Chapter 3: Leadership and Power in Organizations
Leadership is the ability to influence a group toward achieving goals. It is one of the most studied topics in OB because effective leadership directly determines organizational success. This chapter covers leadership theories, styles, power bases, and their application in Nepal's organizational context.
3.1 Leadership vs Management
| Basis | Manager | Leader |
|---|---|---|
| Focus | Planning, organizing, controlling | Inspiring, motivating, visioning |
| Authority | Formal position (assigned) | Personal influence (earned) |
| Time Focus | Short-term efficiency | Long-term direction |
| Approach | "Do things right" | "Do the right things" |
| Risk | Minimizes risk | Takes calculated risks |
3.2 Trait Theory
Early theory suggesting leaders possess inherent traits distinguishing them from non-leaders. Research identified common traits: intelligence, self-confidence, determination, integrity, and sociability. Limitation: no universal set of traits guarantees leadership success.
3.3 Behavioural Theories
Blake and Mouton's Managerial Grid
| Style | Concern for People | Concern for Production | Description |
|---|---|---|---|
| Impoverished (1,1) | Low | Low | Minimal effort; just enough to survive |
| Country Club (1,9) | High | Low | Happy employees but low productivity |
| Authority-Compliance (9,1) | Low | High | Maximum output, minimal human concern |
| Middle-of-Road (5,5) | Medium | Medium | Balance but mediocre results |
| Team Management (9,9) | High | High | Ideal — high commitment and productivity |
3.4 Contingency/Situational Theories
Hersey-Blanchard Situational Leadership
| Follower Readiness | Leadership Style | Behaviour |
|---|---|---|
| R1: Unable, Unwilling | Telling (S1) | High task, low relationship — give clear instructions |
| R2: Unable, Willing | Selling (S2) | High task, high relationship — explain and persuade |
| R3: Able, Unwilling | Participating (S3) | Low task, high relationship — share and facilitate |
| R4: Able, Willing | Delegating (S4) | Low task, low relationship — empower and trust |
Transformational vs Transactional Leadership
| Aspect | Transactional | Transformational |
|---|---|---|
| Focus | Exchange: reward for performance | Inspiration: transform followers' values |
| Motivation | Extrinsic (salary, bonus, punishment) | Intrinsic (purpose, vision, growth) |
| Change | Works within existing system | Challenges and changes the system |
| Components | Contingent reward, management by exception | Idealized influence, inspiration, intellectual stimulation, individualized consideration |
| Nepal Example | Government office with strict rules and hierarchy | Social entrepreneur like Mahabir Pun (Nepal Wireless) |
3.5 Power and Politics
French and Raven's Five Bases of Power
| Power Base | Source | Example |
|---|---|---|
| Legitimate | Formal position/authority | CEO's authority to make strategic decisions |
| Reward | Ability to give rewards | Manager who controls promotions and bonuses |
| Coercive | Ability to punish | Supervisor who can issue warnings or terminate |
| Expert | Knowledge and skills | IT specialist whose expertise is needed by everyone |
| Referent | Personal charisma, admiration | Respected senior who inspires loyalty through personality |
3.6 Comprehensive Leadership Theory Comparison
| Theory | Era | Core Idea | Key Question | Limitation |
|---|---|---|---|---|
| Trait | 1900s-1940s | Leaders are born with certain traits | "Who is a leader?" | No universal trait set; ignores situation |
| Behavioural | 1940s-1960s | Leadership can be learned; focus on behaviors | "What do leaders do?" | No single best style; ignores context |
| Contingency | 1960s-1980s | Best style depends on situation | "When does each style work?" | Complex; hard to assess all situational variables |
| Transformational | 1980s-present | Leaders transform followers through vision and inspiration | "How do leaders create change?" | Potential for manipulation; overemphasis on leader |
| Servant | 1970s-present | Leaders serve followers first | "How do leaders serve others?" | May be seen as weakness; slow decision-making |
3.7 Fiedler's Contingency Model
Fiedler's model matches leadership style to situational favorableness. Leadership style is fixed (measured by LPC — Least Preferred Co-worker score).
Situational Favorableness
| Factor | Favorable | Unfavorable |
|---|---|---|
| Leader-Member Relations | Good trust and respect | Poor trust, conflict |
| Task Structure | Clear, well-defined tasks | Vague, unstructured tasks |
| Position Power | Strong authority to reward/punish | Weak formal authority |
Key Finding: Task-oriented leaders (low LPC) perform best in very favorable OR very unfavorable situations. Relationship-oriented leaders (high LPC) perform best in moderate situations.
Nepal Application
| Situation | Favorableness | Best Style | Nepal Example |
|---|---|---|---|
| Bank branch with trained staff, clear procedures | Highly favorable | Task-oriented (structured management) | Branch manager focuses on targets and compliance |
| New startup team, moderate clarity | Moderate | Relationship-oriented (build trust first) | Startup founder focuses on team building and morale |
| Crisis: earthquake relief, no resources | Very unfavorable | Task-oriented (decisive action needed) | Army officer directing rescue: clear orders, quick action |
3.8 Servant Leadership
Servant leadership (Robert Greenleaf) reverses the traditional model — the leader's primary purpose is to serve followers, helping them develop and perform at their best. The leader leads by serving.
Servant Leadership Characteristics
| Characteristic | Description | Nepal Example |
|---|---|---|
| Listening | Actively seeking to understand followers' needs | Manager holding regular one-on-one meetings with each team member |
| Empathy | Understanding and accepting others' feelings | Understanding employee stress during load-shedding era |
| Healing | Helping followers overcome personal challenges | Providing counseling support after earthquake 2015 |
| Community Building | Creating sense of belonging | Organizing team festivals (Dashain celebrations at office) |
| Stewardship | Managing organization as trustee, not owner | CEO prioritizing long-term value over short-term profit |
3.9 Organizational Politics
Organizational politics are activities not required by formal role but that influence distribution of advantages within the organization. Politics are inevitable but can be constructive or destructive.
| Political Tactic | Description | Ethical? | Nepal Workplace Example |
|---|---|---|---|
| Building Coalitions | Forming alliances with powerful people | Can be | Joining the right "group" for career advancement |
| Impression Management | Controlling how others perceive you | Can be | Volunteering for visible projects before promotion review |
| Information Control | Controlling who gets what information | Questionable | Withholding market data from colleagues competing for same role |
| Scapegoating | Blaming others for failures | Unethical | Manager blaming subordinate for project failure to protect reputation |
Managing Organizational Politics
For Leaders: Set clear performance criteria; promote based on merit; create transparent decision-making processes; address political behavior directly; model ethical behavior. For Employees: Focus on competence and results; build genuine relationships; document your contributions; avoid gossip and manipulation; understand the informal power structure but don't be consumed by it.
Practice Questions
Short Answer:
1. Distinguish between leadership and management.
2. Explain Blake and Mouton's Managerial Grid with five leadership styles.
3. What is situational leadership? Describe the four styles.
4. Compare transformational and transactional leadership.
5. Explain French and Raven's five bases of power.
Long Answer:
6. Discuss the evolution of leadership theories from trait to transformational. Which is most relevant for Nepal? (15 marks)
7. "Effective leadership depends on the situation." Evaluate using Hersey-Blanchard's model with Nepali examples. (15 marks)
8. Compare transactional and transformational leadership. Provide examples of each from Nepal. (15 marks)
9. Discuss the role of power and politics in organizational behaviour. How do managers use different power bases? (15 marks)
10. "Nepal needs more transformational leaders." Critically evaluate this statement with reference to government, business, and social sectors. (15 marks)
Exam Tips: ✓ Leadership comparison tables are frequently asked ✓ Know Managerial Grid positions (1,1 to 9,9) ✓ Situational leadership matches follower readiness to style ✓ Five power bases are a popular short answer ✓ Use Nepal leaders as examples (business, social, political)