Import nce of emotional

Aarhus School of Business Master Thesis
University of Aarhus August 2008

Emotional Intelligence
The Importance of Emotional Intelligence in the Recruitment Process

Margrét Grétarsdóttir
280040

Supervisor:
Frances Jørgensen


Executive Summary

The idea with this paper is to investigate the term emotional intelligence and its importance
during the recruitment process. Over the last few decades a continuous growth has been in the
interest in the area of leadership, with both managers and leadership researchers trying to
identify the behaviour which increases a leader’s effectiveness. Despite of research, there
appears to be little emerging consensus regarding what characterises an effective leader. It
also seems to be quite common to recruit managers on the basis of their technical
qualifications rather than their ability to communicate with others which could be prevented,
or at least minimised, by taking so called “soft” management procedures (focus on the
personal aspects in working environment) into considerations during the recruitment process.
Recently, emotional intelligence as a predictor of effective leadership has gained the attention
of researchers and recruiters. Emotional intelligence can be generally defined as a set of non-
cognitive competencies that are linked to interpersonal effectiveness or “people skills” at
work. More specifically, emotional intelligence includes the ability to monitor one’s own and
others’ feelings and emotions, to discriminate among them, and to use that information to
guide one’s thinking and actions. Emotional intelligence has become extremely popular
within the fields of management because it is thought to underlie various aspects of workplace
performance and success not accounted for by traditional intelligence measures or personality.

The research question put forward in the paper is: “to what degree are managers recruited
and selected on the basis of emotional characteristics versus technical qualification?” In
order to connect theories of emotional intelligence with reality interviews were conducted
with six HR managers of different companies in Iceland. They were all asked the same ten
questions and the findings indicate that managers are being recruited on the basis of their
emotional intelligence characteristics rather than technical qualifications but that the best
combination would be good people skills as well as good technical qualifications. Grades
were also mentioned in connection to this which contradicts the theories that this paper was
based on. According to researchers David McClelland and Daniel Goleman grades in school
and IQ do not indicate how likely it is that an individual will succeed in life and at a work
place.

2


No evaluation measure gives perfect results. Self-evaluations are vulnerable to skews from
people wanting to look good. Therefore, when it comes to assessing emotional competencies,
there is always the danger that a person with low self-esteem does not evaluate accurately his
or her own strengths and weaknesses. Even though self-evaluations can be helpful, if people
really trust that the results will be used for their own good, they can be less reliable without
this trust. Having emotionally intelligent managers does not guarantee that the company gains
more market share or a better bottom line but research throughout the years have indicated
how important the human mind is for the growth of organisations and therefore “soft”
management like emotional intelligence has gained increased popularity.

The outline of this paper is twofold; the first two chapters cover theories of traditional
management and leadership and the main chapters cover the concept of emotional
intelligence, both in theory and practice. It is important to understand the evolution of
management because management problems remain mostly the same over time. While value
systems and perspectives may have changed, experts have gained a better understanding of
what motivates employees.

In the beginning of the twentieth century Mary Parker Follett pointed out in her behavioural
theory that the role of the manager and his influence on employees was becoming more and
more important. Henry Fayol argued that leaders emerged from managers’ authority derived
from their position in the hierarchy but Follett proposed that knowledge and expertise should
decide who would be the leader at any particular moment. Characteristics of managers are
very personal but they are very important for understanding how managers behave, how they
treat and respond to others and how they help contribute to organisational effectiveness
through the four managerial functions; planning, leading, organising and controlling.

When people approach tasks in life with emotional intelligence they should be at an
advantage to solving problems. The kind of problems that people identify and the way they
handle them will probably be more related to internal emotional experience. Such individuals
are more likely to choose a career that will make them happy instead of thinking how much
they will earn and they are also more likely to be more creative and flexible in arriving at
possible alternatives to problems. Individuals who have developed skills related to emotional

3


intelligence understand and express their own emotions, recognise the emotions of others and
they also use moods and emotions to motivate adaptive behaviour.

A person with emotional intelligence can be thought of as having attained at least some form
of positive mental health. These individuals are aware of their own feelings and those of
others, are open to positive and negative aspects of internal experience and are able to
communicate them when appropriate. This leads to the fact that an emotionally intelligent
person is often a pleasure to be around, has good influence and makes others feel better. This
person however does not mindlessly seek pleasure, but rather attends to emotions which lead
to growth.

People are being judged by new yardsticks and it is not how smart they are or what kind of
education they have or expertise, more focus is on how people handle themselves and others.
This yardstick is becoming more important and is increasingly applied when choosing whom
to hire. This new measurement focuses on personal qualities but takes for granted peoples
intellectual abilities and technical skills. Emotional intelligence is even more crucial today,
because organisations are shrinking and the people who remain are more accountable and
visible.

4


Introduction ................................................................................................................................ 6
1. Traditional Management ........................................................................................................ 9
1.1 Theoretical Scope of Management ...................................................................................................... 11
1.2 Management Theories ......................................................................................................................... 13
1.2.1 The Universal Process Approach ................................................................................................. 14
1.2.2 The Operational Approach ........................................................................................................... 16
1.2.3 The Behavioural Approach .......................................................................................................... 18
1.2.4 The Systems Approach ................................................................................................................ 20
1.2.5 The Contingency Approach ......................................................................................................... 21
1.2.6 The Attributes of Excellence Approach ....................................................................................... 22
2. Leadership ............................................................................................................................ 24
2.1 Models of Leadership .......................................................................................................................... 27
2.1.1 The Trait Theory .......................................................................................................................... 27
2.1.2 The Behaviour Theory ................................................................................................................. 28
2.1.3 The Contingency Theory ............................................................................................................. 28
2.1.4 The Transformational Theory ...................................................................................................... 29
2.2. Management vs. Leadership ............................................................................................................... 30
2.3. The Human Side of Managers ............................................................................................................ 32
3. Emotional Intelligence ......................................................................................................... 35
3.1 Theoretical Scope of Emotional Intelligence ....................................................................................... 37
3.2 Models of Emotional Intelligence ........................................................................................................ 41
3.2.1 The Abilities Model ..................................................................................................................... 42
3.2.2 The Mixed Model ........................................................................................................................ 43
3.3 Emotional Intelligence and Its Effect on Leadership ............................................................................ 46
3.4. Emotional Intelligence and the Recruitment Process .......................................................................... 47
3.4.1. The Selection Process ................................................................................................................. 48
4. Emotional Intelligence in Reality ......................................................................................... 50
4.1 Business Research Methods ................................................................................................................ 51
4.2 The Research Method .......................................................................................................................... 52
4.3 The Process of the Interviews .............................................................................................................. 54
4.3.1 Participants .................................................................................................................................. 54
4.3.2 The Interviews ............................................................................................................................. 55
4.2 Findings of the Interviews ................................................................................................................... 57
4.3 Analysis of Findings ........................................................................................................................... 59
.
5. Discussion of Findings ......................................................................................................... 62
5.1 Evaluation of Methods and Findings ................................................................................................... 64
6. Conclusion ............................................................................................................................ 65
Bibliography ............................................................................................................................. 67
Appendix 1 ............................................................................................................................... 70
Appendix 2 ............................................................................................................................... 72
Appendix 3 ............................................................................................................................... 74
Appendix 4 ............................................................................................................................... 76
Appendix 5 ............................................................................................................................... 78
Appendix 6 ............................................................................................................................... 80
Appendix 7 ............................................................................................................................... 82
Appendix 8 ............................................................................................................................... 84

5


Introduction

During the last few decades a continuous growth has been in the interest in the area of
leadership, with both managers and leadership researchers searching to identify the behaviour
which increases a leader’s effectiveness. Despite of research, there appears to be little
emerging consensus regarding what characterises an effective leader. Recently, emotional
intelligence as a predictor of effective leadership has gained the attention of researchers and
recruiters. Emotional intelligence can be generally defined as a set of non-cognitive
competencies that are linked to interpersonal effectiveness or “people skills” at work. More
specifically, emotional intelligence includes the ability to monitor one’s own and others’
feelings and emotions, to discriminate among them, and to use that information to guide one’s
thinking and actions.1

Emotional intelligence has become extremely popular within the fields of management
because it is thought to underlie various aspects of workplace performance and success not
accounted for by traditional intelligence measures or personality. Several studies highlight
that traditional forms of intelligence only account for twenty percent of overall success at
work.2 That leaves eighty percent of the variance unaccounted for. With personality and
motivational measures approximately contributing another ten percent to the puzzle, there still
seems to be a lot that is unknown about what makes some individuals perform better or why
some people are always a step ahead. Therefore, measuring emotional intelligence or the
‘softer skills’, as they are often known, could explain what differentiates between who will be
an effective leader and who will not.

In today’s competitive business world, where the “higher education” level of many leaders
and managers is increasing, emotional intelligence has the potential to become a core
differentiator in terms of selecting the best leaders for organisations. Lack of interpersonal
skills can have tremendous influence over the career prospects of highly intelligent, qualified,
and experienced professionals and can easily destroy them. Scoring high on IQ tests and

1
Salovey and Mayer (1990)
2
Goleman (1995)

6


getting high grades in school counts for little if the individual has difficulty in dealing with
e.g. uncertainty and pressure at work and handles relationship with others badly.3

This paper is about emotional intelligence and to what degree managers are recruited and
selected on the basis of emotional intelligence characteristics versus technical qualification. It
is important to understand the evolution of management because management problems
remain mostly the same over time. While value systems and perspectives may have changed,
experts have gained a better understanding of what motivates employees. In the first chapter
the concept of management is defined and various theories are covered in order to see how
they have developed, where the human mind was considered valuable and made a difference.

In the beginning of the twentieth century Mary Parker Follett pointed out in her behavioural
theory that the role of the manager and his influence on employees was becoming more and
more important. Henry Fayol argued that leaders emerged from managers’ authority derived
from their position in the hierarchy but Follett proposed that knowledge and expertise should
decide who would be the leader at any particular moment.4 With this in mind the second
chapter is focused on leadership as more and more managers are becoming aware of how
important different leadership styles are and are trying to incorporate them into their personal
leadership style.

Characteristics of managers are very personal but they are very important for understanding
how managers behave, how they treat and respond to others and how they help contribute to
organisational effectiveness through the four managerial functions; planning, leading,
organising and controlling. The third chapter covers the theory of emotional intelligence and
focus is put on the importance of the emotions of managers and to what degree companies
recruit and select managers on the basis of emotional intelligence characteristics versus
technical qualifications. This chapter is mostly based on the theory of David McClelland and
Daniel Goleman.5

In modern management, many words have been written about the value of soft management
(focus on the personal aspects in working environment). It is therefore interesting to find out

3
McClelland (1973)
4
Meyer, et al. (2007)
5
McClelland (1973) and Goleman (1998)

7


if this is something that is preached more than practiced, if managers today are really
following the theories that they claim to do and if this is really something that is being used as
a guideline when managers are recruited. Chapter four and five cover this matter with a
description of the research which was conducted in order to connect theory to practice and the
result of that research.

8


1. Traditional Management

The world is changing more rapidly than ever before and managers and other employees
throughout an organisation need to perform at higher and higher levels. In the last twenty
years, competition between organisations, both nationally and internationally, has increased
dramatically. Managers need to learn and adapt to changes in the global environment in order
to achieve the goals of the organisations.6

Today, the term competencies is often used to refer to a specific set of skills, abilities and
experiences that gives a manager the ability to perform at a higher level. Developing such
competencies through education and training has become a major priority for managers and
the organisations they work for.

To understand better the role of managers it is necessary to define what management is.
Management is the organizational process that includes strategic planning, managing
resources, deploying the human and financial assets needed to achieve objectives, and
measuring results. Management also includes recording and storing facts and information for
later use or for others within the organization.

Management functions are not limited to managers and supervisors. Every member of the
organization has some management and reporting functions as part of their job. Jones, George
and Hill describe management as:

“Management is the planning, organising, leading and controlling of resources to
achieve organisational goals effectively and efficiently.”7

According to them there are a few key concepts; organisations, goals, resources and
managers. They explain organisations as collections of people who work together and
coordinate actions to be taken to achieve certain goals. These goals, which are to be achieved,
are what are desired in the future. Resources are the company‘s assets such as people,
machines, information, skills and financial capital. The role of the managers is to supervise

6
Meyer et al (2007)
7
Jones, George and Hill (2000)

9


the use of the resources so the goals can be achieved.8 Figure one shows the four functions of
management:9

Planning is the process that managers use
to identify and select appropriate goals and
courses of action. There are three steps in
planning: 1) deciding what the goals of the
organisation are, 2) deciding what actions
need to be taken in order to achieve these
goals, and 3) deciding how to allocate
organisational resources to accomplish
them. Planning is a complex activity because normally the goals of an organisation are not
immediately clear. Managers take risks when they commit organisational resources to pursue
a particular strategy.

Organising is a process which managers use to establish a structure of working relationships
so that all members of the organisation interact and co-operate to achieve the goals.
Organising involves grouping people into departments according to the job-specific tasks they
perform. Managers lay out the lines of authority and responsibility between individuals and
groups and decide how organisational resources can be best utilised.

Leading is the process of articulating a clear vision for organisational members to follow. This
should enable the members to understand the role they play in achieving organisational goals.
An ideal outcome of good leadership is a high level of motivation and commitment of
organisational members.

Controlling is the ability to measure performance accurately and regulate organisational
efficiency and effectiveness. Managers evaluate how well an organisation is achieving its
goals and take action to maintain or improve performance. They monitor the performance of
individuals, departments and the organisation as a whole and if standards are not met they
need to take action in order to improve performance.10

8
Jones, George and Hill (2000)
9
Meyer et al. (2007) p. 6
10
Ibid,. p. 6-9

10


Management is an organizational function but does not necessarily mean managing people; it
can also be the management of other resources like capital sales areas and marketing.
Management is like an investment. Managers have resources to invest; their time, talent and,
possibly, human resources. The goal (function) of management is to get the best return on
such resources by getting things done efficiently. This doesn't imply being mechanical or
narrowly controlling as some writers on management suggest. The manager's style is a
personal or situational matter and has evolved over time. With highly skilled and self-
motivated knowledge workers, the manager must be very empowering. Where the workforce
is less skilled or not very motivated, the manager may need to monitor output more closely.
Skilled managers know how to vary their style, coach and motivate diverse employees.
Getting things done through people is what they do. By saying that management is a function,
not a type of person or role, it is easier to account for self-managed work teams where no one
is in charge. In a self-managed team, management is a group effort with no one being the
designated manager.11

Improvements in management have taken place because the relevant stakeholders have found
that the current management styles are insufficient in dealing with the problems of the
future.12 The next chapter tells how management theory has developed over time from first
focusing on how to increase the effectiveness of machines to the importance of the human
mind in the organisational process.

1.1 Theoretical Scope of Management

As an area of academic study, management is essentially a product of the twentieth century.
However, the actual practice of management has been around for thousands of years. Tangible
examples can be found throughout history, for example the pyramids of Egypt stand as
evidence of the ancient world’s ability to manage. Even though Egyptian management
techniques were coarse by modern standards, many problems they faced are still around
13
today. They, like today’s managers, had to make plans, obtain and mobilize human and
material resources, coordinate interdependent jobs, keep records, report their progress and

11
McCrimmon (2007)
12
Meyer et al (2007)
13
Kreitner (2001)

11


take corrective action as needed.14 Since the buildings of the pyramids, entire civilizations
have come and gone and management has been practised in each of them. One modern
element has been missing though and that is a systematically record of management
knowledge. In early cultures management was something one learned by word of mouth and
trial and error. It was not something one studied in school or read about in textbooks. 15

The evolution of modern management began at the end of the nineteenth century, after the
industrial revolution had swept through Europe and America. As the economy was changing,
managers in all kinds of organisations, both public and private, were constantly trying to find
better ways to satisfy the needs of customers. Major economic, technical and cultural changes
took place at this time.16 Utilization of steam powered machines was made more efficient and
the development of new machinery and equipment changed the way goods were produced.
This especially applied in the clothing industry as small workshops run by skilled workers,
who produced hand-manufactured products, were being replaced by large factories where
machines were controlled by thousands of unskilled workers who made the products.
Managers and owners of the new factories faced problems as they were often engineers who
had the technical skills to support the machinery but often lacked the craft-specific expertise.
There were also other problems, for example social problems that occurred when people
worked together in large groups. Managers had to search for new techniques to manage their
organisations and soon they began to focus on ways to increase the efficiency of the worker-
task mix.17

Figure 2 The Evolution of Management Theory18

14
Kreitner (2001)
15
Ibid,.
16
Meyer et al. (2007)
17
Ibid,.
18
Ibid,. p. 34

12


To begin with, the management theorists were interested in the subject of why the new
machine/factory systems were more efficient and produced greater quantities of goods than
older production operations. In the mid-eighteenth century, Adam Smith was one of the first
writers to investigate the advantages associated with producing in factories. He provided a
theoretical background to resource-allocation, production and pricing issues. Smith found out
that increasing the level of job-specialisation increased efficiency and led to higher
organisational performance.19 This inspired many managers and researchers to investigate
further how job-specialisation could be improved in order to increase performance. The focus
was on how managers should organise and control the work processes to maximise the
advantage of job-specialisation and the division of labour.20 Since that time many theories
have developed throughout the decades and in the next chapter some of these theories will be
discussed.

1.2 Management Theories

To be able to study modern management it is necessary to provide a useful historical
perspective of management. It is safe to say that no single theory of management is
universally accepted today. There have been different approaches to management throughout
history and some of them are:

• The universal approach
• The operational approach
• The behavioural approach
• The systems approach
• The contingency approach
• The attributes of excellence approach.

Understanding these general approaches to the theory and practice of management is
necessary to see how management has evolved, where it is today and where it appears to be
headed.21

19
Smith (1982)
20
Meyer et al. (2007)
21
Kreitner (2001)

13


1.2.1 The Universal Process Approach

The universal process approach is the oldest and the one of the most popular approaches to
management thoughts. According to this approach, the administration of all organizations
requires the same rational process. One core management process remains the same across all
organisations even though the purpose of the organisations varies. Therefore, successful
managers are equivalent among organisations of different purposes. The universal approach
can also be reduced to a set of separate functions and related principles.22

In 1916, Henry Fayol published his book Administration Industrielle et Générale. Fayol was
first an engineer and later a successful administrator in a large French mining company. He
was a manager who tried to translate his broad administrative experience into practical
guidelines for the successful management of all types of organisations. It was Fayol’s belief
that a manager’s job could be divided into five managerial functions which all were essential
to being a successful manager; planning, organising, command, coordination and control.23
These five elements were Fayol's definition of management roles and actions:24

1. To plan. (Forecast & Plan). Examining the future and drawing up a plan of action. The elements of
strategy.
2. To organize. Build up the structure, both material and human, of the undertaking.
3. To command. Maintain the activity among the personnel.
4. To coordinate. Binding together, unifying and harmonizing all activity and effort.
5. To control. Seeing that everything occurs in conformity with established rule and expressed command.

His fourteen universal principles of management (see table 1) were intended to show
managers how to carry out their functional duties.25 Fayol’s elements and principles have
withstood the test of time because of their widespread applicability. These functions can still
be found in almost all management texts, as Carroll and Gillen put it:

“The classical functions still represent the most useful way of conceptualising the
manager’s job, especially for management education, and perhaps this is why it is still
the most favoured description of managerial work in current management textbooks. The

22
Kreitner (2001)
23
Ibid,.
24
Marino (2008)
25
Kreitner (2001)

14


classical functions provide clear and discrete methods of classifying the thousands of
different activities that managers carry out and the techniques they use in terms of the
functions they perform for the achievement of organisational goals.26”

Table 1. The 14 Management Principles from Henri Fayol (1841-1925)27:

1. Division of Work. Specialization allows the individual to build up experience, and to continuously improve his skills. Thereby he
can be more productive.
2. Authority. The right to issue commands, along with which must go the balanced responsibility for its function.
3. Discipline. Employees must obey, but this is two-sided: employees will only obey orders if management play their part by
providing good leadership.
4. Unity of Command. Each worker should have only one boss with no other conflicting lines of command.
5. Unity of Direction. People engaged in the same kind of activities must have the same objectives in a single plan. This is essential
to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction but does not
necessarily flow from it.
6. Subordination of individual interest (to the general interest). Management must see that the goals of the firm are always
paramount.
7. Remuneration. Payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is
no such thing as a perfect system.
8. Centralization (or Decentralization). This is a matter of degree depending on the condition of the business and the quality of its
personnel.
9. Scalar chain (Line of Authority). A hierarchy is necessary for unity of direction. But lateral communication is also fundamental,
as long as superiors know that such communication is taking place. Scalar chain refers to the number of levels in the hierarchy
from the ultimate authority to the lowest level in the organization. It should not be over-stretched and consist of too-many levels.
10. Order. Both material order and social order are necessary. The former minimizes lost time and useless handling of materials. The
latter is achieved through organization and selection.
11. Equity. In running a business a ‘combination of kindliness and justice’ is needed. Treating employees well is important to
achieve equity.
12. Stability of Tenure of Personnel. Employees work better if job security and career progress are assured to them. An insecure
tenure and a high rate of employee turnover will affect the organization adversely.
13. Initiative. Allowing all personnel to show their initiative in some way is a source of strength for the organization. Even though it
may well involve a sacrifice of ‘personal vanity’ on the part of many managers.
14. Esprit de Corps. Management must foster the morale of its employees. Fayol further suggests that: “real talent is needed to
coordinate effort, encourage keenness, use each person’s abilities, and reward each one’s merit without arousing possible
jealousies and disturbing harmonious relations.”

Fayol’s main contribution to management thought was to show how the complex process of
management can be separated into interdependent areas of responsibility. His idea was that
management is a continuous process beginning with planning and ending with controlling and
this remains popular today.

The functional approach is useful because it describes what managers should do. However, it
does not help explain why and how something should be done. For that purpose, other
approaches are needed.28 The basic concerns that motivated Fayol continue to motivate
managers today. The principles that he set forward have provided a clear and appropriate set
of guidelines that managers can use to create a work-setting that makes effective and efficient
use of organisational resources. The principles are a foundation for modern management

26
Carroll and Gillen (1987) p. 48
27
Marino (2008)
28
Kreitner (2001)

15


theory and other researchers have developed them so that they fit in today. An examples of
this is Fayol‘s thoughts for equity and the links between performance and reward which today
are central themes in modern theories of motivation and leadership.29

1.2.2 The Operational Approach

The operational approach is a convenient description of the production-oriented area of
management dedicated to improving efficiency and cutting waste.30 This is a systematic study
of the relationships between people and tasks for the purpose of re-designing the work process
in order to increase efficiency. Throughout history this approach has been technically and
quantitatively oriented and it has been given many names, such as scientific management,
management science and operations management. The best known protagonist of the
operational approach is Frederick W. Taylor who is best known for defining a set of
principles which have become known as scientific management.31

Taylor was the epitome of the self-made man. In his early life he had problems with his eyes
which prevented him from going to Harvard University so instead he went to work as a
common labourer in a small machine shop. He later became a manufacturing manager and
eventually became a consultant and taught other managers how to use his techniques.

It was Taylor’s believe that the production process would become more efficient if the
amount of time and effort to produce a unit of output could be reduced by increasing job-
specialisation. Based on his findings, Taylor developed four principles to increase efficiency
in the workplace (the four principles are shown on next page).32

29
Meyer et al. (2007)
30
Kreitner (2001)
31
Meyer et al. (2007)
32
Ibid,. p. 36-37

16


Table 2. The Four Principles of Taylor

Principle 1: Study the way workers perform their tasks, gather all the informal job knowledge that workers
possess, and experiment with ways of improving how tasks are performed. Taylor studied and measured in great

deal the way different workers went about performing their tasks to discover the best method of completing a
task. One of the main tools he used was a time-and-motion study, which involves the careful timing and
recording of the actions taken to perform particular tasks. Once Taylor understood the existing methods of
performing a task, he made experiments in order to increase specialisation.

Principle 2: Codify the new methods of performing tasks into written rules and standard operating procedures.
Once the best method of performing a task was determined, Taylor specified that is should be recorded so that
the procedure could be taught to all workers performing the same task. By standardising and simplifying jobs
further, the efficiency would be increased throughout an organisation.

Principle 3: Carefully select workers who possess skills and abilities that match the needs of the task, and train
them to perform the task according to the established rules and procedures. Taylor believed that workers had to
understand the tasks that were required of them in order to increase specialisation. It was his believe that they
needed to be trained to perform a task at an optimum level. Workers who could not be trained to this level were
to be transferred to a job where they were able to reach the minimum required level.

Principle 4: Establish a fair or acceptable level of performance for a task, and then develop a pay system that
provides a reward for performance above the acceptable level. To encourage workers to perform at a higher
level of efficiency, Taylor wanted workers to benefit from any gains in performance. He provided them with an
incentive to reveal the most efficient techniques for performing a task. They should receive bonuses and some
percentage of the performance gains achieved through the more efficient work process.

By 1910, the system of scientific management had become nationally known in the United
States and was fully practised. Among the many that followed in Taylor’s footsteps, Frank
and Lillian Gilbreth and Henry L. Gantt stand out. Frank and Lillian Gilbreth were really
inspired by Taylor’s time-and-motion studies. They turned motion studies into an exact
science. In doing so they pioneered the use of motion pictures for studying and streamlining
work motions. Henry L. Gantt contributed to scientific management by refining production
control and cost-control techniques. He also humanised Taylor’s differential piece-rate system
by combining a guaranteed day rate, or a minimum wage, with an above-standard bonus.
Gantt was ahead of his time in emphasising the importance of the human factor and in urging

17


management to concentrate on service rather than profits.33 Here is where the researchers first
started to think of the importance of the human mind

1.2.3 The Behavioural Approach

The behavioural approach originates from American management theorists who began their
studies and research when Taylorist theories were at the height of their influence. Even
though the approach of these theorists differed, they all focused on behavioural management;
how managers should behave to motivate their employees and encourage them to perform at a
higher level so that the goals of organisations could be reached.34 The advocates of the
behavioural approach believed that people deserved to be the central focus of organised
activity. According to them, successful management depends on the manager’s ability to
understand and work with people who have a variety of backgrounds, needs and perception.

Mary Parker Follett was one of the theorists, in the beginning of the twentieth century, who
focused their work on the way managers should behave towards their employees. She
criticised Taylor’s approach because it didn’t take into account the difference between
individuals and ignored the human side of the organisation. It was her opinion that
management often overlooked the multitude of ways in which employees could contribute to
the organisations if their managers would allow them to participate and use their initiatives in
their every day work lives.35 What made the procedures of Follett and Taylor different was
that Taylor used time-and-motion experts to analyse the jobs of the workers while Follett
thought that the workers should be involved in the job analysis process. It was her opinion
that the workers were the most qualified to analyse their own jobs and therefore they should
participate in the process. The managers should behave as coaches or guides rather than
supervisors. Follett anticipated the emergence of self-managed teams and employee
empowerment which is so popular today. She also saw the importance of different
departments working together or, as it is called today, “cross-functioning”.36

33
Kreitner (2001)
34
Meyer et al. (2007)
35
Graham (1995)
36
Follett (1924)

18


While acknowledging Fayol’s opinion of acknowledged expertise as an important source of a
managers’ authority, Follett went even further. Fayol argued that leaders emerged from
managers’ authority derived from their position in the hierarchy but Follett proposed that
knowledge and expertise should decide who would be the leader at any particular moment. It
was her belief that power is fluid and should flow to the person who could do the most for the
organisation and help it achieve set goals. She looked at the organisation horizontally instead
of Fayol’s hierarchical, bureaucratic view and believed that effective management came from
the way people interacted and reinforced each other. This approach was very radical at that
time but is well recognised today.37

As the socio-political climate changed, behavioural scientists from prestigious universities
began to conduct on-the-job behaviour studies. Instead of studying tools and techniques in the
scientific management tradition, they focused on people.38 One of these studies was
conducted from 1924 to 1932 at the Hawthorne Works of the Western Electric Company.

The Hawthorne studies were a small-scale scientific management study of the relationship
between light intensity and productivity. The performance of a selected group of employees
tended to improve no matter how the physical surroundings were manipulated. Even when the
lights were dimmed to moonlight intensity, productivity continued to grow. As scientists
could not figure out why this happened, a team of behavioural science researchers from
Harvard, headed by Elton Mayo, was asked to conduct a more thorough study. The
Hawthorne studies ended in 1932 and by then over twenty thousand employees had
participated in it. After extensive interviewing with the employees, it became clear that
productivity was much less affected by changes in the work environment than by the attitudes
of the workers themselves. The relationship between the worker and his supervisor and
between members of a group was found to be more significant. This finding influenced many
researchers to turn their attention to managerial behaviour and leadership. If managers could
be taught how to behave and how to motivate their employees then productivity could be
increased.39 From this view emerged the human relations movement, which advocated that
managers should be behaviourally trained to manage their employees in order to increase their
co-operation and as a consequence productivity would also increase.

37
Meyer et al. (2007)
38
Mayo (1933)
39
Kreitner (2001)

19


One of the main assumptions of the Hawthorne studies was that the behaviour of managers
and workers in the work place is as important in explaining the level of performance as the
technical aspects of the task. It is very important for managers to understand how the informal
organisations works, i.e. the system of behavioural rules and norms that emerges in a group
when they try to change behaviour in an organisation. The Hawthorne studies demonstrated
the importance of understanding how feelings, thoughts and behaviour of group members and
managers affected performance. With these studies it was becoming clear to researchers that
understanding behaviour in organisations was critical so that performance could be
increased.40

The increasing interest in the management style known as organisational behaviour dates back
to these early studies. Organisational behaviour is a modern approach to management that
attempts to determine the causes of human work behaviour and translate the results into
effective management techniques. It has had a significant impact on modern management
thoughts by helping to explain why employees behave as they do. Above all else, the
behavioural approach has made it clear that people are the key to productivity. Technology,
work rules and standards do not guarantee good job performance; instead success depends on
motivated and skilled individuals who are committed to organisational goals.41

1.2.4 The Systems Approach

An important milestone in the history of management development occurred when researchers
went beyond the study of how managers could influence behaviour within organisations to
consider how managers control the organisation’s relationship with its external environment.
Universal process, scientific management and human relations theorists studied management
by taking things apart. They assumed that a whole was equal to the sum of its parts and could
be explained in terms of its parts. Systems theorists thought differently, they studied
management by putting things together and assumed that the whole was greater than the sum
of its parts. System thinking presented the field of management with a huge challenge which
was to identify all relevant parts of organised activity and to discover how they interacted.
According to Chester I. Barnard, willingness to serve, common purpose and communication

40
Carey (1967)
41
Kreitner (2001)

20


are the principal elements in an organisation.42 His opinion was that organisations could not
function if these three elements did not exist interdependently. Barnard’s systems perspective
has encouraged management and theorists to study organisations as complex and dynamic
wholes instead of piece by piece. 43

One of the most influential views on how an organisation is affected by its external
environment was developed by three theorists, Katz, Kahn and Thompson in the 1960s. They
viewed the organisation as an open system; a system that takes resources from its external
environment and transforms them into products and services which are then sent back to the
environment and bought and consumed be customers.44 The system is said to be open because
the organisation draws from and interacts with the external environment to survive, i.e. the
organisation is open to its environment. A closed system, on the other hand, is a self-
contained system that is not affected by changes in the external environment.45 Due to the
systems approach, managers now understand the importance of seeing the whole picture.
Open-systems thinking does not permit the manager to become preoccupied with one aspect
of the organisation while ignoring other internal and external angles. Another positive point is
that the approach tries to integrate various management theories, for example both operations
management and organisational behaviour have been strongly influenced by systems
thinking.46

1.2.5 The Contingency Approach

The contingency theory was developed in the 1960s by several researchers both in United
Kingdom and the United States. This approach is an effort to determine, through research,
which managerial practises and techniques are appropriate in specific situations. The crucial
message of this theory is that there is no one best way to organise; managers choose the
organisational structure and the control systems which depend on characteristics of the
external environment in which the organisation operates.47 Contingency has become
synonymous with situational management. According to Shetty, a contingency theorist, the
42
Barnard (1938)
43
Kreitner (2001)
44
Katz and Kahn (1966) Thompson (1967)
45
Meyer et al.(2007)
46
Kreitner (2001)
47
Meyer et al. (2007)

21


effectiveness of a given managerial pattern is contingent on numerous factors and how they
interact in certain situations.48 The appropriate use of a management concept or theory is thus
contingent or dependent on a set of variables that allows the user to fit the theory to the
situation and particular problems. It also allows for management theory to be applied to an
intercultural context where customs and culture must be taken into consideration.49

An important characteristic of the external environment which affects an organisation‘s ability
to obtain resources is the degree to which the environment is changing. These changes can be
for example technological, entry of new competitors or unstable economic conditions. The
more rapidly the environment changes the more important it is for managers to find new ways
to respond to these changes. The contingency theory was an extension of the systems
approach but it added more practical directions.

1.2.6 The Attributes of Excellence Approach

In 1982, Peters and Waterman wrote a book that took the management world by storm. In
their book, “In Search of Excellence” they attempted to explain what made the best-run
companies in America successful. Their approach to management was unconventional for
several reasons. They criticised conventional management theory for being too conservative,
analytical, inflexible and negative. They replaced conventional management terms with catch
phrases and they made their key points with stories and anecdotes rather than with quantified
data and facts. Their aim was to take a fresh look at management.50 Peters and Waterman
conducted a research where they isolated eight attributes of excellence after studying many of
the best-managed and most successful companies in America. The eight attributes where are
shown on the next page.51

48
Shetty (1974)
49
Kreitner (2001)
50
Ibid,.
51
Peters and Waterman (1982)

22


Table 3. The Eight Attributes of Excellence

1. A bias for action: Small scale, easily managed experiments to build knowledge, interest and
commitment.
2. Close to the customer: Learning from the people served by the business.
3. Autonomy and entrepreneurship: Fostering innovation and nurturing 'champions'.
4. Productivity through people: Individuals are treated with respect and dignity.
5. Hands-on, value-driven: Management philosophy that guides everyday practice - management showing
its commitment.
6. Stick to the knitting: Stay with the business that you know.
7. Simple form, lean staff: Authority is decentralised as much as possible.
8. Simultaneous loose-tight properties: Tight overall strategic and financial control is counterbalanced by
decentralised authority, autonomy and opportunities for creativity.

Peters and Waterman pointed out and reminded managers that they should pay closer
attention to the basics such as customers, employees and new ideas.

It is important to understand the evolution of management because management problems
remain mostly the same over time. While value systems and perspectives may have changed,
experts have gained a better understanding of what motivates employees. Peter Drucker, a
writer and management consultant, was under the impression that management had to do with
empowerment; he saw employees as resources rather than simply costs. He argued that
management had to move from the influence of Taylorism, where people are treated as cogs
in a machine, and start to treat them as if the employees had brain. Knowledge and education
was the single most important resource for any advanced society.52 During the twentieth
century managers received more respect and proved their importance. Practitioners of the
science of management also received a certain amount of prestige and that opened the way for
popularised systems of management ideas. At the end of the twentieth century, management
consisted of six separate branches; human resource management, operation management,
strategic management, marketing management, financial management and information
technology management. The role of the manager and his influence on employees was
becoming more and more important as Mary Parker Follett pointed out. Henry Fayol argued
that leaders emerged from managers’ authority derived from their position in the hierarchy
but Follett proposed that knowledge and expertise should decide who would be the leader at
any particular moment. In the next chapter the role of a leader will be discussed.

52
Drucker (1990)

23


2. Leadership

There are almost as many definitions of what leadership is as there are commentators. Many
associate leadership with one person leading but four things stand out in this respect. First of
all, to lead involves influencing others; secondly where there are leaders there are followers.
Third, leaders seem to step forward when there is a crisis or special problem and fourthly,
leaders are people who have a clear idea of what they want to achieve and why. It can be said
that leaders are people who are able to think and act creatively in non-routine situations and
who set out to influence the actions, beliefs and feelings of others. In this sense, being a leader
is personal; it flows from an individual’s qualities and actions. However, it is also often linked
to some other role such as manager or expert but it is important to remember that not all
managers are leaders and not all leaders are managers.53 One of the four primary tasks of
managers is leading and leadership is a key ingredient in effective management. Effective
leaders make people highly motivated and committed but when they are ineffective it is likely
that their subordinates do not perform up to their capabilities and become dissatisfied.54 The
concept of leadership is about getting people to do things willingly and influencing others to
follow you. It can also be seen as a behavioural category. Leadership can be defined as:

“A process in which leader and follower interact in a way that enables the leader to
influence the actions of the follower in a non-coercive way, towards the achievements of
certain aims or objectives.55”

Definitions of leadership often suppose that leadership is a one-way process but other factors
should be considered. Being non-coercive means that it is possible to influence all members.
The nature of leadership should always be goal-directed so that the subordinates know what
they should achieve and they also have to approve of being influenced by the leader.56 The
personal leadership style of a manager, i.e. how he chooses to influence the employees,
shapes the way the manager approaches planning, organising and controlling. All managers
have their own leadership style that determine how they lead their employees and perform
their management tasks. Even though leading is one of the four principal tasks of managing, a
distinction is often made between managers and leaders. Managers are more likely to have

53
Doyle and Smith (2001)
54
Meyer et al. (2007)
55
Ibid,. p. 460
56
Ibid,.

24


formal authority to direct their employees; this may be seen as a “top-down” approach. On the
other hand leaders have to earn their authority through influence and that is more a “bottom-
up” approach.57

There are many different leadership styles in traditional leadership and many ways of defining
a good leader. There are also different leadership styles across cultures, which suggests that
leadership styles do not only differ from person to person but also between countries and
cultures. Leaders in Europe are said to be more humanistic or people oriented than leaders in
America and Japan. American leaders are also thought to be short-term and focused on profits
while in Japan they are thinking of profits in a long term perspective.58

It is stated in classical leadership that the key to effective leadership is found in the power the
leader has to affect other people’s behaviour or getting them to act in a fixed manner.59 There
are several types of power a leader must have: legitimate, coercive, expert, reward and
referent power (see figure 3).60 Effective leaders should make sure that they have sufficient
levels of each type and that they use the power they have in a beneficial way.

Figure 3 Sources of Managerial Power

• Legitimate power is the authority that a manager has by virtue of his position in the
organisation and gives him the power to hire new employees, assign projects, monitor
their work and appraise their performance.

57
Meyer et al. (2007)
58
Calori and Dufour (1995)
59
Mintzberg (1983).
60
French and Raven (1960)

25


• Reward power is the ability to withhold or give tangible (e.g. pay-rises and bonuses)
and intangible (e.g. verbal praise and respect) rewards. Being able to give or withhold
rewards based on performance is a major source of power that allows managers to
have a highly motivated workforce. Effective managers use their reward power to let
their employees know that their work is appreciated. Ineffective managers on the other
hand, use reward power in a more controlling manner.
• Coercive power is the ability to punish others. Punishments can range from verbal
reminders to reduction in pay or actual dismissal. Excessive use of coercive power
seldom results in high performance and is questionable ethically, but may at times be
useful.
• Expert power is based in some special skills or knowledge that the leader has. First-
level and middle managers often have technical expertise relevant to the tasks of their
employees. Their expert power gives them considerable influence. Effective leaders
take steps to make sure that they have an adequate amount of expert power to perform
their leadership roles. They can do that by obtaining additional training or education
and make sure that they are well informed about latest developments and changes in
technology. Expert power tends to be best used in a guiding or coaching manner rather
than in an arrogant way.
• Referent power is more informal than the other kinds of power; it is more a function
of the personal characteristics of a leader. It is a power that comes from subordinates’
and co-workers’ respect, admiration and loyalty. Here it is vital that the leader has the
charisma needed to motivate his employees. Leaders who are likable and whom
employees consider a role model are especially likely to possess referent power.61

More and more managers today are becoming aware of how important different leadership
styles are and are trying to incorporate them into their personal leadership style.
Empowerment, which is the process of giving employees at all levels in the organisation the
authority to make decisions and making them more responsible for their tasks, is very popular
today. This might seem to be the opposite of effective leadership because managers are
allowing their employees to take more active role in leading but actually, empowerment can
contribute to effective leadership for several reasons. Empowerment increases a manager’s
ability to get things done because he has the help of the employees who might have special

61
Meyer et al. (2007)

26


knowledge needed to complete the tasks. Empowerment also increases motivation and
commitment of the employees and they are working toward organisational goals. It also gives
managers more time to concentrate on the tasks they need to complete because they don’t
have to spend all their time on day-to-day supervisory activities.62

2.1 Models of Leadership

Leading has become very important process in all kinds of organisations. Early approaches to
leadership were to determine what effective leaders were like as people and what they did that
made them so effective. In recent literature of leadership the focus has been on four main
theories of leadership; trait theory, behavioural theory, contingency theory and
transformational theory. The next sub-chapters go into more details about each theory.

2.1.1 The Trait Theory

The Trait model of leadership focused on identifying the personal characteristics that cause
effective leadership. It was assumed that effective leaders must have certain personal
qualities, or traits, which made them different from ineffective leaders and from people who
never became leaders. This research started in the 1930s where hundreds of studies were
conducted. The results indicated that there were in fact some personal characteristics which
seemed to be associated with effective leadership. Some of those characteristics were related
to intelligence, knowledge, integrity and self-confidence of the leaders. However, these
characteristics are insufficient in explaining a do not alone explain leader’s effectiveness as
some effective leaders do not possess all of them and some leaders who do possess them are
not effective.63 Since there seemed to be a lack of consistency between the characteristics of
leaders and their effectiveness researchers needed a new focus. Rather than focusing on what
leaders are like, they began to look at what effective leaders actually do, i.e. their behaviour.

62
Meyer et al. (2007)
63
Ibid,.

27


2.1.2 The Behaviour Theory

The Behaviour model describes two kinds of behaviour that most leaders are supposedly
engaging in; consideration and initiating structure. Leaders engage in consideration when they
show their subordinates that they trust, respect and care about them. When leaders engage in
initiating structure they make sure that the work gets done and that the workers perform their
work acceptably and that the organisation is efficient and effective. Examples of initiating
structure are assigning tasks to workers, letting employees know what is expected of them,
deciding how the work should be done and motivating people to perform well.64 The
relationship between performance of consideration and initiating structure behaviour and
leaders effectiveness is not clear. Some leaders are ineffective when they perform both and
some are effective even though they do not perform consideration or initiating structure. Like
the Trait model, this behaviour model does not alone explain why some leaders are effective.
What was researched next and added to the picture were the situations in which leadership
occurs.

2.1.3 The Contingency Theory

Managers lead in a wide variety of situations and have various kinds of employees performing
diverse tasks in many kinds of environmental context. The Contingency models of leadership
take into account the situation which leadership occurs in. According to these model, what
makes a manager effective is combined with what the manager is like as a person, what he
does and the situation in which the leadership takes place.65 The Contingency models cover
few different styles. One of them is the contingency model of Fred E. Fiedler which helps
explain why a manager may be an effective leader in one situation and ineffective in another.
According to Fiedler, all managers can be described as having either of two leadership styles;
relationship-oriented (managers want to develop a good relationship with employees and be
liked by them) or task-oriented (managers focus on task accomplishment and making sure that
each job gets done).66 Another contingency theory is House’s path-goal theory which
describes how leaders can motivate their subordinates by four different kinds of behaviour:
directive, supportive, participative and achievement - oriented.67 A directive leader sets goals,
assigns tasks and shows the employees how to complete tasks. A leader which is supportive

64
Meyer et al. (2007)
65
Ibid,.
66
Fiedler (1967)
67
Evans (1970)

28


expresses his concern for subordinates and looks out for their interests. Those who show
participative behaviours give workers the opportunity to say what they think and be involved
in decision making. Achievement-oriented behaviours motivate employees to perform at the
highest level possible by e.g. setting goals, expecting that they will be met and believing in
the capabilities of the workers.

2.1.4 The Transformational Theory

Transformational leadership is a leadership style where people follow the leader because they
are inspired by him, a leader with a vision and passion that can achieve great things.68
Transformational leadership starts with the development of a vision, a view of the future that
will excite and convert potential followers. This vision may be developed by the leader, by the
senior management team or may emerge from a broad series of discussions. The next step,
which in fact never stops, is to constantly sell the vision. The transformational leader thus
takes every opportunity and will use whatever method that works to convince others to climb
on board.69 In order to create followers, the transformational leader has to be very careful in
creating trust, and their personal integrity is a critical part. In effect, they are selling
themselves as well as the vision. The route forward may not be obvious, but with a clear
vision, the direction will always be known. Transformational leaders are always visible and
will stand up to be counted rather than hide behind their troops and they show by their
attitudes and actions how everyone else should behave. They also make a continuous effort to
motivate their followers, constantly listening, soothing and keeping up the enthusiasm. They
are people-oriented and believe that success comes first and last through deep and sustained
commitment. Transformational leaders are often charismatic, but are not as narcissistic as
pure charismatic leaders, who succeed by believing in themselves rather than believing in
others. One of the traps of transformational leadership is that passion and confidence can
easily be mistaken for truth and reality, they tend to see the big picture, but not the details,
which can be a problem if they don’t have people to take care of this level of information.
Working for a transformational leader can be great and very inspiring, they put passion and
energy into everything they care about and want you to succeed70.

68
Changing Minds (Year unknown)
69
Ibid,.
70
Ibid,.

29


According to Bass, transformational leadership occurs when managers change their
subordinates in three ways:71

• Transformational managers make their employees aware of how important their jobs
are for the organisation and that it is very important that those jobs will be done in a
best way possible so that the organisational goals can be achieved.
• Transformational managers make sure that every need of their employees is met and
that they are aware of what their needs are themselves. Those needs can be personal
growth, development and accomplishment.
• Transformational managers motivate their employees to think of the organisations as a
whole, not just for their own personal gain or benefit.

When managers affect employees in these three ways, it is more likely that the employees
trust the manager and are highly motivated and that helps the organisations in achieving its
goals.72

Now both management and leadership have been defined, but what is it that differs between
them? The next chapter will focus on this difference.

2.2. Management vs. Leadership

An important question is how management differs from leadership. For some, there is no
difference. Due to increasing complexity there is even more need for specialization so it is
really necessary to recognize that leadership and management are two different functions.73
According to Mitch McCrimmon “...a clear way of differentiating the two is to say that
leadership promotes new directions while management executes existing directions as
efficiently as possible.74” The manager’s job is not just to make sure that tasks are completed
on a daily bases, it involves more complex projects. Often, management is mistakenly seen as
task-oriented, controlling and insensitive to people's needs. By contrast, leaders are portrayed
as emotionally engaging, visionary and inspiring. Separating leadership from management is

71
Bass (1985)
72
Meyer et al. (2007
73
McCrimmon (2007)
74
Ibid,.

30


difficult as leading is one of the four functions of management.75 The best managers are very
strategic about themselves because they know that time and other resources are scarce and
that they have to work efficiently and effectively if the organisational goals are to be met.
Working efficiently is however not enough, it is essential to do the right things. Management
is primarily a decision-making role and managers are responsible for making a profit. This
requires them to make wise decisions.76 By contrast, leadership is strictly an informal
influence and what leaders do is to convince people of changing directions. The main
difference between managers and leaders is that “leadership is an occasional act;
management is an ongoing role.”77 Table four shows the main difference between managers
and leaders:78

Table 4. The Difference between Leaders and Managers

Subject Leader Manager

Essence Change Stability
Focus Leading people Managing work
Have Followers Subordinates
Horizon Long-term Short-term
Seeks Vision Objectives
Approach Sets direction Plans detail
Decision Facilitates Makes
Power Personal charisma Formal authority
Appeal to Heart Head
Energy Passion Control
Dynamic Proactive Reactive
Persuasion Sell Tell
Style Transformational Transactional
Concern What is right Being right

Like people everywhere, managers have their own personalities, values, ways of viewing
things and personal challenges and disappointments. In the next chapter the focus is on the
manager as a person with feelings.

75
Meyer et al. (2007)
76
McCrimmon (2007)
77
Ibid,.
78
Changing Minds (Year unknown)

31


2.3. The Human Side of Managers

All people have certain characteristics that influence how they think, feel and behave. These
characteristics are personality traits which according to Meyer et al. are “...particular
tendencies to feel, think and act in certain ways that can be used to describe personality of
every individual.79” It is important to understand the personalities of managers because they
influence their behaviour and what approach they use to manage people and resources. Some
managers are demanding and difficult to get along with but others easy to get along with and
are likeable yet may be demanding as well. Both styles may turn out to be successful but the
way it affects employees is quite different. Research has been conducted and the results
indicate that the way people react to different conditions depends partly on personalities.80
There are several psychological theories that try to explain whether personalities are innate or
develop from socialisation. In these theories there is a distinction between the traits that
people hold (a predisposition towards an enduring behaviour that occurs over time) and the
type of personality they fit into (fits people into categories e.g. extrovert or neurotic). One of
the most influential type theories come from Carl Jung and was developed during the 1950s.81
The Myers-Briggs Type Indicator (MBTI) was developed from this approach. According to
Jung’s theory both types and traits are inborn to a degree but traits can be improved in a
similar way to skills. Types on the other hand evolve naturally over a lifetime.82 The MBTI
categories are four and are based on people’s preferences; extroversion/introversion,
sensing/intuition, thinking/feeling, judging/perceiving. People are given one of sixteen four
letter acronyms such as ESTJ or INFP. This indicates what their preferences are. For example
a person whose category is ENFP is open when dealing with other people as the categories are
extroversion, intuition, feeling and perceiving.83 The MBTI is used in many organisations and
for all kinds of reasons, e.g. the training of employees, personal development and recruitment.
In connection to this it is possible to think of an individual’s personality as being made of five
general traits (characteristics); extroversion, negative affectivity, agreeableness,
conscientiousness and openness to experience.84 Each of these traits can be viewed as a
continuum along which every individual falls. Managers may be at the high end, low end or in
the middle of the continuum.
79
Meyer et al. (2007) p. 68
80
Carpenter (2001)
81
Jung
82
Myers et al (1998)
83
Meyer et al. (2007)
84
Digman (1990)

32


• Extroversion is the tendency to
experience positive emotions and feel good
about oneself and others. People who score
high on extroversion tend to be affectionate
and outgoing. Managers who have a job
which requires a lot of social interactions
benefit if they are high on extroversion.
• Negative affectivity is the tendency
to experience negative emotions and be
critical of oneself and other people. People
who score high on this trait are often angry
and dissatisfied.
• Agreeableness is the tendency to get along well with others. People who score high
on this trait are likely to be affectionate and care about other people. If a manager has
the responsibility of developing close relationships with others than he could benefit
from scoring high on this trait.
• Conscientiousness is the tendency to be careful and preserving. People who score
high on this trait are organised and self-disciplined.
• Openness to experience is the tendency to be original, have broad interests, be open
to a range of stimuli and take risks. People who score high on this trait may be very
likely to take risks and be innovative in their planning and decision making.85

Members of an organisation should understand these differences among managers because
they can explain why managers behave in certain ways. Managers should also be aware of
their own personality traits and of others.

In addition to this there are other traits which also describe people’s personalities. Some of
them are: locus of control, self-esteem and the need for achievement, affiliation and power.86
Locus of control is about how people differ in their view of how much control they have over
what happens to and around them. This can be put into to two categories, internal locus of
control (those who belief that they are responsible for their own fate) and external locus of
control (those who belief that outside factors are responsible for what happens to them). Self-

85
Meyer et at. (2007) p. 72
86
Ibid,.

33


esteem is the degree to which individuals feel about themselves and their capabilities. The
need for achievement is how strongly an individual desires to perform challenging tasks well
and to meet personal standards for excellence. The need for affiliation is about how concerned
a person is about establishing and maintaining good interpersonal relations. The need for
power is how much a person desires to control or influence others.87 These three
characteristics suggest that managers need to be assertive and not only believe that their own
actions determine their own and their organisation’s fates but also believe in their own
capabilities.

Other things can be explored in order to try to explain how managers actually feel at work and
what they think about their jobs. Values, attitudes, moods and emotions capture how
managers and other employees experience their jobs as individuals. Values tend to be deeply
rooted in a person’s socialisation and learning but attitudes emerge through personal
development and social interaction. Values describe what managers are trying to achieve
through work and how they think they should behave, attitudes capture their thoughts and
feelings about their job, moods and emotions encompass how managers actually feel in their
job. These characteristics of a manager are very personal but they are very important for
understanding how managers behave, how they treat and respond to others and how they help
contribute to organisational effectiveness through the four managerial functions; planning,
leading, organising and controlling.88 As the topic of this paper is emotional intelligence, a
focus will be put on the importance of mood and emotions of managers and to what degree
companies recruit and select managers on the basis of emotional intelligence characteristics
versus technical qualifications.

87
Meyer et al. (2007) p. 74-5
88
Ibid,.

34


3. Emotional Intelligence
In order to understand the effects of managers’ and all employees’ moods and emotions, it is
important to take into account their level of emotional intelligence. The concept of emotional
intelligence has its roots from the work of two American psychologists, John Mayer and Peter
Salovey. They defined emotional intelligence as a subset of social intelligence. Social
intelligence is the ability to understand and manage people, but might also be directed inwards
and therefore could be the ability to understand and manage oneself.89 According to them
emotional intelligence is the ability to know, understand and have influence over one‘s own
emotions, “...the ability to monitor one‘s own and others feelings and emotions, to
discriminate among them and to use this information to guide one‘s thinking and actions. “90
It does not include the general sense of self and appraisal of others, rather it is more about the
recognition and use of one‘s own and others emotional states to solve problems and regulate
behaviour.

When people approach tasks in life with emotional intelligence they should be at an
advantage to solving problems. The kind of problems that people identify and the way they
handle them will probably be more related to internal emotional experience. Such individuals
are more likely to choose a career that will make them happy instead of thinking how much
they will earn and they are also more likely to be more creative and flexible in arriving at
possible alternatives to problems. Individuals who have developed skills related to emotional
intelligence understand and express their own emotions, recognise the emotions of others and
they also use moods and emotions to motivate adaptive behaviour.91

A person with emotional intelligence can be thought of as having attained at least some form
of positive mental health. These individuals are aware of their own feelings and those of
others, are open to positive and negative aspects of internal experience and are able to
communicate them when appropriate. This leads to the fact that an emotionally intelligent
person is often a pleasure to be around, has good influence and makes others feel better. This
person however does not mindlessly seek pleasure, but rather attends to emotions which lead
to growth. Salovey and Mayer say that:

89
Salovey and Mayer (1990)
90
Ibid,. p. 189
91
Ibid,.

35


“...emotional intelligence involves self-regulation appreciative of the fact that temporarily
hurt feelings or emotional restraint is often necessary in the service to greater
objective....thus emotionally intelligent individuals accurately perceive their emotions and
use integrated, sophisticated approaches to regulate them as they proceed toward
important goals. ”92

Mayer and Salovey published their theory in 1990 but at that time it did not receive much
attention from the public or scholars. This however did catch the attention of a psychologist
named Daniel Goleman. He took the concept further and published two books about the
concept which became very popular.

Goleman defines emotional intelligence as the ability to understand and manage one’s own
moods and emotions, and the moods and emotions of other people:

“...abilities such as being able to motivate oneself and persist in the face of frustrations;
to control impulse and delay gratification; to regulate one’s moods and keep distress
from swamping the ability to think; to empathize and hope.”93

People are being judged by new yardsticks and it is not how smart they are or what kind of
education they have or expertise, more focus is on how people handle themselves and others.
This yardstick is becoming more important and is increasingly applied when choosing whom
to hire. This new measurement focuses on personal qualities but takes for granted peoples
intellectual abilities and technical skills.94 Emotional intelligence is even more crucial today,
according to Goleman, because organisations are shrinking and the people who remain are
more accountable and visible, as Goleman puts it:

“Where earlier a midlevel employee might easily hide a hot temper or shyness, now
competencies such as managing one’s emotions, handling encounters well, teamwork,
and leadership show, and count, more than ever.”95

The corporate world is changing and no one is guaranteed a job anymore. For many older
workers who were taught that education and technical skills were a permanent ticket to
success this new landscape is quite shocking. People are beginning to realise that to be
successful another type of skills are necessary to survive as Goleman puts it: “Internal
qualities such as resilience, initiative, optimism and adaptability are taking on a new
92
Salovey and Mayer (1990) p. 201
93
Goleman (1995) p. 36
94
Goleman (1999)
95
Ibid,. p. 9

36


valuation.96” All too often, in the context of reviewing competences of leaders or managers
for development purposes, they are told that they need to improve their “people skills”. That
means that these persons are having difficulties in the interpersonal aspects of their
relationships with supervisors, peers and their employees. The problem may be that the
managers are not communicating enough to maintain effective work relationship or there may
be problems at the emotional level, i.e. not connecting emotionally with others.97

According to Goleman, emotional intelligence is more important than traditional intelligence
tests. Goleman pointed out that results of intelligence tests would not predict completely how
well people would do in school, in a job or in life in general. It is his opinion that emotional
intelligence can predict better how well people will actually do, rather than their intelligence
quotient (IQ). Intelligence tests are not a good yardstick on how well people communicate. A
simple job where a person has to be agreeable and be able to communicate well with others
but where understanding, reasoning and judgement is not as important, could be an example
of where emotional intelligence would predict better than their IQ how well a person would
perform on the job.98

3.1 Theoretical Scope of Emotional Intelligence

In the 1930s there was no published research on methods of developing a leader’s
interpersonal skill and very few empirical studies were done prior to 1950 that dealt with any
sort of leadership or managerial development.99 In 1973 David McClelland wrote an article
called “Testing for Competences rather than for Intelligence”. In exploring the ingredients of
a superb job performance, McClelland was joining an enterprise that got its first scientific
footing at the beginning of the twentieth century with the work of Frederick Taylor. Taylorist
efficiency experts analysed the most mechanically efficient moves a worker´s body could
make, the measure of human work was the machine. The next step was another standard of
evaluation, the intelligence quotient (IQ) test and the thought was that the correct measure of
excellence was the capacities of the human mind. By the 1960s personality tests and
typologies were a part of the standard measures of work potential. The tests were used to

96
Goleman (1999) p. 11
97
Riggio and Lee (2007)
98
Goleman (1995)
99

37


indicate whether an individual was outgoing or introverted or a “feeling” or “thinking” type.
The problem with these kinds of measurements was that they did not predict how well people
actually performed on the job. People with a high IQ often performed poorly at work while
those with a moderate IQ did extremely well.100

McClelland shifted the terms of the debate. He argued that traditional academic talents and
grades did not predict how well people would perform on the job or whether they would
succeed in life. McClelland proposed that a set of specific competencies including empathy,
self-discipline and initiative distinguished the most successful from those who were merely
good enough to keep their jobs.101 With his paper, he came forward with an entirely new
approach to the measure of excellence, one that assesses people’s competencies in terms of
the specific job they are doing. The competences he refers to are the personal traits or set of
habits that lead to more effective or superior job performance; the ability that adds economic
value to the efforts of a person on the job.102 McClelland questions intelligence tests and the
power they have over who is considered to be more qualified than the other, as he puts it: “Its
tests have tremendous power over the lives of young people by stamping some of them
“qualified” and others “less qualified” for college work”.103 He also wonders in his articles
how valid grades are as predictors. Researchers have had great difficulties showing that the
grades which people get in school are related to any other behaviour on importance other than
doing well on e.g. intelligence tests. Despite that, the general public seems to look at
intelligence tests as a way of saying how talented people actually are, that those who do well
in school must do better in life than others.104 McClelland tested this himself with the class he
taught in college. He took the top eight students in his class in the late 1940s who all were top
level students and compared what they were doing in 1960s to eight really poor students from
his class, those who barely passed their exams. To his surprise he could not distinguish the
two lists of men fifteen to eighteen years later. There were doctors, lawyers, research
scientists and college teachers in both groups. The only difference that he noted was that those
with better grades got into better law or medical schools but despite of that they did not have
notably more successful careers than the poorer students who were only capable of going to

100
Goleman (1999)
101
McClelland (1973)
102
Goleman (1999)
103
McClelland (1973), p. 1
104
Ibid,.

38


mediocre medical or law schools.105 The findings of McClelland are thus that neither the
amount of education nor grades are related to how successful people become in their jobs.

The main points of McClelland’s article can be summarized into five major themes; a) grades
in school did not predict occupational success, b) intelligence tests and aptitude tests did not
predict occupational success or other important life outcomes, c) tests and academic
performance only predicted job performance because of an underlying relationship with social
status, d) such tests were unfair to minorities and e) personal competencies would be better
able to predict important behaviours that would more traditional tests.106 It was his belief that
intelligence tests would be replaced by competency-based testing as intelligence tests have
been correlated with each other and with grades in school but not with other life outcomes.

Barrett and Depinet (1991) questioned the findings of McClelland that top level students
could not be distinguished from barely passing students in later occupational success. They
pointed out that McClelland findings differed greatly from the result of a study done by
Nicholson in 1915.107 Nicholson study showed that academically exceptional students were
much more likely to achieve distinction in later life. According to Barrett and Depinet the
fundamental problem with McClelland’s research was his failure to define the concept of
competency. They’re opinion was that the evidence which McClelland put forward did not
show that competencies can surpass cognitive ability tests in predicting any important
occupational behaviour.

Decades of leadership research suggest that “people skills” are crucial for leader
effectiveness. Over the last years there has been an explosion of interest in emotional
intelligence and emotions in the workplace.108 There are a number of leader and manager
development programs that focus on improving the interpersonal skills but there seem to be
no agreed-upon models that focus on emotional skills and general communication abilities of
managers and leaders.109 According to Riggio and Lee (2007) there are many leadership
development programs, offered by independent consulting groups, which involve developing
emotional and interpersonal competences of leaders. They point out that theoretical models
and research basis for developing these kinds of leader competences are very recent as the

105
McClelland (1973), p. 2
106
Barrett and Depinet (1991)
107
Ibid,.
108
109
Ibid,.

39


term “emotional intelligence” only entered the research literature when Salovey and Mayer
published their article “Emotional Intelligence” in 1990.

Programs intended to develop interpersonal skills date back to Dale Carnegie guidebooks for
people, as he published his book “How to Win Friends and Influence People” in 1936.110
Like many of the programs intended to develop managerial and leader interpersonal
competences, the program of Carnegie was mostly based on methods that relied on the
experience and insights of the trainers. This is because in the 1930s there was no published
research on methods of how interpersonal skills of mangers or leaders could be developed and
research as shown that only one empirical study was made prior to 1950 that dealt with any
sort of managerial development.111 Models in clinical and social psychology literatures
influence the construction of models for guiding the development of interpersonal skills of
leaders and managers. Even though these models are rarely mentioned by leadership trainers
or in leadership development literature, they have had an indirect impact on how many
leadership programs develop social skills. Despite the popularity of interpersonal training for
managers and leaders, there has been almost no systematic evaluation of the effectiveness of
these programs.112 One exception from this is a research done by Hunt and Baruch in 2003,
who evaluated an intensive, five day interpersonal skill training program for 252 managers
and leaders. The evaluation of the training was based on pre- and post-training assessments.
Skills trained included such things as motivation, coaching, giving direction and providing
positive and negative feedback. Participants were evaluated by their direct reports who rated
their leader’s interpersonal skills. The training proved to be successful in some parts but not
in others. Gains were greatest in skills which were specifically targeted with direct exercises
or step-by-step instructions, such as providing feedback. 113

As mentioned earlier there are very few models which have been constructed for development
of how managers and leaders could improve their interpersonal skills or emotional
intelligence and that has only happened within the recent years. In the next chapters these
models will be addressed.

110
Dale Carnegie (Year unknown)
111
Avolio et al (2005)
112
113
Hunt and Baruch (2003)

40

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