1.4.5 Leadership

Leadership

The influence and direction of the performance of group members towards achieving the goals of the organisation.

The qualities of a leader

• Able to motivate others
• Solve problems
• Be decisive
• Have a vision and plan
• A sense of responsibility
• Adaptability

Difference between management and leadership

Leaders are pioneers of setting a new direction or vision for their group to follow, whilst managers control or direct people towards achieving the business' goal.

Autocratic leadership

🔗 Where the leader makes all decisions without consulting workers as well as separates themselves from the workers.

• Workers focused on achieving set objectives rather than distracted by decision making → Higher productivity knowing they will be rewarded with a financial reward → Lower cost per unit from more output in the same time (E.O.S) → More cost competitive
• High levels of supervision ensure less human error and communication is clear → Less wasted output and more utilised output → Lower cost per unit → More cost-competitive
• Workers don't feel valued by the business or leader → Demotivation → Lower productivity and worse corporate culture → Bad PR for business if the public comes to know → Weakens brand strength and reduces ethically conscious customer sales
• Lack of worker empowerment with little to no delegation → Unable to take up responsibility and be motivated → Workers remain low-skilled and demotivated → Lower productivity and opportunity cost of having responsible workers who are more productive

Democratic leadership

🔗 Where the leader is more inclusive with the workforce willing to delegate responsibility and value worker opinions in decisions

• Workers feel valued by the business due to inclusivity in decision making → Higher productivity from increased motivation → Higher quality products and produced more efficiently → Better corporate culture and atmosphere → Positive PR for business
• Workers empowered from being delegated responsibility → Feel valued and responsible for the success of the business → Higher productivity and quality of product from motivation → Increased customer satisfaction from product and increased brand loyalty
• Consulting workers for opinions and perspectives is time-consuming and may sway leaders in the wrong direction → Workers may not be skilled enough to make correct decision → Wrong decision made → Cost outweighs benefits → Opportunity cost
• Workers may not be able to handle increased responsibility → Lower productivity quality of job due to lack of worker skillset → Lower customer satisfaction → Weakens brand strength and lower customer retention → Lower market share

Paternalistic leadership

🔗 Where the leader is concerned about worker welfare and motivation but continues to hold decision-making power.

• Workers feel valued by the business knowing the leader cares about their welfare → more motivated to be productive/provide higher quality service → Increased customer satisfaction → Increased retention sales and brand loyalty
• Worker attention not diverted with decision making → Able to focus on main job role → Increased productivity/quality of service in given time period → Higher customer satisfaction → Increased brand loyalty and retention sales
• Lack of worker empowerment with limited role in decision making/delegation → Less responsibility reduces motivation and value of worker by business → Lower productivity/quality of service → Fall in customer satisfaction and brand loyalty
• Paternalistic leaders have to explain decisions to the workforce in order to keep them motivated → Time-consuming process → Disrupts production in working hours → Opportunity cost and diverts the attention of workers

Laissez Faire leadership

🔗 A hands-off approach to leadership where workers are given decision-making power with little to no supervision

• Relaxed atmosphere for workers to work in with no supervisor → Improved corporate culture and worker motivation → Higher productivity/quality of customer service → Increased customer satisfaction → Improved brand loyalty and market share from retention sales
• Workers have decision-making power → Encourages them to use their initiative and innovate rather than just follow instructions → Higher quality products/better customer service offered → Competitive advantage for business if USP is created
• Lack of supervision → More mistakes → More wasted output/resources → Higher total cost per unit → Reduced profit margins → Opportunity cost
• Requires high-skilled workforce → Low-skilled workforce lack skills to make key decisions and develop ideas → Lower productivity and more complacency from low supervision → Costs outweigh benefits → Opportunity cost

Mcgregor Theory X and Theory Y

According to Mcgregor, leaders in firms can only follow two paths: Theory X or Theory Y.

Theory X:

• Workers need to be controlled and dislike doing work.
• Workers avoid responsibility and doing work.
• Workers are only motivated by money.

Theory Y:

• Workers have initiative and self-control.
• Workers want to be responsible and do work.
• Workers are motivated by other means (not just monetary benefits).

Situational leadership

🔗 Where a leader adapts their style of leadership based on the circumstances (E.G Skills of workforce, changes in demand, motivation of workforce)