Leadership Self-Assessment: Consideration Style in Accounting

Introduction

In the wake of the corporate scandals involving Enron and the Arthur Andersen Company, there have been increased calls for strong ethical leadership. Leadership has 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 guide their organizations to high levels of success, a lack of management skills means that such victories often 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. Organizational leaders must now be wary of lawsuits the way physicians fear malpractice cases. Furthermore, advances in technology, the collapse of the dot-com industry, and an increasingly diverse and sophisticated clientele have created a new need for leaders who combine old-fashioned management skills with the vision to identify emerging 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 and notes how the classical leadership style necessarily limits a leader's ability to both lead and manage in the modern era. Instead, I propose that, like most organizations, my accounting firm would benefit most from a leader who embodies the consideration style of leadership.

In the next section, I discuss the results of my self-inventory process, which surfaced several leadership qualities that characterize my approach. The results reveal a leadership style focused on fulfilling a company's goals by fostering communication and cooperation among employees.

In the final section, I discuss the effectiveness and advantages of this leadership style, both within my accounting firm and in other organizations more broadly. These examples show how traditional, top-down hierarchies are increasingly giving way to team-based organizational structures.

The classical style is the oldest and most well-known form of leadership. It is akin to a military hierarchy, in which a leader rules over a body of followers. The classical leader is focused on the end goal — whether conquering a territory or outselling a competitor. Unfortunately, this narrow focus often comes at the expense of monitoring the means used to reach that goal (Northouse 1997). For many classical leaders, an orientation toward increased production and profit can trigger worker dissatisfaction and low morale. It can also compromise product safety — as illustrated by the Ford Pinto case in the 1970s, in which an unsafe product was marketed despite known risks.

Leadership Styles in Modern Organizations

Furthermore, the classical style emphasizes the leader's authority in making business decisions, evaluating workers, and handling operational matters. This arrangement can offer benefits; centralized decision-making, for instance, can cut through bureaucratic red tape. However, it also means that classical leaders are reluctant to delegate authority and tend to make decisions without soliciting or considering other relevant perspectives.

This style also values stability and generally resists change. Suggestions for altering production processes, for example, are viewed with suspicion — as potential sources of instability and declining profits. Employees who try new methods are seen as troublemakers.

Classical leadership is best suited to workplace settings with unskilled or low-skilled workers. As in the military, where soldiers are trained to follow orders without question, classical leadership is most effective in environments such as factories, where workers are accustomed to following management directives. In such organizations, there are typically no programs to ensure worker motivation or morale, since the classical leader believes workers rely solely on management direction and that the system exists to accomplish organizational goals regardless of its effects on the workforce.

Such a strictly hierarchical style would no longer work in many modern organizations. Though variations of classical leadership persist, this style would not suit my accounting firm, where the majority of employees are skilled professionals capable of making decisions and valuable contributions independently.

By nature, the accounting industry involves extensive interaction with people — staff, clients, and representatives of government agencies — all of whom can offer valuable input. A classical leader who insists on making every decision alone, without consulting this broader group, misses out on significant contributions.

In response to the inherent limitations of classical leadership, organizational theorists have proposed new approaches more responsive to modern professions such as accounting. Many of these combine a human-resources-oriented perspective with considerations of organizational structure, the leader's personal characteristics, and the qualifications and needs of the workforce.

In contrast to the classical leader, who functions best in times of stability, Northouse (1997) discusses how the charismatic leader can provide both leadership and management during times of crisis. One advantage charismatic leaders hold over their classical counterparts is the ability to inspire employee morale and confidence even when the organization is under pressure. Workers rallied by a charismatic leader will collaborate to accomplish difficult goals, even during lean times, rather than waiting passively for instructions.

Many newer leadership theories shift focus from the head of the organization to the employees themselves. While the classical leader relies on orders, the transactional leader (Northouse 1997) motivates the workforce through contingent rewards — ranging from high praise to significant bonuses for those who contribute most to company goals. The best transactional leaders often also embody charismatic qualities, inspiring employees through both promised rewards and the force of their personalities.

Transactional leadership also overlaps with what Northouse (1997) calls transformational leadership — a form of leadership that genuinely changes and develops followers. A transformational leader achieves organizational success by placing a premium on the growth of those she leads.

In addition to contingent rewards, charisma, and the ability to inspire confidence, the transformational leader also employs intellectual stimulation, individualized consideration, management-by-exception, and laissez-faire strategies (Northouse 1997). Unlike classical leaders who resist change, transformational leaders use intellectual stimulation to challenge the conventional beliefs and assumptions of their employees, encouraging critical and creative thinking to solve problems and introduce new solutions.

Leaders who use management-by-exception techniques also place a premium on workforce productivity, taking proactive steps to address problems before they escalate.

Many of these approaches offer much to the field of accounting. Their most notable departure from classical leadership is the focus on the individual strengths of each organizational member. In an accounting firm, nearly every employee holds a college degree, handles individual clients, and is positioned to make important decisions with far-reaching implications. It would be unrealistic to expect a single classical-style leader to oversee such a group by issuing instructions and expecting compliance without question.

Though my own leadership style draws on charismatic and transactional approaches, the self-assessment exercises in the assigned readings indicate that my style is more accurately described by the theory of consideration in leadership. Like many consideration-style leaders, I view our accountants and employees as the firm's greatest asset and am strongly supportive of our staff. I welcome their suggestions and maintain an open-door policy so that employees can come to me for assistance.

I also view employees not as "workers" but as members of our team. Unlike classical leaders who seek to control all aspects of management and decision-making, I believe it benefits both the employees and the company to delegate tasks to competent individuals and teams. When criticism is necessary, it is directed at the work rather than the individual — a practice rooted in the consideration-style leader's belief that organizational growth flows from the growth of its people.

I believe that consideration-style leadership builds on my strengths as a leader. The Bolman and Deal (1997) tests showed that my leadership strengths do not lie within the structural frame, which is governed by goals, rules, policies, procedures, and most importantly, hierarchies. Rather, I am better suited to the human resources frame, which capitalizes on my skills and interest in working with people — interests that drew me to a career in accounting in the first place.