Olivarez College

OLIVAREZ COLLEGE GRADUATE SCHOOL

MASTER IN BUSINESS ADMINISTRATION

Leading Basic Functions of Management Presented by: ARIEL A. CATAPAL MBA, OLIVAREZ COLLEGE 1ST Semester S.Y. 2009 – 2010

Course Title: Professor:

BA 201 MANAGEMENT PRINCIPLES AND DYNAMICS MR. ERNESTO M. APODACA

ACKNOWLEDGEMENT I would like to acknowledge and extend my heartfelt gratitude to the following persons who have made the completion of this Assignment possible: Our Dean of Graduate School, Dr. Eric L. Olivarez, for his vital encouragement and support.Dr. Avelino S. De Chavez, our Assistant to the Dean of Graduate School, for his understanding and assistance. Miss Bernadette Uy, Secretary of Graduate School, for the constant reminders and much needed motivation. Mr. Ernesto M. Apodaca, our Professor in BA 201 Management Principles and Dynamics for the continuing help and support and inspiration he extended. All the Graduate School, faculty members and Staff. Most especially to my family and friends. And to GOD, who made all things possible.

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TABLE OF CONTENTS I.

INTRODUCTION

II.

DEFINITION OF LEADERSHIP

III.

APPROACHES TO LEADERSHIP 1. TRAIT 2. BEHAVIORAL 3. CONTINGENCY

I.

LEADERSHIP AND POWER

II.

LEADERSHIP AND EMPOWERMENT

III.

PRINCIPLES OF LEADERSHIP

IV.

MOTIVATION

V.

THEORIES OF MOTIVATION 1. NEED 2. EQUITY 3. EXPECTANCY 4. REINFORCEMENT 5. GOAL-SETTING

I.

SUMMARY

II.

BIBLIOGRAPHY

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Leading: an Introduction As one of the four basic functions of management, leading can be both extremely important and challenging. Along with planning, organizing and controlling, all managers will execute these four functions of management. From managing a local store to managing a large corporation, every manager will perform each of the functions at some point in their jobs. Leading Means Inspiring A manager should strive to become an inspiration to the rest of the employees. Employees will follow a manager because the manager is the boss. However, a manager that is an inspiration means that employees follow that person because they believe in what the manager is doing and they are trying to help the company achieve its goals. Finding ways to inspire employees means coaching them and motivating them to succeed as integral parts of the company. Leading Affects Morale The way a manager leads greatly affects employee morale within the department and company as a whole. Managers should create a climate that encourages new ideas and employee input. The more the employees feel that they have a say in the company, the more they will be wiling to share ideas and attempt to find better ways to improve processes. For example, a good manager may reward employees with monetary or benefit incentives if they can increase output of a product. Another idea is a treasure

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box of goodies. Managers can set a goal early in the week and employees who meet the goal by the end of the week are allowed to take a prize from the treasure box. Leading is Key to Effective Communication For a manager to be an effective leader, he or she must also be an effective communicator. A manager that shares information and lets employees know the latest news in the company is someone that is deemed trustworthy by his or her employees. Employees feel little loyalty or trust towards a manager who does not readily give out information. Leading Effectively Contributes More to the Bottom Line An effective leader inspires employees, which allows those employees to feel like they are making a meaningful contribution to the company. Satisfied employees generally work harder and take more ownership in their job positions. This can mean happy customers and a higher level of customer service.

Definition of Leadership LEADING The third function of management is leading. It is possible said that this function having the unique characteristic comparing to other functions. The leading function employ the humanistic perspective and require less systematic process for analytical as other functions. The leading function recently can be called: Leading – to Inspire Effort. First of all, we must understand the keyword of the function. “Leadership” 5

Today…Leadership The face of leadership is changing, because the business’s environment. Today, managers must make quicker, more accurate decisions in a consensus building and teamwork environment. Definitions 1. Leadership is a complex process by which a person influences others to accomplish a mission, task, and objective and directs the organization in a way that makes it more cohesive and coherent. 2. Leadership is the ability to influence a group towards the achievement of goals. 3. Leader creates the memory & shadows of leadership create a certain

atmosphere or climate. Leaders not only face to face impact on people.

As the study about leadership is being more emphasize during 50 years and the way leader performs their work was directly affect by the environmental setting as follows:

Definition of leadership during 50 years 1. Leadership is “ the behavior of an individual… directing the activities of a group toward a shared goal” (Hemphill & Coons, 1957) Explanation: During the 1950s review leadership as the behavior for directing activity in organization. Then the next 20 year, the leaders still be someone who carry on the routine directive in organization. 2. Leadership is the influential increment over and above mechanical compliance with the routine directives or organization (Katz & Kahn, 1978) 6

Explanation: However, in 1980s review leadership as the process, which mean the Leadership study is being more systematic. 3. Leadership is the process of influencing the activities of an organized group

toward goal achievement (Rauch & Behling, 1984) Explanation: In 1990, Leadership was reviewed as the process that not only managers have to direct, but also, he shares idea and commitment from staff in organization. Leader is the change agent in organization. 4. Leadership is a process of giving purpose (Meaningful direction) to collective effort, and sourcing willing effort to be expanded to achieve purpose (Jacob & Jaques, 1990) 5. Leadership…Is the ability to step outside the culture…? To start evolutionary change process that are more adaptive(Schein, 1992) 6. Leadership is the process of making sense of what people are doing together so that people will understand and be committed (Drath & Palus, 1994) What is Leadership? •

Leadership and Vision ○ Leadership  process of inspiring others to work hard to accomplish important tasks ○ Vision  someone who has clear sense of future

Approaches to Leadership Leadership Theories 7

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The leadership literatures are voluminous, and much of is confusing and contradictory. We can separate it into 3 leading theories to explain how people become leaders.

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The first one explains the leadership development for a small number of people which is the Trait Theory (Some personality traits may lead people naturally into leadership roles.)

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Search for Leadership Traits.

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For person that inherits the ability for being a leader might have the following traits. ○ drive ○ desire to lead ○ motivation ○ honesty and integrity ○ self-confidence ○ intelligence and knowledge ○ flexibility

Trait theories •

For the trait theory, Myers-Briggs: Type Indicator (MBTI) have identify there are 16 personality types of people whose have different styles and level for being leader. The Myers-Briggs theory is compound of. ○ Extraverts VS Introverts ○ Sensers VS iNtuitives ○ Thinkers VS Feelers 8

○ Judgers VS Perceivers •

For example the ENFJ is an outstanding leader of groups, both task groups and growth groups. ..Found in only about 5% of population the most rarely to find in the personality trait. However there are some awareness as followed,

Awareness  Trait alone are not sufficient for explain leader. It’s depend upon action that it’s right or not.  Western scholars developed many Leadership theories. So it’s might hardly to explain leader in Asian countries.  Leader is related to power, leaders without power are really not leaders because they have no chance to influence anyone to do anything. Leaders in organization normally derive much of their power from their formal opposition and the ability to allocate reward. In some cases, leaders may have expert are referent power depend upon their individual charismatic. Behavioral Theories To find out what's manager do or exhibit on the job and compare action of manager. The behavioral theory differs to trait theory in terms of the application terms. For trait theory: the leader is naturally born but behavioral theory is something that we can train. Many schools study about behavioral theory as follows. •

Ohio State Studies

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The most comprehensive and replicated of the behavioral theory result form research that began at Ohio State University in the late 1940’s. The study sought to identify independent dimensions of leader behavior. And 9

formed the 2 categories that substantial accounted for most of the leadership behavior describe by subordinate which called Initiating structure and Consideration •

Initiating structure •

Is leading behavior whereby the person organizes work done.

•

Consideration  Leader behavior indicative or mutual trust friendship support respect and warmth.

Behavioral Theories University of Michigan Studies The Michigan group also come up with two dimensions of leadership behavior which are Employee -oriented, which associated with higher, group productivity and higher job satisfaction. Production- oriented which tend to be associated with low group productivity and low worker satisfaction •

Participative and Autocratic styles (Kurt Lewin) Leadership style is the manner and approach of providing direction, implementing plans and motivating people., There are three different styles of leadership

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Participative- share problem with sub as a group

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Autocratic- solve problem and make decision by themselves based upon information available.

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Delegative (Free reign, Laisez Faire) leader allows the employees to make the decision However the leader is still responsible for the decisions that are made use when employee can analyze the situation.

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Although most leaders use all three styles, one of them becomes the dominate one for each person.

Behavioral Theories •

The managerial grid

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Robert Blake and Jane Mouton. They proposed a managerial grid based on the styles of concern for people and concern for production, which represent the Ohio State and Michigan dimension.

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the grid is one of the leadership model

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The leadership model help us to understand what makes leaders act the way they do in certain situations, the deal is not lock yourself in a type of behavior discussion

Leadership Models and Theories •

Focus on Leadership Behaviors ○ Task and People Concerns  task concern •

plans and defines work to be done

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assigns task responsibilities

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sets clear work standards

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urges task completion

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monitors results 11

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Focus on Leadership Behaviors ○ Task and People Concerns  people concern •

acts warm and supportive

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develops social rapport with them

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respects their feelings

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sensitive to their needs

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shows trust in them

Contingency Theories Regarding to the awareness of behavioral theory. Thus, the theorists have to consider the situations that reflex the leading style. That entitled "Contingency Theories". Contingency Theories sometime we call it. (Situational Theories of Leadership) There are sub-theories as followed. 1.Fiedler’s Contingency Theory of Leadership - Position power, task structure, and leader-member relations. 2.Path-Goal Leadership Theory •

Expectancy theory of motivation.

3.Leader-Member Exchange Theory •

Using different styles of leadership with different members of the same workgroup.

4.The situational Leadership Model The Vroom Jago Yetton Model The Four Framework Approach 12

Leadership Models and Theories •

Fiedler’s Contingency Model ○ good leadership depends on a match between leadership and situational demands  least-preferred coworker scale (LPC) ○ Fiedler’s Contingency Model  Diagnosing situational control

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leader-member relations (good or poor)

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degree of task structure (high or low)

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amount of position (strong or weak)

Fiedler’s Contingency Model ○ Matching leadership style and situation  task oriented leader is most successful •

very favorable (high control)

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very unfavorable (low control)

 relationship oriented leader is most successful • •

moderate control situation

Hersey-Blanchard Situational Model ○ Leaders adjust their styles depending on the readiness of their followers  readiness

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how able, willing and confident followers are to perform tasks

Contingency Theories (Situational Theories of Leadership) •

There are 2 models of situational leadership.

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1.The situational Leadership Model The situational leadership model of leadership suggest that leadership should adapt his her leadership style:Delegation, Participation, Selling and Telling to the task.

Leadership Models and Theories •

Hersey-Blanchard Leadership Styles ○ Delegating ○ Participating ○ Selling ○ Telling

Leadership Models and Theories •

Matching Hersey-Blanchard Leadership Styles to Follower Readiness ○ Delegating = high readiness ○ Participating = moderate to high readiness ○ Selling = low to moderate readiness ○ Telling = low readiness

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The Vroom Jago Yetton Model

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(Leader-participation model)

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they developed a leadership model that enables a leader to analyze a situation and decide whether it is right for participation. The technique includes a set of management decision styles, a set of diagnostic question and a decision tree for identifying how much participation is called for a situation.

Contingency Theories (Situational Theories of Leadership) •

Path-Goal Leadership Theory :

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Path Goal theory of leadership developed by House, is based upon expectancy theory, which states whether a person will be motivated depends on whether the person believes he/she has the ability to accomplish a task and his her desire to do.The theory conclude that leaders should increase the personal rewards subordinate receive for attaining goals and make path of those goals easier to follow.The leadership style depend upon the situation leader must flexible and adopt the style that require.

Leadership Models and Theories •

House’s Path-Goal Leadership Theory ○ directive ○ supportive ○ achievement-oriented ○ participative 15

Directions in Leadership Development From the 3 theories, can form the Directions in Leadership Development as follow •

What is Transformational Leadership? ○ Use of charisma and related qualities to raise aspirations and shift people and organizational systems into new high-performance patterns

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Transactional Leadership ○ Use of tasks, rewards and structures to help followers meet their needs while working to accomplish organizational objectives

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Qualities of Transformational Leaders ○ vision ○ charisma ○ symbolism ○ empowerment ○ intellectual stimulation ○ integrity

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Emotional Intelligence (EI) ○ ability to understand and deal well with emotions at work ○ threshold capabilities are technical or knowledge-based skills ○ excellence in leadership depends on EI ○ can be learned

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Trends in Leadership Development •

Gender and Leadership (Dessler,G,Schermerhorn) ○ Women may be more prone to democratic and participative behaviors ○ Men may be more transactional

Gender Differences •

Inaccurate stereotypes - Women generally seen as less capable leaders.

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Leader behaviors - Few measurable differences in behavior between men and women managers.

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Performance - Women perform similarly to men.

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Gender advantage - Women often score higher on patience, relationship development, and communication, all necessary leadership skills.

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Forces

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A good leader uses all three styles, depending on what forces are involved between the followers, the leader and the situation. Some examples include:

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new employee

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team worker show know their job

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Employee who know more about the job

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Using all three: Telling your employees that a procedure is not working correctly and a new one must be establish (Authoritarian) Asking for their 17

ideas and input on creating a new procedure (Participative). Delegating tasks in order to implement the new procedure (Delegative)

Leadership and Power Leadership and Power •

Power

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ability to get someone else to do what you want them to

Position Power •

Reward ○ influence through rewards

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Coercive ○ influence through punishment

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Legitimate ○ influence through authority

Personal Power •

Expert ○ influence through special expertise

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Referent ○ influence through identification

Leadership and Empowerment 18

Leadership and Empowerment •

Empowerment ○ Process through which mangers enable and help others to gain power and achieve influence with in the organization. ○ when employees feel powerful they are more willing to make decisions and take action

Building Trust: The Essence of Leadership •

Deterrence based trust ○ Trust based of fear ○ Knowledge base trust ○ Identification based trust. ○ Trust based on an emotional connection ○ Forces that influence that style to be used included a number of things as ○ How much time is available ○ Are relations based on respect and trust or the disrespect ○ Who has the information ○ How well your employees are trained and how well you know the task ○ Internal Conflicts ○ Stress levels ○ Type of task. Structure, unstructured, complicate or simple ○ Laws or established procedure. 19

Becoming a Leader •

Start to think like a leader.

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Develop your judgment.

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Develop your other leadership traits.

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Start to build your power base.

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Help others share your vision.

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Adapt your style and actions to the situation.

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Use your other management skills to help you lead.

Two Most Important Keys of Leadership ➢ Hay's study examined over 75 key components of employee satisfaction. They found that: ➢ Trust and confidence in top leadership was the single most reliable predictor of employee satisfaction in an organization. ➢ Effective communication by leadership in three critical areas (to understand organization, how to contribute to achieve key business objective, sharing information with employee) was the key to winning organization trust and confidence

Principle of Leadership Principles of Leadership ➢ Know yourself and seek self-improvement 20

➢ Be technically proficient ➢ Seek responsibility and take responsibility for your actions ➢ Make sound and timely decisions ➢ Set the example ➢ Know your people and look out for their well-being ➢ Keep your people informed ➢ Develop a sense of responsibility in your people ➢ Ensure that tasks are understood, supervised and accomplished ➢ rain your people as a team ➢ See the full capabilities of your organization.

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This individual perception of the feel of the organization comes from what the people believe about the activities that occur in the organization. These activities influence both individual and team motivation and satisfaction. Such activities include:

Motivation Motivation Boons and Kurtz, 1992 categorize Motivation theory into 2 approaches. 21

1. Focus on the factors within the person that energize direct sustain and stop

behavior •

Maslow’s need hierarchy.(Five-level need hierarchy)

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Alderfer’s ERG theory. (three-level hierarchy)

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Herzberg’s two factor theory. (Called hygiene-motivators)

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McClelland’s 3 learned needs theory. (Acquired from culture:achievement, affiliation & power)

2. Focus on Motivation Process To describes, explains and analyze how behavior is energized direct sustained and stopped. •

Vroom’s VIE Expectancy. (an expectance theory of choice)

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Porter-Lawler’s Expectancy Theory of Motivation.

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Adam’s Equity Theory of work Motivation. (based on comparisons that individual make)

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Lock’ Goal Setting Theory

(Goal-setting theory that conscious goals and intentions are the detriments of behavior.

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Skinner’s Bahavioristic Theory

Theories of Motivation Factor within Person Maslow’s need hierarchy •

Physiological. The need for food, drink, shelter and relief from pain 22

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Safety and Security. The need for freedom from threat, that is, the security from threatening events or surroundings.

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Belongingness, Social and love. The need for friendship affiliation interaction and love

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Esteem. The need for self-esteem and for esteem from others

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Self- Actualization. The need for fulfill oneself by making maximum use of abilities skills and potential.

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Alderfer’s ERG theory. (three-level hierarchy) 3 set of needs 1. Existence 2. Relatedness 3. Growth Herberg’sTwo-Factor Theory The two factors are called the dissatisfiers-satisfiers or the hygiene motivators or the extrinsic-intrinsic factors. Extrinsic

-Salary,

Job

Security,

Working

conditions,

Status,

Company

procedures,Quality of technical supervision, Quality of interpersonal relation. Intrinsic -Achievement, Recognition, Responsibility , Advancement, The work itself, the possibility of growth. Motivation and Human Needs •

Two-Factor Theory ➢ Herzberg ○ satisfier factors (job content)  things related to the nature of the job itself  source of job satisfaction and motivation ○ hygiene factors (job context)  things related more to the work setting  source of job dissatisfaction

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McClelland’s Learned Needs Theory McClelland has proposed a theory of motivation that is closely associated with learning concepts. Many needs are acquire from the culture : Achievement, Affiliation , Power.

A graphic Comparison of Four Content Approaches to Motivation

Conclusion of Need-Based Approaches •

Herzberg’s Two-Factor Approach - “Hygienes” satisfy lower-level needs and “motivators” satisfy higher-level needs.

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Needs for Achievement, Power and Affiliation

Process Approaches 1. Adam’s Equity Theory - Assumes that people have a need for, and therefore

value and seek, fairness at work.

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Adam’s Equity Theory of work Motivation. (based on comparisons that individual make between input and output) Op=Oc Ip Ic 2. Locke’s Goal Theory of Motivation - Once someone decides to pursue a goal, the person regulates his/her behavior to reach the goal. •

Vroom’s Expectancy Theory

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Expectancy

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Instrumentality

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Valence

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Vroom’s VIE Expectancy.(an expectance theory of choice) M =V x I x E V= Valence 26

I = Instrumentality E = Expectancy •

Porter-Lawler’s Expectancy Theory of Motivation. M =E x I x V

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Learning Reinforcement Approaches ➢ Learning - Relatively permanent change as a result of experience. ➢ Operant behavior ➢ Contingent reward ➢ Behavior modification ➢ Positive reinforcement ➢ Extinction ➢ Negative reinforcement ➢ Punishment

Behavior Modification Changing or modifying behavior through the use of contingent rewards or punishment. Based on 2 principles 1. Behavior that appears to lead to a positive consequence tends to be repeated 2. Behavior that appears to lead to a negative consequence tends not to be repeated. Methods for influencing behavior & motivating employee There are 3 important methods 1. Motivation inaction 2. Job Design 27

3. Alternative Work Arrangements

Motivation in Action 1. MBO 2. Pay for performance 3. Merit raises 4. Sport rewards 5. Skill-based pay 6. Recognition awards 7. Empower employees 8. Goal setting (MBO) 9. Positive reinforcement 10. Lifelong learning Pay for Performance This is a one system of remuneration program which popular at this moment, it’s depend upon the evaluation if the result is good you will receive more salary increase. Using Merit Pay A merit raise is a salary increase, usually permanent, that is based on the employee’s individual performance. It is a continuing increment rather than a single payment like bonus.Relying heavily on merit rewards can be a problem because the reinforcement benefits of merit pay are usually only determined once per year.

Using Spot Awards A spot award is one given to an employee as soon as the laudable performances 28

observed.These rewards are consistent with principles of motivation because they are contingent on good performance and are awarded immediately. Using Skill-Based Pay With Skill-based pay, employees are paid for the range, depth and types of skills and knowledge they are capable of using there than for the job they currently hold. Skillbased pay is consistent with motivation theory because people have self-concept in which they seek to fulfill their potential. The system also appeals to the employee’s sense-efficiency because the reward is a formal and concrete recognition that the person can do the more challenging job well. Using Recognition Some employees highly value day-to- day recognition from their supervisors, peers and team members because it is important for their work to be appreciated by others, Recognition helps satisfy the need people have to achieve and be recognized for their achievement. Using Empowerment Empowerment means giving employees the authority, tools and information they need to do their jobs with greater autonomy

Using Goal-Setting Methods People are strongly motivated to achieve goals they consciously set.

Using Positive Reinforcement Rely on Operant conditioning principles to study positive reinforcement and change behavior. They are variety of consequences including 29

Social consequences (peer approval or praise from the boss) Intrinsic consequences (The enjoyment the person gets from accomplishing tasks) Tangible consequences (bonuses, merit raises.)

Summary Managing and leading are not the same activity. A manager manages employees; this person makes sure that tasks are completed on time and policies are followed. Employees typically follow managers because he or she is the supervisor and in-charge of employees. Employees see a leader as someone that motivates them and guides them to help meet the firm’s goals. In an ideal situation, the manager also serves as the leader. Managers who want to lead effectively need to discover what motivates their employees and inspire them to reach the company objectives.

Bibliography 30

John Schermerhorn. (2008) Management 9th edition. John Wiley and Sons Heins Weihrich and Harold Kontz (2005) Management 11th edition, McGraw Hill www.businessmanagement.suite101.com www.pdfcoke.org

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