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INSTITUTE OF ACCOUNTANCY ARUSHA
DEPARTMENT OF ACCOUNTING AND FINANCE
COURSE CODE: AFT 06209
COURSE TITLE: FUNDAMENTALS OF MANAGEMENT
TOPIC V: LEADING AS A MANAGEMENT FUNCTION
In this topic we will discuss about Leading as a management function.
MEANING OF LEADERSHIP
Refers to the process of influencing others so that they can willingly strive to achieve
identified objectives.
Leader- one who influences
Followers- those who are influenced
In a purely formal organizations leaders may be managers, superiors, supervisors, etc. and
followers may be employees, juniors, subordinates, etc.
Formal Leadership
When the ability to influence others is largely dependent on the formal authority which
one (the leader) possesses.
Formal authority is the power to influence others as derived from the leader’s official
position within an organization’s hierarchy of authority.
Formal leadership follows the chain of command and flows downward in the hierarchy
of authority from superior to subordinate.
Formal leadership is mostly effective in formal organizations.
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Informal Leadership
When the ability to influence others does not depend on the formal authority which
the leader possesses.
Informal leaders emerge spontaneously from within their groups.
Effectiveness of an informal leader largely relies upon the extent to which he/she
is accepted by the group.
Informal leaders may also be found in formal organizations. On fact, formal and
informal leadership co-exist in almost every organized work situation.
SOURCES OF LEADERSHIP POWER & INFLUENCE
In 1959, social psychologists John French and Bertram Raven identified five sources of power
widely used by managers and leaders to influence their subordinates. The five sources of power
and influence are: reward power, coercive power, legitimate power, expert power and referent
power.
i. Power of Reward
Using a reward to obtain power is something you may be familiar with from childhood. Perhaps
you were offered a trip to the amusement park if you earned good grades in school. Motivation
through the offering of reward is common, and when you have the ability to offer such a reward,
you have a source of power. Offering your employees the opportunity to leave work early if they
accomplish the desired task is using the power of reward.
ii. Power of Coercion
Coercive power is also something that you may be familiar with from childhood. A parent using
coercion will send a child to bed early if the child refuses to clean his room, just as an employer
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will threaten disciplinary action if an employee refuses to perform the desired task. When your
employee complies with your orders in an effort to avoid punishment, you have effectively utilized
coercion as a source of power.
iii. Legitimate Power
Legitimate power is power granted and recognized by your position. As a manager, you have
legitimate power over those who directly report to you. Your position is recognized as that of
authority, and your direct reports recognize they are obligated to comply with your requests. Even
when your direct report feels he has a better way to complete the task, your wishes will be followed
out of respect for your position.
iv. Expert Power
Being knowledgeable and experienced in your position provides you with a source of power
known as expert power. With expert power you do not require the title of manager, nor do you
need to be in any position of leadership to effectively influence those around you. The respect you
earn from your experience and knowledge becomes your source of power. Others will listen to you
and follow your guidance because of your high level of expertise.
v. Referent Power
When you admire someone, or when you feel that you relate to him, and this leads to a desire to
earn his approval, it can be said that he has a referent source of power. It is likely that you have
been influenced by, or have influenced others through referent power some time in your life. In a
basic sense, referent power is a son attempting to earn the approval of his father or mother. The
son will do what is asked of him, expecting approval or acceptance in return.
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TYPES OF LEADERSHIP STYLES
Below are common styles of leadership;
i. Autocratic Style
The phrase most illustrative of an autocratic leadership style is "Do as I say." Generally, an
autocratic leader believes that he or she is the smartest person at the table and knows more than
others. They make all the decisions with little input from team members.
ii. Authoritative Style
The phrase most indicative of this style of leadership (also known as "visionary") is "Follow me."
The authoritative leadership style is the mark of confident leaders who map the way and set
expectations, while engaging and energizing followers along the way.
Unlike autocratic leaders, authoritative leaders take the time to explain their thinking: They don't
just issue orders. Most of all, they allow people choice and latitude on how to achieve common
goals.
iii. Pacesetting Style
"Do as I do!" is the phrase most indicative of leaders who utilize the pacesetting style. This style
describes a very driven leader who sets the pace as in racing. Pacesetters set the bar high and push
their team members to run hard and fast to the finish line.
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While the pacesetter style of leadership is effective in getting things done and driving for results,
it's a style that can hurt team members. For one thing, even the most driven employees may become
stressed working under this style of leadership in the long run.
iv. Democratic Style
Democratic leaders are more likely to ask "What do you think?" They share information with
employees about anything that affects their work responsibilities. They also seek employees'
opinions before approving a final decision.
There are numerous benefits to this participative leadership style. It can engender trust and promote
team spirit and cooperation from employees. It allows for creativity and helps employees grow
and develop. A democratic leadership style gets people to do what you want to be done but in a
way that they want to do it.
v. Coaching Style
When you having a coaching leadership style, you tend to have a "Consider this" approach. A
leader who coaches views people as a reservoir of talent to be developed. The leader who uses a
coach approach seeks to unlock people's potential.
Leaders who use a coaching style open their hearts and doors for people. They believe that
everyone has power within themselves. A coaching leader gives people a little direction to help
them tap into their ability to achieve all that they're capable of.
vi. Affiliative Style
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A phrase often used to describe this type of leadership is "People come first." Of all the leadership
styles, the affiliative leadership approach is one where the leader gets up close and personal with
people. A leader practicing this style pays attention to and supports the emotional needs of team
members. The leader strives to open up a pipeline that connects him or her to the team.
Ultimately, this style is all about encouraging harmony and forming collaborative relationships
within teams. It's particularly useful, for example, in smoothing conflicts among team members or
reassuring people during times of stress.
vii. Laissez-Faire Style
The laissez-faire leadership style is at the opposite end of the autocratic style. Of all the leadership
styles, this one involves the least amount of oversight. You could say that the autocratic style leader
stands as firm as a rock on issues, while the laissez-faire leader lets people swim with the current.
On the surface, a laissez-faire leader may appear to trust people to know what to do, but taken to
the extreme, an uninvolved leader may end up appearing aloof. While it's beneficial to give people
opportunities to spread their wings, with a total lack of direction, people may unwittingly drift in
the wrong direction i.e. away from the critical goals of the organization.
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