1. this approach we will go through the transformational

1. Introduction:

Leadership is one of the subjects that
attracted the researchers in the social sciences generally and in the field of
organizational behavior specifically. In the recent competitive business
environment with continuous and rapid changes, leadership theories and styles
have been developed as a response to the organization needs.

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For this assignment we will go through
two approaches, the first is the classical approach where the leader considered
the center of power and we will be reviewing the authoritarian leadership. The
second is contemporary approach where the leader represents a set of ethical
and moral values and leads by passion for his vision. From this approach we
will go through the transformational and the authentic leadership and we will
include the transactional leadership as it considered a counterpart of the
contemporary approach. For the practical part of the assignment we will take
Microsoft Corporation as a case study to follow the development of the company
between two leaders with different leadership approaches, Bill Gates, the
founder of Microsoft and Satya Nadella, the current chief executive officer in
the corporation.

 

2. What is Leadership?

Despite the wide number of researches on
leadership, it is still difficult to come up with a specific definition about
it. Leadership can be defined as the capability of an individual to influence
and control a group or an organization to achieve its goals (George and Jones,
2012, p.339). Another definition of leadership is the use of influence in an
organizational setting or situation to produce an effect that has a meaning and
impact to accomplish challenging goals (Ivancevich, Konopaske and Matteson,
2014, p.435). In the two definitions we can see that leadership relates between
the influence of the leader and the achievement of the organizations’ goals,
from this relation we can understand the importance of leadership and its
attribution to the success or the failure of any organization. Jago (1982,
p.315) stated that “Leadership is both a process and a property. The process of
leadership is the use of noncoercive influence to direct and coordinate the
activities of the members of an organized group toward the accomplishment of
group objectives. As a property, leadership is the set of qualities or
characteristics attributed to those who are perceived to successfully employ
such influence”.

 

3. Leadership in Business Administration:

The concept of leadership has gain a
tremendous popularity in Business Administration due to a good number of
reasons. According to Grasham (1965) the interest in leadership in
administration is derived from concern about the leadership in general due to the
economic and political crisis since the thirties. In a global business
environment which is becoming more complicated, complex and requires continuous
change with many opportunities and threats, the issue of leadership has been
regarded as a main factor for the success or the failure of any organization
(Paraschive, 2013). Modern organizations are tend to be larger, and include
more people who are qualified by specializations either from education or
experience and that increased the tendency for each person to do his own job
without looking or understanding what other people are doing (Grasham, 1965).
These changes in the work environment draw more attention to the importance of
leadership, as Grasham (1965) stated “A Large Organization requires some integrating
force to bring together the diverse aspects of the work of its various parts
and fuse them in the pursuit of its major goals, this force is provided by
leadership”.

 

As this assignment is dealing with
leadership in business administration, it is important to mention that
leadership and management are not the same, although they are interrelated, but
there are number of points that differentiate between the leader and the
manager. According to Verma and Jain (2001) the main purpose of management is the
planning, organizing, and controlling of the organization while leadership prepares
today’s business for the future. Zalenznik in Verma and Jain (2001) stated that
leaders are more concerned with the ideas while managers are more concerned
with the procedures. Leaders use inspiration and motivation to align their
followers with their vision while managers use their control through formal
power (The Guardian in Algahtani, 2014). Finally, as has been stated by Verma
and Jain (2001), “Management is efficiency in climbing the ladder of success
whereas leadership determines whether the ladder is leaning against the right
wall”.

 

4. The Evolution of Leadership Theories:

The scientific study of leadership
started at the turn of the 20th century with the trait-based approach
(Day & Antonakis, 2012). In 1847, Thomas Carlyle claimed in his great man
theory that leaders are born not made, and only those who are gifted with
exceptional potentials could become leaders (Ahmed Khan, Nawaz and Khan, 2016, p.1).
As a result, the early researches focused on identifying the unique
characteristics that the person should have to become a leader. George and
Jones (2012) stated the traits that are related to the effective leadership
such as intelligence, task-relevance knowledge, dominance, self-confidence,
emotional maturity, integrity and honesty. The critiques of the trait-based
leadership approach in the late 1940s led researchers to shift their focus from
the leader traits to how effective leaders behave (Derue, Nahrgang, Wellman and
Humphrey, 2011, p.8). In 1967 Fred Fiedler broke the idea of a single effective
leadership style and argued that the effective leadership is contingent upon
the situation and that the interaction between the style of leadership and the
situation can estimate the effectiveness of leader behavior (Verkerk, 1990). In the late 1970s, and as a way of
improving the organizational performance, leadership researchers moved their
focus beyond the situational leadership and turned to the transactional
leadership theory which explains how leaders motivate their followers through
an exchange on incentives (Stone and Patterson, 2005, p.6).

 

Another shift took
place to change the perspective of leadership, as mentioned in Stone and
Patterson (2005, p.1) the organizations have been evolved from the early
organizations which have been known of the authoritarian leaders who had a
belief that employees are lazy to a new kind of organizations where people are
getting empowered, developed and supported in their individual growth. A group
of contemporary theories have been developed where the relationship between the
leaders and their followers took a real attention. In 1977, Robert House
presented the charismatic leadership and he identified the behavior which is
expected from the charismatic leaders and their followers (Bass and Bass,
2008). Later in the 1978 as mentioned in Bass and Bass (2008) James MacGregor
Burns formalized the transformational leadership theory which claims that
transformational leaders can motivate their followers beyond their
self-interest for the good of the organization or the society. Over the past
five years, distrust has been developed between leaders and their followers and
that was a call to find a new kind of business leaders in the 21st
century. George (2003) in his book “Authentic Leadership: Rediscovering the
Secrets to Creating Lasting Value” challenged the new leaders to be authentic,
leads by heart and to show passion for their purpose.

 

Lately, Petrie (2014, p.6) presented four
trends for the future development of the leadership which are, focusing on
vertical development, transferring the developmental ownership to the
individual, focusing on the collective rather than solo leadership, and focusing
on innovation in leadership development.

 

 

5. The Classical Approach

5.1 The Authoritarian (Autocratic)
Leadership:

The authoritarian leaders (also called
autocratic leaders) represent the extreme form of the transactional leadership,
where leaders exercise complete power over their followers and the
decision-making process is taking place without consulting or explanation
(Uzohue, Yaya and Akintayo, 2016, p.21). Authoritarian leaders known for being
self-oriented; their main concern is their power, statues and image (Sinha,
1976, p. 382). According to Dinham (2007, p.35), Authoritarian leaders
represent the traditional concept of leadership which is based on acceptance
and obedience of the formal authority. They are demanding a complete loyalty
and an unconditional compliance from their followers (Sinha, 1976, p. 382).
Authoritarian leaders don’t negotiate or consult; they expect their followers
to accept their orders without questioning (Dinham, 2007). It has been noticed
in such a leadership style that there is a division between the leader and the
followers (Saqib Khan, Khan, Qureshi, Ismail, Rauf, Latif and Tahir, 2015, p.88).
The one advantage of the authoritarian leadership is the rapidity in
decision-making and implementing those decisions immediately so “Autocratic
leadership is often best used in crises situation, when decisions must be made quickly
and without delay” (Uzohue et al., 2016, p. 21). It has been mentioned in Saqib
Khan et al. (2015, p. 88) as well that “Authoritarian leadership is best
applied to situations where there is little time for group decision-making or
where the leader is the most knowledgeable member of the group”.

6. The Transactional Leadership:

The transactional leadership theory has
been presented by Burns (1978) and it explained the relationship between the
leaders and their followers through designed exchanges to provide benefit for
both sides (McCleskey, 2014, p.122). These exchanges according to McCleskey
(2014) can help the leaders in achieving their objectives, accomplishing the
tasks, motivating their followers toward the organizational goals. Stone and Patterson
(2005, p.6) argued that through these exchanges, followers are not the only
side that will be influenced by their leader; the leader will be under the
followers’ influence as well. The Ohio State studies presented the
transactional leaders as those who guide their followers to achieve a set of
objectives by making a clear role and task requirements (Robbins and Judge,
2013, p.416). In Uzohue et al. (2016, P.20) the transactional theory has been
mentioned to as management or managerial theory and it has been argued that it
is usually used in the organizations where the employees are successful.
According to the same research, the objective of the transactional leadership
is to remove the barriers from the goal’s way to be achieved.

 

7. The Contemporary Approach

7.1 The Transformational Leadership:

Transformational leadership has been
formalized as a theory by James MacGregor Burns in 1978. Transformational
leaders are those who influence and inspire their followers to achieve
remarkable outcomes and in the same time to develop their capacity of
leadership (Bass and Riggio, 2006). It has a lot in common with the charismatic
leadership, but charisma represents one side of the transformational
leadership. According to Bass and Riggio (2006, p.3) the transformational
leaders support their followers to grow into leaders by responding to their
needs, empowering them and aligning the organizational objectives with their
individual goals and objectives. Jones and Rudd (2008) claimed that transformational
leaders inspire their followers by the stimulating internal motivators. Transformational
leadership reinforce the motivation and performance of the followers by
connecting the followers’ sense of self-identity with the organizational
identity, inspiring the followers by being their role model, creating
challenges for the followers and cultivate the sense of taking ownership of
their work, and understanding their strengths and weaknesses (Odumeru and
Ogbonna, 2013, p.356). Transformational leadership has been presented in Bass
and Riggio (2006, pp.6-7) in four sections: Idealized Influence which makes the
transformational leaders trusted, admired and respected by their followers,
Inspirational Motivation by providing challenges and meaning to their
followers’ effort, Intellectual Stimulation by using innovative and creative
ways in their work, and Individualized Consideration by paying an attention to the
individual follower’s needs for achievement and act as a coach or mentor.
Recently, the transformational leadership style has been related to the change
in organizations by many studies that found that the transformational
leadership is the most effective style through the organizational change
(Carter, Armenakis, Field and Mossholder, 2012).

7.2 The Authentic Leadership:

The complex organizations of the twenty
first century are demanding leaders who can lead with purpose, values and
integrity (George, 2003, p.9). According to George (2003), the business world
is going in the wrong direction and there is a need for leaders who are
committed to build authentic organizations without compromising their
principles. Based on the authentic leadership theory, authentic leaders should
behave in way that reflects consistency between their morals, beliefs and
values and their actions (Hannah, Avolio and Walumbwa, 2011). Walumbwa, Avolio,
Gardner, Wernsing and Peterson (2008, P.89) demonstrated that authentic
leadership includes four factors: self-awareness, relational transparency,
internalized moral perspective, and balanced processing. Authentic leaders are
less liable to distortions and exaggerations, their behavior are guided by
moral standards, they promote trust by open sharing of information that
reflects their true thoughts, and they are aware of their strengths and
weaknesses (Walumbwa, Luthans, Avey and Oke, 2011). George (2003, p.12) stated
that “The one essential quality a leader must have is to be your own person,
authentic in every regard”.

 

 

 

 

 

 

8. A Case from the Business World:

In this assignment, Microsoft Corporation
will be taken as a case study of the approaches that have been mentioned in the
previous sections. Microsoft Corporation have been created in 1975 by Bill
Gates and his friend Paul Allen and since then it was working under Gates
leadership till 2014 when he stepped down as a chairman of Microsoft’s board
and became a technology advisor. In 2014 Microsoft’s board members have chosen
Satya Nadella to be the new CEO of the corporate (Nayak, 2014). Regarding the
leadership style, Gates has been known by his authoritarian or autocratic
leadership style. In leadership-and-development.com, Gilliard wrote about
Gates’s leadership “Bill Gates leadership style is authoritarian”. The online article stated that Gates was
requiring so much control and we could see that clearly when Steve Ballmer got
on charge, he was “second in command”. Gates considered as an admired business
leader, which doesn’t fit with the authoritarian style, but he was very
demanding and somehow abrasive boss which can fit with the description of the
classical leadership approach. At the end of the article Gilliard argued that
much of Gate’s success with Microsoft was a result of his quick decision-making
process. As it has been explained through the assignment, the business world is
facing a rapid change and with Gates leadership style, Microsoft started having
some issues. Curtis (2014) in The Telegraph wrote that Gates was under pressure
to step down from the chairman position. According to Curtis (2014) Reuters has
reported in 2013 that investors were worried that having Gates as Microsoft
chairman might block having new strategies and limiting the power of the new
CEO to take steps toward substantial changes.

In 2014, Satya Nadella started working as
the new CEO in Microsoft Corporation with new vision to change the company
structure and enhance its culture. Nadella adopted a notion that says “Growth
Mindset” and he is trying to create an environment where is no space for those
who try to concentrate on the negative side. According to Weinberger who wrote
on Inc.com “Growth Mindset is the notion that you should take nothing for granted and always
be willing to check your assumptions as new data comes in”. In his book “Hit
Refresh”, Nadella has revealed that he is working to shift Microsoft mind-set
from “know it all” to “learn it all” as has been mentioned in a review of his
book on fastcompany.com website, Microsoft culture was strict, highly demanding
and the control had been structured in a hierarchal way which did not give a
space for creativity and spontaneity. Considering the available data through the
Internet, Nadella is showing transformational leadership style in the
development process through his plan to make a cultural change within the
corporation. Such a change will play a role in increasing the individual
engagement, will encourage the innovation and will create a vision that
motivates the employees for a better performance. A sign of the
transformational change of the company can be seen in the following chart that
has been taken from NASDAQ website which shows the stock price curve moving upward
incrementally since Nadella took the position of the CEO with Microsoft. 

There are many expectations from Nadella
for more development in his leadership journey, as a young CEO, it needs some
time and experience to show his characteristics and though our study we can say
that Nadella is a transformational leader under process.

 

 

 

 

 

 

 

Implications:

The use of the authoritarian leadership
style in many business fields can affect the organizational performance and
development. The contemporary leadership approach attained positive position
within the leadership theories, especially the transformational leadership
because it is not only leading the organization toward its objectives, but it
also empowering the employees and support their growth as leaders. Nonetheless,
in some organizations or in specific situations, the classical leadership style
is recommended where there is a need for a fast decision-making process and a
hierarchal structured system is required.

 

Conclusion and Recommendations:

The evolution of leadership theories and
the development of leadership styles showed that there is an increasing focus
on followers’ empowerment compared to the historical researches that
concentrated on the leaders’ traits. As it showed through the assignment there
was a shift from the classical approach toward theories and styles that
represent more ethical and moral concepts. The authoritarian leadership is
facing criticism as it promotes the centralization of power which can be
subjected to power abuse and corruption. As a self-oriented leadership, the
authoritarian leader can direct the effort of the followers for his
self-interest rather than the organization’s best interest. Through the
assignment a wide contrast has been found between the authoritarian leadership
and the contemporary theories (transformational and authentic) while the
transactional leadership style can be considered closer to the contemporary
theory and it can be combined with these theories for a better influence. Some
researches argued that a better leader should be both transformational and
transactional.

 

From the practical part of the
assignment, Microsoft case study, we can conclude that although Bill Gates was
a successful leader for many years, but with the recent market, an
authoritarian or autocratic leadership might slow down the progress of the
company as this kind of leaders acquire high control and that would block the
innovation and the creativity between the employees. On the other hand,
breaking that rigid system and adopting a transformational leadership that seek
positive change, showed a clear incremental improvement in the performance of
the company.

 

The recommendation of this assignment is
to have more researches to identify the interrelation between the contemporary
approach theories, including the transformational and authentic leadership
theories that have been reviewed in the previous sections. Another suggestion
is to find out if the authoritarian leader can be considered as an authentic
leader and how far this authenticity can be employed in the classical approach
theories.