The Concepts of Leadership and Management

The concepts of leadership and management are an essential discussion in business. Each company or organization maintains people who are in charge and the approach they choose to take strongly depends on personality as well as education and training. The field of leadership research has offered competent theories to outline the dynamics of being in a position of power. As industry players expand and become more complex, company executives need to acquire critical skills and balance leadership styles with management approaches. This report will examine the link between leadership and management, introduce theoretical behavioral approaches to leadership development, and use research to analyze the executive program at General Electric.

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Comparison of Leadership and Management

Leadership is necessary for any organization to achieve its mission and vision. It is a process when an individual influences peers to work towards and achieve common objectives or outcomes. The concept of leadership can be developed into a focused, dynamic, and cooperative performance system. Interaction through dialogue and discussion can lead to influence and changes in organizational structure, operational procedures, key performance indicators, and the feedback process. Essentially, leaders help to select a strategic direction for the purpose and function of any given group. That helps to establish a compelling vision that drives achievement, encourages and inspires staff, and helps to navigate arising challenges. Without the presence of clear leadership, the diversity of backgrounds and perspectives existing in any group of people leads to confrontation and disagreement which is inherently counterproductive (Liphadzi, Aigbavboa & Thwala 2017). A leader can guide and unite varying approaches to work styles and problem-solving to harness productivity out of the joint effort.

Management is the process of oversight over a specific task from inception to execution. It is a tedious process of intricate planning, overseeing performance, and management of human, capital, and financial resources within the scope of the project and organization. Management implies discipline and competent adherence to performance goals. This includes creating, monitoring, and rewarding clear target objectives. Furthermore, managers must apply interpersonal skills to drive work ethic within subordinates. Management is utilized in a wide variety of sectors and industries; however, it is particularly crucial in the spheres of production and finances. An influential figure in the development of management practices, Peter Drucker, believed the essential purpose of management included a combination of marketing and innovation (Liphadzi, Aigbavboa & Thwala 2017).

Significant theoretical and academic research on the topic was presented by John Kotter who created a framework for differentiating leadership and management. Kotter argued that management has a central role in creating order and security, while leadership is necessary to drive change and fluidity within an organization. Appendix A presents some of the key components developed by Kotter. Managers have to maintain consistency within set timetables, budgets, and agendas with a focus on organization, structure, and control which, in theory, should generate efficiency in productivity. Meanwhile, leadership thrives on overseeing adaptive change and strategic growth through team-building and communication that is meant to empower rather than control (Liphadzi, Aigbavboa & Thwala 2017).

Leadership is an inherent component of management, providing the vision, guidance, and inspiration for others to achieve performance objectives. Management benefits of careful planning and execution remain mostly inefficient until workers seek to utilize them through the motivation driven by leadership. Despite a common misconception, many leaders are the foundation of an organizational pyramid rather than its top because they influence the company from the ground up. Managers help to administer function and structure within a company, overlooking activities and the overall mechanism of operations. Managers are common in the intermediary organizational levels, balancing management with execution (Răducan & Răducan 2014).

The realities of the modern economy have created complexity and volatility within business operations. Technological innovations, competition, market irregularity, stock market dependence, demographic or political shifts, and rapid industry transitions are influential factors in the global economy. Leadership has become a demanded skill in various industries due to the ability to create change. To remain competitive, companies are forced to adapt and innovate at a relatively rapid rate in comparison to industries of the 20th century Răducan & Răducan 2014). Leadership can guide change since it is focused on driving forward a particular vision.

Meanwhile, management also has relevant applications within industries. Corporations and organizations are more complex than ever before, with extensive supply chains and international distribution networks. Management can help with maintaining control over the complexity and chaos by ensuring a mechanism of order and consistency which is tremendously valued by investors. Competent management addresses issues of quality control, budget planning, and product profitability. Managers can set objectives and create a list of steps and timetable that the target indicators can be achieved given the available resources (Răducan & Răducan 2014).

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In conclusion, leadership and management are conjoined although they are significantly differing concepts. This link is necessary and complementary by offering various approaches to operating a project or organization. It can be argued that attempting to separate these concepts would create critical issues in the modern economy where human capital is valued tremendously. During the industrial era, workers were mostly disposable and undifferentiated in the production process. However, current realities value expertise and experience which each employee can offer (Murray n.d.). Leadership is not an official job position while management remains a critical part of the organizational structure. Workers depend on managers for not only an oversight but to define their purpose. Therefore, managers must adopt the role of leaders to some extent and organize operations in a manner that not only optimizes efficiency but helps to guide, inspire, and develop professional competency in employees.

Behavioral Theory of Leadership

Behavioral theories of leadership focus on particular actions, demeanors, and styles exemplified by leaders. Researchers adhering to this theory believe that behavior serves as the best indicator and predictor of the quality and influence of an individual as a successful leader. The inconsistencies in the Trait Theory of Leadership have led to the creation of the Behavioural approach which was a significant shift in research. Behavioral theories do not emphasize the inborn capabilities of a person but focus on the development and actions of a leader. If leadership can be outlined in terms of desirable skills and describable actions, then, theoretically, other people can attain these traits. Therefore, the premise stands that successful and competent leaders can be made rather than born since successful leadership is based on learnable behavior. While the approach is more widely accepted than its predecessors, there are gaps in research as no studies have been able to connect leadership styles with performance outcomes (Harrison 2017).

The first primary study on behavioral leadership was conducted by Kurt Lewin at Iowa State University in 1939, focusing on the concept of leadership styles. It was identified that two distinct styles existed: autocratic and democratic leadership. An autocratic leader made sole decisions and controlled employees under close supervision. Meanwhile, a democratic leader creates an environment of participation and close cooperation and trust with employees. Further research conducted by Tannenbaum and Schmidt in 1969 suggests that regarding employee participation, more than 100 behaviors could exist on a scale of varying degrees of leadership styles. While an individual may be either democratic or autocratic as described earlier, it is possible to have a combination of both styles (Van Wyk 2008).

The next breakthrough in behavior theory occurred in 1978 at Ohio State University. A study led by Nystrom determined new categories of leadership behavior: consideration and initiating structure. Consideration determines a leader’s sensitivity to subordinates, including establishing mutual respect and trust. This consists of valuing input, understanding challenges, showing recognition, and communicating on a personal level. Meanwhile, initiating structure is the degree to which a leader is task-oriented. This type of leadership is objective-focused and imposes a certain level of control over subordinates to achieve set targets. This includes motivating work ethic, establishing strict guidelines, and controlling deadline adherence. Both consideration and initiating structure categories are independent which means that a leader can hypothetically ardently practice both types of approaches or neither of them. Research shows that all four possible combinations of a leader exemplifying degrees of consideration or initiating control have the potential to be effective (Van Wyk 2008).

Researchers at the University of Michigan compared the behaviors of supervisors based on the effectiveness of their leadership. It was eventually determined that employee-centered leaders show consideration for the human needs and emotions of subordinates. Employee-centered behavior consists of providing support and close interaction. It is vital because by exemplifying support, such leaders were able to promote positive interaction amongst employees as a group. As a result, collaboration increased while conflict instances were reduced which contributes to efficiency in the workplace. This can be compared to the consideration aspect of the Nystrom study. Blake and Mouton sought to consolidate research findings from behavioral theories to date and created a comprehensive framework known as the “Leadership Grid” which showed the dynamics of leadership styles and when they can be applied (Appendix B). While some categories such as an impoverished leader have low concern for production and subordinates, others choose to either balance (middle of the road) or focus on a specific aspect of the leadership spectrum (authority compliance, country club). A team leader, which the researchers agreed is ideal and can be used universally in all situations, shows great concern for both optimal production and employee satisfaction (Van Wyk 2008).

In a review of the literature, it was identified that approximately 65 various classifications of leadership behavior. That number continues to increase as new theories are created, although more often than not, they are not compared to or disapprove pre-existing behavior theories. However, there is consistency amongst all the research that leadership behavior can be classified into the following categories:

  1. Task-oriented behaviors – these are based on initiating structure and select transactional leader behaviors such a contingent reward and management by exception-active. They define specific task roles, dictate relationships within a group, coordinate all actions, and set performance standards (DeRue et al. 2011).
  2. Relational-oriented behaviors – the leaders focus on consideration by exemplifying concern and respect of individuals in a group. They are generally more approachable and seek to empower others. Everyone is treated as equals, and a democratic approach is utilized to gain input from members of the group. Such participative behavior builds respect and focuses on employee welfare above efficiency (DeRue et al. 2011).
  3. Change-oriented behaviors – these leaders are focused on promoting and executing the change in the organization. They are distinct from traditional leaders and are often eccentric or unorthodox. These behaviors consist of formulating and establishing a vision which is then facilitated in an organization by gathering support, promoting innovation, and taking risks (DeRue et al. 2011).
  4. Passive leadership – this is the most ineffective type of leadership, which consists of inaction and a passive approach. They choose to engage only when challenges arise, and their subordinates are unable to continue operating on their own. It can create tremendous problems since a leader may not notice an issue at all or every solution would be reactionary which rarely leads to positive outcomes. There is no active interest or communication with the group, even in terms of work delegation. It is a laissez-faire approach but is often considered a lack of leadership behavior (DeRue et al. 2011).

Research on leadership behaviors is based on existing social and business structures in which leaders hold a formal position of power. The job inherently consists of a specific set of behaviors and roles which are more task-based than actual leadership. If someone failed to actively participate or fulfill job obligations, such actions would be symbolic of an underperforming leader which would result in the loss of power and respect from subordinates, even if that person was able to keep the formal position. Leadership effectiveness focuses on evaluating the individual in their position and the impact on outcomes.

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The degree of participation based on the categories described above becomes critical in leadership effectiveness since every action, even if symbolic, can have profound effects. Behaviour is more predictive of leadership effectiveness than traits. They exemplify more indicators that are comparable to leadership as an action. Furthermore, although traits due impact behavior and demeanor to a certain extent, their manifestation can be tremendously affected by environment and circumstance. Traits are activated when specific situational conditions are met which may be detrimental if it fails to manifest. Leadership contexts are dynamic and vague which can suppress certain traits (DeRue et al. 2011). If traits define leadership effectiveness, it is a game of chance, but behavioral theory suggests that necessary acts of leadership can be trained to manifest when the circumstances call for them. Assessment of leadership effectiveness is measured when observed leadership behavior is exemplified by a specific situation.

Critics of the behavioral approach to leadership suggest that although the classification of leadership styles is valid, their application depends on the industry, environment, and situation. This led to a gradual paradigm shift towards Contingency leadership theory that implies that leadership styles can and should change based on circumstance (Van Wyk 2008). However, behavioral theories have laid a foundation for the study of leadership styles and actions which are utilized to create competent leaders in leading training programs of modern industry.

Program at General Electric

The company General Electric (GE) was created in 1892. Currently, it is a global conglomerate of various unrelated businesses in a wide selection of industries. It participates in manufacturing, research, development, sales, energy, technology, and financial sectors. Its commercial finance, energy, and real estate divisions are one of the leading brands in the global economy. The company’s corporate culture for the last decades has emphasized and rewarded professional learning and development. Each employee not only answers to a direct supervisor but is monitored by an HR manager which can impact career progression. The HR manager identifies, recruits, trains, evaluates, and rewards employees who show promise (Waters 2009).

HR tracks those seeking positions of leadership throughout their career. Competent candidates are recruited into one of many leadership programs that GE offers, lasting for approximately two years. They provide a distinct and varied education and experience. The programs use a rotational design that switches out candidates to different departments in the GE conglomerate to identify the best fit as well as provide valuable hands-on experience in addition to classroom education. It is meant to foster collaboration as well as a critical understanding of the company functioning like a well-oiled machine. If the program is completed successfully, it results in a basic supervisory position, and one enters the corporate management talent pool. With approximately 85,000 employees in that group, further evaluations, considerations, and higher-level training programs exist to identify the most competent and skillful leaders who go on to executive positions (Waters 2009).

The two-year development program is known as Corporate Audit Staff (CAS) is critical for GE’s organizational culture and growth. It creates leaders which are aware of economic realities and work with a strong finance-focused and analytical approach. However, GE executives realized that it needed leaders with in-depth expertise but similar dedication to company values. This led to the creation of the Corporate Leadership Staff (CLS) which is meant to specifically nurture and train future executives for the company with financial, operational, and technical experiences. However, it results in the molding of high-potential talent into competent leaders. CLS combines the most effective elements of CAS and other GE programs, emphasizing rotational approach, integration into real-world scenarios, and business organization. Since GE is a global company, and each geographic region has its intricacies, the rotational approach allows guiding candidates to acquire the skill set needed to function on their career path in the industry of choice. For example, China maintains a joint-venture market that is rarely used in other regions, requiring a leader to have operational expertise in this field. The program’s core purpose is to build leaders based on market-specific capabilities, ensuring the success of candidates that can finish (Tisoczki & Bevier 2014).

General Electric is known as a corporation that has tremendously improved the process of identifying and developing leadership and managerial talent. Having GE leadership experience, especially one of its grueling manager programs is valuable in any industry. GE is an outlier as the company has generated one of the largest numbers of top executives in the last decades which went on to lead various Fortune 500 companies and often increased their performance and valuations which serves as a testament to the effectiveness of training (Lehmberg et al. 2009).

GE utilizes what is known as leadership succession planning which is a strategic decision that is meant to protect the company and ensure stability in critical situations. Economic competition and global influences create a lot of pressure on large corporations to find executive leaders that are innovative, adaptive, and can push the organization ahead. The standard for the industry is the board of directors voting upon a CEO, usually someone already close to the top. A change of the CEO can be a turbulent time for any company, creating pressure from investors or a lack of clear strategy. CEOs usually step down due to poor performance or a crisis, which leaves a gap in company leadership even more detrimental, resulting in loss of stock value and other financial consequences. The CEO of GE Jack Welch (1981-2001) created a leadership succession initiative that took talented candidates from the aforementioned programs and prepared them for top executive positions include the CEO. It ensures that the organizational culture of GE is maintained, and the CEO comes from within its ranks, understanding all aspects of the company’s business and operations (Onatolu 2013).

This process of leadership selection is unique because it ensures a seamless transition amongst executives. The past two CEOs at GE have built their career in the company. During the last shake-up in June of 2017, the announcement of CEO departure and a new chairman named occurred on the same day. Furthermore, almost six months were given to gradually transition the current CEO Flannery into his new role. It had a positive effect on the company as many felt inspired by the change and shareholders showed confidence as stock prices went up 3% (Thomas 2017). Such rapid transitions in large corporations are rare as boards and shareholders can take weeks to vet candidates and select ones with compatible visions. GE’s leadership programs allow cultivating a leader that the conglomerate needs with utmost dedication to its values and prosperity. In turn, this creates a tremendous advantage for the company regarding adaptability and versatility in the volatile conditions of the global economy.

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Theoretical Analysis

The leadership training and succession programs at General Electric can be described as following the dogma that “leaders are made.” Emphasis on skill, experience, and expertise suggests that GE values the development of leadership styles and behaviors. Specially designed programs such as CAS and CLS are meant to foster behaviors that it believes are critical to the prosperity of the company and adaptability to challenges of the global market. Most corporations do not utilize an internal leadership development program, especially to the extent that GE has. That occurs due to companies believing that they have the necessary leadership in place or they fail to see a return on investment. However, a competently planned leadership development program not only ensures future stability for a company but strategic leverage for talent and leadership retention.

Although GE’s program uses a much more modern and complex approach than behavioral theories of leadership developed in the late 20th century, some of its components can be associated with leadership styles developed by behavioral researchers. For example, GE runs an intermediate manager program that focuses on fostering leadership behavior through team training. The offered curriculum not only seeks to address business concepts but self-evaluation as well. Managers were asked to consider challenges to promoting change including hard barriers such as organizational structure and soft barriers such as company culture and leadership influence (Prokesch 2009). This can be directly correlated to change-oriented behaviors in behavioral theory that, similar to GE managers, must balance task-oriented approach with promoting conceptual innovation. Furthermore, team leadership is evident here from the company executives since they are creating programs that consider both, increased productivity and increased employee satisfaction. Managers can receive better qualifications and opportunities which will then bring benefit to the company. Since adaptive change is considered a critical component of modern leadership, GE is attempting to implement these behavioral patterns into its training programs, starting at executive levels down to intermediate managers.

Employee development at GE, starting from entry-level programs is focused on fostering talent and leadership skills. Employees that have been with the company and those who have entered mid-career are provided with help for a development plan which is personalized towards each individual’s experience. For example, if GE were to acquire a smaller firm and bring its managers, it would need to include them in the organizational culture and leadership development programs. Someone without international exposure may be provided with an opportunity to travel while others may need direct sales experience. This process of development consists of continuous feedback and coaching, supervisor by senior management figures. GE hopes that interaction with experienced leaders will help foster and pass on skills necessary for entry employees to thrive and potentially seek leadership opportunities themselves (Krishnamoorthy 2014). In terms of behavioral theory, this can be considered relational-oriented behavior by considering the uniqueness and individuality of entry employees, especially those who have yet to show any benefit for the company. However, it shows that there is a concern for their transition into GE and their professional development.

Although GE’s leadership and management programs have a profound reputation, it is still important to consider whether they have value from a theoretical perspective. Research suggests that executive coaching focused on educating leadership competencies does indeed have an impact on leader behavior. Managers have shown significant improvements in developing organizational capability, creating a vision, developing strategic direction, and collaboration. This was evident through both external and self-evaluation (Smerek et al. 2009). Multisource feedback programs such as the ones at GE are expensive to maintain, which requires empirical evidence to support their utility and improvements to leadership and management concepts. Coaching has been found to influence leadership behavior since managers have a better understanding and are trained to respond to situations in a particular manner. Therefore, the intervention helps to facilitate behavior improvements in real-life business situations.

Conclusion

It is evident that leadership and management often distinct benefits to an organization. In the modern economy, individuals need to combine both aspects to resolve complex problems while inspiring adaptive change. Behavioral theories of leadership suggest that leaders can be made by teaching successful practices and techniques. There are a wide variety of behaviors that are represented by distinct leadership styles, each having its benefits based on the situation. General Electric has experienced tremendous success due to its innovation and pioneering in many global-oriented industries. It has produced a large number of transformational leaders by offering training programs and a unique mechanism of leadership succession which has become an integral part of the company’s strategy. It can be argued that GE partially adapted the behavioral theory approach by focusing on nurturing leadership skills and qualities within its company environment. It has a profound effect on the leverage power of the company and contributes to sustaining an efficient organizational culture.

Reference List

DeRue, S, Nahrgang, J, Wellman, N & Humphrey, S 2011, ‘Trait and behavioural theories of leadership: an integration and meta-analytic test of their relative validity’, Personnel Psychology, vol. 64, pp. 7-52, Web.

Harrison, C 2017, Leadership theory and research: a critical approach to new and existing paradigms, Springer, Cham, Switzerland.

Krishnamoorthy, R 2015, ‘How GE trains more experienced employees’, Harvard Business Review, Web.

Lehmberg, D, Rowe, WG, White, RE, & Philips, JR 2009, ‘General electric: An outlier in CEO talent development’, Ivey Business Journal, Web.

Liphadzi, M, Aigbavboa, C & Thwala, W 2017, ‘A theoretical perspective on the difference between leadership and management’, Procedia Engineering, vol. 196, pp. 478-482, Web.

Murray, A n.d., ‘What is the difference between management and leadership’, The Wall Street Journal, Web.

Onatolu, A 2013, ‘Cultural revolution – just what multinational companies need: a case of GE’, Journal of Business Case Studies, vol. 9, no. 1, pp. 59-62, Web.

Prokesch, S 2009, ‘How GE teaches teams to lead change’, Harvard Business Review, Web.

Smerek, RE, Luce, K, Kluczynski, P & Denison, DR 2009, Executive Coaching: Does leader behavior change with feedback and coaching?, Web.

Thomas, L 2017, ‘General Electric’s Jeff Immelt is stepping down; John Flannery named chairman and CEO’, CNBC, Web.

Tisoczki, B & Bevier, L 2014, ‘A personalized rotation program to develop future leaders’, in CD McCauley, DS DeRue, PR Yost & S Taylor (eds), Experience-driven leader development: Models, tools, best practices, and advice for on-the-job development, John Wiley & Sons, Hoboken, NJ, pp. 93-98.

Van Wyk, J 2008, Chapter 4 leadership theories and models, Web.

Waters, R 2009, ‘Evolution of leadership development at General Electric’, Engineering Management Journal, vol. 21, no. 1, pp. 42-46, Web.

Appendix A

Differences to leadership and management according to John Kotter.
Table 1: Differences to leadership and management according to John Kotter (Liphadzi, Aigbavboa & Thwala 2017).

Appendix B

Leadership (Managerial) Grid Model.
Figure 1: Leadership (Managerial) Grid Model (Van Wyk 2008).
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