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2. 13 Chapter Leadership and Change “Old is easy, new is hard.” ~David B. Peterson and Mary Dee Hicks, Personnel Decisions International

3. Introduction • The best leaders are those who recognize the situational and follower factors inhibiting or facilitating change, paint a compelling vision of the future, and formulate and execute a plan that moves their vision from a dream to reality. • To successfully lead larger-scale change initiatives, leaders must attend to the situational and follower factors affecting their group or organization. • Leaders must use their power and influence, personality traits, coaching and planning skills, and knowledge of motivational techniques and group dynamics to drive change. 13-3 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

4. Leadership and Management: Revisited Again • Leadership is being more concerned with doing the right thing and management is being more concerned with doing things right. • Organizational systems are fairly resistant to change. • Followers may prefer to have a predictable path rather than risk their success on some uncharted course for the future. • Leadership is the key to aligning organizational systems and follower behavior around a new organizational vision. • It takes a combination of both leadership and management skills to successfully implement any team or organizational change effort. 13-4 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

5. The Rational Approach to Organizational Change • D = Dissatisfaction • M = Model • P = Process • R = Resistance • C = Amount of Change • Leadership practitioners who understand the model should be able to do a better job of developing change initiatives and diagnosing where their initiatives may be getting stuck. C = D x M x P > R 13-5 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

6. (D) Dissatisfaction • Followers who are relatively content are not apt to change; malcontents are much more likely to do something to change the situation. • Follower’s emotions are the fuel for organizational change, and change often requires a considerable amount of fuel. • The key for leadership practitioners is to increase dissatisfaction to the point where followers are inclined to take action, but not so much that they decide to leave the organization. 13-6 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

7. (M) Model • Environmental scanning • Vision • Setting new goals to support the vision • Identifying needed system changes • Systems thinking approach • Siloed thinking 13-7 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

8. The Components of Organizational Alignment Figure 13-1 13-8 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

9. (P) Process • The change initiative becomes tangible and actionable because it consists of the development and execution of the change plan. • Change will only occur when the action steps outlined in the plan are actually carried out. • The best way to get followers committed to a change plan is to have them create it. • Leaders who address shifts in styles and inappropriate behaviors in a swift and consistent manner are more likely to succeed with their change initiatives. 13-9 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

10. (R) Resistance • There is often a temporary drop in performance or productivity as followers learn new systems and skills. • Four reactions to change that make up the SARA Model: • Shock • Anger • Rejection • Acceptance • Leaders should: • Recognize the four reactions to change. • Understand that individual followers can take more or less time to work through the four stages. • Understand that people are not likely to take any positive action toward a change initiative until they reach the acceptance stage. • Understand that where people are in the SARA Model often varies according to organizational level. 13-10 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

11. Reactions to Change Figure 13-3 13-11 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

12. The Rational Approach to Organization Change and the Interactional Framework Figure 13-4 13-12 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

13. Concluding Comments about the Rational Approach to Organizational Change • This approach maintains that the leader needs both good leadership and good management skills if a change initiative is to be successful over the long term. • Leadership practitioners should recognize that there is a natural tension between leadership and management skills. • The rational approach provides leaders with a systematic process on how to drive change and an increased understanding on why change initiative succeed or fail in their respective organizations. 13-13 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

14. Charismatic and Transformational Leadership • Charismatic leaders are passionate, driven individuals who are able to paint a compelling vision of the future. • The combination of a compelling vision, heightened emotional levels, and strong personal attachments often compels followers to put forth greater effort to meet organizational or societal challenges. • Some charismatic movements can result in positive and relatively peaceful organizational or societal changes. 13-14 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

15. Charismatic Leadership: A Historical Review • Max Weber maintained that societies could be categorized into one of three types of authority systems: • Traditional authority system • Legal-rational authority system • Charismatic authority system • James MacGregor Burns believed that leadership could take one of two forms: • Transactional leadership • Transformational leadership 13-15 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

16. Charismatic Leadership: A Historical Review (continued) • All transformational leaders are charismatic, but not all charismatic leaders are transformational. • Three newer theories of charismatic or transformational leadership: • Conger and Kanungo Theory (1998) • House, Shamir, and Arthur Theory (1993) • Bass’s Theory of Transactional and Transformational Leadership (2000) 13-16 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

17. Leader Characteristics - Vision • Charismatic leaders recognize shortcomings of a present order and offer an imaginative vision to overcome them. • Important aspects of vision: • Vision is not limited to grand social movements. • The leader’s vision of the future is often a collaborative effort. • Values play a key role in the leader’s vision, and serve as a moral compass for aligning the actions of leaders and followers with strange initiatives. • The leader’s vision helps followers interpret events and actions in terms of a common perceptual framework. 13-17 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

18. Leader Characteristics – Rhetorical Skills and Image and Trust Building • Rhetorical skills heighten followers’ emotional levels and inspire them to embrace the vision. • Transformational leaders are adept at tailoring their language to particular groups, thereby better engaging them mentally and emotionally. • Transformational leaders build trust in their leadership and the attainability of their goals through an image of seemingly unshakeable self-confidence, strength of more conviction, personal example and self-sacrifice, and unconventional tactics or behaviors. 13-18 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

19. Leader Characteristics – Personalized Leadership • One of the most important aspects of charismatic and transformational leadership is the personal nature of the leader’s power. • Three important components of personalized leadership: • Charismatic leaders are more sensitive to the emotional states of followers. • Charismatic leaders tend to be emotionally expressive, especially through such nonverbal channels as their eye contact, posture, movement, gestures, tone of voice, and facial expressions. • Transformational leaders empower followers by building their self-efficacy. 13-19 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

20. Follower Characteristics • Charisma is probably more a function of the followers’ reactions to a leader than of the leader’s personal characteristics. • Four unique characteristics of the reactions that followers have toward leaders: • Identification with the leader and the vision • Heightened emotional levels • Willing subordination to the leader • Feelings of empowerment 13-20 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

21. Situational Characteristics • Situational factors play an important role in determining whether a leader is perceived as charismatic. • Situational factors believed to affect charismatic leadership: • Crises • Task interdependence and social networks • Other situational characteristics • Organizations placing a premium on innovation • Outscoring and organizational downsizing • Time 13-21 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

22. Concluding Thoughts about the Characteristics of Charismatic and Transformational Leadership • Charismatic leadership is most fully understood when we also consider how leader and situational factors affect the attribution process. • It seems unlikely that all the characteristics of charismatic leadership need to be present before charisma is attributed to a leader. • Charismatic leadership can happen anywhere. • It is possible to attribute charisma to an individual based solely on his or her position or celebrity status. • There appears to be overwhelming evidence that charismatic or transformational leaders are more effective than their noncharismatic counterparts. 13-22 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

23. Bass’s Theory of Transformational and Transactional Leadership • Transformational leaders are believed to be more successful at driving organizational change because of followers’ heightened emotional levels and their willingness to work toward the accomplishment of the leader’s vision. • Transactional leaders were believed to motivate followers by setting goals and promising rewards for desired performance. • Bass hypothesized that transformational and transactional leadership comprised two independent leadership dimensions. • The Multifactor Leadership Questionnaire is used to assess the extent to which leaders exhibit transformational or transactional leadership and the extent to which followers were satisfied with their leader and believed their leader was effective. 13-23 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

24. Research Results of Transformational and Transactional Leadership • Results indicated that transformational leadership can be observed in all countries, institutions, and organizational levels, but it was more prevalent in public institutions and at lower organizational levels. • There is overwhelming evidence that transformational leadership is a significantly better predictor of organizational effectiveness than transactional or laissez-faire leadership. • Laissez-faire leadership was negatively correlated with effectiveness. • It is possible for leaders to systematically develop their transformational and transactional leadership skills. • There is no guarantee that leaders who have the right stuff and are schooled in the appropriate techniques will be seen as charismatic by followers. 13-24 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

25. Five Factor Model Dimensions versus Charismatic Leadership Characteristics Table 13-5 13-25 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

26. Summary • Management skills are important to ensure compliance with existing systems, processes, and procedures. • Leadership skills are needed when changes need to be made to existing systems and processes. • The rational approach puts more emphasis on analytic planning and management skills whereas the emotional approach puts more emphasis on leadership skills, leader-follower relationships, and the presence of a crisis to drive organizational change. • There is ample evidence to suggest that either the rational or the emotional approach can result in organizational change, but the effectiveness of the change may depend on which approach leadership practitioners are most comfortable with and the skill with which they can carry it out. 13-26 McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.