This Chapter includes
• Defining leadership?
• Importance of leadership.
• Theories of Leadership.
1. Trait Theories
2. Behavioral Theories of leadership.
• Charismatic Leadership and Transformational Leadership.
• Communication Style of a good leader.
• Role of leader in an organization.
• Leader Versus Manager.
• Characteristics of a good leader.
• Defining Power?
• Types of Power in leadership
1. Legitimate Power.
2. Referent Power.
3. Expert Power.
4. Reward Power.
5. Coercive Power.
6. Informational Power.
• The action of leading a group of people or an organization, or the
ability to do this.
• Leadership is the ability of a company's management to set and
achieve challenging goals.
Importance of leadership
Leadership is an important function of management which helps to maximize efficiency and to achieve
organizational goals. The following points justify the importance of leadership in a concern.
1. Initiates action- Leader is a person who starts the work by communicating the policies and plans to the
subordinates from where the work actually starts.
2. Motivation- A leader proves to be playing an encouragement role in the concern’s working. He motivates the
employees with economic and non-economic rewards and thereby gets the work from the subordinates.
3. Providing guidance- A leader has to not only supervise but also play a guiding role for the subordinates.
Guidance here means instructing the subordinates the way they have to perform their work effectively and
4. Creating confidence- Confidence is an important factor which can be achieved through expressing the work
efforts to the subordinates, explaining them clearly their role and giving them guidelines to achieve the goals
5. Building morale- A leader can be a morale booster by achieving full co-operation so that they perform with
best of their abilities as they work to achieve goals.
6. Builds work environment- Management is getting things done from people. An efficient work environment
helps in sound and stable growth. Therefore, human relations should be kept into mind by a leader.
7. Co-ordination- Co-ordination can be achieved through combining personal interests with organizational goals.
Theories of Leadership
Trait Theory of Leadership:
The trait model of leadership is based on the characteristics of many leaders - both successful
and unsuccessful - and is used to predict leadership effectiveness.
Among the core traits identified are:
1. Achievement drive: High level of effort, high levels of ambition, energy and initiative.
2. Leadership motivation: an intense desire to lead others to reach shared goals.
3. Honesty and integrity: trustworthy, reliable, and open.
4. Self-confidence: Belief in one’s self, ideas, and ability.
5. Cognitive ability: Capable of exercising good judgment, strong analytical abilities, and
6. Knowledge of business: Knowledge of industry and other technical matters.
7. Emotional Maturity: well adjusted, does not suffer from severe psychological disorders.
Behavior Theory of Leadership
Behavioral theories of leadership are classified
as “task oriented and people oriented”. Behaviors
of a leader.
• Task oriented leaders - The task concerned
leaders are focusing their behaviors on the
organizational structure, the operating
procedures (S.O.P.) and they like to keep
They will favor behaviors like.
4. Information Gathering
• People oriented leaders- The people oriented
leaders are focusing their behaviors on
ensuring that the inner needs of the people are
satisfied. Thus they will seek to motivate their
staff through emphasizing the human relation.
• Leaders with a people focus will have
4. Coaching and Mentoring.
The four leadership styles are:
1. Directive: Here the leader provides guidelines, lets subordinates know what is expected of
them, sets performance standards for them, and controls behavior when performance standards
are not met.
2. Supportive: The leader is friendly towards subordinates and displays personal concern for their
needs, welfare, and well-being. This style is the same as people-oriented leadership.
3. Participative: The leader believes in group decision-making and shares information with
subordinates. He consults his subordinates on important decisions related to work, task goals,
and paths to resolve goals.
4. Achievement-oriented: The leader sets challenging goals and encourages employees to reach
their peak performance. The leader believes that employees are responsible enough to
accomplish challenging goals.
Charismatic Leadership and Transformational Leadership.
• charisma is a special quality of leaders
whose purposes, powers, and
extraordinary determination differentiate
them from others
• the term charismatic means to have a
charming and colourful personality
• Charisma is a positive and compelling
quality of a person that makes many
others want to be led by that person.
• the transformational leader helps bring
about major, positive changes by moving
group members beyond their self-
interests and toward the good of the
group, organization, or society.
• The essence of transformational
leadership is developing and
Communication Style of a good leader
• Management by Inspiration: Managing by dictate is being replaced by
managing by inspiration
• Management by Story Telling: Management by storytelling is the
technique of inspiring and instructing team members by telling
Leader Versus Manager.
Basis Manager Leader
A person becomes a manager by virtue of his
A person becomes a leader on basis of his
Manager has got formal rights in an
organization because of his status.
Rights are not available to a leader.
The subordinates are the followers of
The group of employees whom the leaders leads
are his followers.
A manager performs all five functions of
Leader influences people to work willingly for
Stability It is more stable. Leadership is temporary.
Mutual Relationship All managers are leaders. All leaders are not managers.
Concern A manager’s concern is organizational goals.
A leader’s concern is group goals and member’s
Leaders and Managers can be compared on the following basis:
Characteristics of a good leader.
• Communication skills.
• Ability to Inspire others.
• Emotional Intelligence.
• Energy and action oriented.
• Enjoy Risk.
• Self-Promoting Personality.
1. The ability or capacity to do something or act in a particular way.
2. The capacity or ability to direct or influence the behavior of others
or the course of events.
3. Ability to cause or prevent an action, make things happen; the
discretion to act or not act.
Types of Power in leadership
1. Legitimate Power- Also called "positional power," this is the power individuals have from
their role and status within an organization.
2. Referent power comes from the ability of individuals to attract others and build their loyalty. It
is based on the personality and interpersonal skills of the power holder.
3. Expert power - draws from a person's skills and knowledge and is especially potent when an
organization has a high need for them.
4. Reward power - refers to the degree to which the individual can provide external motivation to
others through benefits or gifts. In an organization, this motivation may include promotions,
increases in pay, or extra time off.
5. Coercive power is the ability of a manager to force an employee to follow an order by
threatening the employee with punishment if the employee does not comply with the order.
6. Informational power comes from access to facts and knowledge that others find useful or
valuable. That access can indicate relationships with other power holders and convey status that
creates a positive impression.