Leadership

Effective Leadership in a Changing World

Glenn Boseman, DBA, CLU, CLF

In recent years, practitioners as well as scholarly journals have been singing the praises of leadership. There seems to be a conrinuous parade of new books on the best seller list that address leadership issues. Most of the practitioner books are written by retired managers who want to pass their leadership secrets and wisdom on to subsequent generations. In-deprh articles in scholarly journals typically address otily one aspect of leadership. This leadership column will attempt to bridge the practitioner/scholarly worlds by introducing a particular theoretical leadership concept, explaining the underlying theory, discussing how practitioners apply the concept, and asking the readers to evaluate tliemselves in relation to how other successful practitioners achieve results through the use of the concepts. As such, this column will address two issuesdefining the real job of a leader and evaluating two types of leaders: transactional and rransformational. The term "leadership" is used in such a common fashion today that we take for granted that we all have about the same defmition for it. This is not the case. So that we are all on the same page, lets define leadership with a couple commonly used definitions. First, Winston Churchill defined leadership concisely as the ability to influence people to set aside their personal concerns and supThis issue of fhe Journal went to press in Aprii 2008. Copyright 2008. Society of Financial Service Professionals.

port a larger agendaat leastfora while. Churchill made it clear that effective leaders motivate people to perform above and beyond the call of dut)- in order to enhance group success. To him, leadership effectiveness was not who exerts the most influence or who emerges to control the group; rather, the leader is the one who can achieve high group performance over time. In today's language, we would say that Churchill su^ested that effective leadership is perhaps the best source of organizational competitive advantage. A second commonly used definition of leadership is that it is the act of stimulating, engaging, and satisfying the motives of followers that result in the followers taking a course of action toward a mutually shared vision. Clearly, both of these definitions embrace three important components: the leader, the follower(s), and the context or situation in which the leader and followers fmd themselves. This column will address only the leader. Over the past decades, researchers focused on defining the personal traits of effective leaders but ultimately concluded that it is not so much the traits as it is how individuals utilize these traits. Traits were found to be excellent predictors of leadership emergence rather than leadership effectiveness. This means that individuals who possess the defined traits are more likely to be perceived as leaders by others, but not that they are necessarily more effective leaders. Nevertheless, people with these traits are generally linked to leadership roles. The major defined traits are intelligence, dominance, sociability, self-monitorng, high energy and drive, self-confidence, and a tolerance for ambiguity. If an individual lacks these traits, he or she is unlikely to

be given the opportunity to lead. Leaders are afforded the opportunity to lead not because they are appointed by senior miuiagers; they lead because they are perceived and accepted by followers as leaders. Two researchers, Jim Kouzes and Barry Posner, conducted a research project to determine the top four characteristics that followers seek in leaders. They learned that followers want leaders who are honest, forwardlooking, inspiring, and competent.' Of the defmed leadership traits and four characteristics above, how many do you possess? You are now the leader. What is your real job? Clearly, from the two definitions of leadership, it is your responsibiliry to achieve performance through the efforts of others. But what does it take to do that? Most practitioners have heard of Jack Welch's "4E" framework: "positive energy the ability to energize others, edge to summon the courage to make difficult decisions, and the ability to execute." Although it is not considered part of the 4E framework, Welch explains how important it is that the leader also has passion that serves as the thread that runs throughout the 4E framework and ties it together.Nikos Mourkogiannis has identified four major aaions that every effective leader must master: think, inspire, mobilize, empower.' Mourkogiannis defines thinking as the part of leadership that leads to innovation, developing a purpose, creating a vision, and determining strategic position, all of which mtist be the essential focus of a leader. Inspiringthe most visible part of leadershipis selling the vision through telling stories, confronting reality, ask-

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ing the right questions, teassuting, and ptoviding hope fot a bright future (this is similat to Welch's energizing others). Mobilizing is moving people to action, defining c:impiiigns, setting goals, and encouraging networks. Mobilizing concentrates on influencing key players to obtain their support. Empowering is accomplishing work throtigh others. Hence, execution requires the leader to manage authority and delegate appropriately. Execution involves allocating resources and managing the deployment of these (sometimes scarce) resources. As you reflect on Welch's "4E" framework and Mourkogiannis's four essential actions, how do you evaluate yourself on each? In what areas do you excel and in what areas are you challenged? What plan do you have to develop in those areas in which you are challenged? Research has demonstrated that great leadership is more about what one does than about who one is. Research has also shown that the "doing" part of effective leadership has two primary behavior dimensions: task, or behaviors that focus primarily on the task; and behaviors that focus on the relationships between the leader and follower(s). Therefore, leaders' behavior may either have a primary focus on influencing people to attain goals by directives {task behavior) or by supporting an employee (relationship behavior). The foundation oi elective leadership is built on these two behaviors. A leader who displays task behavior engages in one-way communication; clearly spells out the follower's role; and tells the follower what do where, when, and how; and then closely supervises. A leader who displays relationship behavior engages in two-

way communication, listens, provides support and encouragement, facilitates interaction, and involves the follower in decision making. Words associated with task behavior are structure, control, and supervise; words associated with relationship behavior are praise, listen, and facilitate. Leaders aui be classified as transactional or transformational. Transactional leadership builds important influence components between the leader and follower. The transactional leader's behavior represents an exchange (a transaction) between the leader and follower. The exchange pursues an economic exchange strategy, whereby the leader exchanges rewards for performance, effort, and participation from che toilower. The transactional leadership behaviors are imporumt because they provide the foundation for the relationship between the leader and the follower. Effective leaders understand the benefits of having great relationships with tbe followers: high employee performance, high employee satisfaction, reduced empioyee turnover, and numerotis other benefits. The father of the transactional leadei'ship concept, Bernard Bass, suggests that there are two very effective transactional leader behaviors contingent reward behavior (rewarding for doing a good job) and management by exception (putting out fires and taking necessary corrective action). His research has found that leaders who demonstrate these two behaviors consistently establish positive employee attitudes and behaviors. This flnding is important because it recognizes that contingent reward behavior serves as feedback to the employee and the organization. The followers learn to see the relationship between what they are doing correctly

and the rewards they receive. Because rewards are a powerflil tool to demonstrate to the follower what the leader wants, the contingent reward behavior connection works. Thus, the transactional leader behaviors build a solid foundation for trust between the leader and follower. But thellower wiil deliver only performance tbat is expected and rewarded by the leader and no more. By contrast, the transfortnational leader attempts to stimulate and satisfy the follower's higher-level needs by engaging the whole person. Basically, followers are asked to transcend their own self-interest for the sake of the organization, which is accomplished by raising follower awareness of the importance and value of goals. Although there have been many studies to identify the characteristics of a transformational leader, they all reach essentially the same conclusions. A transformational leader is one who creates and articulates a vision identifies new opportunities for the group and talks positively about what it means to all concerned provides a role modelsets an example for followers to imitate that is consistent with the values that the leader espouses ptovides individualized support^ demonstrates that the leader is concerned about the personal needs and feelings of the individual communicates high performance expectationsshows that the leader expects high performance, quality, and excellence encourages the acceptance of group goalspromotes cooperation among followers so that they work together to accomplish stated goals

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provides intellectual stimulation challenges followers to examine their assumptions about their decision making and work and asks them to rethink alternative decision solutions and how work can be achieved at a higher level Research has found that when leaders engage in transformational leadership, followers are more satisfied, more optimistic, less likely to quit, more likely to trust their leader, and more likely to prodtice at a high level than followers who work tor leaders who do not display the leader behaviors associated with transformational leadership. A major result of transformational leadership is that followers tend to put in extra effort or perform at higher levels than stated or expected. The extra effort comes in the form of organizational citizenship behaviors that benefit the organization but are not formally recognized by the organizational reward system. Typical components of organizational citizenship behaviors are sportsmanship (willingness to tolerate less-than-ideal situations), courtesy (in dealing with all others), conscientiousness (going well beyond the organization's role requirements), civic virtue (responsible participation in the politiail life ofthe organization), and altruism (willingness to help another individual perform a specific task or overcome a specific problem). One interesting point: Historically, it was thought that a transformational leader needed to have extraordinary ability and means. Many years of research have concluded, however, that anyone who wishes to can become an effective transformational leader, and it is not restricted to a particular organizational function, management level.

or type of organization. Transformational leadership can be learned. Take a moment to reflect. How do you rate yourself on each ofthe six characteristics of a transformational leader? When you think about the followers in your organization, what is the state of their organizational citizenship behaviors? If you believe that your followers show low organizational citizenship behavior, you should examine if you are operating on a high level in each ofthe characteristics of transformational leadership. In essence, there should be consistency between the organizational citizenship behavior of followers and the manner in which the leader executes transformational leadership. Evaluate yourself Give yourself a rating of 1 to 10 in each of the dimensions of transformational leadership. Be honest. Add the individual dimensions and take an average. How did you score on the total concept of transformational leadership? Are you above average? Average? Below average? Now rate your followers' organizational citizenship behavior. How would you score them? If you are not satisfied with your evaluation, perhaps you should reexamine the six dimensions that make up transformational leadership. When you evaluated yourself in each of the dimensions, were there .some in which you rated yourself very poorly? If so, have you developed a plan to improve on those dimensions on which you arc challenged? In summary, there is no one best type of leadership; that is, what is effective for one person may not be effective for another. We mtist, however, fully understand the results ofthe two different types of leadership in choosing which one to

adopt. The outcome of transactional leadership is that x}citfollowerwill deliver only performance that is expected and rewarded by the leader and no more. Many leaders

are satisfied with this performance. The outcome of transformational leadership is

that tUe follower will perform beyond the stated level of expectation.

A leader can make a case for using cither style. It is up to the individual leader to decide which style to follow and, when change is needed, to have the courage to develop'and implement a plan to change.
Glenn Boseman, DBA, CLU, CLF, received a BS from Campbell Universitv, an MBA from East Carolina University, and a DBA in organization and administration from Kent State University. In 1985, he received his CLU from The American College, and recently obtained the CLF designation as well. Priortojoining the College in 1981, Dr. Boseman taught management at Temple University, with a one-year interruption to serve as Visiting Scholar of Management at the University of Western Australia. Dr. Boseman has over 20 years' experience in the financial services industry and has been a member of The American College faculty since 1981, He is the director of the Chartered Leadership Fellow (CLF) designation program, and he also teaches in the Master of Science in Financial Services (MSFS) and the Master of Science in Management {MSM L) degree programs. He may be reached at glenn.boseman@ theamericancollege.edu. (1) HrTp://www.leadershipchallenge.com/Wiley CDA/Section/id-131034.html. (2) Nikos Mourkogiaunts, "A Leader's Real Job Description: Nikos Mourkogiannis describes the four actions you need to master to stay on track and focus on what matters," BusinessWeek online, htrp://www.businessweek.coni/ managing/content/dec2007/ca20071225_84]l 62.htm?chan=,search. (3) Ibid.

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