As recognized by Jenkins (1947) and Stogdill (1948), the traits required in a leader are related to the demands of the situation (Jenkins, 1947; Stogdill, 1948), In a review of situational aspects of charismatic leadership, Shamir and Howell (1999, p. 258) took the more qualified view that the principles and processes of charismatic leadership “—apply across a wide variety of situations; however, there are situations in which they apply more than in others. … [Leadership] emergence and effectiveness … may be facilitated by some contexts and inhibited by others.” Individuals differ in their motivation to lead, but their motivation will depend on whether they are in a hierarchical, professional, or entrepreneural organization (Smith & Miner, 1984). U.S. presidents are more likely to be successful if they introduce administrative actions and proposals for legislation as early as possible in their terms (Barber, 1985). Sayles (1958, 1979) and Osborne (1999) focused attention on the interaction between managers’ roles, organizational designs, and organizational environments. Nebekcr and Mitchell (1974) found that differences in leaders’ behavior could be explained by the leader’s expectations that a certain style of leadership would be effective in a particular kind of situation. For example, the success of the careers of 310 British and U.S. managers in 28 different companies corresponded to the extent to which the managers’ achievement orientation matched their companies’ support of risk taking. The managers’ success was evidenced by the progress of their salaries compared to their age. On the other hand, other matches of orientation and the company situation that were expected to make a difference in the managers’ advancement failed to do so (Ansari, Baumgartel, & Sullivan, 1982).
The preceding chapters have examined the personal and situational aspects that account for leadership. In these chapters, we have put more emphasis on general effects across situations and on personal predispositions. Now we will accent situations and contexts, keeping generalities and personal predispositions in mind. Contingencies of situation and predispositions of leaders and followers can give rise to hypotheses about the emergence of successful transformational leadership. For instance, inspirational leadership is likely to arise if the leaders are articulate, the followers are inexperienced, and they are faced with ambiguous tasks, goals, and reinforcements. Considerate leadership is more likely with caring, empathic leaders and inexperienced subordinates with unmet needs. Intellectual stimulation will more likely be generated by a rational and unconventional leader with inexperienced subordinates. Contingent reinforcement will appear if a materialistic leader is in control of material reinforcements and materialist subordinates. Active management by exception will be more likely to appear with a task-oriented leader and inexperienced subordinates working in a context of objective, measureable performance. Passive and laissez-faire leadership are more likely to emerge where tasks, goals, and reinforcements are unimportant, where the leader is neither task-nor relations-oriented, and the subordinates are experienced.
O’Connor and Farrow (1979) illustrated the significance of fitting leaders’ behavior to the situation. They demonstrated the personal satisfaction that accrued from matching the amount of structure required by managers in research and production and the managers’ preferences for such structure. Similarly, managers reported that they needed to engage in political and manipulative behavior most often in organizations that lacked structure, where there was much continuing ambiguity about goals and processes and a great many technological uncertainties (Allen, Panian, & Lotz, 1979; Madison, Allen, Porter, et al., 1980). While transformational leadership of department managers predicted business unit performance a year later, the effect was moderated by support provided for innovation (Howell & Avolio, 1993). Yet, based on 37 years of observation and membership in the U.S. Army and large civilian organizations, Ulmer (1997, p. 78) declared, “Good leaders in our Army look very much like good leaders elsewhere.” Such leaders show flexibility in responding to different situational requirements. Quinn (1988) provided a competing values framework that set forth that leaders need to focus on predictability and order in situations requiring centralization and integration. But they need to value spontaneity and flexibility if situations call for decentralization and differentiation. Hunt and Phillips (1991) were able to apply Quinn’s model to illustrate the various attitudes, values, and behaviors needed by military commanders for successful leadership in garrison and in combat.
As was noted in Chapter 4, the trait approach is not enough for understanding leadership. Above and beyond personal attributes of consequence, the situation can make a difference. Whereas some types of leadership are reported or expected of leaders in all situations, other types are more specific to particular types of situations (Hemphill, 1952). For instance, according to a survey by Hemphill, Seigel, and Westie (1951), when a group has a high degree of control over its members, the leader is expected to dominate and actually does so. In groups whose members participate to a high degree, however, these expectations and reports of leader domination do not occur.
What is required for leadership in a stressful situation is likely to differ from what is needed in calm and steady circumstances. For a given leader in one situation or the other, some subordinates are likely to be more experienced, more motivated, or better adjusted to their situation. The leader may need to deal differently with various kinds of subordinates. Some leadership behavior is a function of individual differences, but other leadership behavior appears to depend mainly on situational differences or on the interaction of the individual and the situation. Any full account requires the “within-and-between” analysis (WABA) advocated by Dansereau, Alutto, and Yammarino (1984). WABA allocates the percentage of variance in leadership behavior and the percentage of the effects of the leadership on performance and satisfaction to the leaders across situations, across the groups led, and to the individual leader-follower relationships within the groups led. Thus for 116 insurance agents in 31 work groups, Yammarino, Dubinsky, and Hartley (1987) showed that 28 percent of the average correlation of subordinates and supervisors about the subordinates’ performance was attributed to the differences among the work groups and their leaders. Fourteen percent was attributed to differences among the subordinates within the work groups led by the same supervisor. The remaining variance was attributed to fluctuations of the followers’ relations with some leaders but not with others. For a sample of 83 retail sales associates in 26 work groups, only 14% could be attributable to differences among the supervisors, while 7% was due to supervisor-subordinate relations within the groups.
Stogdill’s (1951b) study of transferred naval officers suggested that some behaviors of the transferee in the new situations were characteristic of the transferee himself rather than of the position. Such behaviors included a tendency to delegate authority; to spend time in public relations; to evaluate, read, and answer mail; to read technical publications; and to spend time with outsiders. But other behavior, such as the amount of personal contact time; time spent with superiors; and time spent in supervision, coordination, and writing reports, was more a matter of demands of the situation. Barnlund (1962) rotated 25 participants in differing combinations in differing groups dealing with differing tasks and erroneously concluded that the individual participants were less important than the situations involved in the emergence of the leaders of the groups. Kenny and Zaccaro (1983) recalculated Barnlund’s statistics and showed that 49% to 82% of the variance in who emerged as leader was due to some stable aspect of the individual leader. Again, Zaccaro, Foti, and Kenny (1991) conducted a similar experiment using 108 undergraduate students who rotated through four different group tasks. Fifty-nine percent of the variance in the leadership that emerged was due to the individual students across the four group task situations. The students’ self-monitoring was of consequence.
W. O. Jenkins (1947) reviewed a large number of military studies that indicated that the traits required in a leader are related to the demands of the situation. Stogdill’s (1948) review of 124 studies from a broader array of situations suggested that although there may be general traits associated with leadership, the patterns of those traits required for leadership differ with the situation.1 Subsequently, DuBrin (1963) found that a leadership inventory, consisting of both trait and situational items, correlated significantly with a leadership criterion, whereas neither set of items alone was significantly related to the criterion. Again, O. L. Campbell (1961) reported significant differences among leaders in eight different situations when described on the Consideration and Initiating Structure scales of the Leader Behavior Description questionnaire (LBDQ).2
Chapter 19 examined the premium placed on the maturity of subordinates by the Hersey-Blanchard (1977) situational leadership model in determining what style of leadership is appropriate. Even Blake and Mouton (1964) would agree that how the 9,9 style—integrated, highly task-and relations-oriented leadership—properly manifested itself in a leader’s behavior depended on a subordinate’s maturity. Vecchio (1981), among many others, concluded, from an analysis of LBDQ data from 107 subordinates’ descriptions of their supervisors, that a matching of the leader’s style to the needs of subordinates and the work setting yielded the maximum satisfaction of subordinates with the leadership. Such matching was seen as the reason that when each of four CEOs displayed a different pattern of traits, all four emerged as effective leaders in their four different organizational cultures (Free, 1983). Again, in Fiedler’s (1967a) contingency model detailed in Chapter 19, relations-oriented leadership is optimal when the situation is neither highly favorable nor highly unfavorable to the leader in terms of his or her esteem and power and the situation’s structure. Task-oriented leadership is optimal when the situation is either highly favorable or highly unfavorable to the leader.
Situations Alter Leadership Styles. Much has been learned about how the demands of a task and the characteristics of immediate group members modify the type of leadership that occurs. The external environment, the organization in which the tasks are to be accomplished, and the leader’s group may exert important effects on the leader’s behavior. Modern theories of leadership style take note of how the leader’s behavior is systematically changed by changes in situational conditions (Evans, 1974). Changes in the complex organization and its external environment will ordinarily bring on changes in its leadership. As organizations mature, the charismatic founders of social movements usually give way to bureaucratic successors.
In the case of the union movement in the United States, unions had to struggle first for recognition, then to become established institutions. Now many are struggling for survival. In each stage, the requirements for leadership differed. The low-paid, lower-skilled immigrants with limited En glish who made up the members of the United Steel Workers changed to a new generation of highly paid, skilled, En glish-speaking, better-educated members. Leading them required new approaches. Patronage had to give way to persuasion. Newer issues involving the match between the leader and the situation emerged. These issues reflect societal changes, the sharp increase in political and legislative intervention into the world of work, and the changed relations between employers and employees. Further changes in the leadership of the steel union were necessary to deal with the impact of foreign competition and new technologies.
Again, doing business successfully in the competitive and rapidly changing global market and its rules required leadership that was visionary and dedicated with “a balanced scorecard, corporate accountability, (creation of) dynamic capabilities, (and) effective management of intangible resources and assets.” (Zahra, 1999, p. 36). The importance of the situation was illustrated in the case of a successful and effective transformational Minnesota school superintendent who greatly improved her distressed district. She became less successful as a leader when she was appointed a state commissioner in a bureaucratic agency, larger and more complex than her district, that provided her with less freedom to take initiatives and display her transformational qualities (Roberts & Bradley, 1988).
Leaders Change Situations. In all this, one must keep in mind that leaders are not merely reactive to situations; often they can change the situation to suit their own proclivities (Yukl, 1971; Fiedler, Chemers, & Maher, 1976; Wofford, 1982). Graen and Uhl-Bien (1995) advised that leaders could improve the quality of their group’s performance by developing better relations with all of the members. In 1917, the German leaders sent the exiled Lenin from Zurich to Saint Petersburg, enabling him to initiate the Bolshevik Revolution and achieve a peace treaty with Germany. Many of the world’s most eminent leaders could not be deflected from their pursuits by environmental, organizational, or collegial considerations.3 Thus, Singh (1982) argued that Indian managers must avoid allowing the situation to dominate them to such an extent that normlessness results. Fiedler advocated training the leader to make the situation better fit the leader’s LPC orientation. What leaders do can predict long-term organizational alignment, adaptability, and excellence (O’Toole, 1995). Dan Wiens (Dyck, 1994), the Canadian farm movement ecodevelopment leader, envisaged changing the agrifood system to fit environmental and democratic values and principles. He set an example by building his leadership on participative involvement and empowering collaboration. The organizational climate and financial performance of 50 Dutch supermarkets were improved if their store managers were charismatic and considerate in their leadership (Koene, Vogelaar, & Soeters, 2002).
Increasing attention has been devoted to providing rationales for understanding the connections between personal and situational effects. Katz and Kahn’s (1966) introduction of systems theory to the study of leadership and social interaction is illustrative. Most efforts to develop theories, models, and prescriptions for directly fitting the leader’s behavior to the situational requirements appear somewhat like Ashby’s (1957, 1960) Law of Requisite Variety that the functions evolving within a brain or created within a computer must be differentiated to match the different elements in the outside environment with which they must deal. The variety of the leader’s behaviors must coincide with the situational demands that parallel them. Or the explanations take the form of tautologies. The appropriate leadership is that which serves to fix, or get five others to fix, whatever is malfunctioning or less than optimal in the system.
One also has to remain alert to the possibilities of coincidental correlations between leadership attributes or behavior and situations, since theories may inadvertently be built on them. One needs to see the link of direct or indirect causation of the situation on the leader or the leader on the situation. An organization’s size itself may correlate with a more directive leadership style but cannot account for it. Mediating organizational and psychological processes that are connected with both size and leadership are needed to confirm and understand the relationship (Indik, 1965b).
Kerr, Schriesheim, Murphy, and Stogdill (1974) reviewed how situational elements determined whether consideration or initiation of structure was more effective.4 Among the situational variables found to determine whether initiation of structure or consideration yielded satisfaction and productivity were the subordinates’ need for information, job level, expectations of the leaders’ behavior, and perceived organizational independence. Also important were how similar the leaders’ attitudes and behavior were to the managerial style of higher management and the leaders’ upward influence. In addition, the effects of the task, including whether there were pressures to produce and provisions for intrinsic satisfaction, were significant.
Yukl (1981) specified the situations in which 19 leadership behaviors would be most essential. For task-oriented behaviors, for instance, Yukl put forward that the leaders’ emphasis on performance is needed more when subordinates’ errors and deficiencies in the quality of products are costly and difficult to correct or would endanger the health and lives of people. Leaders can structure reward contingencies better when it is possible to measure the subordinates’ performance accurately. More role clarification is desirable when the organization has elaborate rules and regulations and subordinates are not familiar with them. Goal setting by leaders is more effective when the outcomes of performance are highly dependent on the subordinates’ efforts and are not strongly affected by fluctuating conditions that are beyond the control of subordinates. The dissemination of information by the leaders is most important when the work of subordinates is strongly affected by developments in other parts of the organization and subordinates are dependent on the leaders to keep them informed about the developments. The facilitation of work by leaders is required more when shortages of inputs or inadequate support services would result in the serious and immediate disruption of the work.
Yukl also prescribed a number of relations-oriented leadership behaviors for particular situations. The need for more consideration by the leader occurs, according to Yukl, when the leader works in close proximity to subordinates or must interact frequently with them owing to the nature of the task. Praise and recognition by the leader become more important when subordinates are not able to get much direct feedback about their performance from the work itself or from clients, customers, or coworkers. The facilitation of interaction by the leader is essential when the organizational unit is large and contains competing groups or factions.
Conger (1999) noted some of the variables of the external environment that are likely to affect the organization’s and leader’s behavior. The effect of crisis conditions on the emergence of charismatic leadership is well documented. Closer proximity to followers may make more relationship building possible. The external environment may provide a variety of opportunities for entrepreneural leadership to appear. Environmental uncertainties will bring out demands in leadership that restores order.
Systems theory postulates that what takes place outside a system is likely to affect what takes place inside it. External environmental forces interact with the organization and continuously modify what is going on inside it. Thus, if a business operates in a stable environment, it is likely to have more consistent leadership and stable organizational policies and departments that are similar in structure. If an environment is unstable, policies are less uniform and greater differences emerge among the various divisions of the firm (Lawrence & Lorsch, 1967b). Leadership is likely to be less consistent over time and place. Shamir and Howell (1999, p. 265) hypothesized that “charismatic leadership is more likely to emerge and be effective in dynamic organizational environments that require and enable the introduction of new strategies, markets, products and technologies.”
The failure of organizational structures to change in response to changing environmental processing requirements led J. A. Miller (1974), who studied leadership behavior in 10 organizations, to propose and find support for the argument that the optimal degree of initiation of structure by the leader depends on how much the processes demand such structure when the organization has not already provided it. Osborn, Hunt, and Bussom (1977), like Miller, proposed to extend Ashby’s (1957, 1960) Law of Requisite Variety to understand the relationship between environmental demands on the organization and the organization’s structure. The organization must possess as much required variety as the variety that can be expected from the environment. Internal variety of organizational structure should correspond to the environmental variety of demand on the organi zation. Organizations in environments with numerous disturbances should, therefore, contain an equally sophisticated capability to vary important internal characteristics. Similarly, leaders in environments that vary should show more varied behavior than leaders in stable environments. Osborn, Hunt, and Bussom (1977) tested whether the consistency of the matching of the leader’s behavior with environmental conditions was more valid than an alternative model indicating that the leader’s behavior offsets and compensates (as Miller argued) for the environmental demands. In 60 chapters of a business fraternity, within-chapter variations across selected environmental dimensions gave a measure of environmental variety. Five leadership dimensions from the LBDQ-XII5 for each leader of a fraternity chapter yielded a measure of leadership variety. The overall performance of the fraternity was best when environmental variety was low and was mismatched with high leadership variety. However, leadership variety that matched high environmental variety was associated with better performance by the fraternity, but the effects were much smaller.
An attribute of the outside environment that is likely to influence the behavior of leaders inside an organization is the stability of the market in which a firm or agency operates. If the firm operates in a stable marketplace, less total leadership is needed and more substitutes for leadership can be employed. Matters can be programmed; policies can be set; and leadership, when needed, can be directive.6 In a turbulent market, more leadership, particularly consultation, will be needed on a continuing basis.
Entrepreneureal leaders of new ventures need to adapt to the stability or turbulance of their environments. The success of 66 new ventures, according to Ensley, Hmielesky, and Pearce (2006), was greater if the leaders were transactional in stable environments and transformational in dynamic environments. Again, according to Wu, Levitas, and Priem (2005), the number of successful patents filed by 97 pharmaceutical firms from 1992 to 1995 was greater if their technological environment was dynamic rather than stable and their CEOs held shorter tenures of office. Burns and Stalker (1961) found that executives in a sales engineering company were required to deal repeatedly with the same customers, suppliers, and regulatory bodies. The demand for direct interaction with the environment was greater for the sales engineering executives than for those in a clothing company where interaction with outsiders was accomplished indirectly, mainly in written form. Executives had less autonomy in an environment when there was less differentiation of customers, greater feedback, and indirect communication with the environment. The executives in the clothing company spent less time in decision making and more time dealing with routine tasks. Their autonomy was more restricted, both horizontally and vertically, than that of the sales engineering executives (Burns & Stalker, 1961).
Firms that had to operate in turbulent fields were more likely to share the power of decision making inside their organization (Emery & Trist, 1965). In agreement, Lawrence and Lorsch (1967a) compared decision making in the stable container industry with decision making in the more turbulent plastics industry. Again, in a stable environment, the decision-making processes within the container firm were likely to be directive; in the more turbulent environment of the plastics firm, decision-making processes were more likely to be consultative.
Conceiving organizations as machines or as organisms goes back to the nineteenth century. Mechanistic organizations appear to work better in a stable environment; organic organizations, in a turbulent environment. Burns and Stalker (1961) interviewed key people in 20 organizations in a variety of industries. They classified the management methods as either mechanistic or organic. The mechanistic organization was characterized by rule-based, vertical communication patterns, with decision and influence centered at the top levels. Cooperation depended on understanding, conforming to, and agreeing with the rules. Organic forms featured lateral communication, adaptability based on learning, and less rigidly defined jobs. Cooperation depended on understanding, alignment, and acceptance of the organization’s goals. The mechanistic style was more appropriate for dealing with stable environments, whereas the organic style was more suited to turbulent environments. The effective firms in relatively stable environments were mechanistic in their concentration of decision making and influence at the top level of management. Lower-level managers in such stable environments and mechanistic organizations found satisfaction from being able to get a quick decision from those at higher levels. The organic organization was more satisfying as it provided more autonomy, more discretionary opportunities, and appropriate involvement in relevant decisions. The effective firms in a rapidly changing, complex environment were more organic. They involved their lower-level managers in joint departmental decisions. Managers who possessed the competence and knowledge to deal with the environment had more decision-making influence than did those who did not.
Dickson (1998) considered mechanistic–organic as a continuum and extracted six items from the Globe Organizational Policies and Practices questionnaire (House, Hanges, Dickson, et al., 1996–1998) and the responses of 9,527 persons from 225 organizations and 42 countries. He demonstrated that the continuum was reliable and generalizable across organizations and that agreement about their organization was higher among members of mechanistic than organic organizations. Howell (1997) suggested that exchange/transactional leadership was more likely to emerge in mechanistic organizations; charismatic/transformational leadership, in organic organizations. Pillai and Meindl (1998) found that for 596 personnel from 101 work units, compared to generation by crisis conditions, the emergence of charismatic leadership was favored by an organic unit organization and a collectivistic orientation. A study of 45 manager-subordinate dyads in two plants, one organic, the other mechanistic, showed that consultation was most practiced in the plant with an organic organization; a directive style of communication was the most common form of interaction in the plant that was mechanistic (Courtright, Fairhurst, & Rogers, 1989).
Strong versus Weak Organizational Cultures. Organizations with strong and weak cultures were differentiated by Deal and Kennedy (1982). The values of what is right, good, and important are more fixed and fully shared by members in a strong culture, and norms are more fully crystallized. According to Tosi (1991, 1992), mechanistic organizations, with their authority struc-tures and elaborated control systems, are strong in situational effects, for they allow less leeway for individual dif ferences and preferences. In comparison, structurally weaker organic organizations permit individual personalities, competencies, beliefs, and preferences to have more effect. Organic organizations are structurally weaker, as they impose fewer constraints on members and offer less specific mandatory direction on how to deal with problems. They encourage the individual expression of solutions by leaders and followers. O’Regan and Ghobadian (2003) surveyed a sample of 194 small and medium-sized British enterprises and showed that the firms in the upper 25%—in strength of their cultures of external and internal orientation, departmental cooperation, and empowerment—compared with the lowest 25%, were more likely to meet performance objectives, avoid problems, and be more innovative. The same was true for the effects of strong leadership styles.
Studies of legislative leadership by Peabody (1976) and Rosenthal (1974) suggested that a variety of environmental forces strongly affects the stability of political leadership. The same variables can be seen to operate even more intensively in the private sector, where market forces and technological changes often dramatically affect the stability and succession of leadership (Bryson & Kelley, 1978). Performance reviews, in the form of annual elections for the board of directors, periodic audits, and stockholders’ meetings by outsiders, can influence the actions of the leadership and the stability of the dominant coalition inside the organization (M. P. Allen, 1974). A change in the law, in resources, or in competing organizations also may force changes in leadership (Pfeffer, 1972b). Groups of clients, unions, professional associations, and regulatory agencies affect how and what will be discussed and decided, both in legislatures and in private organizations, especially with regard to visible and emotional questions. Feature stories, publicity, and exposures can be used to support or destroy the leadership in both locations (Ilchman & Uphoff, 1969).
Using factored questionnaires, Bass, Valenzi, and Farrow (1977) asked 76 managers to rate the extent to which economic, political, social, and legal forces outside their organization influenced them and their immediate subordinates. Each of the 277 subordinates described the leadership behavior of the managers. Production, accounting, and finance managers saw economic forces as most important; service, sales, marketing, and personnel managers saw economic forces as least important compared to political, social, or legal forces. But even after separating out the effects of the managers’ personality, background characteristics, and managerial function, Bass, Valenzi, and Farrow found that managers who perceived external economic forces as important to their supervisor-subordinate relations tended to be more directive and manipulative, according to their subordinates. On the other hand, managers who felt that external political, social, and legal forces were more important tended to be more consultative, according to their subordinates.
In a follow-up analysis, Farrow, Valenzi, and Bass (1980) examined 250 managers in profit-making organizations and 95 in nonprofit organizations. In the nonprofit firms, the leaders’ styles, as seen by the subordinates, were affected more by the managers’ perceptions of outside environmental influences. Their perceptions of strong economic influences were correlated −.30, −.25, and −.21 with consultation, participation, and delegation, respectively, in the nonprofit organizations. The parallel correlations in the profit-making organizations were −.05, −.11, and −.02. Egri and Herman (2000) interviewed and surveyed 73 leaders in ecological products and services in for-profit and nonprofit organizations. Transformational leadership was more likely to appear in nonprofit than for-profit organizations engaged in ecological activities. Compared to the for-profit environmental industry leaders, the nonprofit leaders also attached significantly more importance to the values of self-transcendence, benevolence, and universalism and less importance to power. Again, the case of the Safety-Kleen Corporation (Flannery & May, 1994) revealed how moral norms, values, environmental attitudes, constituent influence, and behavioral controls influence environmental leadership and strategy.
Community leaders differed in their thoughts about which influences affected the developmental needs of their communities, depending on their regional location. Although those in the Southwest believed that local businesses determined their communities’ needs, far fewer leaders from the Northeast did believed this. At the same time, leaders from the Northeast thought that nonlocal governments and nonlocal businesses exerted more influence on developmental needs (Olien, Tichenor, & Donohue, 1987). These regional findings, no doubt, have been affected by the expansion of business and industry from the Northeast and the Midwest to the South and West and overseas in the twenty-first century, and by the change in the U.S. business structure in the previous decades.
Economic Conditions. A commonly observed reaction of management to economic recession, loss of markets, and reduced sales and profits is to cut programs that contribute to the improvement of leadership and interpersonal relations within the organization. Training and development are seen as overhead that can be sacrificed to assist the firm’s economic balance. During these times, security needs rise, among both workers and managers, that affect their relationships and problems that must be addressed, such as layoffs, retraining, early retirement, and reductions in compensation and benefits. Franke and Kaul (1978) stirred up controversy over the Hawthorne studies (Roethlisberger, 1947). The heightened productivity of the Western Electric personnel at the Hawthorne Works had been attributed by Roethlisberger to the increased attention by supervisors to human relations and the concerns of the workers. Franke and Kaul, in contrast, accounted statistically for the results by an economic downturn in the late 1920s that resulted in an increase in closer supervision and workers’ fearing that they might lose their jobs.
In the 1980s and the 1990s, there was an escalation of mergers, acquisitions, and leveraged buyouts, aided by favorable investor attitudes and increased tax advantages for company debt over equity,7 which some economists applauded for shaking up complacent managements. But others saw mainly predatory business practices that benefited entrepreneurs and management at the expense of other constituents of the organization. Commitment, loyalty, and involvement suffered. Long-term investment for research and development had to be sacrificed in favor of marshaling resources to maintain short-term strength and elevated stock prices. Confusion and anxiety permeated the members of organizations, threatened by the loss of their jobs, policy changes, plant closings, and general uncertainty.
The Sociopolitical Ethos. In an interview survey by Bruce (1986), CEOs noted that the political environment was important to what they could accomplish. Mergers in the preceding 25 years could not have been possible in the antitrust environment of the 1960s. Maccoby (1983) pointed out the need to consider the continual change in societal attitudes toward the ethics of work. He identified four ethics in earlier U.S. history, each of which was replaced when its ideals could no longer meet society’s social and economic needs. The four dominant ethics were: (1) the Protestant or Puritan ethic, (2) the craft ethic, (3) the entrepreneurial ethic, and (4) the career ethic. Each ethic generated different predominant styles of leadership, respectively: work orientation, expert orientation, risky competitiveness, and careerism. Likewise, Bass (1960) saw leadership styles affected by the dominance of task orientation in the United States before 1950 giving way to concern in the 1950s for getting along with others, followed by an increasing self-orientation, which began in the 1960s. The same cycle repeated itself between 1975 and 2000. Each, in turn, had different effects on the practice of leadership in U.S. organizations. Production and the heroes of production are paramount in a task-oriented society. Marketing, conformity, and interpersonal relationships became the predominant issues of the 1950s, followed by the predicted self-oriented focus of the “me-too” outlook from the late 1960s onward, in which issues ranging from individual alienation to careerism surfaced. At the same time, concern for human relations in management and leadership grew. By the turn of the century, we saw a generation of working adults concentrating on family relations and security.
A longer psychohistorical focus of societal effects on leadership was proposed by Demause (1982). Demause noted that the common practice of infanticide and infant abandonment in classical and medieval times promoted the survivors’ view that their parents and the leaders who displaced the parents were their saviors. The ambivalence toward children that followed in the next centuries fostered the model of parents and leaders as benevolent autocrats. Between 1800 and 1950, the prevailing practice of treating children as subjects for training and socialization created the model of the leader as the source of contingent reinforcement. Finally, the post-1950 Dr. Spock generation created a model of parents and leaders as helpers.
Regulatory Agencies. Ungson, James, and Spicer (1985) surveyed 89 firms in two industries—wood products and high technology—about the effects of regulatory agencies on their planning and goal setting and the need to adjust their organizations to the regulatory agencies’ actions. In both industries, managers saw governmental regulatory agencies as more unpredictable and uncontrollable than they did their suppliers of raw material, competitors, customers, and labor. Generally, in the wood products industry, adjustments in personnel were most likely to occur because of governmental regulatory agencies and least likely to occur because of competitors or investors. But in the high-technology industry, none of the outside factors was as important in affecting the adjustments of personnel.
Legal actions often determine an organization’s future. In 1984, after 10 years of work by the antitrust division of the Justice Department, AT&T was ordered by a federal court to break up into competitive sectors. It met the court order by divesting “Ma Bell” from the seven “Baby Bells,” the regional local exchanges, leaving long-distance and global activities to AT&T. The new CEOs emphasized competition between the units and their personnel, shutting down the former free-flowing communications among units. They placed a premium on competing for customers rather than continuing concern for service and cooperation. To improve finances, they acquired many new firms to enter the highly competitive computer business and similarly entered the highly competitive cable business. By 2005, AT&T had lost most of its experienced managers. The regulated monopoly shrank from a million personnel in 1984 to a prospective subsidiary of one of its former divisions. The former “widows and orphans” secure AT&T shares were hitting rock bottom, and the remnants of the firm expected to be acquired by one of its own Baby Bells.
Ownership. Agency theory (Meckling & Jensen, 1976) argues that managers are agents of the owners and shareholders and therefore have divergent economic interests. In 2005, CEOs were taking in compensation equal to as much as a fifth of the annual corporate profits after expenses, allowing the owners and shareholders just four fifths. By 2005, the average CEO in the United States was earning more than 450 times more than the average employee in the firm. These extreme results could be dampened only by concerns for social justice, continuing transparency, and stronger regulation by the SEC, and by boards of directors and their audit committees. The treatment of executives by a higher authority in 71 large manufacturing firms depended, according to Gomez-Mejia, Tosi, and Hinkin (1987), on whether the firm had dominant outside shareholders. Conyon and Peck (1998) reached the same conclusion for Britain. Outside shareholders are owners who view the firms primarily as financial investments. They use their power to compensate hired CEOs according to the economic performance of the firms. Firms without such dominant shareholders are controlled more by the management itself. Here, the compensation awarded to CEOs depends more on the size of the firm’s operations than on its performance. In the scandals of 2002, the compensation of some senior executives was increased substantially even as the firms were moving toward declarations of bankruptcy! There was some semblance of rationality found by Finkelstein and Boyd (1998), who reported that the performance of firms was higher when the CEO’s pay was congruent with the CEO’s latitude of action. Balkin, Markman, and Gomez-Mejia (2000) found, in 90 high-tech firms, that CEOs’ short-term compensation was related to innovation as measured by the firm’s number of patents and spending for R & D. No such relationship of compensation with innovation was found for long-term CEO compensation, nor was there any linkage, long or short term, of CEOs’ compensation with innovation in 74 low-tech firms. Nonetheless, as is usually found, compensation depended on the size of the organization and its operations.
Socioeconomic Status of the Community. Chapter 10 detailed the general contribution of accorded status to leadership. Osborn and Hunt (1979) created an index of the socioeconomic level of a community and showed it correlated with the leadership among college students. A community’s status was based on its median income per family, mean educational level of its residents, the tendency of residents to vote, and other socioeconomic conditions. For the 60 chapters of a national business fraternity mentioned earlier, the investigators obtained a correlation of .40 between the socioeconomic community status of the college chapter leaders and their initiation of structure, and .68 with their consideration, as measured by the LBDQ. Again, secondary school students were affected by the socioeconomic status of their communities. Philbin (1997) reported that secondary school students’ learning increased if the principal was transformational, but only if the students came from the highest socioeconomic levels. However, the transformational leadership of principals was satisfying to teachers in schools of both high and low socioeconomic status.
Religious Affiliation. L. B. Ward (1965) completed a large-scale survey of top managements in the United States that suggested that the religious affiliation of the top managers in a firm affected the personnel policies promoted within the firm. Personnel practices were more likely to be liberal when the top management was not restricted to members of one religious group. Policies were more likely to be liberal if the top management was exclusively Jewish than if it was exclusively Protestant. The most conservative managements were exclusively Catholic.
Other environmental influences on leaders and members of any organization are their reference groups—those people with whom they compare themselves. Hyman (1942) asked subjects to estimate their status along several dimensions: social, economic, intellectual, physical, and the like. He found that individuals estimated some aspects of their status in relation to family members, others in relation to friends or peers at work, and still others in relation to people in general. Small reference groups were usually more important than were people in general in determining the subjects’ satisfaction with their status. Satisfaction with their income was highly dependent on the reference group with which the individuals compared themselves.
Local versus Cosmopolitan. Merton (1949/1957) showed that the identification with different reference groups was associated with variations in patterns of leadership behavior. In a community study, 86 informants identified 379 individuals as persons of some influence. The 30 most influential members of the community were interviewed. Of these 30, 16 were classified as locals and 14 as cosmopolitans in their reference group identifications. The two groups differed in attitudes and behavior that were of consequence to their serving as leaders or followers. Locals were reared locally. They were reluctant to leave the community. They focused on their community interests and fellow members of local fraternal and business groups. They wanted to know many people. Their influence rested on a complex network of personal relationships. They wanted to understand their community. Cosmopolitans were mostly newcomers, willing to leave the community, interested in the world at large, and members of national professional societies. They were selective in their choice of organizations, and their influence derived from their prestige and professional position. They wanted to understand their job.
Multiple Reference Groups. If asked, “What are you?” people usually see themselves as members of several reference groups. In Texas, a Texan may say first that he is an American. Outside Texas, the Texan may first say Texan, then American, businessman, father, and Episcopalian. Each is a reference group, and the effects are complex. Thus, when Festinger (1949) brought Catholic and Jewish girls together in a small club and asked them to elect officers before the girls’ religion was identified, both groups voted as much for nonmembers as for members of their own religion. In a control situation, in which religious identities were publicly disclosed, 64 percent of the Catholics voted for Catholic girls, but the Jewish girls continued to vote equally as often for members of either religion. However, in a large group in which the voters were only privately identified by religious affiliation, Jewish girls showed the same tendency to vote for members of their own religion as did Catholic girls. The same effects were observed when confederates were identified alternately as Catholics and Jews for the benefit of different groups of voters to rule out any influences of the individual nominee on the outcomes.
To understand and predict a person’s interpersonal behavior in a designated social situation, one has to determine his or her various reference groups. For example, if two people collide in a crowded street, they may ignore the collision, they may beg each other’s pardon, or one may shove the other. What each person does will depend, to some extent, on whether the interacting persons are male or female; white or black; and upper, middle, or lower class; and whether the situation occurs in North America or Zambia.8
Leaders usually belong to more groups than do followers. They integrate the various subgroups of a larger group and mediate between the membership groups and the wider community. J. B. Marks (1959) found that leaders maintained significantly more extraclique friendship links than did followers and tended to mediate between their groups and the surrounding social environment. Schiffman and Gaccione (1974) found that the opinion leaders in the nursing home industry were administrators who interacted more often with administrators from other nursing homes. However, the leaders who identified with the norms of the in-house group were more strongly supported by members than were the leaders who identified with the norms of the external groups.
The effects of leaders’ outside connections are well known. Interlocking company directorates can take considerable advantage of such linkages for the good of their organizations, even though doing so has the potential for corruption. When the boards of social service organizations were composed of high-status (business leaders) rather than middle-status (middle management and professional) members, the organizations were found to be more effective, better financed, and able to provide a higher quality of service (Zald, 1967). Pettigrew (1973) observed that developing and maintaining a network of contacts outside as well as inside the organization is the means by which many leaders help their subordinates reach their desired objectives. Xoulack (1977) involved 44 undergraduates in simulated bargaining situations. Leaders who did all the bargaining were treated by out-group members either with friendliness or with hostility. The leaders who were treated in a friendly manner by the out-group members were rated as more effective by the in-group members.
Xenophon’s Anabasis told how 13,000 Greek mercenaries were stranded in Mesopotamia in 401 b.c.e., when the Persian prince who had recruited them was killed and their Greek military leaders were treacherously slain. Nevertheless, their military organization and training and their common Greek culture made it possible for them to march 1,000 miles through hostile territory to safety despite the enemy’s efforts to stop them (Aupperlie, 1996).
Influenced by David Hume and other eighteenth-century fellow Scots philosophers (Herman, 2001), Adam Smith (1776) in his famous Wealth of Nations, observed that civilizing social improvement and merchants, bankers, engineers, and industrial and business organizations developed out of subsistence farmers, fisherman, and miners as a result of the division of labor. Specialization arose from enlightened self-interest and the need for cooperation. Order and good government were required, along with individual liberty and security.
Leadership in an organization is determined by the organization’s legitimating principles and cultural norms and by the social structure within which it occurs. Pawar and Eastman (1997) posited four organizational considerations that influence its leadership: (1) the organization’s structures, (2) the organization’s governance, (3) an emphasis on adaptation or efficiency, and (4) dominance of the organization’s technical core or its boundary-spanning units. They suggested that charismatic/transformational leadership was more likely to succeed in an ad hoc structure of temporary task groups or if the structure was simple and governed by a single entrepreneurial leader rather than by a complex bureaucracy. In the adaptive organization, leadership had to overcome resistance to change and to align the organization’s members to new goals and values. If the emphasis was on efficiency, goal stability would be sought and more transactional leadership would be required. Transactional leadership was more prevalent when the technical core emphasized stability, standardization, and routinization. More transformational leadership is likely if the focus is on boundary spanning and keeping ahead of the external environment.
As the organization matures, so will the strategies of its leadership change (Biggart & Hamilton, 1987). Pellegrin (1953), Weinberg (1965), and Philipsen and Cassee (1965) observed that institutional requirements determine the characteristics of members who are accepted as leaders. It is apparent that the kind of leader who emerges in an organization and the individual who is successful as a leader and is evaluated as effective as a leader depends on the philosophy of the larger organization in which the leader’s group is embedded. The philosophy influences the organization’s directors. In turn, its effects move down to successively lower levels of management and contribute to the constraints that are imposed, the structures that are created, and the ways in which people are mobilized, resources are allocated, and performance is evaluated. These, in turn, affect the patterns of leader-member relations in the organization.
The organization’s philosophy includes its assumptions, values, foci of attention, priorities, goals, and the techniques it promulgates to implement its efforts. Clearly, its philosophy and culture overlap and reinforce each other in determining what is the right thing to do and what is important and good. McGill and Slocum (1993) labeled the knowing organization as believing in the one best way to organize, to manage, and to get the job done; the understanding organization as making only those changes compatible with the organization’s core values and culture; the thinking organization as identifying, analyzing, and fixing problems as they occur; and the learning organization as creating and fostering experimentation, open communication, constructive dialogue, and processing of experience.
Nonprofit Organizations. Carl and Stokes (1991) listed seven elements of value to the nonprofit organization: (1) workshops and formal educational experiences; (2) two-way feedback; (3) teamwork; (4) psychological recognition and rewards in the absence of unaffordable high salaries and bonuses; (5) high standards; (6) a well-functioning board of directors; and (7) high levels of collaboration with the private sector. Without the measure of profitability, nonprofits need to adopt indicators of success in their mission, service, and efficiency. Their accomplishments may be indicated by prevention and control of negative incidents, compliance with standards, timely delivery of services, fairness to access of services, public satisfaction with agency and service, and management of available resources (Gustafson, 1999).
For-Profit Organizations. Some firms concentrate their attention on their financial or physical resources in the search for long-run success. They may adopt Williamson’s (1975) view of organizations as internal markets in which members are opportunistic and self-interested rather than trusting. Conflicts are resolved by fiat or costly bargaining. Some firms may concentrate on their intellectual capital and its exploitation at strategic and operational levels. They take advantage of the extent that knowledge grows exponentially. They can leverage their intellectual capital with a few top professionals who can multiply applications and development of knowledge at lower levels. They can foster intellectual challenges (Quinn, Anderson, & Finkelstein, 1996). Still other firms try managing meaning for their members to arouse their existential needs for satisfying self, family, and life. Attention is on aligning individual members’ and the organization’s goals (Sievers, 1986). The corporation of the twenty-first century may still be seen as legitimate, although scandals are eroding its social legitimacy. Many still vest it with more authority and influence than political party, church, or community. Corporations create, control, and distribute much of society’s wealth (Ghoshal & Bartlett, 1997).
Scientific Management and Its Alternative. Frederick W. Taylor’s (1911) Scientific Management described how production was to be accomplished in the organization. Work on the shop floor was to be subdivided into the smallest and simplest task units possible. Workers were to follow instructions as they were told by their supervisors, who similarly were given little discretion and were expected to be motivated by higher wages. Favored by Taylor were job specialization, short training requirements, and little autonomy. But the lesser-known Ernst Abbe (1900), at the Zeiss optical instruments company in Germany, formulated principles that involved employees in how work was to be done. Knowledge, legitimacy, and intrinsic motivation were emphasized, which better suited the firm’s objectives of making the highest-quality instruments and developing new applications of science. To enable long-term growth of the firm, employees’ skills were to be enhanced. Management decision making was to be rationalized. Progressive labor relations and enlightened social policies were stressed (Buenstorf & Mur-mann, 2003).
Social Capital. Social capital means different things to different writers (Santos, 2003). It may be the organization’s resources, based on any of the following: reputation, entrepreneurship, exchange opportunities, networking, strategic alliances, public-private connections, performance-based trust, career opportunities, compensation plans, and favorable attitudes of its suppliers, clients, consumers, shareholders, managers, em-ployees, and their families. It may refer to the quality of its human resources. The democratic practices of McGregor’s (1960) Theory Y have increased, but some firms are still ruled with an iron hand. Theory X is still in evidence.
Then there are Theory Z firms. Ouchi (1981) described Theory Z as the basis for Japanese management and recognized a number of U.S. firms, such as Procter & Gamble, IBM, and Hewlett-Packard, for following Theory Z in their own systems. These firms at the time were characterized by long-term employment, intensive socialization, and clear statements of objectives and values emphasizing cooperation and teamwork. Management policies to implement these approaches included slow promotion from within, the rotation of jobs, the creation of generalists rather than specialists, complex appraisal systems, emphasis on work groups rather than individuals, open communication, consultative decision making, and a relations-oriented concern for employees. In comparison to top-down, Theory X (authoritarian) organizations, Theory Z organizations are more decentralized and have flatter structures—fewer levels of management. When Roberts (1986) compared the reports of 97 managers in a Type Z business firm with those of 147 managers in a Type X organization, she found, not unexpectedly, that subordinates exercised more upward influence in dealing with their bosses in the Type Z than in the Type X organization.
According to Robbins (1983), although Theory Z gives the impression of greater equalization of power and control and “bottom-up” management, in fact, it actually has mixed effects on top management’s power and control and, for the most part, increases rather than decreases its top managers’ power and control. The decentralization and team decision making of Theory Z increase the equalization of power, but employee-organization lifelong commitments may increase employees’ tolerance for what ordinarily might be subjects of complaints. The emphasis on good human relations may reduce constructive confrontation; generalist career development may reduce the ability to move to another company; and the flatter Theory Z organizations eliminate middle managers, who, in taller structured bureaucracies, for example, filter and control what information gets to top management. Interest in Theory Z and its practice declined with the 15-year recession of the Japanese domestic industries, which in 2006 appeared to be close to ending by 2007. Its export industries did not experience the same decline.
Differing Views of Organization. House (1991) presented a theory to explain how the distribution of power in a complex organization depends on the organization’s environment, form, and the personal characteristics of its members. Organizations may be viewed as rational-structural systems. Metaphorically, in such a view, they are machines composed of interdependent parts, and leadership is a matter of specifying who does what for whom and why. A second view is that organizations are extended families with networks of relations and obligations. In this view, leadership is more concerned with relations, with the socialization and development of subordinates. A third view is that organizations are a political system, a jungle of coalitions and conflicts of interests. According to this view, leadership is based on power and the allocation of scarce resources. A fourth view of organizations is symbolic. It sees organizations as theaters, with members continually trying to play roles that communicate meaning to others about what is happening. In such a view, the leaders are artists and actors (Bolman, 1986).
Variations in 1,200 managers’ and subordinates’ perceptions of their organizations had systematic effects on the organizations’ leadership styles. A factor analysis by Farrow (undated) of managers’ and subordinates’ descriptions of their organizations using the Bass-Valenzi Management Styles Survey found that the views could be factored as follows: (1) well managed (harmonious, clearly organized, orderly, clear task objectives, warm, and trusting), (2) amount of management (management activity, importance of external influences, commitment of members, interdependence of members and units, complexity of operations), (3) mechanistic (many organizational constraints, strong organizational structure, much routine work), (4) bottom-up (subordinate power, discretionary opportunities, independence of members, absence of routine work); (5) top-down (superior’s power, superior’s information). The frequency with which different styles of leadership appeared was related to the factored descriptions. For example, more consultative leadership was seen in well-managed firms, more directive leadership in top-down firms, and more participative leadership in bottom-up firms.
Effects of Stated Policies. The effects of stated organizational policies on a supervisor’s use of reward and punishment were examined experimentally by Greenberg (1978) and Leventhal and Whiteside (1973), who found that experimental subjects rewarded low performers more when they were instructed to encourage high future performance than when they were instructed to reward on the basis of past performance.9 Leventhal, Michaels, and Sanford (1972) found that experimental subjects who were given the policy of minimizing conflict allocated more rewards to low performers than did those subjects who were advised to ignore conflict. Landau and Leventhal (1976) reported that subjects who were required to retain only the best performers, compared to those who had to try to retain all workers, gave fewer rewards to low performers.
Moderation of Organizational Policies. Complicating matters was Liden and Graen’s (1980) finding that the relationship between organizational policies and supervisors’ behavior may be moderated by the severity of the policy and the supervisor’s attributions of the causes of the subordinate’s behavior. An experiment was set up so that subjects had to deal with a “subordinate” who had missed a production deadline. The failure to make the deadline was due to the subordinate in one experimental treatment and was outside the subordinate’s control in the other treatment. Company policy was mild in one case and severe in the other. The mild policy required the supervisor to issue a verbal warning that the subordinate’s pay would be docked if the deadline was missed again. The severe policy was to dock the subordinate for one day’s pay. The results demonstrated that the subjects who acted as supervisors were more likely to follow the policy when the cause of missing the deadline was attributed to the subordinate than when it was attributed to a cause outside the subordinate’s control and when the stated company policy was mild rather than severe.
In a field study, Hammer and Turk (1985) showed that when the management philosophy resulted in intentional pressure on 160 first-line supervisors by higher-ups to supervise strictly, there was a significant unique, negative correlation with the supervisors’ attention to the maintenance of the work group. The supervisors’ perceptions of their authority to fire subordinates were also significantly affected.
Organizations’ Phases and Life Cycles. Baliga and Hunt (1988) reviewed the literature on organizations’ life cycles. Like organic organisms, they transit from one stage to another—from gestation to birth to growth to maturity and finally to revitalization or death. Each stage creates its own demands for constraints on, and choices in, the leaders’ and managers’ roles (Stewart, 1982). For instance, in the birthing phase, the demand is to establish the organization. Choices include selecting the needed resources, and constraints arise in obtaining them. The most effective leaders and managers fulfill demands with the least amount of resources and constraints. They create future favorable demands and the most future organizational slack. Decisions are cost-effective. A viable strategy is developed. Stakeholder confidence is maintained. Key personnel are recruited and committed to the organizational vision and objectives. Lower-level managers socialize their subordinates to the organization’s goals and objectives and design information, control, and appraisal systems. They identify needed technology. Shamir and Howell (1999) suggested that charismatic leadership is most likely to emerge in the early stages in the organization’s life cycle of birth and growth and again in the late stage of renewal.
Organizational Objectives and Functions. The values, beliefs, and rationales that make up an organization’s philosophy affect and are affected by the organization’s mission—its purposes and objectives and the functions it performs to accomplish its mission. In turn, the purposes and functions of an organization affect and are affected by its leadership. Systematic differences have been seen among departments of larger organizations, such as those concerned with manufacturing, personnel, finance, marketing, and R & D. Much has also been written about the different types of leadership that are required for different types of organizations and institutions to meet their systematically different purposes, functions, and membership. For instance, Shamir and Howell (1999) inferred that charismatic leadership is most likely to emerge and be effective when an organization’s members face challenging and complex tasks. Such tasks require initiative, responsibility, creativity, and intense effort if the organization’s goals are ambiguous and extrinsic rewards cannot be linked to performance. A number of person-situation examples have been observed in universities, schools, libraries, cooperatives, unions, and the military. Attention needs to be paid to the local organizational scene and what it requires for leadership.
Goals Differ by Functions. Goals depend on a manager’s functions. C. G. Browne (1950a, 1950b, 1950c) and Dearborn and Simon (1958) found that top-ranking executives of a business firm tended to perceive organizational goals in terms of the functions of their own departments. Manufacturing managers believed that the quality of a product and keeping the costs of production low were goals that were important to the firm; sales and marketing managers saw effective advertising, customer service, and keeping the price of the product low as more important goals.
In a survey of British managers, Heller (1969a) found that those in personnel and general management functions typically used less directive procedures than did their colleagues in finance and production. Managers who led groups in purchasing, stores, and sales tended to be in between. This finding was consistent with earlier work by Fleishman, Harris, and Burtt (1955). They noted that supervisors in manufacturing departments or other departments that worked under time constraints were likely to receive higher merit ratings if they tended to initiate structure more often, while the reverse was true for supervisors in service departments. In addition, in non-manufacturing service departments with fewer time constraints, considerate supervisors were seen as more proficient. More supervisory initiation contributed to greater absenteeism and grievances mainly in manufacturing departments and to turnover in service departments.
Forbes (1985) divided a sample of 246 British and American managers according to their functional areas. He ranked the functional areas according to the presumed degree of uncertainty in the work as follows: personnel and training, R & D, sales and marketing, production, and finance and accounting. The more uncertainty in the function, the more managers reported concern for rules, use of authority, search for learning opportunities, and breadth of focus. An international sample of managers’ interpersonal orientation was recorded in a data bank of results of simulated training exercises (Bass, Burger, et al., 1979). It involved human relations concerns, the ability to listen, trust in others, willingness to discuss feelings, tolerance of conflict, and acceptance of affection and feedback. Interpersonal orientation was higher for 123 managers in sales, marketing, personnel, and training—functional areas with more “people content” in the work to be done. It was lower for the 123 managers in the functional areas of finance, accounting, production, and R & D, where jobs were lower in people content.
Manufacturing versus Service. Manufacturing usually demands more routinization and coordination than do service functions. In a study of 787 managers, Child and Ellis (1973) found that managers in manufacturing organizations saw their roles as more formal, better defined, and more routine than did managers in service organizations. Consistent with this, Solomon (1986) found that Israeli firms that engaged in production, public or private, were more oriented toward performance-based rewards and to contingent rewarding than were public or private firms engaged in services.
Utilitarian versus Voluntary Organizations. Etzioni (1961) suggested that different dynamics of leadership would be at play in utilitarian organizations that produce goods or services than in normative organizations such as voluntary professional societies. Activity may be personally costly, and the rewards are different for office holding in voluntary organizations. Relations are likely to be more personal and informal in voluntary organizations (Walker, 1982). But the expected greater power differentials of the leaders and the led in utilitarian as compared to voluntary organizations did not surface in an interview and questionnaire survey by Pearce (1983). Pearce (1982) compared four volunteer organizations (newspaper, poverty relief, family planning, and fire department) with four counterpart organizations staffed by regular employees. Interviews with random samples in each organization concluded that the workers in the volunteer organizations were much more variable in their performance than were the employees of the utilitarian organizations. In the volunteer organizations, workers were much more likely to ignore their leaders and to work when they wanted and in the way they wanted. Paid employees of utilitarian organizations were more likely to work within the constraints of organizational policies and leaders’ directives.
Leaders of voluntary organizations differed systematically from those in utilitarian organizations. In voluntary organizations, authority was invested in the membership as a whole. Their leaders were the representatives of the membership who could assume some of its authority. It was a bottom-up process. Volunteer followers reported having significantly more personal influence than did utilitarian employee followers. In the utilitarian organizations, employers had the authority to direct top-down to the leaders in the organization. Leaders in the voluntary organizations depended much more on their subordinates than did the leaders in the utilitarian organizations.
Leaders in voluntary organizations are likely to be reluctant to be too directive or controlling for fear of losing volunteers (LaCour, 1977). This reluctance results in their tendency to be relations-oriented (Rawls, Ulrich, & Nelson, 1973). But Kellogg and White (1987) suggested that matters are more complex. Volunteers exchange their time and service for social and psychic rewards such as recognition, worthwhile work, sense of belonging, socializing, and personal growth. The directiveness of volunteer leaders to facilitate the achievement of goals and the satisfaction of the volunteers’ needs may be quite appropriate. Many volunteers are intrinsically motivated by their organizations’ accomplishment of worthwhile purposes. In a survey study of 127 volunteers in 10 voluntary organizations, Kellogg and White (1987) found that, as expected, the leaders’ relations orientation, in the form of support, contributed to the volunteers’ satisfaction. But at the same time, directive role clarification by the leaders enhanced the volunteers’ satisfaction with their work, more so if they originally were lower in intrinsic motivation. Presumably, such leaders gave more meaning and purpose to the work for those who were not particularly motivated by it initially. But specifying the work to be done did combine with high intrinsic motivation to promote the volunteers’ satisfaction.
Governments, universities, schools, and libraries provide evidence of the extent to which organizational policies, purposes, and functions systematically relate to the leadership required.
Governments and Government Agencies. As with most long-standing institutions, governments have a history and sphere of operation of their own, apart from the constituencies they represent. Government institutions maintain ideals, values, and expert capacities across time. Although their constituencies can influence what the government does, the government may also affect the politics of its constituents and how they are represented (Hargrove, 1988).
Even more than in utilitarian organizations, leaders of government institutions, as well as their agencies and departments, are likely to be much more than rational actors pursuing calculated self-interest, knowing their preferences, and how to achieve them. Rather, they are strongly influenced by institutional norms, symbols, and rules that have developed historically. Activities may be carried out as a duty or obligation as well as for self-interest. Helping to maintain the institution may be seen as more important than helping to implement a particular policy. Leaders may have solutions that are looking for problems just as much as problems that are searching for solutions (March & Olsen, 1984). Civil servants, with expert and legitimate power, working within their own professional and institutional norms, may shape policies that depart considerably from a simple balancing of the interests of a diverse constituency (Heclo, 1974).
The leader, manager, or administrator in a government agency begins with a different overall mission than his or her counterpart in a private for-profit firm. The public agency survives as a function of its services in serving the public, legislatures, elected officials, and political power blocs. The private firm survives (if it is not subsidized by public money) by producing wanted goals, services, and profits that satisfy its owners, managers, employees, and community.
The public sector firm or agency differs from the private firm in its lack of dependence on its market, immunity from bankruptcy but not from deficit budgets, different legal and formal constraints, greater exposure to political influences, stronger relations with political authorities, greater exposure to public scrutiny, and greater accountability (Lachman, 1985). Also, executives of public organizations operate with more formalization and less autonomy in hiring, firing, and rewarding than do executives in the private sector (Rainey, 1983). But in an interview of 141 Israeli chief executive officers (40 public, 91 private), all engaged in production, the expected differences about political and market influences did not appear. Likewise, according to Kaminitz (1977) and Palgi (1984), differences in workers’ participation in public versus private industries in Israel also failed to appear. As expected, however, satisfaction was lower for public sector than private sector leaders. An unexpected finding was that the CEOs of public firms had longer time spans of discretion. According to still another comparison of Israeli public and private businesses and industries, managers from private industries were more likely to consult coworkers when they needed help on their own jobs than were managers in government-owned firms (Erez & Rim, 1982). Solomon’s (1986) survey of 240 top Israeli executives, half from the public and half from the private sector, found that the differences in perceptions and satisfaction were in line with expectations. There was much greater emphasis on contingent rewards in the private sector. Also, in the private sector, executives were more likely to promote efficient work methods, task clarification, and task autonomy.
Guyot (1962) compared 100 business managers with 147 public administrators. Contrary to expectations, the public administrators were higher in need for achievement and lower in need for affiliation than the business managers. They were equal in need for power. U.S. managers, like Israeli managers, have generally been more satisfied in the private sector. For example, managers in business organizations were seen to be better satisfied than those in military or governmental organizations (Porter & Mitchell, 1967).10 Rainey (1979) found that, compared to business managers, governmental managers: (1) express weaker expectations of extrinsic reward for performance; (2) are lower on measures of satisfaction; (3) perceive rules about personnel and civil service regulations as constraints on incentives; (4) show no difference in role perceptions and motivation.
Farrow, Valenzi, and Bass (1980) compared the perceptions of managers in 250 profit-making and 95 nonprofit U.S. firms and agencies about their environment, organization, task, work group, and leadership styles. As noted earlier, those in the private sector reported significantly more economic and less political social influence on leader-subordinate relations than those in the public sector, but the same amount of legal influence. The felt constraints, and amount of order and structure were significantly higher in the public sector. The managers in the private sector reported more discretionary opportunities, more complex tasks, and more managerial activities. The managers in the public sector reported more routine work. The power of subordinates was seen to be higher in the public sector. Private sector managers, in comparison to public sector managers, saw themselves as more active as leaders. They perceived themselves to be more directive, negotiative, consultative, and delegative. These results differed from those of an Israeli survey by Chitayat and Venezia (1984), who reported that senior executives in business organizations displayed less direction and more participation than their counterparts in the public sector. As in all earlier studies, the U.S. managers were more satisfied with their own jobs and with their supervisors.
The Israeli kibbutz organization is a mix of service and production-oriented purposes and of utilitarian and normative character. Kibbutzim have strong social and political components. In a simulation study of the work performance of 135 first-level Israeli supervisors from the public and private sectors and from kibbutzim, the kibbutzim leaders, compared to those in the private sector, were most effective when they used direct group participation. Private sector leaders were most effective when they assigned goals; public sector leaders did best with participation from representatives (Erez, 1986).
Educational Institutions: American Universities. Universities contrast greatly with mainline utilitarian organizations and have been described as organized anarchies. According to Cohen and March (1974), who interviewed 42 university presidents, universities are likely to have problematic goals, unclear technologies, and fluid participation in decision making. Inertia is high. Most issues are of little consequence to the members as a whole. Decisions depend on who happens to be involved at the time they have to be made. There is a weak base of information available. Effective decision making in universities requires overcoming inertia by: (1) managing unobtrusively, (2) providing arenas for discussing a wide variety of problems, (3) facilitating the participation of opposing points of view, (4) persisting in attempts to accomplish objectives.
It makes a considerable difference to the leadership of a U.S. university if it is a rich private one or a less well-endowed public university. Roberts (1986) reported that the charismatic, inspirational style of leadership was more likely to be seen in 45 administrators in a rich private university than in 61 administrators in a counterpart public university that operated with fewer resources and had to be mainly transactional rather than transformational in leadership.
The leadership styles of administrators in university settings appear to differ from those of managers in business organizations. Roberts (1986) also compared 106 administrators from two universities with 244 managers from two businesses. She found that the administrators in the universities, in contrast to the business managers, reported using much more competitive impression management to create favorable impressions on others. This was done by working effectively behind the scenes by taking action without the relevant others’ awareness.
Educational Institutions: European Universities. Drenth (1986) noted that European colleges and universities can be structured to provide more organization and less anarchy. The different structures impose different demands on the leadership. Before 1968, the European university was a collegial organization that tended to be run by a fraternity of scholars organized into autonomous departments. Decentralization, informality, and a low level of programming and standardization were intended to provide self-fulfillment and the achievement of personal objectives, particularly the objectives of the departmental chairpersons. The rector fulfilled primarily a ceremonial role, representing the university, chairing traditional sessions, and presiding at other ritual formalities. The rare central decision making was generally based on consensus. Trust, seniority, acceptability, and respect were more effective than managerial direction and task-oriented leadership.
After the student revolution of 1968, the European university emerged as a political organization in which the power of the individual autonomous chair holder was replaced by that of departmental boards with substantial representation by all layers of participants. The forming of coalitions and alliances and use of bargaining, delaying tactics, resistance, and procedural manipulation became normal parts of organizational decision making. Leadership required participation, negotiating, and conflict management, along with inventiveness and initiative.
Some European universities operate as traditional bureaucracies with standardized and formalized work processes, rules, and prescriptions. The influence of the technostructure is strong, with planning and regulation, forms and records, registration and control. The role of the leader involves timing the bureaucratic machinery and using the control systems available from the standardization of processes, output, and skills. Emphasis is placed on regulations and the routine handling of problems.
Almost opposite in organization are those universities, often newly created, whose structure remains simple. These universities emphasize the centralization of decision making and pay relatively little attention to the formalization and standardization of procedures. There is a sense of mission, an identification with common objectives, dependence on one person, and instability. The rector is often a dynamic, powerful, task-oriented individual with charismatic features.
Educational Institutions: Public Schools. Many studies of school principals and superintendents have been cited in the context of other leadership issues. This section summarizes what is known about the particular elements in the school principal’s personality and situation that are of consequence to his or her leadership and administration and their effectiveness. Anecdotes and cases imply that “strong” leadership of a school enhances the effectiveness of the school, but there is no consensus on what is meant by either strong leadership or an effective school (Firestone & Wilson, 1985; Hoy & Ferguson, 1985). Dwyer (1984) interviewed and observed 42 “successful” principals but found no single factor that could account for the success of those principals. According to Goldberg (1984), however, as with transformational leaders in general, successful school leaders establish challenging expectations that force students and teachers alike to work harder to support a vision that they collectively adopt and whose implementation they share. For instance, in a case study of nine New York City elementary schools, Sweeney (1982) found a strong association between the high expectations of the principal and staff and positive school outcomes.
Manasse (1984) reported that in effective school systems, principals build and shape their vision. Simultaneously, they involve the staff and students in the development and implementation of that vision and the expectations to support it. Morphet, Johns, and Reller (1982) argued further that by increasing followers’ involvement and responsibility in the administration of the school, the principal can adopt a more positive, proactive role as a change agent. Less effective principals react to the demands and constraints in their school systems but do not create them (Firestone & Wilson, 1985). Effective principals indicate to their staffs and students the important and valuable goals for the school. They recognize individual differences not only in what individuals can learn but in how they learn (Cole, 1984). J. S. Brown (1970) compared 84 public school administrators with 63 business managers. The school administrators made choices in a simulation with lower payoff coupled with lower risk. They were lower in assessed initiative and achievement orientation but were no different from the business managers in decisiveness and self-assurance.
Libraries. Libraries are more circumscribed educational institutions with distinctive patterns of the emergent and successful leadership by their directors and departmental supervisors. Although service should be the main goal of libraries, the goal is in conflict with a sense of elitism and self-serving preservation (Sager, 1982). New information technologies to enhance the quality-of-service conflict with budgetary constraints, acquisitions of books, and political considerations. In addition, conflicts may arise between the libraries’ two levels of employees, professional and clerical, whose interests may differ.
Dragon (1979) surveyed administrators in three large public libraries with the LBDQ and concluded that the directors and supervisors tended to be higher in initiating structure and lower in consideration than were their counterparts in many other types of organizations. Sparks (1976) found that library administrators, like most other leaders, saw themselves on the LBDQ as more considerate than their subordinates thought them to be. Consistent with this finding, Hall (1979) noted that students who were graduating from library school preferred consultation to more directive styles of leadership. In the same way, R. J. Solomon (1976) demonstrated that the directors of university library departments who earned higher leadership scores (according to their subordinates) led library departments that were more effective in serving other departments, according to the directors of the other library departments. On the basis of the results of administering the Jackson Personality Inventory and the Ghiselli Self-Description Inventory to library directors, Moore (1983) described several traits that are essential for success as an academic library director: flexibility and adaptability, willingness to accept change, a stable and equable temperament, emotional balance, and endurance.
Other kinds of institutions have their own special effects on leadership. For instance, in hospitals and health clinics, in competition with the inside supervisors, outside physicians with expert power exert a strong influence on in-house administrators, nurses, and paraprofessionals, In prisons, the role of guards increases their authoritarian tendencies, tempered by the special exchange relationships that guards develop with inmates. In the military, technical readiness for combat competes with the maintenance of high-quality relationships for career advancement in a bureaucracy. Ulmer (1993) notes that army officers spend at least twice as much time in their career in training and education as their civilian counterparts. Promotion is always from within. Character is more important than expertise.
Many other organizations in both the public and private sectors, such as recreational cruise ships, circuses, extended families, clans, and friendship groups are subjects for leadership study. Some, like voluntary community organizations, require members who can establish relations across organizational boundaries and networks of unity in diversity. Values need to be shared, and a sense of mutual trust and obligation must be developed, along with a sense of responsibility for the community (J. W. Gardner, 1997).
Criminal Organizations. Much still needs to be known about the leadership of terrorist organizations such as the Islamic Al Qaeda. It is quite different in the way its leadership is organized: It does not need to maintain a specific organizational structure. Members appear and disappear. Any member with assets can find volunteers, support, prospects, and purposes. There is no command or control center, no set agenda. Small transient groups of zealots meet fairly openly in mosques and schoolrooms. Continuing aid may be provided from many divergent sources, ranging from governments to individuals. Founded by Osama bin Laden and still a powerful influence, it was more a “field of potential” rather than a tangible single structure of cells and agents. It became more like the nineteenth-century anarchist movement. It still had the potential to generate operational organizations such as schools, secret militias, and illicit financial institutions. Brutal suppression was required to deal with it (J. B. Bell, 2002). By 2006, efforts to suppress and splinter Al Qaeda further made it more of a philosophical, militant, Islamic movement and less of an active operational terrorist network although it can regenerate its most violent component at any time, in either the main body or in splinter groups.
Criminal organizations such as the Mafia, the Columbian drug gangs, the Japanese Yakuza, and the Crips and Bloods street gangs are widely publicized but are less often the study of formal leadership research. Developing better understanding of their nature may emerge from the principles of leadership extracted by Himsel (2004) about the fictitious Sopranos, the television Mafia family, and its leader, Joe Soprano.
Athletic Teams. Leadership by athletic coaches and managers has become an important subject for research in its own right (Maby & Brady, 1996). Coaching practices have been seen as dehumanizing and coaches as autocratic and insensitive (Hendry, 1974). Ogivie and Tutko (1966) found that more successful basketball, football, baseball, and track coaches rated themselves as aggressive, dominant, and inflexible as well as sociable, conscientious, open, trusting, and emotionally stable. Based on House’s Path Goal Theory, Vos Strache (1979) showed that the leadership behavior of losing coaches failed to identify the path to success for team members. Chelladurai and Carron’s (1978) multidimensional theory of sports leadership noted the need to distinguish between the coaching of players of individual and team sports. It suggested that the more the coach’s behavior matched players’ preferences, the better was their performance and satisfaction. The Leadership Scale for Sports was developed to test the theory (Chelladurai & Saleh, 1980). The contribution of the coach’s leadership behavior to task and social cohesion of teams was demonstrated, along with the effect of the team on the coach’s behavior (Westre & Weiss, 1991).
Labor Unions. Leadership research has tended to ignore labor and professional unions and important union leaders. The unions they led had major impact on our economic, political, and social environment as well as private organizations and public agencies. Their leadership shaped politics, modern industrial relations, the lives of their constituents, business, industry and public institutions. Among the most prominent of these leaders were Samuel Gompers, founder of the American Federation of Labor (AFL); Eugene V. Debs, U.S. Socialist Party candidate in five elections for U.S. president; William D. Haywood of the militant Industrial Workers of the World; John L. Lewis, cofounder of the Congress of Industrial Organizations (CIO); Sidney Hillman, cofounder and president of the Amalgamated Clothing Workers of America; César Chávez of the United Farm Workers; Philip Murray of the United Mine Workers; A. Philip Randolph of the Brotherhood of Sleeping Car Porters; Walter Reuther of the United Automobile Workers; and George Meany of the AFL-CIO (Dubofsky & Van Tine, 1987). While membership has declined a great deal in postindustrial United States, labor unions have been replaced to some extent by unions of government employees, schoolteachers, and agricultural workers.
Leadership in organizations is affected by the organization’s philosophy, size, structure, objectives, functions, complexity, and institutional characteristics. Additionally, some aspects of leadership in business, military, educational, and religious organizations may stem from the nature of the leader’s organization.
The size of an organization was recognized early on as a variable that is of consequence to its leadership. The CEO of a hundred-person organization can get to know each member individually and act accordingly, but this is impossible in a thousand-person organization. Nevertheless, based on his experience leading both an army corps of 120,000 soldiers and a complex civilian organization of 120 professionals, Ulmer (1997) felt that both organizations required from him the same amount of energy to fulfill the role of leader.
The size of an organization can be gauged from the number of its members, the amount of its assets, and its output of product or services. Ordinarily, larger organizations require more structure to constrain the geometrically expanding possibilities of connections and interactions among the growing number of units and members.
CEOs’ compensation is likely to be determined by the size of their operations, not by their profitability, particularly if their boards of directors are mainly members of the organization’s management and shares in the firm are widely held by the public. Leading an infantry squad has different requirements from leading an infantry division. Emergent and appointed leadership within these respective organizations are likely to be systematically different. Erez and Rim (1982) found that compared to managers in smaller Israeli firms, those in firms with more than 600 workers turned more frequently to their coworkers for assistance on their own jobs. In firms with 600 to 4,000 workers, in contrast to larger or smaller firms, managers were most concerned with getting coworkers to do the jobs to which the coworkers were assigned. In firms with 4,000 to 6,000 workers, managers most often sought the assistance of their own bosses than did managers in the larger or smaller firms. And managers in firms with up to 600 employees were least likely to use rational tactics with their bosses compared with those in larger organizations.
L. W. Porter (1963a) reported that the overall satisfaction of managers was greater in large companies than in small ones. However, lower levels of management were better satisfied in small companies than in large ones. Higher levels of management were better satisfied in large companies than in small ones. But ElSalmi and Cummings (1968) found that small companies fulfilled the needs of top managers more than did large ones. For middle and lower managers, the reverse was true. Nonetheless, size was not the critical factor. Cummings and ElSalmi (1970) reported that the diversity of roles and the level of the position were more highly related to managers’ satisfaction of their needs than was the size of the department or company.
Confounds. Size itself does not really make the difference. What matters is what size brings with it. Larger organizational size is ordinarily accompanied by a greater need for structural complexity, more filtered and delayed information, geometric increases in the number of dyadic and group relationships, greater social distance, and additional constraints on change. Although many correlations between organizational size and leadership can be singled out for attention, ordinarily they are discussed in the context of other related mediating variables. For example, Koene, Vogelaar, and Soeters (2002) examined the positive effect of charismatic, considerate, and structuring leadership of managers of 50 stores of a Dutch retail chain varying in size from 16 to 120 full-time “personnel equivalents.” Managers’ initiation of structure had little effect on store performance. In the larger stores, it was neutralized by the availability of structures, procedures and systems. Compared to the smaller stores, overall, larger stores showed better results and better organizational climate than smaller stores. Managers in small stores tended to display more leadership in the aggregate. Controllable costs were reduced by charismatic and considerate leadership mainly in the smaller stores. Organizational climate was particularly better under considerate leadership in the smaller stores. In the smaller stores, the manager was the center of communication and had one-to-one contact with employees. In the larger stores, the managers’ charismatic and considerate leadership could influence only the organization’s climate. In the same way, Friesen (1983) needed a combination of organizational size, organizational structure, and organizational auspices to account for subordinates’ descriptions of leaders’ behavior in 23 public and private mental health agencies. The Dover Corporation was divided into many small independent autonomous corporations to provide flexible response to customers, a fair system of compensation, fast decisions, more satisfied managers and employees, and the elimination of corporate politics (G. D. Smith & Sobel, 1989)
Downsizing. It seems logical that when revenues slacken, shrinking the size of the firm will reduce its costs. The payrolls of managers and their staffs can be reduced if the organizational hierarchy is flattened or delayered. But Cascio (1995, 2003) has demonstrated that such involuntary shrinkage may be more costly in many ways, compared to available alternatives. The immediate savings in wages and salaries are offset directly by the increased costs of severance pay and bonuses, accrued vacation and sick pay, pension and benefit payoffs, and administrative processing costs. Indirect costs are the lowered morale, loss of commitment, increased insecurity, and reduced productivity of the remaining workforce, increased employment tax rates, and potential discrimination suits. Additionally, there is the cost to families and the community. When a turnaround in the economy or market occurs, new costs are incurred in recruiting, employing, and training new hires. A lot of experience and knowledge will have been lost. Employee turnover cost 1.5 to 2.5 times an employee’s annual salary at Merck, a pharmaceutical company (J. Solomon, 1988). At the same time, in 25 large companies over a seven-year period, the expected improvements in financial performance failed to materialize from downsizing (Cascio & Morris, 1994). On the other hand, firms that dealt with declines in demand by instituting responsible restructuring instead of downsizing illustrated that financial as well as social benefits accrue from avoiding downsizing. For instance, faced with a seasonal decline, instead of laying off employees, Brooks Beverage Management maintained their benefits and arranged for their transfer to Haworth, a nearby furniture manufacture. In the 1990s, Ford Motor Co. delayered and flattened its organizational hierarchy without layoffs by realigning its worldwide automotive processes and management as well as by instituting early retirement plans. But in 2006 as SUVs fell out of favor, Ford had to plan to close plants with a total of 30,000 employees by 2009. Chase Manhattan Bank changed its organizational culture to increase its efficiency and use of its resources through teamwork across departmental boundaries. The Eaton manufacturing corporation, instead of downsizing, introduced continuous improvement, involving its employees in cost control. IBM arranged, with other firms, buyouts of whole plants and their labor force that no longer fit IBM’s business strategy to other firms and management groups. Employment continued under new managements. The United Steel-workers helped firms reduce immediate labor costs with-out downsizing by agreeing to contracts with significant wage reductions in exchange for employee stock ownership plans (ESOPs). Intel was able to redeploy employees rather than lay them off, using development centers, self-assessment tools, career counseling, temporary assignments, and skill training. Employees were thus enabled to transfer within Intel from manufacturing to sales and from obsolete technology divisions to new centers. Outplacement services were also provided when internal transfer was not feasible. Between 1991 and 1994, Intel placed 90% of its employees through internal redeployment. Finally, in times of sales declines, days worked per month can be reduced and unpaid voluntary leaves of absence (with state unemployment benefits) can be encouraged to reduce costs temporarily. This was done by the Reflex-ite Corporation (Cascio, 1995).
Many more obvious differences in leadership patterns occur in organizations that differ substantially in size. One striking difference is how much relationships have to become more structured and formalized in larger organizations. As Robbins (1983, pp. 70–71) noted, “Decision making is different for an organization (of) ninety thousand employees than … ninety … As size increases, so does departmentalization, job specialization, the height of the structure, the number of horizontal units, and the number of rules and regulations.”
On the basis of empirical factor studies, Pugh, Hick-son, Hinings, and Turner (1968) developed the Aston model. The model included two major organizational factors: structuring of activities (prescribed work roles) and centralization of decision making (limits on discretion). These factors represented the two principal strategies of administrative control. Both usually increase as an organization enlarges.
Along with increasing size, the routineness of operations also leads to greater standardization and structuring of relations. Convenience food restaurants represent the ultimate in routine service, accompanied by a high degree of standardization and structure. In addition, as was noted earlier, stable, predictable environments permit organizations to formalize and structure themselves to a higher degree than those in unstable or uncertain environments.
Chapin and Tsouderos (1955) concluded from the case histories of 91 organizations that as organizations increase in size and differentiation, rank-and-file members become more passive and farther removed from the policy-making centers. Likewise, the executives become farther removed from the activities they plan and initiate. The long lines of command impose problems in communication. Robbins (1983) noted that structure also reflects the needs of the top leaders of the large organization to maintain maximum control over it. As a consequence, a bureaucratic structure is favored, with specialized jobs, standardization, rules and regulations, and centralized decision making. But as was mentioned before, even when the top managers favor a more humanistic organizational philosophy, such as with Theory Z, they may do so because they can still maintain their desired power and control. Compliance can be maintained through commitment at the lower levels rather than through sanctions. Middle managers do not have to be dominated; they can be eliminated.
Katz and Allen (1985) illustrated the importance of structure in a study of the 86 R & D teams embedded in matrix managements in nine firms. The performance of these teams was best when their project manager had more organizational influence and their functional boss had more influence over the technical details of their work. Their performance was also better when the team members perceived that the project manager and the functional manager had equal influence over their salaries and promotions. Lanzetta and Roby (1955) contrasted antiaircraft crews of three men, each performing all functions, with the crews arranged in a hierarchical structure. They found that the performance of crews improved with the structure in place, particularly when the workload was heavy. Results also depended on how relations are structured within a group. Naylor and Dickinson (1969) observed that arranging the way the task was to be carried out, but not distributing the work components among the group members, was positively related to the effectiveness of the group.
Organizational Design. In designing an organization, a balance needs to be struck among three variables: centralized control, decentralized autonomy, and cooperation and teamwork. Control and cooperation need to be balanced between consistency and flexibility. Cooperation and autonomy need to be balanced between synergy and accountability. Autonomy and control need to be balanced between distant and local perspectives (Keidel, 1990).
Utilitarian organizations are usually designed according to functions and products, or a mix of the two. In a functionally designed production organization, people are grouped into units such as marketing, manufacturing, R & D, human resources, finance, and accounting. A functional service agency is similar. Client relations and consulting are substituted for manufacturing. The functional organization is expected to make efficient use of scarce resources, to better develop its personnel, and to centralize decision making. Its disadvantage is the creation of logic-tight silos of thinking, slower responses to change, and too much top-down direction. Units are grouped by products (or services) in product design, e.g., men’s wear, women’s wear, and children’s wear. Coordination is better across necessary functional skills but not as good across product units. Organizational rather than functional goals are stressed. Control over diverse products or services is better. However, there is duplication of resources.
In a mixed design, such as the matrix organization, the manager of the product must obtain necessary resources from functional specialties. But there is better utilization of the needed specialists. On the other hand, the specialist needs to satisfy two bosses at the same time: the product manager and the specialties manager (Hughes, Ginnett, & Curphy, 1993).
Hierarchical Level. Efforts to change organizations are expected to flow through hierarchical levels (Griffin & Mathieu, 1997), usually from the top down but sometimes starting with initiatives from the bottom or the middle. A leader high in the hierarchy and at a social distance from followers needs to be visionary to be seen as charismatic, but a leader lower in the hierarchy and closer to followers needs to be considerate to be seen as charismatic (Shamir, 1995). At higher organizational levels, charismatic leaders rely on image building, strategic envisioning, rhetorical skills, and symbolic activities to influence followers; at lower levels, role modeling and building confidence and a collective identity become salient (Shamir & Howell, 1999). Along with transformational leadership, information technology firms also have need of transactional leadership at higher and middle levels to create structures and systems to deal with knowledge (Stross, 1998).
Pence and Dilts (2003) compared the survey responses of 32 project managers and their 24 senior executives about decisions to terminate a project. The sunk cost bias (the tendency to want to continue a project once an initial investment of money and effort has been made) of the 32 project managers was driven by their own personal efforts. The executives, who heavily weighed their initial expectations, revealed more of a hindsight bias (the tendency to distort a previous judgment in the direction of new information).
Structural Clarity. An important role for leaders is to provide structural clarity for their followers. E. E. Smith (1957) studied experimental groups in which both productivity and satisfaction were found to be related to the degree of role clarity of the members. Similarly, Lenski (1956) noted that group members with low degrees of status crystallization tended to experience difficulty in establishing effective, satisfying patterns of interaction with others. Dyer and Lambert (1953) observed that bomber wings were more efficient when members had a clear recognition of the status structure. In a study conducted by the Life Insurance Agency Management Association (1964a), it was found that agents who reported that the job was accurately described before they were hired were less likely to quit than those who had been less clearly informed. Similarly, Wanous (1973) showed that newly recruited telephone operators who were told both the good and the bad about the job were less likely to quit than those who were told only about the good aspects. After a study in two companies, Trieb and Marion (1969) agreed that the extent to which new employees had been fully oriented to their jobs was highly related to the employees’ subsequent job satisfaction and loyalty to their companies.
Timing and Need for Structure. Kinder and Kol-mann (1976) found that self-actualization gained from sensitivity training groups11 was greatest when leaders’ and members’ roles were highly structured at first and less structured later on. Similarly, Bridges, Doyle, and Mahan (1968) found that hierarchically undifferentiated groups were more effective than differentiated groups in the analysis of problems but not in the synthetic phases of problem solving. Ambrose and Schminke (2003) obtained the responses of 506 individuals from 98 departments in 64 organizations. They indicated the extent, on a seven-item survey of Khandwalla (1976–1977), to which their organization was mechanistic or organic. As expected, effects were somewhat stronger in mechanistic than organic organizations; perceived organizational support correlated .52 and .53 respectively, with perceived procedural and distributive justice.
Individual Differences. Some leaders work better in unstructured situations, while others work better in structured ones. According to Maas (1950), leaders who projected blame on others exhibited a desirable behavioral change when they led relatively informal, unstructured groups. On the other hand, leaders who absorbed blame showed the desirable change when they led formal, structured groups. When placed in reversed situations, both types of leaders exhibited anxiety and signs of stress. Overall, highly structured organizations, both public and private, were expected to determine the types of individuals to work within them. Individuals who choose to join such bureaucracies are also particular types of individuals. Most important, highly structured organizations socialize those who work within them.
Bureaucratic Leadership. In line with Weber’s arguments about bureaucracies (1924/1947), Merton (1940) suggested that bureaucrats are likely to be inflexible. They are likely to overemphasize the importance of goals for those whose attainment the rules were established. The goals will be displaced by attention to outmoded rules. When bureaucratic leaders are inflexible, actions will continue to be bound by inapplicable rules. The career orientation of bureaucrats makes them cautious, conservative, and protective of an entrenched position. They are unwilling to be innovative or to take risks. They are impersonal in their thinking and ignore the concerns of clients and their individuals needs. Their formal authority breeds arrogance. Furthermore, the selection and socialization processes induce a bureaucratic personality without a sense of personal identity. There is little intrinsic interest in work and uncompromising adherence to rules (Bensman & Rosenberg, 1960).
While the above descriptions of bureaucrats fit the conventional wisdom about them, Goodsell (1983) marshaled considerable evidence to support a contrary argument: bureaucrats are human, too. In fact, citing Kohn’s (1971) structured interview study of 3,101 men working in public and private bureaucratic organizations, men who worked in bureaucratic firms and public agencies were more, not less, self-directed than those who worked in nonbureaucratic firms and agencies. They were more open-minded, had more personally responsible standards of morality, were more receptive to change, and showed greater flexibility in dealing with problems. In explaining why Weber’s, Merton’s, and Bensman and Rosenberg’s expectations about the bureaucratic mind were unsupported, Kohn suggested that bureaucratic organizations tend to select better-educated personnel, who are challenged to a great degree by their assignments and whose education makes for greater intellectual flexibility. Also, within the bureaucracy, they are freer from arbitrary actions by their superiors.
Structural Complexity. The more an organization increases in age, size, and structural differentiation, the more complex it becomes. More specialization develops within it. Special staffs that often have different interests arise. More political behavior becomes necessary, requiring more compromise and accommodation. Decision making and implementation processes also become more complicated (Thompson, 1967). As the complexity of the organization increases, the dynamics within it must change. For example, the number of possible coalitions increases. The greater an organization’s complexity, the more leadership positions are required. The positions will be arranged hierarchically, with carefully delineated roles and responsibilities. Additional power is attached to each position that is higher in the heirarchy (Bryson & Kelley, 1978).
The complexity of the organization will affect the pattern of succession.12 The greater the complexity, the more levels any candidate needs to climb to reach the top of the hierarchy. Complexity probably also has an effect on the nature of accession to office. As complexity increases, so does factionalism (Tichy, 1973; Tushman, 1977). A structurally complex organization, such as a major corporation, gives rise to officials who are oriented more toward Theory X in their outlook and who are more concerned than usual about their need for safety and less concerned about ego and self-actualizing needs (Applebaum, 1977).
Hunt, Osborn, and Martin (1979, 1981) completed a line of investigation of that part of a leader’s behavior that is required—that is, determined by the structured relationships imposed by the organization—and that part which is discretionary. In a study of 68 army telecommunication units, they found that greater complexity in the structure of the unit coincided with more discretionary leadership to improve role clarity and provide support. However, such discretionary leadership did not deal with work assignments or with rules and procedures. In addition, the amount of discretionary leadership correlated with both performance and satisfaction. At the same time, the role clarity required from the leadership correlated .25 with the subordinates’ involvement in their jobs and −.24 with subordinates’ intentions to quit (Osborn & Hunt, 1979)
Tall versus Flat Structures. Flat-structured organizations have few hierarchical levels and many members or units at each level; tall-structured organizations have many more levels but fewer members or units at each level. Findings are mixed about the relative effects of tall and flat structures. Worthy (1950) maintained that flat-structured organizations resulted in greater satisfaction of employees than did tall-structured organizations. Richardson and Walker (1948) studied a company (IBM) when the number of vertical levels of organization was reduced and concluded that the reduction of social distance between the management and workers resulted in improved satisfaction and teamwork. Ghiselli and Johnson (1970) obtained some support for Worthy’s contention by showing that satisfaction of the needs for esteem, autonomy, and self-actualization was higher in the flat than in the tall organizations they studied. However, satisfaction of the needs for security and social relationships did not differ in the two types of organizations. At the same time, ElSalmi and Cummings (1968) found that at the top levels, tall structures produced less fulfillment than did flat or intermediate structures. For lower levels, tall structures resulted in greater fulfillment.
In an analysis of experimental organizations with tall and flat structures, Carzo and Yanouzas (1969) found that tall structures required more time to process decisions, but flat structures required more time to coordinate efforts and resolve conflicts. However, tall organizations were superior in profits and rate of return. Porter and Lawler (1964) and Porter and Siegel (1965) surveyed managers in tall or flat organizations that varied in size. In small organizations, the satisfaction of managers was greater in flat than in tall structures, but the findings were reversed for large companies (with more than 5,000 employees). Generally, tall organizations yielded greater satisfaction of security and social needs, while flat organizations gave greater satisfaction of self-actualization. But structure was not at all related to satisfaction of the needs for esteem and autonomy. Esser and Strother (1962) found no relationship between the orientation toward rules by managers and the size or flatness of their organization.
Span of Control. Another way of looking at the effects of tall and flat structures is by examining the effects of the average number of subordinates supervised by each manager. Each manager must supervise many more subordinates in a flat structure than in a tall structure.13 For example, Kipnis and Cosentino (1969) found that as the supervisory span of control of 131 supervisors from five manufacturing firms increased, the number of official warnings the supervisors used to correct employees’ undesirable attitudes and behavior also increased. Good-stadt and Kipnis (1970) experimentally manipulated the leaders’ span of control so that subjects were led to believe they were supervising either three or eight subordinates. The subjects who believed they were supervising eight subordinates spent significantly less time talking to problem workers and threatened to fire them on earlier trials than did subjects who believed they had only three subordinates. Likewise, Ford (1981) found that when supervisors had larger departments to manage, subordinates felt they were shown less consideration by their supervisors. These results are all consistent with the expectation that when faced with a larger number of subordinates who are reporting directly to them, supervisors will be forced to reduce the amount of time they can spend individually with each subordinate. Although it may be possible to remedy the situation with more group meetings, delegation, and the granting of more autonomy, as was seen in the three just-cited studies, management by ex-ception often emerges. With a large span of control, the supervisor tends to concentrate on deviations from standards in efforts to remedy the situation.
Leavitt and Whisler (1956) first recognized that organizational hierarchies would be flattened into shorter structures with wider spans of control as a consequence of the introduction of computers. They forecast that middle management was likely to shrink, as in fact it did in the next half century. A national survey of Australian employers by Littler, Hede, Bramble, et al. (1995) found that 44% of firms had cut out layers of managers, particularly middle managers. One CEO remarked that “Middle managers’ … main effect is to stuff up the business” (p. 2). The flattening organizations were seen to make careers “shorter, sharper and harder.” Career laddering was less prevalent. There was less long-term security in a one company career. Flattened organizations represent a particular challenge to first-line supervisors. For instance, they may have more difficulty dealing with an ethical question, as they are faced with less guidance from a distant impersonal senior management (Sims, Veres, Jackson, et al. 2001).
New Organizational Configurations. Quinn-Mills (1991) proposed a self-managing workforce that could use available technologies of production and service to replace the usual organizational hierarchy, even if flattened. They suggested introducing a flexible, adaptive, semipermanent, residual hierarchy and clusters of 30 to 50 employees from different disciplines working in subclusters of five to seven without direct reporting relationships. Leadership would be rotated depending on competence. Members would be responsible and accountable to their cluster or subcluster linked through employee contacts and with the firm through the residual hierarchy. As with Bennis’s (1959) adhocracy, Gerstein and Shaw (1992) agreed on the need for fluid, transitory organizations that form teams of participants to meet the requirements of different situations with freedom and authority to optimize their work processes. Furthermore, Doloff (1999) argued that rather than depending on job titles and the formal hierarchy of formal channels and protracted process, one must attend to the informal network to determine who is really making the decisions and advancing the work to be done. And Ellerman (1999) advised that much more than codified knowledge transmitted top-down is needed in the new circumstances. More implicit knowledge must be transferred horizontally.
Centralization implies that more leadership accrues in the headquarters, nucleus, or central authority of the organization and fewer decisions are possible in the peripheral units. Centralization promotes greater coordination of efforts and activities among the units, and more uniform policies with respect to the common goals of the larger organization. It makes possible a more rapid, concerted reaction of the whole organization. Centralization or decentralization may be a consequence rather than a cause. Blau (1968) investigated 250 government agencies and found that decentralization was most prevalent in agencies that employed a large number of highly qualified personnel. On the other hand, the presence of automation and poorly qualified personnel in large agencies was accompanied by more vertical levels of organization and tighter managerial control. Centralization of legislative leadership was seen by Bryson and Kelley (1978) as being likely to give greater enforcement power to the leadership and more stability. But more conflicts are also likely because of reduced consultation and a lack of information sharing. (A. Rosenthal, 1974). Consensual decision making becomes less frequent with centralization (Mechanic, 1962; Pettigrew, 1972). Adversarial relationships are greater (R. A. Gordon, 1961), unless statesmen appear at the top of the centralized leadership (Selznick, 1951). Centralization promotes coups (S. Kahn, 1970).
Baker and France (1954) examined the personnel and industrial relations departments of a sample of firms. They observed that top managers tended to prefer the decentralization of industrial relations functions so that local problems arising in a specific plant could be solved as they arose. Union officials, on the other hand, preferred the centralization of industrial relations functions as an aid in industrywide bargaining. M. Whitehill (1968) surveyed companies in the meatpacking industry and found that union negotiations with centralized structures by means of contacts with the main office resulted in more benefits for employees than did negotiations with decentralized structures involving contacts with local plants.
Decentralization usually brings with it more opportunity for its leaders to react quickly and flexibly to opportunities and threats to the organization. Less filtering of information can occur that is of consequence to the decisions made by the decentralized units. The decentralized organization is more likely to adopt an open learning philosophy and recognize the need to invent local adaptations of best practices. It can experiment with new ideas more readily than can the centralized organization (Ellerman, 1999). More “ownership,” sense of responsibility, and commitment are expected for the decentralized-designed organization.
But there are costs to decentralization. Kanter (1982a) described decentralized units that were so concerned about operating issues that their definition of “long range” was the next quarter. T. A. Mahoney (1967) surveyed 283 organizations, obtaining managers’ perceptions on 114 variables. Decentralization was found to be correlated negatively with most criteria of organizational effectiveness. In a survey of 217 executives in 109 firms, Stagner (1969) found that the decentralization of business enterprises was not related to profitability from sales. However, profitability from capital was significantly higher in centralized than in decentralized firms. Nevertheless, Newman and Summer (1961) outlined a set of guides for determining the degree of decentralization that is desirable for an organization, and W. T. Morris (1967) formulated 40 propositions, along with a set of mathematical models, for evaluating the factors involved in the consequences of decentralization.
Dispersion of Authority and Power. Dispersion of authority and power and empowerment to the lowest possible hierarchical levels is made possible with suitable selection and training of personnel (Conger & Kanungo, 1988). To further the possibilities and potential of empowerment, organizational policies can promote emphasis on self-determination, collaboration, and high performance standards (House, 1988). Furthermore, empowering organizations provide loosely committed resources at operational levels, opportunities for networking, and open communication systems (Kanter, 1983). But such policy is not necessarily dependent on decentralization, although it is more easily facilitated by senior managers when they work through the fewer layers of authority of the decentralized organization (Cordiner, 1952; Newman & Logan, 1965; Zald, 1964). Thus, decentralization has been advocated as a method for reducing the concentration of authority in high-level positions and for filtering it down to employees (Kline & Martin, 1958; Kruisinga, 1954). However, the major reason that managers are motivated to decentralize is that they are concerned about coordination problems. As organizations become larger, with many geographically dispersed subunits involving numerous products, the problems of coordination and response to local changes induce a tendency toward decentralization (Chandler, 1956, 1962). Globalization of organizations has probably increased their decentralization, although information technology has made more centralization possible. Mergers and acquisitions have also probably increased decentralization in the enlarged corporations.
Legitimate power is usually disseminated outward when an organization decentralizes. The effects were seen by Baum (1961), who studied the U.S. Civil Service Commission and eight other dependent federal agencies. The commission formulates and enforces policies that must be applied by the agencies in hiring and promoting personnel. Baum found that the decentralization of hiring and promotion were handled effectively only when the agencies accepted and attempted to comply with the policies of the controlling commission. Executives in the more successful agencies regarded decentralization as providing them with the authority they deserve, but the executives in the less successful agencies saw the decentralized function as more work for them. In Baum’s study, decentralization was accompanied by an increase in the decision-making authority of those in the higher levels of administration. Likewise, M. W. Meyer’s (1968) survey of 254 city, county, and state departments of finance found that with the size of the organizations held constant, the number of organizational subunits decreased, but the number of levels of supervision within the subunits increased with the decentralization of decision making. Most important, decentralization was associated with more rules for the evaluation of decisions.
The importance of organizational stability was seen to vary according to the size of organizations. En gland (1976b) reported that managers of middle-sized companies rated organizational stability generally higher in importance than did managers of small companies. Stability was of least importance to managers of large firms.
Using data from 215 governmental departments, M. W. Meyer (1975) found that the stability of an organization’s structure was lower when the leaders had changed a great deal in the past, when leaders were dependent on a higher authority, and when the leaders maintained close contact with their superiors. The top managements of stable firms were found by T. Burns (1957) to differ from those of firms that were growing. Burns (1957) collected diaries for three to five weeks from 76 British top managers in medium-sized companies. Top managers in expanding firms spent relatively more time in discussions with one another. There was less flow of information up and down the hierarchical structures in the growing than in the stable firms. Again, Kerr (1985) demonstrated, in 89 interviews about the managerial compensation systems of 20 large industrial firms, that compensation was hierarchically based in the stable, steady-state firms that were committed to existing products and markets. On the other hand, compensation was more likely to be performance-based in less stable “evolutionary” firms that were involved in acquisitions, mergers, and joint ventures, sometimes in unfamiliar external markets and technologies.
House (1995) noted that employee commitment to unstable organizations in environments of uncertainty was higher when the organizations were led by charismatic leaders. Again, Bass (1998) reported that transformational leadership ratings were higher in dynamic, changing organizational environments than in stable organizations. But Hinken and Tracy (1999) concluded from a modeling analysis of the Multifactor Leadership Questionnaire that while the transformational leadership factors of inspirational motivation, intellectual stimulation, and individualized consideration are generally relevant for organizational performance improvement, the factor idealized influence (charismatic leadership) may be limited in relevance to unstable organizations, if at all. They were in agreement with Bennis and Nanus (1985), who did not find in interviews that otherwise transformational leaders were charismatic.
Managers have considerable supportive latitude to act within boundaries and rules but must also operate under many organizational constraints that will systematically affect their styles of behavior, performance, and satisfaction. The various task-related, interpersonal, and policy barriers to getting work done are also constraints that affect supervisors’ style, performance, and satisfaction. Also constraining are the extent to which organizations require secrecy, restrict employees from bypassing the chain of command, and are scarce in resources. Latitude and constraint often create conflict. Managers must keep both broad and specific objectives in mind; plan, but be flexible; centralize some activities and decentralize others; and provide subordinates with autonomy. Collaboration and maintaining control is expected, yet delegation is to be practiced.
Organizational Support. Approximately 370 recent graduates of a Belgian university responded to a mail survey. If the organization in which they were working was supportive, they were more likely to see their supervisor as representing their organization (Sucharski, 2002). Among 263 manufacturing supervisors and employees working in a Fortune 100 Best Company, perceived organizational support contributed to job dedication and interpersonal communications. The effects were mediated by job satisfaction and affective commitment (Muse & Stamper, 2003). Among 185 pharmaceutical sales representatives, perceived organizational support mediated the effects of situational factors on affective commitment to the organization. The factors included procedural and distributive justice, and satisfaction with communication and supervision and the labor-management climate. (Moideenkutty, Blau, Kumar, et al., 2001).
Organizational Constraints. Hare (1957) observed that self-oriented and group-oriented leaders among groups of boys did not differ in aggression at an adult-supervised playground at school, but self-oriented leaders were significantly more aggressive in unsupervised neighborhood play conditions. There were more differences between the situations than between the leadership styles. Disagreement was higher in both styles on the supervised playground, while tension and antagonism were higher in the unsupervised neighborhood play conditions. Similarly, Farrow, Valenzi, and Bass (1980) found that the leadership styles of direction and consultation were greater when more organization, order, and imposed constraints were present. But less manipulation by leaders was observed under these conditions if goals were clear and levels of trust among the members were high.
Leadership and patterns of social interaction in an organization will be affected by how difficult or easy it is for its members to identify with the organization and its purposes and what outsiders believe about it (Dutton, Duke-rich, & Harquail, 1994). According to Fukuyama (1997, p. 156), “managers … instill a … sense of pride in their employees, [and that] they are part of something larger than themselves. People feel … motivated to do their share if … their company’s purpose is … to push back the frontiers of knowledge rather than … to maximize their stockholders’ return on equity.”
Peters and O’Connor (1980) identified a number of situational variables likely to interfere with supervisors’ accomplishment of tasks, such as lack of ready availability of materials and supplies. Laboratory studies confirmed the importance of this factor to job satisfaction and getting the work done (Peters, Fisher, & O’Connor, 1982). Field studies yielded more complex results. From an open-ended questionnaire, completed by 300 national managers of a chain of convenience stores, O’Connor, Peters, Pooyan, et al. (1984) identified 22 organizational constraints on the managers’ work. Some of these constraints included: (1) shortage of help; (2) lack of authority to enforce company standards; (3) bypassed authority; (4) insufficient training; (5) inadequate equipment; (6) inadequate help; (7) frequent, long, and inappropriate meetings; (8) excessive paperwork; (9) un-scheduled activities; (10) ignorance of company policies and procedures; (11) an inadequate amount of merchandise; (12) lack of job-related information; (13) inadequate response time and budgetary support; (14) inappropriate work space; (15) unkept appointments; (16) excessive or wrong inventory; (17) insufficient materials and supplies; (18) theft by customers and by employees; (19) work overload; (20) wrong inventory. For a sample of 1,450 first-, second-, and third-level managers of the chain of convenience stores, the investigators obtained a correlation of −.40 between the managers’ satisfaction with supervision and the extent to which they perceived overall that these constraints were operating in their work settings. These relations held for all three levels of management, although, as expected, satisfaction with supervision was greater at each successive level of management. In the same way, Mathieu, Tannenbaum, and Salas (1992) developed a 10-item instrument that measured the situational constraints perceived by the leader, such as the leader’s need to correct others’ mistakes, which correlated −.33 with sales performance and −.36 with the quality of leader-member relations (LMX). Nevertheless, Shamir and Howell (1999) hypothesized that charismatic leadership was more likely to emerge when the technology in a situation was difficult to analyze.
Along with institutional constraints, an important constraint on a mental health care staff was the lack of collegial support (Corrigan, Kwartarini, & Pramana, 1992). Situational constraints may place managers under a double handicap. In addition to making their assignments more difficult, the managers may also be appraised as performing less adequately than is justified by the objective evidence. Steel and Mento (1986) investigated the impact of situational constraints (job-induced obstacles, interpersonal obstacles, environmental policy, and procedural constraints) on objective performance. Also obtained were supervisors’ appraisals and self-ratings of 438 branch managers of a finance company. The constraints were highly intercorrelated and formed a single factor scale. The district manager’s supervisory appraisals of the branch managers correlated −.36 with the situational constraints faced by the managers. That is, the more constraints faced by the branch managers, the lower the appraisals they earned. But the constraints had little actual effect on the objective performance of the managers except possibly on their ability to control past due accounts.
Requirements of Secrecy. Required secrecy has impaired communications within and between government agencies in the struggle against terror and crime. A constraint that limits whether managers can be participative with their subordinates is the extent to which the organization requires secrecy concerning products, techniques, and business strategies. Employees cannot be asked to participate in decisions if much of the information required to discuss such decisions cannot be revealed to them (Tannenbaum & Massarik, 1950). Pay secrecy is justified by privacy concerns, by the potential reduction of labor mobility, and by a desire to avoid conflict. But that secrecy may be at the expense of an unwarranted sense of injustice and impaired performance (Colella, Zardkoohi, Paetzold, et al. 2003). Also, some evidence is available to suggest that “open-book” management may be more efficacious than maintaining secrecy. When a campus newspaper of a public university listed the salaries of all its professors (which was actually available for the asking), overall the effect was positive on faculty and students in providing a realistic picture rather than an exaggerated one. Goitein (2004) described the positive effects of open-book management practiced by the employee-owned Springfield ReManufacturing Corporation. Employees were educated about the financial requirements for success and the operational variables critical to meeting the financial requirements. Progress in doing so was shared. For firms with publicly traded securities, regulations of the Securities and Exchange Commission govern disclosures.
Chain of Command. The ability or lack of ability to bypass formal organizational lines of communication appears to affect leaders’ evaluations of their subordinates. On the basis of the responses to a questionnaire, of 395 white-collar employees and managers of the engineering division of a public utility, Hunt, Osborn, and Schuler (1978) concluded that a manager’s approval of subordinates was predicted by the adequacy of the organization’s general communication and planning and how frequently the manager received orders out of the chain of command. The manager’s disapproval of subordinates was also affected by these out-of-the-chain-of-command orders, over which the manager had no control.
Unionization. Labor and professional unions provide alternate channels of influence, both upward and downward. Although leader-subordinate relations within an organization would seem to be mediated by whether the subordinates belonged to a strong or weak union or to none at all, few empirical comparisons have been made. One would expect, for example, that arbitrary, capricious, coercive management would be highly constrained if workers had a second route to upward influence via a strong, effective union. It is more likely that such management would result in unionization that, in turn, would reinforce management’s rule-bound leadership in place of arbitrariness. A rare empirical study of the effect of unionization on supervisory-subordinate relations within a firm was completed by Hammer and Turk (1985), who collected data from 160 first-line supervisors in 12 sections of a factory with an employee union. The percentage of workers who belonged to the union varied from 0% to 82%, depending on the section they were in. Regression analyses showed that the “density” of union members in a section contributed uniquely to the section supervisor’s emphasis on performance, “going by the book,” and sense of a clear authority to discipline. This last result could be explained by the union contract. The supervisors’ use of discipline and penalties against subordinates was regulated. It was power granted to the supervisor through negotiations between management and labor, specified in the union contract. Supervisors, abiding by the contract, knew the rights they had both to reward and to punish; so did their unionized subordinates. Union stewards, as well, according to E. L. Miller (1966), need to remain mindful of the employees’ rights and interests.
Intertwined with the philosophy, purposes, functions, and structure of the organization is its culture. Pericles identified the four aspects of the culture of Athens as an organized polity for its citizens that made it so valuable to them. First, it was open, democratic, and optimistic about its citizens’ individual capabilities. Job assignments and promotions were based on merit, and the individual’s dignity was upheld. Everyone was equal before the law. Second, its culture promoted beauty, good taste, and personal satisfaction in home, work, and play. Third, it was a culture of innovation; it provided the models for others to follow. Fourth, it encouraged an alignment of the interests of the individual citizen with those of the state (Clemens & Mayer, 1987).
For Schein (1992), an organizational culture is the language, stories, customs, traditions, and rites shared or held in common by its members. It also includes its norms and implicit standards. The culture contains the organization’s espoused values, formal philosophy, and implicit rules for getting along in the organization. To the meaning of culture, Trice (1984) adds its myths, sagas, legends, gestures, and the artifacts it creates to express activities. For Schein, also involved is the organizational climate—the way members feel about how they interact with one another as well as with outsiders. Further included are the knowledge, skills, and habits of thinking that are displayed in getting things done. The integrating symbols, ideas, feelings, and images that characterize the organization are another factor. They become consciously or unconsciously embedded in the organization’s offices, sales rooms, plants, and products.
For Weick (1979), the primary function of organizations is sense making. An organization’s members develop a set of mutually acceptable ideas and beliefs about what is real, what is important, and how to respond. The members learn shared patterns of behavior that are transmitted from one generation to the next (Deal & Kennedy, 1982). Along with the values that are shared by the members are the heroes who exemplify the organization’s values, the rituals that inculcate the expressive bonding of members, and the stories that transmit the culture’s values and ideas.
Martin, Feldman, Hatch, and Sitkin (1983) collected three types of stories that members told to assert the distinctiveness of their own impact on how the organizational culture communicates what is expected from its leadership. The stories described: (1) whether the boss was human and, when presented with an opportunity to perform a status-equalizing act, did or did not perform it; (2) rule-breaking (for instance, a senior manager broke a rule and was confronted by a junior person); (3) how the boss reacted to mistakes. Rosen (1985) completed an ethnographic study of an advertising agency that demonstrated how senior management manipulated the language, gestures, and context of a breakfast ritual to ensure acceptance of the goals and practices of the company. This ritual reinforced and reaffirmed the bureaucratic structure of the organization and its capitalistic values.
Jung’s (1971) psychological classification provides a useful fourfold view of widely divergent organizational cultures. These four cultures are: bureaucracies, with sense-thinking managers; matrix organizations, with intuitive-thinking leaders; organic organizations, with intuitive-feeling leaders; and familiar cultures, with sensing-feeling members (Mitroff, 1983). Schein (1985, 1990) provided a fuller set of dimensions along which organizational cultures differ: (1) Relation to its environment—dominant or submissive, harmonizing, searching for a niche? (2) Nature of human activity—proactive, harmonizing, or passive? (3) Determination of truth and reality—pragmatic, relying on wisdom or social consensus? (4) Nature of time—orientation to the past, present, and/or future? (5) Human nature—good, neutral, or evil; fixed or perfectible? (6) Human relationships—competitive or cooperative, favoring individualism or groups, autocracy and paternalism, or collegiality and participation? (7) Homogeneity or diversity—encouragement of similarities or differences; conformity or innovation?
Assumptions. Basic assumptions about the nature of reality, time, space, human nature, and the environment are taken for granted at a preconscious level by those who are embedded in an organization’s culture. There is a greater level of awareness about the interrelated values. The art, technology, and behavior that emerge are visible but not necessarily decipherable. It often takes an outsider to understand the cultural connections of the observable products and behavior to the underlying values and preconscious assumptions. Early in its development, an organization’s culture is the glue that holds the organization together as a source of identity and distinctive competence. But in an organization’s decline, its culture can become a constraint on innovation, since it is focused on the organization’s past glories (Schein, 1985). Hatch’s (1993) model of cultural dynamics is a framework involving processes of manifestation, realization, symbolism, and interpretation. What members of the organization assume to be true influences their values. Their values affect their assumptions and are realized in their artifacts. Symbols and interpretations follow. A visionary culture is able to align its core values and their preservation, “to reinforce its purposes, and to stimulate progress towards its aspirations” (Collins, 1996, p. 19).
Describing Different Organizational Cultures. Ethnographic and case studies have provided the most common means of depicting organizations. To describe a particular organization’s culture, Kilmann and Saxton (1983) listed eight questions that the organizational culture answers: (1) What makes sense; what can be talked about? (2) Who am I; where do I belong? (3) Who rules; how, why, and by what means? (4) What are the unwritten rules of the game for what really counts; how do I stay out of trouble? (5) Why are we here, and for what purposes? (6) What are our history, geography, and the structure we build? (7) What are the stories about ourselves and others? (8) What are our morality and ethics? Are people basically good or evil? As a quantitative survey, the Kilmann-Saxton (1983) cultural gap survey asked organizational members to assess the strength of their organization’s norms. The norms dealt with task support, task innovation, social relationships, and autonomy of individual members, all of which are expected to contribute to an organization’s performance and satisfaction. Low scores reflected gaps in the organization’s culture required for better performance and satisfaction. Cooke and Lafferty (1983) constructed the Organizational Culture Inventory (OCI), asking what was the extent an employee was expected to fit into the organization, such as “Be a good listener,” “Look for mistakes,” and “Keep on top of everything.” Twelve variables could be generated describing the organization’s values culture. They could be factor-analyzed into three types: (1) constructive (humanistic, achieving, affiliative, and self-actualizing), (2) passive/defensive (conventional, approval-seeking, and dependent), (3) aggressive/defensive (power-oriented, competitive, and perfectionistic) (Cooke & Szumal, 1992). Anthony (1994) obtained 585 raters, including 83 managers from first-line to executive. They used the OCI to describe the culture of their 11,000-person telecommunications firm and the Multifactor Leadership Questionnaire (MLQ) to rate the transformational and transactional leadership of their immediate superior. The four constructive culture variables correlated between .42 and .55 with the four MLQ transformational leadership scores, between −.03 and .05 with MLQ transactional active management by exception, and between −.41 and −.39 with passive management by exception. O’Reilly, Chatman, and Caldwell (1991) developed the Organizational Culture Profile (OCP) to provide a measure of the extent which there was a match between individual organizational members’ preferences for 26 cultural norms that characterized their organizations. The factors that emerged were: (1) innovation, (2) attention to detail, (3) out-come orientation, (4) aggressiveness, (5) supportiveness, (6) emphasis on rewards, (7) team orientation, and (8) decisiveness. A year later, the fit of personal preferences and organization norms correlated .28 with commitment, .36 with job satisfaction, and with greater retention after two years.
To assess the aspects of a corporate culture that contribute to organizational excellence more specifically, Sashkin (1986, 1988) extracted seven explicit and three implicit core values or beliefs from Peters and Waterman (1982). Included were task-relevant values, such as being the best at what the company does, attending to details in doing a job, importance of superior quality, service, economic growth, profits, and managers as “hands-on doers,” not just planners and administrators. Other values were more concerned with relationships: people, as individuals, are important; people in the organization should be innovators and should be able to take risks without feeling that they will be punished if they fail; informality is important, as is improving the flow of communication throughout the organization; and people should have fun doing their work. All these values need to be made explicit in a recognized organizational philosophy that is developed and supported by those at the top. Sashkin constructed the Organizational Beliefs Questionnaire to measure respondents’ estimations of whether others in their organization subscribed to such beliefs as “people in this organization believe in being the very best at what we do.” Construct validation was obtained by showing greater variance among rather than within 46 organizations. A total score reflecting the endorsement of values that promote excellence was found to be higher in more effective organizations.
Transformational Cultures. Bass and Avolio (1993) applied the transformational/transactional paradigm to portray organizational cultures. A transformational culture emphasized such concepts as: “we trust each other to do what’s right,” people go out of their way for the good of the department or organization,” and “new ideas are greeted with enthusiasm.” In a transactional culture, the concepts were: “rules and procedures limit discretionary behavior,” “decisions often require several levels of authorization,” and “we negotiate with each other for resources.” Cultures can be typed according to their transformational and transactional scores on the Organization Description Questionnaire (ODQ), as was done for 69 organizations, ranging from hospitals and police departments to civil service agencies and manufacturing firms. In a high-transformational–high-transactional contrast culture, there is much leadership and constructive conflict about the best ways to proceed. In a high-transformational–low-transactional organizational culture, there is much talk about purpose, vision, values, and fulfillment, without much need for formal agreements. Trust has been internalized, and expressiveness and creativity are high. Leaders emphasize confidence and improvement. Bureaucracies are opposite in type: low-transformational–high-transactional. A coasting organization is a mix of moderate-transformational and moderate-transactional values and behaviors. The leadership fails to make full use of the organization’s resources and opportunities. The garbage can organizational culture is neither transformational nor transactional. Leadership, consensus, and cooperation are absent. The organization is anarchic, without clear purposes or rules to control activities. The pedestrian organizational culture, with moderate-transactional rules and regulations but no transformational qualities manages to stagger along as a consequence of formal arrangements but with few improvements and risks (Bass & Avolio, 1993b). Not surprisingly, there is a strong linkage between the ODQ and the MLQ. As expected, leaders earn higher MLQ transformational leadership ratings from their followers in organizations assessed as transformational in culture on the ODQ. They earn higher transactional ratings in bureaucracies. Such high correlations were reported by Corrigan, Lickey, McCracken, et al. (2001) for 118 staff members in four Illinois mental health outpatient service agencies.
An organization’s culture derives from its antecedent leadership. Anecdotal evidence and discourse abound in considering how an organization’s leadership influences its culture. For Sayles and Wright (1985), the CEO’s behavior is the most important determinant of the organization’s culture. For Schein (1985), leadership is critical to the creation and maintenance of culture. One is likely to see a constant interplay between culture and leadership. Leaders create the mechanisms for cultural embedding and cultural reinforcement. Cultural norms arise and change because of what leaders attend to, their reactions to crises, their role modeling, and their recruitment strategies. For Schein, the organizational culture is taught by its leadership.
Bass (1988) observed that charismatic leaders create new cultures for their followers by creating new meanings for them. The process is advanced by frame alignment, or shared interpretive orientations of leader and followers (Snow, Rochford, Worden, et al., 1986). While transactional leaders work within their organizational culture, transformational leaders change them (Bass, 1998). Tichy and Ulrich (1984) thought that the tranformational leader needs to understand and realign the organization’s culture as a way of providing meaning, by making sense of symbols and events. The transformational director of Food for the Hungry/Kenya, an NGO, has been its servant leader as well and has built an organizational culture of shared responsibilities and leadership roles, a strong organizational identity, and a healthy sense of community (Kroll & Vandenberg, 1996).
Hickman and Silva (1984) argued that the two bases of effective organizational performance are strategic thinking and culture building by the leaders. Strategic thinking creates the vision of a firm’s future. The vision becomes a reality when the leaders build a culture that is dedicated to the vision. In contrast to transactional leadership, the leaders here are visionary executives who integrate creative insight and sensitivity to “forge the strategy-culture alloy.” These leaders combine versatility, focus, and patience to maintain the organization’s highly effective performance over the long term. According to Kiefer and Senge (1984), such leadership pushes for a “metanoic” organization, building on such assumptions as those that say that people are inherently good, honest, trustworthy, and purposeful; everyone has a unique contribution to make; and complex problems require local solutions. Leaders who build such cultures need to have personalities with a deep sense of vision and purposefulness. They are aligned around that vision and can balance reason and intuition, as well as empower others (Kiefer, 1986; Senge, 1980). Such leaders display much individualized consideration (Bass, 1985a). They facilitate and teach. They create rather than maintain and are personally involved with the development of key managers (Senge, 1984, 1986). Quinn (1988) applied his competing values model to set forth four alternate ways a leader orients an organization’s climate or culture. A climate or culture with a supportive orientation arises if the leader focuses on flexibility rather than control in the internal organization’s environment; an innovative orientation is built for the external environment with the same flexibility. On the other hand, if the leader is more concerned about control than flexibility, the internal environment will be rules-oriented and the external environment will be goal-oriented. Den Hartog, Muijen, and Koopman (1996) found, for 330 Dutch employees in 28 departments from five different organizations, that rules and goals orientations correlated more highly with transactional leadership (−.54, .61) than with transformational leadership (.42, .54). An innovative and supportive orientation correlated more highly with transformational leadership (−.72, −.69) than with transactional leadership (.52, .48). But emphasizing cultural rather than individual issues did not add to the impact of transformational leadership. In a survey of 4,454 executives rated by approximately 40,000 subordinates, Colvin (1996) reported that transformational leadership had the same positive effects on subordinates whether the executives focused on cultural issues such as setting visions and shaping values or on individual issues such as coaching and empowering. Organizational cultures can also create the negative effects of resistance to change and rejection of innovation and implementation.
The Leader as Cultural Transmitter. Kouzes and Posner (1987) emphasized the importance of the leader in transmitting the organization’s culture and values. An organization contains a network of “priests,” who maintain and bless the values; “storytellers,” who watch over the values; and “gossips,” who are key transmitters of the culture (Deal & Kennedy, 1982). Kotter and Heskett (1992, p. 84) argued that “the single most visible factor that distinguishes major cultural changes that succeed from those that fail is competent leadership at the top.” Leaders act as effective role models, articulate ideologies, and inspire commitment to both old and new values. They use cultural forms to communicate new values and help to institute cultural change (Trice & Beyer, 1991).
Leadership and Organizational Climate. As noted earlier, an important feature of an organization’s culture is its climate—the subjective feelings about the organization among those who work within it. Leaders influence the organizational climate through their behavior and decisions (Van Muijen, Koopman, et al., 1992). The climate directly affects how organizational members relate to one another and the culture within which they work (Den Hartog, Van Muijen, & Koopman, 1996). As might be expected, Kozlowski and Doherty (1989) showed that the quality of leader-subordinate relations was directly related to the satisfaction felt about the organization’s climate. Halpin and Croft (1962) found systematic connections among scales measuring different aspects of a school’s organizational climate and leadership and the response of teachers. Sheridan and Vredenburgh (1978a) showed that head nurses’ consideration and initiation of structure in a hospital could be explained partly by the turnover among staff members and the administrative climate, as measured by an instrument developed by Pritchard and Karasick (1973). J. L. Franklin (1975) examined similar relations in a broader organizational context. Particularly important to an organization’s climate is how clear its leaders make the organization’s goals to the members and convey a sense that the climate is one in which there is a high degree of trust.
For 78 executives described by 407 subordinates, Bass, Valenzi, Farrow, and Solomon (1975) used stepwise regression to determine that in organizations described as more trusting, more participative leadership behavior was observed. In organizations where the subordinates perceived clear goals, the managers were described as more directive, more likely to consult with their subordinates, and more likely to share decision making with the subordinates. In a follow-up, with descriptions by more than 1,200 subordinates of their superiors’ leadership behavior and aspects of the organization, Farrow, Valenzi, and Bass (1980) found that consultation was most frequent when an organization’s goals were clear and levels of trust were high. Similarly, according to Hunt, Osborn, and Schuler (1978), an organization with overall practices that promoted the clarity of jobs and clear standards increased the leaders’ supportive behavior toward their subordinates. Child and Ellis (1973) concluded that more delegation by the superior was seen if work roles were clear and much discretion was perceived in the organization’s climate.
In a survey study of 440 Indian managers from seven organizations, Ansari (1988) found that whether the climate was favorable or unfavorable affected the managers’ efforts to influence. If the climate was favorable, participative managers said they were more individually considerate to their subordinates and less likely to try to block or defy their bosses; task-oriented managers said they increased the use of their expertise and reasoning with both their bosses and their subordinates; and bureaucrats said they were more likely to challenge their subordinates and be ingratiating toward their boss. If the climate was unfavorable, participative managers said they were more likely to use coalition tactics, to manipulate their subordinates, and be more ingratiating with their bosses. The task-oriented managers said they were less defiant toward their bosses, and the bureaucrats said they were more assertive with their subordinates and more transactional and diplomatic with their bosses.
The creation of much of organizational culture is attributed to companies’ entrepreneurial founders (Pettigrew, 1973, 1979). Schein (1983) noted that a founder creates a culture from a preconceived cultural paradigm in his or her head. Then the founder’s and successor’s leadership shapes the culture and the mechanisms to restrain it. Schein and others assumed that a monolithic culture of shared values emerges that is guided and controlled by the founder. Martin, Sitkin, and Boehm’s (1985) detailed interview study with 700 employees of a young and growing electronics manufacturing firm in Silicon Valley, California, implied that the founders’ values may conflict to some extent with those of various constituencies in the firm. In this case, although 72% of the employees’ explanations of the company’s origins, quality control, and turnover agreed with the founders’ interpretations, 19% did not.
Some founders, such as Steven Jobs of Apple Computer, who do not have previous leadership and management experience or much formal education, form companies and originate corporate cultures that they then must leave to others to manage. Jobs subsequently returned to further continue Apple’s unique culture. Among the CEOs of the fastest-growing companies in the United States, three fourths were founders of their companies, and 83% like Walt Disney of Disney Productions and Ray Kroc of McDonald’s, never made plans to retire. They were not just inspired originators; they also had the credentials for long-term tenure. Most were highly educated. All but 19% were college graduates; 46% held graduate degrees, mostly in engineering. Bill Gates of Microsoft, a dropout from Harvard, was an exception. Half had managerial experience in a Fortune 500 company before founding their own company (Nicholson, 1983).
John DeLorean and Hyman Rickover are examples of founders of countercultures. Martin and Siehl (1983) described DeLorean’s counterculture, built within General Motors (GM) in reaction to GM’s dominant cultural values of deference to authority, invisibility, and loyalty. GM’s division heads, despite some degree of autonomy, were expected to conform closely to GM’s dominant values. Deference to authority was expressed, for instance, in the way subordinates were expected to meet their superiors from out of town at the airport, carry their bags, pay their hotel and meal bills, and chauffeur them around day and night. The higher the status of the superior, the more people would accompany him on the flight and the larger the retinue that would await him at the airport (p. 57).
DeLorean enraged his boss by failing to meet him at the airport, and thereby signaling disrespect for his boss’s authority. He also created and recounted stories about the foolish extravagances of subordinates who catered to the whims of visiting VIPs. In the GM culture, invisibility was expressed in such ways as maintaining standardized offices; eating together in the executive dining room; and adopting a uniform dress code of dark suit, white shirt, and blue or black tie. Again, DeLorean violated these rules—for example, in requesting a brighter, more modern and attractive office decor and dressing in a more fashionable but still conservative continental mode. Loyalty in the GM culture was expressed by not voicing criticisms in front of the corporate management. DeLorean invented stories to interpret the costs to GM of “group-think” and conformity.
DeLorean’s counterculture was an attempt to support the value of productivity instead of deference, of objective measures of performance instead of subjective indicators of conformity, and of independence instead of blind loyalty. But his deviance remained within tolerable limits until he left to found his own company, which had notorious consequences. It remained for Roger Smith, a new CEO, to reshape GM’s dominant culture. Ultimately, GM’s inflexibilities in management, marketing, and labor contracts forced radical reductions in size in 2006 to keep up with its competitors.
Hyman Rickover almost singlehandedly constructed a powerful naval counterestablishment in the Nuclear Reactors Branch of the U.S. Navy (Polmar & Allen, 1982). This branch became a separate elite nuclear establishment in de facto control, by 1980, of one third of the U.S. naval fleet! Rickover formed this counterestablishment for his self-satisfaction and to coincide with his personal views of what was wrong with the U.S. Navy’s values and practices, in general, and the U.S. Naval Academy at Annapolis, in particular. His manufactured culture included horrendous stress interviews that were of questionable validity for applicants, generally favoring graduates of NROTC rather than of the academy. Discipline was extreme, focused on overlearning and dedication. There was an intense emphasis on both detailed directive leadership and the practice of management by exception, which involved the bypassing of channels and weekly reports written personally to Rickover, There was an unrelenting pressure to work and study. Rickover, himself, set the workaholic pace in a spartan office with spartan lunches. He was almost always in civilian dress. Expertise took precedence over rank and specialization over general management.
As civilian chief of the Naval Reactors Branch of the Atomic Energy Commission and later, of the Department of Energy, then as the U.S. Navy’s chief for nuclear propulsion, Rickover was the nuclear organization’s network center. For two decades after he would have been retired by the U.S. Navy, he maintained his power, authority, and budget, bypassing the Navy and going directly to Congress. Although experiments with nuclear reactors for propulsion preceded him, he made himself the mythological originator. He rejected cost considerations in the decisions as to whether to build nuclear or conventional fleets. Only nuclear submarines and surface vessels were valued. The result of all this was a large, first-rate nuclear navy, built at the expense of a larger, possibly more nationally useful conventional fleet. A higher price was paid in financial and human costs than was necessary. The human costs were ultimately evidenced in the failure to maintain a sufficient number of volunteers for the nuclear submarine fleet (Polmar & Allen, 1982).
One does not have to construct a counterculture to improve the existing culture. The issue to which top management is particularly sensitive is the leadership required for managing organizational change in its culture. Such change is necessitated by new marketing requirements, new technologies, and new kinds of personnel (Bass, 1985a; Bennis & Nanus, 1985).
Leavitt (1986) and Tichy and Devanna (1986), among others, provided book-length advice, consistent with research results about transformational leaders, on how to accomplish the needed changes in the organizational culture. It is essential for top management to articulate the change that is required. The message may be of a vision that entails directive and persuasive leadership; it may permit modifications and contributions from others. Changes, consistent with the message, are introduced in the structure, processes, and practices. Sufficient participation is encouraged to generate commitment, loyalty, and involvement, accompanied by full, two-way communication with adequate feedback loops. Desired role and behavioral models of leadership begin at the top and are encouraged at each successive level below. Furthermore, leaders who are concerned about organizational renewal will seek to foster organizational cultures and climates that are hospitable and conducive to creativity, problem solving, risk taking, and experimentation. To foster cultural changes in an organization, say to shift it from a service to a market orientation (as with AT&T), leaders should first honor the past, returning to it for inspiration and instruction and identifying past objectives, principles, and still-successful approaches that will be maintained (Wilkins & Bristow, 1987). Kane (1984) described how the General Electric culture was changed in this way by the transformational leadership of Jack Welch. First, there was articulation of the changes that were desired. Next, the necessary changes in structure, processes, and practices were made and were widely communicated. Finally, new role and behavioral models were established. “Leaders must understand the interweaving of continuity and change … in long-term purposes and values.” Promotions should be made to ensure that these older values can survive despite the oncoming changes. Ceremonial events are needed to mourn the loss of the cherished past. Finally, changes should be organic, developing out of new ways that are already desired and providing reinforcement for new incremental efforts that are attempted and successful (J. W. Gardner, 1988b, p. 6).
Organizational Culture and Manipulation by Management. Mitchell (1985) contrasted the values explicit in two empirical studies of successful enterprises. One was Peters and Waterman’s (1982) In Search of Excellence, which identified 62 firms that had a history of growth, economic success, and innovativeness over a 25-year period.14 The other was Levering, Moskowitz, and Katz’s (1984) The 100 Best Companies to Work for in America. These were the 100 companies that employees most said they liked to work for. Only 21 of the 100 best-liked firms showed up among the 62 excellently managed companies mentioned by Peters and Waterman (1982). (There was considerable change in the lists between 1982 and 2006.) Management of the task-effective culture appeared to be manipulative. That is, in such a culture, people are valued not for themselves but as being instrumental to productivity. Employees’ values are shaped to increase their commitment to productivity, the institution, and the maintenance of the work ethic. The manipulation is done not through conviction but through myths, fables, and fairy tales about values that the management itself does not necessarily believe in.
The effort to manage meaning is a case in point. Charismatic leaders give meaning to employees’ efforts and goals by linking them to the employees’ values (Shamir & Howell, 1999). Although finding meaning in one’s work is intrinsically satisfying, an existential view of organizations and the importance of meaning in understanding organizational life has led to efforts to manage meaning at the cost of individual members’ authenticity (Maddi, 1989). A manager of meaning “is concerned with the tricks of the pedagogue, the mentor, the linguist, the more successfully to become the value shaper, the exemplar, the making of meanings” (Peters & Waterman, 1982, p. 82). In contrast, many of the 100 best companies to work for, according to their employees, stressed more truly relations-oriented values, such as making employees feel they were part of a team or family, encouraging open communication, encouraging suggestions, promoting from within, enabling people to feel pride in their products or services, sharing profits, reducing social distance, making the workplace as pleasant as possible, encouraging the employees’ participation in community service, matching employees’ savings funds, avoiding layoffs whenever possible, showing concern for employees’ health, and providing training and reimbursement of tuition.
Specific policy statements about these values were found among many of the 100 best-liked firms. For instance, Apple Computer stated that employees should be able to trust the motives and integrity of their supervisors. Armstrong declared that management should respect the dignity and inherent rights of the individual, maintain high moral and ethical standards, and reflect honesty, integrity, reliability, and forthrightness. According to the policy statements of Doyle Dane Bernbach, employees and the firm may refuse to work on advertising accounts for ethical reasons or on accounts that may have negative effects on the public. Other firms, such as Rolm, focused on honesty; Moog, on statements about the need for mutual trust and respect; and Celestial Seasonings, on dignity, fairness, kindness, and the professional treatment of all individuals and organizations with whom it works. Mitchell (1985) concluded that what seems to be the best-managed firms may be different from those for whom employees most like to work. The best-managed firms create a culture, with symbols and myths, to get employees to work harder and better; managements of the best-liked firms seem genuinely to care about the quality of the experience of everyone in the firm. In the former, management may practice consideration but really believe in exploitation; in the latter, a truer concern for others is seen in their employees’ evaluations. Showing the influence of positive psychology, Luthans (in press) concluded that management should focus on the strengths and capabilities of its people instead of trying to fix what is wrong with them. Singled out for attention would be an organizational culture that encourages self-efficacy, hope, optimism, subjective well-being, and emotional intelligence.
Schein (1985) suggested that culture manages management more than management manages culture. For instance, a strong organizational culture, with values and internal guidelines for more autonomy at lower levels, can prevent top management from increasing its personal power at the expense of middle management (Rubin & Berlew, 1984). Osborn and Ashforth (1990) concluded that the culture of complex high-technology organizations laden with high-risk liability, such as nuclear energy plants, affects its managers as well as its workers with myths and institutionalized structures that the leaders use to focus the attention of their subordinates. Trice and Beyer (1984, p. 666) noted that “managers need to learn to … assess not only the technical consequences of any activities and programs, but also … they need to learn … effective ceremonial skills. Some flair for the dramatic and the ability to be expressive in speech, writing, and gestures could be an asset in meeting … ceremonial requirements.”
Adaptive organizational cultures emphasize innovation, risk taking, open communications, teamwork, and enthusiasm. Nonadaptive cultures stress order, efficiency, and aversion to innovation and change. It follows that transformational leadership is more likely in adaptive organizational cultures and transactional leadership in nonadaptive cultures (Kotter & Heskett, 1992). In addition to individual cognitive processes, organizational culture affects the tendency of managers to “throw good money after bad” and continue failing courses of action. Rathburn, Miller, and Aniolek (2003) hypothesize that failing actions are often escalated as a consequence of cultural norms such as dishonest reporting, the valuing of impression management, and ambivalence about ethical considerations. Escalation is limited if the cultural norms diffuse blame for failure and stimulate generation of alternatives Managers particularly need to attend to the conservativeness, reflected in rites and ceremonials, that can hinder efforts to change the organization. They need to modify the rites and ceremonials, when it is possible to do so, to fit with the desired new directions for the organization. They can invent new rites to replace the old, some of which symbolize the value of change itself (Hedberg, Nystrom, & Starbuck, 1976). One example is the ceremonial introduction of a new product or process to replace an older one.
Lombardo (1983) described three corporations, each of whose different cultures (highly task-oriented, highly pragmatic, and highly considerate of others) resulted in the development of parallel differences among their respective managers. In the same way, Roberts’s (1986) survey described earlier, of the styles used by 350 business managers and university administrators with their subordinates, peers, and bosses found that managers in Type Z organizations (Japanese-style organizations) were less likely to be directive than were their counterparts in Type A (authoritarian, top-down organizations). Shamir, Zackay, and Popper (1998) asked soldiers in 50 field companies of the Israel Defense Forces to what extent their company had special slogans, special songs, special nicknames, special rituals, special jargon, and internal jokes. These provided a measure of each company’s culture. This soldier-rated company culture correlated .31 with the staff’s ratings of the company leader’s supportive leadership behavior (openness, friendliness, sensitivity toward their needs and feelings, giving them autonomy, and deemphasis on social and power distance from followers). Organizational culture also correlated .30 with the leader’s emphasis on collective identity using symbols and emphasis on differences from other companies. But culture did not correlate with exemplary leadership or with the leader’s emphasis on ideology.
Effects of Clan and Market Cultures. Kerr and Slocum (1987) identified two types of corporate reward systems that give rise to two different cultures—clan and market—and characteristically different leadership experiences. The clan is fraternal. Commitments are long-term; interests are mutual. There is stress on teamwork and pressure to conform. Socialization takes a long time, superiors are agents of socialization, and the culture governs a wide range of behaviors. The marketing culture is contractual, commitment is short-term, and self-interests dominate. There is less socialization, superiors are distant, and the cultural norms govern few behaviors. In the clan culture, one’s superior defines and evaluates, usually subjectively, one’s managerial performance. There is promotion from within, often connected with one’s need for further development. People are expected to do more than just what is agreed in contracts. Loyalty to the organization is exchanged for commitment to it. A contrasting market culture develops from a performance-based contingent reward system. One’s role is specifically defined and evaluated by objective financial outcomes. There is much less need for superior-subordinate interaction or concern for subordinates’ socialization and development. Presumably, the clan culture provides more potential for transformational leadership and the market culture, for more transactional leadership.
Effects of Kibbutz Ownership. The effects of the culture of kibbutzim on their top officials’ leadership of firms that the kibbutzim owned as cooperatives was contrasted to the leadership of counterpart publicly and privately owned Israeli business firms. Among a sample of 224 Israeli senior executives, the business executives were more directive, negotiative, and delegative and less participative than were the general managers of firms owned by the kibbutzim. They also had relatively greater power and were more assertive, but they did not differ from the executives of the kibbutzim-owned firms in the amount of consultation they did or how well informed they were (Chitayat & Venezia, 1984).
Instrumentality and Expressiveness in the Culture. Santner (1986) used the High School Characteristics Index to describe two schools, one with a lowinstrumental–low-expressive school climate and the other with a high-instrumental–high-expressive school climate,15 to show the different effects of the two climates on the character of those who emerged as student leaders in the two situations. In the low-instrumental–low-expressive school, personality-tested dominance and friendliness discriminated the formal leaders of official school groups as well as the informal leaders whom their peers distinguished from the nonleaders. In addition, in this low-instrumental–low-expressive school, highly achievement-oriented girls were most likely to be the formal leaders and lower-achievement-oriented boys were more likely to be the informal leaders. But in the high-instrumental–high-expressive school, tested dominance was the only significant factor that differentiated the leaders from the nonleaders.
Situational contingencies that influence the behavior of leaders and followers are emphasized in this chapter. Leader-subordinate relations within a group depend on societal influences, real outside relationships, and reference groups in the minds of both. Leaders who see economic externalities as most important tend to be more directive, whereas leaders who believe social or political influences from the outside to be more important tend to be more participative. The surrounding organization and its policies, size, structure, and culture are of special consequence to leader-subordinate interactions. Although an organization and its culture influence what is expected of the leaders and what they will do, the leaders in turn, shape their organizations and culture to fit their needs. Environmental factors external to the organization and cultural factors, both external and internal, influence leader-subordinate relations inside the organization. Small-group, task, and other situational factors of consequence will be examined further separately in the following chapters. The leader’s discretionary and non-discretionary behavior depend on organizational and environmental considerations. But equally important is the immediate group in which the leadership occurs—the subject that is discussed next.