Managerial Communication and Corporate Reputation Describe how corporate reputations are defined by how an organization communicates to its stakeholders. Management communication is a central discipline in the study of communication and corporate reputation. An understanding of language and its inherent powers, combined with the skill to speak, write, listen, and form interpersonal relationships, will determine whether companies succeed or fail and whether they are rewarded or penalized for their reputations. At the midpoint of the twentieth century, Peter Drucker wrote, “Managers have to learn to know language, to understand what words are and what they mean. Perhaps most important, they have to acquire respect for language as [our] most precious gift and heritage. The manager must understand the meaning of the old definition of rhetoric as ‘the art which draws men’s hearts to the love of true knowledge.’” Drucker, P. F. (1954). The Practice of Management . New York: Harper & Row. Later, Eccles and Nohria reframed Drucker’s view to offer a perspective of management that few others have seen: “To see management in its proper light, managers need first to take language seriously.” Eccles, R. G. & Noria, N. (1992). Beyond the Hype: Rediscovering the Essence of Management . Boston: The Harvard Business School Press, p. 205. In particular, they argue, a coherent view of management must focus on three issues: the use of rhetoric to achieve a manager’s goals, the shaping of a managerial identity, and taking action to achieve the goals of the organizations that employ us. Above all, they say, “the essence of what management is all about [is] the effective use of language to get things done.” Ibid, p. 211. One of the things managers get done is the creation, management, and monitoring of corporate reputation. The job of becoming a competent, effective manager thus becomes one of understanding language and action. It also involves finding ways to shape how others see and think of you in your role as a manager. Many noted researchers have examined the important relationship between communication and action within large and complex organizations and conclude that the two are inseparable. Without the right words, used in the right way, it is unlikely that the right reputations develop. “Words do matter,” write Eccles and Nohria. “They matter very much. Without words we have no way of expressing strategic concepts, structural forms, or designs for performance measurement systems.” Language, they conclude, “is too important to managers to be taken for granted or, even worse, abused.” Ibid, p. 209. So, if language is a manager’s key to corporate reputation management, the next question is obvious: How good are managers at using language? Managers’ ability to act—to hire a talented workforce, to change an organization’s reputation, to launch a new product line—depends entirely on how effectively they use management communication, both as a speaker and as a listener. Managers’ effectiveness as a speaker and writer will determine how well they are able to manage the firm’s reputation. And their effectiveness as listeners will determine how well they understand and respond to others and can change the organization in response to their feedback. We will now examine the role management communication plays in corporate reputation formation, management, and change and the position occupied by rhetoric in the life of business organizations. Though, this chapter will focus on the skills, abilities, and competencies for using language, attempting to influence others, and responding to the requirements of peers, superiors, stakeholders, and the organization in which managers and employees work. Management communication is about the movement of information and the skills that facilitate it—speaking, writing, listening, and processes of critical thinking. It’s also about understanding who your organization is (identity), who others think your organization is (reputation), and the contributions individuals can make to the success of their business considering their organization’s existing reputation. It is also about confidence—the knowledge that one can speak and write well, listen with great skill as others speak, and both seek out and provide the feedback essential to creating, managing, or changing their organization’s reputation. At the heart of this chapter, though, is the notion that communication, in many ways, is the work of managers. We will now examine the roles of writing and speaking in the role of management, as well as other specific applications and challenges managers face as they play their role in the creation, maintenance, and change of corporate reputation. How are corporate reputations affected by the communication of managers and public statements? Why is corporate reputation important? Describe how corporate reputations are defined by how an organization communicates to all of its stakeholders. It is important for managers to understand what your organization stands for (identity), what others think your organization is (reputation), and the contributions individuals can make to the success of the business considering their organization’s existing reputation. It is also about confidence—the knowledge that one can speak and write well, listen with great skill as others speak, and both seek out and provide the feedback essential to creating, managing, or changing their organization’s reputation.

Business


The Major Channels of Management Communication Are Talking, Listening, Reading, and Writing Know why talking, listening, reading, and writing are vital to managing effectively. The major channels of managerial communication displayed in are talking, listening, reading, and writing. Among these, talking is the predominant method of communicating, but as e-mail and texting increase, reading and writing are increasing. Managers across industries, according to Deirdre Borden, spend about 75% of their time in verbal interaction. Those daily interactions include the following. Reading, Writing, Speaking, and Listening: How They Help in Creating Meaning (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license) One-on-One Conversations Increasingly, managers find that information is passed orally, often face-to-face in offices, hallways, conference rooms, cafeterias, restrooms, athletic facilities, parking lots, and literally dozens of other venues. An enormous amount of information is exchanged, validated, confirmed, and passed back and forth under highly informal circumstances. Telephone Conversations Managers spend an astounding amount of time on the telephone these days. Curiously, the amount of time per telephone call is decreasing, but the number of calls per day is increasing. With the nearly universal availability of cellular and satellite telephone service, very few people are out of reach of the office for very long. The decision to switch off a cellular telephone, in fact, is now considered a decision in favor of work-life balance. Video Teleconferencing Bridging time zones as well as cultures, videoconferencing facilities make direct conversations with employees, colleagues, customers, and business partners across the nation or around the world a simple matter. Carrier Corporation, the air-conditioning manufacturer, is now typical of firms using desktop videoconferencing to conduct everything from staff meetings to technical training. Engineers at Carrier’s Farmington, Connecticut, headquarters can hook up with service managers in branch offices thousands of miles away to explain new product developments, demonstrate repair techniques, and update field staff on matters that would, just recently, have required extensive travel or expensive, broadcast-quality television programming. Their exchanges are informal, conversational, and not much different than they would be if the people were in the same room. Ziegler, B. (1994). “Video Conference Calls Change Business,” Wall Street Journal , October 13, 1994, pp. B1, B12. Presentations to Small Groups Managers frequently find themselves making presentations, formal and informal, to groups of three to eight people for many different reasons: they pass along information given to them by executives, they review the status of projects in process, and they explain changes in everything from working schedules to organizational goals. Such presentations are sometimes supported by overhead transparencies or printed outlines, but they are oral in nature and retain much of the conversational character of one-to-one conversations. Public Speaking to Larger Audiences Most managers are unable to escape the periodic requirement to speak to larger audiences of several dozen or, perhaps, several hundred people. Such presentations are usually more formal in structure and are often supported by PowerPoint or Prezi software that can deliver data from text files, graphics, photos, and even motion clips from streaming video. Despite the more formal atmosphere and sophisticated audio-visual support systems, such presentations still involve one manager talking to others, framing, shaping, and passing information to an audience. A series of scientific studies, beginning with Rankin, Nichols and Stevens, and Wolvin and Coakley, confirm: most managers spend the largest portion of their day talking and listening. Rankin, P. T. (1952). The Measurement of the Ability to Understand Spoken Language. (unpublished Ph.D. dissertation, University of Michigan, 1926). Dissertation Abstracts 12, No. 6 (1952), pp. 847–848; Nichols, R. G. & Stevens, L. (1957). Are You Listening? New York: McGraw-Hill; and Wolvin, A. D. & Coakley, C. G. (1982). Listening . Dubuque, IA: Wm. C. Brown and Co.; and Werner, E. K. (1975). A Study of Communication Time. (M.S. thesis, University of Maryland, College Park) Werner’s thesis, in fact, found that North American adults spend more than 78% of their communication time either talking or listening to others who are talking. According to Werner and others who study the communication habits of postmodern business organizations, managers are involved in more than just speeches and presentations from the dais or teleconference podium. They spend their days in meetings, on the telephone, conducting interviews, giving tours, supervising informal visits to their facilities, and at a wide variety of social events. Kotter, J. P. (1999). “What Effective General Managers Really Do,” Harvard Business Review , March–April 1999, pp. 145–159 Public speaking Public speaking is often a terrifying but crucial skill for managers. (Credit: Mike Mozart/ flickr/ Attribution 2.0 Generic (CC BY 2.0)) Each of these activities may look to some managers like an obligation imposed by the job. Shrewd managers see them as opportunities to hear what others are thinking, to gather information informally from the grapevine, to listen in on office gossip, to pass along viewpoints that haven’t yet made their way to the more formal channels of communication, or to catch up with a colleague or friend in a more relaxed setting. No matter what the intention of each manager who engages in these activities, the information they produce and the insight that follows from them can be put to work the same day to achieve organizational and personal objectives. “To understand why effective managers behave as they do,” writes Kotter, “it is essential first to recognize two fundamental challenges and dilemmas found in most of their jobs.” Managers must first figure out what to do, despite an enormous amount of potentially relevant information (along with much that is not), and then they must get things done “through a large and diverse group of people despite having little direct control over most of them.” Berger, P. L. & Luckmann, T. (1966). The Social Construction of Reality . New York: Doubleday; and Searle, J. R. (1967). The Construction of Social Reality . New York: The Free Press, 1995. The Role of Writing Writing plays an important role in the life of any organization. In some organizations, it becomes more important than in others. At Procter & Gamble, for example, brand managers cannot raise a work-related issue in a team meeting unless the ideas are first circulated in writing. For P&G managers, this approach means explaining their ideas in explicit detail in a standard one-to-three-page memo, complete with background, financial discussion, implementation details, and justification for the ideas proposed. Other organizations are more oral in their traditions—3M Canada is a “spoken” organization—but the fact remains: the most important projects, decisions, and ideas end up in writing. Writing also provides analysis, justification, documentation, and analytic discipline, particularly as managers approach important decisions that will affect the profitability and strategic direction of the company. Writing is a career sifter. If managers demonstrate their inability to put ideas on paper in a clear, unambiguous fashion, they’re not likely to last. Stories of bad writers who’ve been shown the door early in their careers are legion. Managers’ principal objective, at least during the first few years of their career, is to keep their name out of such stories. Remember: those who are most likely to notice the quality and skill in managers’ written documents are the very people most likely to matter to managers’ future. Managers do most of their own writing and editing. The days when managers could lean back and thoughtfully dictate a letter or memo to a skilled secretarial assistant are mostly gone. Some senior executives know how efficient dictation can be, especially with a top-notch administrative assistant taking shorthand, but how many managers have that advantage today? Very few, mostly because buying a computer and printer is substantially cheaper than hiring another employee. Managers at all levels of most organizations draft, review, edit, and dispatch their own correspondence, reports, and proposals. Documents take on lives of their own. Once it’s gone from the manager’s desk, it isn’t theirs anymore. When they sign a letter and put it in the mail, it’s no longer their letter—it’s the property of the person or organization it was sent to. As a result, the recipient is free to do as she sees fit with the writing, including using it against the sender. If the ideas are ill-considered or not well expressed, others in the organization who are not especially sympathetic to the manager’s views may head for the copy machine with the manager’s work in hand. The advice for managers is simple: do not mail the first draft, and do not ever sign your name to a document you are not proud of. Communication Is Invention Without question, communication is a process of invention. Managers literally create meaning through communication. A company, for example, is not in default until a team of auditors sits down to examine the books and review the matter. Only after extended discussion do the accountants conclude that the company is, in fact, in default. It is their discussion that creates the outcome. Until that point, default was simply one of many possibilities. The fact is managers create meaning through communication. It is largely through discussion and verbal exchange—often heated and passionate—that managers decide who they wish to be: market leaders, takeover artists, innovators, or defenders of the economy. It is only through communication that meaning is created for shareholders, employees, customers, and others. Those long, detailed, and intense discussions determine how much the company will declare in dividends this year, whether the company is willing to risk a strike or labor action, and how soon to roll out the new product line customers are asking for. Additionally, it is important to note that managers usually figure things out by talking about them as much as they talk about the things they have already figured out. Talk serves as a wonderful palliative: justifying, analyzing, dissecting, reassuring, and analyzing the events that confront managers each day. Information Is Socially Constructed If we are to understand just how important human discourse is in the life of a business, several points seem especially important. Information is created, shared, and interpreted by people. Meaning is a truly human phenomenon. An issue is only important if people think it is. Facts are facts only if we can agree upon their definition. Perceptions and assumptions are as important as truth itself in a discussion about what a manager should do next. Larkin, T. J. & Larkin, S. (1994). Communicating Change: Winning Employee Support for New Business Goals . New York: McGraw-Hill. Information never speaks for itself. It is not uncommon for a manager to rise to address a group of her colleagues and say, “The numbers speak for themselves.” Frankly, the numbers never speak for themselves. They almost always require some sort of interpretation, some sort of explanation or context. Do not assume that others see the facts in the same way managers do, and never assume that what is seen is the truth. Others may see the same set of facts or evidence but may not reach the same conclusions. Few things in life are self-explanatory. Context always drives meaning. The backdrop to a message is always of paramount importance to the listener, viewer, or reader in reaching a reasonable, rational conclusion about what they see and hear. What’s in the news these days as we take up this subject? What moment in history do we occupy? What related or relevant information is under consideration as this new message arrives? We cannot possibly derive meaning from one message without considering everything else that surrounds it. A messenger always accompanies a message. It is difficult to separate a message from its messenger. We often want to react more to the source of the information than we do to the information itself. That’s natural and entirely normal. People speak for a reason, and we often judge their reasons for speaking before analyzing what they have to say. Keep in mind that, in every organization, message recipients will judge the value, power, purpose, intent, and outcomes of the messages they receive by the source of those messages as much as by the content and intent of the messages themselves. If the messages managers send are to have the impact hoped for, they must come from a source the receiver knows, respects, and understands. Managers’ Greatest Challenge Every manager knows communication is vital, but every manager also seems to “know” that she is great at it. Managers’ greatest challenge is to admit to flaws in their skill set and work tirelessly to improve them. First, managers must admit to the flaws. Larkin and Larkin write, “Deep down, managers believe they are communicating effectively. In ten years of management consulting, we have never had a manager say to us that he or she was a poor communicator. They admit to the occasional screw-up, but overall, everyone, without exception, believes he or she is basically a good communicator.” Ibid. Managers’ Task as Professionals As a professional manager, the first task is to recognize and understand one’s strengths and weaknesses as a communicator. Until these communication tasks at which one is most and least skilled are identified, there will be little opportunity for improvement and advancement. Foremost among managers’ goals should be to improve existing skills. Improve one’s ability to do what is done best. Be alert to opportunities, however, to develop new skills. Managers should add to their inventory of abilities to keep themselves employable and promotable. Two other suggestions come to mind for improving managers’ professional standing. First, acquire a knowledge base that will work for the years ahead. That means speaking with and listening to other professionals in their company, industry, and community. They should be alert to trends that could affect their company’s products and services, as well as their own future. It also means reading. Managers should read at least one national newspaper each day, including the Wall Street Journal , the New York Time s, or the Financial Times , as well as a local newspaper. Their reading should include weekly news magazines, such as U.S. News & World Report, Bloomberg’s Business Week , and the Economist . Subscribe to monthly magazines such as Fast Company and Fortune . And they should read at least one new hardcover title a month. A dozen books each year is the bare minimum on which one should depend for new ideas, insights, and managerial guidance. Managers’ final challenge is to develop the confidence needed to succeed as a manager, particularly under conditions of uncertainty, change, and challenge. Disney and H-1B Visas On January 30, 2015, The Walt Disney Company laid off 250 of its IT workers. In a letter to the laid-off workers, Disney outlined the conditions for receipt of a “stay bonus,” which would entitle each worker to a lump-sum payment of 10% of her annual salary. Of course, there was a catch. Only those workers who trained their replacements over a 90-day period would receive the bonus. One American worker in his 40s who agreed to Disney’s severance terms explained how it worked in action: “The first 30 days was all capturing what I did. The next 30 days, they worked side by side with me, and the last 30 days, they took over my job completely. I had to make sure they were doing my job correctly.” To outside observers, this added insult to injury. It was bad enough to replace U.S. workers with cheaper, foreign labor. But to ask, let alone strong-arm, the laid-off workers into training their replacements seemed a bit much. However unfortunate, layoffs are commonplace. But this was different. From the timing to the apparent neglect of employee pride, the sequence of events struck a nerve. For many, the issue was simple, and Disney’s actions seemed wrong at a visceral level. As criticism mounted, it became clear that this story would develop legs. Disney had a problem. For David Powers and Leo Perrero, each a 10-year information technology (IT) veteran at Disney, the invitation came from a vice president of the company. It had to be good news, the men thought. After all, they were not far removed from strong performance reviews—perhaps they would be awarded performance bonuses. Well, not exactly. Leo Perrero, one of the summoned workers, explains what happened next. “I’m in the room with about two-dozen people, and very shortly thereafter an executive delivers the news that all of our jobs are ending in 90 days, and that we have 90 days to train our replacements or we won’t get a bonus that we’ve been offered.” Powers explained the deflating effect of the news: “When a guillotine falls down on you, in that moment you're dead . . . and I was dead.” These layoffs and the hiring of foreign workers under the H-1B program lay at the center of this issue. Initially introduced by the Immigration and Nationality Act of 1965, subsequent modifications produced the current iteration of the H-1B visa program in 1990. Importantly, at that time, the United States faced a shortage of skilled workers necessary to fill highly technical jobs. Enter the H-1B visa program as the solution. This program permits U.S. employers to temporarily employ foreign workers in highly specialized occupations. “Specialty occupations” are defined as those in the fields of architecture, engineering, mathematics, science, medicine, and others that require technical and skilled expertise. Congress limited the number of H-1B visas issued to 85,000 per year. That total is divided into two subcategories: “65,000 new H-1B visas issued for overseas workers in professional or specialty occupation positions, and an additional 20,000 visas available for those with an advanced degree from a U.S. academic institution.” Further, foreign workers are not able to apply for an H-1B visa. Instead, a U.S. employer must petition on their behalf no earlier than six months before the starting date of employment. In order to be eligible for an employer to apply a foreign worker for an H-1B visa, the worker needed to meet certain requirements, such as an employee-employer relationship with the petitioning U.S. employer and a position in a specialty occupation related to the employee’s field of study, where the employee must meet one of the following criteria: a bachelor’s degree or the foreign equivalent of a bachelor’s degree, a degree that is standard for the position, or previous qualified experience within the specialty occupation. If approved, the initial term of the visa is three years, which may be extended an additional three years. While residing in the United States on an H-1B visa, a worker may apply to become a permanent resident and receive a green card, which would entitle the worker to remain indefinitely. U.S. employers are required to file a Labor Condition Application (LCA) on behalf of each foreign worker they seek to employ. That application must be approved by the U.S. Department of Labor. The LCA requires the employer to assure that the foreign worker will be paid a wage and be provided working conditions and benefits that meet or exceed the local prevailing market and to assure that the foreign worker will not displace a U.S. worker in the employer’s workforce. Given these representations, U.S. employers have increasingly been criticized for abuse of the H-1B program. Most significantly, there is rising sentiment that U.S. employers are displacing domestic workers in favor of cheaper foreign labor. Research indicates that a U.S. worker’s salary for these specialty occupations often exceeds $100,000, while that of a foreign worker is roughly $62,000 for the very same job. The latter figure is telling, since $60,000 is the threshold below which a salary would trigger a penalty. Disney faced huge backlash and negative press because of the layoffs and hiring of foreign workers. Because of this, Disney had communication challenges, both internally and externally. Disney executives framed the layoffs as part of a larger plan of reorganization intended to enable its IT division to focus on driving innovation. Walt Disney World spokesperson Jacquee Wahler gave the following explanation: “We have restructured our global technology organization to significantly increase our cast member focus on future innovation and new capabilities , and are continuing to work with leading technical firms to maintain our existing systems as needed.” (Italics added for emphasis.) That statement is consistent with a leaked memo drafted by Disney Parks and Resort CIO Tilak Mandadi, which he sent to select employees on November 10, 2014 (not including those who would be laid off), to explain the rationale for the impending layoffs. The memo read, in part, as follows: “To enable a majority of our team to shift focus to new capabilities , we have executed five new managed services agreements to support testing services and application maintenance. Last week, we began working with both our internal subject matter experts and the suppliers to start transition planning for these agreements. We expect knowledge transfer to start later this month and last through January. Those Cast Members who are involved will be contacted in the next several weeks.” Responding to the critical New York Times article, Disney represented that when all was said and done, the company had in fact produced a net jobs increase. According to Disney spokesperson Kim Prunty: “Disney has created almost 30,000 new jobs in the U.S. over the past decade, and the recent changes to our parks’ IT team resulted in a larger organization with 70 additional in-house positions in the U.S. External support firms are responsible for complying with all applicable employment laws for their employees.” New jobs were promised due to the restructuring, Disney officials said, and employees targeted for termination were pushed to apply for those positions. According to a confidential Disney source, of the approximately 250 laid-off employees, 120 found new jobs within Disney, 40 took early retirement, and 90 were unable to secure new jobs with Disney. On June 11, 2015, Senator Richard Durbin of Illinois and Senator Jeffrey Sessions of Alabama released a statement regarding a bipartisan letter issued to the attorney general, the Department Homeland Security, and the Department of Labor. “A number of U.S. employers, including some large, well-known, publicly-traded corporations, have laid off thousands of American workers and replaced them with H-1B visa holders . . . . To add insult to injury, many of the replaced American employees report that they have been forced to train the foreign workers who are taking their jobs. That’s just plain wrong and we’ll continue to press the Administration to help solve this problem.” In response to request for comment on the communications issues raised by the Disney layoffs and aftermath, New York Times columnist Julia Preston shared the following exclusive analysis: “I would say Disney’s handling of those lay-offs is a case study in how not to do things. But in the end it’s not about the communications, it’s about the company. Those layoffs showed a company that was not living up to its core vaunted family values and no amount of shouting by their communications folks could change the facts of what happened.” Questions for Discussion Is it ethical for U.S. companies to lay off workers and hire foreign workers under the H-1B program? Should foreign countries restrict the hiring of foreign workers that meet their workforce requirements? Discuss the internal and external communications that Disney employed in this situation. The examples here are of the formal written communications. What should Disney have been communicating verbally to their employees and externally? Sources: Preston, Julia, Pink Slips at Disney. But First, Training Foreign Replacements , The New York Times June 3, 2015, http://www.nytimes.com/2015/06/04/us/last-task-after-layoff-at-disney-train-foreign-replacements.html; Vargas, Rebecca, EXCLUSIVE: Former Employees Speak Out About Disney's Outsourcing of High-Tech Jobs , WWSB ABC 7 (Oct. 28, 2015), http://www.mysuncoast.com/news/local/exclusive-former-employees-speak-out-about-disney-s-outsourcing-of/article_d8867148-7d8c-11e5-ae40-fb05081380c1.html; Boyle, Mathew, Ahead of GOP Debate, Two Ex-Disney Workers Displaced by H1B Foreigners Speak Out for First Time, Breitbart.com, October 28, 2015 , http://www.breitbart.com/big-government/2015/10/28/ahead-of-gop-debate-two-ex-disney-workers-displaced-by-h1b-foreigners-speak-out-for-first-time; Sandra Pedicini, Tech Workers File Lawsuits Against Disney Over H-1B Visas , Orlando Sentinel , published January 25, 2016, accessed February 6, 2016, available at http://www.orlandosentinel.com/business/os-disney-h1b-visa-lawsuit-20160125-story.html; U.S. Citizenship and Immigration Services, Understanding H-1B Requirements, accessed February 6, 2016, available at https://www.uscis.gov/eir/visa-guide/h-1b-specialty-occupation/understanding-h-1b-requirements; May, Caroline, Sessions, Durbin: Department Of Labor Has Launched Investigation Into H-1B Abuses, Breitbart.com (June 11, 2015), http://www.breitbart.com/big-government/2015/06/11/sessions-durbin-department-of-labor-has-launched-investigation-into-h-1b-abuses/; Email from Julia Preston, National Immigration Correspondent, The New York Times, to Bryan Shannon, co-author of this case study, dated February 10, 2016. What are the four components of communication discussed in this section? Why is it important to understand your limitations in communicating to others and in larger groups? Why should managers always strive to improve their skills? Describe the roles that managers perform in organizations. There are special communication roles that can be identified. Managers may serve as gatekeepers, liaisons, or opinion leaders. They can also assume some combination of these roles. It is important to recognize that communication processes involve people in different functions and that all functions need to operate effectively to achieve organizational objectives. Chapter Review Questions Describe the communication process. Why is feedback a critical part of the communication process? What are some things that managers can do to reduce noise in communication? Compare and contrast the three primary forms of interpersonal communication. Describe the various individual communication roles in organizations. How can managers better manage their effectiveness by managing e-mail communication? Which communication roles are most important in facilitating managerial effectiveness? Identify barriers to effective communication. How can barriers to effective communication be overcome by managers? Managerial Skills Application Exercises The e-mails below are not written as clearly or concisely as they could be. In addition, they may have problems in organization or tone or mechanical errors. Rewrite them so they are appropriate for the audience and their purpose. Correct grammatical and mechanical errors. Finally, add a subject line to each. E-Mail 1 To: Employees of The Enormously Successful Corporation From: CEO of The Enormously Successful Corporation Subject: Stop bringing bottled soft drinks, juices and plastic straws to work. Its an environment problem that increases our waste and the quality of our water is great. People don’t realize how much wasted energy goes into shipping all that stuff around, and plastic bottles, aluminum cans and straws are ruining our oceans and filling land fills. Have you seen the floating island of waste in the Pacific Ocean? Some of this stuff comes from other countries like Canada Dry I think is from canada and we are taking there water and Canadians will be thirsty. Fancy drinks isn’t as good as the water we have and tastes better anyway. E-Mail 2 To: All Employees From: Management Subject: Our Committee to Improve Inter-Office Communication has decided that there needs to be an update and revision of our policy on emailing messages to and from those who work with us as employees of this company. The following are the results of the committee’s decisions, and constitute recommendations for the improvement of every aspect of email communication. Too much wordiness means people have to read the same thing over and over repeatedly, time after time. Eliminating unnecessary words, emails can be made to be shorter and more to the point, making them concise and taking less time to read. You are only allowed to send and receive messages between 8:30AM east coat time and 4:30PM east coast time. You are also not allowed to read e-mails outside of these times. We know that for those of you on the west coast or travelling internationally it will reduce the time that you are allowed to attend to e-mail, but we need this to get it under control. You are only allowed to have up to 3 recipients on each e-mail. If more people need to be informed it is up to the people to inform them. Write a self-evaluation that focuses specifically on your class participation in this course. Making comments during class allows you to improve your ability to speak extemporaneously, which is exactly what you will have to do in all kinds of business situations (e.g., meetings, asking questions at presentations, one-on-one conversations). Thus, write a short memo (two or three paragraphs) in which you describe the frequency with which you make comments in class, the nature of those comments, and what is easy and difficult for you when it comes to speaking up in class. If you have made few (or no) comments during class, this is a time for us to come up with a plan to help you overcome your shyness. Our experience is that as soon as a person talks in front of a group once or twice, it becomes much easier—so we need to come up with a way to help you break the ice. Finally, please comment on what you see as the strengths and weaknesses of your discussions and presentations in this class. Refer to the photo in . Comment on the body language exhibited by each person at the meeting and how engaged they are in the communication. In the movie The Martian , astronaut Mark Watney (played by Matt Damon) is stranded on Mars with limited ability to communicate with mission control. Watney holds up questions to a camera that can transmit photographs of his questions, and mission control could respond by pointing the camera at a “yes” or “no” card with the camera. Eventually, they are able to exchange “text” messages but no voice exchanges. Also, there is a significant time delay between the sending and receipt of the messages. Which part of the communication process would have to be addressed to ensure that the encoding of the messages, the decoding of the messages, and that noise is minimized by Watney and mission control? Managerial Decision Exercises Ginni Rometty is the CEO of IBM. Shortly after taking on the role of CEO and being frustrated by the progress and sales performance, Rometty released a five-minute video to all 400,000 plus IBM employees criticizing the lack of securing deals to competitors and lashed out at the sales organization for poor sales in the preceding quarter. Six months later, Rometty sent another critical message, this time via e-mail. How effective will the video and e-mail be in communicating with employees? How should she follow up to these messages? Social media, such as Facebook, is now widespread. Place yourself as a manager that has just received a “friend” request from one of your direct reports. Do you accept, reject, or ignore the request? Why, and what additional communication would you have regarding this with the employee? During a cross-functional meeting, one of the attendees who reports to a manager who is also at the meeting accuses one of your reports of not being fit for the position she is in. You disagree and feel that your report is a good fit for her role. How do you handle this? Critical Thinking Case Facebook, Inc. Facebook has been in the news with criticism of its privacy policies, sharing customer information with Fusion GPS, and criticism regarding the attempts to influence the 2016 election. In March 2014, Facebook released a study entitled “Experimental evidence of massive-scale emotional contagion through social networks.” It was published in the Proceedings of the National Academy of Sciences (PNAS) , a prestigious, peer-reviewed scientific journal. The paper explains how social media can readily transfer emotional states from person to person through Facebook’s News Feed platform. Facebook conducted an experiment on members to see how people would respond to changes in a percentage of both positive and negative posts. The results suggest that emotional contagion does occur online and that users’ positive expressions can generate positive reaction, while, in turn, negative expression can generate negative reaction. Facebook has two separate value propositions aimed at two different markets with entirely different goals. Originally, Facebook’s main market was its end users—people looking to connect with family and friends. At first, it was aimed only at college students at a handful of elite schools. The site is now open to anyone with an Internet connection. Users can share status updates and photographs with friends and family. And all of this comes at no cost to the users. Facebook’s other major market is advertisers, who buy information about Facebook’s users. The company regularly gathers data about page views and browsing behavior of users in order to display targeted advertisements to users for the benefit of its advertising partners. The value proposition of the Facebook News Feed experiment was to determine whether emotional manipulation would be possible through the use of social networks. This clearly could be of great value to one of Facebook’s target audiences—its advertisers. The results suggest that the emotions of friends on social networks influence our own emotions, thereby demonstrating emotional contagion via social networks. Emotional contagion is the tendency to feel and express emotions similar to and influenced by those of others. Originally, it was studied by psychologists as the transference of emotions between two people. According to Sandra Collins, a social psychologist and University of Notre Dame professor of management, it is clearly unethical to conduct psychological experiments without the informed consent of the test subjects. While tests do not always measure what the people conducting the tests claim, the subjects need to at least know that they are, indeed, part of a test. The subjects of this test on Facebook were not explicitly informed that they were participating in an emotional contagion experiment. Facebook did not obtain informed consent as it is generally defined by researchers, nor did it allow participants to opt out. When information about the experiment was released, the media response was overwhelmingly critical. Tech blogs, newspapers, and media reports reacted quickly. Josh Constine of TechCrunch wrote: “ . . . there is some material danger to experiments that depress people. Some people who are at risk of depression were almost surely part of Facebook’s study group that were shown a more depressing feed, which could be considered dangerous. Facebook will endure a whole new level of backlash if any of those participants were found to have committed suicide or had other depression-related outcomes after the study.” The New York Times quoted Brian Blau, a technology analyst with the research firm Gartner, “Facebook didn’t do anything illegal, but they didn’t do right by their customers. Doing psychological testing on people crosses the line.” Facebook should have informed its users, he said. “They keep on pushing the boundaries, and this is one of the reasons people are upset.” While some of the researchers have since expressed some regret about the experiment, Facebook as a company was unapologetic about the experiment. The company maintained that it received consent from its users through its terms of service. A Facebook spokesperson defended the research, saying, “We do research to improve our services and make the content people see on Facebook as relevant and engaging as possible. . . . We carefully consider what research we do and have a strong internal review process.” With the more recent events, Facebook is changing the privacy settings but still collects an enormous amount of information about its users and can use that information to manipulate what users see. Additionally, these items are not listed on Facebook’s main terms of service page. Users must click on a link inside a different set of terms to arrive at the data policy page, making these terms onerous to find. This positioning raises questions about how Facebook will employ its users’ behaviors in the future. Critical Thinking Questions How should Facebook respond to the 2014 research situation? How could an earlier response have helped the company avoid the 2018 controversies and keep the trust of its users? Should the company promise to never again conduct a survey of this sort? Should it go even further and explicitly ban research intended to manipulate the responses of its users? How can Facebook balance the concerns of its users with the necessity of generating revenue through advertising? What processes or structures should Facebook establish to make sure it does not encounter these issues again? Respond in writing to the issues presented in this case by preparing two documents: a communication strategy memo and a professional business letter to advertisers. Sources: Kramer, Adam; Guillory, Jamie; and Hancock, Jeffrey, “Experimental evidence of massive scale emotional contagion through social networks,” PNAS (Proceedings of the National Academy of Sciences of the United States of America ). March 25, 2014 http://www.pnas.org/content/111/24/8788.full; Laja, Peep. “Useful Value Proposition Examples (and How to Create a Good One), ConversionXL , 2015 http://conversionxl.com/value-proposition-examples-how-to-create/; Yadav, Sid. “Facebook - The Complete Biography,” Mashable, Aug. 25, 2006. http://mashable.com/2006/08/25/facebook-profile/#orb9TmeYHiqK; Felix, Samantha, “This Is How Facebook Is Tracking Your Internet Activity,” Business Insider , Sept. 9, 2012 http://www.businessinsider.com/this-is-how-facebook-is-tracking-your-internet-activity-2012-9;

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Introduction (Credit: Tambako the Jaguar/ flickr/ Attribution 2.0 Generic (CC BY 2.0)) Learning Outcomes After reading this chapter, you should be able to answer these questions: What is the nature of leadership and the leadership process? What are the processes associated with people coming to leadership positions? How do leaders influence and move their followers to action? What are the trait perspectives on leadership? What are the behavioral perspectives on leadership? What are the situational perspectives on leadership? What does the concept “substitute for leadership” mean? What are the characteristics of transactional, transformational, and charismatic leadership? How do different approaches and styles of leadership impact what is needed now? John Arroyo: Springfield Sea Lions John Arroyo is thrilled with his new position as general manager of the Springfield Sea Lions, a minor league baseball team. Arroyo has been a baseball fan all of his life, and now his diligent work and his degree in sports management are paying off. Arroyo knew he had a hard act to follow. The general manager whom John replaced, “T.J.” Grevin, was a much-loved old-timer who had been with the Sea Lions since their inception 14 years ago. John knew it would be difficult for whoever followed T.J., but he didn’t realize how ostracized and powerless he would feel. He tried a pep talk: “I’m the general manager—the CEO of this ball club! In time, the staff will respect me.” [Not a very good pep talk!] After his first season ends, Arroyo is discouraged. Ticket and concession sales are down, and some long-time employees are rumored to be thinking about leaving. If John doesn’t turn things around, he knows his tenure with the Sea Lions will be short. Questions: Is John correct in assuming that the staff will learn to respect him in time? What can John do to earn the loyalty of his staff and improve the ball club’s performance? Outcomes: During the winter, John thinks long and hard about how he can earn the respect of the Sea Lions staff. Before the next season opener, John announces his plan: “So I can better understand what your day is like, I’m going to spend one day in each of your shoes. I’m trading places with each of you. I will be a ticket taker, a roving hot dog vendor, and a janitor. And I will be a marketer, and an accountant—for a day. You in turn will have the day off so you can enjoy the game from the general manager’s box.” The staff laughs and whistles appreciatively. Then the Springfield mascot, Sparky the Sea Lion, speaks up: “Hey Mr. Arroyo, are you going to spend a day in my flippers?” “You bet!” says John, laughing. The entire staff cheers. John continues. “At the close of the season, we will honor a staff member with the T.J. Grevin Award for outstanding contributions to the Sea Lions organization. T.J. was such a great guy, it’s only right that we honor him.” The meeting ends, but John’s staff linger to tell him how excited they are about his ideas. Amidst the handshakes, he hopes that this year may be the best year yet for the Sea Lions. According to Louise Axon, director of content strategy, and her colleagues at Harvard Business Publishing, in seeking management talent, leadership is an urgently needed quality in all managerial roles. Louise Axon, Elisa Friedman, and Kathy Jordan. 2015 (July). Leading Now: Critical Capabilities for a Complex World. Harvard Business Publishing, (Accessed July 25, 2017) http://www.harvardbusiness.org/leading-now-critical-capabilities-complex-world. Good leaders and good leadership are rare. Harvard management professor John P. Kotter notes that “there is a leadership crisis in the U.S. today,” K. Labich. 1988 (Oct. 24). The seven keys to business leadership. Fortune, 58. and the late USC Professor Warren Bennis states that many of our organizations are overmanaged and underled. W. Bennis. 1989. Why leaders can’t lead. San Francisco: Jossey-Bass.

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The Nature of Leadership What is the nature of leadership and the leadership process? The many definitions of leadership each have a different emphasis. Some definitions consider leadership an act or behavior, such as initiating structure so group members know how to complete a task. Others consider a leader to be the center or nucleus of group activity, an instrument of goal achievement who has a certain personality, a form of persuasion and power, and the art of inducing compliance. B.M. Bass. 1990. Bass & Stogdill’s handbook of leadership: Theory, research, and managerial applications. New York: The Free Press. Some look at leadership in terms of the management of group processes. In this view, a good leader develops a vision for the group, communicates that vision, W. Bennis. 1989. Why leaders can’t lead. San Francisco: Jossey-Bass; W. Bennis, & B. Nanus. 1985. Leaders: The strategies for taking charge. New York: Harper & Row. orchestrates the group’s energy and activity toward goal attainment, “[turns] a group of individuals into a team,” and “[transforms] good intentions into positive actions.” T.B. Pickens, Jr. 1992 (Fall/Winter). Pickens on leadership. Hyatt Magazine, 21. Leadership is frequently defined as a social (interpersonal) influence relationship between two or more persons who depend on each other to attain certain mutual goals in a group situation. E.P. Hollander & J.W. Julian. 1969. Contemporary trends in the analysis of leadership process. Psychological Bulletin 7(5): 387–397. Effective leadership helps individuals and groups achieve their goals by focusing on the group’s maintenance needs (the need for individuals to fit and work together by having, for example, shared norms) and task needs (the need for the group to make progress toward attaining the goal that brought them together). Joe Madden at pitcher mound Joe Maddon, manager of the Chicago Cubs baseball team, is lauded for both his managerial and leadership skills. Maddon is a role model for managers competing in the business world. Managers can learn and profit from the Cubs skipper's philosophy of instilling an upbeat attitude with the team, staying loose but staying productive, and avoiding being the center of attention. Leader versus Manager The two dual concepts, leader and manager, leadership and management, are not interchangeable, nor are they redundant. The differences between the two can, however, be confusing. In many instances, to be a good manager one needs to be an effective leader. Many CEOs have been hired in the hope that their leadership skills, their ability to formulate a vision and get others to “buy into” that vision, will propel the organization forward. In addition, effective leadership often necessitates the ability to manage—to set goals; plan, devise, and implement strategy; make decisions and solve problems; and organize and control. For our purposes, the two sets of concepts can be contrasted in several ways. First, we define the two concepts differently. In Management and Organizational Behavior , we defined management as a process consisting of planning, organizing, directing, and controlling. Here we define leadership as a social (interpersonal) influence relationship between two or more people who are dependent on each another for goal attainment. Second, managers and leaders are commonly differentiated in terms of the processes through which they initially come to their position. Managers are generally appointed to their role. Even though many organizations appoint people to positions of leadership, leadership per se is a relationship that revolves around the followers’ acceptance or rejection of the leader. E.P. Hollander. 1964. Emergent leadership and social influence. In E.P. Hollander (ed.), Leaders, groups, & influence. New York: Oxford University Press. Thus, leaders often emerge out of events that unfold among members of a group. Third, managers and leaders often differ in terms of the types and sources of the power they exercise. Managers commonly derive their power from the larger organization. Virtually all organizations legitimize the use of certain “carrots and sticks” (rewards and punishments) as ways of securing the compliance of their employees. In other words, by virtue of the position that a manager occupies (president, vice president, department head, supervisor), certain “rights to act” (schedule production, contract to sell a product, hire and fire) accompany the position and its place within the hierarchy of authority. Leaders can also secure power and the ability to exercise influence using carrots and sticks; however, it is much more common for leaders to derive power from followers’ perception of their knowledge (expertise), their personality and attractiveness, and the working relationship that has developed between leaders and followers. From the perspective of those who are under the leader’s and manager’s influence, the motivation to comply often has a different base. The subordinate to a manager frequently complies because of the role authority of the manager, and because of the carrots and sticks that managers have at their disposal. The followers of a leader comply because they want to. Thus, leaders motivate primarily through intrinsic processes, while managers motivate primarily through extrinsic processes. Finally, it is important to note that while managers may be successful in directing and supervising their subordinates, they often succeed or fail because of their ability or inability to lead. F.E. Fiedler. 1996. Research on leadership selection and training: One view of the future. Administrative Science Quarterly 41:241–250. As noted above, effective leadership often calls for the ability to manage, and effective management often requires leadership. What is the nature of leadership and the leadership process? What is the nature of leadership and the leadership process? Leadership is a primary vehicle for fulfilling the directing function of management. Because of its importance, theorists, researchers, and practitioners have devoted a tremendous amount of attention and energy to unlocking the secrets of effective leadership. They have kept at this search for perhaps a greater period of time than for any other single issue related to management. leadership A social (interpersonal) influence relationship between two or more persons who depend on each other to attain certain mutual goals in a group situation.

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The Leadership Process What are the processes associated with people coming to leadership positions? Leadership is a process, a complex and dynamic exchange relationship built over time between leader and follower and between leader and the group of followers who depend on each other to attain a mutually desired goal. Hollander & Julian, 1969. There are several key components to this “working relationship”: the leader, the followers, the context (situation), the leadership process per se, and the consequences (outcomes) (see ). R.M. Stogdill. 1948. Personal factors associated with leadership: A survey of the literature. Journal of Psychology 28: 35–71. Across time, each component interacts with and influences the other components, and whatever consequences (such as leader-follower trust) are created influence future interactions. As any one of the components changes, so too will leadership. A.J. Murphy. 1941. A study of the leadership process. American Sociological Review 6:674–687. The Leadership Process (Attribution: Copyright Rice University, OpenStax, under CC-BY 4.0 license) The Leader Leaders are people who take charge of or guide the activities of others. They are often seen as the focus or orchestrater of group activity, the people who set the tone of the group so that it can move forward to attain its goals. Leaders provide the group with what is required to fulfill its maintenance and task-related needs. (Later in the chapter, we will return to the “leader as a person” as part of our discussion of the trait approach to leadership.) New York Philharmonic @ UN The New York Philharmonic, conducted by Music Director Alan Gilbert, paid special tribute in the General Assembly Hall to UN Secretary-General Ban Ki-moon as a tribute to his 10-year term. Gilbert is the formal leader of the New York Philharmonic. The Follower The follower is not a passive player in the leadership process. Edwin Hollander, after many years of studying leadership, suggested that the follower is the most critical factor in any leadership event. Hollander, 1964. It is, after all, the follower who perceives the situation and comes to define the needs that the leader must fulfill. In addition, it is the follower who either rejects leadership or accepts acts of leadership by surrendering his power to the leader to diminish task uncertainty, to define and manage the meaning of the situation to the follower, and to orchestrate the follower’s action in pursuit of goal attainment. The follower’s personality and readiness to follow determine the style of leadership that will be most effective. For example, individuals with an internal locus of control are much more responsive to participative styles of leadership than individuals with an external locus of control. R.J. House & T.R. Mitchell. 1974 (Autumn). Path-goal theory of leadership. Journal of Contemporary Business 81–97. Individuals with an authoritarian personality are highly receptive to the effectiveness of directive acts of leadership. G. Yukl. 1971. Toward a behavioral theory of leadership. Organizational Behavior and Human Performance 6:414–440. It is the followers’ expectations, as well as their performance-based needs, that determine what a leader must do in order to be effective. The strength of the follower’s self-concept has also been linked to the leadership process. High-self-esteem individuals tend to have a strong sense of self-efficacy, that is, a generalized belief they can be successful in difficult situations. They therefore tend to be strongly motivated to perform and persist in the face of adversity. D.G. Gardner & J.L. Pierce. 1998. Self-esteem and self-efficacy within the organizational context. Group & Organization Management 23(1):48–70. The high-self-esteem follower tends to be responsive to participative styles of leadership. Low-self-esteem individuals, who doubt their competence and worthiness and their ability to succeed in difficult situations, function better with supportive forms of leadership. This helps them deal with the stress, frustration, and anxiety that often emerge with difficult tasks. Followers without a readiness to follow, limited by their inability to perform and lack of motivation and commitment, usually need more directive forms of leadership. P. Hersey & K.H. Blanchard. 1988. Management of organizational behavior utilizing human resources. Englewood Cliffs, NJ: Prentice-Hall. Follower behavior plays a major role in determining what behaviors leaders engage in. For example, followers who perform at high levels tend to cause their leaders to be considerate in their treatment and to play a less directive role. Followers who are poor performers, on the other hand, tend to cause their leaders to be less warm toward them and to be more directive and controlling in their leadership style. C.N. Greene. 1975. The reciprocal nature of influence between leader and subordinate. Journal of Applied Psychology 60: 187–193. The Context Situations make demands on a group and its members, and not all situations are the same. Context refers to the situation that surrounds the leader and the followers. Situations are multidimensional. We discuss the context as it pertains to leadership in greater detail later in this chapter, but for now let’s look at it in terms of the task and task environment that confront the group. Is the task structured or unstructured? Are the goals of the group clear or ambiguous? Is there agreement or disagreement about goals? Is there a body of knowledge that can guide task performance? Is the task boring? Frustrating? Intrinsically satisfying? Is the environment complex or simple, stable or unstable? These factors create different contexts within which leadership unfolds, and each factor places a different set of needs and demands on the leader and on the followers. The Process The process of leadership is separate and distinct from the leader (the person who occupies a central role in the group). The process is a complex, interactive, and dynamic working relationship between leader and followers. This working relationship, built over time, is directed toward fulfilling the group’s maintenance and task needs. Part of the process consists of an exchange relationship between the leader and follower. The leader provides a resource directed toward fulfilling the group’s needs, and the group gives compliance, recognition, and esteem to the leader. To the extent that leadership is the exercise of influence, part of the leadership process is captured by the surrender of power by the followers and the exercise of influence over the followers by the leader. Hollander & Julian, 1969. Thus, the leader influences the followers and the followers influence the leader, the context influences the leader and the followers, and both leader and followers influence the context. The Consequences A number of outcomes or consequences of the leadership process unfold between leader, follower, and situation. At the group level, two outcomes are important: Have the group’s maintenance needs been fulfilled? That is, do members of the group like and get along with one another, do they have a shared set of norms and values, and have they developed a good working relationship? Have individuals’ needs been fulfilled as reflected in attendance, motivation, performance, satisfaction, citizenship, trust, and maintenance of the group membership? Have the group’s task needs been met? That is, there are also important consequences of the leadership process for individuals: attendance, motivation, performance, satisfaction, citizenship, trust, and maintenance of their group membership. The leader-member exchange (LMX) theory of the leadership process focuses attention on consequences associated with the leadership process. The theory views leadership as consisting of a number of dyadic relationships linking the leader with a follower. A leader-follower relationship tends to develop quickly and remains relatively stable over time. The quality of the relationship is reflected by the degree of mutual trust, loyalty, support, respect, and obligation. High- and low-quality relationships between a leader and each of his followers produce in and out groups among the followers. Members of the in group come to be key players, and high-quality exchange relationships tend to be associated with higher levels of performance, commitment, and satisfaction than are low-quality exchange relationships. B.B. Graen & M. Wakabayashi. 1994. Cross-cultural leadership-making: Bridging American and Japanese diversity for team advantage. In M. D. Dunnette (ed.), Handbook of industrial and organizational psychology, 4 (2nd ed.): 415–446. Palo Alto: Consulting Psychologists Press. Attitudinal similarity and extroversion appear to be associated with a high-quality leader-member relationship. C.A. Schriesheim, S.L. Castro, & F.J. Yammarino. 2000. Investigating contingencies: An examination of the impact of span of supervision and upward controlling on leader-member exchange using traditional and multivariate within- and between-entities analysis. Journal of Applied Psychology 85:659–677; A.S. Phillips & A.G. Bedeian. 1994. Leader-follower exchange quality: The role of personality and interpersonal attributes. Academy of Management Journal 37:990–1001. The nature of the leadership process varies substantially depending on the leader, the followers, and the situation and context. Thus, leadership is the function of an interaction between the leader, the follower, and the context. The leadership context for the leader of a group of assembly line production workers differs from the context for the leader of a self-managing production team and from the context confronted by the lead scientists in a research laboratory. The leadership tactics that work in the first context might fail miserably in the latter two. How a Start-Up Finds the Right Leader Start-ups, by their very nature, require innovation to bring new products and services to market. Along with establishing a new brand or product, the leader has to develop the relationships and processes that make a company succeed, or risk its early demise. While leading an established firm has its challenges, a start-up requires even more from a leader. How critical is leadership to a start-up? Ask the four cofounders of the now-defunct PYP (Pretty Young Professionals), a website founded as a source of information for young professional women. What began as four young professional women working on a new start-up ended with hurt feelings and threats of legal action. In 2010, Kathryn Minshew, Amanda Pouchot, Caroline Ghosn, and Alex Cavoulacos decided to create the website and Minshew was named CEO (Cohan 2011a). Lines blurred about Minshew’s authority and the ultimate look, feel, and direction of the website. Ideals about shared leadership, where the company was going, and how it was going to get there ultimately got lost in the power shuffle. By June 2011, passwords were changed and legal actions began, and in August Minshew and Cavoulacos left altogether (Cohan 2011b). When the legal haggling from PYP was over, Alex Cavoulacos and Kathryn Minshew, joined by Melissa McCreery, tried again. But this time, rather than hoping for the best, they put a leadership plan in place. Minshew was named CEO of the new start-up, The Daily Muse, with Cavoulacos as chief operating officer and McCreery as editor in chief. Rather than trusting to luck, the three cofounders based their team positions on strengths and personalities. Cavoulacos and McCreery agreed that Minshew’s outgoing personality and confidence made her the proper choice as CEO (Casserly 2013). No single trait will guarantee that a person can lead a start-up from idea to greatness, but a survey of successful entrepreneurs does show some common traits. According to David Barbash, a partner at Boston-based law firm Posternak Blankstein & Lund LLP, personality is paramount: “You can have great technology but if you’re not a great communicator it may die in the lab” (Casserly 2013 n.p.). A start-up needs a leader who is confident and willing, if not eager, to face the future. According to Michelle Randall, a principal of Enriching Leadership International, start-up CEOs have to be willing to fundraise and not be too proud to beg (Casserly 2013). Peter Shankman, an entrepreneur and angel investor, says leaders have to be willing to make the hard decisions, even risking being the bad guy (Casserly 2013). Gary Vaynerchuk credits his success to six factors. Angel investor, social media marketer, and early social media adopter, Vaynerchuk leveraged YouTube in its early years to market wine from the family’s liquor store, eventually increasing sales from $3 million to $60 million a year (Clifford 2017). Gary believes good leaders recognize that they don’t dictate to the market, but rather respond to where it is going. They have respect for and believe in other people, and have a strong work ethic, what Vaynerchuk called a “lunch pail work ethic”: they are willing to put in long hours because they love the work, not the perks. He also stresses that he loves technology and doesn’t fear it, is obsessed with the youth of today, and is optimistic about people and the future of humanity (Vaynerchuk 2017). Leading a startup requires more than simple management. It requires the right leader for the right company at the right time, which means matching the right management skills with the proper flexibility and drive to keep it all together and moving in the right direction. Sources: Casserly, Meghan. 2013. “Rocks, Paper, CEO: Finding The Best Leader For Your Startup.” Forbes. https://www.forbes.com/sites/meghancasserly/2013/01/15/rocks-paper-ceo-finding-the-best-leader-for-your-startup/#16b520cd20a5 Clifford, Catherine. 2017. “Self-made millionaire Gary Vaynerchuk: This is the real secret to success.” CNBC. https://www.cnbc.com/2017/03/13/self-made-millionaire-gary-vaynerchuk-shares-real-secret-to-success.html Cohan, Peter. 2011a. “A Cautionary Tale: Friendship, Business Ethics, and Bad Breakups (Acts I and II). Forbes. August 9, 2011. https://www.forbes.com/sites/petercohan/2011/08/09/a-cautionary-tale-friendship-business-ethics-and-bad-breakups-acts-i-and-ii/#256d318b2735 Cohan, Peter. 2011b. “A Cautionary Tale: Friendship, Business Ethics, and Bad Breakups (Acts III and IV). Forbes. August 9, 2011. https://www.forbes.com/sites/petercohan/2011/08/09/a-cautionary-tale-friendship-business-ethics-and-bad-breakups-acts-iii-and-iv/3/#66b22dd4a4f6 Vaynerchuk, Gary. 2017. “What Makes Me a Great CEO.” https://www.garyvaynerchuk.com/makes-great-ceo/ Why would start-up leaders need different leadership qualities than someone managing an established firm? Vaynerchuk has been quoted as saying that if you live for Friday, get a different job. How does this apply to successful entrepreneurs? What are the processes associated with people coming to leadership positions? What are the processes associated with people coming to leadership positions? Organizations typically have both formal and informal leaders. Their leadership is effective for virtually identical reasons. Leadership and management are not the same. Although effective leadership is a necessary part of effective management, the overall management role is much larger than leadership alone. Managers plan, organize, direct, and control. As leaders, they are engaged primarily in the directing function.

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Leader Emergence How do leaders influence and move their followers to action? Leaders hold a unique position in their groups, exercising influence and providing direction. Leonard Bernstein was part of the symphony, but his role as the New York Philharmonic conductor differed dramatically from that of the other symphony members. Besides conducting the orchestra, he created a vision for the symphony. In this capacity, leadership can be seen as a differentiated role and the nucleus of group activity. Organizations have two kinds of leaders: formal and informal. A formal leader is that individual who is recognized by those outside the group as the official leader of the group. Often, the formal leader is appointed by the organization to serve in a formal capacity as an agent of the organization. Jack Welch was the formal leader of General Electric, and Leonard Bernstein was the formal leader of the symphony. Practically all managers act as formal leaders as part of their assigned role. Organizations that use self-managed work teams allow members of the team to select the individual who will serve as their team leader. When this person’s role is sanctioned by the formal organization, these team leaders become formal leaders. Increasingly, leaders in organizations will be those who “best sell” their ideas on how to complete a project—persuasiveness and inspiration are important ingredients in the leadership equation, especially in high-involvement organizations. J.A. Conger. 1993. The brave new world of leadership training. Organizational Dynamics 21(3):46–59. Informal leaders, by contrast, are not assigned by the organization. The informal leader is that individual whom members of the group acknowledge as their leader. Athletic teams often have informal leaders, individuals who exert considerable influence on team members even though they hold no official, formal leadership position. In fact, most work groups contain at least one informal leader. Just like formal leaders, informal leaders can benefit or harm an organization depending on whether their influence encourages group members to behave consistently with organizational goals. As we have noted, the terms leader and manager are not synonymous. Grace Hopper, retired U.S. Navy admiral, draws a distinction between leading and managing: “You don’t manage people, you manage things . You lead people .” Pickens, 1992, 21. Informal leaders often have considerable leverage over their colleagues. Traditionally, the roles of informal leaders have not included the total set of management responsibilities because an informal leader does not always exercise the functions of planning, organizing, directing, and controlling. However, high-involvement organizations frequently encourage their formal and informal leaders to exercise the full set of management roles. Many consider such actions necessary for self-managing work teams to succeed. Informal leaders are acknowledged by the group, and the group willingly responds to their leadership. Paths to Leadership People come to leadership positions through two dynamics. In many instances, people are put into positions of leadership by forces outside the group. University-based ROTC programs and military academies (like West Point) formally groom people to be leaders. We refer to this person as the designated leader (in this instance the designated and formal leader are the same person). Emergent leaders , on the other hand, arise from the dynamics and processes that unfold within and among a group of individuals as they endeavor to achieve a collective goal. A variety of processes help us understand how leaders emerge. Gerald Salancik and Jeffrey Pfeffer observe that power to influence others flows to those individuals who possess the critical and scarce resources (often knowledge and expertise) that a group needs to overcome a major problem. G.R. Salancik & J. Pfeffer. 1977 (Winter). Who gets power and how they hold on to it: A strategic contingency model of power. Organizational Dynamics, 3–21. They note that the dominant coalition and leadership in American corporations during the 1950s was among engineers, because organizations were engaged in competition based on product design. The power base in many organizations shifted to marketing as competition became a game of advertising aimed at differentiating products in the consumer’s mind. About 10–15 years ago, power and leadership once again shifted, this time to people with finance and legal backgrounds, because the critical contingencies facing many organizations were mergers, acquisitions, hostile takeovers, and creative financing. Thus, Salancik and Pfeffer reason that power and thus leadership flow to those individuals who have the ability to help an organization or group [overcome its critical contingencies]. As the challenges facing a group change, so too may the flow of power and leadership. Many leaders emerge out of the needs of the situation. Different situations call for different configurations of knowledge, skills, and abilities. A group often turns to the member who possesses the knowledge, skills, and abilities that the group requires to achieve its goals. A.J. Murphy. 1941. A study of the leadership process. American Sociological Review 6:674–687. People surrender their power to individuals whom they believe will make meaningful contributions to attaining group goals. L. Smircich & G. Morgan. 1982. Leadership: The management of meaning. Journal of Applied Behavioral Science 18(3): 257–273; Stogdill, 1948. The individual to whom power is surrendered is often a member of the group who is in good standing. As a result of this member’s contributions to the group’s goals, he has accumulated idiosyncrasy credits (a form of competency-based status). These credits give the individual a status that allows him to influence the direction that the group takes as it works to achieve its goals. Hollander, 1964. It is important to recognize that the traits possessed by certain individuals contribute significantly to their emergence as leaders. Research indicates that people are unlikely to follow individuals who, for example, do not display drive, self-confidence, knowledge of the situation, honesty, and integrity. Leadership as an Exercise of Influence As we have noted, leadership is the exercise of influence over those who depend on one another for attaining a mutual goal in a group setting. But how do leaders effectively exercise this influence? Social or (interpersonal) influence is one’s ability to effect a change in the motivation, attitudes, and/or behaviors of others. Power , then, essentially answers the “how” question: How do leaders influence their followers? The answer often is that a leader’s social influence is the source of his power. French and Raven provide us with a useful typology that identifies the sources and types of power that may be at the disposal of leaders: Reward power —the power a person has because people believe that they can bestow rewards or outcomes, such as money or recognition that others desire Coercive power —the power a person has because people believe that the person can punish them by inflicting pain or by withholding or taking away something that they value Referent power —the power a person has because others want to associate with or be accepted by him Expert power —the power a person has because others believe that the person has and is willing to share expert knowledge that they need (The concept of resource power extends the idea of expert power to include the power that a person has because others believe that the person possesses and is willing to share resources, such as information, time, or materials that are needed.) Legitimate power —the power a person has because others believe that the person possesses the “right” to influence them and that they ought to obey. This right can originate in tradition; in the charisma or appeal of the person; and in laws, institutional roles within society, moralistic appeal, and rationality (that is, logical arguments, factual evidence, reason, and internally consistent positions). J. R. P. French, Jr. & B. Raven. 1959. The bases of social power. In D. Cartwright (ed.), Studies in social power. Ann Arbor, MI: Institute for Social Research, University of Michigan, 150– 167. Not all forms of power are equally effective (see ), nor is a leader’s total power base the simple sum of the powers at his disposal. Different types of power elicit different forms of compliance: Leaders who rely on coercive power often alienate followers who resist their influence attempts. Leaders who rely on reward power develop followers who are very measured in their responses to [what?]; the use of rewards often leads people to think in terms of “How much am I getting?” or “How much should I give?” or “Am I breaking even?” The use of referent power produces identification with the leader and his cause. The use of rationality, expert power, and/or moralistic appeal generally elicits commitment and the internalization of the leader’s goals. A. Etzioni. 1961. A comparative analysis of complex organizations, on power, involvement, and their correlates. New York: Free Press of Glenco; H. C. Kelman. 1958. Compliance, identification, and internalization: Three processes of attitude change. Journal of Conflict Resolution , 51–61. The Leader-Follower Power Relationship Leaders who use referent and expert power commonly experience a favorable response in terms of follower satisfaction and performance. Research suggests that rationality is the most effective influence tactic in terms of its impact on follower commitment, motivation, performance, satisfaction, and group effectiveness. G. Yukl & J. B. Tracey. 1992. Consequences of influence tactics used with subordinates, peers, and the boss. Journal of Applied Psychology 77:525–535; T.R. Hinkin & CA. Schriesheim. 1990. Relationships between subordinate perceptions of supervisor influence tactics and attributed bases of supervisory power. Human Relations 43:221–237; P.M. Podsakoff & C.A. Schriesheim. 1985. Field studies of French and Raven’s bases of power: Critique, reanalysis, and suggestions for future research. Psychological Bulletin 97:398–411. Reward and legitimate power (that is, relying on one’s position to influence others) produce inconsistent results. Sometimes these powers lead to follower performance and satisfaction, yet they also sometimes fail. Coercive power can result in favorable performance, yet follower and resistance dissatisfaction are not uncommon. Good leaders, whether formal or informal, develop many sources of power. Leaders who rely solely on their legitimate power and authority seldom generate the influence necessary to help their organization and its members succeed. In the process of building their power base, effective leaders have discovered that the use of coercive power tends to dilute the effectiveness of other powers, while the development and use of referent power tends to magnify the effectiveness of other forms of power. A compliment or reward from a person we like generally has greater value than one from someone we dislike, and punishment from someone we love (such as “tough love” from a parent) is less offensive than the pain inflicted by someone we dislike. T.R. Hinkin & C.A. Schriesheim. 1990. Relationships between subordinate perceptions of supervisor influence tactics and attributed based of supervisory power. Human Relations 43:221–237. In sum, one key to effective leadership, especially as it pertains to the exercise of social and interpersonal influence, relates to the type of power employed by the leader. Overall leader effectiveness will be higher when people follow because they want to follow. This is much more likely to happen when the leader’s influence flows out of intrinsic such as rationality, expertise, moralistic appeal, and/or referent power. Leadership is also about having a vision and communicating that vision to others in such a way that it provides meaning for the follower. Bennis, 1989. Language, ritual, drama, myths, symbolic constructions, and stories are some of the tools leaders use to capture the attention of their “followers to be” to evoke emotion and to manage the meaning “of the task (challenges) facing the group.” L. Smircich & G. Morgan. 1982. Leadership: The management of meaning. Journal of Applied Behavioral Sciences 18(3): 257–273. These tools help the leader influence the attitudes, motivation, and behavior of their followers. Influence-Based Leadership Styles Many writers and researchers have explored how leaders can use power to address the needs of various situations. One view holds that in traditional organizations members expect to be told what to do and are willing to follow highly structured directions. Individuals attracted to high-involvement organizations, however, want to make their own decisions, expect their leaders to allow them to do so, and are willing to accept and act on this responsibility. This suggests that a leader may use and employ power in a variety of ways. The Tannenbaum and Schmidt Continuum In the 1950s, Tannenbaum and Schmidt created a continuum (see ) along which leadership styles range from authoritarian to extremely high levels of worker freedom. R. Tannenbaum & W.H. Schmidt. 1958 (Mar.–Apr.). How to choose a leadership pattern. Harvard Business Review, 95–101; R. Tannenbaum & W.H. Schmidt. 1973 (May–June). How to choose a leadership pattern. Harvard Business Review, 162–175. Subsequent to Tannenbaum and Schmidt’s work, researchers adapted the continuum by categorizing leader power styles as autocratic (boss-centered), participative (workers are consulted and involved), or free-rein (members are assigned the work and decide on their own how to do it; the leader relinquishes the active assumption of the role of leadership). K. Davis & J.W. Newstrom. 1985. Human behavior at work: Organization behavior. New York: McGraw-Hill. Tannenbaum and Schmidt’s Leadership Continuum Source: Modified from R. Tannenbaum and W. H. Schmidt. May—June 1971. How to choose a leadership pattern. Harvard Business Review , 167. Theory X and Theory Y Leaders McGregor’s Theory X and Theory Y posits two different sets of attitudes about the individual as an organizational member. D. McGregor. 1957. The human side of enterprise, Management Review 46:22–28, 88–92; D. McGregor. 1960. The human side of enterprise. New York: McGraw-Hill. Theory X and Y thinking gives rise to two different styles of leadership. The Theory X leader assumes that the average individual dislikes work and is incapable of exercising adequate self-direction and self-control. As a consequence, they exert a highly controlling leadership style. In contrast, Theory Y leaders believe that people have creative capacities, as well as both the ability and desire to exercise self-direction and self-control. They typically allow organizational members significant amounts of discretion in their jobs and encourage them to participate in departmental and organizational decision-making. Theory Y leaders are much more likely to adopt involvement-oriented approaches to leadership and organically designed organizations for their leadership group. Theory X and Theory Y thinking and leadership are not strictly an American phenomenon. Evidence suggests that managers from different parts of the global community commonly hold the same view. A study of 3,600 managers from 14 countries reveals that most of them held assumptions about human nature that could best be classified as Theory X. M. Haire, E.E. Ghiselli, & L.W. Porter. 1966. Managerial thinking: An international study. New York: Wiley. Even though managers might publicly endorse the merits of participatory management, most of them doubted their workers’ capacities to exercise self-direction and self-control and to contribute creatively. R.E. Miles. 1975. Theories of management: Implications for organizational behavior and development. New York: McGraw-Hill. Directive/Permissive Leadership Styles Contemplating the central role of problem-solving in management and leadership, Jan P. Muczyk and Bernard C. Reimann of Cleveland State University offer an interesting perspective on four different leadership styles (see ) that revolve around decision-making and implementation processes. J.P. Muczyk & B.C. Reimann. 1987. The case for directive leadership. The Academy of Management Executive 1:301–311. Leadership Behavior and the Uses of Power Source: Modified from J. P. Muczyk and B. C. Reimann. 1987. The case for directive leadership. Academy of Management Executive , 1:304. A directive autocrat retains power, makes unilateral decisions, and closely supervises workers’ activities. This style of leadership is seen as appropriate when circumstances require quick decisions and organizational members are new, inexperienced, or underqualified. A doctor in charge of a hastily constructed shelter for victims of a tornado may use this style to command nonmedical volunteers. The permissive autocrat mixes his or her use of power by retaining decision-making power but permitting organizational members to exercise discretion when executing those decisions. This leader behavior is recommended when decision-making time is limited, when tasks are routine, or when organizational members have sufficient expertise to determine appropriate role behaviors. Also sharing power is the directive democrat, who encourages participative decision-making but retains the power to direct team members in the execution of their roles. This style is appropriate when followers have valuable opinions and ideas, but one person needs to coordinate the execution of the ideas. A surgeon might allow the entire surgical team to participate in developing a plan for a surgical procedure. Once surgery begins, however, the surgeon is completely in charge. Finally, the permissive democrat shares power with group members, soliciting involvement in both decision-making and execution. This style is appropriate when participation has both informational and motivational value, when time permits group decision-making, when group members are capable of improving decision quality, and when followers are capable of exercising self-management in their performance of work. The permissive democratic approach to leadership is characteristic of leadership in high-involvement organizations. Here, leaders act as facilitators, process consultants, network builders, conflict managers, inspirationalists, coaches, teachers/mentors, and cheerleaders. W. A. Pasmore. 1988. Designing effective organizations: The sociotechnical systems perspective. New York: Wiley; T. J. Peters & R.H. Waterman, Jr. 1982. In search of excellence: Lessons from America’s best-run companies. New York: Harper & Row. Such is the role of Ralph Stayer, founder, owner, and CEO of Johnsonville Foods. He defines himself as his company’s philosopher. At Quad/Graphics, president Harry V. Quadracci is a permissive democrat because he encourages all Quad employees to play a major role in decision-making and execution as they manage their teams as independent profit centers. Jeff Bezos Jeff Bezos, founder and CEO of Amazon, used to bring an empty chair to meetings to signal and remind participants of the most important people that did not have a seat at the table: the customers. He has now replaced the empty chair with Amazon employees with the job title Customer Experience Bar Raisers. What is the role of the leader and follower in the leadership process? How do the theories of Tannenbaum and Schmidt’s leadership continuum and McGregor’s Theory X and Theory Y attempt to define leadership? How do leaders influence and move their followers to action? There are many diverse perspectives on leadership. Some managers treat leadership primarily as an exercise of power. Others believe that a particular belief and attitude structure makes for effective leaders. Still others believe it is possible to identify a collection of leader traits that produces a leader who should be universally effective in any leadership situation. Even today, many believe that a profile of behaviors can universally guarantee successful leadership. Unfortunately, such simple solutions fall short of the reality. designated leader The person placed in the leadership position by forces outside the group. emergent leader The person who becomes a group’s leader by virtue of processes and dynamics internal to the group. formal leader That individual who is recognized by those outside the group as the official leader of the group. informal leader That individual whom members of the group acknowledge as their leader.

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