Term Paper: How Leadership Style and Characteristics Affect Business Success and Failure

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¶ … Leadership Style and Characteristics Affect Business Success and Failure

While the debate over nurture vs. nature continues, it is clear that some people appear to be "natural-born" leaders who are capable of motivating others to achieve far more than others. These leaders seem to possess the right combination of personality, vision and motivational skills and can use them to their maximum advantage in a wide variety of organizational settings. These leaders also have an enormously positive impact on an organization's bottom line, and it is not surprising that an increasing amount of research in recent years has been devoted to identifying what characteristics these leaders share and what they do that is so fundamentally different from ineffectual leaders. The purpose of this study is to provide an overview and background concerning leadership and its importance in helping an organization achieve its goals and improve its profitability, and to examine how two such leaders, Bill Gates of Microsoft and Steve Jobs of Apple fame, have used their leadership skills to guide their respective organizations to the success they enjoy today. To this end, a critical review of the peer-reviewed and scholarly literature is followed by case studies of these two business leaders and their companies. A summary of the research and salient findings are presented in the conclusion.

Review of the Literature.

Background and Overview. Because of its importance to the survival of virtually all organizations, leadership has been the focus of an intensive amount of study in recent years. Indeed, the 20th century witnessed the emergence of various leadership styles, all of which were intended to improve the interaction between management and employees with a view to motivating everyone to superior performance and results. Over a decade ago, industry analysts recognized that the leadership talents of two individuals in particular were going to model the way for others: "It is the wizards of the computer companies -- Steve Jobs of Apple and William Gates of Microsoft who are looked to as harbingers of a new and leaner American competitive stance" (Gardner & Laskin, 1996 p. 144). Since that time, both Gates and Jobs have been referred to in less than "harbinger" terms by many critics, but the fact remains these leaders have managed to steer and guide their organizations through some tough economic times to emerge as robust and renewed companies with innovative products and services that continue to enjoy large shares of their respective markets.

By any measure, an individual's leadership style can make or break a company. It just makes sense: if a leader recognizes that something is wrong and takes action to correct it, this is an opportunity gained rather than a mistake. Organizations that have effective leaders can learn from them and this is one of the essential qualities of the individuals that emerge as top-notch leaders in their fields today. Throughout history, though, there have been examples of people that have modeled the way for others. These people seem to just know what needs to be done and how best to motivate others to help them achieve it. In recent years, these types of leaders have often been referred to as "transformational" leaders, because, well, they somehow manage to "transform" an ineffectual organization into an effective one. According to Avolio and Bass (2002), "Transformational leaders motivate others to do more than they originally intended and often even more than they thought possible. Such leaders set more challenging expectations and typically achieve higher performances" (Avolio & Bass, 2002, p. 1). Therefore, it can be reasonably posited that both Jobs and Gates have achieved this level and style of leadership by motivating their followers to achieve beyond their own expectations.

In reality, though, and despite the importance of effective leadership to the success of any type of organization, these broad conceptualizations of leadership according to various styles and traits are fairly recent in origin. For instance, Storey (2004) reports that prior to the 1980s, "leadership" and "management" were largely considered in the same context: "They [leadership and management] were regarded as either interchangeable or as extensively overlapping activities. When 'leadership' was studied or taught it was usually regarded as a small sub-set of management and the focus was on 'influencing' of small groups" (p. 8). During the past few decades, though, an increasing number of studies have examined various leadership styles to identify what works and why, and these issues are discussed further below as they relate to transformational and charismatic leadership styles that appear to apply to both Jobs and Gates alike.

Characteristics of Effective Leadership.

Because every individual and organization is unique, it can be misleading to describe every type of leader as possessing specific characteristics, but studies have shown that many transformational leaders possess some commonalities that are important for the purposes of this analysis. According to Sosik (1998), "Leadership scholars have identified transformational leaders as highly effective in enhancing group creativity. Transformational leaders use intellectual stimulation, promote consideration of different viewpoints, and inspire collective action to promote group creativity" (p. 112). Much of the seminal work on transformation leadership was conducted by Bernard M. Bass, who based his work on the 1978 book Leadership by Burns wherein the author defined transformational leadership as occurring when one or more persons "engage with others in such a way that leaders and followers raise one another to higher levels of motivation and morality" in other words, both leader and followers -- as well as the social system in which they function -- are transformed" (quoted in Rosenbach & Taylor, 2000, p. 52). According to organizational leadership guru Bass (1998), transformational leadership is actually an extension of what has been termed "transactional leadership": "Transactional leadership emphasizes the transaction or exchange that takes place among leaders, colleagues, and followers. This exchange is based on the leader discussing with others what is required and specifying the conditions and rewards these others will receive if they fulfill those requirements" (p. 4). As to the various traditional transactional, or managerial, aspects of leadership, Bass further identified three subcategories that were comparable to those identified through studies conducted by earlier researchers, as noted below:

Laissez-faire. This component refers to a tendency for the leader to abdicate responsibility toward his or her followers, who are left to their own devices. Laissez-faire leadership really indicates an absence of leadership.

Contingent reward. Frequently termed reward-and-punishment or simply carrot-and-stick leadership, this approach means that the leader rewards followers for attaining performance levels the leader had specified. Performance-contingent strategies are by no means completely ineffective; in general, they are associated with both the performance and satisfaction of followers.

Management by exception. This type of transactional leadership involves managers taking action only when there is evidence of something not going according to plan. There are two types of MBE: (a) active and (b) passive; the former describes a leader who looks for deviations from established procedure and takes action when irregularities are identified. The passive form of this type describes a tendency to intervene only when specific problems arise because established procedures are not being followed (Rosenbach & Taylor, 2000, p. 53).

It can also reasonably be argued that almost any type of leader - notwithstanding a pigeonholed definition as to style - engages in these types of leadership processes from time to time as circumstances dictate, but there are some specific characteristics involved in each leadership style that researchers point to in an effort to distinguish one from the other according to a preponderance of the leadership style used. According to Rosenbach and Taylor, "Each of these is different from the forms of transactional leadership just described, because there is no tit-for-tat, no reward (or punishment) from the leader in exchange for followers' efforts" (p. 53). As Erez, Kleinbeck and Thierry (2001) caution, though, "There is some question as to the mechanisms by which transformational leadership produces beneficial organizational outcomes, if it does" (p. 20). In order to determine whether such leadership styles can in fact help organizations better achieve their goals, Miner (2002), that in a traditional transactional leader:

Recognizes what it is people want to get from their work and tries to see that they get what they want if their performance justifies it;

Exchanges rewards and promises of reward for their workers' effort;

Is responsive to their immediate self-interests if they can be met by their getting the work done.

By contrast, transformational leaders tend to motivate people to do more than they had previously expected to do by:

By raising their level of awareness, their level of consciousness about the importance and value of designated outcomes, and ways of reaching them;

By getting their workers to transcend their own self-interest for the sake of the team, organization, or larger polity; and,

By altering their need level on Maslow's (or Alderfer's) hierarchy or expanding their portfolio of needs and wants (Miner, 2002 p. 741).

Therefore, transformational leadership theory takes into account and incorporates such hierarchy of needs and prepotency concepts as these,… [END OF PREVIEW]

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