Research Paper: Leadership Theories and Practical Application as Organizations

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Leadership Theories and Practical Application

As organizations continue to face challenges and demands from external environments, effective work relationships will no longer be an option but a critical source of competitive advantage (Luthans, et al. 2008). This is largely due to the social capital that effective relationships generate. Social capital is derived through the social structure of the organization and facilitates the actions of individuals within the larger organizational framework (Nahapiet & Ghoshal, 1998). This capital generates resources through networks of mutual acquaintance and recognition (Luthans, et al. 2008). In contrast to human capital, which is a quality of individuals (e.g., KSAs: knowledge, skills, and abilities), social capital is a quality created among people. Social capital comes from the assets created and leveraged from interpersonal relationships developed through a history of interactions among individuals (Howe, 2002). Therefore, we cannot consider employees' knowledge, skills, and abilities as human capital until we recognize that their contributions to firm performance depend on how they interact with one another through interpersonal relationships.

Despite this, as a theoretical domain in the management literature, interpersonal work relationships have not established as much awareness as they should (Bass, 2005). Interpersonal relationships are often considered as variables in management research, but work relationships have not emerged as a dominant field of inquiry in organizational behavior study (Cox & Beale, 2008). In the human resource (HR) literature, relationships have hardly been mentioned at all. For example, Graen et al., (2010) argued that companies that methodically plan with their human resources in mind are most probable to increase a competitive benefit by having "the correct people at the correct place in the right time" to create quality products efficiently. This focus on individuals, however, does not address the fact that within organizations people do not act in isolation. To more accurately reflect leadership and HR functioning, we must realign our focus toward the "right people at the right place in the right time with the right relationships."

The value of a relational focus is shown by research examining the positive benefits of high-quality manager -- subordinate relationships on work-related outcomes. House, (2003) showed that performance is about 20% higher and satisfaction about 50% higher for subordinates who have higher quality relationships with their supervisors than subordinates with lower quality relationships. More importantly, low-quality relationships can present tremendous costs to organizations (Cox & Beale, 2008), with employees in lower quality relationships tending to quit after approximately 12 months, costing the organization training and recruitment expenses (Mayfield & Mayfield, 1998). Employees in higher quality relationship move on for promotions within the same firm.

A focus on relationships, therefore, represents a mainly untapped chance to recover firm performance. To understand how to capitalize on this opportunity, we must first understand what leadership is and how it is linked to relationships.

Problem Statement

Although a vast number of leadership definitions have been offered over the years (Yukl, 1998), there appear to be two common denominators among these definitions: change and influence. Leadership is about managing change; it differs from management in that management is about coping with complexity (Kotter, 2001). According to Kotter (2001), the function of leadership is to produce change. Leadership behaviors involve looking for patterns, relationships, and linkages that help explain events in the environment, and then using these to develop and act upon visions and strategies for how to create change. Leadership involves generating ideas for change (e.g., analyzing, recommending, creating vision) and acting successfully to get others to follow (e.g., motivating, inspiring, persuading). Being a leader means being a risk taker, from the standpoint of both making decisions in an ambiguous situation (e.g., one risks being wrong) and taking a public stand (e.g., the risk of speaking out, going against status quo). Leadership also involves influence. House, (2003) defined leadership as the incremental influence that gets people to go above and ahead of mechanical conformity with routine directions of the group. This perspective emphasizes personal power rather than position power (Etzioni, 1961), such that followers are intrinsically motivated (Cox & Beale, 2008) and perform extra-role behaviors (Valle & Halling, 1989). The intent of this influence is to get people not just to comply with directives but also to act in ways not specified by their formal roles. Thus leaders differ from managers in that they gain personal influence with others to get them to do more than they would otherwise (i.e., to create change).

Combining these two perspectives means that leadership is using influence to create change. Thus influence is the essence of leadership (House, 2003), as is creating change (as change results from the use of influence) (Kotter, 2001). Contrary to a previous view that influence is a characteristic that a leader (i.e., manager) may or may not have (Cox & Beale, 2008), the perspective presented here suggests that perhaps we should consider it as a defining element of leadership. When individuals engage in the use of influence to create change, they are engaging in leadership.

Assumption 1. Leadership happens when individuals use power to create change.

The value of this definition is that it views leadership as a behavior, not as a formal role. In this way, we gain a broader perspective of leadership and of how to develop leaders. By using this definition anyone may act as a leader, not just those in formal roles, when they use leadership behaviors (i.e., behaviors that use influence to create change) (Luthans, et al. 2008). In other words, those individuals we typically consider followers (e.g., subordinates) may act as leaders even when in a subordinate role.

This perspective helps alleviate problems in the literature of using the terms leader and manager interchangeably, which assumes that by studying managers we are studying leaders, since managers are those in formal roles that require leadership. Similarly, it addresses problems of confounding the terms follower and subordinate, which assumes that followers are subordinate (e.g., subordinate is a hierarchical term suggesting subordination, and followers are not always subordinate). Such terminology limits thinking about what leadership (and followership) is and can be within organizations. This thinking also contributes to limited conceptualizations about leadership development that focus on those in formal managerial roles or those targeted to take on such roles in the future. By thinking of leadership as a behavior, not a formal role, it extends the capability for leadership behaviors to all organizational members and calls for a change in how we approach leadership development, which then should focus beyond managers or future managers to include all organizational members. Moreover, such a transition in LMX theory would take it from managerial leadership theory to relational leadership theory.

Assumption 2. Leadership is a behavior, not an official role (therefore, individuals not in official roles are leaders when they employ leadership behaviors).

Literature Review

Leadership is engaging in behaviors that create change, and creating change requires influence. To be leaders, therefore, individuals need to have and effectively use influence (Luthans, et al. 2008). Influence is the power to affect others: the ability to produce outcomes due to some personal characteristic that gets others to follow (House, 2003).

By definition, influence is inherently interpersonal. Influence takes place within the context of interpersonal relationships. According to relational Leadership Theories, influence comes from relationships (Bass, 2005). Relational perspectives in leadership view leadership as generated through mutual influence that results from the development of trust, respect, and obligation among dyad members (Cox & Beale, 2008).

LMX theory describes this influence as being created through stages of relationship building (House, 2003). Individuals begin at a "stranger" stage, get to know one another through testing processes, and as a result of the testing process, either progress to an advanced stage of leadership development (e.g., partnership) or remain at lower levels of relationship development (e.g., acquaintance or stranger) (Cox & Beale, 2008).

Those who attain more advanced stages of relationship building -- and thus develop more effective relationships with interdependent others (e.g., managers and other higher-ups, subordinates, peers, clients, external constituents) -- are able to more effectively perform their roles. More effective, or high-quality, leader -- member exchanges are described as leadership rather than as supervisory relationships (Luthans, 1998). High-quality relationships are considered mature partnerships based on respect, trust, and mutual obligation for on each other (Luthans, et al. 2008). These relationships go beyond the formal contract and generate personal power (i.e., influence given by the other), rather than position power or authority (Luthans, et al. 2008). They are also characterized by willing followership, meaning employees are driven by intrinsic as opposed to extrinsic motivation (Steers et al., 1996). As a result, dyad partners (i.e., individuals engaged in an exchange) act because they want to, not because they have to. Research on LMX shows that more effectively developed relationships have significant and positive associations with performance, organizational commitment, employee citizenship behavior (i.e., extra-role behavior), job satisfaction, delegation and participation in decision making, and enhanced career development opportunities (Luthans, et al. 2008). These relationships are negatively related to turnover, job problems, and role conflict… [END OF PREVIEW]

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