2.3 management and leadership

leadership vs management

leadership	management
create vision, set direction; develop culture of change	execute plans; conform to org’s norms
influencing and inspiring employees to achieve a goal → through motivating them	directing and monitoring employees
focuses on people, their needs and motivation	focuses on efficiency of processes
long-term strategy and vision	short-term targets and objectives
innovators	problem solvers

leadership styles

• autocratic

• paternalistic

• democratic

• laissez-faire

• situational

autocratic leadership

• authoritative leader, centralised decision-making, formal chains of command. leader does not consult people, follows own ideas, instincts and experiences to make decisions.

• Suitable when employees are unskilled, inexperienced, lack initiative / for critical and urgent decision-making

• Advantages

  • leader has complete control

  • faster decision-making → appropriate when critical and urgent decisions need to be made.

  • gives workers with a clear sense of direction and clarity over their roles, as they understand exactly what is expected.

• Disadvantages

  • discourages creativity

  • top-down communication, no feedback

  • demotivates employees as their opinions are not considered

  • does not build an intrapreneurial culture

    • entrepreneur → take risks, start org

    • intrapreneur → training future leaders of org

  • higher labour turnover rate

paternalistic leadership

• Might take input but final decision is made by leader, based on the team’s best interests (closer to autocratic since there is a central figure)

• The subordinates have higher loyalty, will trust the leader and follow their decision (subordinates do not feel suppressed, unlike autocratic)

• suitable for subordinates who are less experienced

• Advantages

  • motivate staff as they feel guided and that their interests are protected

  • higher loyalty

  • valued/empowered → meets social and esteem needs

• disadvantages

  • decision-making is still centralised, so workers can dissatisfied if their views are ignored

  • leaders may not always make the best decisions, which can lead to conflict

democratic leadership

• leader consults subordinates, encourages participation in decision-making

• Ultimately, decision is made by leader. Communication is needed to explain the decision.

• employees are skilled and experienced → can delegate and trust

• Advantages

  • feel valued and empowered

  • Collaboration leads to higher morale and productivity.

  • encourages creativity

  • better understand employees concerns

  • Increases motivation and loyalty → lower labour turnover

• Disadvantages

  • disagreement; unable to please everyone.

  • ineffective when critical decisions need to be made quickly

  • managers need time to consult everyone, so decision-making is slower → time-consuming and opportunity cost

laissez-faire leadership

• Especially for creative industries

• delegate of significant amount of authority to subordinates, provide them with freedom to carry out tasks in their own way, with minimal direction or supervision

• success depends on employees

• Advantages

  • encourages creativity

  • develop intrapreneurial culture

  • employees empowered/motivated because trusted

• Disadvantages

  • Monitoring and coordination of business operations are more difficult and time consuming

  • lack of supervision → slacking/complacency

  • lack of clear guidance and direction

situational leadership

• adjust leadership style to adapt to changing needs/circumstances

• eg in crisis, urgent decision-making needed so switch to autocratic

• advantages

  • recognises that effective leaders need to adapt, not rigid

  • the most practical since applies to all organisations

  • can adapt to the dynamic external business environment

• disadvantages

  • leaders have preferred leadership style, difficult for them to change

  • if subordinates are used to particular style, will be disheartened/unsettled if leader changes

factors affecting choice of leadership style

• task: routine activity → democratic or laissez-faire / high-risk → autocratic

• workers: skills, experience, confidence

• individual: personality of leader → preferred leadership style

• culture: self-driven workers? eg japanese workoholic, respect vs american work-life balance, address bosses on first-name basis

• experiences: leaders have experience in different circumstances, impacts how they lead in different situations

management

• categories

  • Senior management: set and oversee the long-term plans and strategies of the organization. held responsible for the results of the business.

  • Middle management: establish departmental goals and strategies, are responsible for their staff

  • Supervisory/junior management: lmonitor the regular day-to-day tasks

• Roles and functions

  • Planning: SMART objectives. Middle management sets short term plans (tactics), senior management sets long term plans (strategies)

  • devise plan of action to meet goals (short/long term) using factors of production

  • have authority to make decisions and delegate but are held responsible for the outcome

  • coordinating different business functions to achieve org goals

  • ensuring that the performance of employees meets standards

scientific management

• give clear tasks → match workers to task → insist on a way to complete task → measure performance → differentiated piece rate system as motivator

• advantages

  • clear direction

  • logical decision-making

  • decisions and outcomes are monitored

• used when

  • significant, long-term consequences of decision

  • org has resources to measure and monitor performance data

  • org is controlled by professional managers (not owners)

intuitive management

• gut feeling

• advantages

  • faster

  • based on personal experience, more effective

• used when

  • owner controls major decisions

  • qualitative factors like employee welfare and customer relations are important (eg family businesses)

  • data is outdated, unavailable, unreliable

  • changing business environment