The main issue associated with the differentiation between leadership and management lies in that employers themselves use the two terms interchangeably, which leads to confusion. However, there are differences between the two concepts, and in order to be knowledgeable regarding the topic of leadership, it is important to know the definitions of both terms. According to Ratcliffe (2013) from the Guardian, management is defined as a set of tools and processes that maintain organisational performance and functioning. Such processes include forecasting, planning, budgeting, hiring and staffing, performance measurements, and problem-solving, which are all targeted at enhancing organisational operations.
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Leadership, on the other hand, does not deal with keeping an organisation functioning; it is about aligning employees to the vision through effective communication and inspiration (Ratcliffe 2013). For example, Winston Churchill can be considered an effective leader, although, he was not a manager since he allowed for the processes like bureaucracy function and prosper. A manager, on the other hand, would have focused on eliminating all processes that hinder the country’s prosperity, but Churchill focused on leading the nation with a clear vision of the future.
If to delve further into the examination of differences between leadership and management, it is important to investigate three most distinct differences. First, a leader innovates and invents while a manager organises (Monnappa 2015). The team’s leader usually comes up with innovative ideas to start a business or shift its development into a new stage. To do this, a leader develops new strategies and techniques for catering to the current trends and advancements.
By contrast, a manager is an employee that is predominantly responsible for maintaining what has already been established or developed in a company. Thus, a manager should control the bottom-line within an organisation to prevent any instabilities from occurring. According to Murray (2010) in The Wall Street Journal essential guide to management: lasting lessons from the best leadership minds of our time, a manager is a person that “establishes appropriate targets and yardsticks, and analyzes, appraises, and interprets performance” (p. 3). Therefore, a manager is a person that has to understand the needs of employees who work alongside him or her in order to determine who will fit a specific job better.
Second, a leader inspires trust while a manager relies on control. A leader is a person that should push employees to perform as effectively as they possibly can as well as set the most appropriate tone for the entire group. On the other hand, by their job description, organisation managers are required to control employees and develop their personal assets and skills that will bring out the best in them (Monnappa 2015).
This means that managers have to understand their employees in order to increase their job effectiveness. Third, a leader usually asks questions such as ‘why’ and ‘what’ while a manager focuses on questions such as ‘when’ and ‘how.’ Therefore, in order to be effective leaders, some people may need to challenge the existing authorities to change or reverse decisions that do not prioritise teams’ best interests. However, managers do not have to assess or analyze procedures and tools that result in failures. Their job description places and emphasis on the ‘how’ and ‘when’ to make sure that the introduced plan is executed appropriately. This means that leaders attempt to change, while managers accept the status quo exactly as it is (Monnappa 2015).
Leadership Theory Analysis
Contingency theory (developed by Fiedler) is an approach to the studying organisational performance in which “explanations are given as to how contingent factors such as technology, culture, and the external environment influence the design and function of organisations” (Islam & Hu 2012). The basic premise of Contingency Leadership theory is that there is no definite and correct way to lead a company.
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Rather, whether an organisation is efficient depends on a match between the type of implemented technology, environmental factors, the type and style of the organisation, and the existing information system. Contingency theories evolved from sociological functionalist theories of organisational structure developed by Reid and Smith (2000), Chenhall (2003), and Woods (2009). All three studies hypothesised that the structure of an organisation depended on an array of contextual factors.
According to the contingency theory of leadership, there is no ideal behaviour that organisational leadersh should exhibit. Both relationship- and task-oriented leadership approaches can become effective if they favorably contribute to a given situation. Such favourability of a leadership approach can be determined through leader-member relations, task structure, and leader position power. Leader-member relations depend on the level of trust and respect that followers have for their leader.
Task structure refers to the extent to which followers’ responsibilities can be organised, and their performance measured. Leader position power is the extent of control that a leader has over the rewards of the subordinates. Nevertheless, the contingency theory does not postulate that leaders must adapt to the changing circumstances because their personalities cannot change much; therefore, in the contingency approach towards leadership, leaders had to change the situation to fit them, which is referred to as “job engineering” (Insights 2016).
Contingency theory of leadership has several advantages that separate it from others. First, the theory has gained a lot of attention in empirical research (e.g. Strube & Garcia; Peters, Hartke & Pohlman). In an environment in which both electronic and paper media give advice on “how to become a successful leader,” the contingency theory presents a unique approach to a long-standing tradition.
Many researchers have managed to test it and determine that the contingency theory was a reliable approach that explains how people can become effective leaders. The second advantage refers to the fact that contingency theory has expanded the understanding of leadership by making people consider the effect situations have on choosing a leadership style. Prior to the development of contingency theory, all leadership theories were focused on whether there was one type of leadership that could be used in any situation (such as the trait approach).
Nevertheless, the contingency theory approach placed emphasis on the importance of paying attention to the relationship between the style of the leader and the situation in which he or she was placed. In its essence, the contingency theory approach contributed to the change of emphasis in the context of leadership, especially because of the link between the leader and the situation (Northouse 2012). Third, the contingency theory is predictive and therefore can provide important information about the leadership style that could be the most efficient in a specific context. Fourth, this approach does not require individuals to be effective in every situation.
According to Northourse (2012), contingency theory argues that leaders are not expected to lead their followers in every situation; therefore, organisations should make an attempt to put leaders in those circumstances that will fit their style of leadership. In cases when it is obvious that leaders were placed in wrong situations, there should be efforts targeted at changing the work variables and moving leaders to another context. Lastly, contingency theory provides information regarding leader’s approach that can be beneficial to developing leadership profiles, such as the LPC score. It can be used in conjunction with other HR planning assessments for developing profiles on different people for determining where and how they will serve an organisation in the most effective way.
Trait theories of leadership postulate that there are certain traits of personality that differentiate leaders from non-leaders. Under this approach, leaders are born and are not made, so there is a direct relationship between leadership and personality. Unlike the majority of leadership theories that focus on getting an understanding of how personality develops, trait theories rarely talk about development. Moreover, predicting a specific behavior in a specific situation does not concern trait theorists. Also, contrast to other theoretical orientation of leadership, trait theorists are focused on comparing leaders on the basis of not only their aspects of personality but also degrees.
The trait theory of leadership is based on the characteristics of many leaders (both effective and not) and is used for predicting leadership success. The list of traits presented below is compared to the characteristics of potential leaders for assessing the likelihood of failure or success:
- Knowledge of the business;
- Integrity and honesty;
- Motivation and drive.
When the connections found, the trait theory suggests that natural leaders are nurtured in order to become great leaders. As a rule, the most advanced versions of the trait theory regard leadership characteristics as innate. Some implications of the trait theory of leadership are the following:
- Specific traits produce specific behavioral patterns;
- Behavioural patterns are consistent with different situations;
- Individuals are born with leadership traits.
If to provide examples for the trait theory, if an individual does not possess self-confidence, it is unlikely that he or she will be an effective leader. Self-confidence, intelligence, determination, integrity, and sociability are considered the most common traits of an effective leader as postulated by the theory. Intelligence refers to an individual’s ability to understand, learn, plan, create, think logically, and be self-aware.
Intelligence is positively related to leadership because when an individual has strong verbal ability and strong reasoning, he or she is more likely to be an effective leader. Self-confidence refers to the ability of an individual to be certain about his or her skills and competencies; it includes a sense of self-assurance and self-esteem. Because leadership is associated with influencing other people, self-confidence will allow an individual to be sure about the attempts to lead other people towards accomplishing the established organisational goals. A determination is a trait that refers to the desire of an individual to accomplish a specific goal; it includes characteristics such as persistence, initiative, drive, and dominants (Northouse 2012).
As a rule, determined people are the ones who are willing to be proactive and preserve their reputation when dealing with different obstacles. Moreover, determination can often call for exhibiting dominance in cases when followers require clear direction. Integrity is another fundamental trait of leaders. It refers to the qualities of trustworthiness and honesty. In the modern business environment, integrity is a characteristic that has received a lot of attention. Scandals that occurred in the corporate world (e.g. WorldCom, American Apparel) have caused the public to be skeptical of leaders who did not exhibit particularly ethical behaviours.
For this reason, leadersh should have the integrity to inspire confidence in their followers and gain the trust of the public to make themselves more believable. Finally, sociability is a final trait that is crucial for leaders to have; it refers to an individual’s desire to seek social relationships with others. Usually, sociable leaders are diplomatic, outgoing, friendly, are extremely sensitive to the needs of their followers, and show concern for the well-being of other people. Social leaders tend to have increased interpersonal skills to create trustworthy relationships with their followers.
The trait theory is different from other approaches such as contingency theory because it exclusively emphasizes the leader, not his or her followers or the environment. Theoretically, the trait approach towards leadership is more straightforward since it does not hypothesize what kind of leader is needed in a specific organisational environment. Rather, the trait theory of leadership suggests that an organisation will operate better if those in the positions of management had suitable leadership profiles and skills.
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To achieve this, it is a common practice for companies to use personality assessment tools. It is assumed that personality assessment is more likely to bring the appropriate personnel to an organisation and increase its effectiveness. Furthermore, companies may specify the characteristics and traits that are required for them and then implement personality assessments for finding out whether a specific individual fits their organisational needs (Northouse 2012).
Effectiveness of Leadership Selection and Training
If to analyse the effectiveness of leadership selection and training program in one organisation, the example of Oracle can be helpful. According to the Oracle (2012) White Paper on Seven steps for effective leadership development, companies usually face two significant challenges when looking for and developing leaders. Currently, organizations are required to identify the most qualified individuals for filling leadership roles; to achieve this, they have to create comprehensive leadership selection and training programs to support and develop future leaders. Major talent management functions all play important roles in the creation of effective leadership selection and training programs and can be supported by a set of talent management platforms (Oracle 2012). Such functions may include the following:
- Recruitment for sourcing the leadership talent;
- Assessment for the evaluation of both internal and external capabilities of leaders;
- Performance management for monitoring any correcting the course taken by developing leaders;
- Succession planning for avoiding future gaps in leadership;
- Career planning for enabling workers understand their options of leadership and set specific goals;
- Development for creating a framework targeted at reducing the skill gaps (Oracle 2012).
A successful program of leadership development is the one that starts with the alignment of leadership development with the strategy of an organisation and the definition of the leadership type required to be executed within that strategy. If to examine the example of Oracle, the company first focused on determining the most suitable leadership style. It was found that each leader had different traits and characteristics that could fit different styles of leadership, so Oracle did not specify one leadership type to fit all situations. For assessing leaders’ fit within the organisation, Oracle focused on the following to steps:
- Getting to know leaders better. Through applying behavioural and psychological assessments, the management linked the future success in leadership roles to the specific traits of different leaders.
- Understanding the organisational culture. Through asking employees, board, partners, and others about what makes a good leader for them, the company managed to come up with a profile of a leader that could effectively perform within the organisation.
For identifying current and potential leaders within the company, Oracle focused on the identification of expected leadership skills and competencies that individuals should have for effective performance. In order to succeed, the company applied various competence models for identifying the potential of their leaders. However, it is important to mention that whether a company uses competence models or not, it should be able to have a clear understanding of its success measurements and integrating into their system of performance management. Then, on the basis of the identified leadership competencies, employees’ capabilities are tested and measured in the course of the performance management review stage.
When it comes to the process of leadership selection and training, Oracle proposed a two-tier approach. First, the company focused on the benefits of developing internal leaders within the organisation. the key advantage of the of internal development of leaders is associated with the fact that they are likely to achieve success almost 50% faster compared to the external candidates (Oracle 2012). this advantage is particularly true for companies in which the knowledge of internal processes and structure is necessary for successfully accomplishing the job. Leadership capabilities and skills can be effectively developed in a variety of ways; however, on-the-job training is the most popular approach across organisational boards.
When appropriate leadership competencies cannot be filed by the available employees within the company, the human resource team should use the set criteria for testing the skills and competencies of future leaders found outside the organisation. Second, a company should go through the process of identifying suitable leaders through recruitment and then training them to become effective in the organisational setting.
Online pre-assessment tools can be very helpful fo accelerating the process of recruitment and filtering through eliminating candidates that do not pass the necessary threshold scores. Such assessments are effective in helping organisations reduce the time spend on the filtering since it usually takes a company 80% of the time to get to the short list of the most suitable candidates, which leaves only 20% of time for examining and evaluating the quality candidates (Oracle 2012).
Leaders selected both internally and externally are then required to participate in leadership training programs targeted at developing a leadership mindset, being effective in a specific organisational context, engaging in further learning, setting well-articulated expectations, and much more (Carpino 2014). Developing a leadership mindset is one of the most important aspects of leadership training programs since it is necessary to teach future leaders that leadership is fundamentally different from management.
Organisational context is another important point that should be integrated into leadership training since the development of true leaders does not and should not look the same for all organisations. For instance, the way in which leaders make business decisions in a start up is radically different from the way decisions are made in a 50-year old organisation that has a solid base of loyal customers.
The effectiveness of leadership development programs depends on whether the training sessions go beyond the traditional measures of training. Apart from tracking learner’s satisfaction and participation, it is crucial to focus on real business outcomes (Carpino 2014). It is worth for organisations to answer questions such as “What does our business need to see better results of the training program?” or “How are leaders’ daily jobs align with the retention and the development of careers within our organisation?” Answers to such questions will shape how the leadership development programs should be designed (Carpino 2014).
Implications of Changes in Leadership and People Management
The modern business environment has changed dramatically and has become more complex and unpredictable. This calls for the change in leadership skills; people need to develop more adaptive and complex thinking and decision-making skills. However, methods implemented for developing leaders have not changed to cater to the leadership needs. The majority of leaders receive training from on-the-job experiences, mentoring, and training programs. While such training methods are still important, they are not enough for addressing the leadership challenges of the current organisational environment (Petrie 2015).
Therefore, there is a challenge ahead of organisation to address the issue of development and management of employees, so they extend their knowledge and become “bigger minds.” Moreover, managers should become experts in “what” leadership alongside with the “how” on their own development.
If to assess the implications of leadership and people management changes, the following four trends in leadership development are likely to occur soon:
- Placing emphasis on vertical rather than horizontal development. Companies have spent a lot of time and effort to develop horizontally (expanding and improving competencies) while not much attention was given to vertical development (developmental stages). The main difference between the two types of leadership development is that horizontal is transferred from an expert (a coach, a teacher, or a mentor) to employees while vertical development is something that employees should achieve personally for themselves.
- Replacing collective developmental ownership with individual. It is important to hold workers accountable for the progress they have made. For this reason, an implication for the changes in leadership and people management may be associated with encouraging organisations to make each employee responsible for their development. Instead of relying on human resources or their manager, employees should be encouraged to take “the driver’s seat” and take action.
- Focusing on collective leadership rather than individual. At the current point, leadership has become too individually focused since it evolved from the idea that a leadership position is a one person role. A new approach is associated with making leadership a collective process that is spread over a network of individuals. Therefore, the question of “Who is the leader of this organisation?” will shift to “What specific conditions are needed for leadership to become effective in this organisational context?”
- Emphasizing the importance of innovation in leadership development. Unfortunately, there are no simple methods or models that will help to sufficiently develop leadership in the increasingly complex future (Petrie 2015). For this reason, a stage of rapid innovation will be required in companies to experiment with new models and approaches to combine different ideas on leadership management in completely unique ways. Technology and the Internet will be beneficial for driving the change and ensure that organisations embrace the changes in leadership and people management instead of resisting them.
Contextualisation of Leadership Selection and Development Programme
Training programs targeted at developing different leadership traits can be very effective in increasing trainees’ motivation to increase their performance. With regards to the contextualisation of contingency leadership in a training programme, the situational leadership approach can be the most beneficial. Situational leadership is a contingency theory approach, which suggests that leaders should use different styles of leaders depending on the developmental level of their followers.
In this model, employee readiness is the main factor that determines which leadership style should be used. Situational leadership has been hugely popular in the modern industry, with 70% of Fortune 500 companies using the approach, as found by the Center for Leadership Studies (2016). An example of Situational Leadership application is associated with British Telecom. According to the chairman Sir Iain Vallance, the informational ages makes the traditional approach towards leadership redundant. For this reason, the management of the company focused on becoming more effective in doing things differently for catering to the needs of the organisation.
The most important aspect was spreading leadership throughout the entire company so that all employees had a shared set of values with regard to promoting continuous learning and rapid reactions to the external events.
Contrast to the situational approach towards leadership; trait leadership development focuses on cultivating traits that an effective leader should exhibit. For instance, Steve Jobs was a leader who was known for his charisma and the ability to passionately communicate his vision to make others follow him. Very often, organisations use personality assessments for determining which traits are effective and which are not. Trait leadership development training programmes are used by organisations in order to train employees how to develop their leadership traits and use them effectively during their everyday operations.
Trait leadership approach is a method that makes personality assessments valuable for identifying the weaknesses and strengths of a potential leader. Leadership trait training are targeted at identifying good leadership behaviours, learning the difference between management and leadership, developing decision-making skills, learning how to lead a group by example, as well as learning how to improve interpersonal and communication skills.
Leadership development and selection programs with regards to both trait and situational (contingency) approaches have specific benefits to offer for organisations. Among the benefits, the benefits below stand out the most:
- Productivity increase. Consistent leadership is more likely to increase the productivity of employees. To achieve this, leaders should be educated on how to exhibit emotional intelligence that encourages them to stay smart about their emotions and effectively use empathy for engaging employees into increasing their productivity.
- Employee retention. If organisational leaders receive training on the development of appropriate leadership traits and effective behaviours to fit different contexts and situations, they are more likely to positively influence on employees’ engagement and retention. Through investing in leadership training, organisations will be able to retain suitable personnel and reduce the expenses on recruitment.
- Nurturing future leaders. Situational and trait leadership development training is a strategic advantage for nurturing future leaders. Without an effective strategy, leadership roles are often given to the most stand out and dominant personalities within an organisation. However, quality leadership combines right qualities with targeted leadership training, so in order to nurture future leaders, it is important to support the succession planning and offering a clear career path for workers.
- Increasing employee engagement. to increase the engagement of employees, organisations should invest into leadership development trainings to teach leaders how to effectively give feedback to workers and increase their level of skills.
- Implementing an effective style of leadership. Leadership development training programs can be beneficial in implementing the most suitable style of leadership (whether situational or trait). Since there is a variety of leadership style that can fit different contexts, leadership development training can help leaders to implement an effective leadership style.
- Making better decisions. Effective leadership training can lead to more effective decision-making. Because leaders usually operate at higher levels of emotional intelligence, they are more likely to make intelligent and well-informed decisions. For this reason, organisations should invest into providing employees with cohesive leadership development training programs.
In conclusion, the discussion about leadership found that the recent developments in the corporate world call for dramatic changes in how leaders are trained. In the paper, the researcher focused on two different theories of leadership: contingency theory and trait theory. The two approaches are different in the nature of their focus: while the trait theory focuses on the individual, the contingency theory emphasizes the importance of a situation with regards to the selection of the suitable style of leadership.
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