ACCA BTChapter 24
Leadership, Management, and Supervision
Definitions
Leadership – The social process where an individual convinces others to follow a direction through factors other than formal authority.
Management – The process of organisation and coordination of activities to achieve objectives.
Supervision – The management activity of directly overseeing the work of another individual.
Leaders inspire others, make them want to follow, and give them a sense of achieving something desirable and worthwhile.
Leaders can come from any level: they do not have to be managers or directors and often aren’t.
The board of directors members often consider themselves providing leadership to their company, although some do this better than others.
Leaders can also come from the ranks of the workforce, for example, by becoming trade union leaders.
Businesses may have inspiring leaders but they also need managers and supervisors to operate successfully.
Managers are the people whose job is to plan and direct the activities in an organisation so that the organisation fulfils its purpose and achieves its objectives.
Managers may have inspirational leadership qualities, but most perform an organising and directing function.
Organisations can’t function well without management: managers decide how the organisation’s resources will be used and try to ensure that they are used economically, efficiently, and effectively.
Supervisors are junior managers or front-line managers.
They organise and direct at the workplace where the day-to-day routine activities of the organisation get done.
When several employees do work of a similar nature which involves repetitive routines, they will be managed by a supervisor.
Activity 1
Determine whether the activity is that of leadership, management, or supervision.
Activity
Aspect
(Leadership, management, or supervision)
Monitoring the work of accounts staff to ensure it is performed correctly
Presenting the company’s strategic plans to company staff
Planning a television advertising campaign for the company
Checking the work of staff in a telephone call centre for customer queries and complaints
Motivating the staff during a difficult business period, such as during a recession
Organising workers on a day-to-day business
Monitoring actual annual costs against budgeted costs
Setting sales targets for the month
Inspiring staff with a speech that outlines the business organisation’s mission statement
Management in a large functional organisation operates within a hierarchy, from senior management at the top to junior managers and supervisors at the bottom.
In smaller organisations, there are fewer managers, and the hierarchy of authority is less well-defined.
Aspects of Management
Managers should have the authority to do certain things and be responsible for what gets done. The concepts of authority, responsibility, delegation and accountability are closely linked.
· Authority – The right to make decisions, perform an activity, instruct others, and demand outcomes. It is usually derived from a formalised role.
· Responsibility – The obligation to use authority to its intended effect.
· Delegation – The management activity of empowering subordinates to exercise authority and be responsible.
· Accountability – The obligation to accept the consequences for the exercise of authority.
Some examples of how the aspects of management are exercised include:
Description
Authority
A manager must have authority over the scope of work they are responsible for. An example is that a restaurant head chef must have authority over their subordinates in the kitchen.
Responsibility
The scope of work and the outcomes to be achieved. Managers are given purposes for their authority.
They should use the granted authority to achieve those purposes.
Accountability
Managers should be made accountable for the exercise of their authority. They must be able to explain their decisions and actions.
Accountability means submitting their performance to review by the person, committee, or board of directors from which they receive their authority. Holding managers accountable for the authority that has been delegated to them is a form of control within an organisation.
Delegation
Authority, responsibility, and accountability can be delegated, except in smaller organisations that a single person manages.
Managers often delegate to subordinates: typically, managers lower on the hierarchy in a functional organisation.
Although some management aspects can be delegated, ultimate responsibility cannot be delegated. Managers remain responsible for the authority delegated from them to others.
For example, a national sales manager may delegate authority to regional sales managers, with each manager having management authority – and responsibility – for their region.
However, the national sales manager remains ultimately responsible for sales management at the national level and the performance of each of the regional managers.
Matching Authority, Responsibility, And Accountability
Key Point
Successful management can only occur when the manager has a fair mix of authority, responsibility, and accountability.
Within a management structure, managers should always be held responsible for the authority that they are given.
If managers do not have the authority to carry out a specific action – for example, the authority to hire and fire staff – then they should not be responsible for this action.
So a manager who does not have the authority to hire new staff cannot be held responsible if poor-quality staff have been hired.
When managers exercise authority, they will need to accept accountability for the outcomes of their actions.
Power
Definition
Power – The ability to direct or influence the actions of others or the course of events.
Power is different from authority. Authority is the right to do something, whereas power is the ability to do it.
Weak managers may lack the power to enforce their authority. Individuals who do not have authority may be able to exert influence over what gets done.
Types of Power
French and Raven identified five sources of power:
Power Type
Example
Coercive
Ability to force someone to do something through fear of punishment.
Employees may feel compelled to do something by a manager because they fear they may lose their job if they do not do what they are told.
Reward
Ability to get someone to do something through control over the ability to reward them for doing what is required.
A manager may award bonuses or pay raises for satisfactory work.
Legitimate
Being in a position of authority within the organisation.
For example, a manager may be able to get people to do what they want simply because they are their boss within the organisation hierarchy.
Expert
Having the expertise or knowledge that others do not have.
In a hospital, senior doctors have expert power and decide how to treat a patient, even if they do not have a position within the hospital’s management structure. In IT businesses, individuals may exercise expert power through their unique skills and abilities in software development.
Referent
The personal qualities of the individual.
The individual can get others to do things because other people look up to them with admiration.
They identify with the individual and want to do the same things that the individual does.
Within a company, individuals may follow a person due to their strength of personality or admiration of a personal attribute (problem solver, calm in times of crisis, etc.)
Other types of power may be found within an organisation.
Resource power comes from control over essential resources, such as money.
Negative power is the ability to prevent something from happening, such as opposing changes in work practices with the threat of strike action.
Henri Fayol: The Five Functions of Management
Henri Fayol was a French industrialist and management writer in the early 20th century whose work is associated with the classical administrative school of management thought, which focuses on the management process and principles of management at a more general level.
He is most remembered for formalising:
The five functions of management.
The fourteen principles of management.
During his time, management assumed people function as instructed like machines, so human relations like communication and motivation were not prioritised.
Five Functions of Management
Function
Planning
Setting targets or objectives and then formulating strategies, plans or procedures for achieving those objectives.
Planning occurs at different levels within an organisation.
Forecasting is also associated with planning (sometimes shown as a sixth function).
Organising
Creating the structure of company functions.
Organisation involves establishing a structure of roles and jobs.
Organising involves arranging the departmental structure, how authority should be delegated within a functional organisation, and what individuals’ jobs should be.
Commanding
Instructing subordinates.
Managers give instructions to subordinates within their area of management authority, and they should be responsible for using their authority.
Coordinating
Devising methods for individuals and groups to work together.
Managers have the role of coordinating the activities of different departments, groups and individuals.
Coordinating means ensuring that everyone within the organisation works towards a common goal or objective.
Controlling
Comparing performance to targets and taking corrective action.
Managers exercise control.
They monitor actual performance, predict future performance, and compare this with planned or expected performance.
Where actual and plan differ, or when forecast and plan differ, managers take appropriate control action to correct deviations from the plan.
Planning and control are closely related management activities.
Activity 2
Determine which aspect of Fayol’s five functions of management the activity relates to:
Co-ordinating
Setting up project teams to develop new IT systems for the company
Ensuring that production capacity in the company’s factory will be increased to meet the expected rise in sales demand next year
Deciding on the capital expenditure programme for the company next year.
Instructing a subordinate to produce a report by the end of next week
Taking measures to reduce the cost of wastage of materials in the production process
Henri Fayol: The Fourteen Principles of Management
Fayol also identified fourteen principles of management. These were principles that management should apply to organise and interact with their subordinates and others.
Many of these principles are now well-established and accepted as core features of business management.
Division of Work: assigning tasks to employees to become proficient on. Multitasking is not encouraged.
Applying all of Fayol’s principles with equal focus in real situations may not be appropriate. Different management scenarios may require different approaches.
Taylor: Scientific Management
The scientific management school of thinking originated in the early 20th century and is most closely associated with the American Frederick Winslow Taylor.
The main principle of scientific management is that scientific techniques should be used to analyse work and break it down into smaller units. Specialists are employed to do each work unit in such a way that enables the work to be done quickly.
Scientific management is associated with the concept of ‘time and motion study’ – working out by scientific analysis and experimentation what is the most efficient way of doing routine and repetitive work.
Principles of Scientific Management
Taylor suggested that scientific management consists of four principles:
Routine or repeated tasks should be analysed and broken down into smaller units. Experimentation should be used to decide the most efficient way of doing this and performing each of these smaller tasks.
This is done by analysing different work methods and measuring the time it takes to complete them.
The focus of this analysis was to enable the specialisation of tools and processes for the task.
Employees should be selected scientifically. Some individuals are better suited to certain types of work than others. Once chosen, employees should be trained on how to do their job.
Optimum efficiency is achieved by combining scientifically-identified tasks with scientifically-selected employees.
Work should be divided between managers (planners) and employees (the ‘doers’), and they should cooperate.
Frederic Winslow Taylor developed his ideas through studies at the Bethlehem Steel Works in the United States of America, where one of the tasks was moving coal in the coal yard for transporting to the steelworks.
Taylor believed that the most efficient way of moving the coal – moving the required amount of coal in the shortest possible time – was to make the task specialised.
For example, the tools used should be picked or designed for the best performance.
Taylor experimented with shovels of different sizes, handle lengths, and amounts of coal on the shovel for each shoveling movement.
The aim was to find the optimum amount of coal to move and the best shovel design.
Taylor also found that some employees could do the work better than others, and he analysed the skills that were particularly well suited to the job.
He also experimented with different frequencies and lengths of rest periods.
At the end of his experiments, Taylor believed that he had found, through scientific analysis, the most efficient way of shoveling coal at the steelworks.
Criticisms of Scientific Management
The principles of scientific management can be applied today to repetitive work.
However, with the development of automation, efficiency is often determined by machinery and equipment rather than by the efficiency of humans.
One criticism is that work is broken down into dull, repetitive tasks, and jobs can therefore be monotonous. Employees may become demoralised by the monotony and lack of variety.
As a result, the benefits of scientific working methods may be offset by the loss of efficiency caused by workers’ demoralisation or lack of interest.
Henry Mintzberg: Management Functions
Henry Mintzberg is a management theorist who is particularly well-known for research that he carried out into what managers do rather than what they are supposed to do in theory.
He disagreed with the classical view that management time is spent on planning, organising, commanding, coordinating and controlling.
Mintzberg suggested that reality is different from the classical principles of management and that the work of managers is fragmented and disjointed. His research made several discoveries.
Mintzberg’s Ten Management Functions
Based on his research Mintzberg concluded that management performs three roles, which can be subdivided into ten different functions. The three roles are:
Interpersonal role
A manager fulfils a linking role based on their position within the organisation.
Within this role, managers act as figureheads and leaders and provide liaison.
Figurehead (Ceremonial)
Managers, especially senior managers, fulfil a ceremonial role as a figurehead for the organisation.
They represent the face of the organisation to people outside it, for example, at events such as conferences.
Leader
Managers also fulfil an interpersonal role in their formal position for activities such as hiring and firing staff, providing motivation to subordinates, and training and development.
Liaison
Managers act as a link with other managers outside the vertical chain of command.
They act as a point of contact with managers in other departments and parts of the organisation.
Informational role
A manager’s informational role involves gathering and giving information.
The manager’s ability to perform this function is based on their position in the communication channel up or down the organisation hierarchy and on the manager’s external contacts with other departments and people outside the organisation.
Monitor
Managers act as intelligence gatherers
They monitor what is happening and, in doing so, can develop extensive knowledge (through both formal and informal channels) about what is happening in the organisation.
Spokesperson
Managers act as a spokesperson for the part of the business over which they have authority.
For example, a department manager acts as a spokesperson for the department in its dealings with other departments, groups and individuals.
Disseminator
Managers spread the information that they have acquired, formally or informally.
For example, managers are often an essential source of information for subordinates, who learn about what is happening or what is planned through their ‘boss’.
Decision-making role
A manager’s decisional role involves making different types of decisions. Mintzberg identified four different types of decision-making functions.
Entrepreneur
Managers make decisions that initiate change.
Change may be needed in response to external events, or there may be changes to improve the way work is carried out.
Managers should be looking all the time for ways of making improvements.
Disturbance handler
Managers need to deal with unexpected problems, including work conflicts and disruptions.
On a more formal level, managers are responsible for comparing actual performance against the plan and taking measures to deal with deviations of actual results from the plan.
Resource allocator
Managers decide how resources should be allocated to different activities.
This function at a senior management level includes deciding how budgeted expenditure should be allocated between departments.
At a supervisor level, this function includes deciding how to allocate workers (and their time) between different tasks.
Negotiator
Managers may also make decisions through negotiation and agreement with others, such as managers in other departments, customers and suppliers.
Activity 3
Match the activity to the management role it illustrates.
Agreeing on the terms of a new contract with a major supplier
Reading a report prepared by management in another department
Warning a subordinate about the unsatisfactory nature of the subordinate’s work
Making a sales presentation to a potential customer in an attempt to win a sales contract
Setting up a new company to deliver a service to customers to gain a competitive advantage over rivals
Peter Drucker: Manager Functions
Peter Drucker identified five main areas of responsibility or five main functions of management.
Setting objectives
Managers decide goals and objectives for the organisation and what must be done to achieve those objectives.
The objectives are then communicated to others who need to be informed.
Organise
Managers decide the organisation’s structure and the jobs within it. They also select the people to do the jobs.
Motivate and communicate
Managers should motivate employees and provide them with the information (and guidance) they need to do their job.
Measure
Managers set objectives for performance for the organisation, different parts of the organisation and individuals.
They arrange for performance to be measured and reported, and they analyse and appraise performance by comparing actual performance against the objectives.
Develop people
Managers should seek to develop the people who report to them. They should also seek to develop and improve themselves.
Comparing Drucker’s views with those of Fayol, there is an emphasis on communication, motivation, and developing people as a management function rather than just commanding.
Assessment of Managers
Drucker managers should be assessed on three aspects based on the economic performance they achieve for the business.
Managers are responsible for the economic performance of the company. They have responsibility for innovation (entrepreneurship) and marketing. Drucker was one of the first management writers to promote the concept of ‘putting the customer first’.
Managers should set targets for achievement for themselves, their area of operations, and the subordinate managers reporting to them. Actual performance by managers should be measured against their objectives. Drucker introduced ‘management by objectives’ into management terminology.
Managers also have responsibility for managing the work that the organisation carries out and the workers who do it.
Activity 4
Match the management activity to Drucker’s management functions:
Setting weekly sales targets
Creating a staff schedule
Setting up a bonus scheme and informing staff about it
Comparing sales figures against targets
Organising sales training so that staff become better salespeople
Fred Fiedler: Theory of Leadership
Fred Fiedler developed a leadership theory based on the view that the best type of business leader depends on circumstances.
He argued that there are two styles of leader or manager:
Trait
Psychologically-distant managers (PDMs)
Psychologically-close managers (PCMs)
Formality of relationship
Keep their distance from subordinates (and superiors) by formalising roles within the work team.
Refrain from trying to formalise relationships and roles with subordinates and superiors.
Interpersonal interaction
Are withdrawn and reserved in interpersonal relationships
Seek to develop good relationships with others
Method of communication
Prefer formal methods of communication (for example, formal meetings and reports) rather than informal discussions
Prefer informal methods of communication – informal discussions and opinion-sharing
Focus
Task-oriented: focus on the task to be done
People-oriented: focus on the people rather than the task
Effectiveness
Most effective in high pressure work situations where clear direction is necessary.
Most effective when the work requires collaboration among the members of the team.
Fred Fiedler: Factors affecting Favourableness of Manager’s Work Situation
Fiedler argued that the type of leader who will be more effective depends on three factors that determine if the work situation is ‘favourable’ or ‘unfavourable’.
The favourableness of the work situation will then determine which type of leader is best.
Fiedler’s work suggested that the PDM approach works best when the situation is either very favourable or very unfavourable. A PCM approach works best when the situation is only moderately favourable to the leader.
Factors Affecting Work Situation Favourableness
Factor
Favourable work situation
Unfavourable work situation
Relationship between the leader and the workgroup
The trust and respect the workgroup members have for their leader.
Higher level of respect and trust
Lower level of respect and trust
Degree of task structure
The extent to which the workgroup’s tasks are structured and clearly defined.
For example, work of a routine nature is more clearly defined than work involving creativity and inventiveness.
More structured
More unstructured
Leader’s position power
The extent to which the leader derives power from their position.
Higher power to grant rewards or impose punishments
Lower power to grant rewards or impose punishments
When the work situation is highly favourable or highly unfavourable, Fiedler argued that the most effective type of leader is a psychologically distant manager.
A psychologically distant manager makes roles and relationships more formal, uses formal communications, is task-oriented and appraises colleagues based on performance.
A psychologically close manager will be more effective when the work situation is in between and only moderately favourable.
A psychologically close manager prefers informal roles and relationships in a work team situation, uses informal communication rather than formal meetings, and puts good relationships ahead of ensuring that work is completed efficiently.
Fiedler also argued that individuals could not be made to change their personality – whether they are psychologically distant or psychologically close – so the leader who is selected for the job should be the one who is appropriate for the particular work situation.
John Adair: Action-Centred leadership
John Adair’s action-centred leadership model is based on what leaders do (action).
In performing these functions, leaders need to consider the needs of three aspects:
Task needs
The first leadership concern is with the task and meeting the demands of the task.
Group needs
The second is with the workgroup and the need to manage and maintain an effective workgroup.
Individual needs
The third is managing the individuals in the work team, assisting them, giving them support and praise when it is due, developing them in their job and using their strengths and competencies.
Adair argued that leaders must give attention to the task, group, and individuals when performing their leadership functions.
Each of these three aspects of the work situation should be balanced, and the leader should give their time to task, group or individuals, depending on the work situation.
An effective leader needs all three skills: skills at dealing with the task, the group and individual team members. They should be someone who can successfully balance the occasionally conflicting needs of these three areas to the best effect.
Activity 5
Determine if the activity addresses the task, group, or individual needs.
Need addressed
(Task, group, or individual)
Training
Conflict resolution
Counselling
Obtaining information
Communicating
Warren Bennis: Transformational Leadership
Warren Bennis researched the qualities required of a business leader who can transform the business and introduce significant change and innovation by pursuing a vision for the long term.
He made a distinction between:
managers, who provide transactional leadership; and
real leaders who provide transformational leadership to innovate and develop the business.
Transactional managers
Administer
Focus on systems and structures
Reliance on control
Short-term view: slow and gradual change
Doing Things Right
Doing what needs to be done correctly and properly.
Transformational leaders
Innovate and develop
Inspire trust in others
Challenge the status quo
Long-range view and vision
Doing The Right Things
Making the right choices on what to do.
Leadership Skills
In his book Leaders (1985), Bennis argued that although there is no single ‘best way’ to provide leadership, transformational leaders have four broad skills to manage different aspects of leadership.
Leadership skill
Management of attention
Leaders create a compelling vision for the future that will inspire the people they lead. They innovate.
Management of meaning
Leaders must be able to communicate their vision to the group that they lead. They give their dream meaning to others.
Management of trust
Leaders act consistently and honestly with the people they lead. They build the trust of others in the leader and the commitment of others to the leader’s vision.
Management of self
Leaders are aware of themselves and their weaknesses. They also give attention to other people.
Leaders
Blake and Mouton: Leadership Styles
Robert Blake and Janet Mouton carried out research, known as the Ohio State Leadership Studies, into managerial behaviour.
Their studies used a questionnaire, and responses to the questionnaire were used to analyse the style of individual managers. By placing managers on a grid, the assessment could be used to locate where each manager’s style fit and where the style needed to be if they wanted to improve.
Blake and Mouton Leadership Dimensions
Blake and Mouton argued that there are two elements or dimensions to management and leadership
concern for the task; and
concern for people doing the work.
Concern for the task means concern for achieving work targets, such as budgeted output and sales or target efficiency levels.
Concern for the people refers to ensuring good interpersonal relationships, especially with subordinates, and maintaining the respect and trust of the workgroup.
These two dimensions can be plotted on a graph.
Managers can be ‘scored’ by plotting their position on the graph according to their concern for the task and people.
To plot the extent to which a manager shows concern for the task and concern for people, Blake and Mouton established a scoring system. Managers could be scored on a scale from 1 to 9 for each aspect of concern.
A score of 1 indicates a low level of concern, and 9 shows a high level of concern.
So individual managers can be placed on the grid (known as Blake’s grid) according to the responses obtained from the questionnaires.
Some possible scores are shown on the grid above: The first number indicates concern for the task, and the second number shows concern for people.
Leadership Styles on the Blake and Mouton Grid
Grid coordinates
Leadership style
1,1
Impoverished
The manager gives little attention to getting the work done and shows little concern for the staff: a lazy manager – the worst type of leader possible.
1,9
Country club
The manager has low concern for getting the work done but shows high concern for maintaining good interpersonal relations.
9,1
Authoritarian
The leader concentrates on the task –getting the work done efficiently – and shows little concern for maintaining good relations with others.
5,5
‘Middle-of-theroad’
The manager does enough to fulfil their role reasonably but may need to do more to be a better leader.
9,9
Team management
The manager shows great concern for both the task and people. This is likely to be the most effective type of leader.
Application
Blake and Mouton suggested that their grid could be used for the performance appraisal of managers and as a personal development tool for managers.
Seeing their position on the grid and how their subordinates view them on it should help them see how their performance is assessed and how they can improve it by showing more concern for the task, people, or both.
The Ashridge School
A research team from Ashridge College in the UK suggested a different way of analysing leadership styles, using the ‘tells’, ‘sells’, ‘consults’ and ‘joins’ model.
Style
Tells
An autocratic leadership style. The leader makes the decisions, tells subordinates what to do, and expects to be obeyed without question.
Sells
A persuasive style of leadership. The leader is autocratic and makes the decisions, but they try to explain the reasons for those decisions to subordinates.
The leader ‘sells’ their decisions and may acknowledge the views of subordinates. This means there is some consultation in the decision-making process, but not much.
Consults
A participative approach. The leader asks subordinates for their views and opinions before making a decision.
The views of subordinates may therefore influence or alter decisions by the leader.
Joins
A democratic style of leadership is one where the leader allows subordinates to get on with their work and do what they consider necessary within established guidelines and constraints for action.
The leader has minimal involvement with what subordinates are doing.
Each style of leadership may be the most suitable in a given situation. The researchers from Ashridge College found, however, that:
Subordinates, on the whole, prefer a ‘consults’ style of leadership most
The worst type of leadership is one with inconsistency (variation) in the leadership style.
Ashridge suggests no superior style: their effectiveness depends on the situation.
Activity 6
Determine which style is illustrated by the statement.
Statement
Can you check those figures for me, please? There may be some errors in them.
Your sales target for this month is $5000.
We need to reduce our expenditure: it’s a long way over budget. Do you have any suggestions about what we should do?
I’m not allowing anyone to do overtime working in this office. We should be able to get all the work done during regular working hours.
Please can you get me a list of customers who are more than two weeks late with a payment?
OK, if you all think it’s possible, I agree that we should aim to finish this part of the project within the next two weeks.
