Critical Evaluation Of Leadership Theories Business Essay


a leader is someone who can inspire people to do things in way that the people get completely in it. Leaders are people who leave their footprints in their areas of passion. (J.Byrnes, 2005).effective leaders must have two major qualities: knowledge and communication competence. Leader needs knowledge of issue and the ways of effectively leading a team. Leader also needs to be effective communicators as equally listener and speaker. Leaders should acquire qualities of flexible, openness, courage, interactive and positive attitude.

Leadership refers to the process of influencing the activities of others toward high levels of goal setting and achievement.Peter Drucker (1999) writes the leader ability to generate unusual or exceptional commitment a vision. And of leadership being 'the lifting of people's vision to a higher sight, the raising of their performance to a higher standard, the building of their personality beyond its normal limitations'.

Leadership theories:-

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There are three major approaches of leadership theory. They are:-

Historical approach

Classical approach

Contemporary approach

Trait theory:-a trait is relatively stable aspect of an individual's personality that influences behavior in a particular direction. Many people have tried to identify the personal characteristics associated with effective leaders. According to trait theory every person will be born with some traits. Trait theory says that every leader will have certain traits that make them more suited to leadership than others. A person would have these traits from birth which will be his characteristics which makes him more suitable to be leaders than others. Traits are the distinguishing personal characteristics of a leader, such as intelligence, values, self confidence and appearance

Behavior theory:-according to behavior theory leaders are made not born. This theory is completely against the traits theory. Traits theory says that leadership qualities come from birth where as the classical leadership style like the behavioral theory says that they come from practice and not from birth. It says that leadership is defined, hence any person can learn those qualities required to be leader and can successfully lead when there is need for it. Leadership qualities can be adopted by looking at others.

Perhaps any leader can adopt the correct behavior with appropriate training.

Contingency theory:-contingency approach a model of leadership that describes the relational ship between leadership styles and specific organizational situations. An early, extensive effort to combine leadership style and organizational situation into a comprehensive theory of leadership was made by Fiedler and his associates. Contingency theory is a refinement of the situational viewpoint and focuses on identifying the situational variables which best predict the most appropriate or effective leadership style to fit the particular circumstances.

Transactional approach: - James Burnes (1978) distinguish between transactional and transformational leaders. A transactional leader is one who treats leadership as an exchange, giving followers what they want if they do what the leader desires. And a transformational leader is a leader who treats leadership as a matter of motivation and commitment, inspiring flowerers by appealing to higher ideals and moral values. The leader, who holds power and control over his or her employees or followers, provides incentives for follower to do what the leader wants. Hence, transactional leadership simply involves an exchange that leads to desired outcomes and transformational leadership motivates us to do more than we originally expected to do.

Participative theory:-participative theory says that whatever the decision or whenever the decision is need to be made, involve everyone who is attached to that. Don't take decision solely. Reason is when everyone come together to take the decision they feel involved in it. In participative type of leadership people are more committed because they are involved in decision making. The drawback of this style would be it can confuse a leader as which course of action to be taken as there are more ideas. This can be time consuming because more people are involved decisions cannot be made quickly.

Situational theory: - according to Hersey and Blanchard's situational theory, a leader can adopt one of the four leadership style, based on a combination of relationship and task behavior. These four styles are:-

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The telling style reflects a high concern for task and a low concern for people and relationships. This is very directive style. It involves giving explicit directions about how tasks should be accomplished.

The selling style is based on a high concern for both people and tasks. With this approach, the leader explains decisions and gives subordinates a chance to ask questions and gain clarity and understanding about work tasks.

The participating style is based on a combination of high concern for people and relationship and low concern for production tasks. The leaders shares ideas with subordinates, gives them a chance to participate, and facilities decision making.

The delegating style reflects a low concern for both relationships and tasks. This leader style provides little direction and little support because the leader turns over responsibility for decisions and their implementation to subordinates.

The leadership approach of Richard Branson:-

The diversity of business operated by virgin group helps the company maintain a high level of loyalty in many different industries. Sir Richard Branson is the current chairman of the company and is well known for his colorful yet competitive leadership style of Branson. Manager of virgin company use the concept of innovation to inspire the employees to contribute the company at all levels. The transformational leadership pattern followed by the company made the employees to contribute to their level best to walk towards success. The transformational leadership has proved to be a valuable tool for executives, managers and workers alike. Because of the highest level of management they encourage employees to use their skills in a way that best compliment the company. Employees within the company have a willingness to work together to expand and improve the company in order to reach their own personal success in life. According to Richard, a good leader also has a good listener. He has created a unique management formula that has contributed to the long term success of the company.

Perhaps the simples and best advice is that:

"Good managers sleep well at night-because they have clear consciences after the decisions of each working day."

Different Leadership style:-

Management styles influence how leaders communicate with employees. For example, enterprise operates an open door policy. These include everybody within the organization to have direct contact with senior managers. The chief executive officer Andy Taylor is following the values set by his father by making opportunities for employees to meet and talk to senior managers. Enterprise puts a high level value on teamwork and open communication between employees at all levels.

Managers have their own preferred management style. Some prefer an autocratic style where tell employees what to do and how to do it. Others prefer a democratic style where they help their team to discover solutions to problems for themselves. The management style must change to fit the circumstances. Some decisions must be made at the highest level. For example, a manager would need to give immediate instructions on a health and safety issue or in a fire. However, if changing an office layout, the manager could leave the team to investigate and decide on the solution for themselves. There are many management styles discuss below:

Autocratic style

An autocratic style of management is when a manager makes a decision alone. The manager conveys the decision to staff and they have to work within the scope of that decision. For example, in order to deliver good customer service, instruct all staff to fallow enterprise's guidelines for dealing with customer.

Example: The vice president of corporate communications for enterprise established an environmental committee. Its aim was to influence the behavior of the whole organization by reducing waste and improving its carbon footprint .as the industry leader, enterprise attempts to set high standards when it comes to the impact of rental cars on the environment.


quick decision making

effective when employing many low skilled workers

Likes to tell those working under them what to do

No consultation

Subordinates are expected to obey instructions


No two way communication so can be de-motivating

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creates "them and us" attitude between manager and workers

Helps complete urgent tasks that need doing quickly or where there is an element of risk about the work

May lead to lack of creativity or resistance if employees have no input.

Douglas McGregor in 1960 used terms theory x and theory y to identify two very different forms of management style:

A theory x manager tells employees what to do and supervises their work. This involves using strict controls within the business. This reflects an autocratic style. A theory y manager believes employees want to do well. The manager provides individuals with the opportunity to take control of their work. They can contribute towards solving a problem or issue. This helps motivate them to do better.

Democratic style

Management the other hand tries to involve employees to find out their opinions before reaching a decision. Certain matters can be decided through discussion and consultation.

As an example, there may be a complex decision to be made about shutting down a piece of equipment and the effect of this on other production systems. Enterprise uses democratic decision -talking in many parts of business. Everyone has the opportunity to contribute ideas to the decision. There are two types of democratic decision-making:

Persuasive democratic management-here the leader makes the decision first and then persuades employees that he or she has made the right decision.

Consultative democratic management-this involves the group contributing to the decision making process, with the leader making the final decision.

The team is central to delivering good customer service. The consultative approach helps enterprise achieve this business objective. This independent approach enables enterprise employees to have ownership of many of their activities. This acts as a motivator for staff. In 1943, Abraham Maslow, looking at motivation, identified a hierarchy of needs for individual employees. Everyone has needs for water, food, warmth and safety. These have to be met before a person can move on to fulfilling their higher needs. When employees are empowered to make decisions, this improves their sense of worth and also helps them to use creative skills within their role and motivates them to perform better. Making decisions at a local level helps to meet customers' needs and enables individuals to take a pride in their job. This recognizes that employees are motivated by factors other than financial ones. These include praise, recognition or having more responsibility.


authority is delegated to works which is motivating

useful when complex decisions required that need specialist skills

shares information with team members

provides opportunities for the team to influence decision making


Mistakes or errors can be made if workers are not skilled or experienced enough.

Paternalistic style

Sometimes managers need to adopt a paternalistic style. This means that they may make decisions without consultation or participation, but they have the employees' best interest at heart. If decision is presented in this way, although employees are not involved in making the decision, they are less likely to feel unhappy about it.

Example: in the oil and gas industry it is important to create for every employee a well -rounded, safe, rewarding and challenging work this way employees will be motivated to work at their best and actively contribute to creating that safe working and living environment.


more two way communication so motivating

workers feel their social needs are being met


low down decision making

still quite a dictatorial or autocratic style of management

Laissez-faire style

Derived from the French meaning 'leave alone', this is a loose leadership style. It allows employees to carry out activities freely within broad limits. It differs from the democratic style in that individuals are able to behave independently and make their own decisions, rather than coming together on an agreed course of action.

Small entrepreneurial teams manage and lead local enterprise offices. These teams are decentralized and make many decisions on their own. This shows a type of laissez- faire structure.


Enterprise's jack Taylor founding values award demonstrates the laissez -faire approach. This is part of enterprise's corporate responsibility programme.Each region manages and participates in community projects. These may involve, for example, working in a nursing home or gardening for the elderly. If the region wins the award, it is free to use the money as it chooses.


Some employees might not be able to motive themselves or make the right decision alone. Therefore individuals within enterprise teams work to corporate guidelines for dealing with customers. Staff also receives regular training and feedback. Employees in a local branch have a sense of ownership for many of their activities. At the same time, they have the support and career structure of a large multinational company.

Depending upon the circumstance, managers will use different management styles. By developing leaders who are able to make decisions at a local level, enterprise can respond more closely to customer needs within a competitive service industry, its high levels of customer service provide it with competitive advantage over its rivals. Managers must select a management style that is best suited for them, their department, their subordinates, and finally the organization they work for. The situations managers encounter may require varying management styles depending on a specific assignment, the employees being managed, or the manager's personality. Management style can ultimately determine the performance outcome of employees and a company's growth depends on the management styles of its executives. Therefore, in order to determine the most appropriate management style, it is necessary to first review previous results produced as a result of a particular management approach.

Cultural differences: - there are several cultural differences between nations and ethnic groups. This influences the extent to which both individuals and the organizations are judged on their track record and on their promise. These differences are important because business is conducted across frontiers and because many organizations have bases in several countries. Organizations have to adjust their style for different customers and markets and accept that there will be cultural differences between the various parts of the organization. This reality affects the ability of the strategic leader to synthesize the various parts of the organization and achieve the potential synergies.

Kantor (1991) research drew out different perspectives on competitive success between the leading nations, where she argued that these stemmed from national cultures and cultural differences. Her findings indicated the following priorities:-


product development


product quality


customer service

product quality



workforce skills

problem solving


These conclusions may be summarized by arguing that Japan is driven by a commitment to innovation, America by customers and Germany by engineering.

The power of culture should not be underestimated, both for a company's success and if it is inappropriate, in frustrating change. Values, strategies, systems, organization and accountabilities- the components of culture- are a very strong mix which can either make a company successful or alternatively, lead to its decline. The task of corporate leadership is to apply energy and judgement to the corporate culture to ensure its relevance. (Allen Sheppard)

Business plays an important role in any culture. The specific role it plays is the result of society's expectations. Some believe that the only social role business should play is to maximise profits. Society, applying legal and political power, has demanded greater social and ethical sensitivity from business. It has required that business takes into account the community of individuals whose lives are affected by its decisions.


Over the years a number of leadership theories have been put forward in an attempt to explain the nature of employee motivation and suggest ways in which it may be improved.motivation is the force that makes us behave in a particular way. In hospitatility and tourism setting movtivation is about ensuring that employees put in the effort required to achieve the objectives set for them.

Motivation theories:-

Frederick Taylor's theoy:-

Taylor 'motivation theory:-

Taylor was an American engineer who studied production methods in the steel industry. He concluded that workers main motivation was pay and that they needed close supervision.he belive that complex jobs would be most efficiently performed if broken down into separate operations where little could go wrong.

Elton mayo:-

According to Elton mayo 1920 the employees were responding to the attention given to them, rather than to the physical working conditions.he was investigating why, despite improved facilities and benefits, there was much dissatisfaction and poor productivity.

Abraham Maslow's hierarchy of needs:-

Maslow first developed his theory of human motivation in 1943. Maslow believed that motivation comes from a desire to satisfy a hierarchy of human needs. We must first of all saisfy our basic needs for survival such as food and shelter.maslow accepted that a variety of needs will exist at the same time, but suggested that once lower needs are satisfied then higher needs become the strongest motivations.

Frederick Herzberg's two factor theory:-

Frederick Herzberg's two factor theory, produced in the 1950s. Concers job design and satisfaction.from numerous interviews with accountants and engineers he concluded that two sets of factors are important in motivations.

Douglas McGregor's theory X and Y

McGregor put forward two extreme views about the way in which organizations manage their employes. He called these theory X and Y theory.

Theory X organizations

Theory Y organizations

Hold a traditional view. They believe that their workers are selfish, will not accept responsibility are essentially lazy and work only because they have to. They have no loyalty to the organization and need to be strictly supervised. They are motivated only by pay or by threats.

Have a positive view. They believe that their workers respond to encouragement and given the right situation, will accept responsibility can be genuinely creative wil accept change and can be motivated by work that is interesting. These workers will care about their organization if it values their efforts.

Motivation -overview

Motivation may be provided by either:-

changing the working environment, including the job itself and the culture of the organization. This will enables us to satisfy our internal needs.

Offering incentives which encoueage and reward performance-these may be financial or non financial.


Now day's people are part of a worldwide economy with competition coming from nearly every continent. For this reason, organizations need diversity to become more creative and open to change. Since managing diversity remains a significant organizational challenge, managers must learn the managerial skills needed in a multicultural work environment.

Diversity meaning: London & Rosener [1991] define diversity as that which differentiates one group of people from another along primary and secondary dimensions.

"A group is diverse if it is composed of individuals who differ on a characteristic on which they base their own social identity" [O'Reilly, Willliams, &Barsade 1998, p.186]

Cultural diversity:

Cultural diversity has been defined as "the representation, in one social system, of people with distinctly different group affiliations of cultural significance". It has been studied in both laboratory and field setting. [Cox et al.1991].

Within culturally homogeneous groups, members will have tendency to communicate with each another more often and in a greater variety of ways ,perhaps because they share worldviews and a unified culture resulting from in group-attachments and shared perceptions[early &mosakawski,2000]

According to Mahatma Gandhi:

"I do not want my house to be walled in on all sides, and my windows to be stuffed. I want the cultures of all the lands to be blown about my house as freely as possible. Buit I refuse to be blown off my feet by any."Globalization provides both positive and negative impact on cultural diversity:


It allows self-representation and information sharing on a whole new level. Technology provides a medium where depiction of images and portrayals of self-identity can provide the means in which truism can be established.

Global media centers allow cultures to promote awareness and provide public knowledge and understanding of their stories and identities.

It also allows for the communication of their relevant accounts and commentaries on issues that are important in preserving the culture and knowledge acquisition of cultural ways - allowing them to retain their diversity.

Being in charge of their own media production companies allows control of their artifacts, signs and symbols that are regarded as cultural property. When cultures are in control of their own public images they are better equipped to manage and represent their images appropriately without misrepresentation.

Technology allows for self-representation and preservation of personal and collective identity by providing autonomy and empowerment.

Globalization provided the opportunity to redefine collective identity along with identifying a place for distinctive cultures. Global social, political and economic networks, combined with common goals, will no doubt enable the emerging empowerment among cultural peoples (Smith, 2000).

This is far more advantageous than individual communities or groups coming forward to raise global or local concerns. Global positioning of cultural groups allows social and political power that has previously not been seen.

Utilizing global networking provides the opportunity to problem-solve and strategize with other cultures that are experiencing similar challenges in acclimatizing to technological change.

It can become a platform to mobilize ideas, viewpoints, campaigns and strategies to protect and cultivate interests and garner political power.

Global awareness provides many benefits, including a spotlight on government policies, access to education, living conditions, and injustices, which promotes economic pressure from foreign countries to promote national change. Cultural awareness leads to empathy, understanding and tolerance, while global markets can lead to employment, economic and educational opportunities.

Diversity has become valued internationally, and is promoted through international organizations. This discourse views the homogenization of societies as necessary to create "greater niche diversity" (TWBG, 2004)

Negative impact:

There are a number of negative impacts globalization has had on cultural diversity, including the influence multinational corporations have on promoting a consumer culture, exploitation of workers and markets and influencing societal values. This increased availability of commercial media and products can "drown out" local cultural influences.

Loss of individualism and group identity: Loss of individualism and group identity occur when globalization encourages a 'Western ideal of individualism'. This promotes a homogeneous set of values and beliefs. There is an assumption that the values and ideologies of the "Global North" will provide a suitable framework for the new knowledge economies of the developing "Global South" (Youngman, 2000).

COLONINIZATION: Globalization allows further colonization which impacts intellectual property and cultural rights.

Global access to information has opened the gateway to acquiring cultural property and information. Many view that 'if it is out there it is free for the taking', which includes cultural signs, songs, dance, rituals and other cultural artifacts. These icons of a culture are viewed as a living heritage and are an integral part of identity (Smith,2000)

Challenge for leaders of today:

Though they work together, they maintain their distinct identities, diverse culture and separate lifestyles. Managers of today must learn to live with these diverse behaviors.

Diversity, if properly managed, can increase creativity and innovation in organizations as well as improve decision making by providing different perspectives on problems.

Diversity mainly came into the picture when globalization came in 1990-91.As the wave of globalization sweeps across the organizations, there is a convergence of workforce from diverse countries, cultures, values, styles etc .Such convergence of distinctly different people presents tremendous opportunities as well as challenges.

Organizations can derive unassailable lead in the marketplace when they have in place effective Human Resource Management practices and diversity initiatives that accept differences, values equality and create preferred places to work and as we enter the 21st century, workforce diversity has become an essential business concern. In the so-called information age, the greatest assets of most companies are now on two feet (or a set of wheels). Undeniably, there is a talent war raging. No company can afford to unnecessarily restrict its ability to attract and retain the very best employees available. Managing diversity means managing people in the best interest of employee as well as employer.

Our main objective to describe the process of change of cultural differences between certain social groups, caused by globalization.  Cultural identity on certain societies that show cultural diversity will remain even stronger after Globalization effects. Cultural diversity will remain and coexist with Globalization. On the other hand, Globalization will take force from cultural diversity to increase its scope and power of diffusion.