In the wake of the corporal scandals of Enron and the Arthur Anderson Company, there have been increased calls for strong ethical leadership. Leadership had always been regarded as a key factor in ensuring the effectiveness of any organization. However, new models are also being developed to challenge the limitations of the prevailing classical theories of leadership.
This paper argues for a tempered approach, one that combines effective leadership with good management. Both factors are important, since over-managed and under-led organizations tend to lose sight of their goals. By the same token, while charismatic leaders can lead their organizations to high levels of success, the lack of management skills means that such victories do not last in the long run.
The growing awareness of corporate and white-collar crime has likewise presented new challenges to the classical leadership model. Organization leaders should now be wary of lawsuits the way physicians fear malpractice cases.
Furthermore, advances in technology, the crash of the dotcom industries and an increasingly diverse and sophisticated clientele have created a new need for a leader has both the old-fashioned skills of management combined with the vision to identify new needs and innovations before they become trends.
In this paper, I apply the leadership theories discussed in Peter G. Northouse's
Leadership: Theory and Practice and Lee G. Bolman and Terrence E. Deal's Reframing Organizations to my own profession as a partner in a local accounting firm. The first part of the paper discusses various leadership styles. In this section, I note how the classical leadership style necessarily limits the ways in which a leader can both lead and manage in the modern era. Instead, I propose that like most organizations, my accounting firm would benefit best from a leader who embodies the consideration style of leadership.
In the next section, I will discuss the results of my self-inventory process, which brought out several leadership qualities that characterize my leadership style. The results show a leadership style that is focused on fulfilling a company's goals by fostering communication and cooperation among employees.
In the last section, I discuss the effectiveness and other advantages of this style of leadership, both in my accounting firm as well as in other companies in general. These examples show how traditional, top-down hierarchies in organizations are increasingly giving way to team-based organizational structures.
Leadership styles in modern organizations
The classical style is the oldest and most well-known form of leadership. This style is akin to a military hierarchy, where a leader/general rules over a body of followers. The classical leader is focused on the end goal - whether it is conquering a territory or selling more cars than a competitor. Unfortunately, the classical leader's focus on the end-goal often comes at the expense of monitoring the means towards that goal (Northouse 1997). For example, many classical leaders, the narrow orientation towards increased production and profit can trigger worker dissatisfaction and low morale. It can also compromise product safety and, as seen in the Ford Pinto case in the 1970s, the marketing of an unsafe and dangerous product.
Furthermore, the classical style of leadership emphasizes the leader's authority in making business decisions, evaluating workers and dealing with other issues related to the operations of the organization. This arrangement can have benefits.
For example, centralized decision-making can cut through the bureaucratic red tape that strangles many organizations. However, this also shows that classical leaders loathe delegating authority, and thus tend to make decisions without discussing or considering other relevant concerns.
Furthermore, this style of leadership values stability and generally eschews change. As a result, suggestions for change in the production process, for example, are viewed with suspicion, as potential sources of destabilization within the organization and dips in profit levels. Employees who try new methods of production are seen as disturbers or potential troublemakers.
This classical style of leadership is best applied in a workplace setting with unskilled or low-skilled workers. As in the military, where soldiers are trained to follow their superior's orders without question, classical leadership is most effective in organizations like factories, where workers are accustomed to following instructions from management.
Thus, in a classically led organization, there are no programs in place to ensure worker motivation or employee morale, since the classical leader believes that a worker relies solely on directions from management. Thus, the classical leader is geared towards developing a system that accomplishes the organization's goal, despite any negative effects this system may have on the workers.
Such a strictly hierarchical leadership style would no longer work in many modern organizations today. Though varieties of classical leadership are still evident in many organizations, this style certainly would not fit in with the needs of my accounting firm, where majority of the employees are skilled workers who are capable of making decisions and valuable contributions on their own.
Furthermore, by nature, the accounting industry involves much interaction with people, from the staff and clients to representatives of government agencies.
All these people can have valuable contributions to the accounting process. A classical leader who insists on making all decisions on her own, without consulting this group of people, thus misses out on valuable input.
In response to the inherent limitations of classical style leadership, organizational theorists have proposed new leadership methods that are more responsive to the needs of modern professions, such as accounting firms. Many of these new leadership styles combine a human resources-friendly approach with other perspectives, such as the nature of the organization, the leader's personal characteristics and the needs and qualifications of the employees and workers.
In contrast to the classical leader who is most effective in times of stability, Northouse (1997) discusses how the charismatic leader can provide both leadership and management in times of crisis. One advantage of charismatic leaders over their traditional counterparts is the formers' ability to inspire employee morale and confidence, even when their organizations are under siege. Thus, while workers in a classical organization will wait around for instructions, those who are rallied together by a charismatic leader will work together to accomplish difficult goals, even during lean times.
Many of these new leadership theories shift the focus from the head of the organization to the employees. For example, while the classical leader relies on orders, the transformation leader (Northouse 1997) motivates her workforce through contingent rewards. Such rewards can range from high praise to significant bonuses to the employees who contribute most towards the company's goals. Often, the best transactional leaders also embody many characteristics of charismatic leaders, thus inspiring employees through promises of rewards as well as the force of their personalities.
Additionally, transactional leadership can also be seen as "transformational leadership," (Northouse 1997) a form of leadership that changes and transforms the employees and followers.
Thus, a transformational leader achieves an organization's success by placing a premium on her followers.
In addition to contingent rewards, charisma and the power to inspire confidence, the transactional leader also utilizes intellectual stimulation, individualized consideration, individualized consideration, management-by-exception and laissez-faire strategies (Northouse 1997). Unlike classical leaders who eschew change, transformational leaders apply intellectual stimulation are able to challenge the normal beliefs and views of their employees. As a result, employees are encouraged to think critically and creatively, to solve problems and introduce new solutions within their organizations.
Furthermore, leaders who employ management-by-exception techniques place a premium on the productivity of their workforce. This leader thus takes proactive approaches to nip problems in the bud.
Many of these leadership approaches have much to offer the field of accounting. The most notable difference of these approaches from classical leadership, however, is the focus on the individual strengths of the members of the organization. In an accounting firm, almost every employee has a college degree. Each one handles individual clients and is thus in a position to make important decisions that can have far-reaching effects for the accounting firm. It would therefore be unrealistic to expect a single classical-style leader to prevail over such a group, issuing instructions and expecting to be followed without question.
Though my own leadership style borrows from charismatic and transactional leadership, the self-assessment tests in the readings show that I employ is more accurately described by the theory of consideration in leadership. Like many consideration-style leaders, I believe that the accountants and other employees are our firm's greatest asset and am thus very supportive of our staff. I welcome their suggestions and try to maintain an open-door policy where employees can come to me for assistance.
A further distinction is that I view the employees of our firm not as "workers," but as members of our accounting firm's team. Thus, unlike classical leaders who strive to control all aspects of management and decision-making, I believe it is beneficial both for the employees and the company to delegate tasks between competent individuals and teams. When criticism needs to be made, suggestions for improvement are targeted to the work rather than the individual. All these techniques are rooted in the…