2.3 Leadership & management

Leadership

Includes the functions of ruling, guiding and inspiring other people within an organization in pursuit of agreed objectives.

The functions of leadership

• Creating a vision for the organization

• Deciding objectives for the organization

• Providing expertise and setting standards for the organization

• Planning every role in determining the structure for the organization

• Becoming a role model for individuals within the organization

Management

Refers to planning, organizing, directing and controlling all or part of a business.

The functions of management

• Planning

• Organizing

• Directing

• Controlling

• Coordinating

Autocratic leadership

Refers to when managers keep control of information and take major decisions on their own without consulting subordinates, then announce the decision to them.

Autocratic leadership communication style

One-way communication downwards from manager to subordinate.

Autocratic leadership decision making style

Objectives are set and tasks allocated. The leader retains control throughout.

Advantages of Autocratic leadership

• Quick decision making

  • Higher productivity

  • Link: Emergency

• Suitable when employees are unskilled

  • more experienced leaders’ directions will lead to higher productivity

• The business’s image can be seen as confident and well-led

  • As the business’s decisions are consistent as they are controlled by the leadership without room for discussion

• Higher quality output

  • Control and close oversight within the organization

• Clear hierarchy

  • Employees do not question decisions made and execute

    • effect: Could potentially increase productivity and thus output and revenue

• Employees have a clear sense of goals and direction

  • Less confusion, effect: more productivity, more output

Disadvantages of Autocratic leadership

• Does not nurture leadership among employees, damaging future competitiveness of the company

• Demotivates workers as their ideas are not valued

  • Relevant especially if employees are highly skilled, talented, motivated and creative

• Could cause poor or uninnovative decision making

  • If taking complex decisions requiring diverse knowledge & skills of the employees

  • Stifles initiative and creativity as employees are not involved in decision making

    • Effect: A poor decision is made as a result; employees may be unhappy

• Employees may become dependent on leaders and not make decisions, making them ineffective when the leader is absent

  • Effect: leadership may also feel overworked and can lead to diseconomies of scale due to resulting inefficiency

Paternalistic leadership

Refers to a style in which managers take decisions they believe are in the best interests of their subordinates.

Paternalistic leadership communication style

Mainly downwards towards subordinates, though feedback will take place.

Paternalistic leadership decision-making style

Leader explains decisions and ensures social and leisure needs are met

Advantages of Paternalistic leadership

• Builds loyalty, morale, and motivation

  • Because employees feel heard and accounted for

    • Lower staff turnover

• Economies of scale

  • Due to better relationships at work as there is feedback involved leading to less conflict or resentment

• The business’s image can be seen as confident and well-led

  • As the business’s decisions are consistent as they are still controlled by the leadership

• Clear hierarchy employees know who is in charge, tasks are done without confusion as a result

  • effect: Could potentially increae productivity and thus output and revenue

• Consistent goals and direction

  • Less confusion, effect: more productivity, more output

• Suitable when employees are unskilled

  • more experienced leaders’ directions will lead to higher productivity

Disadvantages of Paternalistic leadership

• Poor decision making

  • due to lack of participation of employees in decision-making

• Employees may become dependent on leaders and not make decisions

  • Effect: leadership may also feel overworked and can lead to diseconomies of scale due to resulting inefficiency

• Still downward communication which could lead to dissatisfaction

Democratic Leadership

Occurs when a manager or leader shares information with subordinates, is able to delegate authority as well as consult subordinates in the decision-making process.

Democratic leadership communication style

• Extensive

• Two-way communication

• Contributions from subordinates are encouraged

Democratic leadership decision making style

Participation of subordinates is encouraged and delegation of authority is used.

Advantages of Democratic Leadership

• Employees have higher morale,

  • Workers feel their opinions and input are valued

    • Lower potential staff turnover

• Can lead to better decision making for the business

  • Due to collaborative environment

  • (link) Suitable when employees are fairly skilled

• Can lead to innovation

  • As ideas are shared in the workplace

    • Can allow for better competitiveness in the long-term

Disadvantages of Democratic Leadership

• Slow decision-making as more members are involved

  • Slower revenue generation

• Less consistent brand image

  • decisions may change depending on opinions of the majority

• Since delegation is given to subordinates, frequent disagreements may occur

  • Diseconomies of scale

Laissez - faire

Takes place when a manager or leader trusts and allows employees the freedom to make their own decisions and delegates authority to them.

Laissez-faire communication style

There is little communication between leadership and subordinates, and all that does occur is between members at the same level in the organization

Laissez-faire decision making style.

Leader evades duties and decisions and delegation of tasks is uncoordinated

Advantages of Laissez-faire

• Nurtures innovation

  • Since employees are trusted to come up with ideas and make decisions

    • Suitable when a team is highly driven, talented and creative

    • Could improve competitiveness of the company in the future

• Higher motivation for staff

  • Increase staff retention

Disadvantages of Laissez-faire

• Lack of focus and direction

  • Goals are set by subordinates and not by management

• Management is not aware of what the employees are doing

  • Lead to more mistrust

• There is no standardized output

  • Could impact the company’s image projected to consumers, possibly leading to lower brand awareness and brand loyalty

Situational leadership

Refers to when a leader adjusts their leadership style to best suit a particular situation or task.

Advantages of Situational leadership

• Suitable to each employee and task

  • Can ideally maximize the success of each project

• Workers may benefit from different leadership styles as they can change their mindset based on more directive activities vs. support from leaders.

Disadvantages of Situational leadership

• Can be confusing for employees, in terms of when they can take part in decision-making and when not.

  • Internal diseconomies of scale due to disagreements and unsatisfactory output

• Leaders have a natural style, so changing style according to different situations may be difficult

  • less effective leadership overall

• Leader may lose credibility with employees

  • Due to inconsistency

  • Leading to lower productivity as there is less sense of authority