Organizational Theory
Content
Fiedler’s Contingency Theory of Leadership Fred Fiedler developed the contingency theory of leadership in 1967, in an attempt to make sense of the complexities of human personalities and of the situations in which leaders must act. The theory rest on the belief that situations influence the effectiveness of any leader and that as a result, a leader who is successful in one situation may fail in another situation. The theory tries to account in which certain types leaders should perform well. Fiedler’s theory focuses on the much between the leader’s personality and the Situation. Fiedler’s describe the leader’s basic personality traits in terms of task versus relationship motivation. He describes the situation in terms of how favorable it is for the leader. Fiedler’s concept of task motivation is similar to concern for production on the managerial grid, and his relationship motivation parallels the grid’s concern for people. Fiedler believes that person’s tendency to be task- oriented or relationship-oriented is basically constant- if you are more concerned with people than with the task in one situation, you will show the same tendency in other situations. Fiedler measured task and relationship motivation through the use of the least-preferred co-worker (LPC) scale. Leader’s think of one person with whom they have worked in the past and with whom they would least like to work now and then rate that person on sixteen different qualities, such as tendencies to be inefficient/efficient and unfriendly/friendly. Fiedler believes that the LPC scores actually say more about the leader than the least-preferred co-worker relatively (high LPC) are concerned with interpersonal relations, whereas a low LPC score indicates the leader is more apt to be focused on a task. According to Fiedler, three factors determine the degree to which a situation is favorable or unfavorable to a leader: leader-member relations, task structure, and the leader’s position power. The personal relationship between the leader and his or her subordinates- leader-member relations depends on the degree of mutual trust, respect, and confidence. Task structure includes such factors as the number of different ways a job can be performed and whether there is one best way, the amount of feedback a job provides, and the clarity of the requirements for the job. The theory assumes that highly structured jobs- those that can be performed only one way, have clear requirements, and provide feedback- are favorable to the leader. Such jobs are routine and easily understood. Less structured jobs that involves more decisions and ambiguity are less favorable for a leader, because those jobs require the to play a greater role in guiding and directing subordinates. The leader’s role provides the leader with position power. Leaders who have control over their management decisions have high, or favorable, position power. Leaders with high position power can assign work and reward and punish employees on their
own. Leaders with less favorable, low-power positions must get approval for such action’s. 1. Fiedler has also encouraged the use of a leader match concept since effective leadership is a function of both the individual leader and situation; two alt6ernatives are available to the leader who wants a better match between the two. The leader can either attempt to change his or her personality or work to change the situational variables and make them more favorable. Fiedler argues that it is too difficult to get leaders to change their personalities; it is more effective to change the situation. As a result, Fiedler and his associates have developed a self-paced program instruction work book for this purpose. The booklet teaches leaders how to (1) assess their relationship based on their LPC score, (2) assess the amount of situational favorableness that currently exists in their environment, and (3) change the situation so that it matches their style. The theory has been applied quite successfully. 2. Fiedler’s model suggests that managers develop a dominant style of leadership early in their careers and it changes very little over time. In his view, this predisposition to one style is strongly grounded in personality, and although some marginal change in behavior is possible, a significant change is unlikely. This conclusion has strong implications for staffing managerial positions and for replacing managers. When there is a mismatch between a manager’s predisposed leadership style and situation, that manager may have to be replaced by someone more closely attuned to situational demands. If the mismatch is not severe, however, a leader’s style may be sufficiently changed by management development techniques. The best solution in fiedler’s view is to modify the task structure or leader-member relationships. 3. When Fiedler examined the relationships among leadership style, situational favorability, and group task performance, he found the pattern that taskoriented leaders are more effective when the situation is either highly favorable or highly unfavorable. Relationship-oriented leaders are more effective in situations of moderate favorability. The reason the task-oriented leaders excels in the favorable situations is that when everyone gets along the task is clear, and the leader has power, all that is needed is for someone to take charge and provide directions. Similarly, if the situation is highly unfavorable to the leader, a great deal of structure and task direction is needed. A strong leader defines task structure and can establish authority over subordinates. Because leader-member relations are poor anyway, a strong task oriented will make no difference in the leader’s popularity. The reason the relationship-oriented leader performs better in situation of intermediate favorability is that human relations skills important in achieving high group performance. In these situations the leader may modify well liked, and have some power,
and supervise jobs that contain some ambiguity. A leader with good interpersonal skill can create a positive group atmosphere that will improve relationships, clarify task structure, and establish position power. The leader, then, needs to know things in order to use Fiedler’s contingency theory. First, the leader should know whether he or she has a relationship-or task-oriented style. Second, the leader should diagnose the situation and determine whether leadermember relations, task structure, and position power are favorable. Fittings leader style to the situation can yield large dividends. 4. Fiedler believes that managers cannot easily change their LPC orientation or management style. As a result, he argues that leaders need to understand their leadership style and analyze the degree of favorability, or situational control. If the match between the two is not good, a leader needs to either make changes (e.g. increased task structure) or find a more compatible leadership situation. Fiedler calls this approach “engineering the job to fit the manager.” 5. Where leader-position power is weak would call for a participative leadership style. If the leader is uncomfortable with participative approaches, he or she might be given additional position power. This would indicate the need for a more directive approach. 6. In spite of extensive research to support the theory, critics, question the reliability of the measurement of leadership style and the range and appropriateness of three situational components the leader-member relations, task structure, and position power. However, managers can use this model to diagnose the nature of several contingencies that affect leadership style and begin to identify the appropriate style for a given context. House’s Path Goal Theory Robert House of the University of Toronto has proposed a situational theory of leadership called Path-Goal Theory. Unlike Fiedler’s contingency theory, which relies on the somewhat ambiguous LPC trait, Path-Goal Theory is concerned with the situations under which leader behaviors are most effective. The theory why did house choose the name path-goal for his theory? According to House, the most important activities of leaders are those that clarify the paths to various goals of interest to subordinates. Such goals might include a promotion, a sense of accomplishment, or a pleasant work climate. In turn, the opportunity to achieve such goals should promote job satisfaction, leader acceptance, and high effort. Thus the effective leaders form a connection between subordinate goals and organizational goals. House argues that, to provide job satisfaction and leader acceptance, leader behavior must be perceived as immediately satisfying or as leading to future satisfaction.
Leader that is seen as unnecessary or unhelpful will be resented. House contends that, to promote subordinate effort, leaders must make rewards dependent on performance and ensure that subordinates have a clear picture of how this reward can be achieved. To do this, leader might have to provide support through direction, guidance, and coaching. Leader Behavior Path-Theory is concerned with four specific kinds of leader behavior. These include: Supportive Leadership This style considers subordinates needs and supports a friendly climate at work. When work is tedious or boring, supportive leaders ease frustrations and make task more tolerable, thereby influencing more productive performance. However, when work is pleasant and the environment enjoyable, supportive leaders have little effect on performance or satisfaction. Directive Leadership. This behavior reflects authority, rules, policies, and a formal organization. Subordinates follow specific guidelines and traditional pattern of decision making. When task are unstructured and roles ambiguous, directive leaders are effective because subordinates perceive that closer supervision and more directive leadership will increase their opportunities for success. In other words uncertain or unstructured work environment make employees apprehensive, and in these circumstances a directive style of leadership enhances their expectations for success and rewards related to high performance. However, when subordinates know their jobs and feel confident about performing well, directive leadership is viewed as unnecessary imposition. Participative Leadership. Participative leaders emphasize a consensus environment of team-building relationships. Results are similar to those of directive leadership. In unstructured and ambiguous situations, participative leadership enhances performance and satisfaction. However, unlike directive leadership, participative methods also enhance satisfaction when work is tedious, boring, dangerous, or otherwise unpleasant. Thus participative style incorporates supportive and directive advantages, and works in many situations. But when work is structured and subordinates have clear understanding of their jobs, participative leadership has little or no effect on performance. Achievement leadership. This style of leadership sets challenging goals, encourages innovation, and emphasize confidence in subordinates. It is particularly important when subordinates have to perform nonrepetitive tasks in ambiguous circumstances. When tasks are repetitive and clear, achievement-oriented leadership has or no effect on performance or satisfaction.2 Identifying leadership style. Fielder believes a key factor in leadership success is the individual’s basic leadership style. So he begins by trying to find out what that basis style is. Fiedler created the LPC questionnaire for this purpose. It contains 16 contrasting adjectives (such as pleasant – unpleasant, efficient – inefficient, open – guarded, supportive – hostile). The questionnaire then asks respondents to think of all the co – workers they have ever had and to describes the one person they least enjoyed working
with by rating him on a scale of 1 to 8 for each of the 16 sets of contrasting adjectives. Fiedler believes that based on the respondents’ answer to this LPC questionnaire, he can determine their basic leadership style. If the least preferred co – worker is described in relatively positive terms (a high LPC score). Then the respondent is primarily interested in good personal relations with his co – worker. That is if one essentially describes the person he is least able to work with in favorable terms, Fiedler would label him relationship oriented. In contrast, if the least preferred co – worker is seen relatively unfavorable terms (a low LPC score), the respondent is primarily interested in productivity and thus would be labeled task – oriented. About 16 percent of respondents score in the middle range. Such individuals cannot be classified as either relationship oriented or task oriented and thus fall outside the theory’s predictions. The rest of the discussion therefore, relate to the 84 percent who score in wither the high or low range of the LPC. Fielder assumes that an individual’s leadership style is fixed. This is important because it means that it a situation requires a task – oriented leader and the person in that leadership position is relationship oriented, either the situation ha to be modified or the leader removed and replaced if optimum effectiveness is to be achieved . Fiedler argues that leadership style is innate to a person – one can’t change the style to fit changing situations. Defining the situation. After an individual’s basic leadership style has been assessed through the LPC, it is necessary to match the leader with the situation. Fielder has identified three contingency dimensions that, he argues, define the key situational factors that determine leadership effectiveness. These are leader – member relations, task structure, and position power. they are defined as follows: 1. Leader – member relation is the degree of confidence, trust, and respect subordinates have in their leader. 2. Task structure is the degree to which job assignments are procedurized (that is, structured or unstructured. 3. Position power is the degree of influence a leader has over variables such as hiring, firing, discipline, promotions, and salary increases. The next step in the Fiedler model is to evaluate the situation in terms of the three contingency variables. Leader – member relations are either good or poor, task structure is either high or low, and position is either strong or weak. Fiedler states that the better the leader – member relations, the more highly structured the job, and the stronger the position power, the more control or influence the leader has. For example, a very favorable situation (where the leaders would have a great deal of control) might involve a payroll manger who is well respected and whose
subordinates have confidence in him, (good leader – member relations), where the activities to be done – such as wage computation, check writing, report filing – are specific and clear (high task structure), and the job provides considerable freedom for him to reward and punish his subordinates (strong position power). On the other hand, an unfavorable situation might be the disliked chairperson of a voluntary fund – raising team. In this jog the leader have very little control. Altogether, by mixing the three contingency variables, there are potentially eight different situations or categories in which leaders could find themselves. Matching leaders and situations. With knowledge on an individual’s LPC and an assessment of the three contingency variable, the Fiedler model proposes matching them up to achieve maximum leadership effectiveness (Fiedler, Chemers and Mahar, 1997). Based on Fiedler’s study of over 1,200 groups, in which he compared relationship versus task – oriented leadership styles in each of the eight situational categories, he concluded that task – oriented leaders tend to perform better situational that were very favorable to them and in situations that were very unfavorable. So Fiedler would predict that when faced with a category I, II, III, VII, situation, or VIII task – oriented leaders perform better. Relationship – oriented leaders; however, perform better in moderately favorable situations – categories IV through VI. Given Fiedler’s findings, how would one applies them? One would seek to match leaders and situations. That “situation” would defined by evaluating the three contingency factor of leader – member relations, task structure, and position power. But remember the Fielder views an individual’s leadership style as being fixed. Therefore, there are really only two ways in which to improve leader effectiveness. First, once can change the leader to fit the situation, as in a baseball game; a manger can reach into the bullpen and put in a right – handed pitcher of a left – handed pitcher, depending on the situational characteristics of the hitter. So for example, if a group situation rates a highly unfavorable but is currently led by relationship – oriented manger, the group’s performance could be improved by replacing that manger with one who is task oriented. The second alternative would be to change the situation to fit the leader. That could be done by restructuring tasks or increasing or decreasing the power that the leader has to control factors such as salary increases. Promotions and disciplinary actions. To illustrate, a task – oriented leader is in a category IV situation. If this leader could increase his power, then the leader would be operating in category III and the leader – situation match could be compatible for high group performance. Evaluation. As a whole, reviews of the major studies that tested the overall validity of the Fiedler’s model lead to a generally positive conclusion. That is, there is considerable evidence to support at least substantial parts of the model (Schriesheim, Tepper and Tetrault, 1994; Ayman, Chemers, and Fiedler, 1995). But additional variables are probably needed if an improved model is to fill in some of the remaining gaps. Move over, there problems with the LPC and the practical use of the model that needs to be addresses. For instance, the logic underlying the LPC is nor well understood and studies
have shown those respondents’ LPC scores are not stable (Kennedy, Houston, korgard, and Gallo, 1997). Also, the contingency variables are complex and difficult for practitioners to assess. It’s often difficult in practice to determine how good the leader – member relations are, how structured the task is, and how much positions power the leader has. Cognitive Resource Theory: an update on Fiedler’s contingency model. More recently, Chemers and Ayman (1993) reconceptualized the Fiedler’s original theory to deal with ‘some serious oversight that need to be addressed.” Specifically, they are concerned with trying to explain the process by which a leader obtains effective group performance. They call this reconceptualization cognitive resource theory. They began making two assumptions. First, intelligent and competent leaders formulate more effective plans decisions, and action strategies than less intelligent and competent leaders. Second, leaders communicate their plans decisions, and strategies through directive behavior. They then show how stress and cognitive resources such as experience, tenure, and intelligence act as important influences on leadership effectiveness. The essence of the new theory can be boiled down to three predictions: (1) directive behavior results in good performance only if linked with intelligence in a supportive, nonstressful leadership environment, (2) in highly stressful situations, there is a positive relationship between job experience and performance, and 93) the intellectual abilities of leaders correlate with group performance in situations that the leader perceives as nonstresful. The limited numbers of studies to test the theory have, to date generated mixed results (Vecchio, 1990; Gibson, Fiedler and Barret, 1993) clearly, more research is needed. Yet given the impact of Fiedler’s original model of leadership on organizational behavior, the new theory’s link to this earlier model and the new theory’s introduction of the leader’s cognitive abilities as an important influence on leadership effectiveness, cognitive resource should not be dismissed out of hand. Leader – Member Theory The previous discussion on leadership theories covered have largely assumed that leaders treat all their subordinates in the same manner. However, leaders often act very differently toward different subordinates. The leader tends to have favorites who made up his “ in – group” The leader – member exchange (LMX) theory argues that because of time pressures, leaders establish a special relationship with a small group of their subordinates. These individuals make up the in – group – they are trusted, get a disproportionate amount of the leader’s attention, and are more likely to receive special privileges. Other subordinates fall into the out – group. They get less of the leader’s time, fewer of the
preferred rewards that the leader controls, and have superior – subordinates relations based on formal authority interactions. The theory proposes that early in the history of the interaction between a leader and a given subordinates, the leader implicitly categorizes the subordinates as an “in” or an “out” and that relationship is relatively stable over time (Liden, Wayne, and Stilwell, 1993) just precisely how the leader chooses who falls into each category is unclear, but there is evidence that leaders tend to choose in – groups members because they have personal characteristics (for example, age, gender attitudes) that are similar to the leader, a higher level of competence than out – group members, and/or extroverted personality (Liden, Wayne, and Stilwell, 1994; Deluga and Perry, 1994; Philips and Bedeian, 1994). LMX theory predicts that subordinates with in – groups status will have higher performance ratings, less turnover, and greater satisfaction with their superiors. Research to test LMX theory has been generally supportive (Dockery and Steiner, 1990; Graen and Uhl – Bein, 1995; Settoon, Bennett and Liden, 1996). More specifically, the theory and research surrounding it provide substantive evidence that leaders do differentiate among subordinates, that these disparities are far form random, and that in – group and out – group status is related to employee performance and satisfaction Path-goal theory. A contingency approach to leadership specifying that the leader’s responsibility is to increase subordinates’ motivation by clarifying the behaviors necessary for task accomplishment and rewards. Path Goal Theory. Currently, one of the most respected approaches to leadership is the path – goal theory. Developed by Robert House, path – goal theory is a contingency model. A 1986 meta – analysis by Robert Lord and his associates remedied this shortcoming with the following insights: First, the Lord study criticized leadership researchers for misinterpreting Stogdill’s and Mann’s findings. Specifically, correlations between traits and perceived leadership ability were misinterpreted as linkages between traits and leader effectiveness. Second, a reanalysis of Mann’s data and subsequent studies revealed that individuals tend to be perceived as leaders when they possess one or more of the following traits: intelligence. Dominance and masculinity. Thus, Lord and his colleagues concluded that personality traits are associated with leadership perceptions to a higher degree and more consistently than the popular literature indicated. (Lord, Vader, and Alliger, 1986). This conclusion was supported by results from several recent studies (Atwater and Yammarino, 1993; Morgan, 1993: Malloy and Janowski, 1993). Three recent meta – analysis of more than 61 studies uncovered three key results. First, men and women differed in the type of leadership roles they assumed within work groups. Mere were seen as displaying more overall leadership and task leadership. In contrast, women were perceived as displaying more social leadership (Eagly and Karau, 1991). Secondly, leadership styles varied by gender. Women used a more democratic or
participative style than men. Men employed a more autocratic and directive style thatn women (Eagly, Karau and Johnson, 1992). Third, female leaders were evaluated more negatively that equivalent male leaders, this bias was considerably stronger when somen used an autocratic or directive leadership style. Women evaluators were male (Eagly, Makhihani, and Klonsky, 1992). Behavioral Styles. This phase of leadership research began during World War II as part of an effort to developed better military leaders. It was an outgrowth of two events: the seeming inability of trait theory to explain leadership effectiveness and the human relations movement, an outgrowth of the Hawtorne Studies. The thrust of early behavioral leadership theory was to focus on leader behavior directly affected work group effectiveness. This led researchers to identify patterns of behavior (called leadership styles) that enabled leaders to effectively influence others. Behavioral styles theory spawned a lot or research and generated many perspective models. Perhaps the most widely known behavioral styles model of leadership is the Managerial Grid, renamed the Leadership Grid in 1991 (bass and Stogdill, 1991). This model is based on the premise that there is one best style of leadership. This model prescribes that leaders should demonstrate a high concern of people and a high concern for production. Situational leadership theory is another well – known prescriptive theory. According to the theory, appropriate leadership is found by cross referencing an employee’s readiness, which is defined as the extent to which an employee possesses the ability and willingness to complete a task, with one of four leadership styles. By emphasizing leader behavior, something is learned; the behavioral style approach makes it clear that leaders are made, not born. This is the opposite of the trait theorists’ traditional assumption. Given what we know about behavior shaping and model – based training, leader behaviors can be systematically improved and developed. Foe example, a study demonstrated that employee creativity was increase when leaders were trained to (1) help employees identify problems and (2) enhance employees feelings of self – efficacy (Redmond, Mumford and teach, 2993). Behavioral styles research also revealed that there is no one best style of leadership. The effectiveness of a particular leadership depends on the situation at hand. For instance, employees prefer structure to consideration when faced with role ambiguity (Bass & Stogdill, 1995) Situational leadership. Situational leadership theories grew out of an attempt to explain the inconsistent findings about traits and styles. Situational theories propose that the effectiveness of a particular style of leader behavior depends on the situation. As situations change, different styles become appropriate. This directly challenges the idea of one best of leadership. There are three alternative situational theories of leadership that reject the notion of one best leadership style.
Leader – member relations reflect the extent to which the leader has the support, loyalty, and trust of the work group. This dimension is the most important component of situational control. Good leader – member relations suggest that the leader can depend on the groups, thus ensuring that the work will try t meet the leader’s goals and objectives. Task structure is concerned with the amount of structure contained within tasks performed by the work group. For example, a managerial job contains less structure that that of a bank teller. Since structured tasks have guidelines for how the job should be completed, the leader has more control and influence over employees performing such task. This dimension is the second most important component of situational control. Position power refers to the degree to which the leader has formal power to reward, punish, or otherwise obtain compliance from employees (Fiedler, 1993). Linking leadership style and situation control. Fiedler (1993) contends that task oriented leaders are more effective in extreme situations of either high of low control, but relationship – oriented leaders tend to be more effective in middle – of – the – road situations of moderate control. Overall accuracy of Fiedler’s contingency model was tested through a meta – analysis of 35 studies containing 137 leaders – style performance relations. According to the researcher’s findings: (1) the contingency theory was correctly included from studies on which it was based, (2) for laboratory studies testing the model, the theory was supported for all leadership situations except situation II, and (3) for fields studies testing the model, three of the eight situations produce completely supportive results while partial support was obtained for other situations. This last findings suggests that Fielder’s model may need theoretical refinement (findings: (1) the contingency theory was correctly included from studies on which it was based, (2) for laboratory studies testing the model, the theory was supported for all leadership situations except situation II, and (3) for field studies testing the model, three of the eight situations produced completely supportive results whiled partial support was obtained of other situations. This last finding suggests that Fiedler’s model may need theoretical refinement (Peters, Harke, and pohlamann, 1993). In conclusion, except for the validity of the LPC scale, Fiedler’s contingency model as considerable support. This implies that organizational effectiveness can be enhanced by appropriately matching leaders with situations. Leaders with an inappropriate style need to change their degree of situational control. Path – goal theory. Robert House originated the path – goal theory of leadership. He proposed a model that describes how expectancy perceptions are influenced by the contingent relationships among four leadership styles and various employee attitudes and behaviors. According to the path – goal model, leader behavior is acceptable when employees view it as a source of satisfaction or as paving the way to future satisfaction. In addition, leader behavior is motivational to the extent it (1) reduces roadblocks that interfere with goal accomplishment, (2) provides the guidance and support needed by employees, and (3) ties meaningful rewards to goal accomplishment. Because the model deals with pathways to goals and rewards, it is called path – goal theory of leadership.
House sees the leader’s main job as helping employees stay on the right paths to challenging goals and valued rewards. House believes leaders can exhibit more than one leadership style. The contrasts with Fiedler, who proposes that leaders have one, dominant style, the four styles identified by House is: Directive Leadership Providing guidance to employee about what should be done and how to do it, scheduling work, and maintaining standards of performance. Supportive Leadership. Showing concern for the well – being and needs of employees, being friendly and approachable, and treating workers as equals. Participative Leadership. Consulting with employees and seriously considering their ideas when making decisions. Achievement – oriented leadership Encouraging employees to perform to perform at their highest level by setting challenging goals, emphasizing excellence, and demonstrating confidence in employee abilities. Research evidence supports the idea that leaders exhibit more than one leadership style (House, 1993). Description on business leaders reinforces these findings. For example, Michael Walsh, prior to his untimely death from cancer, used multiple styles of leadership to engineer a turnaround at ailing Tenneco (Johnson, 1993) Contingency Factors. Contingency factors are situational variables that cause one style of leadership to be more effective than another. In the present context, these variables affect expectancy or path – goal perceptions. This model has two groups of contingency variables. They are employee characteristics and environmental factors. Five important employee characteristics are locus of control, task ability, need for achievement, experience, and need for clarity. Three relevant environmental factors are: the employee’s task, the authority system, and the work group. All these factors have the potential for hindering or motivating employees. Research has focused on determining whether the various contingency factors influence the effectiveness of different leadership styles. The employee characteristics of need for achievement, experience, and need of clarity – affected employee’s preferences
for leadership. Specifically, a study of 298 ROTC cadets revealed that individuals with high achievement needs preferred directive leadership (Kohli, 1990). People with low achievement needs wanted supportive leadership. Experience salespeople were more satisfied when leaders granted them more autonomy and less direction, whereas with a high need of clarity performed better and were more satisfied with directive leadership. With respect to environment contingency factors. Supportive leader behavior promoted job satisfaction when individuals performed structured tasks (Schriesheim and De Nisi, 1991) Managerial implications. There are three important managerial implications, first, leaders possess and use more that one style of leadership. Managers thus should not be hesitant to try new behaviors when the situation calls for them. second, managers should modify their leadership style to fit employee characteristics. Employees with high achievement needs. Little experience, and need for clarity generally should receive directive leadership to increase satisfaction and performance. Third, the degree of task structure is a relevant contingency factor. Managers should consider using supportive supervisions when the task is structured. Supportive supervision is satisfying in this context because employees already now that they should be doing. Hofstede Organizational Theory What is Organizational Theory? Organizational theory is the study of how organizations functions and how they affect and are affected by the environment in which they operate. In this book, we examine the principles that underlie the design and operation of effective organizations. Understanding how organizations operate, however, is only the first step in learning how to control and change organizations so that they can effectively create wealth and resources. Thus the second is to equip manager in an organization, with the conceptual tools to influence organizational situations in which you find yourself. The lessons of organizational theory are as important at the level of first – line supervisor as they are at the level of chief executives officer, in small or large organizations, and in settings as diverse as a not – for – profit organizations or the assembly line of manufacturing company. Managers knowledgeable about organizations theory are able to analyzed the structure and culture of their organization, diagnose problems, and, utilizing the process of organizational design, make adjustments, that help the organizations to achieve its goals
Organizational Theory The study of how organizations functions and how they affect and are affected by the environment in which they operate.
Organizational Structure • The formal system of task and authority relationship that controls how people are to cooperate and use resources to achieve the organization’s goals. Controls coordination and motivation; shapes behaviors of people and the organization. Is response to contingencies involving environment, technology, and human resources. Evolves as organization grows and differentiates. Can be managed and changed through the process of organizational design
Organization Design • The process by which mangers select the manage various dimensions and components of organizational structure and culture so that an organization can control the activities necessary to achieve its goals. •
Organization Culture The set of shared values and norms that controls organizational members’ interactions with each other and with people outside the organization. Controls coordination and motivation; shapes behavior of people and the organization. Is shaped by people, ethics, and organizational structure. Evolves as organization grows and differentiates. Can be manages and changes through the process of organizational design
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Balances the need of the organization to manage external and internal pressures so that it can survive in the long run.
The Importance of Organization Design Because of increased global competitive pressures and because of the increasing use of advanced information technologies, organizational design has become one of management’s top priorities. Today, as never before, managers are searching for new and better ways to coordinate and motivate their employees to increase the value their organization’s can create. There are several specific reason why designing an organization’s structure and culture is such an important task. Organizational design has important implications for company’s ability to deal with contingencies, achieve, achieve a competitive advantage, effectively manage diversity, and increase its efficiency and ability to innovate new goods and services. Dealing with Contingencies A contingency is an event that might occur and must be planned for, such as changing environment or a competitor like Amazon.com that decides to use now technology in an innovative way. The design of an organization determines how effectively an organization responds to various factors in its environment and obtains scarce resource. For example, an organizations ability to attract skilled employees, loyal customers, or government contracts is a function of the degree to which it can control those three environment factors. An organization can design its structure in many ways to increase control over its environment. An organization might change employee task relationships so that employees are more aware of the environment, or it might change the way the organization relates to other organizations by establishing new contracts or joint ventures. For example, when Microsoft wanted to attract new customer for its Windows 98 software both in the United States and globally, it recruited large numbers of customers service representatives and created a new department to allow them to better meet customers’ needs, the strategy was very successful, and Windows 98 has become the best selling operating system in the world. Changing technology is another contingency to which organization must respond. Today, the emergence of the Internet as an important new medium through which organizations mange relationships with their employee, customers, and suppliers is fundamentally changing the design of organizational structure. Gaining Competitive Advantage Competitive advantage. The ability of one company to outperform another because its mangers are able to create more value from the resources at their disposal. Core Competences. Managers’ skills and abilities in value – creating activities.
Strategy. The specific pattern of decisions and actions that managers take to use core competencies to achieve a competitive advantage and outperform competitors. Managing Diversity Differences in the race, gender, and national origin of organizational members have important implications for the values of an organization’s culture and for organizational effectiveness. The quality of organizational decision making, for example, is a function of the diversity of the viewpoints that get considered and of the kind of analysis that takes place. Similarly, in many organizations, particularly service organizations, a large part of a workforce are minority employees, whose needs and preferences must be taken into consideration. Also, changes in the characteristics of the workforce, such an influx of immigrant workers or the aging of the current workforce, require attention and advance planning. An organization needs to design a structure to make optimal use of the talents of a diverse workforce and to developed cultural values that encourages people to work together. An organization’s structure and culture determine how effectively mangers are able to coordinate and motivate workers. Efficiency and innovation Organizations exist to produce goods and service that people value. There better organizations functions, the more value, in the form of more or better goods and services, they create. Historically, the capacity of organizations to create value has increase enormously as organizations ha e introduced better ways of producing and distributing goods and services. Earlier, we discussed the importance of the division of labor and the use of modern technology in reducing costs and increasing efficiency. The design and use of new and more efficient organizational structures is equally important. In today’s global environment, for example, competition from countries with low labor costs is pressuring companies all over the world to become more efficient in order to reduce costs or increase quality. Similarly, the ability of companies to compete successfully in today’s competitive environment is increasingly a function of how well they innovate and how quickly they can introduce new technologies. Organizational design plays an important role in innovation. For example, the way an organization’s structure links people in different specializations, such as research and marketing, determines how fast the organization can introduced new products. Similarly, an organization’s culture can affect people’s desire to be innovative. A culture that is based on entrepreneurial norms and values is more likely to encourage innovation than is a culture that is conservative and bureaucratic because entrepreneurial values encourage people to learn how to respond and adapt to a changing situation. Organizational design involves a constant search for new or better ways of coordinating and motivating employees. Different structures and cultures cause employees to behave in different ways.
The Consequences of Poor Organizational Design Many management teams fail to understand the effect of organizational design on their company’s performance and effectiveness. Although behavior is controlled by organizational structure and culture, managers are often unaware of this relationship and pay scant attention to the way employees behave and their role in the organization – until something happens. General Motors, IBM, Sears, Eastman Kodak, and AT & T have all experienced enormous problems in the last decade adjusting to the reality of modern global competition. References: 1 2 3 4 5 6 7 8 9 10 David D. Van Fleet, Behavior in organization 1991. Houghton Mifflin Company Richard M. Hodgetts and Donald F. Kuratko. Management Second Edition 1988. Harcourt Brace Jovanovich. David H. Holt. Management Principles and Practices, Second Edition. 1990 Printice Hall, Englewood Cliffs New Jersey Richard Daft. Management, Second Edition 1991.The Dryden Press. Kathryn M. Bartol and David C.Martin. Management 1998. Irwin McGraw-Hill Judith R. Gordon. A Diagnostic Approach to Organizational Behavior, Third Edition.1991.Allyn and Bacon USA. Curtis W. Cook and Phillip L. Hunsaker. Management and Organizational Behavior2001, McGraw-Hill, Irwin. Gareth R. Jones Organizational Theory Third Edition. 2000. Printice Hall. Ayman, R. M.M. Chemer, and F, Fiedler. The Contingency Model of Leadership Effectiveness: Its Levels of Analysis. Leadership Quarterly Summer1995. Schriesheim, C.A., Tepper, and L.A. Tetrault. Least preferred Co-Worker Score, Situational Control, and Leadership Effectiveness: A Meta Analysis of Contingency Model Performance Prediction. Journal of applied Psychology August 1995 Vecchio, R.P. Theoretical and Empirical Examination of Cognitive Resource Theory Journal of Applied Psychology 1990. Deluga, J.T., Perry. The Role of Subordinate Performance and Integratiation in Leadership-Member Exchange. Group and Organizational Management, MarcGraw-Hill 1994 Eagly, A.H. and S.J. Karau. Gender and Emergence of Leaders: A Meta-Analysis Journal of Personality Social Psychology. May 1991 Eagly, A.H.S.J.Karau and B.T. Johnson. Gender and Leadership Style Among School Principals; a Meta Analysis. Educational Administration Quarterly February 1992. Eagly.A.H. M.G.Makhijani and B, G. Klonsky. Gender and Evaluation of Leaders: A Meta Analysis. Psychological Bulletin. January 1992.
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CENTER FOR GRADUATE AND MANAGEMENT PHILIPPINE CHRISTIAN UNIVERSITY DASMARINAS, CAVITE
ORGANIZATION THEORY
A Report Paper Submitted In Partial Fulfillment For The Course PhD in Development Administration
Submitted to: Dr. Revelino Garcia PhD (Professor)
Submitted by: MEDRADO O LASCUNA & CINSP SOFRONIO V AGUILA JR
own. Leaders with less favorable, low-power positions must get approval for such action’s. 1. Fiedler has also encouraged the use of a leader match concept since effective leadership is a function of both the individual leader and situation; two alt6ernatives are available to the leader who wants a better match between the two. The leader can either attempt to change his or her personality or work to change the situational variables and make them more favorable. Fiedler argues that it is too difficult to get leaders to change their personalities; it is more effective to change the situation. As a result, Fiedler and his associates have developed a self-paced program instruction work book for this purpose. The booklet teaches leaders how to (1) assess their relationship based on their LPC score, (2) assess the amount of situational favorableness that currently exists in their environment, and (3) change the situation so that it matches their style. The theory has been applied quite successfully. 2. Fiedler’s model suggests that managers develop a dominant style of leadership early in their careers and it changes very little over time. In his view, this predisposition to one style is strongly grounded in personality, and although some marginal change in behavior is possible, a significant change is unlikely. This conclusion has strong implications for staffing managerial positions and for replacing managers. When there is a mismatch between a manager’s predisposed leadership style and situation, that manager may have to be replaced by someone more closely attuned to situational demands. If the mismatch is not severe, however, a leader’s style may be sufficiently changed by management development techniques. The best solution in fiedler’s view is to modify the task structure or leader-member relationships. 3. When Fiedler examined the relationships among leadership style, situational favorability, and group task performance, he found the pattern that taskoriented leaders are more effective when the situation is either highly favorable or highly unfavorable. Relationship-oriented leaders are more effective in situations of moderate favorability. The reason the task-oriented leaders excels in the favorable situations is that when everyone gets along the task is clear, and the leader has power, all that is needed is for someone to take charge and provide directions. Similarly, if the situation is highly unfavorable to the leader, a great deal of structure and task direction is needed. A strong leader defines task structure and can establish authority over subordinates. Because leader-member relations are poor anyway, a strong task oriented will make no difference in the leader’s popularity. The reason the relationship-oriented leader performs better in situation of intermediate favorability is that human relations skills important in achieving high group performance. In these situations the leader may modify well liked, and have some power,
and supervise jobs that contain some ambiguity. A leader with good interpersonal skill can create a positive group atmosphere that will improve relationships, clarify task structure, and establish position power. The leader, then, needs to know things in order to use Fiedler’s contingency theory. First, the leader should know whether he or she has a relationship-or task-oriented style. Second, the leader should diagnose the situation and determine whether leadermember relations, task structure, and position power are favorable. Fittings leader style to the situation can yield large dividends. 4. Fiedler believes that managers cannot easily change their LPC orientation or management style. As a result, he argues that leaders need to understand their leadership style and analyze the degree of favorability, or situational control. If the match between the two is not good, a leader needs to either make changes (e.g. increased task structure) or find a more compatible leadership situation. Fiedler calls this approach “engineering the job to fit the manager.” 5. Where leader-position power is weak would call for a participative leadership style. If the leader is uncomfortable with participative approaches, he or she might be given additional position power. This would indicate the need for a more directive approach. 6. In spite of extensive research to support the theory, critics, question the reliability of the measurement of leadership style and the range and appropriateness of three situational components the leader-member relations, task structure, and position power. However, managers can use this model to diagnose the nature of several contingencies that affect leadership style and begin to identify the appropriate style for a given context. House’s Path Goal Theory Robert House of the University of Toronto has proposed a situational theory of leadership called Path-Goal Theory. Unlike Fiedler’s contingency theory, which relies on the somewhat ambiguous LPC trait, Path-Goal Theory is concerned with the situations under which leader behaviors are most effective. The theory why did house choose the name path-goal for his theory? According to House, the most important activities of leaders are those that clarify the paths to various goals of interest to subordinates. Such goals might include a promotion, a sense of accomplishment, or a pleasant work climate. In turn, the opportunity to achieve such goals should promote job satisfaction, leader acceptance, and high effort. Thus the effective leaders form a connection between subordinate goals and organizational goals. House argues that, to provide job satisfaction and leader acceptance, leader behavior must be perceived as immediately satisfying or as leading to future satisfaction.
Leader that is seen as unnecessary or unhelpful will be resented. House contends that, to promote subordinate effort, leaders must make rewards dependent on performance and ensure that subordinates have a clear picture of how this reward can be achieved. To do this, leader might have to provide support through direction, guidance, and coaching. Leader Behavior Path-Theory is concerned with four specific kinds of leader behavior. These include: Supportive Leadership This style considers subordinates needs and supports a friendly climate at work. When work is tedious or boring, supportive leaders ease frustrations and make task more tolerable, thereby influencing more productive performance. However, when work is pleasant and the environment enjoyable, supportive leaders have little effect on performance or satisfaction. Directive Leadership. This behavior reflects authority, rules, policies, and a formal organization. Subordinates follow specific guidelines and traditional pattern of decision making. When task are unstructured and roles ambiguous, directive leaders are effective because subordinates perceive that closer supervision and more directive leadership will increase their opportunities for success. In other words uncertain or unstructured work environment make employees apprehensive, and in these circumstances a directive style of leadership enhances their expectations for success and rewards related to high performance. However, when subordinates know their jobs and feel confident about performing well, directive leadership is viewed as unnecessary imposition. Participative Leadership. Participative leaders emphasize a consensus environment of team-building relationships. Results are similar to those of directive leadership. In unstructured and ambiguous situations, participative leadership enhances performance and satisfaction. However, unlike directive leadership, participative methods also enhance satisfaction when work is tedious, boring, dangerous, or otherwise unpleasant. Thus participative style incorporates supportive and directive advantages, and works in many situations. But when work is structured and subordinates have clear understanding of their jobs, participative leadership has little or no effect on performance. Achievement leadership. This style of leadership sets challenging goals, encourages innovation, and emphasize confidence in subordinates. It is particularly important when subordinates have to perform nonrepetitive tasks in ambiguous circumstances. When tasks are repetitive and clear, achievement-oriented leadership has or no effect on performance or satisfaction.2 Identifying leadership style. Fielder believes a key factor in leadership success is the individual’s basic leadership style. So he begins by trying to find out what that basis style is. Fiedler created the LPC questionnaire for this purpose. It contains 16 contrasting adjectives (such as pleasant – unpleasant, efficient – inefficient, open – guarded, supportive – hostile). The questionnaire then asks respondents to think of all the co – workers they have ever had and to describes the one person they least enjoyed working
with by rating him on a scale of 1 to 8 for each of the 16 sets of contrasting adjectives. Fiedler believes that based on the respondents’ answer to this LPC questionnaire, he can determine their basic leadership style. If the least preferred co – worker is described in relatively positive terms (a high LPC score). Then the respondent is primarily interested in good personal relations with his co – worker. That is if one essentially describes the person he is least able to work with in favorable terms, Fiedler would label him relationship oriented. In contrast, if the least preferred co – worker is seen relatively unfavorable terms (a low LPC score), the respondent is primarily interested in productivity and thus would be labeled task – oriented. About 16 percent of respondents score in the middle range. Such individuals cannot be classified as either relationship oriented or task oriented and thus fall outside the theory’s predictions. The rest of the discussion therefore, relate to the 84 percent who score in wither the high or low range of the LPC. Fielder assumes that an individual’s leadership style is fixed. This is important because it means that it a situation requires a task – oriented leader and the person in that leadership position is relationship oriented, either the situation ha to be modified or the leader removed and replaced if optimum effectiveness is to be achieved . Fiedler argues that leadership style is innate to a person – one can’t change the style to fit changing situations. Defining the situation. After an individual’s basic leadership style has been assessed through the LPC, it is necessary to match the leader with the situation. Fielder has identified three contingency dimensions that, he argues, define the key situational factors that determine leadership effectiveness. These are leader – member relations, task structure, and position power. they are defined as follows: 1. Leader – member relation is the degree of confidence, trust, and respect subordinates have in their leader. 2. Task structure is the degree to which job assignments are procedurized (that is, structured or unstructured. 3. Position power is the degree of influence a leader has over variables such as hiring, firing, discipline, promotions, and salary increases. The next step in the Fiedler model is to evaluate the situation in terms of the three contingency variables. Leader – member relations are either good or poor, task structure is either high or low, and position is either strong or weak. Fiedler states that the better the leader – member relations, the more highly structured the job, and the stronger the position power, the more control or influence the leader has. For example, a very favorable situation (where the leaders would have a great deal of control) might involve a payroll manger who is well respected and whose
subordinates have confidence in him, (good leader – member relations), where the activities to be done – such as wage computation, check writing, report filing – are specific and clear (high task structure), and the job provides considerable freedom for him to reward and punish his subordinates (strong position power). On the other hand, an unfavorable situation might be the disliked chairperson of a voluntary fund – raising team. In this jog the leader have very little control. Altogether, by mixing the three contingency variables, there are potentially eight different situations or categories in which leaders could find themselves. Matching leaders and situations. With knowledge on an individual’s LPC and an assessment of the three contingency variable, the Fiedler model proposes matching them up to achieve maximum leadership effectiveness (Fiedler, Chemers and Mahar, 1997). Based on Fiedler’s study of over 1,200 groups, in which he compared relationship versus task – oriented leadership styles in each of the eight situational categories, he concluded that task – oriented leaders tend to perform better situational that were very favorable to them and in situations that were very unfavorable. So Fiedler would predict that when faced with a category I, II, III, VII, situation, or VIII task – oriented leaders perform better. Relationship – oriented leaders; however, perform better in moderately favorable situations – categories IV through VI. Given Fiedler’s findings, how would one applies them? One would seek to match leaders and situations. That “situation” would defined by evaluating the three contingency factor of leader – member relations, task structure, and position power. But remember the Fielder views an individual’s leadership style as being fixed. Therefore, there are really only two ways in which to improve leader effectiveness. First, once can change the leader to fit the situation, as in a baseball game; a manger can reach into the bullpen and put in a right – handed pitcher of a left – handed pitcher, depending on the situational characteristics of the hitter. So for example, if a group situation rates a highly unfavorable but is currently led by relationship – oriented manger, the group’s performance could be improved by replacing that manger with one who is task oriented. The second alternative would be to change the situation to fit the leader. That could be done by restructuring tasks or increasing or decreasing the power that the leader has to control factors such as salary increases. Promotions and disciplinary actions. To illustrate, a task – oriented leader is in a category IV situation. If this leader could increase his power, then the leader would be operating in category III and the leader – situation match could be compatible for high group performance. Evaluation. As a whole, reviews of the major studies that tested the overall validity of the Fiedler’s model lead to a generally positive conclusion. That is, there is considerable evidence to support at least substantial parts of the model (Schriesheim, Tepper and Tetrault, 1994; Ayman, Chemers, and Fiedler, 1995). But additional variables are probably needed if an improved model is to fill in some of the remaining gaps. Move over, there problems with the LPC and the practical use of the model that needs to be addresses. For instance, the logic underlying the LPC is nor well understood and studies
have shown those respondents’ LPC scores are not stable (Kennedy, Houston, korgard, and Gallo, 1997). Also, the contingency variables are complex and difficult for practitioners to assess. It’s often difficult in practice to determine how good the leader – member relations are, how structured the task is, and how much positions power the leader has. Cognitive Resource Theory: an update on Fiedler’s contingency model. More recently, Chemers and Ayman (1993) reconceptualized the Fiedler’s original theory to deal with ‘some serious oversight that need to be addressed.” Specifically, they are concerned with trying to explain the process by which a leader obtains effective group performance. They call this reconceptualization cognitive resource theory. They began making two assumptions. First, intelligent and competent leaders formulate more effective plans decisions, and action strategies than less intelligent and competent leaders. Second, leaders communicate their plans decisions, and strategies through directive behavior. They then show how stress and cognitive resources such as experience, tenure, and intelligence act as important influences on leadership effectiveness. The essence of the new theory can be boiled down to three predictions: (1) directive behavior results in good performance only if linked with intelligence in a supportive, nonstressful leadership environment, (2) in highly stressful situations, there is a positive relationship between job experience and performance, and 93) the intellectual abilities of leaders correlate with group performance in situations that the leader perceives as nonstresful. The limited numbers of studies to test the theory have, to date generated mixed results (Vecchio, 1990; Gibson, Fiedler and Barret, 1993) clearly, more research is needed. Yet given the impact of Fiedler’s original model of leadership on organizational behavior, the new theory’s link to this earlier model and the new theory’s introduction of the leader’s cognitive abilities as an important influence on leadership effectiveness, cognitive resource should not be dismissed out of hand. Leader – Member Theory The previous discussion on leadership theories covered have largely assumed that leaders treat all their subordinates in the same manner. However, leaders often act very differently toward different subordinates. The leader tends to have favorites who made up his “ in – group” The leader – member exchange (LMX) theory argues that because of time pressures, leaders establish a special relationship with a small group of their subordinates. These individuals make up the in – group – they are trusted, get a disproportionate amount of the leader’s attention, and are more likely to receive special privileges. Other subordinates fall into the out – group. They get less of the leader’s time, fewer of the
preferred rewards that the leader controls, and have superior – subordinates relations based on formal authority interactions. The theory proposes that early in the history of the interaction between a leader and a given subordinates, the leader implicitly categorizes the subordinates as an “in” or an “out” and that relationship is relatively stable over time (Liden, Wayne, and Stilwell, 1993) just precisely how the leader chooses who falls into each category is unclear, but there is evidence that leaders tend to choose in – groups members because they have personal characteristics (for example, age, gender attitudes) that are similar to the leader, a higher level of competence than out – group members, and/or extroverted personality (Liden, Wayne, and Stilwell, 1994; Deluga and Perry, 1994; Philips and Bedeian, 1994). LMX theory predicts that subordinates with in – groups status will have higher performance ratings, less turnover, and greater satisfaction with their superiors. Research to test LMX theory has been generally supportive (Dockery and Steiner, 1990; Graen and Uhl – Bein, 1995; Settoon, Bennett and Liden, 1996). More specifically, the theory and research surrounding it provide substantive evidence that leaders do differentiate among subordinates, that these disparities are far form random, and that in – group and out – group status is related to employee performance and satisfaction Path-goal theory. A contingency approach to leadership specifying that the leader’s responsibility is to increase subordinates’ motivation by clarifying the behaviors necessary for task accomplishment and rewards. Path Goal Theory. Currently, one of the most respected approaches to leadership is the path – goal theory. Developed by Robert House, path – goal theory is a contingency model. A 1986 meta – analysis by Robert Lord and his associates remedied this shortcoming with the following insights: First, the Lord study criticized leadership researchers for misinterpreting Stogdill’s and Mann’s findings. Specifically, correlations between traits and perceived leadership ability were misinterpreted as linkages between traits and leader effectiveness. Second, a reanalysis of Mann’s data and subsequent studies revealed that individuals tend to be perceived as leaders when they possess one or more of the following traits: intelligence. Dominance and masculinity. Thus, Lord and his colleagues concluded that personality traits are associated with leadership perceptions to a higher degree and more consistently than the popular literature indicated. (Lord, Vader, and Alliger, 1986). This conclusion was supported by results from several recent studies (Atwater and Yammarino, 1993; Morgan, 1993: Malloy and Janowski, 1993). Three recent meta – analysis of more than 61 studies uncovered three key results. First, men and women differed in the type of leadership roles they assumed within work groups. Mere were seen as displaying more overall leadership and task leadership. In contrast, women were perceived as displaying more social leadership (Eagly and Karau, 1991). Secondly, leadership styles varied by gender. Women used a more democratic or
participative style than men. Men employed a more autocratic and directive style thatn women (Eagly, Karau and Johnson, 1992). Third, female leaders were evaluated more negatively that equivalent male leaders, this bias was considerably stronger when somen used an autocratic or directive leadership style. Women evaluators were male (Eagly, Makhihani, and Klonsky, 1992). Behavioral Styles. This phase of leadership research began during World War II as part of an effort to developed better military leaders. It was an outgrowth of two events: the seeming inability of trait theory to explain leadership effectiveness and the human relations movement, an outgrowth of the Hawtorne Studies. The thrust of early behavioral leadership theory was to focus on leader behavior directly affected work group effectiveness. This led researchers to identify patterns of behavior (called leadership styles) that enabled leaders to effectively influence others. Behavioral styles theory spawned a lot or research and generated many perspective models. Perhaps the most widely known behavioral styles model of leadership is the Managerial Grid, renamed the Leadership Grid in 1991 (bass and Stogdill, 1991). This model is based on the premise that there is one best style of leadership. This model prescribes that leaders should demonstrate a high concern of people and a high concern for production. Situational leadership theory is another well – known prescriptive theory. According to the theory, appropriate leadership is found by cross referencing an employee’s readiness, which is defined as the extent to which an employee possesses the ability and willingness to complete a task, with one of four leadership styles. By emphasizing leader behavior, something is learned; the behavioral style approach makes it clear that leaders are made, not born. This is the opposite of the trait theorists’ traditional assumption. Given what we know about behavior shaping and model – based training, leader behaviors can be systematically improved and developed. Foe example, a study demonstrated that employee creativity was increase when leaders were trained to (1) help employees identify problems and (2) enhance employees feelings of self – efficacy (Redmond, Mumford and teach, 2993). Behavioral styles research also revealed that there is no one best style of leadership. The effectiveness of a particular leadership depends on the situation at hand. For instance, employees prefer structure to consideration when faced with role ambiguity (Bass & Stogdill, 1995) Situational leadership. Situational leadership theories grew out of an attempt to explain the inconsistent findings about traits and styles. Situational theories propose that the effectiveness of a particular style of leader behavior depends on the situation. As situations change, different styles become appropriate. This directly challenges the idea of one best of leadership. There are three alternative situational theories of leadership that reject the notion of one best leadership style.
Leader – member relations reflect the extent to which the leader has the support, loyalty, and trust of the work group. This dimension is the most important component of situational control. Good leader – member relations suggest that the leader can depend on the groups, thus ensuring that the work will try t meet the leader’s goals and objectives. Task structure is concerned with the amount of structure contained within tasks performed by the work group. For example, a managerial job contains less structure that that of a bank teller. Since structured tasks have guidelines for how the job should be completed, the leader has more control and influence over employees performing such task. This dimension is the second most important component of situational control. Position power refers to the degree to which the leader has formal power to reward, punish, or otherwise obtain compliance from employees (Fiedler, 1993). Linking leadership style and situation control. Fiedler (1993) contends that task oriented leaders are more effective in extreme situations of either high of low control, but relationship – oriented leaders tend to be more effective in middle – of – the – road situations of moderate control. Overall accuracy of Fiedler’s contingency model was tested through a meta – analysis of 35 studies containing 137 leaders – style performance relations. According to the researcher’s findings: (1) the contingency theory was correctly included from studies on which it was based, (2) for laboratory studies testing the model, the theory was supported for all leadership situations except situation II, and (3) for fields studies testing the model, three of the eight situations produce completely supportive results while partial support was obtained for other situations. This last findings suggests that Fielder’s model may need theoretical refinement (findings: (1) the contingency theory was correctly included from studies on which it was based, (2) for laboratory studies testing the model, the theory was supported for all leadership situations except situation II, and (3) for field studies testing the model, three of the eight situations produced completely supportive results whiled partial support was obtained of other situations. This last finding suggests that Fiedler’s model may need theoretical refinement (Peters, Harke, and pohlamann, 1993). In conclusion, except for the validity of the LPC scale, Fiedler’s contingency model as considerable support. This implies that organizational effectiveness can be enhanced by appropriately matching leaders with situations. Leaders with an inappropriate style need to change their degree of situational control. Path – goal theory. Robert House originated the path – goal theory of leadership. He proposed a model that describes how expectancy perceptions are influenced by the contingent relationships among four leadership styles and various employee attitudes and behaviors. According to the path – goal model, leader behavior is acceptable when employees view it as a source of satisfaction or as paving the way to future satisfaction. In addition, leader behavior is motivational to the extent it (1) reduces roadblocks that interfere with goal accomplishment, (2) provides the guidance and support needed by employees, and (3) ties meaningful rewards to goal accomplishment. Because the model deals with pathways to goals and rewards, it is called path – goal theory of leadership.
House sees the leader’s main job as helping employees stay on the right paths to challenging goals and valued rewards. House believes leaders can exhibit more than one leadership style. The contrasts with Fiedler, who proposes that leaders have one, dominant style, the four styles identified by House is: Directive Leadership Providing guidance to employee about what should be done and how to do it, scheduling work, and maintaining standards of performance. Supportive Leadership. Showing concern for the well – being and needs of employees, being friendly and approachable, and treating workers as equals. Participative Leadership. Consulting with employees and seriously considering their ideas when making decisions. Achievement – oriented leadership Encouraging employees to perform to perform at their highest level by setting challenging goals, emphasizing excellence, and demonstrating confidence in employee abilities. Research evidence supports the idea that leaders exhibit more than one leadership style (House, 1993). Description on business leaders reinforces these findings. For example, Michael Walsh, prior to his untimely death from cancer, used multiple styles of leadership to engineer a turnaround at ailing Tenneco (Johnson, 1993) Contingency Factors. Contingency factors are situational variables that cause one style of leadership to be more effective than another. In the present context, these variables affect expectancy or path – goal perceptions. This model has two groups of contingency variables. They are employee characteristics and environmental factors. Five important employee characteristics are locus of control, task ability, need for achievement, experience, and need for clarity. Three relevant environmental factors are: the employee’s task, the authority system, and the work group. All these factors have the potential for hindering or motivating employees. Research has focused on determining whether the various contingency factors influence the effectiveness of different leadership styles. The employee characteristics of need for achievement, experience, and need of clarity – affected employee’s preferences
for leadership. Specifically, a study of 298 ROTC cadets revealed that individuals with high achievement needs preferred directive leadership (Kohli, 1990). People with low achievement needs wanted supportive leadership. Experience salespeople were more satisfied when leaders granted them more autonomy and less direction, whereas with a high need of clarity performed better and were more satisfied with directive leadership. With respect to environment contingency factors. Supportive leader behavior promoted job satisfaction when individuals performed structured tasks (Schriesheim and De Nisi, 1991) Managerial implications. There are three important managerial implications, first, leaders possess and use more that one style of leadership. Managers thus should not be hesitant to try new behaviors when the situation calls for them. second, managers should modify their leadership style to fit employee characteristics. Employees with high achievement needs. Little experience, and need for clarity generally should receive directive leadership to increase satisfaction and performance. Third, the degree of task structure is a relevant contingency factor. Managers should consider using supportive supervisions when the task is structured. Supportive supervision is satisfying in this context because employees already now that they should be doing. Hofstede Organizational Theory What is Organizational Theory? Organizational theory is the study of how organizations functions and how they affect and are affected by the environment in which they operate. In this book, we examine the principles that underlie the design and operation of effective organizations. Understanding how organizations operate, however, is only the first step in learning how to control and change organizations so that they can effectively create wealth and resources. Thus the second is to equip manager in an organization, with the conceptual tools to influence organizational situations in which you find yourself. The lessons of organizational theory are as important at the level of first – line supervisor as they are at the level of chief executives officer, in small or large organizations, and in settings as diverse as a not – for – profit organizations or the assembly line of manufacturing company. Managers knowledgeable about organizations theory are able to analyzed the structure and culture of their organization, diagnose problems, and, utilizing the process of organizational design, make adjustments, that help the organizations to achieve its goals
Organizational Theory The study of how organizations functions and how they affect and are affected by the environment in which they operate.
Organizational Structure • The formal system of task and authority relationship that controls how people are to cooperate and use resources to achieve the organization’s goals. Controls coordination and motivation; shapes behaviors of people and the organization. Is response to contingencies involving environment, technology, and human resources. Evolves as organization grows and differentiates. Can be managed and changed through the process of organizational design
Organization Design • The process by which mangers select the manage various dimensions and components of organizational structure and culture so that an organization can control the activities necessary to achieve its goals. •
Organization Culture The set of shared values and norms that controls organizational members’ interactions with each other and with people outside the organization. Controls coordination and motivation; shapes behavior of people and the organization. Is shaped by people, ethics, and organizational structure. Evolves as organization grows and differentiates. Can be manages and changes through the process of organizational design
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Balances the need of the organization to manage external and internal pressures so that it can survive in the long run.
The Importance of Organization Design Because of increased global competitive pressures and because of the increasing use of advanced information technologies, organizational design has become one of management’s top priorities. Today, as never before, managers are searching for new and better ways to coordinate and motivate their employees to increase the value their organization’s can create. There are several specific reason why designing an organization’s structure and culture is such an important task. Organizational design has important implications for company’s ability to deal with contingencies, achieve, achieve a competitive advantage, effectively manage diversity, and increase its efficiency and ability to innovate new goods and services. Dealing with Contingencies A contingency is an event that might occur and must be planned for, such as changing environment or a competitor like Amazon.com that decides to use now technology in an innovative way. The design of an organization determines how effectively an organization responds to various factors in its environment and obtains scarce resource. For example, an organizations ability to attract skilled employees, loyal customers, or government contracts is a function of the degree to which it can control those three environment factors. An organization can design its structure in many ways to increase control over its environment. An organization might change employee task relationships so that employees are more aware of the environment, or it might change the way the organization relates to other organizations by establishing new contracts or joint ventures. For example, when Microsoft wanted to attract new customer for its Windows 98 software both in the United States and globally, it recruited large numbers of customers service representatives and created a new department to allow them to better meet customers’ needs, the strategy was very successful, and Windows 98 has become the best selling operating system in the world. Changing technology is another contingency to which organization must respond. Today, the emergence of the Internet as an important new medium through which organizations mange relationships with their employee, customers, and suppliers is fundamentally changing the design of organizational structure. Gaining Competitive Advantage Competitive advantage. The ability of one company to outperform another because its mangers are able to create more value from the resources at their disposal. Core Competences. Managers’ skills and abilities in value – creating activities.
Strategy. The specific pattern of decisions and actions that managers take to use core competencies to achieve a competitive advantage and outperform competitors. Managing Diversity Differences in the race, gender, and national origin of organizational members have important implications for the values of an organization’s culture and for organizational effectiveness. The quality of organizational decision making, for example, is a function of the diversity of the viewpoints that get considered and of the kind of analysis that takes place. Similarly, in many organizations, particularly service organizations, a large part of a workforce are minority employees, whose needs and preferences must be taken into consideration. Also, changes in the characteristics of the workforce, such an influx of immigrant workers or the aging of the current workforce, require attention and advance planning. An organization needs to design a structure to make optimal use of the talents of a diverse workforce and to developed cultural values that encourages people to work together. An organization’s structure and culture determine how effectively mangers are able to coordinate and motivate workers. Efficiency and innovation Organizations exist to produce goods and service that people value. There better organizations functions, the more value, in the form of more or better goods and services, they create. Historically, the capacity of organizations to create value has increase enormously as organizations ha e introduced better ways of producing and distributing goods and services. Earlier, we discussed the importance of the division of labor and the use of modern technology in reducing costs and increasing efficiency. The design and use of new and more efficient organizational structures is equally important. In today’s global environment, for example, competition from countries with low labor costs is pressuring companies all over the world to become more efficient in order to reduce costs or increase quality. Similarly, the ability of companies to compete successfully in today’s competitive environment is increasingly a function of how well they innovate and how quickly they can introduce new technologies. Organizational design plays an important role in innovation. For example, the way an organization’s structure links people in different specializations, such as research and marketing, determines how fast the organization can introduced new products. Similarly, an organization’s culture can affect people’s desire to be innovative. A culture that is based on entrepreneurial norms and values is more likely to encourage innovation than is a culture that is conservative and bureaucratic because entrepreneurial values encourage people to learn how to respond and adapt to a changing situation. Organizational design involves a constant search for new or better ways of coordinating and motivating employees. Different structures and cultures cause employees to behave in different ways.
The Consequences of Poor Organizational Design Many management teams fail to understand the effect of organizational design on their company’s performance and effectiveness. Although behavior is controlled by organizational structure and culture, managers are often unaware of this relationship and pay scant attention to the way employees behave and their role in the organization – until something happens. General Motors, IBM, Sears, Eastman Kodak, and AT & T have all experienced enormous problems in the last decade adjusting to the reality of modern global competition. References: 1 2 3 4 5 6 7 8 9 10 David D. Van Fleet, Behavior in organization 1991. Houghton Mifflin Company Richard M. Hodgetts and Donald F. Kuratko. Management Second Edition 1988. Harcourt Brace Jovanovich. David H. Holt. Management Principles and Practices, Second Edition. 1990 Printice Hall, Englewood Cliffs New Jersey Richard Daft. Management, Second Edition 1991.The Dryden Press. Kathryn M. Bartol and David C.Martin. Management 1998. Irwin McGraw-Hill Judith R. Gordon. A Diagnostic Approach to Organizational Behavior, Third Edition.1991.Allyn and Bacon USA. Curtis W. Cook and Phillip L. Hunsaker. Management and Organizational Behavior2001, McGraw-Hill, Irwin. Gareth R. Jones Organizational Theory Third Edition. 2000. Printice Hall. Ayman, R. M.M. Chemer, and F, Fiedler. The Contingency Model of Leadership Effectiveness: Its Levels of Analysis. Leadership Quarterly Summer1995. Schriesheim, C.A., Tepper, and L.A. Tetrault. Least preferred Co-Worker Score, Situational Control, and Leadership Effectiveness: A Meta Analysis of Contingency Model Performance Prediction. Journal of applied Psychology August 1995 Vecchio, R.P. Theoretical and Empirical Examination of Cognitive Resource Theory Journal of Applied Psychology 1990. Deluga, J.T., Perry. The Role of Subordinate Performance and Integratiation in Leadership-Member Exchange. Group and Organizational Management, MarcGraw-Hill 1994 Eagly, A.H. and S.J. Karau. Gender and Emergence of Leaders: A Meta-Analysis Journal of Personality Social Psychology. May 1991 Eagly, A.H.S.J.Karau and B.T. Johnson. Gender and Leadership Style Among School Principals; a Meta Analysis. Educational Administration Quarterly February 1992. Eagly.A.H. M.G.Makhijani and B, G. Klonsky. Gender and Evaluation of Leaders: A Meta Analysis. Psychological Bulletin. January 1992.
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CENTER FOR GRADUATE AND MANAGEMENT PHILIPPINE CHRISTIAN UNIVERSITY DASMARINAS, CAVITE
ORGANIZATION THEORY
A Report Paper Submitted In Partial Fulfillment For The Course PhD in Development Administration
Submitted to: Dr. Revelino Garcia PhD (Professor)
Submitted by: MEDRADO O LASCUNA & CINSP SOFRONIO V AGUILA JR
