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Subject Psychology

Paper No and Title Paper no.12: Organizational Behaviour

Module No and Title Module no. 25: Contemporary issues in leadership

Module Tag PSY_P12_M25

TABLE OF CONTENTS
1. Learning Outcomes
2. Introduction
3. Charismatic Leadership
3.1 Definition and its meaning
3.2 Attributes of Charismatic Leaders
3.3 How Charismatic Leaders influence Followers?
3.4 Outcome of Charismatic Leadership

4. Transformational Leadership
4.1 Definition and its meaning
4.2 Aims of Transformational Leaders
4.3 Components of Transformational Leadership
4.4 Transformational Leadership v/s Charismatic Leadership

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5. Transactional Leadership
5.1 Definition and its meaning
5.2 Assumptions of Transactional Leadership
5.3 Characteristics of Transactional Leaders
5.4 Transactional Leadership v/s Transformational Leadership

6. Contemporary Leadership
6.1 Mentoring
6.2 Self-Leadership
6.3 E-Leadership

7. Summary

1. Learning Outcomes
After studying this module, you shall be able to:

· Understand the contemporary leadership issues

· Describe the different forms of leadership
· Know the nature of each of the different forms of leadership
· Analyze the functions of leaders in contemporary world
· Identify the key attributes of different leadership styles
· Learn the different influence processes employed by contemporary leaders

2. Introduction
In the contemporary world, organizations are witnessing a plethora of changes. These changes
have redefined the entire business world. The organizations today are fast moving and evolving in
every possible way. The workers are goal-driven and the need to perform is stark. In these
changing times, the roles of a leader have massively outgrown. The leaders are now facing the
pressure of not only leading and facilitating, but also understanding the growth and development
needs of their followers and to model these needs in tune with the organizational goals. This
module addresses various forms of leadership which have evolved as a response to the
contemporary organizational demands.

3. Charismatic Leadership

3.1 Definition and its meaning

The concept of Charismatic Leadership has its roots in ancient wisdom. Although the charismatic
concept, or charisma, goes as far back as the ancient Greeks and it finds mention in the Bible, its

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modern development is often attributed to the work of Max Weber (1948). Charismatic leadership
was first discussed by Max Weber more than a century ago. He defined charisma as:
“a certain quality of an individual personality, by virtue of which he/she is set apart from ordinary
people and treated as endowed with supernatural, superhuman, or at least specifically exceptional
powers or qualities”.
Further, he defined charismatic authority as "resting on devotion to the exceptional sanctity,
heroism or exemplary character of an individual person, and of the normative patterns or order
revealed or ordained by him."
The concept of charisma was applied to the field of Organizational Behaviour as a leadership
characteristic. A major shift in leadership research in the mid 1970s led to the development of
many charismatic leadership theories. Charisma is a leadership trait that can influence employees
to take early and sustained action. It is a form of interpersonal attraction of a leader that inspires
support and acceptance from others. Charismatic leadership is, therefore, a type of influence
based on the leader’s personal charisma.
This work was pioneered by Robert House (1976) who developed the Charismatic Leadership
Theory. On the basis of the analysis of political and religious leaders, Weber suggested that
charismatic leaders are characterized by self-confidence and confidence in their associates, high
expectations for associates, ideological vision, and the use of personal example. Since these
qualities are not easily accessible by the common person, followers make attributions of heroic or
extraordinary leadership abilities when they observe these behaviours. Traits and personality are
related to charisma. Charismatic leaders are likely to be extraverted, self-confident, and
achievement-oriented.

3.2 Attributes of Charismatic Leaders

3.2.1 Vision and articulation

The primary attribute exhibited by charismatic leaders is that have a vision which is frequently
articulated by them. This vision appeals to the beliefs and needs of the followers, and hence, is
easily shared among them. The vision is expressed as an idealized goal that proposes a future
better than the status quo. A charismatic leader is able to clarify the importance of the vision in
terms that are understandable to his/her followers. The vision presented is usually value centred,
realizable, and with superior imagery.

3.2.2 Personal risk

Charismatic leaders are apparently willing to take on high personal risk, ready to incur high costs
and engage in self-sacrifice to achieve the vision. This attribute is a major source of devotion
offered to them by their followers. The charismatic leader makes self-sacrifices to demonstrate
courage and convictions about the vision

3.2.3 Environmental sensitivity

Charismatic leaders are able to make realistic assessments of the environmental constraints and
resources needed to bring about change. They exhibit sensitivity towards environment and
actively take on themselves to

3.2.4 Sensitivity to follower needs

Charismatic leaders are exceptionally perceptive of others’ abilities and responsive to their needs
and feelings. The leader communicates high performance expectations for his/her followers
simultaneously expressing confidence that followers can attain them.

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3.2.5 Unconventional behaviour
A charismatic leader usually engages in behaviours that are perceived as novel and counter to
norms. They exhibit behaviours that are out of the ordinary, unconventional, and awe-inspiring.

3.3 How Charismatic Leaders influence Followers?

Charismatic leaders are known to exert immense influence over their followers. These leaders
possess exceptional qualities which make them almost god-like for their followers. The charm of
charismatic leaders make their followers go behind them without questioning. A strong bond
exists between these leaders and their followers. Such magnitude of influence has been tied to the
psychological attributes of the leaders which make them successful charismatic leaders. Various
studies have shown that charismatic leaders appeal to the core values and belief systems of the
followers and it is this psychological link between the two that make charismatic leaders
successful. Therefore, it is important to understand the process of influence. Charismatic leader
influence followers through four processes:

3.3.1 Attractive Vision: Leader articulates an attractive vision which promises of a glorious
future. This vision statement is a formal, long-term strategy to attain goals and it links past,
present, and future. Since it is close to people’s hearts, it commands extraordinary influence over
them.

3.3.2 High Expectations: Leader communicates high performance expectations from his/her
followers while showing sensitivity to their needs. The leader also reiterates his/her confidence in
the abilities of the followers.

3.3.3 Values: Leader conveys a new set of values which are embraced by the followers. These
new values are seen as appealing by the followers because the charismatic leader establishes them
by setting a number of personal examples.

3.3.4 Tapping into Followers’ Emotions: Charismatic leader often engages in emotion-
inducing and unconventional behaviours. He/she tries to reach out to the followers through
stirring actions and speeches which are emotionally charged and arousing.

3.4 Outcomes of charismatic leadership

Charismatic leadership has been seen as a positive force by many, which essentially brings out
desirable results. However there have been multiple instances which highlight the negative
aspects of charismatic leadership. It is important to understand both sides of the charismatic
leadership.
On the positive side, it is observed that charismatic leadership exerts extraordinary influence over
the followers which has been used by the leaders in positive directions. It motivates followers to
put in extra efforts than what is expected from them otherwise. Charismatic leaders produce in
their followers, performance beyond expectations as well as a very strong commitment to the
organization. Charismatic leadership also works to heighten the morale of the followers. It shapes
the society and the business world the way the followers and the leader had dreamt. As a result, it
increases the overall efficiency of the organization. It also infuses a sense of unity and
belongingness in the followers towards the organization.
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On the other hand, The shared vision and ideas between the leader and followers generate
tremendous energy in the organization. In many cases, charismatic leaders have employed this
energy in destructive ways. There is a high probability that charismatic leaders are tempted to
abuse their powers. Many companies have witnessed their charismatic leaders going corrupt
without the knowledge of their followers or superiors. A well documented example is that of
Enron, which has been described as an example of ‘corporate cult’ as a result of its charismatic
leaders who ultimately led to its fall.

4. Transformational Leadership

4.1 Definition & its Meaning

Transformational Leadership, as the name suggests, is all about transformation or ‘leading-
change’. This was first identified by James McGregor Burns in 1978. But major research into this
topic was first carried out by Bernard Bass (1985). Burns defined it as:

Transformational Leadership is “A relationship of mutual stimulation and elevation that converts

followers into leaders and may convert leaders into moral agents.”

Bass (1990) explains that transformational leadership “occurs when leaders broaden and elevate
the interests of their employees, when they generate awareness and acceptance of the purposes
and mission of the group, and when they stir their employees to look beyond their own self-
interest for the good of the group.”

Transformational leaders are more popularly referred to as agents of change who energize and
direct their followers to a new set of behaviors. This form of leadership is characterized by
leader’s attention to the concerns and developmental needs of individual followers. They are
specifically concerned with empowering their followers to take greater risks and venture ahead
with innovative ideas. Transformational Leaders change followers' perspective by helping them
to look at old problems in new ways; and they are able to inspire followers to improve their
performance for achievement of group goals.

The followers of transformational leaders are more than ready to put out extra effort to achieve
their goals and objectives. They are facilitated to be more creative and innovative by their leaders.
Another important aspect of transformational leadership is that it taps into the ambitions and
aspirations of individual followers. Based on this, the transformational leaders build a vision
which is communicated to seek commitment and trust from followers. Transformational leaders
enhance the followers’ awareness of issues through information sharing and open
communication. This form of leadership also highlights the role of a leader as a father figure.

4.2 Aims of Transformational Leadership

4.2.1 Changing situations for the better: Transformational leaders are the agents of change.
They ‘transform’ the status quo for the better. They transform their followers as well as the
organization. They do so by instilling confidence in their followers and helping them move
toward growth and achievement.

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4.2.2 Developing followers into leaders: Transformational leaders develop their followers to
the point where followers are able to take on leadership roles and perform beyond established
standards or goals.

4.2.3 Overhauling organizations: Transformational leaders provide the organizations with

strategic directions which ultimately renovates the entire organizational structure.

4.2.4 Visioning: Transformational leaders provide an inspiring vision to their followers. This
energizes and arouses the followers for higher achievements and better performances.

4.2.5 Providing a high ideal for moral and ethical conduct: Transformational leaders set
high standards for moral and ethical conduct among the followers.

4.3 Components of Transformational Leadership

Transformational leadership exhibits following distinct factors:

4.3.1 Idealized Influence: This deals with the image and influence of the leader.
Transformational leaders have an idealized image in the eyes of the followers which closely
matches the follower’s perception of what a leader should be. They exert their influence through
charisma.

4.3.2 Inspirational Motivation: Another important component of transformational leadership

is the process of inspiring and empowering of followers to enthusiastically accept and pursue
challenging goals and missions. The leader is positive, upbeat, and inspiring about the future.
They are optimistic about the future and are able to get their followers excited about it. They
inspire followers by communicating high expectations, using symbols to focus efforts, and
expressing important issues simply.

4.3.3 Intellectual Stimulation: Transformational leaders consider old problems in new ways,
articulate these new ideas, and encourage followers to rethink their conventional practices and

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ideas. They challenge their followers by introducing them to new ideas and new ways of thinking.
In this way, transformational form of leadership promotes creativity and innovation.

4.3.4 Individualized Consideration: This component consists of behaviours such as

communicating personal respect to followers by giving them specialized attention, by treating
each one individually, and by recognizing each one’s unique needs. Individualized Consideration
is what allows the transformational leaders to be personally involved in the lives of their
followers.

4.4 Transformational Leadership v/s Charismatic Leadership

There is some debate about whether transformational leadership and charismatic leadership are
the same. Robert House (1976), the researcher who introduced the concept of charismatic
leadership considers them synonymous but Bernard Bass (1985) argues that transformational
leadership is broader than charismatic leadership.

The differences are highlighted below:

Transformational Leadership Charismatic Leadership

Charisma of the leader is just one attribute Charisma of the leader is the central attribute
Transformational Leaders seek to empower and Charismatic leaders may try to keep followers
elevate followers weak and dependent on them
Transformational Leaders develop followers Charismatic leaders instill personal loyalty to
into leaders themselves rather than developing followers
Transformational Leaders Charismatic leaders

5. Transactional Leadership

5.1 Definition & its Meaning

Transactional Leadership is simply described as a form of leadership which is based on the
transactions between leaders and subordinates. This was also identified by James McGregor
Burns. Burns (1978) stated that transactional leadership involves an exchange between leader and
follower. Followers receive certain valued outcomes (e.g. wages, prestige) when they act
according to their leader's wishes. Bass (1985) described it as a transactional or cost-benefit
exchange process.
Transactional Leadership is also known as managerial leadership. It focuses on improving
performance of the followers within the same organizational context and does not strive to bring
about any transformation. Within the context of Maslow's hierarchy of needs, transactional
leadership works at the basic levels of need satisfaction, where transactional leaders focus on the
lower needs of their followers and do not facilitate their creative and innovative ventures. Based
on satisfaction of needs, the transactional leaders use rewards and punishments to exert their
influence. Good work by the followers is rewarded while any deviation from the established task
requirements is punished.

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Transactional Leaders are primarily concerned with specific task performance. They provide
short-term goals which are in tune with the established goals. They guide or motivate their
followers by clarifying role and task requirements. Therefore, transactional leaders are effective
in crisis and emergency situations, as well as in getting tasks completed in a specific fashion.

5.2 Assumptions of Transactional Leadership

· Transactional leadership assumes that workers require a definite and reliable chain of
command to perform well. They perform their best when the chain of command is
definite and clear.
· Workers can be motivated to perform better through the use of rewards and punishments.
· The primary goal of the followers is to work according to the demands of the leader.
They should obey the instructions and commands of the leader under all circumstances.
· The leaders need to carefully monitor their subordinates in order to ensure that
expectations are met.

5.3 Characteristics of Transactional Leaders

5.3.1 Contingent Reward: Bass (1990) explains leaders exhibit contingent reward when they
“contract exchange of rewards for effort, promises rewards for good performance, (and)
recognizes accomplishments”. Simply put, Contingent reward provides rewards for effort and
recognizes good performance. Transactional Leaders transact with followers by rewarding efforts,
telling them what to do to gain rewards, punishing undesired action, and giving extra feedback
and promotions for good work.

5.3.2 Management by Exception (active): Management-by-exception maintains the status

quo, intervenes when subordinates do not meet acceptable performance levels, and initiates
corrective action to improve performance. It is when the leader “watches and searches for
deviations from rules and standards, takes corrective action.” In the active form of management-
by-exception (AM) leaders try to anticipate mistakes or problems.

5.3.3 Management by Exception (passive): Management by Exception (passive) is when the

leader “intervenes only if standards are not met”. In passive management-by-exception (PM)
leaders intervene only after standards are not met

5.3.4 Laissez-Faire: This characteristic states that the leader “abdicates responsibilities, avoids
making decisions.”

5.4 Transactional Leadership v/s Transformational Leadership

Transactional Leadership Transformational Leadership

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6. Contemporary Leadership Roles

Changing organizational scenario has brought along a need for the leaders to play multiple kinds
of roles in the larger interest of the organization. Unlike the traditional leadership roles of guiding
and motivating, the contemporary leaders have to adapt themselves to the dynamic needs of the
organization as well as their followers. Contemporary organizational environment calls for not
only traditional leadership roles but also those which are suitable to the present. Three of such
roles are discussed below:

6.1 Mentoring

A mentor is a senior employee who sponsors and supports a less-experienced employee. The
employee on the receiving end of this relationship is called a Protégé. It is a widespread form of
intergenerational knowledge-sharing, in which the mentor guides and nurtures the mentee. While
mentoring can be formal or informal, the most effective mentoring relationships exist outside the
formal supervisor-supervisee relationship.

Mentoring is not a phenomenon restricted to lower or entry level personnel. Rather, it finds a
place even at the highest levels of organizational hierarchy, as in the grooming of the next CEO.
For e.g. Narayan Murthy, one of the founders of Infosys Technologies in Bangalore stepped
down as CEO to serve as the chief mentor. He is also known to have mentored the next Infosys
CEO, Nandan Nilekani. It is however important to note that the character of mentoring changes
as the participants move up the corporate hierarchy.

Mentoring not only benefits the mentee, but is also in the larger interest of the organization. Many
organizations have formal mentoring programs which serve different purposes. The most often
discussed benefits are those related to the development of human resources. Mentoring can
contribute to employee motivation, job performance, and retention rates. More and more leaders
are embracing the role of mentorship because mentoring not only sees career functions, but also
serves psychological functions.

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6.2 Self Leadership

Self-leadership is the phenomenon through which people guide their own behaviour. This ability
is gradually developed in an individual under constant support and guidance from the leaders.
Proponents of self-leadership propose that there are a set of processes through which individuals
control their own behaviour. The leaders who strive to develop their followers into leaders are
often referred to as the super leaders. These “super leaders” are effective leaders who advocate
employees' managing themselves. This is done by developing leadership qualities in others and
nurturing followers so that they no longer need to depend on formal leaders for direction and
motivation.

The underlying assumptions behind self-leadership are that people are responsible, capable, and
able to exercise initiative without the external constraints of bosses, rules, or regulations. Given
the proper support, individuals can monitor and control their own behaviour. The emerging trend
of work teams has further bolstered this concept. Many times, the teams are expected to work
without formal guidance from their superiors. In such circumstances, those who lack autonomy
might fail to deliver. Therefore, training in self-leadership is an excellent means to help
employees function in an independent and autonomous manner,

6.3 E-Leadership
In today’s world, the traditional 9 to 5 job scenario has undergone a major change. The
emergence of internet and other means of telecommunication have ousted the need to work from
a single work space. The advanced information technology has given rise to the new trend of
anytime-anywhere workspace. The flexibility in time and space of work life has aroused new
demands for the leaders. The leaders now have to provide guidance and motivation to people
working across the globe, or to those whom they have never met. The practice of leading the
workers in virtual space is called e-leadership.
In this new role, the leaders have to motivate and direct individuals to set goals and enhanced
performance even in the absence of face-face communication. The messages are exchanged
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through online interactions, which lack the component of non-verbal communication. This
requires the leaders to be more careful about what they say or write. In this unique scenario, the
challenges faced by the leaders are also unique. The greatest of these seems to be developing and
maintaining trust. In the absence of direct interactions, trust building becomes important. Hence,
the leaders themselves have to become innovative and flexible in order to succeed in their role of
leading.

7. Summary

· Leadership roles are redefining themselves in contemporary business world.

· Charismatic leaders use vision, personal risk, sensitivity to follower needs, and
unconventional behaviors to command exceptional loyalty from their followers.
· Charismatic leaders infuse immense amount of energy in their followers which can
sometimes be used in the wrong direction.
· Transformational leaders bring about a change in status quo for the better. They strive to
enhance the abilities of their followers as well as overhaul the organizations by
providing strategic directions. They foster creativity and innovation.
· Transactional leaders operate through contingent rewards, management by exception
and Laissez-Faire. They promote a ‘compliance’ environment by sticking to set rules and
established norms.
· Leaders have assumed different roles in contemporary world. These include mentoring,
self-leadership, and e-leadership.

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