Chapter 10: Management and Leadership (AS LEVEL BUSINESS STUDIES)

Definitions to Remember:

• Manager: responsible for setting objectives, organising resources and motivating staff so tat the organisation's aims are met
• Leadership: the art of motivating a group of people towards achieving a common objective
• Autocratic Leadership: a style of leadership that keeps all decision-making at the centre of the organisation
• Democratic Leadership: a leadership style that promotes the active participation of workers in taking decisions
• Paternalistic Leadership: a leadership style based on the approach that the manager is in a better position than the workers to know what is best for an organisation
• Laissez-faire Leadership: a leadership style that leaves much of the business decision-making to the workforce - a 'hands-off' approach and the reverse of the autocratic style
• Informal Leader: a person who has no formal authority but has the respect of colleagues and some power over them
• Emotional Intelligence: the ability of managers to understand their own emotions, and those of the people they work with, to achieve better business performance

Notes:

Responsibilities of Managers

1. Setting Objectives and Planning

Senior managers will establish overall strategic objectives and these will be translated into tactical objectives for the less-senior managerial staff. 

2. Organising Resources to Meet the Objectives

People throughout the business need to be recruited carefully and encouraged to take some authority and to accept some accountability via delegation.

3. Directing and Motivating Staff

This means guiding, leading and overseeing of employees to ensure that organisational goals are being met.

4. Coordinating Activities

The goals of each branch, division, region and even all staff must be welded together to achieve a common sense of purpose.

5. Controlling and Measuring Performance Against Targets

It is the management's responsibility to appraise performance against targets and to take action if underperformance occurs

Managerial Roles According to Henry Mintzberg

1. Interpersonal Roles: dealing with and motivating staff at all levels of the organisation
• Figurehead: symbolic leader of the organisation undertaking duties of a social or legal nature
• Leader: motivating subordinates; selecting and training other managers/staff
• Liaison: linking with managers and leaders of other divisions of the business and other organisations
2. Informational Roles: acting as a source, receiver and transmitter of information
• Monitor (Receiver): collecting data relevant to the business's operations
• Disseminator: sending information collected from external and internal sources to the relevant people within the organisation
• Spokesperson: communicating information about the organisation to external groups and people
3. Decisional Roles: taking decisions and allocating resources to meet the organisation's objectives
• Entrepreneur: looking for new opportunities to develop the business
• Disturbance handler: responding to changing situations that may put the business at risk; assuming responsibility when threatening factors develop
• Resource Allocator: deciding on the spending of the organisation's financial resources and the allocation of its physical and human resources
• Negotiator: representing the organisation in all important negotiations

Autocratic Style of Leadership

Main Features

• Leader takes all decisions
• Gives little information to staff
• Supervises workers closely
• Only one-way communication
• Workers only given limited information about the business

Drawbacks

• Demotivates staff who want to contribute and accept responsibility
• Decisions do not benefit from staff input

Possible Applications

• Defence forces and police where quick decisions are needed and the scope for discussion must be limited
• Times of crisis when decisive action might be needed to limit damage to the business or danger to others

Democratic Style of Leadership

Main Features

• Participation encouraged
• Two-way communication used, which allows feedback from staff
• Workers give information about the business to allow full staff involvement

Drawbacks

• Consultation with staff can be time-consuming
• On occasions, quick decision-making will be required
• Level of involvement - some issues might be too sensitive (e.g. job losses) or too secret (e.g. development of new products)

Possible Applications

• Most likely to be useful in businesses that expect workers to contribute fully to the production and decision making processes, thereby satisfying heir higher-order needs
• An experienced and flexible workforce will be likely to benefit most from this style
• Situations that demand a new way of thinking or a new solution, then staff input can be very valuable

Paternalistic Style of Leadership

Main Features

• Managers do what they think is best for the workers
• Some consultation might take place, but the final decisions are taken by the managers - there is no true participation in decision-making
• Managers want workers to be happy in their jobs

Drawbacks

• Some workers will be dissatisfied with the apparent attempts to consult, while not having any real power or influence

Possible Applications

• Used by managers who have a genuine concern for workers' interests, but feel that 'managers know best' in the end - when workers are young or inexperienced this might be an appropriate style to employ

Laissez-Faire Style of Leadership

Main Features

• Managers delegate virtually all authority and decision-making powers
• Very broad criteria or limits might be established for the staff to work within

Drawbacks

• Workers may not appreciate the lack of structure and direction in their work - this could lead to a loss of security
• The lack of feedback - as managers will not be closely monitoring progress - may be demotivating

Possible Applications

• When managers are too busy to intervene
• May be appropriate in research institutions where experts are more likely to arrive at solutions when not constrained by narrow rules or management control

McGregor's Theory X and Theory Y

• Theory X managers view their workers as lazy, disliking work and unprepared to accept responsibility, needing to be controlled and made to work. Clearly, managers with this view will be likely to adopt an autocratic style of leadership
• Managers who held Theory Y views believed that workers did enjoy work and that they would be prepared to accept responsibility, were creative and they would take an active part in contributing ideas and solutions to work-related problems

The general view is that workers will behave in a particular way as a result of the attitude that management have towards them. 

The style of leadership used will depend on some factors:

• The training and experience of the workforce and the degree of responsibility that they are prepared to take on
• The amount of time available for consultation and participation
• The attitude of managers, or management culture; influenced by the personality and business background of the managers
• The importance of the issues under consideration - different styles may be used in the same business in different situations

Informal Leadership

• Have the ability to lead without formal power, because of their experiences, personality or special knowledge
• May have more influence over workers than formal leaders, especially if the latter are just seen as supervisors of work rather than true leaders and motivators
• Appointing informal leaders to formal leaders, the person concerned could quickly lose support if they were seen to be joining the 'other side'
• An ideal business situation involves ensuring the aims of the informal leaders are common with the aims of the business

Emotional Intelligence involves:

• Understanding yourself, your goals, your behaviour and your responses to people
• Understanding others and their feelings

Daniel Goleman has suggested that there are four main EI competencies that managers should try to develop and improve on:

1. Self Awareness: Having a realistic view of our own abilities and having self-confidence in our abilities
2. Self Management: being able to recover quickly from stress, being trustworthy and conscientious, showing initiative and self control
3. Social Awareness: sensing what others are feeling, being able to take their views into account and being able to get on with a wide range of people
4. Social Skills: handling emotions in relationships well and accurately understanding different social situations; using social skills to persuade, negotiate and lead