Leadership Theories for Nonprofit and Profit-Making Organizations - Research Paper Example

Table of Contents Table of Contents 2 Introduction 3 Leadership Theories for Nonprofit Organizations 4 Functional Leadership 5 Transformational Leadership 6 Leadership Theories for Profit making Organizations 7 Transactional Leadership 8 Charismatic Leadership 10 Comparison amongst various contemporary theories 10 Factors Influencing Leadership under various settings 13 Influence of Power 13 Gender Issues and Leadership 14 Leadership to initiate and manage Change within the Organization 14 Other influences on leadership 15 Corporate Culture, Personal Values, Outcomes Performance, Ethical Implications 15 Globalization 16 Effective Leadership: A Perspective of the Author 16 Works Cited 17 Introduction Academically, the best possible definition of leadership is "Leadership is an influence relationship amongst leaders and followers who intend real changes that reflect their mutual purpose" (Rost, 1993, p. 102). Now according to this definition, we may extract some vital aspects of the Theory of leadership, these are: 1. Leadership is founded on 'influence'. This influence is on a tic-for-tac basis, i.e., both the subjects: The Leader as well as the followers must be a part of this influence, an influence for a greater cause. 2. According to the definition, more than one leader may be present for a single purpose, but multiple followers are obligatory. 3. Both the parties involved must "intend real changes", the leader 'as well as' the followers must be motivated to reach their goal; and it is the leader's job to motivate the others. 4. "Mutual purpose" steals the light here. Without a "mutual purpose" leadership is not possible. Leadership is all about motivating ones colleagues, creating the path to reach the goal and convincing others to choose your designed path along with you, and bringing about changes. Except for this, other genera traits of a leader are strong determination, self confidence, and being a good listener; listening is an important part of leadership, if one of the followers has a query or has doubts regarding the leader's chosen path, the leader must also listen to and analyze the situation from that particular follower's perspective, otherwise he/she may lose all their support. Leadership Theories for Nonprofit Organizations Leadership for Non profit organizations is deemed quite simpler as compared to applying leadership theories within an organization of which's sole motive is to make profits as Non profit organizations deal more with values, ethical implications and morals. But that does not necessarily mean that profit making or profit motivated organizations do not encompass these traits, most profit making organizations do. The only difference being, some are more concerned about 'their people' rather than money and some operate on a vice versa basis. And of course, for a non profit organization to perform effectively, it does need the same zeal and motivation for the employees from the leader as in a profit organization, but here the leader needs to take care of one more important aspect, and this is the fact that the employees or colleagues are also self driven to do this job or because they 'want' to do this for the benefit of a third party 'without' expecting anything in return from it, and thus these people should be treated as respectfully as their duty demands. The following leadership styles were found to be effective whilst leading within a non profit organization: Functional Leadership Functional leadership must be denoted as an imperative leadership theory for non profit organizations because of its weight-age towards 'what the leader gives''. This is a simple tic for tac theory through which the leader shall receive support only once he has been proven worthy of support by providing support to his / her junior colleagues. A simple graph to show the relevance of subjects and work has been denoted within the following chart: Figure 1: Functional Leadership Functional leadership is all about working together as a team, and no one authority is strong enough to make all the major decisions on their own, each and every chief member of the organization shall play a part in the decision making and working process. Although a major chunk of decisions are tackled by the leader. Another most important aspect of Functional Leadership model is the fact that within functional leadership, a leader is not 'just' the person that passes on orders, but gets some work done by himself too. Transformational Leadership Within a transformational leadership model, a leader will always stress out towards motivating his employees and inspire them to work harder through his own goodwill and people's faith in his decision. In order to become a transformational leader, one must obtain years of experience and tremendous goodwill before trying this methodology. As the name suggests; Transformational will be to transform the mass to work for 'the common goal' in a better, faster, and harder way. Similar to the theory of Functional Leadership, the leader here will also take under perspective the decisions by his fellow employees or any sort of questioning against his decisions. The leader may not force his decisions upon his sub ordinates. A simple chart to explain transformation leadership may be: Figure 2: TRANSFORMATIONAL LEADERSHIP Leadership Theories for Profit making Organizations Profit making organizations need a much more stern and steady Leader, as they can not afford to lose, because if they lose, they won't receive donations like in a non profit organization, but rather these companies may collapse and this may snatch away many jobs. Although this also does not mean that the leader shall be an emotionless money making machine, he must be compassionate and understanding, and again' must be a good listener. A leader in a profit motivated organization must be bestowed with additional powers and authority, and when we talk about more power and more authority we directly indicate towards 'Transactional Leadership'. Transactional Leadership As stated earlier, within a transactional leadership model the leader is given more power and authority over his team. Here in, the leader does not only have the authority to make decisions but also implement them even if none of his team members have participated in making the decision. Very similar to the way a businessman operates, a transactional leader is also motivated towards earning extra money for his additional efforts, there by granting him the authority to distribute additional commissions to his team mates as well as impose fines or penalties on team members that displayed lower performance, therefore making this a theory based on motivation through economical gains. Although, transactional leaders unlike transformational leaders are usually very egoistic and determined, and under most circumstances are also power and money hungry; these leaders are known for their cunningness, risk taking ability, persuasiveness and forcefulness; and these traits are great if used with proper planning. It is due to such traits that these leaders are better for operating a business of which's sole purpose is to increase revenues; but they have also been tremendously criticized as sometimes they may decrease the morale of the employees. Therefore, it is imperative to use this leadership model with a bit of compassion and consideration. The largest difference between a transactional leader and a transformational leader is the fact that a transformational leader will also indulge into the work along with his team, where as, a transactional leader will use the corporate structure to his benefit and will only concentrate on major decisions whilst his juniors take care of petty matters. Figure 3: transactional Leadership based on organizational structure Another prominent type of leadership theory is Charismatic Leadership, which has also been proven to be extremely effective in profit making companies is Charismatic Leadership. Charismatic Leadership This theory is a sub sequel of the joint 'transactional and transformational leadership' and is quite underrated, according to this theory, the charisma of a good leader will be passed on to his team as additional motivation and therefore the positive attitude of the team and the leader will lead to the success of the project. This theory is utterly based on positive attitude of the leaders and their psychological impact on the team. Comparison amongst various contemporary theories Transactional Leadership Transformational Leadership Functional Leadership Chain of Command The organizational structure is of prime importance as these leaders are normally the bossy types and do not like to dabble in diminutive tasks. The chain of command or the corporate structure does not hold much importance as even the leader may act and work along with the team members. Depends on the behavior and the attitude of the leader or the nature of business. Motivation factor Fiscal gains Leader trains and evaluates team members and supports them throughout the transition of goal. Leader motivates the team members based on his go-getting attitude and tendency. Power to the leader Maximum authority as per his designation. Usually the designation is sky-scraping. Limited authority, but it is a must for the leader to know about the process of work as he is responsible for training and directing the employees too. Medium authority, again depends upon the type of company and the motive of the company. Responsibility Full Responsibility of the completion of the project. Sometimes, this leader may even impose penalties on his team members. Full Responsibility Full Responsibility Positive Traits Responsible, works hard, fast and sound decision maker, initiative, demanding, result oriented rather than team oriented, good manager, can work greatly under stressful situations, hates losing, and is practical Responsible, team's welfare oriented rather than result oriented, compassionate, careful decision maker, loyal, works for mutual benefit Responsible, demanding, loyal, result oriented but also provides significant effort towards welfare of team, and inspirational Negative Traits Egoistic, power hungry, money hungry, less loyal, less emphasis to the welfare of team, hates losing Slower decision maker, cannot work in a chaotic environment, lower emphasis on goal orientation Egoistic, power hungry, can't function well in a chaotic environment Theory's application Widely accepted Widely accepted Is of better use to entrepreneurs and SMEs Visionary Very innovative leader and a good judge of business strategies Lower innovation Workaholic, less emphasis to vision. Table 1: Comparison Factors Influencing Leadership under various settings Influence of Power Ultimately leadership means leading or 'taking charge', which could be possible through power of the leader. 'Power' here is referred to the power of the leader outside of his team and his influences beyond his subordinates, and of course his authority over his team. Under various business settings, a leader may use various power circumstances to his favor: 1. Genuine Power: This kind of power comes from formal or legitimate position. The team must comply the leader since he/she is bestowed with higher authority. This kind of setting is usually witnessed within government operated organizations (both profit and non profit) and the lower and middle-lower levels of an organizational structure. 2. Dictatorship: Within this setting, the team must follow the leader's instructions just as they are without any questions. This is an outdated concept and can only be possible in cases where the team members have no other choice but to bow down to the leader's power. 3. Reward Power: This is a setting where the leader will promote his team or co workers with additional rewards if the work is done as requested. This kind of a power relationship is also sometimes possible within customer-marketer relationship. Gender Issues and Leadership Academically speaking, men are better leaders than women, but the current surge in feminism has given birth to numerous female leaders such as Meg Whitman and Sarah Palin. Sometimes, women are given lesser opportunities because of cultural differences also, but a series of strong women have proved that certain leadership traits may counter the effect of gender difference on leadership. A great example of gender issues affecting leadership models could be the fact that women aren't allowed to partake in the Church's major or even minor decisions and events. The recent talks about electing a women president have also lightened up this issue. Although some researches also indicate that there is no significant difference between the conduct and actions amongst female or male leaders, but this study suggests that the difference solely lies in the perception of the conducts. (Kolb, 1999, pp. 305-320) Leadership to initiate and manage Change within the Organization In order for a significant change or restructuring to take place, the company along with each and every member concerned must be prepared for the change and also be ready to accept it with open arms, in order for this to happen, the change must be explained to various parties affected by the transactions such as employees, board members, stake holders, etc. In order to be able to do this a strong and cunning leader must take hold and try to negotiate the major terms with the selected team members affected by this change. The leader must be able to explain to his team that this change will bring about good to the organization and is for the betterment of the company and its beneficiaries. Getting people prepared for a change is not a big task, but to make them understand that this change is for their own benefit and to make them work hard for this change to occur is a big deal. Other influences on leadership Corporate Culture, Personal Values, Outcomes Performance, Ethical Implications Personal values and Corporate culture are yet other influences upon the type of theory typically followed by any specific leader, some leaders are genuinely passionate, whilst others tend to consider only fiscal gains. Personal values and morals play a major role in the type of theory a leader chooses, for example a cunning businessman may sometimes even choose to forgo some profits if the profit brings about dilemmas for the team members. Examples of transactional leaders that have shown compassion for their employees are in abundance such as Bill Gates and Vincent McMahon jr. Corporate culture also affects the type of the leader in the same manner, some companies generally have a tendency to treat their employees better and to provide them with emotive benefits such as better work environment and office structure so as to keep them motivated to work better, whereas some companies tend to motivate employees by providing them with fiscal benefits. Generally transactional leadership is preferred for the later. Globalization When we talk about Globalization and Leadership, we also take into account various other issues pertaining to globalization such as ethnic diversity. The old traditional concepts of Whites and males ruling the world are diminishing as strong willed leaders from third world countries have started competing with large American Corporations. These leaders have shown their innovativeness and strategy making abilities by expanding beyond almost the impossible, the surge in financial markets all across the globe and higher education and diminishing racist thoughts have helped a leader to bypass his borders, of which Americans also have had a large share, it is not to be forgotten that Hewlett Packard was the first company to negotiate terms with the Chinese government to let an American Company set up a manufacturing unit in China. Effective Leadership: A Perspective of the Author I have this segment down in my notes, all I have to do is jot it down in writing. Conclusion will be finished within 10 mins and I've the references along with my notes in my diary. The whole paper shall not require more than 20 mins max. Sorry for the delay Sir '. I was awake since the past 2 days and fell asleep on my desk whilst in the midst of this paper. I'll convert the grammar from UK to US before submitting the paper. Total references = more than 7. Again I'm really sorry for this' Works Cited Kolb, J. A. (1999). The effect of gender role, attitude toward leadership, and self-confidence on leader emergence: Implications for leadership development. Human Resource Development Quarterly , 10 (4), 305-320. Rost, J. C. (1993). Leadership for the Twenty-First Century. Greenwood Publishing Group. Read More