LEADERSHIP

DLMBLSE01-01
LEADERSHIP
 MASTHEAD

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DLMBLSE01-01
Version No.: 001-2023-0914
N.N.

© 2023 IU Internationale Hochschule GmbH

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2
 TABLE OF CONTENTS
LEADERSHIP

Introduction
Signposts Throughout the Course Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Required Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Learning Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Unit 1
Leadership Overview 13

1.1 Significance of Good Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

1.2 Leadership: Conceptual Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.3 Criteria for Leadership Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Unit 2
Leadership Theories through Changing Times 19

2.1 Trait Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

2.2 Leadership Style and Leadership Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.3 Consideration of the Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.4 Systemic Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.5 Symbolic Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.6 Transactional and Transformational Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.7 Leadership Theories through Changing Times—Leadership in a Field of Tension . . . 32

Unit 3
New Leadership Approaches 37

3.1 VUCA and Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

3.2 Empowering Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.3 Sociocracy and Holacracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Unit 4
Stresses, Work-Life Balance, and Self-Management 43

4.1 Stresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.2 Work-Life Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.3 Self-Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

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 Unit 5
Motivation, Communication, and Appraisal 51

5.1 Motivation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
5.2 Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
5.3 Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Unit 6
Teams 65

6.1 Team Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

6.2 Organizational Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.3 Shared Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.4 Change Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Unit 7
Current Trends and Debates 75

7.1 Personality and Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

7.2 Leadership Derailment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.3 Toxic Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
7.4 Power in Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
7.5 Generations X, Y, and Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

Unit 8
Intercultural Leadership 87

8.1 Intercultural Leaders and Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

8.2 Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
8.3 Intercultural Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

Appendix
List of References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
List of Tables and Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

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INTRODUCTION
 WELCOME
SIGNPOSTS THROUGHOUT THE COURSE BOOK

This course book contains the core content for this course. Additional learning materials
can be found on the learning platform, but this course book should form the basis for your
learning.

The content of this course book is divided into units, which are divided further into sec-
tions. Each section contains only one new key concept to allow you to quickly and effi-
ciently add new learning material to your existing knowledge.

At the end of each section of the digital course book, you will find self-check questions.
These questions are designed to help you check whether you have understood the con-
cepts in each section.

For all modules with a final exam, you must complete the knowledge tests on the learning
platform. You will pass the knowledge test for each unit when you answer at least 80% of
the questions correctly.

When you have passed the knowledge tests for all the units, the course is considered fin-
ished and you will be able to register for the final assessment. Please ensure that you com-
plete the evaluation prior to registering for the assessment.

Good luck!

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 SUGGESTED READING
GENERAL SUGGESTION

Ang, S., & van Dyne, L. (2015). Conceptualization of cultural intelligence – Definition, cis-
tinctiveness and nomological network. In Ang, S., & van Dyne, L. (Eds.), Handbook of
cultural intelligence (pp. 3–15). Routledge. http://search.ebscohost.com.pxz.iubh.de:8
080/login.aspx?direct=true&db=cat05114a&AN=ihb.48733&site=eds-live&scope=site

Bass, B. M. (1985). Leadership and performance beyond expectations. Free Press.

Hofstede, G. (2001). Culture’s consequences: Comparing values, behaviors, institutions and

organizations across nations. SAGE publications.

Schein, E. H. (2004). Organizational culture and leadership (5th ed.). Wiley. http://search.eb
scohost.com.pxz.iubh.de:8080/login.aspx?direct=true&db=cat05114a&AN=ihb.27938&
site=eds-live&scope=site

Steers, R. M., & Osland, J. S. (2020). Management across cultures: Challenges, strategies,
and skills. Cambridge University Press.

UNIT 1

Caruso, D. R. & Salovey, P. (2004). The emotionally intelligent manager: How to develop
and use the four key emotional skills of leadership (pp. 31–74). Jossey-Bass. http://sea
rch.ebscohost.com.pxz.iubh.de:8080/login.aspx?direct=true&db=nlebk&AN=106985&s
ite=eds-live&scope=site

UNIT 2

Schein, E. H. (2004). Organizational culture and leadership (5th ed., pp. 270–295). Wiley. htt
p://search.ebscohost.com.pxz.iubh.de:8080/login.aspx?direct=true&db=cat05114a&A
N=ihb.27938&site=eds-live&scope=site

UNIT 3

Schein, E. H. (2004). Organizational culture and leadership (5th ed., pp. 125–225). Wiley. htt
p://search.ebscohost.com.pxz.iubh.de:8080/login.aspx?direct=true&db=cat05114a&A
N=ihb.27938&site=eds-live&scope=site

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 UNIT 4

Bolden, R. (2011). Distributed leadership in organizations: A review of theory and research.

International Journal of Management Reviews, 13(3), 251–269. http://search.ebscohost
.com.pxz.iubh.de:8080/login.aspx?direct=true&db=edsbas&AN=edsbas.B44BB7C2&sit
e=eds-live&scope=site

UNIT 5

Gordon, J. (2017). The power of positive leadership [electronic resource]: How and why posi-
tive leaders transform teams and organizations and change the world (pp. 45–57).
Wiley. http://search.ebscohost.com.pxz.iubh.de:8080/login.aspx?direct=true&db=cat0
5114a&AN=ihb.49445&site=eds-live&scope=site

Cameron, K. (2013). Practicing positive leadership: Tools and techniques that create extraor-
dinary results (pp. 125–147). Berrett-Koehler Publishers. http://search.ebscohost.com.
pxz.iubh.de:8080/login.aspx?direct=true&db=edsebk&AN=581863&site=eds-live&scop
e=site

UNIT 6

Kotter, J. P. (2012). Leading change. Harvard Business Review Press. http://search.ebscoho

st.com.pxz.iubh.de:8080/login.aspx?direct=true&db=nlebk&AN=675195&site=ehost-liv
e&scope=site

UNIT 7

Judge, T. A., Bono, J. E., Ilies, R., & Gerhardt, M. W. (2002). Personality and leadership: A
qualitative and quantitative review. Journal of Applied Psychology, 87(4), 765–774. htt
p://search.ebscohost.com.pxz.iubh.de:8080/login.aspx?direct=true&db=cmedm&AN=
12184579&site=eds-live&scope=site

UNIT 8

Schein, E. H. (2004). Organizational culture and leadership (5th ed., pp. 105–123). Wiley. htt
p://search.ebscohost.com.pxz.iubh.de:8080/login.aspx?direct=true&db=cat05114a&A
N=ihb.27938&site=eds-live&scope=site

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 REQUIRED READING
UNIT 1

Yukl, G. (2012). Effective leadership behavior: What we know and what questions need
more attention. Academy of Management Perspectives, 26(4), 66–85. http://search.ebs
cohost.com.pxz.iubh.de:8080/login.aspx?direct=true&db=edsjsr&AN=edsjsr.23412661
&site=eds-live&scope=site

UNIT 2

Hendry, J., & Seidl, D. (2003). The structure and significance of strategic episodes: Social
systems theory and the routine practices of strategic change. Journal of Management
Studies, 40(1), 175–196. http://search.ebscohost.com.pxz.iubh.de:8080/login.aspx?dir
ect=true&db=edsrep&AN=edsrep.a.bla.jomstd.v40y2003i1p175.196&site=eds-live&sco
pe=site

UNIT 3

Lawrence, K. (2013). Developing leaders in a VUCA environment. UNC Executive Develop-

ment. Available online

UNIT 4

Bakker, A. B., & Demerouti, E. (2007). The job demands-resources model: State of the art.
Journal of Managerial Psychology, 22(3), 309–328. http://search.ebscohost.com.pxz.iu
bh.de:8080/login.aspx?direct=true&db=edsair&AN=edsair.doi.dedup.....4c50a49e7f53f
c3a9c44e8a68fe912e7&site=eds-live&scope=site

UNIT 5

Kaufmann, S. B. (2023). Self-Actualizing People in the 21st Century: Integration With Con-
temporary Theory and Research on Personality and Well-Being. Journal of Humanistic
Psychology, 63(1), 51–83. Available online.

UNIT 6

Kotter, J. S. (1995). Leading change: Why transformation efforts fail. Harvard Business
Review. http://search.ebscohost.com.pxz.iubh.de:8080/login.aspx?direct=true&db=bs
u&AN=23363656&site=eds-live&scope=site

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 UNIT 7

Grijalva, E., Harms, P. D., Newman, D. A., Gaddis, B. H., & Fraley, C. R. (2015). Narcissism
and leadership: A meta‐analytic review of linear and nonlinear relationships. Person-
nel Psychology, 68(1), 1–47. http://search.ebscohost.com.pxz.iubh.de:8080/login.aspx?
direct=true&db=edswis&AN=edswis.ECON825960746&site=eds-live&scope=site

UNIT 8

Earley, P. C., & Mosakowski, E. (2016). Cultural intelligence. Harvard Business Review. http:/
/search.ebscohost.com.pxz.iubh.de:8080/login.aspx?direct=true&db=cmedm&AN=15
559582&site=eds-live&scope=site

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 LEARNING OBJECTIVES
In today’s knowledge society, a company’s employees are one of its most important
resources. One of the basic competencies of leaders is to develop and promote the knowl-
edge and skills of individuals in their organization through leadership. The professional
and systematic leadership of employees is decisive to a company’s success in the face of
its competition.

Against this backdrop, this Leadership course book addresses the necessary competen-
cies of leaders in companies with modern, knowledge-based work organizations. Key
issues, as well as various approaches to modern leadership theory and practice, are dis-
cussed. The focus is on the basics of professional leadership, leadership and motivational
tools, aspects of situational leadership, and communication and interaction in the context
of strategic leadership and change processes. A methodological, conceptual basis, as well
as empirical examples and discussions of leadership behavior in organizations, are also
presented to help prepare students for the challenges of leadership, handling change,
team development, and conflict management within a company.

In this context, what constitutes good leadership is addressed while drawing on the most
significant leadership theories and their empirical validation. Leadership is discussed as a
balance of values between the requirements of organizations, people, and performance.
Furthermore, current empirical findings on leadership, teams and work-life balance, com-
munication, and appraisal of employees will be explored. Following this course, students
will be able to take the practical and problem-solving understanding of leadership and
leadership behavior that they have acquired and apply it in corporate practice.

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 UNIT 1
LEADERSHIP OVERVIEW

STUDY GOALS

After completing this unit, students will be able to ...

– explain definitions of leadership by three of the great management thinkers.

– consider levels of leadership success.
– analyze the extent leadership influences a company’s success.
– assess leadership success based on efficiency and effectiveness criteria.
 1. LEADERSHIP OVERVIEW

Introduction
There are two marketing teams in Company A. One is led by Ms. Peters, the other by Mr.
Sanchez. Ms. Peters leads her team with great commitment, holds regular team meetings
to coordinate the team, and has a very cordial relationship with each of her employees.
She knows exactly what each individual is working on at any given time and how things
are going in their private life.

Mr. Sanchez takes a somewhat different approach to leadership. In his view, his employees
are all experts in their respective fields who do their job very well and at their own pace.
He finds it wrong to look over their shoulders and, as he perceives it, “interfere with their
work.” When his employees have questions, they seek out Mr. Sanchez and quickly clarify
anything that needs to be cleared up with zero bureaucracy.

Is Mr. Sanchez or Ms. Peters the better leader? Would you rather work on Ms. Peters’s team
or Mr. Sanchez’s? Can they both be equally effective?

1.1 Significance of Good Leadership

Leadership is an area of great historic and contemporary significance. Associations with
leadership often refer to powerful and dynamic personalities who fought important bat-
tles (e.g., Julius Caesar or Alexander the Great) or were responsible for large companies or
nations while stationed in ostentatious buildings. Leadership has something mysterious
about it because it is difficult to describe “how to lead properly” in a single sentence. Dif-
ferent people in history have led their respective projects to success in very different ways.
So, is there one correct way to lead well?

Considering this complexity, there are different ways to identify and describe good leader-
ship. Specifically, this means that there are many measurement variables for leadership
success and, accordingly, different factors can be identified for the various types of leader-
ship success.

Leadership can be assigned to the role of a leader, but it can also be viewed as a process of
social influence (Yukl, 2012, p. 24). As an influence process, leadership has far-reaching
consequences and a leader can have an influence on many different aspects, for example,

• the goals and actions of an organizational unit,

• employees’ motivation to achieve these goals,
• trust and cooperation among employees,
• the allocation of resources towards goals and measures, and
• the arrangement of bureaucracies and systems (Yukl, 2012, p. 24).

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Leadership has an indirect, but significant, influence on the overall success of a company.
Let’s say that there are two field sales managers, each of whom leads a few traveling sales-
persons. If one of these field sales managers succeeds in motivating their employees
more, they will presumably be able to record greater product turnover, which ultimately
leads to a higher sales volume, and therefore to greater earnings.

However, this is not only true in sales; it also applies to other areas of a company. Imagine
that a company has an increased error rate in production. A leader who makes their
employees alert to this problem, explains the significance of error rates, and offers solu-
tions for error-free production can also contribute to a company’s success through their
leadership behavior.

The topic of leadership can be traced back to a long tradition of research that continues to
this day. This is devoted to two questions in particular (Kals, 2006, p. 97):

1. What personality traits characterize a successful leader? (question of selection)

2. Which successful leadership strategies be used under which conditions? (question of
modification)

The following sections provide an overview of the most significant answers to these two
questions.

1.2 Leadership: Conceptual Definitions

Leadership is a complex construct. In the broadest sense, however, it can be found wher-
ever social organization is involved (Guldin & Gelléri, 2014, p. 680). To begin, an overview
of how the well-known management thinkers Peter Drucker, Jack Welch, and John S. Kot-
ter understand and define the term is presented.

Peter Drucker, the developer of the “management by objectives” (MBO) concept, outlines
leadership in four aspects (Drucker, 1996):

1. Leadership requires employees who follow.

2. Leadership is not about being popular or admired, but about doing the things that
need to be done. It is not popularity that makes a leader—it is the results achieved.
3. A leader must be visible and lead by example.
4. It is not rank, privilege, title, or money that makes a leader—it is their responsibility.

John S. Kotter, a professor at Harvard Business School, describes leadership as the defini-
tion of how the future should be shaped, by coordinating employees and goals, and
through a force that inspires employees to achieve their goals despite any obstacles (Kot-
ter, 2011).

15
 Jack Welch, the long-standing CEO of General Electric, describes the process of assuming
leadership in such a way that the first task in preparing for leadership is one’s own growth.
As soon as a person assumes leadership responsibility, their focus must switch to support-
ing the growth of others (Welch & Welch, 2005).

Rosenstiel’s understanding of leadership is established in German-speaking countries: He

describes leadership as “goal-oriented influencing” that is intended to motivate the per-
son being led to achieve specific goals, which are usually derived from the goals of a com-
pany (von Rosenstiel, 2014, p. 3). Concrete goals can be those already addressed, such as
increasing sales, improving the work atmosphere, or emphasizing specific quality stand-
ards.

In principle, this influencing can occur in two ways: via leadership through structures and
leadership through people. Structures are thought of in terms of organizational charts, job
descriptions, and procedural rules. They often have an effect, even without the direct
intervention of a particular person. No matter how rigid or flexible these structures of an
organization may be, leadership through people is of central importance. The leader’s
behavior is crucial in clarifying goals, coordinating tasks, motivating employees, and mon-
itoring results.

In summarizing and clarifying these thoughts, the following definition of the leadership
Leadership of of employees can be formulated (von Rosenstiel 2014, p. 4, as translated by author):
employees Leadership is the goal-oriented influencing of subordinates by supervisors with the aid of
This is defined as the
process of influencing communication tools. Weibler (2012, p. 258) also adds that the success of leadership
undertaken by supervi- depends on acceptance by employees.
sors.

1.3 Criteria for Leadership Success

There is no one right approach to assessing leadership success. Rather, different authors
and research groups have developed varying approaches to measuring or assessing lead-
ership success. These are briefly presented below.

Three different levels can be considered when assessing leadership success. The first level
Dyad is the dyad, i.e., the relationship between each individual being led and their leader. The
A dyad is a relationship second level is the group or team, and the third level is the entire organization (Weibler,
between two people. For
example, a dyad exists 2012).
between a leader and
employee A, and another One indicator of leadership success could be the success of the entire organization. How-
dyad exists between a
leader and employee B. ever, empirical findings on organizational success and leadership show mixed results. An
early study by Lieberson and O’Connor (1972) of return on sales and annual net profit
measured over 20 years and its relationship with leadership showed that leadership only
makes a very small contribution to organizational success. In another study, however, a
leadership influence of 50 percent (of the CEO) on the company’s success was shown.
These examples, along with many other studies, reinforce the idea that it is very difficult
to clearly determine what contribution good leadership makes to a company’s success.
Pfeffer (1977) substantiates this with the high degree of similarity between top managers

16
and business leaders in terms of their education and attitudes. However, there is limited
scope for action due to predefined roles and norms, and a large number of environmental
factors, such as the economy and technical progress, have a strong impact on company
success.

Weibler (2012, p. 65) proposes three efficiency criteria for assessing leadership success:

1. Economic efficiency
2. Performance process efficiency
3. Personal efficiency

Economic efficiency refers to typical indicators of a company’s success, such as earnings,

profitability, or sales. In the case of performance process efficiency, success can be differ-
entiated according to tangible performance processes (e.g., rejects, accidents, or devia-
tions from plans) and intangible performance processes (e.g., problem solving). Personal
efficiency can also be differentiated in terms of work-related attitudes (satisfaction,
morale, or complaints) and individual attitudes (acceptance of influence or willingness to
cooperate).

If, in contrast to efficiency, the effectiveness of leadership is considered, three types of

effectiveness criteria can be distinguished (Weibler, 2012, p. 72):

1. Performance (quality, time savings, creative performance)

2. Cohesion (team cohesion, frustration tolerance, group performance)
3. Satisfaction (job satisfaction, commitment)

In addition to the efficiency and effectiveness criteria described above, a broader stake-
holder approach can be used. Successful leadership can be defined as leadership that ach-
ieves the highest possible level of satisfaction among as many stakeholders as possible
(e.g., employees, suppliers, customers, lenders, and society).

Von Rosenstiel (2014, p. 5) correctly points out that it is ultimately a decision of company
policy as to which criteria are used to measure and assess supervisors—even if this is
rarely made explicit in practice.

SUMMARY
Leadership is a complex construct and the question of what constitutes
“good” leadership is therefore difficult to answer. Historically, leadership
has been of considerable importance in politics and wars. Nevertheless,
there are many different definitions of what exactly leadership means.

The core of the various definitions of leadership is that it is a process of

communication between the leader and the led, which, in turn, has the
purpose of achieving a certain goal.

17
 Leadership success can be measured or assessed in many ways. In addi-
tion to the efficiency approach, the effectiveness approach can be
deployed. Alternatively, a stakeholder approach can be used to assess
leadership success.

Ultimately, the decision on which criteria to use to measure and assess

supervisors is up to the individual company.

18
 UNIT 2
LEADERSHIP THEORIES THROUGH
CHANGING TIMES

STUDY GOALS

After completing this unit, students will be able to ...

– describe the different leadership models and approaches.

– explain how a particular situation can be included in leadership approaches.
– differentiate between systemic and symbolic leadership approaches.
– compare transactional and transformational leadership.
 2. LEADERSHIP THEORIES THROUGH
CHANGING TIMES

Introduction
Ms. Smith is a department manager at a bank. Her department includes Mr. Lang, Ms.
Meyer (an intern), Ms. Patel, Mr. Elmer, and Mr. Faro. Ms. Patel, Mr. Elmer, and Mr. Faro have
each worked at the bank for nearly 20 years, and Ms. Smith often includes them in her
decisions or asks them for their professional opinion. Otherwise, she gives them a great
deal of freedom in doing their work because she knows they are doing a good job.

Ms. Smith’s behavior toward Ms. Meyer and Mr. Lang, however, is completely different. She
monitors the former at every turn; Ms. Meyer must present her with interim versions of her
work several times a day, and Ms. Smith gives her very clear guidelines that must be
adhered to. Ms. Meyer finds this unfair. Mr. Lang, who has only recently moved to the bank
and previously worked at the city administration, is also somewhat unnerved by the close
monitoring to which Ms. Smith subjects him. Although he does not need to defend his
work on a daily basis, he does have to do so several times a week in regular meetings. Ms.
Smith always seems to find something wrong with it. Mr. Lang wonders if Ms. Smith
secretly favors the other three employees and has a personal dislike for Ms. Meyer and
himself.

How would you rate Ms. Smith’s leadership style? Does she act inconsistently, genuinely,
or unfairly?

The concept of what constitutes “good,” “right,” or “effective” leadership has changed con-
siderably over the years. Many authors have developed approaches and models to provide
guidelines for leadership. Even now, there is no consensus in management research as to
the best leadership approach.

2.1 Trait Theory

Trait theory is primarily concerned with the personality of the ideal leader. It is, therefore,
based on the following question: What traits and characteristics must a person have to be
particularly qualified as a leader?

Trait theory, also known as the “great man theory,” developed in the second half of the
nineteenth century—a time when social Darwinist elitism prevailed (Schirmer & Woydt,
2016, p. 55). Successful men, including Werner von Siemens, Gottlieb Daimler, and Alfred
Krupp, were impressive with their accomplishments, which were characterized by sole
decision-making power. This approach resulted from ideals that were still shaped by feu-
dal structures and were based on the idea that leadership talent was inherited by the
nobility, clergy, and heads of industry, which is why employee participation in decision-

20
making was also categorically rejected (Schirmer & Woydt, 2016, p. 55). This approach is
complementary to Taylorism, which assumes that workers can only act in a limited way at
a particular time, resulting in a marked division of labor. When employees are seen as
mentally limited, their participation is virtually excluded and strong leadership is required.

As a result of trait theory, management research between 1900 and 1950 heavily focused
on the identification of key traits in the personality of leaders. Initially, it focused on exter-
nal traits, such as size, strength, and health. Later, these were supplemented by internal
traits, such as intelligence, willpower, and decisiveness (Schirmer & Woydt, 2016, p. 55). An
early meta-analysis by Stogdill (1948) revealed the following traits as central to leadership
success:

• ability (e.g., intelligence, judgement, and eloquence)

• achievement (e.g., knowledge, academic success, and athletic success)
• responsibility (e.g., reliability, initiative, and self-confidence)
• participation (e.g., cooperation, adaptability, and humor)
• status (e.g., socioeconomic position, background, and popularity)

Since the 1990s, Stogdill’s work has been continued by authors such as Timothy A. Judge,
Joyce Bono, Fred Luthans, and Robert and Joyce Hogan. Most studies use the Big Five per-
sonality test (i.e., extraversion, agreeableness, openness, conscientiousness, and neuroti-
cism) or the Hogan Development Survey to assess personality (Judge et al., 2000). In
recent years, there has been increasing interest in what are known as “state-like” person-
ality traits, i.e., personality traits that can be developed with training (such as grit; Duck- Grit
worth et al., 2007). This trait approach is described as a static approach, meaning that the This refers to persever-
ance, resilience, and the
leadership situation is not considered. pursuit of long-term
goals.

2.2 Leadership Style and Leadership

Person
One-Dimensional Leadership Styles

The Iowa Studies were the first to test the effectiveness and consequences of different
leadership styles (Lewin et al., 1939). In randomized groups, ten-year-old boys were
assigned to one of three group leaders, with whom they worked on various handicraft
projects over several weeks. In each case, one leader behaved in an authoritarian, demo-
cratic, or laissez-faire manner. In the authoritarian group, the expectations of the children
were clearly communicated and the method for making the crafts was clearly dictated. In
the democratically led group, the leader integrated into the group, guided, and allowed
feedback and input from the children. In the laissez-faire group, the leader left the chil-
dren to their own devices and offered little guidance.

Subsequently, the children’s satisfaction with their group leader was surveyed and the
children’s performance in the craft projects was assessed. 19 out of 20 children were satis-
fied with democratic leadership and 14 out of 20 preferred the laissez-faire leadership over

21
 authoritarian leadership. The behavior of the children among themselves was interesting;
within the authoritarian group, the children’s aggression among themselves was the high-
est, while in the democratic group it was the lowest. The democratically-led group was
also the most productive, while the laissez-faire group was the least productive.

Although this study laid the foundations for further empirical research on the effective-
ness of different leadership styles, its limitations are obvious. The extent to which the
behavior of ten-year-old children (in this case, exclusively boys) can be transferred to a
highly qualified workforce featuring other genders is extremely questionable. Given the
background of this study, the effectiveness of one-dimensional leadership styles must
therefore be questioned.

Based on these constraints, Tannenbaum and Schmidt (1958) developed the leadership
style continuum, which considers the act of leadership in the given framework conditions.

Figure 1: The Leadership Style Continuum

Source: Tannenbaum & Schmidt (1958, p. 96).

Under an authoritarian leadership style, the supervisor (or leader) issues orders and
makes decisions without consulting their employees. Under a paternalistic leadership
style, the supervisor makes decisions on their own, but strives to convince employees of
the correctness of their decisions. In an informational style, the supervisor makes deci-
sions, but questions about correctness are allowed. A consultative leadership style means
that the supervisor informs their employees of planned decisions and employees then
have the opportunity to contribute their opinions before a final decision is made by the
supervisor. Under a cooperative leadership style, the team develops proposals before the
leader identifies the proposal to be implemented from the pool of suggestions developed

22
by their team. Using a delegative leadership style, the employees’ freedom is so great that
the group decides for itself based on the leader’s specification of the problem and their
established guard rails. Semi-autonomous groups make decisions completely on their
own, with the supervisor acting as an advisor.

In principle, the question of which leadership style is most effective, and in which cases,
cannot be answered. Rather, it is important to take the framework conditions into
account, such as the personal characteristics of the leader, team size, industry and work
content, the qualifications of the employees, and the level to which the leader is accepted
by the team, and then to exercise an appropriate leadership style based on this.

2.3 Consideration of the Situation

Various models propose a consideration of the situation or framework conditions of lead-
ership. Fiedler’s contingency theory, Hersey and Blanchard’s model, and Vroom and Yet-
ton’s decision model are closely examined in this section.

Contingency Theory According to Fiedler

Contingency theory addresses the question of which leadership style is most promising in
which situation (Stock-Homburg, 2013, p. 493). It takes its name from situational influen-
ces (contingency factors) that are of key importance to leadership success. Its central
hypothesis is that group performance is a function of the relationship between leadership
style and the extent to which the group situation allows the leader to exercise influence
(Kals, 2006, p. 100). The situation, which represents the sum of the framework conditions
of a leadership situation, can be further defined by the following aspects (Fiedler, 1967):

• leader-employee relationship. Group employees tend to be more willing to accept stim-

uli from their leader if they value their leader or feel valued. The dyadic relationship is
the most important situational variable.
• positional power. A leader’s influence based on their hierarchical position in the organi-
zation is also referred to as positional power. The greater their positional power, the
more influence the leader has on the behavior of the employees being led.
• degree of task structuring. This refers to the number of recurring elements, their pre-
dictability, and the verifiability of performance results. The more clearly the tasks are
structured, the easier it is to coordinate and control the employees being led.

Each of the aspects named above can be high or low, resulting in eight different situations.
Depending on the situation, Fiedler recommends more employee-oriented or perform-
ance-oriented leadership.

23
 Figure 2: Contingency Theory According to Fiedler

Source: Stock-Homburg (2013, p. 495).

In empirical studies, Fiedler was able to show that different leadership styles have promis-
ing results in different leadership situations. In particularly favorable and unfavorable sit-
uations alike, performance-oriented leadership was proven to be more effective in terms
of group employee performance and satisfaction. In contrast, a more employee-oriented
leadership style should be applied in intermediate situations.

It must be added that Fiedler’s results have been confirmed in a laboratory experiment,
but are yet to be proven in field studies. Despite all the criticism, however, it should be
noted that Fiedler was the first to take situational conditions into account in an empiri-
cally verifiable leadership model (Kals, 2006, p. 101).

Maturity Model According to Hersey and BlanchardTitle

The maturity model according to Hersey and Blanchard bears this name because it makes
a recommendation for leadership behavior depending on the “maturity level” of the per-
son being led. It is assumed that employees with different levels of maturity are to be led
differently (Stock-Homburg, 2013, pp. 423—427). For the first time, Hersey and Blanchard
advocated for individualized leadership and were against the “watering can” principle.
This means that, despite authentic leadership by a supervisor, it is more effective and
fairer if employees are led differently. This is not intended to cause inconsistency in lead-
ership, but rather to consider the theory that employees with lower maturity need more
guidance and monitoring, while employees with very high maturity deserve more free-
dom.

24
The authors distinguish between four levels of maturity among employees (M1 to M4),
which are based on their psychological and functional (work-related) maturity. It is impor-
tant to note that this is not a matter of the employee’s abstract personal maturity. Instead,
this maturity looks at the task in question against the backdrop of their current area of
responsibility and “depends on performance motivation, willingness to assume responsi-
bility, and training or experience” (Kals, 2006, p. 102).

• M1 is characterized by low psychological and low functional maturity.

• M2 is characterized by high psychological but low functional maturity.
• M3 is characterized by low psychological but high functional maturity.
• M4 is characterized by both high functional and psychological maturity.

In this respect, the new 18-year-old trainee in a department would likely be assigned M1,
whereas the long-standing employee in accounting, who has successfully handled difficult
circumstances, could be assigned M4. An employee who has a great deal of potential and
enthusiasm, but has only recently moved from purchasing to sales, would correspond to
M2. At the same time, the question of maturity level arises anew when an employee starts
a new job.

The figure below illustrates how leadership behaviors and employee maturity are correla-
ted according to Hersey and Blanchard.

25
 Figure 3: The Maturity Model According to Hersey and Blanchard

Source: Stock-Homburg (2013, p. 423).

The maturity model differs from Fiedler’s contingency theory on essential points. While
the latter is based on the assumption that a leadership style can only be changed in the
medium to long term, Hersey and Blanchard assume that each employee should be led
according to their maturity. They additionally require that leaders always work to maxi-
mize the maturity level of their employees. In this respect, a leader must master all four
leadership styles (supportive, delegative, directive, and coaching) and use them as appro-
priate for the maturity model to be effectively implemented. An empirical study from Tai-
wan by Silverthorne and Wang (2001) tested the effectiveness of the maturity model. It
showed that the better the leader can respond to the maturity level of each employee, the
higher the employee’s productivity. Nevertheless, the maturity model has also been criti-
cized as lacking empirical evidence. In spite of this, in view of its plausibility, it enjoys high
popularity in the practice of leadership training (von Rosenstiel, 2014, p. 17).

Vroom-Yetton Decision Model

The decision model by Vroom and Yetton frequently serves as the basis of leadership
training, with its validity supported by empirical studies (Kals, 2006, p. 102). As a situa-
tional leadership theory, it also addresses the question of when a leader should allow par-
ticipation by those led and to what degree. It considers autocratic decisions, decisions

26
based on consultation with those led, and group decisions. The leader is guided through
six situation diagnostic questions. Each question must be answered with yes or no and fol-
lows a decision tree (Kals, 2006, p. 102):

1. Does the decision to take one action strategy or another make a difference?
2. Is the problem structured?
3. Does implementation require that employees accept the decision and its consequen-
ces?
4. Would they also accept it if the leader made the decision on their own?
5. Do employees share the organization’s goals that the decision is intended to achieve?
6. Is the decision likely to lead to a conflict among employees?

Once the leader has answered these questions, they are advised on whether they should
make their leadership decision alone, after consultation with those led, or as part of a
group decision-making process. Depending on how the questions are answered, one of
the following five recommendations is provided at the end of the decision tree (Kals, 2006,
p. 102):

1. Authoritarian decision by the leader

2. Authoritarian decision by the leader after gathering information from their employees
3. Decision of the leader on their own, but after prior one-to-one consultations with indi-
vidual employees
4. Sole decision by the leader after consultation with the working group
5. Group decision

The first six questions above lead to a better leadership decision depending on the situa-
tion, whereby the (presumed or actual) improvement is determined by three hierarchical
criteria (von Rosenstiel, 2014, p. 17):

1. Quality of the decision

2. Acceptance of the decision
3. Economics of the decision behavior

Von Rosenstiel (2014) summarizes that despite the model’s “rationalistic and mechanistic
[appearance], there is indeed evidence for its usefulness . . . The learning objective here is
to sensitively perceive one’s own leadership situation in order to then be able to react flex-
ibly in terms of leadership behavior” (p. 18).

2.4 Systemic Leadership

In the 1980s, leadership underwent a paradigm shift, largely driven by the work of Niklas
Luhmann (1984). This changed the prevailing opinion from an input/output-related,
mechanistic, and monocausal view of leadership to a systemic perspective that seeks to
consider reality in its entire, non-linear complexity. The core idea of systemic leadership is
that leadership actions in a complex, networked, social structure lead to a multitude of
direct and indirect reactions.

27
 Systems are understood as a number of different elements (e.g., people in a company)
that are related to and interact with each other in different ways. For example, a gearbox is
a fairly simple system in which various cogwheels engage with each other. A specific force
occurs as input, the elements exist in different relations and interact, and a specific force
results as output. Larger social systems such as companies are exponentially more com-
plex because if an input (for example, a competitive situation) changes, the company can
anticipate many potential conditions.

In general, systems theory is focused on synergetics. This describes regularities, according

to which, new self-organized structures and effective reactions can arise in complex sys-
tems (Schirmer & Woydt, 2016, p. 201). Self-organization can be understood as the adapta-
tion of a system in the presence of new input. For example, self-organization would occur
in a “company system” when the “competitive situation” input changes. If a direct com-
petitor lowers prices, the product management team, finance department, and sales divi-
sion will coordinate whether a lower price can be accepted on a temporary basis, thereby
resulting in lower contribution margins from sales, or whether more economical product
variants can be produced at short notice, which offer fewer features but canbe sold at a
lower price.

According to Luhmann (1984), the basic element in social systems is not the human being,
but communication itself. This is influenced by the subjective construction of reality by the
subjects in the system, with suitable structures created based on this. Luhmann (1984)
also explains that if a system is to be influenced, this is only possible by inducing a con-
structivist view of reality. The various subjects or employees involved exhibit different
interpretation patterns that can lead to a variety of alternative outcomes.

In this respect, systemic leadership does not attempt to reduce complexity; rather, it
attempts to influence it by means of communication as a necessary component of the sys-
tem. It is the task of a leader to understand complex and bilateral interactions between all
participants (employees, customers, suppliers, etc.). Ultimately, a leader only has the task
of acting as an initiator (Schirmer & Woydt, 2016, p. 202). The problem of leadership using
the systemic view lies in the fact that the leader themself is a subject in the system and
therefore dependent on various uncontrollable, self-regulating influences.

2.5 Symbolic Leadership

According to Nerdinger (2014) and Neuberger (2002), leadership not only depends on the
intention of the leadership behavior, but also on the manner of leading. “Symbolic leader-
ship” is the term used when leadership behavior symbolizes the values and beliefs of a
company (Neuberger, 2002, p. 194). A symbol is understood to be a representation of
something that cannot be tangibly perceived. In the sense of symbolic leadership, it is not
only what happens objectively in a company that is important, but also how this event is
perceived by the leader and their employees (Rybnikova, 2014, p. 234).

28
This is because many things that occur in a company—be it a written or personal
announcement of a new strategy, an unwritten dress code, or the fact that the manage-
ment is located on the top floor of the building—also have a symbolic character and, thus,
indirectly say something about a company (Nerdinger, 2014, p. 106). For example, a con-
servative dress code may represent conservative values at a company, and the removal of
a timekeeping system without replacement may represent a company’s trust in its
employees. According to Nerdinger (2014, p. 106), leadership behavior is always symbolic,
since led people will always interpret the behavior of their leaders. An open door to a
supervisor’s office can signal responsiveness and, by implication, be interpreted by
employees as their supervisor’s appreciation of the importance of their issues.

However, recommendations regarding symbols in leadership should be treated with cau-

tion, since forced symbolism is quickly perceived as inauthentic. If a company has spent
years following a formal, conservative dress code with a strict hierarchy and an expecta-
tion that employees are not on a first-name basis with each other, it may seem inauthentic
if, overnight, the dress code becomes more casual and employees are expected to use first
names with each other.

Moreover, the same leadership action can be interpreted differently by different employ-
ees. For example, if the leader frequently and thoroughly checks the work results of their
employees, this can be interpreted by one employee involved the leader being as consci-
entious, interested, and supportive, but can alternatively be perceived as them being con-
trolling and mistrusting.

The theory of symbolic leadership still has not been subjected to sufficient empirical
research (Rybnikova, 2014, p. 253). Regardless, its merit undeniably lies in broadening a
narrow view of leadership as the effective handling of human objects toward a more com-
prehensive view of leadership as a process that involves all participants and conveys
meaning to them.

2.6 Transactional and Transformational

Leadership
The concept of transformational leadership has had a lasting influence on international
leadership research over the past 30 years. This approach is becoming more widespread International leadership
in the practice of leadership development. Transformational leadership builds on transac- research
While the transforma-
tional leadership, complementing and extending it by utilizing positive reinforcement, but tional leadership
placing even greater focus on the leader’s function as a role model. Building on earlier approach was initially
research, Bernhard M. Bass was the first author to distinguish between “transactional” met with skepticism in
Germany, it has stimula-
and “transformational” approaches (Bass, 1985). Both approaches will be explained in ted numerous research
more detail and distinguished from each other in this section. activities there, as well.

29
 Transactional Leadership

Transactional leadership is based on the principle of reinforcement, drawn from learning

theory, that stems from operant conditioning. This is based on the experiments of Burrhus
Frederic Skinner (1963) and is often described in management jargon as “carrot and stick”
leadership. Positive work results are rewarded (carrot), while negative results are pun-
ished (stick). The table below provides an overview of the different types of conditioned
reinforcement.

Table 1: Reinforcement Types

Apply a stimulus Remove a stimulus

Positive reinforcement (e.g., praise or bonus pay- Negative reinforcement (e.g., cancellation of an
ment) employee discount)

Punishment (e.g., demotion or warning) Extinction (e.g., by ignoring undesirable behavior)

Source: Nerdinger et al. (2014, p. 90).

In transactional leadership, the leader controls both the way in which tasks are completed
and the achievement of goals by employees (Nerdinger, 2014, p. 90). The concept of trans-
actional leadership corresponds with the idea of “management by exception” (MBE),
which involves the leader not interfering until exceptions occur. Positive exceptions can
arise through special performance that the leader should then positively reinforce, and
conversely, negative exceptions should be negatively reinforced or punished. In addition,
there is the possibility of ignoring negative exceptions, but this contradicts the idea of
management by exception (Nerdinger, 2014, p. 90).

Transformational Leadership

Transformational leadership focuses on different leadership principles than transactional

leadership. Whereas transactional leadership focuses on the “transaction,” i.e., the fair
exchange between leader and employee, and the leader is responsible for achieving and
monitoring goals, transformational leaders motivate their employees by influencing their
values and feelings on four levels (known as the “4 Is”) by doing the following:

• convincingly communicating attractive visions (inspirational motivation),

• credibility embodying a role model (idealized influence),
• stimulating independent thinking and supporting change (intellectual stimulation), and
• supporting employee development (individualized consideration).

In this way, long-term and overriding values and ideals can replace short-term material
goals. Transactional leadership is thus supplemented, but there is certainly no room for
the development of transformational leadership if performance and consideration do not
exist in a relationship of fair exchange (work performance in return for pay and develop-
ment opportunities; Felfe, 2014, p. 39).

30
Thus, it is primarily a matter of trust and of conveying meaning to employees at work (Ner-
dinger, 2014, p. 90). Transformational leadership is, thereby, manifested in the above char-
ismatic behavior, inspiration, intellectual stimulation, and individual appreciation of
those led (Yammarino & Dubinsky, 1994, as cited in Stock-Homburg, 2013, p. 463).

A large number of empirical studies have now shown that transformational leadership has
a positive effect on various success factors, such as individual commitment and employ-
ees’ self-efficacy expectations, as well as on the success of a company as an organization.
Research has also shown that this correlation is particularly high in an environment that is
considered unstable (Felfe, 2014, p. 40).

Numerous meta-analyses on individual success variables show the positive effects of

transformational leadership on job performance, commitment, work engagement, job sat-
isfaction, and employee well-being, among other things. Furthermore, employees are less
likely to quit if they are led according to transformational leadership principles, i.e., with
charisma, inspiration, intellectual stimulation, and individual appreciation (Stock-Hom-
burg, 2013, p. 465).

With regard to organizational success variables, empirical studies reveal the positive
effects of transformational leadership on the development of product and process innova-
tions, the market launch of such innovations, and company performance (including mar-
ket share and return on sales; Stock-Homburg, 2013, p. 466). The table below provides an
overview of the various role behaviors of a transactional or transformational leader.

Table 2: Role Behaviors of Leaders

Traits Transactional leadership Transformational leadership

Coordination mechanisms of Contracts, rewards, or punish- Enthusiasm, cohesiveness, trust,

leadership ment or creativity

Focus on employee motivation External incentives (extrinsic) Task in itself (intrinsic)

Focus on goal achievement Rather short-term Rather long-term

Goal content Material goals Idealistic goals

Role of the person leading Instructor Teacher or coach

Source: Stock-Homburg (2013, p. 464).

31
 2.7 Leadership Theories through
Changing Times—Leadership in a Field of
Tension
There is a multitude of leadership theories and approaches, as well as a wealth of empiri-
cal studies that have tested the effectiveness and efficiency of these approaches. Despite
the abundance of empirical data, it has not been possible to identify a single correct lead-
ership theory, since the matter depends on too many contextual factors, such as the spe-
cific industry, the economic situation, (company) culture, power distance, leader person-
ality, trust between a leader and their employees, and many others.

With the help of a wide range of leadership theories, a leader can expand their (theoreti-
cal) spectrum of action but must then decide on a concrete option for the action they take.
Their task can therefore be understood as acting in a field of tension (Berkel, 2007). As a
result, leadership must ultimately be understood not only as a role, behavior, or leader-
ship style choice, but also as striking a balance of values within this field of tension. To
understand what constitutes “values,” reference can be made to the philosophy of Frie-
drich Nietzsche and his aphoristic observations (Berkel, 2007, p. 207):

• Values are perspectives or points of view, according to which people prefer or pursue
things/relationships.
• Values are discovered or created.
• Values change because people change, and different values are a primary focus at dif-
ferent times.
• Values demand to be something that people ought to do, but, unlike laws, they cannot
be forces to comply with.

With regard to leadership, a distinction can then be made between managers and leaders
on the basis of values. Management is understood as a profession that focuses on results
and relies on measurable goals, while leaders use values to guide. Measurable goals repre-
sent important parameters that allow “landing with pinpoint accuracy and checking that
landing with precision” (Berkel, 2007, p. 209). However, much is lost if a company is exclu-
sively reduced to measurable goals. The desirability of management that works simplisti-
cally and strictly with quantitative goals is also questionable. Instead, goals need to be
supplemented by values, since goals in themselves are derived from values. For example,
if sales growth goals of 15 percent are set, this goal is derived from the growth and expan-
sion value.

Nevertheless, unlike goals, values require an argumentative accommodation and intellec-

tual debate. Organizations are always more than the monetary condensation of perform-
ance based on their values. Fundamental values outline “the cosmos in which one moves
and is understood [...]. They give employees indications of how to act in new situations
not yet covered by goal planning in order to fulfill the company’s mission” (Berkel, 2007, p.
210). Values thus create a common ground and understanding between those involved.

32
In contrast to values, quantitative goals compel employees to act rationally and optimally.
However, it is essential to consider people in all their complexity, because “they experi-
ence and act . . . not only as rationally programmable beings, they also have an abundance
of feelings, standards, communication” (Berkel, 2007, p. 210). If management is solely
based on quantitative goals, companies risk dissatisfaction and the loss of voluntary,
internal self-commitment, as well as the willingness to take risks and innovate on the part
of those employees that companies urgently need. This is particularly relevant in competi-
tive circumstances to be able to act flexibly while simultaneously staying on course with
the overall vision.

In this respect, companies’ exclusive orientation and incentive systems toward quantita-
tive goals can be viewed very critically. Shareholder value can be seen as a value in the
company, but questions can also be raised as to whether it should be the only value pur-
sued by the organization. In Germany, this is already the case for legal reasons, since the
country’s Basic Law succinctly states in Article 14 that “[p]roperty entails obligations. Its
use shall also serve the common good” (Federal Ministry of Justice, n.d.). The principles of
the social market economy, which include employee participation, are derived from this.
For this reason alone, it is not possible in Germany for a company to be exclusively orien-
ted toward the principles of shareholder value. The interests of other stakeholders, such
as employees, must also be taken into account and this is considered to be a de jure value
here. In other words, it is a value that abides by German law.

Berkel proposes the graphic model below to depict leadership in a field of tension.

33
 Figure 4: Triad Leadership Ethos Model According to Karl Berkel

Source: Berkel (2007, p. 219).

The model is based on the considerations of traditional anthropology. It distinguishes

between three spheres of human reality: the material, social, and spiritual sides. In rela-
tion to a company or an organization, the material side refers to what the organization
represents, such as products, processes, and services. The social side includes all relation-
ships among members, as well as with the outside world, that are reflected in communica-
tion, cooperation, or customer orientation. The spiritual side refers to an organization’s
global line of approach, its purpose, and reason for existence (raison d’être). It manifests
itself in an organization’s guiding ideas, principles, and structures (Berkel, 2007, p. 211).

As it relates to the leadership model, responsible, loyal, and critical organization can be
applied to the spiritual side of an organization; relationships between people should be
caring and truthful, and its performance (material side) should be competent, as well as
efficient and effective. Understood in this way, the goal of good leadership is to act justly
(i.e., equally and fairly) within this field of tension among values (Berkel, 2007, p. 219).

34
SUMMARY
It is difficult to make a value judgment with regard to leadership. Many
theoretical models have been developed over the past 50 to 100 years.
Some of these models have undergone a variety of empirical tests (e.g.,
the transformational leadership approach), while others are difficult to
test empirically due to their conceptual complexity (e.g., Berkel’s leader-
ship ethos model).

Still, even empirical testing does not always yield the clear findings
desired in practice. For example, the transformational leadership
approach has been shown to be quite effective for certain variables,
though studies of the transactional approach have found even greater
effects.

Many researchers address the topic of leadership every year, and a great
deal of professional journals (e.g., Leadership Quarterly) annually pub-
lish numerous articles on the subject. The topic of leadership is alive, it
is dynamic, new approaches are emerging, and, ultimately, leadership is
always contextual. It depends on the personality and experience of a
leader, the maturity of individual employees, the composition of the
workforce, the value structure of a company, and its incentive systems.
In this respect, it is extremely difficult to derive generally applicable
principles for “good leadership.” Rather, empirical studies allow for mak-
ing limited, comparative correlative statements (constructions like “the
bigger X is, the better Y is”). Theoretical works also provide normative
principles on how leadership should be designed responsibly and ethi-
cally.

35
 UNIT 3
NEW LEADERSHIP APPROACHES

STUDY GOALS

After completing this unit, students will be able to ...

– define agile leadership.

– explain how Agile leaders can be developed.
– define the terms “VUCA” and “flat world.”
– understand how empowering leadership is and its consequences for employees.
– contextualize the buzzword concepts of “holacracy” and “sociocracy.”
 3. NEW LEADERSHIP APPROACHES

Introduction
Concepts and claims such as “the world is flat,” “new work,” and “Agile leadership” domi-
nate the headlines of many blogs on leadership topics and are increasingly penetrating
professional literature. Although there is still a considerable lack of empirical studies test-
ing the causal relationships and success of such new leadership approaches, they are
quickly gaining acceptance in practice.

3.1 VUCA and Leadership

Volatility VUCA is an acronym applied to environments and times characterized by volatility, uncer-
This term refers to a state tainty, complexity, and ambiguity (Lawrence, 2013). The acronym originated in the US
of potential quick, unex-
pected changes. military and was widely used after September 11, 2001 to describe the changing world in
which we live. The financial crisis of 2008, which rendered many business models obso-
lete, also contributed to the acronym’s use, as did the explosive spread and growing signif-
icance of social media (Lawrence, 2013, p. 3).

Thomas Friedman refers to this in his book The World is Flat and describes the develop-
ment as the “rapid flattening of the world” (Friedman, 2005, p. 78). Significant changes are
taking place, changes that are not only developing rapidly but also simultaneously affect-
ing far more people than any change has before. This challenges management at every
company to adapt to these rapidly changing conditions. The greatest difficulty arises from
the unpredictability of events and changes that require leaders to possess a high level of
adaptability, as well as the ability to make continual and rapid adjustments to their busi-
ness model, processes, technology, and organization (Lawrence, 2013, p. 3). A study by the
Boston Consulting Group confirms this and underscores the need for “adaptive compa-
nies” and an “adaptive advantage,” rather than a “competitive advantage” (Lawrence,
2013, p. 3).

Johansen’s VUCA Prime Model proposes the following qualifications for management to
counter the threats posed by VUCA (Lawrence, 2013):

• A strong vision can counter volatility. Managers with a strong vision can better guide
companies if they have long-term goals and are able to withstand unforeseen events.
• Uncertainty can be met with understanding, which can be paraphrased as the ability to
look inward, look carefully, and listen.
• Complexity can be met with clarity by facing chaos using deliberative thinking.
• Ambiguity can be countered by agility, which is defined as the ability to communicate
throughout the entire organization and apply speed in implementing solutions.

38
In this context, vision, understanding, agility, and clarity are not understood as completely
independent of each other, but rather as intertwined. Lawrence (2013, p. 6) suggests the
same points as recommendations for action in talent management. Firstly, hire Agile lead-
ers by taking agility and the ability to think through complex issues into account as early
as the selection process.

Secondly, develop managers to be Agile leaders by promoting adaptivity, innovativeness,

collaboration, communication, and openness to change, as well as critical thinking strat-
egies. Scenario planning tools are ideal for this and aid in mentally implementing different
scenarios in order to react to changing framework conditions. Virtual simulations are par-
ticularly well-suited to this purpose. Job rotation is an example of enhancing adaptivity
since it promotes thinking outside the box and cross-functional thinking.

Finally, develop an organizational culture that fosters Agile capabilities and retains Agile
leaders. To this end, Lawrence suggests creating incentives for innovation, Agile behavior,
and taking calculated risks while being flexible in their design. This can be done by offer-
ing leaders inducements that appeal to them, such as vacation days, bonuses, and stock
options, in order to communicate agility in the design of incentives, as well.

3.2 Empowering Leadership

Leaders who have a strong focus on empowerment “share power with their employees by
delegating authority to employees, holding employees accountable, involving employees
in decision-making, encouraging self-management of work, and conveying confidence in
employees’ capabilities to handle challenging work” (Chen et al., 2011, p. 541). If leaders
show a low willingness to empower, they tend to micromanage and monitor (Chen et al.,
2011, p. 541).

Leaders with a strong or weak commitment to empowerment impact their teams in differ-
ent ways. If leaders permit empowerment, they promote motivation within the team and
ensure that employees can contribute fully. They have more confidence in their teams and
trust them more overall. They are also more open to involving their employees in deci-
sion-making and giving the team more autonomy and decision-making freedom (Chen et
al., 2011, p. 541). In turn, empowerment by a leader results in self-confidence, a sense of
self-determination, and an awareness of creating value, autonomy, opportunities for
development, and self-efficacy with regard to the required work results (Chen et al., 2011,
p. 541). Alongside this, commitment is strengthened, which further contributes to
employee engagement and subsequently lowers the labor turnover rate.

3.3 Sociocracy and Holacracy

Sociocracy and holacracy describe organizational structures that represent alternatives
to the conventional hierarchy. Sociocracy is based on four cornerstones:

39
 Sociocracy 1. Consensus takes precedence. Decisions are made when there are no serious reserva-
The term “sociocracy” tions in the decision-making body. Reservations and counterarguments are highly val-
goes back to the French
philosopher Auguste ued and must be presented rationally.
Comte (1798—1857), who 2. Organization in circles. The organization consists of semi-autonomous circles, each of
was a proponent of socio- which is responsible for the implementation, measurement, and monitoring of their
logically driven politics.
respective processes. They are also responsible for the development of the circle and
its members. The circle should find its own knowledge gaps and close them autono-
mously.
3. Double link. The operational leader of each circle is automatically a member of the
next circle up. In addition, each circle elects another representative who is also a
member of the next circle up. Thus, there are two “links” up (and down, if there are
subordinate circles).
4. Election by consensus. This principle complements the first principle in that individu-
als are elected for responsibilities by consensus, as described above. Again, dissenting
votes are weighted particularly heavily. Members of the circle may nominate them-
selves or others. After discussion, nominations may be changed, and the discussion
leader proposes the person with the strongest nominations for election.

Holacracy was developed by Brian Robertson, the founder of a tech company in Pennsyl-
vania. It is strongly based on the ideas of sociocracy and follows these principles:

• roles instead of job descriptions. Here, holacracy distinguishes between person and
role, meaning that one person can hold multiple roles. A role follows a unique format
with title, purpose, control domains (if applicable), and responsibilities that are upda-
ted on a regular basis.
• circular structure. Holacracy consists of several circles that are hierarchically structured.
Each circle is assigned a clear purpose and responsibility by the superordinate circle.
Circles are self-organized and determine their own deadlines, the assignment of roles
within the circle, and the execution of work. The circles are linked with each other by a
“rep link” and a “lead link” who represent their respective circles in meetings with
higher-level circles to ensure communication flow and ensure strategic alignments.
• management guidelines. Each circle is free to formulate its own management guide-
lines.
• operational processes. In holacracy, processes are designed around operational con-
straints and keep all members of the respective circle working together effectively and
efficiently. In this process, each member has a high degree of autonomy and self-deter-
mination in their roles, as well as permission to innovate. Instead of asking for extra,
holacracy gives people a “blank check,” as it were, to do and initiate everything to fulfill
their role(s) in the best possible way. The principle of holacracy is freedom and
autonomy, which is only restricted in the event of misconduct.

One prominent representative of holacracy is the US shoe and fashion retailer Zappos. A
number of tech companies, such as Mercedes-Benz.io GmbH and Rising Systems AG in
Germany, and Liip in Switzerland, among others, are committed to holacracy.

40
SUMMARY
Sociocracy, which originated in philosophy and sociology during the
nineteenth century, is a more democratic form of organization than a
hierarchy. It follows the four principles of consensus, organization in cir-
cles, double links, and election by consensus.

Holacracy, which emerged from the software industry in the 2000s, can
be understood as a further development of sociocracy. It also follows
four principles and features roles, instead of job descriptions, whereas
holacracy distinguishes between person and role. This means that one
person can also hold multiple roles. Holacracy consists of several circles,
which are hierarchical in themselves. The circles are connected to each
other by a “rep link” and a “lead link,” who represent their respective cir-
cles in meetings with higher-level circles to ensure communication flow
and implementation of the strategic direction. Each circle is free to
design its own management guidelines. In a holacracy, processes are
designed around operational necessities. There is little empirical
research to date to assess the effectiveness of these new organizational
forms.

41
 UNIT 4
STRESSES, WORK-LIFE BALANCE, AND
SELF-MANAGEMENT

STUDY GOALS

After completing this unit, students will be able to ...

– explain how the increasing demands of work contribute to the deterioration of work-
life balance.
– explain job-related effort and enjoyment based on the job demands-resources model.
– improve work-life balance with effective self-management.
– asses how perceived musts create stress and how prioritization can reduce stress.
 4. STRESSES, WORK-LIFE BALANCE, AND
SELF-MANAGEMENT

Introduction
Work and family are an integral part of human life. Until the twentieth century, many peo-
ple in Western countries, for example, had a predestined life path that was clearly divided
into gendered roles. There was often an intact extended family in the background that hel-
ped look after the children and relieve the burden on the core family itself.

However, this picture gradually changed after the Second World War, as more women
entered the workforce. Women gained increasingly better education and technical pro-
gress increased rapidly. The share of women in the workforce grew steadily. Work also
became increasingly global and mobility requirements expanded, too. Vocational training
began to take somewhat longer to complete, due to increasing qualification requirements.
In the meantime, people began to acknowledge a “rush hour,” in which careers, the con-
struction or purchase of one’s own home, and the desire to have children are to be made a
reality. Alongside this, burdens due to aging relatives were also likely to arise.

Technological progress, in the form of smartphones, has contributed to the dissolution of

Dissolution of work work boundaries by progressively mixing work with private life. Employees and leaders
boundaries increasingly took their constant availability for granted until a few years ago when unions
Work is increasingly mix-
ing with private life. and works councils at larger corporations intervened and demanded that emails not be
forwarded to smartphones.

Work intensification In addition to the dissolution of boundaries, an increasing work intensification was
What were previously sev- observed at the same time. The replacement of letters with emails has rapidly accelerated
eral separate jobs are
combined and assigned communication and the introduction of easy-to-use computers has shifted many support
to one employee. This functions, such as secretarial tasks, archiving, and research to employees and leaders. The
process is called work following sections discuss the effects of the dissolution of boundaries and work intensifi-
intensification.
cation and possible measures to counteract the overburdening they cause.

4.1 Stresses
According to Section 5 of the German Occupational Health and Safety Act, employers are
obligated to conduct workplace risk assessments, i.e., to clarify which sources of danger
could harm employees. In this context, an endangerment is understood as a person’s
potential physical or time-related encounter with a source of danger that may result in
harm (Hofmann et al., 2002, cited in Kastner, 2014, p. 105). While chemical and mechanical
stresses have decreased in recent decades due to better filtering, cleaner processes, lower
limit values, and automation, psychological stresses have increased due to the dissolution
of work boundaries and work intensification.

44
In recent years, the average absence due to illness was twelve days, while the average
absence due to mental illness was 30 days. Unfortunately, these “[p]sychosocial stresses
are barely addressed within the statutory regulations on occupational safety and health.
Older workers in particular are often exposed to such stressors” (Kastner, 2014, p. 108).
These include “deadline and performance pressure, disturbances, interruptions, high lev-
els of concentration, different tasks simultaneously, minor errors with serious consequen-
ces, etc.” (Kastner, 2014, p. 108). These new stressors, combined with a lack of ability to
recover from previous stressors, means that employees put an inappropriate amount of
effort into their work (Kastner, 2014, p. 108).

An endangerment exists when the person concerned does not have sufficient coping strat-
egies or the physical and psychological resources to cope successfully.

The most common burden in the workplace is stress (Stock-Homburg, 2013, p. 777). Stress
can be defined as a “negative emotional condition in connection with increased (work)
demands” (Stock-Homburg, 2013, p. 777). The occurrence of stress can be explained by
means of the job demands-resources model (JD-R model) below.

Figure 5: The Job Demands-Resources Model According to Bakker and Demerouti

Source: Bakker & Demorouti (2007, p. 213).

The model is a simplified representation of how positive and negative forces affect
employees. Activities place different demands on an employee, whether cognitive, physi-
cal, or emotional. In a foundry, for example, physical demands are high because it is usu-
ally noisy and hot. A doctor’s job in a hospital can be emotionally as well as physically
demanding when shifts are long, hectic, and many patients are struggling. As a counter-
weight to this, there are also occupational resources that have a positive effect on an
employee’s motivation. For example, this can be good team cohesion, autonomy in organ-

45
 izing one’s own activities, a strong sense of purpose in activities, or support and backing
from a leader. In the JD-R model, a distinction is made between two processes that can
also run in parallel under certain circumstances:

1. The effort-driven process is induced by high demands. In the short term, employees
can increase their commitment and work performance. However, excessive demands
over extended periods of time lead to overload and a decline in work performance.
2. The motivation-driven process is induced by occupational resources and sufficient
support that allow employees to happily manage their work, which increases satisfac-
tion and performance in the long term.

Moreover, occupational resources can also absorb the negative effects of high demands,
which is what the expression “work hard, play hard” essentially means. Likewise, master-
ing high demands can also be an enriching experience and even provide new (creative)
strength.

Different occupations and activities have very different levels of demand in themselves.
Doctors in hospitals will generally be exposed to higher emotional and physical demands
than customer-facing clerks in a bank. Likewise, executives with a great deal of responsi-
bility and travel activities will experience higher demands than internal sales staff. It is
important for human resource (HR) management to take these demands into account and,
if necessary, further expand occupational resources for affected employees. Examples of
measures include preventing conflicts and harassment, averting role conflicts due to mul-
tiple workloads, providing clear responsibilities, and avoiding task-related uncertainties.
Specialized training courses, self-management training, and relaxation techniques can be
used to build up resources.

4.2 Work-Life Balance

The term “work-life balance” describes the balance between work and private life and is
often used to refer to the compatibility of work and family. Stock-Homburg and Bauer
(2007) define the facets of work-life balance as follows:

• Work describes the value of work for the employee, job satisfaction, and the potential
conflict between work and private life.
• Life describes the value of private life, life satisfaction, and the conflict between private
life and work.
• Balance describes the extent to which the work-life interface is adequately structured,
as well as satisfaction with the work-life balance.

A distinction can be drawn between two types of conflict when conflicts arise between pri-
vate life and work. A work-family conflict occurs when private life is neglected due to the
employee’s workload, while a family-work conflict occurs when private commitments
(e.g., illness of a child) cause problems with the performance of occupational duties.

The different approaches to avoiding these conflicts are summarized in the figure below.

46
Figure 6: Avoidance of Conflicts to Promote Work-Life-Balance

Source: Kreiner et al. (2009, p. 711).

The work-life balance of employees and leaders is becoming increasingly relevant with the
recent dissolution of work boundaries and work intensification. If the work-life balance
tips to one side, to the detriment of private life and recreation, the risk of burnout quickly
arises. Three components are typical of burnout (Stock-Homburg, 2013, p. 794): emotional
exhaustion, reduced performance, and depersonalization. The latter includes perceptions
of being outside oneself, as if the body is heavier than usual, or as if memory is failing. It
also includes a derogatory or cynical attitude toward the occupational environment.

In this respect, the work-life balance of employees and leaders should be a high priority
for a company’s leadership. This not only serves to observe the general and special duty to
undertake protective measures in accordance with Section 618 of the German Civil Code
(BGB), but also to secure a company’s human capital in the long term and to act in a
socially responsible manner.

4.3 Self-Management
Self-management is of particularly high importance for leaders. Performing a leadership
position requires the leader to use their own resources responsibly and prioritize success-
fully in order to complete daily tasks. It also requires the leader to act as a role model. This
section addresses how to handle stress and a high workload, as well as how to identify
possible solutions for common issues.

47
 Stress through Perceived Musts

Perceived musts What are known as perceived musts are at the core of many stress-related problems
The pressure for perfec- (Hansch, 2009, p. 95). These can relate to an individual, other people, or society. A per-
tion creates stress. This
drive is expressed ceived must in relation to an individual could read as follows: “I must be perfect[,] . . . per-
through perceived musts. form at a high level, . . . [and] not show weaknesses . . . [I] must always be entirely certain
when making decisions. If something does not work out for me, I should conceal it”
(Hansch, 2009, p. 109). Perfection, however, is an abstraction of the mind and more of an
object of desire and a goal than something that is realistically attainable. Wanting to be
perfect is not expedient.

Instead, it is beneficial to thoroughly know one’s own personal idiosyncrasies and utilize
personal strengths wherever possible. In the long term, an occupational environment that
makes use of each individual’s strengths will be healthier and create greater occupational
satisfaction. Mistakes should be interpreted as learning opportunities rather than failures
because they often turn out to be helpful for development in the long run. For example,
the glue used in Post-it® notes was created when 3M was conducting research into an
extremely strong adhesive. Although their research did not produce an ultra-strong indus-
trial adhesive, it did result in an unbeatably successful product.

Perceived musts in relation to other people can be expressed in thoughts such as: “Other
people must always behave well, decently, considerately, and fairly. They [...] must fulfill
their tasks and obligations perfectly” (Hansch, 2009, p. 118). This perceived must is inextri-
cably connected to stress because there is no global definition of what constitutes good,
decent, or considerate behavior. Rather, it depends heavily on subjective ideas—other
people are also not perfect and make mistakes, too.

Perceived musts in relation to society or the environment often refer to safety culture or
fairness, for example: “My living environment [.….] must be completely intact, or at least
develop positively, and this must be assured for the foreseeable future. I can only enjoy
life and be happy under these conditions” (Hansch, 2009, p. 124). In order to cope with
such thought patterns, it is helpful to keep in mind that people pay more attention to neg-
ative news than positive news, and negative aspects tend to linger more strongly in the
memory. Attention must be very consciously directed toward positive messages in order
to avoid stress. Furthermore, in the Buddhist philosophy of mindfulness, the solution to
these thought patterns is to pay more attention to the moment at hand instead of brood-
ing about the past or the future.

Prioritization and Time Management for Stress Management

Stephen Covey’s book The 7 Habits of Highly Effective People (Covey, 2005) describes a suc-
cessive approach to more effective self-management by means of stress reduction and pri-
oritization. While this is not an academic work, it does provide a number of practical
pieces of advice that have proven effective for time management. With the first habit, the
reader is encouraged to separate their circle of concern from their circle of influence. Per-
ceived musts in relation to others and the world, as described, refer to what is called the
“circle of concern,” that is, a circle that affects us, but over which we have no direct influ-
ence. Covey, therefore, advises focusing energy on the direct “circle of influence” and put-

48
ting aside anger and complaints about events in the circle of interest. The second habit Circle of influence
describes the importance of having a clear conceptualization of the goal or vision in ques- In contrast to the circle of
concern, people are only
tion. Covey suggests to first clearly define the goal and work backward from there to the able to actively change
present, thus determining all the necessary steps and actions. things in their circle of
influence.

The third habit relates to clearly prioritizing goals and tasks, with the Eisenhower Matrix Prioritizing
proposed for this. The matrix is named after the US General and later President Dwight D. The concept of prioritiza-
tion requires a distinction
Eisenhower, who neither created it nor followed it, but inspired its creation with a famous to be drawn between
distinction: “I have two kinds of problems, the urgent and the important. The urgent are important and urgent.
not important, and the important are never urgent.”

Following this thinking, tasks and goals are prioritized by assigning them to one of the fol-
lowing four fields:

1. Important and urgent

2. Important, but with less time pressure
3. Urgent, but not so important
4. Not particularly important and with little time pressure

Tasks in the first category are “emergencies” that cannot be postponed. As a result, it is
not possible to actually prioritize them at all; a multitude of such tasks inevitably leads to
pronounced stress. They should be prioritized with an initial clean-up so there is time for
tasks that are not immediately urgent, but are nevertheless important. Otherwise, the
tasks in the second category often remain undone. However, these tend to be elementary
management tasks (employee appraisals, feedback rounds, etc.) that require the neces-
sary care.

The fourth through sixth habits revolve around relationships with others, and in the sev-
enth habit, Covey describes the principle of self-renewal, which is about sustaining work
performance over the long term through healthy and strategic choices.

Handling Stresses

Kastner (2014) developed starting points for handling stresses on three levels (work) situa-
tion, individuals, and organization, as shown in the table below.

Table 3: Starting Points for Stress Management

Level Starting points

(Work) Situation • Facilitate work activity, workload, work intensity,

and scope of action
• Improve work organization, information, and
participation
• Eliminate harassment and disturbances in the
workplace
• Reduce time pressure

49
 Level Starting points

Individuals • Promote internal resources such as health

awareness, control convictions/perceived musts,
and competencies
• Promote well-being, life and work satisfaction,
and health
• Create coherence for a sense of purpose, man-
ageability, and explicability

Organization • Creation of a culture of health, systemic leader-

ship, social support, and fair work distribution
• Increasing autonomy in work scheduling and
self-determination of work pace
• Job security
• Recognition of performance and effort, opportu-
nities for advancement

Source: Kastner (2014, p. 109).

SUMMARY
Work and family have always been integral parts of adult life. A growing
number of challenges to a healthy work-life balance have emerged with
the rising employment of women, decline of extended families, and
increasing mobility. Work-family conflicts, in which personal life is
neglected, and family-work conflicts, in which the job is neglected due
to private problems, can occur. The job demands-resources model
describes how effort-driven and motivation-driven processes contribute
to employee satisfaction and performance.

Different interface tactics between work and private life can contribute
to an improvement in work-life balance. A distinction can be drawn
between behavioral, physical, communication-related, and time-related
tactics.

Healthy and sustainable self-management requires turning away from

perceived musts. To reduce stress, clear prioritization is recommended
and can be transferred to individual time management. Steven Covey’s
book offers a variety of approaches for successful self-management. Var-
ious approaches to dealing with stress can be used at the levels of situa-
tions, organizations, and individuals.

50
 UNIT 5
MOTIVATION, COMMUNICATION, AND
APPRAISAL

STUDY GOALS

After completing this unit, students will be able to ...

– explain what motivation is built upon and how it is created.

– differentiate the models of motivation that exist with specific implications for leader-
ship.
– understand the importance of communication in leadership.
– explain misunderstandings and coflicts using relevant communication models.
– know what requirements and functions appraisal processes (should) have in a com-
pany and which framework conditions contribute to their success.
 5. MOTIVATION, COMMUNICATION, AND
APPRAISAL

Introduction
The task of leadership is to influence relationships with employees in such a way that
organizational goals are achieved and, ideally, everyone involved is satisfied with the way
these goals have been reached. The fine art of leadership, so to speak, is to reconcile the
individual interests of employees with organizational goals. This results in leaders being
required to motivate employees to achieve those goals. This is based on communication
between leaders and employees in the form of bottom-up feedback and appraisal inter-
views. Motivation, communication, and appraisal are discussed successively in the follow-
ing sections.

5.1 Motivation
Human action is characterized by a striving for effectiveness and is based on a variety of
individual and temporal motives. Motives refer to characteristic value systems and dispo-
sitions toward action, which can be related to experience, performance, power, or aggres-
sion (Huber, 2018). In this respect, motives represent the reasons for specific actions. They
are not immediately identifiable, but are consistent over time and across different situa-
tions. For example, if a person has a strong status motive, they are likely to attach impor-
tance to a fancy car, being well dressed, ensuring that they are not passed over for a pro-
motion, and may compete with colleagues for a corner office.

Needs According to Maslow

The hierarchy of needs or motives concept distinguishes between deficiency and growth
needs, which can be classified into five levels of needs.

52
Figure 7: The Needs Hierarchy According to Maslow

Source: Regina Cordes (2019), based on Huber (2018, p. 105).

The four deficiency needs are physiological needs, such as food, sleep, and a safe living Deficiency needs
or working environment. These are followed by safety needs, such as protection from dan- The desire to eliminate a
lack of something is refer-
ger, stable living conditions, and minimum income. Safety needs are followed by social red to as a deficiency
needs, such as affection, group belonging, and communication. The deficiency needs fin- need.
ish with esteem needs, e.g., self-confidence, competence, respect, opportunities for
advancement, and status symbols.

Growth needs are motives for self-actualization. These include, for example, the desire for Growth needs
personal development, a challenging job, top performance, participation, and cooperative The desire for self-actuali-
zation is referred to as a
leadership (Huber, 2018, p. 105). growth need.

The idea of a hierarchy among needs comes from the assumption that needs at the lowest
levels must first be satisfied before the needs on the next level up gain relevance. So, hun-
ger and thirst must be satisfied before job security gains importance. It is only when all the
deficiency needs have been met that the desire for self-actualization comes to the fore-
front.

Leaders should be familiar with this model to better assess the motivational situation of
their employees and be able to establish adequate incentives.

53
 ERG Theory

Alderfer’s existence, relatedness, and growth (ERG) theory represents a further develop-
ment of Maslow’s hierarchy of needs (Huber, 2018). It does not distinguish between five
classes of needs; instead, it identifies a mere three categories:

1. Existence needs
2. Relatedness needs
3. Growth needs

In addition to these relationships, which are also hierarchically arranged, Alderfer pre-
sumes that the lower the degree of fulfillment, the more strongly those needs are activa-
ted (Huber, 2018, p. 106).

Basic Motivation Model

Motivation can be understood as an individual’s activating willingness to behave in such a

way that enables them to achieve specific goals. It is merely a hypothetical construct and
cannot be measured. In aptitude diagnostics, however, the strongest motives of a person
can be determined through psychological testing. If a person has a strong health motive, it
is likely that they will develop motivation for healthy eating and fitness.

Situations that address needs or motives are called incentives, and a behavioral tendency
can be expressed through a drive or avoidance tendencies. If a task is perceived as being
very demanding (for example, delivering bad news to a difficult customer), the “peace and
quiet” motive (low effort) can create an avoidance tendency, which involves delaying and
shifting tasks. Based on the peace and quiet motive, the employee has an incentive to
delay the unpleasant conversation as long as possible and hope that a colleague will take
care of the matter.

Volition is necessary for motivation to be reflected in concrete actions. This term refers to
the transformation of motivational tendencies into concrete actions and is referred to as
an act of will. In relation to the health motive, volition means packing a bag with sports
clothes and going to the gym after work, for example.

Figure 8: Basic Motivation Model

Source: Regina Cordes (2019), based on Weibler (2012, p. 171).

54
As shown in the figure above, the environment in question provides certain incentives in a
given situation, such as performing at a high level in the case of variable compensation or
postponing unpleasant tasks in the absence of control. The motivational structure anch-
ored in an individual’s personality provides the motives, which can be related to power,
status, leisure, performance, or aggression, depending on the individual. The combination
of incentives and motives yields motivation, i.e., the reasoned intention to act. When voli-
tion is added, these intended actions are carried out and manifested in behavior.

Intrinsic and Extrinsic Motivation

People frequently talk about motivation problems among employees when the achieve-
ment of goals leaves much to be desired. As mentioned, individuals have an intrinsic
motivation structure that is based on specific likes and dislikes. However, these intrinsic Intrinsic motivation
goals and values are often in competition with externally imposed goals and values at If an activity is performed
for its own sake, it is
work. Extrinsic motivation comes into play when employees pursue certain goals and intrinsically motivated.
values because external incentives motivate them to do so. For example, car salespeople Extrinsic motivation
would have strong extrinsic motivation if a higher commission was offered for each car If an activity stems from
external incentives, it is
sold in a given month. Intrinsic motivation occurs when a particular activity is performed extrinsically motivated.
for its own sake and not because of the expected results (Weibler, 2012). For example, if a
car mechanic switched to sales because they much prefer talking to people, are good at
financing cars, and love customer contact, this would be intrinsic motivation for the activ-
ity. If an activity has a strong intrinsic motivation, the person can also enter what is refer-
red to as the flow state. This is described as the “oblivious, pleasurable absorption in a
smoothly running activity” (Weibler, 2012, p. 172).

VIE Theory

In the valence, instrumentality, and expectancy (VIE) model, motivation is viewed as a

function of the components of goal achievement. This means that efforts are only accep-
ted if they appear to generate a reward in terms of goal achievement. According to Vroom,
three factors have an effect on the motivation situation (Huber, 2018, p. 108):

1. Valence describes the value of an action outcome in terms of a positive (or negative)
affective meaning of the outcome. Anything that has positive valence for a person is
pursued, while outcomes with negative valence are avoided.
2. Instrumentality describes a value for the degree of connection between action out-
come and action consequence.
3. Expectancy describes the subjectively perceived probability of a specific action out-
come. This expected probability lies between 0 (completely improbable) and 1 (cer-
tain to occur).

The theory assumes a connection between the three factors, which then make it possible
to draw a conclusion about a person’s motivation or action tendency.

Action Tendency = Valence of Result · Expectancy

55
 This makes it clear that a motivating effect requires an outcome with a positive valence
and an expectancy greater than zero. This mathematical connection has made VIE theory
one of the most interesting motivation theories. It is widely used in empirical research.

5.2 Communication
Conversations represent the most essential form of human communication and are cen-
tral to any relationship. Thousands of words are used every day during our communica-
tion with each other. Conversations actually take up the majority of leaders’ time during
their daily work; many of them are spontaneous and brief. Alongside this, however, more
formal feedback and appraisal discussions are often held and are more time-consuming to
prepare for and conduct.

In addition to quantity, quality plays a crucial role in shaping employee leadership. Never-
theless, many leaders are unaware of the complexity and multi-layered nature of commu-
nication processes. The essential models of communication are now therefore discussed
to enhance this understanding: the iceberg model, the communication square, and trans-
action analysis.

The Iceberg Model

The iceberg model postulates that only about one-seventh of all communication is con-
scious and spoken, comparable to the tip of an iceberg sticking out of the water. The
remaining six-sevenths of communication remain unspoken, with agents often not con-
scious of them. However, this unspoken communication can manifest itself non-verbally,
such as through facial expressions, gestures, body posture, and distance from the conver-
sation partner in question. Silence can also communicate something, e.g., “You’re annoy-
ing me” or “I don’t want to make myself vulnerable.”

The Communication Square

Friedemann Schulz von Thun further developed the iceberg model into what is known as
the communication square. The intention is that communication and messages not only
contain a factual statement, but also three other levels (Schirmer & Woydt, 2016, p. 141).

56
Figure 9: The Communication Square According to Schulz von Thun

Source: Schirmer & Woydt (2016, p. 141).

The communication square is a very helpful tool for understanding how misunderstand- Communication square
ings come about. For example, if your boss says, “The coffee pot is empty” in a meeting, The communication
square offers starting
this can be interpreted as: “Please refill it as quickly as possible!” The four sides of a state- points for clarifying mis-
ment say the following: understandings.

1. Factual content. The pure information content of a statement that can be classified as
true or untrue, such as the fact that the coffee pot is empty or the traffic light is green.
2. Relationship. This provides information about how the speaker relates to the other
person and what they think of them, at least in relation to the current conversation.
This is supported by facial expressions and gestures, such as frowning, touching, or
smiling. For example, “A nice, fresh cup of coffee would make our meeting even more
pleasant for both of us.”
3. Self-disclosure. This provides information about the speaker. If it is noticed that the
coffee pot is empty, this could indicate that the speaker takes coffee seriously and
expects it at the meeting. It resonates with an indication of an individual state: “I’d like
to have a coffee.”
4. Appeal. This term refers to the intention with which a statement is made. If a
reproachful undertone comes with holding out the pot to a coworker to remark that
the coffee is empty, it is likely that an appeal is being made to bring more coffee. As
another example, when the passenger in a car says, “It’s green,” the appeal is usually
that the driver should continue driving through the light.

Misunderstandings occur when a statement is assigned to a different side of the square

from the one the sender was trying to convey. For example, the information “the coffee
pot is empty” can be meant on the factual level, to prevent others from reaching for the
pot in vain. However, it can be understood on the appeal level (“Please go get some”), or
also on the relationship level (“As a boss, I don’t go get coffee, one of you does that”).

57
 Sensitivity to the different perceptions of statements is extremely important for leaders.
No matter how carefully words are chosen, some statements may be received by employ-
ees in a completely different way than intended.

Transactional Analysis

Transactional analysis Transactional analysisalso provides insight into how misunderstandings or conflicts
Transactional analysis occur in interactions. Eric Berne (1910–1970) developed this model by observing that peo-
offers starting points for
clarifying conflicts. ple communicate from three different “ego states” and react to specific ego states of their
counterparts when communicating with them (Schirmer & Woydt, 2016, p. 143). There are
three ego states with a total of six characteristics:

1. In the parent ego state, learned value judgments are applied. “You shouldn’t do that,”
and “What will others think?” are typical ways of thinking and statements that indi-
cate this state. The parent ego resorts to social control and emotional norms.
It is possible to distinguish between two states in the parent ego state:
• The critical parent ego (“Of course you’re going to hurt yourself!”) leans toward a
know-it-all attitude and talking down to people.
• The caring parent ego (“Shouldn’t you go to a doctor for that?”). Statements from
this state can easily be interpreted as patronizing.
2. In the childhood ego state, the focus is on a person’s feelings and needs. It is about
getting what is wanted and less about giving something. The main motive is to receive
attention from others. Three additional states can be distinguished in the childhood
ego state:
• The free childhood ego state is characterized by imagination, wittiness, love, and
creativity (“If I win the lottery, I’ll go on vacation for six weeks, buy a Ferrari, and
invite all my friends over for a big party”).
• The rebellious childhood ego state is about gaining attention and escaping a per-
ceived dictatorial situation. Problems with authorities often arise from this ego
state.
• The conformist childhood ego state is about avoiding tension with authority, yield-
ing, and trying to make “everything right.”
3. The adult ego state is predominantly concerned with fact-gathering, weighing proba-
bilities, and decision-making. The state is active, probing, objective, and fair. Good
leaders predominantly act in this ego state.

As indicated, conflicts can arise through what are referred to as crossover or concealed
transactions. Ideally, leaders and employees (or people in general) act in the same ego
state. In leadership situations, this would preferably be the adult ego state. A transaction
could proceed as follows:

CONVERSATION EXAMPLE 1
Boss: “Are there any problems with the XY project?”

58
 Employee: “Yes, it was slightly delayed due to technical problems. Everyone is
pitching in so we can still meet the deadline.”

Problematic crossover transactions occur when the interaction partners act from different
ego states. In the following example, the boss is acting from the adult ego and the
employee from the rebellious childhood ego:

CONVERSATION EXAMPLE 2
Boss: “Are there any problems with the XY project?”

Employee: “Is it always my fault when something doesn’t go right?!”

Crossover transactions usually take one conversation partner by surprise. In this case, the
boss who asks an open question is probably surprised by the employee’s aggression. In
terms of the communication square, the boss has asked the question on the factual level,
but the employee has taken it on the relational level (i.e., “You must be incapable”). Cross-
over transactions can be very frustrating for one or both parties. If one party reacts from
the childhood ego, they can be difficult to persuade. External help, e.g., mediation, may be
appropriate here.

Concealed transactions can occur when partners believe they are communicating on a fac-
tual level, i.e., in the adult ego state, but are actually meeting on a different level.

CONVERSATION EXAMPLE 3
Managing director: “We won’t achieve very much with this team. They’re all lazy
and calling in sick.”

Production manager: “All worthless. Production could be running much more

efficiently with a new team.”

What both presumably perceive as a factual exchange is a concealed transaction in the

critical parent ego state, which is about social control and a belief that they know better
about everything.

The figure below provides an overview of the different transaction forms.

59
 Figure 10: Transaction Forms in the Sense of Transaction Analyses

Source: Regina Cordes (2019).

5.3 Appraisals
The objective of appraisal interviews is to make the performance and potential of both
leaders and employees transparent (Stock-Homburg, 2013, p. 360). The appraisal inter-
view is a thorough feedback discussion that is conducted according to a set plan and usu-
ally carried out at periodic intervals. In many companies with negotiated remuneration
agreements, the appraisal interview is decisive for remuneration. However, appraisals also
play a significant role for employees without negotiated remuneration agreements.
Appraisal interviews fulfill various functions.

• information function. According to Section 82 (2) of the German Works Constitution Act
(BetrVG), every employee has the right to learn the extent to which their own perform-
ance contributes to the success of the company from their supervisor.
• diagnostic function. Performance and potential, as well as strengths and weaknesses, of
the person to be appraised are analyzed.
• coordination function. Defining uniform quantitative and qualitative performance
standards facilitates coordination between leaders and employees and enables
employees’ performance to be compared.
• motivational function. Coordination makes employees’ needs and motives more trans-
parent, enabling leaders to identify effective incentives to achieve goals. According to
ERG theory, the feedback employees receive in the appraisal interview forms a key fac-
tor in the motivation process.
• control and monitoring function. Appraisal interviews offer an opportunity for differen-
tiated insights into the activity of employees and allow comparative appraisals (coordi-
nation function).

60
• decision support function. Appraisals provide information for other human resource
(HR) management processes, such as compensation, personnel development, or team
and employee leadership.

Requirements

Personnel appraisal measures must also meet several requirements (Stock-Homburg

2013, p. 364), including

• systematic implementation,
• clear reference values,
• relevant content covered,
• high acceptance by those appraised,
• adaptation to different reference objects, and
• high competence of the individuals performing the appraisal.

The identity of the individual conducting the personnel appraisal must be determined
before it occurs. Various groups of people can be considered as appraisers: leaders,
experts, or supplementary information providers (Stock-Homburg, 2013, p. 366). In the
leaders group, the direct leader or a circle of leaders can be considered appraisers, while
the group of experts includes psychologically trained specialists, coaches, or human
resources (HR) personnel. Colleagues or team members, employees or customers, and
suppliers can be considered supplementary sources of information.

360-degree feedback is a “process for assessing leaders in which the led employees, col-
leagues, superiors, and customers provide structured feedback with regard to selected
behaviors of the person being assessed” (Stock-Homburg, 2013, p. 367). The surveys on
which 360-degree feedback is based are generally conducted anonymously and in writing.
The main advantages of 360-degree feedback are the rich information that is brought to
the assessment by the multiple appraisers and the objectivized appraisals. Its primary dis-
advantages are the considerable effort required to realize the advantages and potential
distortions due to certain interests, such as those of employees or suppliers who have had
to accept uncomfortable decisions.

Time Reference

Appraisal interviews often refer to the past, i.e., the employee’s performance since their
most recent appraisal is taken into account, but they should also make reference to the
future, to be fair in terms of the motivational and coordinating functions. Employee poten-
tial is a typical criterion that is assessed in relation to the future.

For example, development potential for tasks with more responsibility is assessed (moti-
vation function) or development needs for taking over a specific job succession (coordina-
tion function) are identified. Weißenrieder and Kosel have combined the past and future
references of an appraisal in a performance potential matrix (Weißenrieder & Kosel, 2005,
p. 106).

61
 Figure 11: The Performance-Potential Matrix

Source: Regina Cordes (2019), based on Weißenrieder & Kosel (2005, p. 106).

“Problem cases” are employees who are currently performing poorly and have low future
potential. In the case of these employees, it is the leader’s task to research the causes of
these deficits and eliminate them. These are often employees with rather low maturity in
the sense of the situational leadership model according to Hersey and Blanchard. In this
respect, typical causes are often a lack of experience in the job, technical overload,
capacity overload, or insufficient qualifications.

Although the potential of stable performers is rather weak, they reliably support opera-
tions with medium to high performance. For this group, the focus should be on maintain-
ing performance.

If employees have average potential and moderate performance, the focus should be on
finding the causes of this, as in the case of problem employees, in order to evaluate
whether they can be developed into talented employees. “High performers with poten-
tial” are extremely high-performing employees, but they still have potential that needs to
be exploited. This is why it is necessary to evaluate the extent to which they can be devel-
oped into high-potential employees.

Talent is about turning uncut diamonds into brilliant ones. Often, talents are found among
career starters and career changers who need specific support in the form of mentoring or
development measures in order to be able to realize their full potential.

Reference Values for Personnel Appraisal

In practice, companies use the employee’s performance in the period since the most
recent appraisal, the goals to be met, and the performance of other employees for com-
parison.

62
When assessing past performance, the goal is to identify positive or negative deviations
compared to previous periods. An appraisal model as shown in the figure below is suitable
for an appraisal and can, for example, be applied to support the appraisal of a sales man-
ager.

Table 4: Exemplary Assessment Scheme

Exemplary
characteris- Performance Performance
tics (before) (current) Deviation Weight Points

Specialized 11 11 0 1 0
knowledge

Productivity 9 12 +3 2 +6

Customer sat- 7 7 0 2 0
isfaction

Leadership 6 8 +2 2 +4
behavior

Subtotal +10

Source: Regina Cordes (2019), based on Stock-Homburg (2013, p. 383).

However, it must be considered that there is little room for improvement in the case of
outstanding employees or leaders, which is why positive deviations may only be very
small. In this case, the potential of the employee in question is the decisive factor, and
they should be classified as a high performer, a high performer with potential, or a high
performer with high potential.

SUMMARY
To motivate employees effectively, knowledge of the motivational and
need structure is crucial in order to establish incentives. According to
Maslow or Alderfer, needs can be divided into different levels.

Conversations represent the most essential form of human communica-

tion and are central to the shaping of any relationship. The iceberg
model, Schulz von Thun’s communication square, and Berne’s transac-
tional analysis all illustrate how misunderstandings and conflicts can
arise based on different perspectives of what is communicated.

Performance and potential are the key values for employee appraisals.
Essential requirements must be met in order to provide a fair and goal-
oriented appraisal. Specifically, these include highly systematic imple-
mentation, provision of clear reference values, the inclusion of relevant
content, and a high level of acceptance by those appraised. The

63
 appraisal must also be adapted to different reference objects and the
individual performing the appraisal must have a high level of appraisal
competence.

64
 UNIT 6
TEAMS

STUDY GOALS

After completing this unit, students will be able to ...

– distinguish a group from a team.

– decide which constituent foundations are relevant for a team.
– describe the life cycle phases of a team.
– explain how organizational culture affects cooperation.
– describe what shared leadership is based on.
– assess what matters in successful change management.
 6. TEAMS

Introduction
Are teams and groups the same thing? Consider two soccer teams as an example (Birker &
Birker, 2007, p. 9): On Team A, the players try to put themselves in the limelight as much as
possible to potentially receive a lucrative transfer offer. In risky situations, they prefer to
pull back to avoid getting injured, otherwise game bonuses could be lost. They prefer to
score goals themselves because it puts them on newspapers’ front pages and earns them
bonuses.

On Team B, the players perform their tasks according to their position (striker, defender,
midfielder, etc.) for the benefit of the overall result. In addition, each player shares respon-
sibility for other positions, so the defender helps out in an attack and the goalkeeper
pushes forward to help the striker.

Team A would be considered a group of soccer players. In contrast, Team B would be con-
sidered a team, based on the description of teamwork “as the optimal design of structures
based on the division of labor, making use of the special skills of the team, particularly in
the accomplishment of complex tasks” (Birker & Birker, 2007, p. 9).

6.1 Team Leadership

Not every collection of individuals can be considered a team. Specialized literature applies
constituent and descriptive characteristics to distinguish teams from groups (Stock-Hom-
burg, 2013, p. 555).

Table 5: Team Characteristics

Characteristics Description

Constituent characteristics of teams

Multi-personality A team consists of at least three members.

Goal orientation Team members work together with the purpose of

achieving common goals.

Interdependence Team members depend on each other to achieve

goals.

Descriptive characteristics of teams

Interpersonal interaction Team members exchange professional and inter-

personal information.

66
 Characteristics Description

Perception of membership Team members feel they belong to a social unit

within the company.

Structured relationships Roles, rules, and norms exist to guide and control
the behavior of team members.

Mutual influence Team members influence the attitudes and behav-

iors of other team members.

Individual motivation Membership of the team satisfies personal needs.

Source: Stock-Homburg (2013, p. 555).

There are various types of teams that differ in terms of their performance and cohesion.
The expressions of the factual and relationship levels at hand are of essential importance.

Figure 12: Types of Teams

Source: Regina Cordes (2019), based on Stock-Homburg (2013, p. 559).

67
 In a “lone wolf” group, there is hardly any emotional cohesion and professional coopera-
tion. In this kind of constellation, leaders must work in parallel to improve the factual and
relationship levels in the team. In a “sociable” group, too much time is spent on relation-
ship maintenance or power struggles. It is therefore the leader’s task to encourage the
team to strengthen the factual level. If the factual level is high but the relationship level is
low, a team is said to be an “expert team.” Performance is then impaired by the fact that
team members only support each other to a very limited extent in personal matters, and
difficult situations can cause the team to tear apart due to a lack of emotional cohesion. A
“true team” has highly developed factual and relationship levels. In this case, it is the task
of the leader to not yield to the motto of “never change a winning team” and, by exten-
sion, to inflexibility. Instead, the leader should keep their team flexible.

To create the most productive team possible, it is important to recognize group dynamics
and guide them in productive directions. One dynamic process in groups that can have a
Groupthink negative impact on productivity is what is known as the groupthink process. Groupthink
There is a stronger focus describes the dynamic of a group in which high loyalty and solidarity prevail to give keep-
on harmony than on pro-
ductivity in this form of ing peace within the team a higher priority than constructive disagreement (Stock-Hom-
group dynamics. burg, 2013, p. 556). This means that teams with strongly pronounced groupthink have a
higher motivation to place peace and unanimity in the team above alternative approaches
and discussions.

Leaders can counteract groupthink among team members by

• preventing excessive striving for harmony in the team,

• encouraging critical professional discussions about the work process,
• promoting an open approach to professional conflicts, and
• changing the team composition occasionally.

The opportunities and risks of teamwork for a company are summarized in the table
below.

Table 6: Opportunities and Risks of Teamwork

Opportunities Risks

Better decision quality due to multiple individuals Groupthink

Greater efficiency through the use of different skills Increased coordination effort
and strengths

Bundling of competencies Increased risk of conflicts

Risk reduction through frequent communication Development of a subculture in the team, differen-
and mutual control tiating it from the company as a whole

Source: Stock-Homburg (2013, p. 557).

68
Leadership of Different Types of Teams

Teams can either be divided into different types according to their phase in the life cycle
(i.e., according to how long the team has existed) or according to the characteristics of the
factual and relationship levels in the team.

Team life cycle concept

One of the goals of teamwork is to increase the effectiveness of a group of employees

compared to their individual performance. This begs the question, therefore, as to when a
group becomes a team and increases in effectiveness can be recorded.

The life cycle concept of teams is based on the assumption that newly formed teams are
not effective immediately. Instead, they go through different phases in which effectiveness
and productivity develop gradually (Tuckman, 1965, p. 384). The progression of the rela-
tionship between time and effectiveness is illustrated in the figure below.

Figure 13: The Life Cycle Model of Teams

Source: Regina Cordes (2019), based on Tuckman (1965, p. 390—394).

The four phases each focus on different things. In the forming phase, the focus is on rela-
tionship building and thus on the relationship level between the team members. A rela-
tively long time is needed to get to know each other and to build relationships among
each other. Initially, the working or factual level is therefore of secondary importance. In
the storming phase, the relationship level remains in the foreground, because this is about
the distribution of roles and who is in charge within the team. In the norming phase,
expectations are set for the team members and the effectiveness of the team increases

69
 noticeably because the factual level gains weight and the relationship level loses such
weight. Finally, in the performing phase, all the necessary group dynamic processes have
been completed and the team can work together effectively: the factual and relationship
levels are balanced.

The central statement of the life cycle model is that teams must be managed differently in
the various stages, as shown by the table below.

Table 7: Life Cycle Phases Model

Phase Leadership

1. Forming Role of the leader: Relationship manager

Appropriate measures: Informal meetings to get to
know each other, identification of strengths and
potential

2. Storming Role of the leader: Mediator

Appropriate measures: Deployment of individuals
according to their respective strengths and poten-
tial, identification of informal authority figures, de-
escalation of conflicts

3. Norming Role of the leader: Coordinator

Appropriate measures: Agreement on goals and
tasks, definition of guidelines and communication
processes, selective performance checks

4. Performing Role of the leader: Coach

Appropriate measures: Transfer of competencies to
the team, support through structuring aids, provi-
sion of resources

Source: Stock-Homburg (2013, p. 584).

6.2 Organizational Culture

Leadership always occurs within the context of an organization. A company’s culture and
values, as well as its lived identity and image, are important here (Schirmer & Woydt, 2016,
p. 123). While a leader can be effective and successful in one company, they may fail in
another.

Company culture is often understood as the “social glue” that holds organizations
together. The culture of a company manifests itself in many areas, such as the fact and
nature of a Christmas party or how tardiness in meetings is handled. Is the latecomer
ignored, attacked with sharp comments, greeted in a friendly manner, or welcomed with
companionable banter? Is the Christmas party a dull, obligatory event that many stay
away from, or are employees excited about it and swap stories from it for months after-
ward?

70
The following elements can be seen as the constituent parts of an organizational culture
(Schirmer & Woydt, 2016, p. 110):

• behaviors (e.g., work schedules, rituals such as casual Fridays, after-work drinks, or
bringing in a cake to mark a team member’s birthday)
• group norms (e.g., tardy fund and cell phone ban in meetings)
• professed values (e.g., set down in a company’s vision)
• philosophy (e.g., “work hard, play hard” or “make the world a better place”)
• rules of the game (e.g., leaders are hired from outside or must have first gone through a
“school of hard knocks” as an executive assistant)
• climate (e.g., formal Mr./Mrs./Ms. or casual first name culture, businesslike or cheerful
interaction)
• symbols (e.g., company car policy, office furnishings, art, and gym)

Schein (1995) summarizes these elements in a three-level system.

Figure 14: The Three-Level System according to Schein

Source: Created on behalf of IU (2023)

71
 As shown in the model, the externally proclaimed values and assumptions do not necessa-
rily need to match the prevailing basic assumptions within the company. It is common for
the mission statement to be changed when there is a change in leadership or when a com-
pany is taken over. This is because there is usally an attempt made to alter the assump-
tions and behaviors that have developed over the long term. However, this often only has
the effect of being superimposed (Schirmer & Woydt, 2016, p. 110) if these proclaimed
basic assumptions are perceived by employees as being forced and are therefore not
implemented and lived.

At the level of values, rules, and standards, there are norms and guidelines for behavior
that are implemented in a company, such as the requirement that meetings always start
and end on time. The actual behavior of employees can be observed at the symbolic level,
e.g., how employees present themselves to the outside world, how they interact with each
other, and how employees see themselves as part of an organization.

6.3 Shared Leadership

The shared leadership concept emerged after the turn of the century following increasing
disillusionment with personality-based, hero-focused leadership theories. In many cases,
leaders and employees still cling to the romantic ideal of the great leader who makes reso-
lute decisions. However, this is at least partially outdated, since various studies show that
the contribution of an individual leader to the success and performance of their team is
not as essential as once presumed (Bolden, 2011).

Uhl-Bien et al. (2007) define shared leadership (SL) as a collective, social process that
occurs through the interaction of multiple players. Shared leadership can also be under-
stood as a counter-design to traditional hierarchical top-down leadership. In essence, it is
about employees taking on parts of the leadership function that would otherwise be con-
nected with the responsible leader. Shared leadership should not be confused with “lead-
ership from below,” which is a rather conspiratorial action by employees aimed at weaken-
ing or overruling their leader.

Shared leadership considers the fact that increasingly complex and highly technical work
also requires highly qualified employees. If a team of highly qualified specialists is led, the
knowledge and experience gap between the leader and the employees is often only mar-
ginal or even non-existent.

The following aspects can be stated as prerequisites for the shared leadership concept:

• minimal technical and competence-based advantages of a leader

• democratic or participative leadership style
• willingness of employees to take responsibility
• high maturity of employees
• positive climate in a company that promotes shared leadership instead of attributing
leadership weakness

72
6.4 Change Management
Organizations are constantly exposed to a variety of internal and external change pro-
cesses. Although they have always experienced fluctuating environmental influences, they
are currently facing increasing pressure to change. One reason for this is the increase in
complexity (Weibler, 2012, p. 26), which is characterized by increased diversity, nonlinear-
ity, dynamism, and the introduction of new technologies. Unclear situations also heighten
the need for coordination when greater variety and geographic expansion are pursued at
the same time. Change can be accelerated further by rampant technological progress and
shorter development times, creating more uncertainty and insecurity. Moreover, there are
increasingly paradoxical requirements, such as cooperation and competition (e.g., in the
joint engine development by Daimler and Audi), as well as stability and flexibility. Cus-
tomer requirements are also continually changing. In particular, increased quality aware-
ness in saturated markets and higher service demands from customers intensify the pres-
sure on organizations to adapt, which requires change management. In this respect, Change management
change management encompasses the strategic and operational repositioning and This describes the strate-
gic and operational repo-
restructuring of a company at the content and process level. sitioning and restructur-
ing of a company.
A good example of change management is Apple’s successful turnaround that began when
Steve Jobs rejoined the company as CEO in 1997. Jobs ended the longstanding enmity
with Microsoft and made Microsoft applications work on Apple’s Macs. The introduction of
iPods, and later iPhones and iPads, crowned the change process with extraordinary finan-
cial success.

Employees often initially reject major, albeit necessary, changes. After Microsoft had long
been built up as an enemy in the minds of Apple employees, it was difficult to convince
employees of the meaningfulness of cooperating with them. Long-held convictions are at
odds with imminent uncertainty, feared chaos, and possibly insufficient communication
and transparency. This very often leads to resistance among the workforce. Imagine that a
leader is driving a car and their employees are passengers. What looks harmless from the
driver’s point of view or is a logical maneuver can trigger uncertainty among the passen-
gers. Therefore, communication and transparency are two very essential components of
successful change management.

However, in practice, a great number of change processes fail. A prominent example of

this is Nokia’s slide from its position as the global market leader in cell phones following
the advent of smartphones. The same applies to Motorola and Blackberry, which failed to
keep pace with technological change.

Solution Approaches in Change Management

The first step in the change process is to identify the need for change within a company
and to collect ideas and suggestions for adaptations (Welbourne, 2014). In the next step, it
is important to bring along the employees and provide them with information and train-
ing available, so they are convinced of the necessity and meaningfulness of the change
measures and accept them.

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 Kotter developed an eight-stage model for change management that is considered a clas-
sic for change processes (Kotter, 1995):

1. Establish and communicate urgency

2. Form coalitions that initiate change
3. Create a strategic vision
4. Empower an army of willing supporters
5. Reduce barriers and obstacles
6. Strive for quick wins
7. Maintain momentum
8. Anchor change

Success factors in leading change processes include the creation of a very clear vision that
anticipates the outcome of the change in a business case. In addition, effective communi-
cation is extremely important, as described in the example above. It explains and
describes the reasons for the change to employees, as well as the benefits to be gained by
individuals from the improvement.

SUMMARY
Not every group is automatically a team, since teams must have certain
constituent characteristics. After a new team has been formed, it goes
through four typical phases that are characterized by varying degrees of
effectiveness: forming, storming, norming, and performing.

Organizational culture has a significant influence on cooperation within

a company and is evident in various areas such as behavior, climate, phi-
losophy, and symbols. Shared leadership, which is a collective, social
process, will only be successfully implemented in an open, partnership-
based culture.

If changes are necessary due to repositioning and restructuring, certain

aspects must be considered, for which Kotter proposes an eight-stage
process.

74
 UNIT 7
CURRENT TRENDS AND DEBATES

STUDY GOALS

After completing this unit, students will be able to ...

– connect personality and leadership.

– identify promising personality traits for leaders.
– explain how narcissism and psychopathy affect occupational careers.
– identify toxic workers and assess their impact on a company.
– describe “management derailment” and “counterproductive work behavior” and their
implications.
– explain forms of power and what they mean for leadership.
– assess how Generations X, Y, and Z are shaping working life.
 7. CURRENT TRENDS AND DEBATES

Introduction
Several topics in leadership research have attracted controversy in recent years and even
piqued the interest of popular media and daily newspapers. Two of these topics are the
phenomena of narcissists and psychopaths in leadership positions. Research has focused
on how people with these personality traits come to hold leadership roles and to what
extent they can succeed or fail despite, or because of, their particular personality structure
(i.e., leadership derailment).

The next aspect that is a point of contention in research is the phenomenon of the “toxic
worker.” Many people have groaned about a colleague who causes nothing but discord in
a team. Recent research has produced econometric findings and approaches to identifying
and catching toxic workers at an early stage.

In addition, a detailed examination of power and status in leadership positions and their
effects on leaders themselves, their employees, and the wider environment is presented.
As a final point in this unit, Generations X, Y, and Z and their respective expectations and
influences on working life are discussed.

7.1 Personality and Leadership

Trait theory, also known as the “great man theory,” was one of the early leadership theo-
ries that shaped the focus on certain traits held by leaders.

Mai et al. (2015) summarize the main findings of personality research related to leadership
as follows:

HINT
Boudreau et al. (2001) link the correlation between personality requirements
and success by citing the traits of successful managers. The authors explain that
the personality of a top manager has a direct and indirect effect on career suc-
cess via motivation and human capital. Boudreau et al. (2001) also identify a
high level of optimism, self-confidence, and self-awareness, as well as the pur-
suit of success and decisiveness, as predictive personality traits of managers
and thus support a deeper examination of personality. Moreover, Giberson et al.
(2005) and Bono and Judge (2004) focus on the analysis of dominant personality
profiles based on various character traits.

76
 Shao and Webber (2006) and Judge and Bono (2000) examine the dominant pro-
files among leaders on the basis of the Big Five, which produces a profile similar
to those described above. In each case, dominant types emerge from these
studies that nevertheless differ in direct comparison within their trait expres-
sions and are rarely only found in one type. With regard to analysis of a domi-
nant profile, Stogdill (1948) concluded early on that it is not possible to derive a
uniform personality profile, that is, a generalizable set of traits, on the basis of
trait theory.

Depending on the psychological tests applied in each case, various studies have revealed
different personality traits that are supposed to make successful leaders. The table below
provides an overview of selected studies on this subject.

Figure 15: Studies on the Effectiveness of Leaders

Source: Judge et al. (2002, p. 768).

Judge et al. (2002) conducted a meta-analysis due to the inconsistent results of individual
studies. In this process, the correlations of several studies are combined and converted
into the meta-correlation coefficient ρ. Judge et al. (2002) drew a distinction between two

77
 Meta-analysis leadership variables in their analysis: the first is “leadership emergence,” i.e., the likeli-
These are studies that hood that someone will be promoted to a leadership position, and second, “leadership
summarize previous stud-
ies on the same or a simi- effectiveness,” i.e., the effectiveness of a leader in their role.
lar topic and thus provide
an overview of an entire
The results of the meta-analysis showed a slightly different picture of the probability of
field of research.
being promoted to a leadership position and the subsequent effectiveness of this leader.
While emotional stability, extraversion, and conscientiousness played a central role in pro-
motion, extraversion, creativity, and adaptability emerged as the most important traits for
the effectiveness of a leader.

This discrepancy in the promotion to and effectiveness as a leader is doubtless surprising

and should lead to scrutiny of the methods applied when selecting leaders. If it is proven
that adaptability and creativity play a significant role in leadership success, then, of
course, leaders should be selected accordingly.

Personality abnormalities, such as narcissism and psychopathy, are being increasingly

discussed in more recent literature as traits of leaders.

Narcissism

The term “narcissism” comes from Greek mythology, inspired by a myth about a young
man, Narcissus, who fell in love with his own reflection. Since then, narcissism has stood
for an exaggerated love of self and the idea of thinking of oneself as the greatest. Camp-
bell et al. (2011) define narcissism as a stable individual personality trait based on some
degree of delusions of grandeur, self-love, and exaggerated self-worth. Narcissism mani-
fests itself in three ways (Campbell et al., 2011, p. 269):

1. Narcissistic self-perception is characterized by positive self-evaluations and the per-

ception of being special, as well as vanity and the desire for power and achievement.
2. Narcissists typically have little empathy and are incapable of establishing genuine
closeness with their fellow human beings. Instead, they often have numerous
acquaintances and superficial friendships, many of which are exciting, but are often
also manipulative and focused on the benefits to be expected from the other person.
3. Narcissists adopt certain strategies to maintain their exaggerated self-worth. For
example, they specifically look for opportunities to excel and show off, and they rarely
shy away from taking credit for the work of others. When they can do this without
negative consequences, they have high self-esteem and a strong sense of life satisfac-
tion. However, if they cannot justify their excessive self-esteem, they often become
aggressive or their self-esteem turns into depression and anxiety.

Narcissists can be divided into two subtypes: “grandiose narcissists” and what are known
as “vulnerable narcissists.” Grandiose narcissists are often found among top leaders
(board members, CEOs) who are self-confident, extroverted, dominant, attention-seeking,
and charismatic, but can also be incapable of receiving criticism, as well as being aggres-
sive, arrogant, and exploitative. In contrast, vulnerable narcissists tend to behave in a hos-
tile manner because they feel that the whole world is conspiring against them. They are
often also arrogant, but have low self-esteem, and are somewhat depressed and with-
drawn.

78
Narcissism plays a special role in leadership and management because grandiose narcis-
sists often strive for power and influence, which is why an above-average number of nar-
cissists are found in leadership positions. Since they often perform well at assessment
centers, narcissism also contributes to leadership emergence: they like to talk a lot, domi-
nate group discussions, and are only too happy to present and stand at the flip chart.
However, the traits that make them stand out positively in assessment centers are not
exactly those that make them a pleasant colleague or boss. Campbell et al. (2011)
describe this as the “chocolate cake effect,” i.e., something that can be particularly pleas-
ant in very small doses quickly becomes unpleasant in large doses. Yet, given that assess-
ment centers became increasingly popular in the 1990s and early 2000s, a particularly
large number of narcissists are now to be found in leadership positions, precisely because
they stood out at that time.

Recent meta-analyses have looked at the circumstances under which narcissism helps or
hinders leaders (see Grijalva et al., 2015). The results showed an inverted U-shaped pro-
gression of narcissism and leadership effectiveness, which is also shown in the figure
below.

Figure 16: Connection between Narcissism and Effectiveness as a Leader

Source: Regina Cordes (2019), based on Grijalva et al. (2015).

As the figure shows, the most effective leaders (across many different studies) are those
who exhibit a moderate level of narcissism. Both poles, very high and very low narcissism,
lead to comparatively low effectiveness as a leader to the same extent.

79
 Psychopathy

Psychopathy, or antisocial personality disorder, is defined as a profound pattern of disre-

gard for and violation of the rights of others that begins in early adolescence and persists
into adulthood (Dutton, 2013). The Diagnostic and Statistical Manual of Psychiatry (DSM)
identifies seven factors, at least three of which must have occurred before the age of 15 to
make a reliable diagnosis (American Psychiatric Association, 2018):

1. Inability to conform to social norms, repeated criminal acts

2. Dishonesty, repeated lying to gain advantage
3. Impulsiveness and lack of caution
4. Irritability and aggression, fights, or assaults
5. Recklessness
6. Long-term irresponsibility with regard to work or financial matters
7. Lack of remorse, indifference, or rationalization of one’s own missteps

Hare (1991) presented the first empirical measurement instrument for the clear identifica-
tion of psychopaths (Psychopathy Check List Revised, PCL-R). A distinction is drawn
between four dimensions: interpersonal, affective, lifestyle-related, and antisocial. The
table below provides a more detailed overview of the PCL-R according to Hare.

Table 8: The Psychopathy Check List

Factor 1 Factor 2 Factor 3 Factor 4

Interpersonal Affective Lifestyle-related Antisocial

Tricky, articulate, Lack of conscience Constant feeling of Uncontrolled behavior

superficial charm boredom

Inflated self-esteem Superficial feelings Parasitic lifestyle Early behavioral con-

spicuities

Constant lying Lack of empathy Aimlessness Delinquency in youth

Deceptive conduct Rejection of responsi- Impulsivity Violation of instruc-

bility tions and restrictions

Source: Dutton (2013, p. 163).

Dutton (2013) conducted a descriptive study in which participants were asked about their
occupation and their psychopathy score was subsequently measured. The results of this
study are summarized in the table below.

Table 9: Occupation and Psychopathy

Occupations with above-aver- Occupations with below-aver-

Rank age psychopathy scores age psychopathy scores

1 CEO Care aide

2 Lawyer Nurse

80
 Occupations with above-aver- Occupations with below-aver-
Rank age psychopathy scores age psychopathy scores

3 Media (television/radio) Therapist

4 Salesperson Craftsperson

5 Surgeon Hairdresser

6 Journalist Charity worker

7 Police officer Teacher

8 Clergyperson Creative artist

9 Chef Doctor

10 Civil servant Accountant

Source: Dutton (2013, p. 210).

The table shows that highly paid occupations, such as CEO and lawyer, seem to attract
more psychopathic individuals or that they can flourish in such occupations. Psychopathy
also seems to be more of an advantage in sales. Dutton (2013) explains this phenomenon:
“Psychopathy . . . is like a medicine for modern times . . . in moderation, it can . . . alleviate
a lot of existential ailments that we would otherwise fall victim to because our fragile psy-
chological immune systems just aren’t up to the job of protecting us” (p. 203). But, as is
the case with many medicines “if you take too much of it, if you overdose on it, then there
can . . . be some rather unpleasant side effects” (Dutton, 2013, p. 203).

7.2 Leadership Derailment

The term “leadership derailment” refers to failure in a leadership role. Time and again, the
media reports on top managers who were once highly celebrated, but then crashed. Exam-
ples include Thomas Middelhoff, who is associated with the bankruptcy of Arcandor and
Karstadt/Quelle; Jürgen Schrempp, who is blamed for the failure of the Daimler-Chrysler
merger; Ron Sommer, who is responsible for Deutsche Telekom’s bumpy IPO; and Klaus
Zumwinkel, who sat on the board of Deutsche Post for 18 years, but whose integrity
became questionable when he was targeted by a tax investigation.

Various descriptive studies have identified behaviors, motives, and personality factors
that are associated with leadership derailment. These factors are also referred to as
“counterproductive work behavior.” Across multiple studies, interpersonal difficulties are
shown to be a prominent indicator of leadership derailment (Hogan et al., 2010). In partic-
ular, the inability to create a true team with cohesion, mutual trust, and a common goal
seems to foster derailment. Lack of management skills, arrogance, egoism, and the pur-
suit of one’s own agenda instead of a company’s goals are other possible factors (Hogan et
al., 2010).

81
 Hogan and colleagues (2010, p. 564) distinguish between three strategies in the interper-
sonal domain with varying degrees of promise:

1. “Moving away” by avoiding contact with others and using intimidation to achieve
goals
2. “Moving against” by using manipulation and charm to achieve goals
3. “Moving toward” by striving for goals through integration of others and partnerships

The three strategies are each preferred by specific personality types. For example, the
moving away strategy is preferred by unstable, suspicious, shy, and pessimistic types. The
moving against strategy is particularly favored by people who are arrogant, manipulative,
eccentric, attention-seeking, and egocentric. In contrast, the moving toward strategy is
more likely to be applied by people who are careful, conscientious, reliable, and even per-
fectionistic (Hogan et al., 2010). It can be concluded that the moving toward strategy is
likely the most promising approach to building and maintaining sustainable interpersonal
relationships. Consequently, the selection process for leaders should be designed in such
a way that candidates with the above-mentioned traits, who prefer a moving toward strat-
egy, are hired.

In addition to the moving toward strategy, the following cross-cultural factors have been
shown to be protective against leadership derailment (Hogan et al., 2010):

• successful management of complexity

• effective guidance and motivation of employees
• sense of honor
• pursuit of excellence
• adeptness in terms of organization and management
• self-control and dignified appearance
• sensitivity and empathy
• smart personnel decisions

7.3 Toxic Workers

Toxic workers are those members of a team who frequently display counterproductive
work behavior. Houseman and Minor (2015) describe them as employees who, in the mild-
est case, are a poor fit for the company and the position at hand, resulting in costly back-
filling. In the worst case, sexual harassment, workplace violence, fraud, or other rule viola-
tions can occur. In addition, toxic workers often generate more output than average
contributors—but this output tends to be of a lower quality (Houseman & Minor, 2015).

The reasons for toxic behavior are diverse. However, it is often due to incentive systems
that are not necessarily in line with ethical guidelines. Equally relevant, however, is the
selection process to filter out toxic individuals from the beginning (Houseman & Minor,
2015). Houseman and Minor (2015) identify the following factors that lead to more toxic
behavior:

82
• weak service orientation, reflecting disdain for others
• excessive optimism and a particularly high opinion of oneself
• multiple contacts with other toxic individuals
• low supervision and monitoring of position by supervisors

Houseman and Minor (2015) provide a comparison of savings when either a superstar per-
former is hired or a toxic worker is fired, based on an estimation model with actual com-
pany data. The savings from removing a toxic worker come from preventing a further out-
flow of average or good employees, since colleagues of toxic workers usually feel annoyed
by them and leave the company after a certain period of time. In each case, eliminating a
toxic worker in the Houseman and Minor (2015) model leads to savings of $12,489. In con-
trast, hiring a superstar performer who is among the top 25 percent of performers in a
company results in savings of only $1,951. Savings from hiring a top performer should be
understood to mean that the performer is as productive as 1.3 to 1.5 “average” employees,
but costs only one salary (instead of 1.3 to 1.5 times the salary). If a company hires a
superstar performer who is in the top percent of performers, $5,303 is saved because they
are significantly more productive than average employees, but still only cost one salary.

However, as the table below shows, firing a toxic worker is more than twice as efficient as
hiring an outstanding employee in terms of cost savings (Houseman & Minor, 2015, p. 22).

Table 10: Comparison of Top Performers and the Cost of Toxic Workers

Avoid a toxic worker (cost sav-

Superstar rank (in percentage) Hire a superstar (cost savings) ings)

Top 25 $ 1,951 $ 12,489

Top 10 $ 3,251 $ 12,489

Top 5 $ 3,875 $ 12,489

Top 1 $ 5,303 $ 12,489

Source: Houseman & Minor (2015, p. 22).

7.4 Power in Organizations

Power, status, and influence in companies and organizations can emerge in different ways,
with the various types of power available to an individual also determining the degree of
influence they have. In essence, the concept of power in companies can be broken down
into two subdimensions: positional or organizational power, and personal power. The fig-
ure below shows the different power dimensions.

83
 Figure 17: Sources of Power

Source: Regina Cordes (2019), based on Colquitt et al. (2011).

Positional or organiza- Organizational power is divided into three subtypes:

tional power
Positional, or organiza-
tional, power refers to the 1. Hierarchical power occurs through a position in the hierarchy. The placement of the
share of influence that position in the organizational chart shows the extent to which the position is assigned
can be exercised through to management, coordination, or supervision functions.
the position assigned by
the company and the 2. Power through reward occurs when a leader has a majority or complete control over
tools available. employees’ variable salary components and can, therefore, directly influence their
amount.
3. Enforcing power occurs through direct authority. This often results from the organiza-
tional chart but is specifically never written in a job description.

Personal power Personal power is also divided into three subtypes:

This is not dependent on
the position in the hierar-
chy and the available 1. Expert power occurs through broad specialist knowledge. Power is therefore allocated
resources, but only comes on the basis of a disparity in knowledge and experience.
from the individual’s 2. Identification power is often accompanied by charisma and is described as an influ-
characteristics and
efforts. ence that occurs when other people prefer to identify and associate with this person.
Identification power is a key component of transformational leadership, which is
based on the fact that the leader is perceived by their employees as a role model and
convinces them with charisma.
3. Power through networking comes from the fact that the leader has many sustainable
relationships in different areas of the company and beyond. This can result in an infor-
mation advantage, symbioses can arise, and synergies can be utilized.

84
7.5 Generations X, Y, and Z
Leading people of different age groups with different preferences represents a challenge
for leaders. The (real or perceived) differences between Generations X, Y, and Z are fre-
quently discussed. Generation X refers to those born between approximately 1970 and
1980. The Millennials of Generation Y are those born between 1981 and 1996, and finally,
Generation Z consists of those born after 1997 (Bresman & Rao, 2017).

A large-scale study of the values and aspirations of the members of these three genera-
tions revealed not only a number of differences, but also many similarities. In their compa-
rative study of 18,000 people worldwide, Bresman and Rao (2017) found that geography,
background, and gender often play at least as important a role as belonging to one of the
three generations.

This means that leaders must approach their employees individually and should not sim-
ply lump them into one “generation box.” Rather, special cultural and personal character-
istics, behind which generational affiliation can be secondary, must also be considered.
Their findings regarding leadership ambitions, entrepreneurial ambitions, and the targe-
ted match between personality and work are of particular interest.

Leadership Ambitions

A full 61 percent of respondents from Generations Y and Z and 57 percent of respondents

from Generation X see the assumption of leadership responsibility as important. However,
there were major regional differences. For example, only 47 percent of the Generation Y
Norwegians surveyed had leadership ambitions, while over 75 percent of Mexicans and US
Americans of the same age did. Of course, this is significant for companies. In labor mar-
kets with less pronounced leadership ambitions (such as Denmark, Sweden, and France),
the challenge may lie more in finding suitable young leaders, while in the other countries,
the focus may be more on managing expectations and finding alternative motivators.

Fundamentally, Generations X and Y are particularly attracted to the coaching and men-
toring required of a leader during leadership. In contrast, Generation Z is focused on
increased responsibility. But here, too, there are strong regional differences: For Genera-
tion X in Spain, playing the role of coach is the most important component of their leader-
ship ambitions, while in Germany, the UK, and the US, the challenging scope of the posi-
tion is in the forefront. There are also gender-specific differences: Across all generations
surveyed, men have stronger leadership ambitions than women. However, the respond-
ents in the younger Y and Z generations are strongly converging. Here, 63 percent of the
men and 61 percent of women have a corresponding leadership ambition.

Entrepreneurial Ambitions

All three generations show a strong interest in their own entrepreneurial activities. As
many as one in four Generation Z students surveyed would like to become self-employed.
Here, too, there are major regional differences. For example, the desire to become self-
employed was by far the strongest in India and Mexico, irrespective of generation.

85
 It certainly must be considered that the respondents in the more developed economies of
Europe and North America have more attractive employment opportunities than in sec-
ond and third-world countries. Regardless of age, the lack of alternatives in such countries
means that the share of company founders is higher there than, for example, in Germany,
where the deliberate choice to start a company is at the forefront (entrepreneurial activity
out of necessity versus choice), as shown by the annual “Global Entrepreneurship Moni-
tor” from the Babson School of Management.

Targeted Match between Personality and Work

For younger generations, it is more important to have a good fit with a company in terms
of personality and values (50% of Generation Z versus 40% of Generation X).

Across all generations, 70 percent of respondents say that making working hours and
work more flexible represents the greatest opportunity over the next ten years. It is worth
noting that more respondents from Generation X would take part in an online course than
those from Generation Z. In fact, only 13 percent of Generation Z would choose an online
course if they had the alternative of a classroom course.

SUMMARY
Leadership is strongly influenced by personality. However, the exact
cause-and-effect relationship has not been clearly established, since dif-
ferent studies have identified various promising personality traits. How-
ever, the empirical situation is striking with regard to leadership derail-
ment, which is often due to interpersonal problems. Narcissism and
psychopathy, although frequently responsible for derailment, are sur-
prisingly common among top leaders. Counterproductive work behavior
is often exhibited by toxic workers.

Empirical studies show that it is much more effective to remove a toxic

worker from a team than to hire a particularly productive employee.

Leaders have various forms of power at their disposal that should be uti-
lized according to the situation.

Different generations have various preferences with regard to the world

of work. Nevertheless, other parameters such as gender and background
must also be considered, since belonging to a generation alone does not
establish a definitive difference in terms of a particular work attitude.

86
 UNIT 8
INTERCULTURAL LEADERSHIP

STUDY GOALS

After completing this unit, students will be able to ...

– understand the meaning of culture.

– differentiate between the understanding of leadership in the East and West.
– build competencies to master intercultural challenges.
– assess the intervention options available to leaders when confronted with multicul-
tural team challenges.
 8. INTERCULTURAL LEADERSHIP

Introduction
In an increasingly globalized world, new terms and concepts are being created to describe
how organizations, and the people within them, fit into these structures. In this unit, the
different types of intercultural leaders and their roles are introduced.

Culture not only describes the habits and traditions found across different geographical
regions, but also the nuances of social groups, including organizations. They include basic
taken-for-granted social expectations that influence and guide our day-to-day dealings.
Indeed, business is not removed from such influences and directly affected with its own
special customs and expectations.

As will be explored, increasing our sensibilities to cultural differences both at home and
around the world allows us to contribute to a more understanding work environment and
productive culture where we create intercultural leaders. Intercultural leaders require a
global mindset, cultural intelligence, and multicultural competence to effectively lead
multicultural teams, as well as intervene when challenges arise.

8.1 Intercultural Leaders and Culture

Intercultural Leaders

The times when leadership took place in a homogeneous cultural context are long gone.
And today, even the context of intercultural leadership typical to the onset of modern
Expatriates globalization—namely through expatriates (managers sent abroad by the employer; the
These are people who term comes from the Latin ex patria, meaning outside the home country)—is now only one
permanently live and
work abroad—either at context among many (Steers & Osland, 2020, p. 8). Expatriates are sent by their companies
their own request or as to work temporarily or permanently in another country, and thus in another culture. They
employees who have often speak the local language, have a special affinity for the local culture, and, over time,
been dispatched by their
employer. often become intermediaries between the home and host countries.

As Steers and Osland (2020) explain, expatriates represent only one of four groups of lead-
ers who today face the challenges of intercultural leadership (p. 8). These days, many lead-
ers find themselves in one, or even several, of four roles that require them to successfully
operate across cultural boundaries. These are: expatriates, frequent flyers, global entre-
preneurs, and home country managers.

88
Expatriates

Expatriates are traditionally deployed for various reasons. For example, it is often the case
that their company seeks to establish a representative office abroad, wants to exert
greater control over an existing local company, or cannot find qualified employees locally.
Of course, there are also expatriates who seek to go abroad on their own initiative, how-
ever, they do not always possess the necessary cultural intelligence for this.

Frequent flyers

Frequent flyers are leaders who are not stationed abroad but spend a great deal of time Frequent flyers
commuting between different locations where their employees are working. In global These people spend a
great deal of time travel-
companies, it is not uncommon for organizational units to be distributed across different ing between different
countries or even continents. For example, a sales manager for the Europe, Middle East, countries where their
and Africa (EMEA) region of a large mechanical engineering company may manage depart- employees are located.

ments in Germany, Lebanon, and Nigeria. They will then visit all these locations regularly
in order to effectively agree on and achieve goals with their employees. In addition, the
generation and care of important business contacts and the final negotiation of important
contracts can be conducted on-site. All of this usually cannot be handled purely online.
Instead, it requires the manager in question to travel in person to the countries involved.
During this process, frequent flyers must engage with a variety of different cultures, both
among their employees and their business partners. Nevertheless, they are typically much
less capable of becoming true experts on a single different culture than expatriates due to
the shorter amount of time that they spend at location.

Global entrepreneurs

Steers and Osland (2020) refer to company founders who establish and orient their busi-
ness internationally from the outset as global entrepreneurs. Unlike in earlier times, it is Global entrepreneurs
no longer essential to find suppliers and other business partners near a company’s head- They do not limit their
activities to their home
quarters. Investors can be located all over the world and finance companies from wher- country, but rather look
ever they are. The decline of political and economic barriers to trade, as well as the availa- for their investors,
bility of a great deal of significant information worldwide, allows global entrepreneurs to employees, and business
partners worldwide.
choose the best production locations and business partners—even if they are located in
other countries.

Home country managers

Today, intercultural competence is often also expected of home country managers who Home country managers
do not leave their home country at all. They also work in a globalized economy and inter- They often face intercul-
tural challenges because
act frequently, perhaps even daily, with people and companies from other cultures, com- their employees—local or
municating with colleagues, customers, suppliers, and other stakeholders all over the expatriate—come from
world from their office or home office. The employees for whom they have professional or different cultural back-
grounds.
disciplinary responsibility may also come from very different cultures, too. As a result,
even “at home,” they must face the challenges of intercultural leadership if they want to
master their task successfully.

89
 Regardless of which of these four categories a leader falls into, they must handle the cul-
tural differences that they encounter in order to be able to discover the right approach for
their own most promising behavior.

8.2 Culture
Culture What exactly is meant by culture when “intercultural leadership” and “cultural differen-
It is a distinguishing char- ces” are discussed? This term is not uniformly understood by experts from various disci-
acteristic of human
groups and is expressed plines. The pioneer of intercultural organizational research, Geert Hofstede, has offered an
in their values, habits, understanding of culture that is widely accepted. He describes culture as “the collective
and customs. programming of the mind that distinguishes members of one human group from another”
(Hofstede, 2001, p. 1). It is not only about the values of these groups, but also about more
superficial factors, such as habits and customs. For example, in some cultures, it is cus-
tomary to kiss each other in greeting, in others to bow, and in others to shake hands
(Brett, 2014, p. 26). Many human groups, not just nations, exhibit distinguishable cultures;
for instance, it is quite common for different cultures to exist in the same country. Like-
wise, businesses and other social organizations often exhibit their own cultures.

Characteristics of Cultures

Steers and Osland (2020) name three characteristics that exemplify cultures (p. 35):

1. Culture is shared by members of a group and often defines precisely who belongs to
that group. Cultural preferences are not the same or even universal around the world.
At the same time, not all members of a culture necessarily have the same preferences.
Of course, the fact that most Koreans and Mexicans appreciate spicy foods does not
mean that all Koreans and Mexicans do. Nor does it mean that all Canadians or Dutch
people avoid spicy foods.
2. People learn culture through membership of a group or community. Cultures entail
rules of living together, and these are taught by parents, elders, teachers, superiors,
and society. We acquire the values and behaviors of our culture by observing others’
behavior in society.
3. Culture influences the attitude and behavior of its members. Neuroscience has found
that cultural experience physically shapes the brain of a growing child. Many of our
attitudes, values, and behaviors are not innate, but acquired (consciously or uncon-
sciously) throughout our lives. People in other communities acquire their own, some-
times quite different, culture.

Understandings of Leadership in the East and West

There are entirely different understandings of what leadership means in the East and
West. The concepts and insights presented in this course book naturally tend toward the
tradition of the West.

90
The foundations of Western civilization and the understanding of science that came from
them go back to ancient Greece in many aspects. For example, they developed the con-
cept of

eidos (ideal) as a perfect form that humans should aspire to and achieve as telos (goal). In this
scheme, the work of a leader consists of bridging the gap between telos as an ideal state and
reality . . . with the goal of achieving perfection (Steers & Osland, 2020, p. 195).

In Asia, other civilizations and traditions of thought emerged which also date back to
ancient times. In ancient China and much of Asia, however, this did not involve a concept
similar to the Greek ideal, focusing instead of the forces of yin and yang, which oppose Yin and yang
and complement each other. This concept in Eastern thinking The concept of yin and
yang was developed in
the cultural tradition of
did not result from an ideal to be accomplished but from a natural propensity of processes ancient China.
already in motion. . . . [It] focused on very concrete and specific situations of everyday life, rather
than abstractions of the essence of an ideal form (Steers & Osland, 2020, p. 195).

Alongside these two great traditions, there is naturally a multitude of additional funda-
mental cultural understandings—and the most diverse forms even exist within the West
and Asia. Nevertheless, it is possible to draw a distinction here between the two basic
trends that have led to different understandings in the East and West. In terms of trends,
the understanding of leadership differs with regard to four core components: task, goal,
logic, and preference, as shown in the following table.

Table 11: Understanding of Leadership in the East and West

Western cultures Eastern cultures

Task The search for the ideal final The search for a balance of
state (eidos and telos) opposing forces (yin and yang)

Goal Establishing and pursuing desir- Creating the conditions that ena-
able goal states and managing ble success and managing the
the outcomes process

Logic Articulating goals and identify- Clever positioning to take

ing the means to achieve them advantage of opportunities as
they arise

Preference A preference toward action and A preference toward patience

initiative and the utilization of opportuni-
ties

Source: Georg Berkel (2022), based on Steers & Ostland (2020, p. 195).

Leaders must keep these factors clearly in mind. But what does the skillset that enables
them to successfully engage in intercultural activity look like?

91
 8.3 Intercultural Leadership
Intercultural leadership What special characteristics are required of intercultural leaders? Steers and Osland
This requires a combina- (2020, p. 21) emphasize three qualities in particular: a global mindset, cultural intelli-
tion of mindset, intelli-
gence, and practical com- gence, and multicultural competence.
petence.
A Global Mindset

A global mindset combines an open-mindedness toward different cultural realities with

the ability to mediate between those different cultural circumstances and reconcile them.
It is a matter of recognizing differences in local and global realities and strategically han-
dling them in the right way. Above all else, this requires an openness to such differences.

Cultural Intelligence

Steers and Osland (2020, p. 21) refer to the ability to act effectively in situations character-
Cultural intelligence ized by cultural diversity as cultural intelligence. The economists Earley and Mosakowski
This is characterized by coined the alphabetism “CQ” for this, drawing on the abbreviation of the intelligence quo-
the ability to perceive cul-
turally determined differ- tient (IQ). CQ makes it possible to recognize cultural differences as such and to handle
ences and to handle them them appropriately (Earley & Mosakowski, 2016). The latter may suggest a very different
intelligently. approach than one is familiar with in their own culture. Research has shown that high cul-
tural intelligence reliably predicts success in intercultural constellations (Ang & van Dyne,
2015). However, people possess CQ to widely varying degrees. The good news is that cul-
tural intelligence is not innate but can be learned and increased over a lifetime. Earley and
Mosakowski (2016, p. 4) have studied the CQ of thousands of leaders and conclude that, to
a large extent, it can be learned.

Researchers have identified three factors that contribute to a person’s CQ: cognitive ability
(head), physical behavior (body), and motivation (heart; Earley & Mosakowski, 2016).

Head

When an awareness exists that human behavior all over the world is shaped by culture,
the actions of others can be better interpreted and understood. This is a cognitive skill
that is acquired through conscious reflection. It often requires distancing from one’s own
intuitive “gut feeling” about cultural matters—and, by extension, developing a potentially
more appropriate strategy for action. Countries or people are not the only entities to have
different cultures: companies do as well, albeit to a lesser extent. Here, too, it is important
to make conscious use of the cognitive component of cultural intelligence. For an example
of this concept, see Earley and Mosakowski (2016, p. 5).

92
Body

The cognitive dimension of CQ is joined by another: an understanding and, where appro-

priate, mirroring of behaviors in order to engage with the other culture. This engagement
with the other culture often has a physical component (as in the different greeting rituals
or the different perceptions of how much physical distance is appropriate in a personal
conversation).

Heart

Finally, CQ also requires the willingness to engage with another culture in the first place
and alongside this, to question one’s own culture and, where sensible and desirable, to
leave it behind. This does not necessarily mean adopting the other approach entirely.
Rather, it often makes the most sense for all involved to find a middle ground.

Multicultural Competence

In addition to the right mindset and intercultural intelligence, it is also important for a
leader to acquire practical competence in engaging with different cultures. It is commonly
necessary for leaders to engage with more than just one or two cultures; this ability is
referred to as “multicultural competence.” This is not a situation where the leader either
has this ability or not. Rather, it is a matter of gradation. The more of it a person has, the
better. Why? Steers and Osland (2020) answer this question succinctly: “Simply put, better
trained managers – especially those with higher levels of multicultural competence – tend
to succeed in challenging foreign environments more often than those with lower levels of
competence” (p. 21).

Leading Multicultural Teams

Four challenges

Brett, Befahr, and Kern identify four challenges that leaders of multicultural teams often
face (Brett et al., 2020).

1. Insufficient language skills

Team members do not always have comparable language skills. Thus, it is not uncommon
for individual employees to lack sufficient command of the dominant team language.
Apart from practical problems, this often leads to their other competencies being underes-
timated by others. This can cause barriers and even gridlock.

2. Different communication styles

The way people talk to each other can vary greatly. In many Western countries, for exam-
ple, very direct and explicit communication is the norm. By contrast, in Asian countries,
communication is often indirect, and the content that is intended to be communicated is
sometimes derived from what is not said. In negotiations between international leaders
from the East and West, say, it is often easier for Asians to understand what the other side

93
 means than it is for Europeans or Americans. In Germany, for instance, people are often
not afraid to express their rejection of an offer by saying “no.” Conversely, a Japanese per-
son’s “yes” does not necessarily mean agreement, but may merely express, “Yes, I’m lis-
tening to you and understand what you’re saying (but don’t agree with it).”

3. Different understanding of hierarchy

In some cultures, there is a more egalitarian understanding of hierarchy. In other cultures,

leaders are accorded a higher status. For instance, in the Arab world, as well as in the USA,
superiors are often expected to give clear instructions and make clear decisions—and they
do not necessarily expect to be questioned. Such differences can lead to team members
only wanting to contribute very cautiously, or not at all, in joint brainstorming sessions
with their boss. However, the enthusiasm for discussion that is common in their home
country can come across as unpleasantly demanding and argumentative on these kinds of
occasions abroad.

4. Different standards of decision-making

Cultures sometimes differ greatly in the way decisions are made. This becomes clear, for
example, when carrying out group tasks in leadership workshops. For instance, a group of
German leaders is presented with a task to be carried out together (such as the production
of a physical object using specified means). It is typical for this group to first develop a
well-thought-out plan for its approach and only start putting it into practice after that. In
contrast, British teams may take a completely different approach—here, the implementa-
tion often begins immediately—and is adjusted “along the way,” following the idea of trial
and error. Remarkably, both approaches often lead to a similar end result. The approach
of these teams is also likely to differ on a day-to-day basis. As a result, a working group
composed of members from different cultural backgrounds often does not automatically
have the right approach for the task.

Four Intervention Options

Brett, Befahr, and Kern identified four intervention options available to leaders facing the
challenges of multicultural teams (Brett et al., 2020):

1. Adaptation. A team acknowledges the existing differences and consciously attempts

to find ways to handle them. Their leader encourages them to adjust and adapt to
each other.
2. Structural intervention. If certain employees find it difficult to work together on a sus-
tained basis, team responsibilities and workflows can be reorganized.
3. Management decision. A team cannot solve a problem on its own. For example, a
team of experts with different language skills may be instructed to work only in lan-
guage-skilled subgroups within certain teams. This should be an exception, rather
than a rule.
4. Exit. Sometimes, the last resort is the voluntary or involuntary removal of a member
from the team if, for example, too much damage has been caused by a conflict for rea-
sonable cooperation to still be possible.

94
SUMMARY
Leaders today work in increasingly complex environments whereby they
balance different cultural frameworks along with social expectations.

There are different types of intercultural leaders, including expatriates

(living and working abroad), frequent flyers (not stationed, but working
abroad), global entrepreneurs (founders with a global outlook), and
home country managers (local with international staff).

Cultural characteristics influence attitudes and behaviors. Discussion in

this unit applies understandings of leadership in the East and West
based on tasks, goals, logic, and preferences, highlighting their impor-
tance for leaders.

Today, a global mindset is open-mindedness toward different cultural

realities; the ability to mediate different cultural circumstances with cul-
tural intelligence, i.e., acting effectively with cultural diversity, cultural
intelligence, and practical competence.

Leading multicultural teams presents various challenges that can be

resolved using intervention options, such as adaption, structural inter-
vention, management decision-making, and exit strategies.

95
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 LIST OF TABLES AND
FIGURES
Figure 1: The Leadership Style Continuum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Figure 2: Contingency Theory According to Fiedler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Figure 3: The Maturity Model According to Hersey and Blanchard . . . . . . . . . . . . . . . . . . . . . 26

Table 1: Reinforcement Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Table 2: Role Behaviors of Leaders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Figure 4: Triad Leadership Ethos Model According to Karl Berkel . . . . . . . . . . . . . . . . . . . . . . 34

Figure 5: The Job Demands-Resources Model According to Bakker and Demerouti . . . . . 45

Figure 6: Avoidance of Conflicts to Promote Work-Life-Balance . . . . . . . . . . . . . . . . . . . . . . . 47

Table 3: Starting Points for Stress Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Figure 7: The Needs Hierarchy According to Maslow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Figure 8: Basic Motivation Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Figure 9: The Communication Square According to Schulz von Thun . . . . . . . . . . . . . . . . . . 57

Figure 10: Transaction Forms in the Sense of Transaction Analyses . . . . . . . . . . . . . . . . . . . 60

Figure 11: The Performance-Potential Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Table 4: Exemplary Assessment Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Table 5: Team Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

Figure 12: Types of Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Table 6: Opportunities and Risks of Teamwork . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Figure 13: The Life Cycle Model of Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Table 7: Life Cycle Phases Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

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 Figure 14: The Three-Level System according to Schein . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Figure 15: Studies on the Effectiveness of Leaders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Figure 16: Connection between Narcissism and Effectiveness as a Leader . . . . . . . . . . . . . 79

Table 8: The Psychopathy Check List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Table 9: Occupation and Psychopathy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Table 10: Comparison of Top Performers and the Cost of Toxic Workers . . . . . . . . . . . . . . . 83

Figure 17: Sources of Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

Table 11: Understanding of Leadership in the East and West . . . . . . . . . . . . . . . . . . . . . . . . . 91

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