TRANSFORMATIONAL LEADERSHIP INFLUENCES ON EMPLOYEE TRUST AND SATISFACTION IN A
SURINAME CONTEXT THE CASE OF CKC BEM
BY
Marlène A Amelo (SURINAME)
This paper was submitted in partial fulfillment of the requirements for the Masters of Business Administration (MBA) degree at the Maastricht School of Management (MSM), Maastricht, the Netherlands, July 2005
TRANSFORMATIONAL LEADERSHIP INFLUENCES ON EMPLOYEE TRUST AND SATISFACTION IN A
SURINAME CONTEXT THE CASE OF CKC BEM
BY
Marlène A Amelo (SURINAME)
This paper was submitted in partial fulfillment of the requirements for the Masters of Business Administration (MBA) degree at the Maastricht School of Management (MSM), Maastricht, the Netherlands, July 29, 2005
Maastricht School of Management F.H.R. Lim A Po Institute For Social Studies
P.O.Box 1203 P.O.Box 12340
6201 BE Maastricht Paramaribo The Netherlands Suriname
July 2005
Marlène Amelo, MBA-Intake-1, 2003 MsM/FHR Lim A Po Institute
“Courage - not complacency - is our need today; Leadership – not salesmanship…. “
John F. Kennedy
Marlène Amelo, MBA-Intake-1, 2003 MsM/FHR Lim-A-Po Institute
DEDICATIONS
This thesis is dedicated to the memory of my father, Harry Egbert Amelo, who practiced life- long learning and instilled in me a strong work ethic as well as a belief in myself and my capabilities. I wish he was here to enjoy this achievement.
To my life-companion Rolf de Jong, for his unconditional support, love and care during my
“school years” (which turned out to be longer than we had anticipated).
To Raoul, Ray and Jeiël, my sons who have always believed in me and supported me in everything I attempt.
ACKNOWLEDGEMENTS
A number of people have contributed to the completion of this thesis and I wish to acknowledge my gratitude for their support. Firstly and most importantly, I acknowledge and thank my supervisor Professor Dr. Beatrice I.J.M van der Heijden for her assistance, advice and encouragement. Her punctual and characteristic feedback stimulated me greatly. In the truest sense of the word Beate has been a mentor and I thank her for guiding me during a journey of personal and professional development.
For support and advice when I encountered statistical problems I am indebted to Mr. Ivan Sno and Mr. Gerold van Dijk for their time and resilience in explaining what sometimes seemed inconceivable. Sincere thanks goes to Vanessa Goedschalk for sharing her expertise in using the SPSS program. Aishel Bradley thanks for assisting in formatting this document. Mrs. Shirley Asjes made this a legible English document. Thank you for your insights. Furthermore, I would like to thank the organization that took part in the study, CKC BEM. This thesis could not have eventuated without the support of the leadership and staff alike. Thank you for sharing your insights, feelings, attitudes and concerns with me. I hope that the findings of this study will contribute, at least in some small way, to a more fulfilling working life.
I would also like to express my gratitude to all my colleagues of MBA-Intake-1 at FHR Lim A Po institute for their sharing and caring all through the course of the study.
My dear friends Ivan and Dulcie Graanoogst were invaluable in keeping my spirits up throughout this process. I am also grateful for the motivational talks from my friends Truus and Jessica Schaap. Carla Lamsberg your prayers strengthened my heart. I was truly fortunate to have a great family and friends who supported me throughout the study. It is impossible to list everyone but I extend my heartfelt thanks to each and every one of them.
Last, but never least, I must acknowledge the extraordinary support and encouragement that was demonstrated in so many ways by Hans Lim A Po LLM, Dr. Howard Nicholas, Ollye Chin A Sen MA, the Course Director, and Ms, Alida Pengel, the Course Assistant.
Hans, bringing the renowned MsM-MBA program to Suriname was truly visionary. You are a true transformational leader. My heartfelt thanks. I foremostly thank the Divine Essence of the Cosmic for the sustained infusion of my being all through the years.
Marlène Amelo, MBA-Intake-1, 2003 MsM/FHR Lim A Po Institute
Marlène Amelo, MBA-Intake-1, 2003 iii MsM/FHR Lim-A-Po Institute
TABLE OF CONTENTS
DEDICATIONS... i
ACKNOWLEDGEMENTS... ii
TABLE OF CONTENTS... iii
LIST OF TABLES... vi
LIST OF FIGURES ... vii
LIST OF ABREVIATIONS ... viii
LIST OF APPENDIXES... ix
ABSTRACT... x
1. THE PROBLEM AND ITS SETTING... 1
1.1 Introduction... 1
1.2 Definition of the Problem ... 1
1.3 Research Questions... 3
1.4 Objectives of the Research... 3
1.5 Significance of the Study ... 4
1.6 Methodology and Scope of the Study... 4
1.7 Organization of the Study ... 5
1.8 Constraints of the Study... 6
2. MACRO AND MICRO CONTEXT ... 7
2.1 Introduction... 7
2.2 Country Background... 7
... 9
2.2.1 Leadership 2.3 The Concrete Construction Sector ... 9
2.4 CKC BEM... 11
... 12
2.4.1 Current Organization 2.4.1.1 Organization Vision... 12
2.4.1.2 Infrastructure... 13
2.4.1.3 Management Philosophy... 15
2.4.1.4 Communication Flow... 17
2.4.1.5 Incentive Program... 18
2.4.1.6 Opportunities and Threats... 18
2.5 Summary ... 19
3. LITERATURE REVIEW ... 20
3.1 Introduction... 20
3.2 Definition of Main Concepts Used ... 21
... 21
3.2.1 The concept of Leadership ... 21
3.2.2 The concept of Transformational Leadership ... 22
3.2.3 The concept of Trust ... 22
3.2.4 The concept of Job Satisfaction 3.3 Approaches to Leadership... 23
3.4 New Leadership Theories ... 24
... 24
3.4.1 The Full-Range Leadership Theory ... 26
3.4.2 Transformational Leadership ... 29
3.4.3 Transactional Leadership ... 30
3.4.4 Laissez-Faire Leadership 3.5 Trust in Organizations... 30
... 31
3.5.1 Dimensions of Trust in Organizations ... 32
3.5.2 Bases of Trust in Organizations ... 33
3.5.3 Leadership Style and Trust 3.6 Leadership Behavior and Employee Trust... 33
3.7 Leadership style and Employee Satisfaction ... 35
3.8 Summary ... 36
4. CONCEPTUAL FRAMEWORK ... 38
4.1 Introduction... 38
4.2 Hypothesis... 39
4.3 Implementation of Conceptual Model ... 40
4.4 Summary ... 40
5. RESEARCH METHODOLOGY... 42
5.1 Introduction... 42
5.2 Research Hypothesis... 42
5.2.1 Independent Variable... 42
... 43
5.2.2 Dependent Variables ... 44
5.2.3 Influence 5.3 Research Design... 44
5.4 Data Collection ... 45
5.5 Data Analysis ... 48
5.6 Validity and Reliability... 49
... 49
5.6.1 Construct Validity ... 49
5.6.2 Internal Validity ... 50
5.6.3 External Validity ... 50
5.6.4 Reliability 5.7 Summary ... 50
6. RESULTS ... 52
6.1 Introduction... 52
6.2 Study Findings ... 52
... 52
6.2.1 Research Question 1: 6.2.1.1 Results of the MLQ... 53
... 55
6.2.2 Research Question 2: 6.2.2.1 Leadership Style... 55
... 55
6.2.3 Research Question 3: 6.2.3.1 Results of Trust... 56
... 56 6.2.4 Research Question 4:
Marlène Amelo, MBA-Intake-1, 2003 iv MsM/FHR Lim A Po Institute
6.2.4.1 Results of Job Satisfaction... 56
6.3 Discussion of findings... 57
6.4 Summary ... 59
7 CONCLUSIONS AND PRACTICAL IMPLEMENTATION... 60
7.1 Introduction... 60
7.2 Contribution of the Current Study ... 60
7.3 Summary and Conclusions ... 61
7.4 Recommendations... 63
7.5 Implications for Management ... 64
7.6 Implementation ... 65
... 65
7.6.1 Making Changes 7.6.1.1 Organizational Structure... 66
7.6.1.2 Managerial Principles... 67
7.6.1.3 Incentive Program... 67
7.6.1.4 Training and Development... 68
7.6.1.5 Implementation Strategy... 68
7.7 Limitations of the study ... 68
7.8 Directions for further Research... 69
SELECTED BIBLIOGRAPHY... i
APPENDIX A: MAPS... xii
APPENDIX B: ORGANIZATIONAL HIERARCHY CKC BEM ... xv
APPENDIX C: CASE STUDY DETAILS... xvi
APPENDIX D: SURVEY RESULTS ... xxiv
Marlène Amelo, MBA-Intake-1, 2003 v MsM/FHR Lim A Po Institute
LIST OF TABLES
Table 1 : Operating results CKC - BEM 1998 - 2001 ... 11
Table 2: Threats and Opportunities... 19
Table 3: Summary of Leadership Approaches... 23
Table 4: Cronbach alphas for Transformational Leadership, Trust and Job Satisfaction... 51
Table 5: Descriptive Statistics MLQ... 53
Table 6: Correlation between Transformational Leadership and the Performance Outcomes ... 54
Table 7: Correlation between Transactional Leadership and the Performance Outcomes ... 55
Table 8: Descriptive Statistics Trust ... 56
Table 9: Correlations Between TL and TXL and Trust ... 56
Table 10: Descriptive statistics Job Satisfaction... 57
Table 11: Correlations between TL and TXL and Job Satisfaction... 57
Marlène Amelo, MBA-Intake-1, 2003 vi MsM/FHR Lim A Po Institute
LIST OF FIGURES
Figure 1: Structure of the Thesis... 6
Figure 2: Staff composition CKC BEM 1998 - 2004 ... 14
Figure 3: Sick leave progress 1999 - 2004... 14
Figure 4: Concrete Tube Production 1998 - 2004 ... 16
Figure 5: Concrete Stones Production 1998 - 2004 ... 17
Figure 6: Optimal and Sub-optmal model of Range of Leadership model... 25
Figure 7 : Leadership factors in the augmentation model of Transactional and Transformational Leadership... 30
Figure 9: Conceptional Framework ... 39
Figure 10: Staff distribution by Gender ... 47
Figure 11: Staff distribution by Age ... 47
Figure 12: Total staff distribution CKC BEM ... 47
Figure 13: Staff distribution by Number of Years Employed... 48
Figure 15: Galbraith's Star Model... 64
Marlène Amelo, MBA-Intake-1, 2003 vii MsM/FHR Lim A Po Institute
LIST OF ABREVIATIONS ABS - Algemeen Bureau voor Statistiek
ASTM - American Society for Testing Materials CARICOM - Caribbean Community & Common Market CEO - Chief Executive Officer
CKC BEM - C. Kersten & Co Bouwmaterialen Exploitatie Maatschappij CR - Contingent Reward
CSME - Caribbean Single Market & Economy
ed - edition
EIU - Economist Intelligence Unit GDP - Gross Domestic Product
IA - Charisma or Idealized Influence (Attributes) IB - Idealized Influence (Behavior)
IC - Individualized Consideration IM - Inspirational Motivation IS - Intellectual Stimulation
ISO - International Organization for Standardization LDC - Least Developed Countries
LF - Laissez-Faire or Non-leadership MBA - Master of Business Administration MBE-A - Management by Exception Active MBE-P - Management by Exception Passive MDC - Most Developed Countries
MLQ - Multifactor Leadership Questionnaire
N - North
NEN - Nederlandse Norm
OECS - Organization of Eastern Caribbean States
p - page
PPP - Purchasing Power Parity
RQ - Research Questions
SPSS - Statistical Package for the Social Sciences sq km - square kilometers
TL - Transformational Leadership TXL - Transactional Leadership
UNDP - United Nations Development Program
W - West
WTO - World Trade Organization
Marlène Amelo, MBA-Intake-1, 2003 viii MsM/FHR Lim A Po Institute
LIST OF APPENDIXES
Appendix A. Maps A-1 Map of Suriname
A-2 Map of the Caricom States
Appendix B. Organizational Hierarchy CKC – BEM Appendix C. Case Study Details
C-1 Interview Question
C-2 Case Survey Questionnaires-covering letter
C-3 Multifactor Leadership Questionnaire and Scoring Key C-4 Trust Questionnaire and Scoring Key
C-5 Job Satisfaction Questionnaire and Scoring Key Appendix D. Survey Results
D-1 Frequency Distribution MLQ D-2 Frequency Distribution Trust
D-3 Frequency Distribution Job Satisfaction D-4 Reliability Analysis MLQ
D-5 Reliability Analysis Trust
D-6 Reliability Analysis Job Satisfaction D-7 Pearson’s Correlation tests
Marlène Amelo, MBA-Intake-1, 2003 ix MsM/FHR Lim A Po Institute
ABSTRACT
Whether organizations succeed or fail depends, for a large part, on leadership. Transformational leadership is assumed an indispensable element in the process of initiating and sustaining change and development in organizations.
CKC BEM, a viable but financially burdensome company in a vital production sector of the Surinamese economy is the subject of the study. After consecutive years of heavy losses and a number of leadership changes a new CEO was appointed, who introduced a different leadership style. Although necessary investments remained forthcoming, production increased and sick leave decreased; however recent developments indicate that it seems as if employees are gradually losing confidence.
Adopting a single, multi-modal case study approach using both qualitative and quantitative data, the researcher reviewed the prevailing literature on Transformational Leadership, Trust and Job Satisfaction.
Using Bass and Avolio’s model (2004) the conceptual framework postulated a relationship between Transformational Leadership and the other constructs. The researcher hypothesized a positive relationship between the independent (TL) and dependent (trust and job satisfaction) variables and examined whether CKC BEM was practicing Transformational Leadership and then sought to determine whether this leadership style influenced trust and satisfaction within the organization.
Primary research comprising of unstructured interviews with the CEO and the management team were carried out. Using paper and pencil questionnaires, data collection for the case study survey was carried out among the mid-level managers as well as the management team and the general staff.
Transformational leadership was assessed by the Multi-factor Leadership Questionnaire (MLQ). The trust scale instrument from Ciancutti and Steding was used to assess and measure the multiple facets of trust. Satisfaction was measured using the Schriesheim and Tsui Job Satisfaction instrument and the survey analysis was conducted using the Statistical Program for Social Sciences.
Marlène Amelo, MBA-Intake-1, 2003 x MsM/FHR Lim A Po Institute
Findings from the interviews and the MLQ supported the Transformational leadership style and are consistent with those of Bass and Avolio. Given the high scores it was apparent that the Transformational Leadership style has proven successful in this company as far as interpersonal relationships are concerned. The results also imply that within CKC BEM this leadership style complements the Transactional style.
The findings on Trust and Job Satisfaction, however, were indicative of the existing organizational situation. No significant correlation was found between the Transformational Leadership style and Job Satisfaction and a negative, although insignificant, correlation was found between the Leadership style and Trust. The researcher postulated that these results could be explained by frequent changes in CEOs and the employees’ up-surging disbelief in the continuity of the company which was caused by the Holding company’s hesitation to invest in resources and the resulting lack of equitable rewards.
Although the hypothesis could not be supported in this study the insight has been gained that through the transformational leadership style exerted by the CEO, he is well appreciated by the followers who expressed appreciation for his attempts at improvement as well as his commitment to treat employees in a sensitive and considerate manner. They expressed trust in the person of the CEO. In fact, the researcher inferred that the trust in the CEO is such that it mitigates the harmful effects of the distrust in the intentions of the holding company.
The main conclusion that can be drawn from this case is that however important it is to practice Transformational Leadership, without the essential investments the organization will not reach the corporate financial goals. If the equipment and machinery are not functioning up to standard, it will not be possible to offer good working conditions and lasting job satisfaction;
employees’ trust will gradually recede.
In view of the problems envisioned, the researcher recommended solutions and strategies to obtain the full benefit of Transformational Leadership through implementation of an effective and flexible organizational design with commitment and involvement of all concerned. A prerequisite would be the necessary investments. The study concluded with recommendations for future research and practice.
Keywords: CKC BEM, Transformational Leadership, Transactional Leadership, Employee Trust, Job Satisfaction.
Marlène Amelo, MBA-Intake-1, 2003 xi MsM/FHR Lim A Po Institute
CHAPTER 1.
1. THE PROBLEM AND ITS SETTING 1.1 Introduction
Organizations are constantly facing rapid changes. Whether caused by factors such as economic globalization, technological innovations, fast product obsolescence and a changing workforce, the world economy is in the process of transforming from an industrial to a knowledge and information focus, offering ever-increasing options to customers. As a result organizations are changing to flatter and looser structures and adopting horizontal information flows. In these changing environments there is a demand for more flexible and responsive leadership.
Authoritarian styles of leadership based on assumed superiority will not be effective in solving complex problems exacerbated by an accelerating rate of change. The styles of leadership required in these changing environments will emphasize collaborative skills based on a philosophy of participation and a sense of common purpose and shared interest. Leaders will have to be more change-oriented. If these leaders develop clear visions and instill a sense of direction in employees, they will motivate and inspire employees to pursue the vision.
Change in the organizational environment instilled a number of new leadership theories, one of which is transformational leadership. The original formulation of the transforming leadership theory comes from Burns (1979 paperback). Burns argues that “transforming leadership ultimately becomes moral in that it raises the level of human conduct and ethical aspiration of both leader and led, and thus it has a transforming effect on both” (p.20) Transforming leadership is people centered. Burns argues that focusing on needs, makes leaders accountable to the follower.
1.2 Definition of the Problem
Given the competitive environment in the present interrelated world, companies worldwide are being forced to manage their organizations in a more globally integrated manner. The world marketplace that has emerged as a result of globalization compels companies to implement
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strategies to remain competitive. Within industries, companies develop individual strategies to be able to cope with the changes in their environment. Researchers and practitioners focus on the importance of leadership to cope with market circumstances. Top managers in Surinamese companies face the same challenges exemplified by Suriname’s accession to CARICOM1, which led to increased competition in the domestic market on the one hand and at the same time they were unable to benefit from interesting new markets on the other hand.
In view of this development it is important that companies in Suriname identify a competitive advantage. Given Suriname’s position within CARICOM, organizations need to adopt competitive strategies to cope with the changed situation of increased competition. People- centered approaches that align the human capital and the interest of the organization are an important source of competitive advantage. The unique Surinamese workforce consisting of different cultural groups - each with its own values, beliefs and attitudes - is a powerful factor to motivate performance beyond even their own expectations. In these conditions organizations can succeed only through effective leadership. Traditional transactional leadership has failed to create the high level performance in our so-called “weak” companies. There is a need in the Surinamese economy to improve the performance of companies.
In preparing companies to meet the competitive challenge, transformational leadership is a key factor to attain the competitive organizational goals.
The researcher assumes the following hypothesis: Transformational leadership will positively influence employee trust and satisfaction within CKC BEM.
The study will focus on CKC BEM industries, one of the large companies in the concrete construction sector in Suriname, and investigate whether the leadership practices the transformational leadership style and whether transformational leadership can be used as a strategic tool to instill trust, and lead to job satisfaction. Additionally, the study will attempt to suggest ways to implement the findings.
In the developing country Suriname, given the multiplier effect of the construction sector, activities in this sector are considered an economic indicator for the development of the
1 Caribbean Community &Common Market (CARICOM) was formed by the Treaty of Chaguaramas in 1973 as a movement towards unity in the Caribbean.
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country. Driven by the construction and mining sectors (EIU Country report August 2004) the country’s economic activity increased by approximately 5.6% in 2003. Suriname has three major industrial producers of concrete construction stones with comparable workforces and units of production per day. CKC BEM had suffered significant losses during the five years prior to the appointment of the present Chief Executive Officer (CEO), who was appointed four years ago.
He practices transformational principles in his leadership style and it remains to be seen if his leadership will influence the organization for the better.
1.3 Research Questions
The research will address the following central question:
Research Question (RQ) 1: What evidence exists that Transformational Leadership influences outcome measures in an organization in a Surinamese setting?
The following sub-questions will be answered.
Research Question 2: How can the leadership style employed within CKC BEM best be described?
Research Question 3: Does Transformational Leadership influence employee trust within the CKC BEM organization?
Research Question 4: Does Transformational Leadership enhance employee satisfaction within CKC BEM?
1.4 Objectives of the Research The objectives of this study are:
• To investigate whether the CEO of CKC BEM is practicing Transformational Leadership
• To test the implications of Transformational Leadership in a company in a Surinamese setting.
• To examine the relationship between transformational leadership style, employee trust, and satisfaction in the CKC BEM organization.
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• To sustain the competencies, skills and knowledge acquired during the MBA program.
1.5 Significance of the Study
The result of the study will provide the CKC BEM Company with a more profound insight into the mechanisms of transformational leadership. Moreover the study could supply information to the concrete construction sector for a better understanding of transformational leadership in striving to survive and developing a competitive advantage in the changing environment of Suriname. Additionally, the researcher could convey the knowledge gained to a wider range of Surinamese companies and an array of other interested parties which engage her services as a consultant.
In view of Suriname’s position within CARICOM, local organizations need to adopt competitive strategies to cope with the changed situation of increased competition. People centered approaches that align human capital and the interest of the organization, are an important source of competitive advantage that cannot be easily imitated. In this respect, the study could also be of relevance.
The author’s fascination with the subject of leadership and the quest to find out what Suriname as a nation can do to improve its position in the global marketplace served as a stimulation to dedicate the study to one of the modern types of leadership. In the author’s experience as a consultant, she has met a number of Chief Executive Officers (CEOs) who complain that they are mostly “fighting fires” and are caught up in day-to-day business instead of analyzing long-term opportunities and planning for organizational growth. People do not act in isolation, and leaders have the opportunity to influence employees in such a way that they develop a sense of ownership of their organization and have pride in their achievements at work, thus realizing higher organizational performance while at the same time fulfilling their own needs.
1.6 Methodology and Scope of the Study
The research adopts a single, multi-modal case study approach. The research deals with
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transformational leadership, one issue of critical importance to organizations in a changing environment. The scope is limited to one organization in the concrete construction sector, CKC BEM. This company which is in a transition phase will be studied and analyzed. The study will cover the period 1999 – 2004. In 2001 a change in the top leadership of the company took place after the company had suffered a number of consecutive years of heavy losses and low productivity. The new CEO is attempting to bring about productivity improvements by instilling trust and enrichment of employee satisfaction through his leadership style. Secondary sources of data will be reviewed, studied, analyzed and evaluated. Apart from an in-depth literature review, research methods will include primary research through unstructured interviews; while a case- survey using the Multifactor Leadership Questionnaire (MLQ) short form will be done to measure Transformational Leadership and its influences on employee trust and satisfaction. The different components of the constructs trust and satisfaction will be assessed using previously validated questionnaires. ”Within-case analysis” will be done to analyze the interviews and documents and the case-survey will be statistically processed and analyzed. The focus of this research will include top management influences on department heads and the organizational levels. All department heads and all workers are incorporated in the research as all are directly or indirectly affected.
1.5 Organization of the Study
As represented in figure 1 on page 6, Chapter one, the introductory chapter incorporates: the background with the topic; the problem definition and its setting; the research question; the objective and significance of the research; identification of the methodology and scope of the research. Chapter two introduces the macro - and micro environment and the sector of which CKC BEM is the organization under study and describes the organizational changes. Chapter three starts with a brief description of the definitions used and further portrays the literature review; evaluates and links transformational leadership theories relating to the relevant concepts used in the study. Chapter four presents the Conceptual Framework and hypothesizes the assumed relationship between the independent and dependent variables. The resulting research questions serve to find answers for the hypothesis. Chapter five focuses on the methodological
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aspects of the study wherein the author justifies the application of the case study as research method and looks at the limitations of the applied methodology. In Chapter six the results are depicted and the gathered, reviewed, analyzed and interpreted data are presented and compared with the conceptual framework of chapter four. The case survey is further analyzed using the Statistical Program for Social Sciences (SPSS). Chapter seven deals with the implications for management and conclusions, and proposes recommendations and possible strategies for implementation. The study ends with implications for further research.
1.6 Constraints of the Study
The relatively short time interval allocated for this thesis will hamper efforts for a more comprehensive analysis. Another time-consuming impediment with respect to data collection of Surinamese institutions and enterprises is the lack of up-to-date data needed to gather quality data. The findings of the study will provide a contingent generalization since only one company with specific characteristics and unique circumstances is involved.
Figure 1: Structure of the Thesis
Source: Author
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CHAPTER 2 2. MACRO AND MICRO CONTEXT 2.1 Introduction
In this chapter the Surinamese background is described from the perspective of CKC BEM as a company in the concrete construction material sector. The chapter further presents an organizational overview and analysis of CKC BEM; plus the threats and opportunities which this environmental perspective provides are discussed.
2.2 Country Background
Suriname gained independence from The Netherlands on 25 November 1975; the official name being Republiek Suriname. The geographic coordinates are: 4 00N, 56 00W (See Appendix A- 1). Suriname is bordered in the North by the Atlantic Ocean and is located between French Guiana and Guyana; its southern neighbor is Brazil. The total area is 163,270 sq km of which 161,470sq km. is land and 1,800sq km. is water, which makes Suriname the smallest country on the South American continent and the only country on this continent where Dutch is the official language. Because of the small but multi-ethnic population2 (ABS/Censuskantoor 2005/01 Voorlopige Resultaten Zevende Algemene Volks-en Woningtelling in Suriname) and the number of languages and dialects spoken and given the harmonious way the citizens live together, the nation is also typified as the “Little United Nations”. Suriname has a relatively small, mining- based economy highly dependent on exports and imports, although the export basket is very limited. According to World Bank reports, 70% of the population lives below the poverty line, however Suriname is classified as a mid-income country with a GDP per capita of US$ 1,538.00 ( PPP US$3,524.00) . The bauxite industry is the backbone of the economy and accounts for more than 15% of GDP and 70% of export earnings. The Government accounts for 17% of GDP with manufacturing contributing 8.9% to GDP, and Construction 6.9%. It is estimated that the informal sector (mostly small-scale gold mining) represents some 20% of GDP, while agriculture contributes 9% to GDP (EIU country report, August 2004).
2 Hindustani 37%, Creole 31%, Javanese 15%, Maroons 10%, Amerindians 2%, Chinese 2%, White 1%, Other 2%
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Another study done by the World Trade Organization (WTO) secretariat revealed that Suriname “experienced the 13th highest volatility of output among 143 WTO members, as a result of fluctuations in the world market price of alumina measured by the standard deviation of per capita GDP growth rates” (WTO document WT/COMTD/SE/W/5 23 October 2002), and also as a result of Suriname’s “poor macro-economic management record”. Another WTO study argues that “quality of institutions is fundamental in distinguishing small countries that succeed from those that do not” (WTO document WT/COMTD/SE/W/4 23 July 2002). In view of the new Dutch Government policy regarding Suriname’s poor economic management of Dutch aid, Suriname will have to become less dependent on Dutch aid and integrate more into the region (EIU Country report, August 2004).
Suriname joined the CARICOM on June 29,1995 as its 14th member. CARICOM (See Appendix A-2) consists of fifteen highly differentiated groupings of countries ranging from the mini-economic union of the Organization of Eastern Caribbean States (OECS), comprising of the islands Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kits and Nevis, St. Lucia and St. Vincent and the Grenadines, to the more developed states, (MDC) such as Barbados, Guyana, Jamaica, Suriname and Trinidad and Tobago. The MDCs depend on primary export such as petroleum (Trinidad and Tobago), bauxite and alumina (Jamaica, Suriname and Guyana).
Trinidad is the lead manufacturer in the region. Belize and Haiti constitute the least developed countries (LDCs) of the region. Although initially established to facilitate cooperation in foreign policy, external trade and intra-regional trade, CARICOM has been on a mission to transform itself into a single market and economy (CSME) since 1993. However, because trade within the region is less than 15% of total, trade liberalization poses significant hurdles for economic and social development in the region.
Joining CARICOM was inspired by the reality that supranational and transnational forces and organizations increasingly affect and lessen the ability of individual states to control events in their economic system. The consequence for small (Caribbean) states is that they become increasingly more vulnerable. In that respect a body like CARICOM could serve to achieve the goal of decreasing the vulnerability of the individual state, Suriname. However, Suriname’s accession to CARICOM has had serious consequences for local companies. Not only were
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Surinamese companies ill-prepared and as a result experienced immediate increased competition in the domestic market; but the Surinamese government also had omitted to ensure an enabling environment where all companies could exercise their rights for the beneficial use of the enlarged market.
2.2.1 Leadership
Historically Suriname has been known for multi-party, multi-ethnic governments that have thrived on patronage and an intricate balance of power system. The leadership style could be characterized as transactional. Decision making happens by default. According to the Human Development Report 2002 of the United Nations Development Program (UNDP) Suriname has moved from the 65th to the 74th place as regards human development and functioning of democratic institutions. At the same time Suriname’s position within CARICOM after ten years of membership is characterized as technically disadvantageous compared to other member states.
A comparison based on the Country watch report (2004) of GDP Current Exchange Rate method as well as Purchasing Power Parity (PPP) method, reports that of the CARICOM member states, Barbados and Trinidad and Tobago rank highest and Suriname lowest, even after Guyana.
Given the challenges the country faces as a result of globalization and intensified competition and at the same time decreasing development aid, combined with the modern problems of illegal drug trafficking and increasing related crimes, a transforming style of leadership is demanded. It is obvious that solutions to these and emerging problems will require a multidisciplinary approach and a new type of leadership in which private sector organization leaders could play a vital role. (Brana – Shute, Leadership in the Caribbean Working Papers)
2.3. The Concrete Construction Sector
The concrete construction sector contributes 8.9% to GDP. Two factors play an important role in this sector, namely housing construction and infrastructural works. As a result of its multiplier effect and the derived demand which is largely dependent on developments in housing construction and infrastructural works, the sector is considered an indicator of economic
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growth. The concrete construction industry is typified by capital intensive production facilities and integrated operations.
As a result of very difficult access to factual information only a concise analysis of the sector as will follow.
The sector comprises three major producers of concrete construction material. These companies offer the whole range of concrete constructions products according to NEN3 and ASTM4 standards and are considered competitors. Concrete solid 4”5 and 6”stones determine the majority of the turnover of these companies. Practical experience has proven that the solid 4” and 6” stones have a pull function for related construction products such as sand, stones, and reinforcing bars. The major production equipment of each of these companies is the BESSER6 machine, which is considered the “Rolls Royce” amongst the stone-producing machines.
(Werkgroep Betonsector C.Kersten & CO. N.V. 2004) The three producers have an average daily production of 75,000 solid 4” stones, with CKC BEM having the lowest production output as a result of decreased capacity. The second largest producer has recently invested in new production units which will threefold not only its production capacity but the quality as well to the level of CKC BEM, who so far was considered to produce superior quality stones. Another phenomenon is the emergence of a number of sizeable and less sizeable producers7 of a limited number of products, mainly 4” stones of lesser quality. Typically, the smaller home craft style producers operate small flexible machines and have an average daily production of 1000 - 4000 stones of limited assortment, usually restricted to building stones, poles, decorating stones and/or tubes. The most recent market entry is of a number of foreign (Chinese) concrete construction companies of which no data is available so far.
Given the changing market environment it is imperative that the leadership of the concrete construction companies determine a strategy to cope with the challenging situation.
3 A Dutch quality standard
4 An American standard
5 Solid 4” and 6” are the measurements of the fast movers among the stones.
6 Brand name for the stone producing machine
7 Ten new producers emerged with an average daily production of 4,000 stones and about 50 smaller producers with a daily average of 1,000 stones
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2.4. CKC BEM
C.Kersten & Company N.V. (CKC) was established in 1768 by the Moravian Church. It is the oldest business company in Suriname and one of the oldest in the western Hemisphere. Until 1998 CKC had a centralized decision-making policy. In 1998 the company was structured into eleven operational companies in the trade, services and production sector of which CKC Bouwmaterialen Exploitatie Maatschappij N.V. (CKC BEM) became an operating company in the concrete construction sector (C. Kersten & Co. Holding Company). For more than fifty years CKC BEM8 has been the producer and supplier of a variety of concrete products such as concrete building stones, pavement stones, sewer systems, tubes, sand, stones, and reinforcing bars. The company is well established in the Surinamese society.
As a result of the financial crisis of the 1980s and the recession of the 1990s CKC BEM had been suffering heavy financial losses. In early 2000, the condition of the machines and other equipment was such that there was dire need of re-investment in capital equipment, a situation which affected optimal production. The overall situation could be characterized as urgently requiring substantial investments to modernize operations and increase the viability of the company, as well as effective leadership, training of specialized manpower and a more flexible organizational structure to allow for the much-needed cultural change. The liquidity of the company did not allow for these investments and called for borrowed capital investment financing. The operating results for CKC BEM from 1998 to 2001 are shown in table 1.
Table 1 : Operating results CKC - BEM 1998 - 2001
(x1000 SRG) Turnover Gross Profit Total Expenses Net Profit before Tax 2001 2,110,983.00 1,012,558.00 1,497,602.00 (485,044.00) 2000 2,005,875.00 1,224,787.00 1,366,158.00 (141,371.00)
1999 1,698,095.00 718,975.00 995,827.00 (276,852.00)
1998 1,135,766.00 484,119.00 464,513.00 19,606.00
Source: Ernst& Young: Audit Reports 1998-2001
8 CKC BEM was incorporated in September 1954
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2.4.1 Current Organization
When decisions are made to change an organizational structure it is important to proceed in a logical manner. First the vision and goals need to be established, and then the needed changes must be identified after which the structural changes must be put in place. An important aspect in this endeavor is communication which should be cross-company to achieve transparency and get everyone involved and committed. The next aspect to consider is the incentive plan and employee training and development to reduce the knowledge gap and enhance the understanding of individual and company needs.
In mid-2001 the CKC Kersten Holding appointed a new Chief Executive Officer (CEO) under the condition that no immediate investments could be expected within the first three years.
The CEO would first have to prove the viability of the enterprise. Every effort had to be made to cut costs and reduce spending. There was no emphasis on the future of the company except to maximize efficiency in order to minimize cost. The company vision was non-existent and its mission was not articulated and, as a consequence its future was unclear.
As a starting point of the transformation process the new leadership of CKC BEM needed to examine its organizational vision, its structure, its overall communication plan and its incentive plan. An employee training program would have to be set up in order to achieve and support its efforts in the organizational formation.
2.4.1.1 Organization Vision
Between 1998 and 2000 there were many changes in CKC BEM leadership, none with the desired result. After dismissal of the last CEO the strategic management team left, leaving the company in total disarray. To recover part of the excruciating loss the Holding company demanded the dismissal of 35% of the employees and a substantial asset sale to recover part of the losses. Moreover, production had to concentrate on a limited number of items. Following his appointment in 2001, the new CEO committed to and communicated the vision that the organization would improve its operation and aim to reach zero losses within three years, making optimal employment of the human resources available. At that point, knowingly or unknowingly
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he was indicating one aspect of Transformational Leadership. To completely utilize the full potential of our workforce we need to empower our human resources by providing better education and training and above all, better leadership and a dynamic organizational structure.
With the new management in place, people learnt to discuss long-term vision and short-term goals. Departments contributed in creating mission statements. The CEO established trust by concerning himself with the employees’ personal needs, basing this on his belief that cooperation and commitment are the bases of corporate strategies. A quick scan (CKC BEM Quick Scan July 2001) of the organization revealed that there was a substantial market for their products. In fact, the demand was so large and the supply so short that a large number of small producers benefited from the opportunity by setting up small operations. Internally, the situation was one of complete de-motivation.
Contrary to the demands and instructions of the Holding company and the Board, and armed with the results of the Quick Scan, the CEO decided not to limit the product assortment but to increase production and expand the sales margin. In the human resources sphere the decision was to motivate the workforce in order to at least double the production. A good communication structure was needed and good behavior and performance had to be rewarded.
To recover from the resulting knowledge and skills gap all eligible supervisory level managers underwent leadership and management training and were upgraded through a lengthy process of coaching and guidance. In 2002, the company – the first and only of eleven CKC companies - applied for an ISO-9001-2000 certification and was successfully awarded in 2003.
2.4.1.2 Infrastructure
The management team of CKC BEM consists of the Chief Executive Officer, a Human Resources Manager, Production Manager, Quality Control Manager, Technical Manager, Financial Manager and a Sales and Marketing Manager. The management team is supported by a Secretarial Department. (See Appendix B).
The organizational structure under the management team consists of seven first line supervisors in various production and technical areas with the support of three group leaders overseeing the daily operations. In 2004, the organization employed 60 general staff and 7 upper
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management team members as illustrated in Figure 2: a 50 person reduction from 1998.
Presently the number has been reduced to 51 general staff.
Figure 2: Staff composition CKC BEM 1998 - 2004
0 20 40 60 80 100 120
Total Number of Staff 1998 - 2004
Staff 10 12 8 8 9 7 7
CAO 107 97 91 81 77 66 60
1998 1999 2000 2001 2002 2003 2004
Source: Annual Reports CKC BEM 1998 - 2004
Table 3 shows that employee sick leave decreased considerably initially, but increased in 2002;
most likely because symptoms of set-in fatigue.
Figure 3: Sick leave progress 1999 - 2004 Sick leave 1999 - 2004
1999 16%
2000 21%
2001 9%
2002 19%
2003 20%
2004
15% 1999
2000 2001 2002 2003 2004
Sick Leave 1999 2000 2001 2002 2003 2004
days 1160 1491 614 1372 1451 1060
Source: Annual Reports CKC BEM 1999-2004
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The organizational structure is the typical pyramid structure and is more vertically organized than would be expected. The Supervisory Board sets the path and approves the proposals of the CEO. Major decisions are made by the management team and communicated by the managers to their respective teams by means of meetings, memos and occasionally e-mails. Supervisors hold meetings with their group leaders and general staff for the dissemination of information or for the implementation of upper-management decisions. Special customer orders, complaints or demands are channeled upward from supervisors to managers, and then discussed at management meetings for decisions or resolutions, which are then conveyed back down the hierarchical ladder. This structure creates long lines of communication and narrow spans of control; moreover, it reduces speed of responsiveness to market demand. CKC BEM is not as effective as it could be if levels of hierarchy were less pyramidal. CKC BEM is functionally oriented. Separating work by function and task creates communication barriers across functional lines, limiting timely information flow and preventing employees from understanding the overall mission of the company. Moreover, the production lay-out is outdated and inefficient. In addition to the above-mentioned factors, production equipment is outdated and as a consequence of the enduring financial problems, there is insufficient working capital. As a result it is difficult for CKC BEM to be efficient in its daily operation, to respond swiftly to market demands, to consistently offer excellent customer service, and most importantly, to remain competitive or gain market share.
2.4.1.3 Management Philosophy
Since mid-2001 the management philosophy has been shifting from a purely transactional to a more participative and transformational leadership (Bass, B and Avolio, B; Improving Organizational Effectiveness through Transformational Leadership. Thousand Oaks: Sage Publications 1994). Former CEOs were authoritative and believed in centralized decision making. Consequently, staff morale was low and the organization was ineffective in servicing customers. Upon his ingression in 2001 the CEO of CKC BEM introduced a changed management philosophy. The overall responsibilities are presently shared by the entire
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management team. The management style is evolving to a more transformational one. Although not as yet completely in place, several issues were revitalized such as: safety procedures;
personnel policies; customer service procedures; production procedures; and quality control procedures. The trade union was involved at an early stage, not only to be informed of new policies but also to listen to the desires of the union members. As a result of the involvement employees became more motivated, involved and committed. Without being able to improve on other factors of production and with a decreased workforce9, but confident that conditions would change for the better under the new leadership, they increased output significantly (See figures 4 and 5). Personnel policies were changed to satisfy employee expectations and to introduce fairness in the execution of policies. However, the overall operations are still lagging behind significantly as a result of a lack of working capital and funds to reinvest in equipment and machines.
Despite important adaptations mainly in the human resources policies, the overall effectiveness is still not entirely developed. Management understands the changing and competitive business environment and is continuously exploring ways - albeit ad hoc - to improve operational effectiveness and to face its challenges.
Figure 4: Concrete Tube Production 1998 - 2004
1998 1999 2000 2001 2002 2003 2004
- 2,000.00 4,000.00 6,000.00 8,000.00 10,000.00 12,000.00 14,000.00 16,000.00
Tube Production
tubes 3,437.00 1,924.00 2,472.00 6,777.00 11,041.00 14,580.00 8,738.13
1998 1999 2000 2001 2002 2003 2004
Source: Annual Reports CKC BEM 1999-2004
9 The workforce decreased from 91 in 2001 to 61 in 2004; production increased inversely
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Figure 5: Concrete Stones Production 1998 - 200410
1998 1999 2000 2001 2002 2003 2004
0 500,000 1,000,000 1,500,000 2,000,000
Stones Production
Stones 1,315,037 1,253,702 1,010,861 1,111,290.0 1,537,280.0 1,940,760.0 1,222,449.0
1998 1999 2000 2001 2002 2003 2004
Source: Annual Reports CKC BEM 1999-2004
2.4.1.4 Communication Flow
As acknowledged in the infrastructure section, the communication flow at CKC BEM is awkward and sometimes thwarted. Inherent in the vertical pyramid structure is a communication breakdown caused by interrupted linkages from one level to the next and unclear information (as a result of long lines of communication). These break downs may cause considerable problems for the company; for instance, human errors may result or valuable time loss may occur, all resulting in higher operation cost. In the end a severely crippled communication system may eventually cause loss of customers and revenue and may result in decrease of employee morale.
An optimal communication system will encourage quick response to customer needs and swift resolution of customer problems; moreover, employee morale will most likely further improve.
Such a communication plan is imperative to enhance CKC BEM’s communication mechanism and improve its ability to be successful in the future.
10 In 2003 several hurricanes destroyed large parts of the Caribbean and the United States. As a result almost all cement production was dedicated to rebuilding these areas during the first half of 2004. Consequently imports into Suriname were just a fraction of the normal quantities and resulted in lower levels of concrete stones production.
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2.4.1.5 Incentive Program
CKC BEM’s compensation policy is based on yearly negotiations with the labor union. The secondary benefits constitute a substantial part of the compensation, something the CKC companies are noted for. Following the hyperinflation of the 1990s the otherwise excellent remuneration of BEM personnel eroded. Whereas most other companies have renegotiated the compensation structure with the labor unions, the CKC companies did not adjust the secondary benefits, causing a disparity between the level of secondary benefits and net income, leaving CKC BEM with high overall labor costs; and workers dissatisfied with their net incomes.
Given the delicate financial position, the CEO consulted with the labor union and reached a mutual agreement comprising of the following:
• No increases would be awarded until the profit and loss account reached break even;
• Incentives would only be awarded based on increased responsibility;
• Exceptional incentives would be awarded solely based on extraordinary performance;
• Only those employees, who against all fairness had been deprived from increases, would be awarded a correction;
• New personnel would be employed against higher compensation but with adapted secondary benefits.
During 2002 no salary increases were awarded. In 2003 an increase of 20% was awarded based on the average percentage production increase. Over 2004 no salary negotiations took place.
2.4.1.6 Opportunities and Threats
The business environment in which CKC BEM operates poses both threats and opportunities. In order to decide on the right strategies CKC BEM must be fully responsive to neutralize the threats and turn them into opportunities and to take full advantage of existing opportunities.
Table 2 on page 19 depicts some of the threats and opportunities.
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Table 2: Threats and Opportunities
Threats Opportunities
1. Deficient Support from Holding Company Explosive increase in demand for concrete construction materials (building sector)
2. Recent Expansion of Large Local Competitor Marketing based on ISO certification11 Expanded ( CARICOM) Market
Increased Infra-structural activities (projects) New, varied customer taste
2.5 Summary
This chapter has introduced the country background from the perspective of CKC BEM, and the sector in which the organization operates. The dire financial position was discussed as a result of years of lack of investments. In this respect the position of the Holding Company towards the operating company CKC BEM was considered. Changes occurring within the organization and the evolution of the leadership style of the newly appointed CEO were studied. The organizational structure, staff composition, level of production, philosophy and incentive programs and sick leave progress was discussed. Finally, threats and opportunities facing the organizational context were exemplified.
11 CKC BEM is the only ISO 9001-2000 certified local concrete construction company and also the only one of the eleven CKC Kersten companies that is ISO certified.
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CHAPTER 3.
3. LITERATURE REVIEW
3.1 Introduction
Leadership is as old as mankind. The need for great leadership nowadays is greater than ever before. Given the changing environment, the pressures of globalization, changing workforces and rapid technological development amongst others, people have to be better equipped to be able to steer their organizations to sustained success. The examples of failing enterprises are numerous: companies fail, mostly because their leadership fails. Effective leadership is an all- encompassing factor of successful companies. For companies to remain competitive their leadership must have integrity and vision, must be able to motivate employees to perform even beyond their own expectation and to their fullest potential and must be able to quickly adapt to changes. For developing countries this is even more true.
Upon his inception at CKC BEM in 2001 the CEO, after having assessed the situation, decided to implement a type of leadership so far unknown in the organization. His approach was to orientate the organization to a more intrinsically motivated workforce through the style of leadership which was exercised.
Transformational leadership (TL) – for the purpose of this thesis – is a construct that cannot and should not be studied in isolation. The complexity of leadership demands solid comprehension of the historical development of, and approaches to leadership.
This review of literature firstly examines leadership theories commonly referred to in organizational contexts for a better general understanding of the development and dimensions of the complex construct of leadership. This study will be summarized in table 1. Then focus is placed on the studies of transformational leadership, its characteristics and fundamental qualities and the relationship of the construct on trust, and employee satisfaction. The chapter ends with a summary. The review begins with the description of main concepts used during the study.
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3.2 Definition of Main Concepts Used
3.2.1 The concept of Leadership
It is believed that leadership has it roots in conflict and has evolved through centuries. The attributes that conceptualize leadership vary in the literature depending on the perspective of the researcher. Some writers have identified leadership as a position, others as a person, some as a behavior, some as a relationship; others a process. The handbook definition of Bass & Stogdill’s Handbook of Leadership (3rd edition p.19) provides the definition: “Leadership is an interaction between two or more members of a group that often involves a structuring or restructuring of the situation and the perceptions and expectations of the members”. Northouse, in Leadership, theory and practice (2004, 3rd edition p. 3) defines it as: “Leadership is a process whereby an individual influences a group of individuals to achieve a common goal”. James MacGregor Burns, in Leadership (1979, p 18) mentions that: “Leadership over human beings is exercised when persons with certain motives and purposes mobilize, in competition or conflict with others, institutional, political, psychological, and other resources so as to arouse, engage, and satisfy the motives of followers”. Yukl, (2001 p.7): “Leadership is the process of influencing others to understand and agree about what needs to be done and how it can be done effectively, and the process of facilitating individual and collective efforts to accomplish the shared objectives”.
Hellriegel and Slocum in Organizational Behavior (10th ed. p. 250) define leadership as: ” The process of developing ideas and a vision, living by values that support those ideas and that vision, influencing others to embrace them in their own behavior, and making hard decisions about human and other resources”.
From these and other definitions we may conclude that leadership is about relationships with other actors, about influencing these actors, and about performing.
3.2.2 The concept of Transformational Leadership
James MacGregor Burns in Leadership (1978 p. 4) conceptualized transforming leadership as follows: “the transforming leader recognizes and exploits an existing need or demand of a
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potential follower. But beyond that, the transforming leader looks for potential motives in followers, seeks to satisfy higher needs, and engages the full person of the follower”.
When addressing transformational leadership, Bernie Bass is the foremost author on the subject. For the purpose of this study we will adopt the Transformational Leadership approach as put into operation by Bass: “Transformational leaders motivate others to do more than they originally intended and often even more than they thought possible. They set more challenging expectations and typically achieve higher performances”. “Transformational leaders do more with colleagues and followers than set up simple exchanges or agreements. They behave in ways to achieve superior results by employing one or more of the four components of transformational leadership: Idealized Influence, Inspirational Motivation, Intellectual Stimulation, and Individualized Consideration”. (Bass 1994)
3.2.3 The concept of Trust
Trust is an interpersonal relationship that plays a vital role in leadership. Organizational researchers have defined trust from different dimensions. For the purpose of this study we will approach trust as a combined dimension of cognitive and affective forms (Dirks K & Donald, Ferrin, Trust in Leadership META ANALYSIS, Journal of Applied Psychology, 2002, 87, 611- 628 p. 15) and adopt the definition of Rousseau et al (1998) as mentioned by Dirks and Ferrin p.5: “a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another”.
3.2.4 The concept of Job Satisfaction
Job satisfaction answers the question: “Do people really like their jobs?” It also relates to feelings which are reflected in attitudes towards their jobs (Hellriegel & Slocum, Organizational Behavior 10th ed. p.51). The construct is important since it is directly related to job performance.
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3.3 Approaches to Leadership
The meaning of construct leadership depends on the context in which leadership takes place. In leadership literature different classification systems have been developed over time. In some classification systems leadership is viewed in terms of power relationships with the followers; in other systems leadership is viewed from a personality perspective, a behavioral perspective or as a process. (Northouse 2004, p. 2) Given that leadership is an interaction between leader and follower, the effectiveness of the leadership style exhibited in organizations is a critical determinant of organizational success. In table 3 below the researcher will place “old” leadership theories within the context of their evolution.
Table 3: Summary of Leadership Approaches
Leadership Approaches Summary of Theory Trait Leadership
Early part of 20th Century
Leader as Great Man. Devoted to leader inborn characteristics; leaders lead the way.
Criticism: no specific set of traits for all leaders, does not take the situation into account.
Strength: Is intuitively appealing and holds some truth; is widely researched.
Behavioral Leadership Late 1940s
Explains what leaders do and how they act, especially towards followers. As such distinguishes between task behavior, to realize goals and objectives, and relationship behavior, to help followers feel comfortable in a given situation. Ohio state- and University of Michigan state studies well known.
Ohio State University: developed the initiating structure; the extent of the leader initiating activity and consideration: the degree of showing concern for the followers. Michigan University distinguishes between leaders with an employee orientation (concern for the follower) and production orientation, emphasizing the goals to be realized Criticism:
Research has not proven how styles are associated with performance. No universal style emerged for every situation. Strength: Makes the leadership process comprehensible;
sufficient empirical support; worthwhile in understanding complexities of leadership
Situational Leadership Late 1960s
Focus is on leadership in situations. Directive and supportive dimension dependent on followers’ readiness and level of development. Criticism: Little research done, theoretical basis questioned. Strength: well-known, used for training to become effective leaders.
Practical in use. Tells what to do in which situations. Is flexible in nature. Emphasizes individuality of followers.
Contingent Leadership Mid to late 1960s
Leader effectiveness depends on fit of style and situation. Characteristic of situation:
Leader-member relations are task or relationship motivated. Criticism: Fails to explain effectiveness of one style over the other; Strength: Supported by empirical evidence;
provides data on leadership styles that can be used in developing leadership profiles
Path-Goal Leadership Early 1970s
Focused on reaching the goal. Leader chooses the path that best fits the needs of followers.
Directive style when followers are dogmatic; Supportive style when followers need affiliation; Participative when followers are autonomous.
Criticism: complex to implement. Only partial support from empirical research. Strength:
Good theoretical framework, integrates the motivational principles of expectancy into leadership theory. A Practical model.
Source: Author
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