Leadership Theories and Practical Application

Leadership Theories and Practical Application

As organizations continue to face challenges and demands from external environments, effective work relationships will no longer be an option but a critical source of competitive advantage (Luthans, et al. 2008). This is largely due to the social capital that effective relationships generate. Social capital is derived through the social structure of the organization and facilitates the actions of individuals within the larger organizational framework (Nahapiet & Ghoshal, 1998). This capital generates resources through networks of mutual acquaintance and recognition (Luthans, et al. 2008). In contrast to human capital, which is a quality of individuals (e.g., KSAs: knowledge, skills, and abilities), social capital is a quality created among people. Social capital comes from the assets created and leveraged from interpersonal relationships developed through a history of interactions among individuals (Howe, 2002). Therefore, we cannot consider employees' knowledge, skills, and abilities as human capital until we recognize that their contributions to firm performance depend on how they interact with one another through interpersonal relationships.

Despite this, as a theoretical domain in the management literature, interpersonal work relationships have not established as much awareness as they should (Bass, 2005). Interpersonal relationships are often considered as variables in management research, but work relationships have not emerged as a dominant field of inquiry in organizational behavior study (Cox & Beale, 2008). In the human resource (HR) literature, relationships have hardly been mentioned at all. For example, Graen et al., (2010) argued that companies that methodically plan with their human resources in mind are most probable to increase a competitive benefit by having "the correct people at the correct place in the right time" to create quality products efficiently. This focus on individuals, however, does not address the fact that within organizations people do not act in isolation. To more accurately reflect leadership and HR functioning, we must realign our focus toward the "right people at the right place in the right time with the right relationships."

The value of a relational focus is shown by research examining the positive benefits of high-quality manager -- subordinate relationships on work-related outcomes. House, (2003) showed that performance is about 20% higher and satisfaction about 50% higher for subordinates who have higher quality relationships with their supervisors than subordinates with lower quality relationships. More importantly, low-quality relationships can present tremendous costs to organizations (Cox & Beale, 2008), with employees in lower quality relationships tending to quit after approximately 12 months, costing the organization training and recruitment expenses (Mayfield & Mayfield, 1998). Employees in higher quality relationship move on for promotions within the same firm.

A focus on relationships, therefore, represents a mainly untapped chance to recover firm performance. To understand how to capitalize on this opportunity, we must first understand what leadership is and how it is linked to relationships.

Problem Statement

Although a vast number of leadership definitions have been offered over the years (Yukl, 1998), there appear to be two common denominators among these definitions: change and influence. Leadership is about managing change; it differs from management in that management is about coping with complexity (Kotter, 2001). According to Kotter (2001), the function of leadership is to produce change. Leadership behaviors involve looking for patterns, relationships, and linkages that help explain events in the environment, and then using these to develop and act upon visions and strategies for how to create change. Leadership involves generating ideas for change (e.g., analyzing, recommending, creating vision) and acting successfully to get others to follow (e.g., motivating, inspiring, persuading). Being a leader means being a risk taker, from the standpoint of both making decisions in an ambiguous situation (e.g., one risks being wrong) and taking a public stand (e.g., the risk of speaking out, going against status quo). Leadership also involves influence. House, (2003) defined leadership as the incremental influence that gets people to go above and ahead of mechanical conformity with routine directions of the group. This perspective emphasizes personal power rather than position power (Etzioni, 1961), such that followers are intrinsically motivated (Cox & Beale, 2008) and perform extra-role behaviors (Valle & Halling, 1989). The intent of this influence is to get people not just to comply with directives but also to act in ways not specified by their formal roles. Thus leaders differ from managers in that they gain personal influence with others to get them to do more than they would otherwise (i.e., to create change).

Combining these two perspectives means that leadership is using influence to create change. Thus influence is the essence of leadership (House, 2003), as is creating change (as change results from the use of influence) (Kotter, 2001). Contrary to a previous view that influence is a characteristic that a leader (i.e., manager) may or may not have (Cox & Beale, 2008), the perspective presented here suggests that perhaps we should consider it as a defining element of leadership. When individuals engage in the use of influence to create change, they are engaging in leadership.

Assumption 1. Leadership happens when individuals use power to create change.

The value of this definition is that it views leadership as a behavior, not as a formal role. In this way, we gain a broader perspective of leadership and of how to develop leaders. By using this definition anyone may act as a leader, not just those in formal roles, when they use leadership behaviors (i.e., behaviors that use influence to create change) (Luthans, et al. 2008). In other words, those individuals we typically consider followers (e.g., subordinates) may act as leaders even when in a subordinate role.

This perspective helps alleviate problems in the literature of using the terms leader and manager interchangeably, which assumes that by studying managers we are studying leaders, since managers are those in formal roles that require leadership. Similarly, it addresses problems of confounding the terms follower and subordinate, which assumes that followers are subordinate (e.g., subordinate is a hierarchical term suggesting subordination, and followers are not always subordinate). Such terminology limits thinking about what leadership (and followership) is and can be within organizations. This thinking also contributes to limited conceptualizations about leadership development that focus on those in formal managerial roles or those targeted to take on such roles in the future. By thinking of leadership as a behavior, not a formal role, it extends the capability for leadership behaviors to all organizational members and calls for a change in how we approach leadership development, which then should focus beyond managers or future managers to include all organizational members. Moreover, such a transition in LMX theory would take it from managerial leadership theory to relational leadership theory.

Assumption 2. Leadership is a behavior, not an official role (therefore, individuals not in official roles are leaders when they employ leadership behaviors).

Literature Review

Leadership is engaging in behaviors that create change, and creating change requires influence. To be leaders, therefore, individuals need to have and effectively use influence (Luthans, et al. 2008). Influence is the power to affect others: the ability to produce outcomes due to some personal characteristic that gets others to follow (House, 2003).

By definition, influence is inherently interpersonal. Influence takes place within the context of interpersonal relationships. According to relational leadership theories, influence comes from relationships (Bass, 2005). Relational perspectives in leadership view leadership as generated through mutual influence that results from the development of trust, respect, and obligation among dyad members (Cox & Beale, 2008).

LMX theory describes this influence as being created through stages of relationship building (House, 2003). Individuals begin at a "stranger" stage, get to know one another through testing processes, and as a result of the testing process, either progress to an advanced stage of leadership development (e.g., partnership) or remain at lower levels of relationship development (e.g., acquaintance or stranger) (Cox & Beale, 2008).

Those who attain more advanced stages of relationship building -- and thus develop more effective relationships with interdependent others (e.g., managers and other higher-ups, subordinates, peers, clients, external constituents) -- are able to more effectively perform their roles. More effective, or high-quality, leader -- member exchanges are described as leadership rather than as supervisory relationships (Luthans, 1998). High-quality relationships are considered mature partnerships based on respect, trust, and mutual obligation for on each other (Luthans, et al. 2008). These relationships go beyond the formal contract and generate personal power (i.e., influence given by the other), rather than position power or authority (Luthans, et al. 2008). They are also characterized by willing followership, meaning employees are driven by intrinsic as opposed to extrinsic motivation (Steers et al., 1996). As a result, dyad partners (i.e., individuals engaged in an exchange) act because they want to, not because they have to. Research on LMX shows that more effectively developed relationships have significant and positive associations with performance, organizational commitment, employee citizenship behavior (i.e., extra-role behavior), job satisfaction, delegation and participation in decision making, and enhanced career development opportunities (Luthans, et al. 2008). These relationships are negatively related to turnover, job problems, and role conflict and ambiguity (House, 2003).

The benefits of high-quality relationships come from relational resources (Wright, et al. 2005) they create. Such resources include durable obligations (e.g., arising from feelings of gratitude, respect, and friendship), network contacts and connections (including privileged access to information and opportunities, social status, and reputation of influential others), and the ability to have open information exchanges with those around them (Valle & Halling, 1989).

Relationships that do not develop so well are considered lower quality. These relationships are not as beneficial for the individuals involved or for the organization as a whole (Gerstner & Day, 1997; Liden et al., 1997). Lower quality relationships are described as contractually defined, formal exchanges based on limited trust and in-role interactions (Luthans, 1998). These types of relationships generate management rather than leadership. They are characterized by lack of mutual respect, formal downward communications, little mutual understanding, limited support and commitment for one another, and no mutual obligation (i.e., a "stranger" relationship) (Graen & Uhl-Bien, 1991a). Findings have shown that lower quality relationships are negatively related to satisfaction, organizational citizenship behaviors, and commitment, and are positively related to turnover (Gerstner & Day, 1997). Uhl-Bien and Maslyn (2003) recently found evidence of an even more extreme case of low-quality relationship, which is characterized by negative reciprocity, or an exchange of injuries (e.g., negative social exchange, Ruehlman & Karoly, 1991).

Thus, based on relational leadership theory, effective relationships may generate mutual influence and understanding that allow leaders to more effectively perform their roles.

Assumption 3. Leadership influence to make alteration is enabled by effectual relationships.

Yet, despite the value of high-quality relationships for organizations, not all relationships are high quality. Given the findings from LMX theory, we know that low-quality relationships are not beneficial in terms of many aspects of organizational functioning, so they are not desirable in organizations, but they still are prevalent (Gerstner & Day, 1997). Moreover, in some cases we may even have negative, or dysfunctional relationships (Uhl-Bien & Maslyn, in press). Why is this, and what can we do about it? (Bass, 2005)

Beyond LMX Differentiation

The LMX literature says that LMX differentiation, in which leaders have higher quality relationships with some subordinates and lower quality relationships with others, occurs because leaders do not have time (or the need) to generate high quality relationships with everyone (Cox & Beale, 2008). Therefore, they develop a group of trusted assistants to help them perform the work of the unit. These trusted assistants would supposedly be the best or most reliable employees in the unit.

Twenty years after the inception of the theory, Graen and Uhl-Bien (1995) argued that the creation of "in-groups" and "out-groups" within work units is not beneficial, and that instead leaders should strive to develop high-quality relationships with all subordinates. They do this by "making the offer" of high-quality relationships to all and then through testing processes, different quality relationships result (Luthans, et al. 2008). This perspective allows for the fact that all relationships may not (and likely will not) reach high quality, but at least the dyad members both take part in how the relationship develops (rather than the leader determining who will be the trusted assistants) and have the opportunity to create a high-quality relationship.

This perspective also recognizes that a focus on differentiation rather than on high-quality relationships offered to all creates tremendous opportunity for lost potential in organizations. As noted by Organ (1990), when individuals are not fully committed (or are dissatisfied), they will withdraw discretionary behaviors that benefit others or the organization (e.g., helping, altruism, civic behaviors). These discretionary behaviors are beneficial to the organization (Luthans, et al. 2008) and as a result, much attention has been given in the literature to determining when and how individuals engage in these behaviors (Graen et al., 2010).

Instead of LMX differentiation, therefore, our goal should be for individuals to strive to have influence with one another (and with higher-ups). With the support of a relationship, individuals are freer to open up and provide one another with more accurate and complete information (Kotter & Cohen, 2002) so they can provide the "real" information (the "real" story). This goes both ways: with a good relationship comes reduced filtering (holding back) of information, both up and down the hierarchy (Fairhurst & Sarr, 1996). It allows individuals to share with one another the hard truth. Too many leaders do not have good information, and too many hold back in being truthful with their subordinates (House, 2003). If we extend this beyond managers to leaders more broadly, then we can argue that organizational members need to be comfortable with providing information to one another, and this comes with having effective work relationships (Luthans, 1998).

Remembering that effective leaders are defined as those who use influence to create change, individuals' abilities to be effective leaders are directly related to their ability to have influence in the organization. Since effective work relationships can extend individuals' influence networks (Drath, 1998), those who have more effective relationships with others will likely have more opportunity to gain and use influence (Kotter & Cohen, 2002). Therefore, leadership effectiveness is likely enhanced by the ability to build effective work relationships with a broader range of interdependent others (Luthans, 1998).

Proposition 1a. Leadership effectiveness is improved by the individual's aptitude to construct effective work relationships with mutually dependent others. Moreover, given the benefits of high-quality relationships and the lost potential (Organ, 1990) or harm of low-quality relationships (Northouse, 2007), more effective work situations are those with leader/managers who develop more high-quality relationships or fewer low-quality relationships.

Proposition 1b. More effectual leaders are those who are able to construct relationships with a wider range of others (instead of with only a select few).

A New Twist on Relationship Development

Both of the approaches (described previously) regarding LMX differentiation are highly manager driven: The "leader" is the primary responsible party for the quality of the relationship, either by selecting the trusted cadre (Bass, 2005) or by making offers to all (House & Podsakoff, 2003). The notion of leader control seems to be an assumption throughout LMX and leadership research (Cox & Beale, 2008). As noted by Lord and Emrich (2001), the leadership literature often assumes that causality (for leadership) originates in a leader, but this is likely an over simplification, because leadership processes always involve an interaction of leader, subordinate, and contextual qualities.

Recently, House & Podsakoff, (2003) considered manager -- subordinate relationship development from the standpoint of investigating who put effort into the relationship development: the manager or the subordinate. Consistent with reciprocity and social-exchange perspectives (House & Podsakoff, 2003), the findings showed that own effort in relationship development was not significant, but other effort was highly significant. In other words, both parties were responsible for relationship development through the amount of effort that each perceived the other to have put into the relationship (e.g., norm of reciprocity, Gouldner, 1960). Moreover, these findings were consistent across managers and subordinates. This suggests that perhaps we need to rethink some traditional notions about how relationships develop to focus more generally on the roles and responsibilities of both dyad members in relationship building.

We may also need to rethink commonly accepted conceptualizations about what constitutes a high-quality relationship. In a criticism of LMX theory, Luthans, et al. (2008) stated that high-quality relationships have been identified in the literature as having trust, respect, mutual obligation (loyalty) and influence, and wide latitude for discretion. House and Aditya (1997) pointed out, however, that these may not be universal attributes of high-quality relationships. In other words, ideas about what is considered to be a high-quality relationship may, and likely will, vary according to the members of the relationship. Moreover, it suggests that we need to more carefully consider the antecedents to relationship development relative to what each dyad member wants from the relationship.

Implicit Relational Theories

Taken together, and combined with new perspectives to be discussed here, these ideas present some very interesting possibilities regarding how we may view the development of managerial relationships in the workplace. First, considering relationship development specifically, it is possible that some relationships are easier, more "natural" to form than others. For example, in some relationships individuals may "hit it off" from the beginning, for whatever reason. This could be because they have complementary personalities, common values, congruent perspectives or interpersonal styles, similar backgrounds, and so on, such that the relationship gets off to a good start and just keeps going, with neither member really thinking about or consciously managing the process. Other relationships, however, may be much harder to develop due to personality differences, style differences, incongruent values, and so on, that make it more difficult for dyad members to build the relational components necessary for higher quality relationships. These relationships that are less compatible and require more effort to develop may be the ones that result in lower quality relationships. In contrast, those that are easier to develop may become the higher quality relationships.

Extending this logic, it is possible that LMX differentiation may be related to what I will term relational favorability, or the extent to which conditions are favorable or unfavorable for the development of the relationship. This could include a wide range of variables, such as personality characteristics, value congruence, job/organization fit, task characteristics, unit size, demographics, etc. Although LMX literature has attempted to identify antecedents to LMX relationships (Burns, 1978), we still know little about what leads to higher and lower LMX and, with the exception of work on relational demography (Cox & Beale, 2008), this line of investigation has not taken on a strong relational focus.

To advance understanding of relational leadership theory and leadership development, more work needs to be conducted investigating issues regarding relational favorability. Specifically, we need to better understand both interpersonal (i.e., relational) and contextual situations that foster effective relationships and interpersonal and contextual situations that work against them.

Taking the concept of relational favorability one step further, it is possible that relational favorability from an interpersonal standpoint (versus a contextual or work environment standpoint) may be associated with implicit relational theories. The concept of implicit leadership theories (ILTs) has had a strong presence in the leadership literature (Northouse, 2007), but the concept to fan implicit relational theory has not been considered.

ILTs examine the extent to which followers recognize leaders based on their fit with leadership prototypes that followers hold (Lord & Emrich, 2001; Lord & Maher, 1991). Prototypes are expectations about patterns of traits, skills, and behaviors of leaders and are developed and refined over time as a result of experiences with leaders and social -- cultural influences (House, 2003). Once someone matches the follower's prototype (e.g., is labeled an effective or ineffective leader), subsequent information is filtered through the ILT, to the extent that followers may have difficulty determining actual behaviors from the behaviors associated with the ILT. Leaders who do things inconsistently with follower prototypes would be considered less favorably than those who conform to the ILT, and these perceptions would then affect subsequent attitudes and behaviors of the follower.

The ILT cognitive approach has contributed greatly to our understanding of how followers perceive and react to leaders (House & Podsakoff, 2003). Though this approach addresses interactions and cognitive behavioral interpretations that occur between a follower (subordinate) and a leader (manager), it does not address relationships. The distinction between an ILT and an implicit relational theory (IRT), therefore, would be that the latter focuses specifically on relationships: what are the prototypes individuals hold regarding work relationships? An IRT would be the beliefs and assumptions about the characteristics of effective relationships (distinguishing between work and personal relationships). This is a broader perspective, because IRT allows for schemas addressing a broader set of roles beyond the leader role (e.g., relationships with followers, coworkers, higher-ups, etc.). For example, individuals might hold global implicit relational schemas for professional or work relationships and then hold more specific implicit relational schemas that would address different types of relationships (e.g., with managers, subordinates, coworkers, higher-ups, etc.).

Therefore, it can be argued that just as individuals hold ILTs, they also hold IRTs, which consist of prototypical traits and behaviors that they expect relational partners to demonstrate. When dyad partners exhibit these prototypes, interpersonal favorability is higher, and relationship development to more advanced stages of relationship building is facilitated. Examination of IRTs and how they are associated with concepts of relational favorability may help provide the next step in advancing understanding about leadership relationship development.

Proposition 2. Individuals have relationship prototypes that are part of their implicit relational theories for their work relationships.

Proposition 3. If a dyad partner matches an individual's relational prototype, interpersonal relational favorability is higher and the relationship will be more likely to develop into a higher quality relationship. Conversely, if a dyad partner does not match an individual's relational prototype, interpersonal relational favorability is lower and the relationship will be less likely to develop into a higher quality relationship.

Relational Skills

The propositions just presented may not hold for all individuals, however. It may be that some individuals are able to develop effective work relationships even in situations of relational "unfavorability. " Moreover, some individuals may be able to manage their implicit relational schemas such that, in situations of high need for relationship development (e.g., high interdependency), they may be able to develop effective relationships, even with those who do not initially match their prototypical relational schemas. For these individuals, they may be able to modify their cognitive representation of what constitutes a high-quality relationship to meet their situational needs, realizing that effective work relationships are necessary for personal success in organizations.

Such individuals could be considered to be higher in relational skills. In contrast to interpersonal, or social, skills (the ability to interact effectively with others), relational skills can be identified as the skills necessary to build effective and lasting work relationships (with a variety of people and across varying task situations). The distinction between interpersonal or social and relational skills is in their focus. Interpersonal and social skills focus on interacting to present a good image of oneself, being able to persuade and influence the other person to meet one's interpersonal goals. Relational skills focus specifically on actions taken in the context of a relationship with the objective of building effective relationships that are mutually beneficial and enduring. Although the distinction may seem subtle, I believe it offers a critical and valuable addition to leadership development literature. This value lies in the explicit distinction between those who are able to make themselves look good in interactions (high interpersonal and social skills) and those who understand the qualities necessary to build effective work relationships (high relational skills).

Relational skills comprise components of emotional intelligence (EI)( Graen et al., 2010) and social skills (Bauer & Green, 2007). However, they differ in that relational skills focus specifically on relationship building, whereas social skills and EI approaches do not fully address this. Because of this, they single out specific dimensions of social skills and EI that address relationship building, as well as add dimensions not previously described in those literatures, particularly testing processes and reciprocity (House & Podsakoff, 2003).

For example, social skills are the skills involved in the basic sending, receiving, and controlling of information relative to emotional-nonverbal and social-verbal domains (Drath, 1998). Emotional intelligence is "the ability to monitor one's own and others' feelings and emotions, to discriminate among them and to use this information to guide one's thinking and actions" (House & Podsakoff, 2003). It reflects a composite of distinct emotional reasoning abilities: perceiving emotions (understanding and interpreting the meaning of various emotional states and their relation to other sensory experiences), understanding emotions (interpreting how basic emotions are blended to form complex emotions, whether various emotional reactions are likely in given social settings), and regulating emotions (controlling emotions in oneself and in others) (Burns, 1978). Although both address interpersonal skills, as can be seen by these definitions, neither explicitly describes the processes and objectives of relationship building.

Relational skills fill in the gaps left in these approaches by addressing the skills necessary to establish and maintain effective interpersonal relationships with others. (I focus here on work relationships.) Relational skills include characteristics such as: (a) an understanding of the testing process in relationship building (reciprocity) (Bauer & Green, 2007); (b) social skills, since they address self-presentation and dyadic communication skills necessary for relationship building (e.g., emotional expressivity, emotional sensitivity, emotional control, social expressivity, social sensitivity, social control, Burns, (1978); (c) relational self-management skills (self correcting behavior, ability to accept negative feedback from a dyad partner and use it to adapt accordingly, taking blame/accepting responsibility for failed actions in the relationship); and (d) relational feedback giving (effectiveness in addressing difficult/sensitive issues in a way that the other will listen; not avoiding difficult subjects with the other).