Disadvantages
 This style of leadership results in disorganization and chaos in the
organization as every one is at liberty to make decision in different
directions without thinking for attainment of group and organizational
objectives.
 Because of granting of absolute freedom to the members or the lead,
conflicts may arise among them as a result, delegated tasks or duties
may not be accomplished.
 As there is no defined decision making and controlling authority in the
organization, frustration and insecurity may develop among the
individual member and also the group.
 Group cohesiveness and team sprit may suffer because of non-
cooperative attitude and mental frame-work of few members of the
organization.

§ 8.4 Leadership (Leader) and Management

(Manager): Distinguishing Features
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Distinguishing features of leadership (Leader) and management (manager)
are as follows:
Management (Manager) Leadership (Leader)
 Managership is a  Leaders have followers or lead,
fundamental but they may not have authority to
characteristics of a manage like managers.
manager.
 Managership or  Leadership can be of any group,
management has organized or even unorganized.
reference to an
organized hierarchical
structure.
 Managers, by virtue  Leadership is the ability of a
of being in a managerial person to influence others to work
position, enjoy toward group goals and objectives.
managership, but they
may not possess
leadership attributes or
qualities to influence
the followers or the
organizational people.
 Managers may or  Leadership pre-supposes the
may not be effective, existence of a group of followers
like leaders, in and leadership is the ability of
influencing their influencing people to strive
subordinates towards willingly for mutual objectives.
accomplishment of
organizational goals and
objectives.
 The ultimate aim of  The ultimate aim of a leader is
a manager is to achieve to satisfy the needs and aspirations
organizational goals and of his followers or the lead.
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objectives.
 Managership is  Leadership may be formal or
always formal. informal.
 Managership is an  Leadership is not an attribute of
attribute of business business alone. Leadership function
performances. may emerge any where, where
people work in groups, like in the
government, in trade unions, in
clubs, in hospitals, in students
union, etc.
 In the processes of  The process of leadership
managing, managers involves non-coercive influence to
may use coercive achieve group goals and objectives.
influence to achieve The leader should have ‘human-
organizational goals and touch’ approach with his followers.
objectives.
 A person may be an  A person may be an effective
effective and successful and successful leader, but he may
manager, but may not lack in managing.
be an effective and
successful leader.
According to Peter F. Drucker and Warren Bennis
 ‘Management is  ‘Leadership is doing right
doing things right’. things’.
 ‘Management’s  ‘Leadership determines whether
efficiency lies in the ladder is leaning against the
climbing the ladder of right wall’.
success’.

§ 8.5 Skills Required of a Leader

 A leader whether he belongs to a business organization, a non-trading
organization, an educational institution, a charitable trust, a hospital or

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a club, demands a mixture of various types of skills for pursuing
his/her leadership activities.
 A skill is an acquired and learned ability and also the competency
which allows the leaders to understand, analyze organizational
problems and opportunities and deal with the human resources (his/her
followers) towards contributing to the achievement of organizational
performance.

§ 8.5.1 Various skills

Leaders, at all levels, need to possess the following skills:
i) Analytical/Diagnostic Skills
ii) Communication Skills
iii) Human Relations/Interpersonal Skills
iv) Negotiating Skills
v) Technical Skills
vi) Conceptual Skills
vii) Influencing Skills

i) Analytical skills/ diagnostic skills

 Diagnostic or analytical skill refers to a leader’s ability to break a
problem into its component parts, to identify the cause and effects,
investigate and diagnose the symptom for any given problem.
 Through diagnostic skill, a leader can apply rational and scientific
approach for arriving at a feasible and optimal solution for any given
problem.

ii) Communication skills

 Leaders are to deal with people (followers) and hence they are to
communicate with their followers orally and in writing.
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 The skill of communicating effectively is rarely an inherited gift. The
majority of leaders are not blessed with instinctive flair, but they can
develop the ability to communicate by acquiring and understanding the
techniques of effective communication.

iii) Human Relations/interpersonal skills

 For actuating the organizational tasks, leaders are to work with their
followers (Human Resource). Leaders are to deal with people
resource in the organization as well as external people.
 For this, leaders need to develop interpersonal skills and ability to
work with their followers.
 Leaders, with interpersonal or human relations, possess the ability to
understand and recognize the viewpoints of their followers and thus
get things done through and with followers and effectively interacting
with their followers.

iv) Negotiating skills

 A leader, as a negotiator, is to negotiate with other party/parties to
reach an acceptable agreement.
 A leader is to negotiate deals and agreements within and outside the
organization.
 As a negotiator, a leader, while negotiating, should have the following
skills:
 Sharing all relevant information with the negotiating party/parties
openly and honestly;
 Looking objectively at the view points of the negotiating
party/parties;
 Creating a climate of trust.
 Negotiating with a positive attitude.

v) Technical skills
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 Technical skill is required of a leader.
 Technical skills basically refer understanding and proficiency in doing
a specific job involving knowledge, process, method, procedures and
techniques, etc in an effective way.
 Technical skills demand specialized knowledge, ability and expertise
in solving day-to-day problems and activities and enable it to solve the
mechanism involved in actuating a particular task.

vi) Conceptual skills

 Conceptual skill is the ability of a leader to visualize the organization
as a whole and as a total entity.
 Conceptualization requires broad knowledge, imagination, organized
thinking and also the mental capacity to conceive abstract ideas.
 Through conceptual skills, leaders are able to recognize the inter
relationships and relative values of various factors involved in
leadership problems.

vii) Influencing skills

 Leadership is a mutual influence process. A leader must have to
posses the ability and skill to influence his/her followers to change
their behaviour by using a collaborative style of leading.
 A leader should have non-coercive influence on followers to achieve
group goals and objectives and have ‘human-touch’ approach with
his/her followers.

§ 8.6 Leadership – A Mutual Influence

Process
 Leadership is a process of influence exercised by the leader on his
group members/followers.
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 Leadership is considered to be an influence process with several

interacting elements like the individuals, group, the task structure, the
organization, the situation and the general and socio-cultural
environment.
 Leadership abilities, styles and skills influence the followers and as a
result the followers accept his advice, guidance and direction.
 As the leader becomes able to influence his/her followers, change the
behaviour, attitude and beliefs of his/her followers, similarly, the
followers come to trust their leader and follow him to achieve their
own objectives.
 It is true that a leader influences his followers, but it is also true that
the followers and situations influence their leader, subject to certain
situational variables, like characteristics of the followers, work
requirement of the followers, psychological climate of the followers
being led, etc.
 Thus, the process of influencing, both on the part of leader and
followers, is composed of three elements – leader, follower and the
situation.
 Lastly, to justify leadership as a process of influence, the views of
James Cribbin may be cited below:-
James Cribbin views leadership as “a process of influence on a group in a
particular situation at a given point of time and in a specific set of
circumstances that stimulates people to strive willingly to attain
organizational objectives, giving them the experience of helping attain the
common objectives and satisfaction with the type of leadership provided”.

§ 8.7 Leadership and Power

§ 8.7.1 Leadership
 Leadership is an art of influencing, motivating and directing men and
or women in such a way so as to obtain their willing obedience,
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confidence, respect, active co-operation and sincere participation in
order to accomplish a task or a mission.
 In other words, leadership is a dynamic art of influencing others to the
extent of making them to do. It is the art of making the subordinates
work with utmost confidence towards the attainment of organizational
objectives. Managers who possess this quality can be called leaders.

§ 8.7.2 Power
 Power is a natural phenomenon or process and a reality of group and
organizational life.
 Power may be defined as an effort or ability of an individual to
influence, exercise, command and control the behaviour of another
person, persons, or group for compliance with his or her request.
 In the context of organization, power may be referred to as the
capacity or ability of one person to influence and dominate the will
and behaviour of other, others or group of the organization to get
things done the way one (the power holder) wants them to be done.
 The main aspect or feature of power is dependency. Power depends
highly on dependency relationship.

For example, the greater P depends on Q, the greater power is dominated

by Q on P.

§ 8.7.3 Relationship between Leadership and Power

The relationship or contract between leadership and power is shown
below:
Leadership Power
 For attaining organizational  Power is a means in the hands of
objectives and goals the organization leaders to
organization leaders use facilitate the desired
power. achievements.
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 Leadership requires  Power depends highly on

relationship between the goals dependency, which is its main
of the followers and the leader. aspect or feature.
 Leadership is a dynamic art of
influencing followers to the  The essence of power is
extent of making them do. It domination or control over the
is the art of making the behaviour of others. It does not
subordinates work with follow any straight line method.
utmost confidence towards It may be multi-directional.
attainment of organizational
objectives.  Power encompasses and focuses
 Leadership is style based, like on tactics. People, for gaining
authoritarian, participative, power, use tactics in order to
democratic or free-rein styles, influence others, which may in a
etc. positive or negative manner.

§ 8.7.4 Organizational power

Meaning of power
 In simple sense, power is the ability to get things done, to get people to
do what you want to do, to make the final decision.
 Power refers to the ability to control over the behaviour of others.
 Power is natural phenomena in any group or in organization of any
type. It is nothing but a reality of group-life or organizational life.

§ 8.7.5 Definitions of power given by eminent

thinkers
 MAX WEBER, in his book “The theory of social and Economic
organization” defined power as “the probability that one actor within a
social relationship will be in a position to carry out his own will
despite resistance”.

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 Jeffrey Pfeffer, in the book “managing with powers” defined power

“as the potential ability to influence behavior, to change the course of
events, to overcome resistance, and to get people to do things that they
would not otherwise do”.

§ 8.7.6 Sources of power in organizations

 Sources of power in organizations may be divided into two separate
and distinct sources – (i) Inter-personal sources of power and (ii)
Structural sources of power.

i) Interpersonal sources of power: Interpersonal sources of power are

discussed as under:
 Power of people: Power lies with the people. Well organized people
can defend their rights; pursue their goals, when they are united.
 Reward power: Reward power comes with the organizational office.
The higher the rank, the more power one usually have. In
organizations, Managers have the power to pay increase, promotion,
work assignments, rewards and recognitions, etc.
 Coercive power/ power to punish: This power also comes with the
organizational office. The higher the rank, the more power one usually
have. In organizations, managers by virtue of their positions have
coercive power to reprimand, demote, and administer punishment.
 Legitimate power/authority: Legitimate power is that power that
goes with the job. In an organizational setting, a manager’s position
gives him the power over his subordinates in his area of responsibility.
The subordinates are obliged to accept his power as the manager.
Thus. Legitimate power creates an obligation to accept to be
influenced.
 Expert power/ expertise power: The expertise or expert power is
enjoyed by one because of his/her expertise. The expert powers inhere
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in the person. It is an individual’s ability to influence other because of
possession of competencies, talents and specialized knowledge, like
technical, administrative, legal, medical or personnel matters.
 Referent power: Like expert power, referent power, inhere in the
person. Referent power is associated with attractiveness, likability and
lastly charisma of the person. The strength of an individual’s
attractiveness or charisma represents power. In an organizational
setting, managers with referent power enjoy attraction of subordinates
and they want to identify with them. The subordinates grant the person
power as he is charismatic and desirable personal characteristics. To
have the benefit of charisma, generally advertisers take the advantage
of using celebrities like film-stars or sports-figures.

ii) Structural sources of power: The structural sources of power are

discussed below:
 Knowledge as power: Knowledge is awareness of areas of ignorance.
Knowledge is information. Knowledge is potential power and it
becomes power only when it is acted upon. For effective
organizational operations, use information is of utmost importance.
Individuals or groups in an organization possess wide information and
thus have power. Knowledge information sharing has an important
bearing on the quality of decision making and other aspects of
organizational performance.
 Organizational recourses as power: Organizations cannot survive
without adequate availability of all the necessary resources and
material recourses like, money, material, technology, machines,
methods, raw-materials and customers, etc. In an organizational
setting, a manager allocates necessary resources to the production unit
depending on the requirement of that unit. Thus, the manager, as
allocator of recourses, enjoys power over his subordinates. Again, a

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manager who has control over allocation of scarce recourses yields
more power in the organization.
 Decision-making as power: Whatever a manager does, he does
through decision making. Managers have authority to take decision as
it is within their power. As the authority to take decisions acts as a
source of power, similarly, the ability to influence the decisions
makers in the case of taking decisions is also a source of power. When
a person decides to buy a colored television or a laptop, the real power
may lie on those (his friends) who strongly influence that person to
buy particular model of TV or laptop. Here, actual decisions making
power is not with the buyer, but with the influencer.

§ 8.8 Example of Effective Organisational

Leadership in India
Example–I:
Narayana Murthy and Infosis Technologys Ltd.
 Mr. Narayana Murthy was a student of Electric Engineering
Department of the University of Mysore, wherefrom he obtained his
Bachelor’s degree in 1967 and his master’s degree in Technology from
the Indian Institute of Technology (IIT) Kanpur, in 1969.
 He joined Indian Institute of Management (IIM), Ahmedabad, as the
head of the Computer Centre.
 In 1972, Narayana Murthy went to Paris where he was part of the team
that designed a 400- terminal, real-time operating system for handling
air Cargo for Charles De Gaulle airport.
 While in Paris, he also extensively travelled around Europe and he
came with a belief that the only way to pull India out of poverty was to
create more jobs by setting up new organization. After returning from
abroad in 1975, he joined systems Research Institute, Pune,
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Maharashtra and also headed Patna Computer System (P) ltd. Mumbi,
Maharastra.
 Infosys was founded in 1981, by Narayana Murthy, as its chairman
and CEO and other six professional entrepreneurs like Nandan
Nilekani, S. Gopala Krishnan, K. Dinesh, S.B. Shibulal, N.S.Rahgavan
and Ashok Arora. (All the six entrepreneurs left Infosys in (1983).
 Infosys was incorporated in Bangalore, Karnataka, with an equity
capital of Rs. 10,000,00 only. The objective of the company was to
offer information technology consulting and software services.
 Infosys was one of the biggest exporters of software from India
 Narayana Murthy had built ‘Infosys’ which was respected across the
country, with high ethical values and a friendly working environment.
 Infosys, in late 2000, became a total software services company and
had set up a software development centre at Toronto as part its
globalization strategy.
 In 1987, Infosys entered into a joint venture with Kurt Salmon
Associates (KSA), a leading global management consultancy firm.
KSA- Infosys was the first Indo-American joint venture in the U.S.
 Infosys set up its first office in the U.S in 1988-89. When the company
like Reebok of France was looking for a software system to handle its
distribution management, at the most opportune moment, Infosys
bagged the contract and accordingly developed the distribution
management Application package for Rebook’s French operations.
 By mid -1990s, Infosys was competing with other Indian major
software companies like Tata Consultancy Services (TCS) and
‘WIPRO’, as also with overseas companies like Cambridge
Technology Partners and Sapinet, which offered software solutions.
Besides, Infosys also competed with consultancy companies like
Andersan consultancy and Ernest and young.

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 In 1998-99, Narayana Murthy listed the shares of Infosys on Nasd

through American Depository Receipts (ADR) issue worth us $75
million, to position his company as a true global company –global
clients, global operations, global staff and also global image.
 Infosys was the first company to push for off-shore development.
 Narayana believed in commitment to values and ethical conduct of
business. Infosys was the recipient for its good corporate governance
practices.
 In 2001, Infosys was rated India’s most respected company by
Business world.
 Infosys was also ranked second in corporate governance among 495
emerging companies.
 In 2000, Infosys was awarded the “National Award for Excellence in
corporate governance” by the government of India.
 In 2001, Infosys was voted as the Best Managed Company in Asia in
the Information Technology sector, in leading financial magazine
Euromoney’s 5th Annual Survey of Best Managed companies in Asia.
 Infosys was the first Indian company to follow the US Generally
Accepted Accounting Principles (GAAP) disclosure norms.
 Towards people management, Infosys was one of the first companies
to adopt an employee stock options plan (ESOP) and create additional
wealth for its employees. About 80% of the middle and senior level
executives were promoted from within the organization. Most
employees were paid high salaries by industry overage for software
companies. Employees were encouraged to communicate with each
other and also the higher management about interesting ideas and
ways of solving problems through electronic bulletin boards.
 Narayana Murthy’s global strategy was based on three features. These
were (1) Global delivery model. “Producing where it is most cort
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effective to produce, and selling where it is most profitable to sell”. (2)
Moving up the value chain- “getting involved in a software
development project the earliest stage of its life cycle” and (3)
Acording to Murthy-there are four fundamental tenets of any well run
business ‘PSPD’, where P-stands for predictability of revenues S-
stands for sustainability of the predictions, P-stands for profitability of
revenues and D-stands for De-risking model, that is to put limits on its
exposure to such business that could disappear overnight.

Example–II:
Gautam Adani and Adani Group
 Goutam S. Adani was born on June 24, 1962, in Ratanpal in
Ahmedabad. While studying, Adani showed little interest in the family
business of textile trading. But he wanted to start his own business.
He dropped out of his college when he was only 15 and headed to
Mumbai.
He started his career as a diamond sorter at Mahindra Brothers.
It was then that his elder brother Mansukhbhai bought plastic unit in
Ahmedabad. He asked Gautam to come back and manage that unit.
 It was a turning point, Gautam soon saw an opportunity to import
plastic and break the monopoly of the local manufactures.
 In 1988, Gautam launched ‘Adani Exports’ which went public in mid
1990 as ‘Adani Exports Ltd’ by which time it had expanded to coal
and scrap metal business.
 In 2001, Gautam set up Mundra port, the first and the largest sector
private port in the country. The port, under 5000 areas of land and its
surrounding land is home to the largest multi-product special
economic zone in the country. These crown jewels on the Gujrat
Coast-line stand testimony to Adani’s business acumen.
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Today Mundra port handles close to 30 million tones of Cargo,
ranging from automobiles to crude oil.
 After building the port, Adani added backward links to complete the
chain. He laid down a private 100-kilometre-long rail line, as the
nearest line was kilometers away. The proposed size of the special
Economic zone is 32,000 acres.
 In November 2007, Mundra port (MPSEZ) listed on the Bombay
stock. Exchange to become the first company from the SEZ and port
sectors to hit the capital markets.
 The transition of his flagship company, Adani Enterprises, would be
more spectacular. From a trading house with around Rs. 22,000 crore
revenue, it is set to become an infrastructure conglomerate with more
than Rs. 42,000 crore revenue by 2012.
 Adani Enterprises is the largest trading house in India and the larger
private sector player in coal trading with 20 million tones contract in
2008-09.
It is also the largest private company in power trading. He has
carmarked investments of over Rs. 25,000 crores over the next three
years.
 The ambitions translate into high targets. The company is planning to
increase its coal mining scale to 75 million tones by 2012, to become
one of the largest private mining companies in India.
 It is operating green field coal mines in Indonesia, The target for
Mundra port is 50 millions tones. The missing link, shipping, is also
being filled. Two ships have been ordered with tonnage of around
90,000.
 Adani power’s initial plan was to build 500-600 mw capacity. Adani
has a new mission now. His many ultra megawatt power projects will
feed the starving grids of the country. He has a 25 year contract to
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supply power to three states and is planning to generate a capacity of
20,000 mw by 2020.
 Gautam S. Adani established Adani Enterprises ltd. with a seed capital
of about Rs. 5 lakhs in 1988. Today, the group has array of companies
that cater to logisties, power generation, coal, oil and gas exploration,
gas distributions, real estates, ports, SEZs and IT enabled services. The
array of companies are, Mundra port and special Ecoomic zone, Adani
logistics ltd, Adani Wilmar ltd, Adani power ltd. Adani Energy ltd,
Adani Agri Fresh ltd, Real estate, etc.
 Adani values management expertise above all and has built a strong
team of professionals to drive the group’s rapid growth.
 Adani believed that employees are part of the family. Without a
dedicated force of manpower and commitment one can not build an
empire. He always thinks about empowering and motivating his
employees.
 Dhirubhai Ambani and Dr. Vikram Sarabhai are the role models to
Goutam Adani. The Gujrat media call Gautam as the next Dhirubhai
Ambani of Gujrat.
 Gautam Adani is the chairman of the Rs. 27,000 crore Adani group.

Gautam Adani – At a glance

 A college dropout
 Started business at the age of 15
 Set up Mundra port, the first and largest private port, in India.
 Gujrat media call him the second Dhirubhai Anbani
 Owns the country’s leading edible oil brand ‘Fortune’.
 Plans to generate 20,000 mw hour by 2020.

§ 8.9 Caselet on leadership

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 BYZAINTAIN LTD., a software company, operating its business from

Bangalore since 1980s, with an initial manpower of 250. Within 10
years of its glorious existences, its manpower raised to 1300.
 Mr. Francies, the founder and CEO of the company had built that
organization with very strong systems, high ethical values and a
nurturing working environment. Mr. Francies has always believed that
the human recourses are the greatest asset of his company.
 It was the vision of Mr. Francies, the founder to the company to make
it big in the global business arena and also to transform the company
from being just a software developing unit to one providing
consultancy services to other organizations to cater their needs and
meet their strategic goals.
 Mr. Francies believed that if the company had to survive in the
dynamic business environment, it would have to develop leaders of
high quality from within the company, who had a global perspective.
 In 2000, Mr. Francies set up a Leadership Learning Institute (LLI) at
Bangalore to prepare his employees to face the complexities of a
rapidly changing marketplace and to bring about a change in work
culture by instilling leadership qualities and thus to manage the future
growth of his company.
 At the Leadership Learning Institute (LLI), employees from various
operational units of the company spread across the globe were
imparted training in Leadership qualities.
 The employees were divided into sizeable groups of 50, each group
being periodically sent to the Institute for 4 weeks, where Leadership
training was imparted.
 The Leadership workshops initiated at the LLI revolved around the
objective of developing timeless Leadership principles that would help
the company withstand the turbulent environmental changes, the tough
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competition outside and other contingencies. Besides, the employees
were also trained in effective decision making and other related issues.
 On successful completion of the training, the trained employees were
given opportunities to hone their leadership skills in the company and
transfer the knowledge acquired by them during the training session to
other employees of the company.
 Thus, Mr. Francies by creating the Leadership Learning Institute
attempted to develop leadership from within the company, instead of
hiring business leaders from outside, for addressing and redressing
business risks through succession planning, and with a vision to create
world-class leaders who will be at the forefront of the business and
technology in today’s competitive Marketplace.

Questions:
1. Which prompted Mr. Francies to create and develop the Leadership
Learning Institute?
2. Is it was a futile exercise on the part of Mr. Francies to create a
Leadership Learning Institute to develop leaders of high quality from
within the organization or is it an in-born trait in individuals?

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Exercise
1. Define Leadership. [Ans. § 8.1.2]
2. What are the features or characteristics of leadership?
[Ans. § 8.1.4]
3. What qualities are required of a leader? [Ans. § 8.1.5]
4. Define trait theory and point out the traits that are required of a
leader. [Ans. § 8.2.1]
5. Define behavioural theory of leadership. [Ans. § 8.2.2]
6. Define the following studies under behavioural theory of
leadership: [Ans. § 8.2.2.1]
i) Ohio state studies
ii) University of mechigan studies
iii) Blake and Mouton’s managerial grid
iv) Likert’s 4-systems management.
7. Define situational theory of leadership. [Ans. § 8.2.3]
8. Define contingency theory of leadership. [Ans. § 8.2.4]
9. Discuss F. E. Fiedler’s contingency theory of leadership.
[Ans. § 8.2.4.1(1)]
10. Define Autocratic/Authoritarian style of leadership with its
advantages and disadvantages. [Ans. § 8.3.1]
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11. Discuss Democratic/Consultative/participative style of
leadership with its advantages and disadvantages. [Ans. § 8.3.2]
12. Differentiate the features of a leader and a manager.
[Ans. § 8.4]
13. What are the skills required of a leader?
[Ans. § 8.5]
14. “Leadership is a mutual influence process”– Do you agree? Justify
the statement in your favour. [Ans. § 8.6]
15. What is ‘power’? Define the relationship between leadership and
power. [Ans. § 8.7.2 and § 8.7.3]

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