COURSE BOOK

Leadership
DLMBLSE01-01
Course Book
Leadership
DLMBLSE01-01
2 Masthead

Masthead

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DLMBLSE01-01
Version No.: 001-2022-0907

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 Module Director 3

Module Director
Prof. Dr. Georg Berkel

Mr. Berkel is a Professor of Business Administration and Law. He also

works as an attorney and a consultant. Prior to joining IU Interna-
tional University of Applied Sciences in 2012, he worked on projects in
Europe, Asia, the Middle East, and North America as an executive in
leading technology companies.

He graduated from the University of Passau in Germany with a degree

in Law and earned an MBA from IESE Business School, University of
Navarra in Barcelona, Spain. He also obtained a doctorate in business
administration from the University of St. Gallen, Switzerland. He spent
a year as a visiting scholar at the Kellogg Graduate School of Manage-
ment, Northwestern University in Evanston, USA, and qualified as
mediator in the United States and Germany.

Mr. Berkel is the author of a textbook from Cambridge University

Press, and has written teaching material for Harvard Law School. He
has taught executives and students in more than 20 countries across
the globe.
4 Contents

Table of Contents
Leadership

Module Director . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Introduction
Leadership 7
Signposts Throughout the Course Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Learning Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Unit 1
Leadership Overview 12
1.1 Significance of Good Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1.2 Leadership: Conceptual Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

1.3 Criteria for Leadership Success . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Unit 2
Leadership Theories through Changing Times 18
2.1 Trait Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

2.2 Leadership Style and Leadership Person . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

2.3 Consideration of the Situation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

2.4 Systemic Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

2.5 Symbolic Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

2.6 Transactional and Transformational Leadership . . . . . . . . . . . . . . . . . . . . 27

2.7 Leadership Theories through Changing Times—Leadership in a Field

of Tension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
 Contents 5

Unit 3
New Leadership Approaches 36
3.1 VUCA and Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

3.2 Empowering Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

3.3 Sociocracy and Holacracy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Unit 4
Stresses, Work-Life Balance, and Self-Management 42
4.1 Stresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

4.2 Work-Life Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

4.3 Self-Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Unit 5
Motivation, Communication, and Appraisal 52
5.1 Motivation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

5.2 Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

5.3 Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Unit 6
Teams 66
6.1 Team Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

6.2 Organizational Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

6.3 Shared Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

6.4 Change Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

6 Contents

Unit 7
Current Trends and Debates 78
7.1 Personality and Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

7.2 Leadership Derailment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

7.3 Toxic Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

7.4 Power in Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

7.5 Generations X, Y, and Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

Unit 8
Intercultural Leadership 92
8.1 Intercultural Leaders and Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

8.2 Culture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

8.3 Intercultural Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Appendix 1
List of References 104

Appendix 2
List of Tables and Figures 110
Introduction
Leadership
8 Introduction

Signposts Throughout the Course Book

Welcome

This course book contains the core content for this course. Additional learning materials can
be found on the learning platform, but this course book should form the basis for your
learning.

The content of this course book is divided into units, which are divided further into sections.
Each section contains only one new key concept to allow you to quickly and efficiently add
new learning material to your existing knowledge.

At the end of each section of the digital course book, you will find self-check questions.
These questions are designed to help you check whether you have understood the concepts
in each section.

For all modules with a final exam, you must complete the knowledge tests on the learning
platform. You will pass the knowledge test for each unit when you answer at least 80% of the
questions correctly.

When you have passed the knowledge tests for all the units, the course is considered fin-
ished and you will be able to register for the final assessment. Please ensure that you com-
plete the evaluation prior to registering for the assessment.

Good luck!
 Introduction 9

Learning Objectives

In today’s knowledge society, a company’s employees are one of its most important resour-
ces. One of the basic competencies of leaders is to develop and promote the knowledge and
skills of individuals in their organization through leadership. The professional and systematic
leadership of employees is decisive to a company’s success in the face of its competition.

Against this backdrop, this Leadership course book addresses the necessary competencies of
leaders in companies with modern, knowledge-based work organizations. Key issues, as well
as various approaches to modern leadership theory and practice, are discussed. The focus is
on the basics of professional leadership, leadership and motivational tools, aspects of situa-
tional leadership, and communication and interaction in the context of strategic leadership
and change processes. A methodological, conceptual basis, as well as empirical examples
and discussions of leadership behavior in organizations, are also presented to help prepare
students for the challenges of leadership, handling change, team development, and conflict
management within a company.

In this context, what constitutes good leadership is addressed while drawing on the most
significant leadership theories and their empirical validation. Leadership is discussed as a
balance of values between the requirements of organizations, people, and performance. Fur-
thermore, current empirical findings on leadership, teams and work-life balance, communica-
tion, and appraisal of employees will be explored. Following this course, students will be able
to take the practical and problem-solving understanding of leadership and leadership
behavior that they have acquired and apply it in corporate practice.
Unit 1
Leadership Overview

STUDY GOALS

After completing this unit, students will be able to ...

… explain definitions of leadership by three of the great management thinkers.

… consider levels of leadership success.

… analyze the extent leadership influences a company’s success.

… assess leadership success based on efficiency and effectiveness criteria.

DL-E-DLMBLSE01-01-U01
12 Unit 1

1. Leadership Overview

Introduction
There are two marketing teams in Company A. One is led by Ms. Peters, the other by Mr.
Sanchez. Ms. Peters leads her team with great commitment, holds regular team meet-
ings to coordinate the team, and has a very cordial relationship with each of her
employees. She knows exactly what each individual is working on at any given time and
how things are going in their private life.

Mr. Sanchez takes a somewhat different approach to leadership. In his view, his
employees are all experts in their respective fields who do their job very well and at
their own pace. He finds it wrong to look over their shoulders and, as he perceives it,
“interfere with their work.” When his employees have questions, they seek out Mr. San-
chez and quickly clarify anything that needs to be cleared up with zero bureaucracy.

Is Mr. Sanchez or Ms. Peters the better leader? Would you rather work on Ms. Peters’s
team or Mr. Sanchez’s? Can they both be equally effective?

1.1 Significance of Good Leadership

Leadership is an area of great historic and contemporary significance. Associations with
leadership often refer to powerful and dynamic personalities who fought important
battles (e.g., Julius Caesar or Alexander the Great) or were responsible for large compa-
nies or nations while stationed in ostentatious buildings. Leadership has something
mysterious about it because it is difficult to describe “how to lead properly” in a single
sentence. Different people in history have led their respective projects to success in
very different ways. So, is there one correct way to lead well?

Considering this complexity, there are different ways to identify and describe good
leadership. Specifically, this means that there are many measurement variables for
leadership success and, accordingly, different factors can be identified for the various
types of leadership success.

Leadership can be assigned to the role of a leader, but it can also be viewed as a proc-
ess of social influence (Yukl, 2012, p. 24). As an influence process, leadership has far-
reaching consequences and a leader can have an influence on many different aspects,
for example,

• the goals and actions of an organizational unit,

• employees’ motivation to achieve these goals,
• trust and cooperation among employees,
• the allocation of resources towards goals and measures, and
• the arrangement of bureaucracies and systems (Yukl, 2012, p. 24).
 Unit 1 13

Leadership Overview

Leadership has an indirect, but significant, influence on the overall success of a com-
pany. Let’s say that there are two field sales managers, each of whom leads a few trav-
eling salespersons. If one of these field sales managers succeeds in motivating their
employees more, they will presumably be able to record greater product turnover,
which ultimately leads to a higher sales volume, and therefore to greater earnings.

However, this is not only true in sales; it also applies to other areas of a company.
Imagine that a company has an increased error rate in production. A leader who makes
their employees alert to this problem, explains the significance of error rates, and
offers solutions for error-free production can also contribute to a company’s success
through their leadership behavior.

The topic of leadership can be traced back to a long tradition of research that contin-
ues to this day. This is devoted to two questions in particular (Kals, 2006, p. 97):

1. What personality traits characterize a successful leader? (question of selection)

2. Which successful leadership strategies be used under which conditions? (question
of modification)

The following sections provide an overview of the most significant answers to these
two questions.

1.2 Leadership: Conceptual Definitions

Leadership is a complex construct. In the broadest sense, however, it can be found
wherever social organization is involved (Guldin & Gelléri, 2014, p. 680). To begin, an
overview of how the well-known management thinkers Peter Drucker, Jack Welch, and
John S. Kotter understand and define the term is presented.

Peter Drucker, the developer of the “management by objectives” (MBO) concept, out-
lines leadership in four aspects (Drucker, 1996):

1. Leadership requires employees who follow.

2. Leadership is not about being popular or admired, but about doing the things that
need to be done. It is not popularity that makes a leader—it is the results achieved.
3. A leader must be visible and lead by example.
4. It is not rank, privilege, title, or money that makes a leader—it is their responsibility.

John S. Kotter, a professor at Harvard Business School, describes leadership as the defi-
nition of how the future should be shaped, by coordinating employees and goals, and
through a force that inspires employees to achieve their goals despite any obstacles
(Kotter, 2011).
14 Unit 1

Jack Welch, the long-standing CEO of General Electric, describes the process of assum-
ing leadership in such a way that the first task in preparing for leadership is one’s own
growth. As soon as a person assumes leadership responsibility, their focus must switch
to supporting the growth of others (Welch & Welch, 2005).

Rosenstiel’s understanding of leadership is established in German-speaking countries:

He describes leadership as “goal-oriented influencing” that is intended to motivate the
person being led to achieve specific goals, which are usually derived from the goals of
a company (von Rosenstiel, 2014, p. 3). Concrete goals can be those already addressed,
such as increasing sales, improving the work atmosphere, or emphasizing specific qual-
ity standards.

In principle, this influencing can occur in two ways: via leadership through structures
and leadership through people. Structures are thought of in terms of organizational
charts, job descriptions, and procedural rules. They often have an effect, even without
the direct intervention of a particular person. No matter how rigid or flexible these
structures of an organization may be, leadership through people is of central impor-
tance. The leader’s behavior is crucial in clarifying goals, coordinating tasks, motivating
employees, and monitoring results.

In summarizing and clarifying these thoughts, the following definition of the leadership
Leadership of of employees can be formulated (von Rosenstiel 2014, p. 4, as translated by author):
employees Leadership is the goal-oriented influencing of subordinates by supervisors with the aid
This is defined as of communication tools. Weibler (2012, p. 258) also adds that the success of leadership
the process of influ- depends on acceptance by employees.
encing undertaken
by supervisors.

1.3 Criteria for Leadership Success

There is no one right approach to assessing leadership success. Rather, different
authors and research groups have developed varying approaches to measuring or
assessing leadership success. These are briefly presented below.

Three different levels can be considered when assessing leadership success. The first
Dyad level is the dyad, i.e., the relationship between each individual being led and their
A dyad is a relation- leader. The second level is the group or team, and the third level is the entire organiza-
ship between two tion (Weibler, 2012).
people. For example,
a dyad exists One indicator of leadership success could be the success of the entire organization.
between a leader However, empirical findings on organizational success and leadership show mixed
and employee A, and results. An early study by Lieberson and O’Connor (1972) of return on sales and annual
another dyad exists net profit measured over 20 years and its relationship with leadership showed that
between a leader leadership only makes a very small contribution to organizational success. In another
and employee B. study, however, a leadership influence of 50 percent (of the CEO) on the company’s suc-
cess was shown. These examples, along with many other studies, reinforce the idea
that it is very difficult to clearly determine what contribution good leadership makes to
a company’s success. Pfeffer (1977) substantiates this with the high degree of similarity
 Unit 1 15

Leadership Overview

between top managers and business leaders in terms of their education and attitudes.
However, there is limited scope for action due to predefined roles and norms, and a
large number of environmental factors, such as the economy and technical progress,
have a strong impact on company success.

Weibler (2012, p. 65) proposes three efficiency criteria for assessing leadership success:

1. Economic efficiency
2. Performance process efficiency
3. Personal efficiency

Economic efficiency refers to typical indicators of a company’s success, such as earn-

ings, profitability, or sales. In the case of performance process efficiency, success can
be differentiated according to tangible performance processes (e.g., rejects, accidents,
or deviations from plans) and intangible performance processes (e.g., problem solving).
Personal efficiency can also be differentiated in terms of work-related attitudes (satis-
faction, morale, or complaints) and individual attitudes (acceptance of influence or
willingness to cooperate).

If, in contrast to efficiency, the effectiveness of leadership is considered, three types of

effectiveness criteria can be distinguished (Weibler, 2012, p. 72):

1. Performance (quality, time savings, creative performance)

2. Cohesion (team cohesion, frustration tolerance, group performance)
3. Satisfaction (job satisfaction, commitment)

In addition to the efficiency and effectiveness criteria described above, a broader

stakeholder approach can be used. Successful leadership can be defined as leadership
that achieves the highest possible level of satisfaction among as many stakeholders as
possible (e.g., employees, suppliers, customers, lenders, and society).

Von Rosenstiel (2014, p. 5) correctly points out that it is ultimately a decision of com-
pany policy as to which criteria are used to measure and assess supervisors—even if
this is rarely made explicit in practice.

Summary

Leadership is a complex construct and the question of what constitutes “good”

leadership is therefore difficult to answer. Historically, leadership has been of con-
siderable importance in politics and wars. Nevertheless, there are many different
definitions of what exactly leadership means.

The core of the various definitions of leadership is that it is a process of communi-

cation between the leader and the led, which, in turn, has the purpose of achieving
a certain goal.
16 Unit 1

Leadership success can be measured or assessed in many ways. In addition to the

efficiency approach, the effectiveness approach can be deployed. Alternatively, a
stakeholder approach can be used to assess leadership success.

Ultimately, the decision on which criteria to use to measure and assess supervisors
is up to the individual company.

Knowledge Check

Did you understand this unit?

You can check your understanding by completing the questions for this unit on the
learning platform.

Good luck!
Unit 2
Leadership Theories through Changing
Times

STUDY GOALS

After completing this unit, students will be able to ...

… describe the different leadership models and approaches.

… explain how a particular situation can be included in leadership approaches.

… differentiate between systemic and symbolic leadership approaches.

… compare transactional and transformational leadership.

DL-E-DLMBLSE01-01-U02
18 Unit 2

2. Leadership Theories through Changing

Times

Introduction
Ms. Smith is a department manager at a bank. Her department includes Mr. Lang, Ms.
Meyer (an intern), Ms. Patel, Mr. Elmer, and Mr. Faro. Ms. Patel, Mr. Elmer, and Mr. Faro
have each worked at the bank for nearly 20 years, and Ms. Smith often includes them in
her decisions or asks them for their professional opinion. Otherwise, she gives them a
great deal of freedom in doing their work because she knows they are doing a good
job.

Ms. Smith’s behavior toward Ms. Meyer and Mr. Lang, however, is completely different.
She monitors the former at every turn; Ms. Meyer must present her with interim ver-
sions of her work several times a day, and Ms. Smith gives her very clear guidelines
that must be adhered to. Ms. Meyer finds this unfair. Mr. Lang, who has only recently
moved to the bank and previously worked at the city administration, is also somewhat
unnerved by the close monitoring to which Ms. Smith subjects him. Although he does
not need to defend his work on a daily basis, he does have to do so several times a
week in regular meetings. Ms. Smith always seems to find something wrong with it. Mr.
Lang wonders if Ms. Smith secretly favors the other three employees and has a per-
sonal dislike for Ms. Meyer and himself.

How would you rate Ms. Smith’s leadership style? Does she act inconsistently, genu-
inely, or unfairly?

The concept of what constitutes “good,” “right,” or “effective” leadership has changed
considerably over the years. Many authors have developed approaches and models to
provide guidelines for leadership. Even now, there is no consensus in management
research as to the best leadership approach.

2.1 Trait Theory

Trait theory is primarily concerned with the personality of the ideal leader. It is, there-
fore, based on the following question: What traits and characteristics must a person
have to be particularly qualified as a leader?

Trait theory, also known as the “great man theory,” developed in the second half of the
nineteenth century—a time when social Darwinist elitism prevailed (Schirmer & Woydt,
2016, p. 55). Successful men, including Werner von Siemens, Gottlieb Daimler, and Alfred
Krupp, were impressive with their accomplishments, which were characterized by sole
decision-making power. This approach resulted from ideals that were still shaped by
feudal structures and were based on the idea that leadership talent was inherited by
the nobility, clergy, and heads of industry, which is why employee participation in deci-
sion-making was also categorically rejected (Schirmer & Woydt, 2016, p. 55). This
approach is complementary to Taylorism, which assumes that workers can only act in a
 Unit 2 19

Leadership Theories through Changing Times

limited way at a particular time, resulting in a marked division of labor. When employ-
ees are seen as mentally limited, their participation is virtually excluded and strong
leadership is required.

As a result of trait theory, management research between 1900 and 1950 heavily
focused on the identification of key traits in the personality of leaders. Initially, it
focused on external traits, such as size, strength, and health. Later, these were supple-
mented by internal traits, such as intelligence, willpower, and decisiveness (Schirmer &
Woydt, 2016, p. 55). An early meta-analysis by Stogdill (1948) revealed the following
traits as central to leadership success:

• ability (e.g., intelligence, jugement, eloquence, and intelligence)

• achievement (e.g., knowledge, academic success, and athletic success)
• responsibility (e.g., reliability, initiative, and self-confidence)
• participation (e.g., cooperation, adaptability, and humor)
• status (e.g., socioeconomic position, background, and popularity)

Since the 1990s, Stogdill’s work has been continued by authors such as Timothy A.
Judge, Joyce Bono, Fred Luthans, and Robert and Joyce Hogan. Most studies use the Big
Five personality test (i.e., extraversion, agreeableness, openness, conscientiousness,
and neuroticism) or the Hogan Development Survey to assess personality (Judge et al.,
2000). In recent years, there has been increasing interest in what are known as “state-
like” personality traits, i.e., personality traits that can be developed with training (such
as grit; Duckworth et al., 2007). This trait approach is described as a static approach, Grit
meaning that the leadership situation is not considered. This refers to perse-
verance, resilience,
and the pursuit of
long-term goals.
2.2 Leadership Style and Leadership Person

One-Dimensional Leadership Styles

The Iowa Studies were the first to test the effectiveness and consequences of different
leadership styles (Lewin et al., 1939). In randomized groups, ten-year-old boys were
assigned to one of three group leaders, with whom they worked on various handicraft
projects over several weeks. In each case, one leader behaved in an authoritarian,
democratic, or laissez-faire manner. In the authoritarian group, the expectations of the
children were clearly communicated and the method for making the crafts was clearly
dictated. In the democratically led group, the leader integrated into the group, guided,
and allowed feedback and input from the children. In the laissez-faire group, the leader
left the children to their own devices and offered little guidance.

Subsequently, the children’s satisfaction with their group leader was surveyed and the
children’s performance in the craft projects was assessed. 19 out of 20 children were
satisfied with democratic leadership and 14 out of 20 preferred the laissez-faire leader-
ship over authoritarian leadership. The behavior of the children among themselves was
interesting; within the authoritarian group, the children’s aggression among themselves
20 Unit 2

was the highest, while in the democratic group it was the lowest. The democratically-
led group was also the most productive, while the laissez-faire group was the least pro-
ductive.

Although this study laid the foundations for further empirical research on the effective-
ness of different leadership styles, its limitations are obvious. The extent to which the
behavior of ten-year-old children (in this case, exclusively boys) can be transferred to a
highly qualified workforce featuring other genders is extremely questionable. Given the
background of this study, the effectiveness of one-dimensional leadership styles must
therefore be questioned.

Based on these constraints, Tannenbaum and Schmidt (1958) developed the leadership
style continuum, which considers the act of leadership in the given framework condi-
tions.

Under an authoritarian leadership style, the supervisor (or leader) issues orders and
makes decisions without consulting their employees. Under a paternalistic leadership
style, the supervisor makes decisions on their own, but strives to convince employees
of the correctness of their decisions. In an informational style, the supervisor makes
decisions, but questions about correctness are allowed. A consultative leadership style
means that the supervisor informs their employees of planned decisions and employ-
ees then have the opportunity to contribute their opinions before a final decision is
made by the supervisor. Under a cooperative leadership style, the team develops pro-
posals before the leader identifies the proposal to be implemented from the pool of
 Unit 2 21

Leadership Theories through Changing Times

suggestions developed by their team. Using a delegative leadership style, the employ-
ees’ freedom is so great that the group decides for itself based on the leader’s specifi-
cation of the problem and their established guard rails. Semi-autonomous groups
make decisions completely on their own, with the supervisor acting as an advisor.

In principle, the question of which leadership style is most effective, and in which
cases, cannot be answered. Rather, it is important to take the framework conditions
into account, such as the personal characteristics of the leader, team size, industry and
work content, the qualifications of the employees, and the level to which the leader is
accepted by the team, and then to exercise an appropriate leadership style based on
this.

2.3 Consideration of the Situation

Various models propose a consideration of the situation or framework conditions of
leadership. Fiedler’s contingency theory, Hersey and Blanchard’s model, and Vroom and
Yetton’s decision model are closely examined in this section.

Contingency Theory According to Fiedler

Contingency theory addresses the question of which leadership style is most promising
in which situation (Stock-Homburg, 2013, p. 493). It takes its name from situational
influences (contingency factors) that are of key importance to leadership success. Its
central hypothesis is that group performance is a function of the relationship between
leadership style and the extent to which the group situation allows the leader to exer-
cise influence (Kals, 2006, p. 100). The situation, which represents the sum of the frame-
work conditions of a leadership situation, can be further defined by the following
aspects (Fiedler, 1967):

• leader-employee relationship. Group employees tend to be more willing to accept

stimuli from their leader if they value their leader or feel valued. The dyadic rela-
tionship is the most important situational variable.
• positional power. A leader’s influence based on their hierarchical position in the
organization is also referred to as positional power. The greater their positional
power, the more influence the leader has on the behavior of the employees being
led.
• degree of task structuring. This refers to the number of recurring elements, their
predictability, and the verifiability of performance results. The more clearly the tasks
are structured, the easier it is to coordinate and control the employees being led.

Each of the aspects named above can be high or low, resulting in eight different situa-
tions. Depending on the situation, Fiedler recommends more employee-oriented or
performance-oriented leadership.
22 Unit 2

In empirical studies, Fiedler was able to show that different leadership styles have
promising results in different leadership situations. In particularly favorable and unfav-
orable situations alike, performance-oriented leadership was proven to be more effec-
tive in terms of group employee performance and satisfaction. In contrast, a more
employee-oriented leadership style should be applied in intermediate situations.

It must be added that Fiedler’s results have been confirmed in a laboratory experiment,
but are yet to be proven in field studies. Despite all the criticism, however, it should be
noted that Fiedler was the first to take situational conditions into account in an empiri-
cally verifiable leadership model (Kals, 2006, p. 101).

Maturity Model According to Hersey and BlanchardTitle

The maturity model according to Hersey and Blanchard bears this name because it
makes a recommendation for leadership behavior depending on the “maturity level” of
the person being led. It is assumed that employees with different levels of maturity are
to be led differently (Stock-Homburg, 2013, pp. 423—427). For the first time, Hersey and
Blanchard advocated for individualized leadership and were against the “watering can”
principle. This means that, despite authentic leadership by a supervisor, it is more
effective and fairer if employees are led differently. This is not intended to cause incon-
sistency in leadership, but rather to consider the theory that employees with lower
maturity need more guidance and monitoring, while employees with very high maturity
deserve more freedom.
 Unit 2 23

Leadership Theories through Changing Times

The authors distinguish between four levels of maturity among employees (M1 to M4),
which are based on their psychological and functional (work-related) maturity. It is
important to note that this is not a matter of the employee’s abstract personal matur-
ity. Instead, this maturity looks at the task in question against the backdrop of their
current area of responsibility and “depends on performance motivation, willingness to
assume responsibility, and training or experience” (Kals, 2006, p. 102).

• M1 is characterized by low psychological and low functional maturity.

• M2 is characterized by high psychological but low functional maturity.
• M3 is characterized by low psychological but high functional maturity.
• M4 is characterized by both high functional and psychological maturity.

In this respect, the new 18-year-old trainee in a department would likely be assigned
M1, whereas the long-standing employee in accounting, who has successfully handled
difficult circumstances, could be assigned M4. An employee who has a great deal of
potential and enthusiasm, but has only recently moved from purchasing to sales, would
correspond to M2. At the same time, the question of maturity level arises anew when an
employee starts a new job.

The figure below illustrates how leadership behaviors and employee maturity are corre-
lated according to Hersey and Blanchard.
24 Unit 2

The maturity model differs from Fiedler’s contingency theory on essential points. While
the latter is based on the assumption that a leadership style can only be changed in
the medium to long term, Hersey and Blanchard assume that each employee should be
led according to their maturity. They additionally require that leaders always work to
maximize the maturity level of their employees. In this respect, a leader must master
all four leadership styles (supportive, delegative, directive, and coaching) and use them
as appropriate for the maturity model to be effectively implemented. An empirical
study from Taiwan by Silverthorne and Wang (2001) tested the effectiveness of the
maturity model. It showed that the better the leader can respond to the maturity level
of each employee, the higher the employee’s productivity. Nevertheless, the maturity
model has also been criticized as lacking empirical evidence. In spite of this, in view of
its plausibility, it enjoys high popularity in the practice of leadership training (von
Rosenstiel, 2014, p. 17).

Vroom-Yetton Decision Model

The decision model by Vroom and Yetton frequently serves as the basis of leadership
training, with its validity supported by empirical studies (Kals, 2006, p. 102). As a situa-
tional leadership theory, it also addresses the question of when a leader should allow
 Unit 2 25

Leadership Theories through Changing Times

participation by those led and to what degree. It considers autocratic decisions, deci-
sions based on consultation with those led, and group decisions. The leader is guided
through six situation diagnostic questions. Each question must be answered with yes
or no and follows a decision tree (Kals, 2006, p. 102):

1. Does the decision to take one action strategy or another make a difference?
2. Is the problem structured?
3. Does implementation require that employees accept the decision and its conse-
quences?
4. Would they also accept it if the leader made the decision on their own?
5. Do employees share the organization’s goals that the decision is intended to ach-
ieve?
6. Is the decision likely to lead to a conflict among employees?

Once the leader has answered these questions, they are advised on whether they
should make their leadership decision alone, after consultation with those led, or as
part of a group decision-making process. Depending on how the questions are
answered, one of the following five recommendations is provided at the end of the
decision tree (Kals, 2006, p. 102):

1. Authoritarian decision by the leader

2. Authoritarian decision by the leader after gathering information from their employ-
ees
3. Decision of the leader on their own, but after prior one-to-one consultations with
individual employees
4. Sole decision by the leader after consultation with the working group
5. Group decision

The first six questions above lead to a better leadership decision depending on the sit-
uation, whereby the (presumed or actual) improvement is determined by three hier-
archical criteria (von Rosenstiel, 2014, p. 17):

1. Quality of the decision

2. Acceptance of the decision
3. Economics of the decision behavior

Von Rosenstiel (2014) summarizes that despite the model’s “rationalistic and mechanis-
tic [appearance], there is indeed evidence for its usefulness . . . The learning objective
here is to sensitively perceive one’s own leadership situation in order to then be able
to react flexibly in terms of leadership behavior” (p. 18).

2.4 Systemic Leadership

In the 1980s, leadership underwent a paradigm shift, largely driven by the work of
Niklas Luhmann (1984). This changed the prevailing opinion from an input/output-rela-
ted, mechanistic, and monocausal view of leadership to a systemic perspective that
26 Unit 2

seeks to consider reality in its entire, non-linear complexity. The core idea of systemic
leadership is that leadership actions in a complex, networked, social structure lead to a
multitude of direct and indirect reactions.

Systems are understood as a number of different elements (e.g., people in a company)

that are related to and interact with each other in different ways. For example, a gear-
box is a fairly simple system in which various cogwheels engage with each other. A spe-
cific force occurs as input, the elements exist in different relations and interact, and a
specific force results as output. Larger social systems such as companies are exponen-
tially more complex because if an input (for example, a competitive situation) changes,
the company can anticipate many potential conditions.

In general, systems theory is focused on synergetics. This describes regularities, accord-

ing to which, new self-organized structures and effective reactions can arise in complex
systems (Schirmer & Woydt, 2016, p. 201). Self-organization can be understood as the
adaptation of a system in the presence of new input. For example, self-organization
would occur in a “company system” when the “competitive situation” input changes. If
a direct competitor lowers prices, the product management team, finance department,
and sales division will coordinate whether a lower price can be accepted on a tempo-
rary basis, thereby resulting in lower contribution margins from sales, or whether more
economical product variants can be produced at short notice, which offer fewer fea-
tures but canbe sold at a lower price.

According to Luhmann (1984), the basic element in social systems is not the human
being, but communication itself. This is influenced by the subjective construction of
reality by the subjects in the system, with suitable structures created based on this.
Luhmann (1984) also explains that if a system is to be influenced, this is only possible
by inducing a constructivist view of reality. The various subjects or employees involved
exhibit different interpretation patterns that can lead to a variety of alternative out-
comes.

In this respect, systemic leadership does not attempt to reduce complexity; rather, it
attempts to influence it by means of communication as a necessary component of the
system. It is the task of a leader to understand complex and bilateral interactions
between all participants (employees, customers, suppliers, etc.). Ultimately, a leader
only has the task of acting as an initiator (Schirmer & Woydt, 2016, p. 202). The problem
of leadership using the systemic view lies in the fact that the leader themself is a sub-
ject in the system and therefore dependent on various uncontrollable, self-regulating
influences.

2.5 Symbolic Leadership

According to Nerdinger (2014) and Neuberger (2002), leadership not only depends on
the intention of the leadership behavior, but also on the manner of leading. “Symbolic
leadership” is the term used when leadership behavior symbolizes the values and
beliefs of a company (Neuberger, 2002, p. 194). A symbol is understood to be a repre-
 Unit 2 27

Leadership Theories through Changing Times

sentation of something that cannot be tangibly perceived. In the sense of symbolic

leadership, it is not only what happens objectively in a company that is important, but
also how this event is perceived by the leader and their employees (Rybnikova, 2014, p.
234).

This is because many things that occur in a company—be it a written or personal

announcement of a new strategy, an unwritten dress code, or the fact that the manage-
ment is located on the top floor of the building—also have a symbolic character and,
thus, indirectly say something about a company (Nerdinger, 2014, p. 106). For example, a
conservative dress code may represent conservative values at a company, and the
removal of a timekeeping system without replacement may represent a company’s trust
in its employees. According to Nerdinger (2014, p. 106), leadership behavior is always
symbolic, since led people will always interpret the behavior of their leaders. An open
door to a supervisor’s office can signal responsiveness and, by implication, be interpre-
ted by employees as their supervisor’s appreciation of the importance of their issues.

However, recommendations regarding symbols in leadership should be treated with

caution, since forced symbolism is quickly perceived as inauthentic. If a company has
spent years following a formal, conservative dress code with a strict hierarchy and an
expectation that employees are not on a first-name basis with each other, it may seem
inauthentic if, overnight, the dress code becomes more casual and employees are
expected to use first names with each other.

Moreover, the same leadership action can be interpreted differently by different

employees. For example, if the leader frequently and thoroughly checks the work
results of their employees, this can be interpreted by one employee involved the
leader being as conscientious, interested, and supportive, but can alternatively be per-
ceived as them being controlling and mistrusting.

The theory of symbolic leadership still has not been subjected to sufficient empirical
research (Rybnikova, 2014, p. 253). Regardless, its merit undeniably lies in broadening a
narrow view of leadership as the effective handling of human objects toward a more
comprehensive view of leadership as a process that involves all participants and con-
veys meaning to them.

2.6 Transactional and Transformational Leadership

The concept of transformational leadership has had a lasting influence on interna-
tional leadership research over the past 30 years. This approach is becoming more
widespread in the practice of leadership development. Transformational leadership
builds on transactional leadership, complementing and extending it by utilizing posi-
tive reinforcement, but placing even greater focus on the leader’s function as a role
model. Building on earlier research, Bernhard M. Bass was the first author to distin-
guish between “transactional” and “transformational” approaches (Bass, 1985). Both
approaches will be explained in more detail and distinguished from each other in this
section.
28 Unit 2

International leader-
ship research Transactional Leadership
While the transfor-
mational leadership Transactional leadership is based on the principle of reinforcement, drawn from learn-
approach was ini- ing theory, that stems from operant conditioning. This is based on the experiments of
tially met with skep- Burrhus Frederic Skinner (1963) and is often described in management jargon as “carrot
ticism in Germany, it and stick” leadership. Positive work results are rewarded (carrot), while negative results
has stimulated are punished (stick). The table below provides an overview of the different types of
numerous research conditioned reinforcement.
activities there, as
well.
Reinforcement Types

Apply a stimulus Remove a stimulus

Positive reinforcement (e.g., praise or Negative reinforcement (e.g., cancella-

bonus payment) tion of an employee discount)

Punishment (e.g., demotion or warning) Extinction (e.g., by ignoring undesirable

behavior)

In transactional leadership, the leader controls both the way in which tasks are com-
pleted and the achievement of goals by employees (Nerdinger, 2014, p. 90). The concept
of transactional leadership corresponds with the idea of “management by exception”
(MBE), which involves the leader not interfering until exceptions occur. Positive excep-
tions can arise through special performance that the leader should then positively
reinforce, and conversely, negative exceptions should be negatively reinforced or pun-
ished. In addition, there is the possibility of ignoring negative exceptions, but this con-
tradicts the idea of management by exception (Nerdinger, 2014, p. 90).

Transformational Leadership

Transformational leadership focuses on different leadership principles than transac-

tional leadership. Whereas transactional leadership focuses on the “transaction,” i.e.,
the fair exchange between leader and employee, and the leader is responsible for ach-
ieving and monitoring goals, transformational leaders motivate their employees by
influencing their values and feelings on four levels (known as the “4 Is”) by doing the
following:

• convincingly communicating attractive visions (inspirational motivation),

• credibility embodying a role model (idealized influence),
• stimulating independent thinking and supporting change (intellectual stimulation),
and
• supporting employee development (individualized consideration).
 Unit 2 29

Leadership Theories through Changing Times

In this way, long-term and overriding values and ideals can replace short-term material
goals. Transactional leadership is thus supplemented, but there is certainly no room for
the development of transformational leadership if performance and consideration do
not exist in a relationship of fair exchange (work performance in return for pay and
development opportunities; Felfe, 2014, p. 39).

Thus, it is primarily a matter of trust and of conveying meaning to employees at work

(Nerdinger, 2014, p. 90). Transformational leadership is, thereby, manifested in the
above charismatic behavior, inspiration, intellectual stimulation, and individual appre-
ciation of those led (Yammarino & Dubinsky, 1994, as cited in Stock-Homburg, 2013, p.
463).

A large number of empirical studies have now shown that transformational leadership
has a positive effect on various success factors, such as individual commitment and
employees’ self-efficacy expectations, as well as on the success of a company as an
organization. Research has also shown that this correlation is particularly high in an
environment that is considered unstable (Felfe, 2014, p. 40).

Numerous meta-analyses on individual success variables show the positive effects of

transformational leadership on job performance, commitment, work engagement, job
satisfaction, and employee well-being, among other things. Furthermore, employees
are less likely to quit if they are led according to transformational leadership principles,
i.e., with charisma, inspiration, intellectual stimulation, and individual appreciation
(Stock-Homburg, 2013, p. 465).

With regard to organizational success variables, empirical studies reveal the positive
effects of transformational leadership on the development of product and process
innovations, the market launch of such innovations, and company performance
(including market share and return on sales; Stock-Homburg, 2013, p. 466). The table
below provides an overview of the various role behaviors of a transactional or transfor-
mational leader.

Role Behaviors of Leaders

Traits Transactional leadership Transformational leader-

ship

Coordination mecha- Contracts, rewards, or Enthusiasm, cohesive-

nisms of leadership punishment ness, trust, or creativity

Focus on employee moti- External incentives Task in itself (intrinsic)

vation (extrinsic)

Focus on goal achieve- Rather short-term Rather long-term

ment
30 Unit 2

Traits Transactional leadership Transformational leader-

ship

Goal content Material goals Idealistic goals

Role of the person lead- Instructor Teacher or coach

ing

2.7 Leadership Theories through Changing Times—

Leadership in a Field of Tension
There is a multitude of leadership theories and approaches, as well as a wealth of
empirical studies that have tested the effectiveness and efficiency of these approaches.
Despite the abundance of empirical data, it has not been possible to identify a single
correct leadership theory, since the matter depends on too many contextual factors,
such as the specific industry, the economic situation, (company) culture, power dis-
tance, leader personality, trust between a leader and their employees, and many oth-
ers.

With the help of a wide range of leadership theories, a leader can expand their (theo-
retical) spectrum of action but must then decide on a concrete option for the action
they take. Their task can therefore be understood as acting in a field of tension (Berkel,
2007). As a result, leadership must ultimately be understood not only as a role, behav-
ior, or leadership style choice, but also as striking a balance of values within this field
of tension. To understand what constitutes “values,” reference can be made to the phi-
losophy of Friedrich Nietzsche and his aphoristic observations (Berkel, 2007, p. 207):

• Values are perspectives or points of view, according to which people prefer or pur-
sue things/relationships.
• Values are discovered or created.
• Values change because people change, and different values are a primary focus at
different times.
• Values demand to be something that people ought to do, but, unlike laws, they can-
not be forces to comply with.

With regard to leadership, a distinction can then be made between managers and lead-
ers on the basis of values. Management is understood as a profession that focuses on
results and relies on measurable goals, while leaders use values to guide. Measurable
goals represent important parameters that allow “landing with pinpoint accuracy and
checking that landing with precision” (Berkel, 2007, p. 209). However, much is lost if a
company is exclusively reduced to measurable goals. The desirability of management
that works simplistically and strictly with quantitative goals is also questionable.
 Unit 2 31

Leadership Theories through Changing Times

Instead, goals need to be supplemented by values, since goals in themselves are

derived from values. For example, if sales growth goals of 15 percent are set, this goal is
derived from the growth and expansion value.

Nevertheless, unlike goals, values require an argumentative accommodation and intel-

lectual debate. Organizations are always more than the monetary condensation of per-
formance based on their values. Fundamental values outline “the cosmos in which one
moves and is understood [...]. They give employees indications of how to act in new sit-
uations not yet covered by goal planning in order to fulfill the company’s mission” (Ber-
kel, 2007, p. 210). Values thus create a common ground and understanding between
those involved.

In contrast to values, quantitative goals compel employees to act rationally and opti-
mally. However, it is essential to consider people in all their complexity, because “they
experience and act . . . not only as rationally programmable beings, they also have an
abundance of feelings, standards, communication” (Berkel, 2007, p. 210). If management
is solely based on quantitative goals, companies risk dissatisfaction and the loss of vol-
untary, internal self-commitment, as well as the willingness to take risks and innovate
on the part of those employees that companies urgently need. This is particularly rele-
vant in competitive circumstances to be able to act flexibly while simultaneously stay-
ing on course with the overall vision.

In this respect, companies’ exclusive orientation and incentive systems toward quanti-
tative goals can be viewed very critically. Shareholder value can be seen as a value in
the company, but questions can also be raised as to whether it should be the only
value pursued by the organization. In Germany, this is already the case for legal rea-
sons, since the country’s Basic Law succinctly states in Article 14 that “[p]roperty entails
obligations. Its use shall also serve the common good” (Federal Ministry of Justice, n.d.).
The principles of the social market economy, which include employee participation, are
derived from this. For this reason alone, it is not possible in Germany for a company to
be exclusively oriented toward the principles of shareholder value. The interests of
other stakeholders, such as employees, must also be taken into account and this is
considered to be a de jure value here. In other words, it is a value that abides by Ger-
man law.

Berkel proposes the graphic model below to depict leadership in a field of tension.
32 Unit 2

The model is based on the considerations of traditional anthropology. It distinguishes

between three spheres of human reality: the material, social, and spiritual sides. In
relation to a company or an organization, the material side refers to what the organiza-
tion represents, such as products, processes, and services. The social side includes all
relationships among members, as well as with the outside world, that are reflected in
communication, cooperation, or customer orientation. The spiritual side refers to an
organization’s global line of approach, its purpose, and reason for existence (raison
d’être). It manifests itself in an organization’s guiding ideas, principles, and structures
(Berkel, 2007, p. 211).

As it relates to the leadership model, responsible, loyal, and critical organization can be
applied to the spiritual side of an organization; relationships between people should
be caring and truthful, and its performance (material side) should be competent, as
well as efficient and effective. Understood in this way, the goal of good leadership is to
act justly (i.e., equally and fairly) within this field of tension among values (Berkel, 2007,
p. 219).
 Unit 2 33

Leadership Theories through Changing Times

Summary

It is difficult to make a value judgment with regard to leadership. Many theoretical

models have been developed over the past 50 to 100 years. Some of these models
have undergone a variety of empirical tests (e.g., the transformational leadership
approach), while others are difficult to test empirically due to their conceptual
complexity (e.g., Berkel’s leadership ethos model).

Still, even empirical testing does not always yield the clear findings desired in prac-
tice. For example, the transformational leadership approach has been shown to be
quite effective for certain variables, though studies of the transactional approach
have found even greater effects.

Many researchers address the topic of leadership every year, and a great deal of
professional journals (e.g., Leadership Quarterly) annually publish numerous arti-
cles on the subject. The topic of leadership is alive, it is dynamic, new approaches
are emerging, and, ultimately, leadership is always contextual. It depends on the
personality and experience of a leader, the maturity of individual employees, the
composition of the workforce, the value structure of a company, and its incentive
systems. In this respect, it is extremely difficult to derive generally applicable prin-
ciples for “good leadership.” Rather, empirical studies allow for making limited,
comparative correlative statements (constructions like “the bigger X is, the better Y
is”). Theoretical works also provide normative principles on how leadership should
be designed responsibly and ethically.

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Unit 3
New Leadership Approaches

STUDY GOALS

After completing this unit, students will be able to ...

… define agile leadership.

… explain how Agile leaders can be developed.

… define the terms “VUCA” and “flat world.”

… understand how empowering leadership is and its consequences for employees.

… contextualize the buzzword concepts of “holacracy” and “sociocracy.”

DL-E-DLMBLSE01-01-U03
36 Unit 3

3. New Leadership Approaches

Introduction
Concepts and claims such as “the world is flat,” “new work,” and “Agile leadership”
dominate the headlines of many blogs on leadership topics and are increasingly pene-
trating professional literature. Although there is still a considerable lack of empirical
studies testing the causal relationships and success of such new leadership
approaches, they are quickly gaining acceptance in practice.

3.1 VUCA and Leadership

Volatility VUCA is an acronym applied to environments and times characterized by volatility,
This term refers to a uncertainty, complexity, and ambiguity (Lawrence, 2013). The acronym originated in the
state of potential US military and was widely used after September 11, 2001 to describe the changing
quick, unexpected world in which we live. The financial crisis of 2008, which rendered many business
changes. models obsolete, also contributed to the acronym’s use, as did the explosive spread
and growing significance of social media (Lawrence, 2013, p. 3).

Thomas Friedman refers to this in his book The World is Flat and describes the devel-
opment as the “rapid flattening of the world” (Friedman, 2005, p. 78). Significant
changes are taking place, changes that are not only developing rapidly but also simul-
taneously affecting far more people than any change has before. This challenges man-
agement at every company to adapt to these rapidly changing conditions. The greatest
difficulty arises from the unpredictability of events and changes that require leaders to
possess a high level of adaptability, as well as the ability to make continual and rapid
adjustments to their business model, processes, technology, and organization (Law-
rence, 2013, p. 3). A study by the Boston Consulting Group confirms this and under-
scores the need for “adaptive companies” and an “adaptive advantage,” rather than a
“competitive advantage” (Lawrence, 2013, p. 3).

Johansen’s VUCA Prime Model proposes the following qualifications for management to
counter the threats posed by VUCA (Lawrence, 2013):

• A strong vision can counter volatility. Managers with a strong vision can better guide
companies if they have long-term goals and are able to withstand unforeseen
events.
• Uncertainty can be met with understanding, which can be paraphrased as the ability
to look inward, look carefully, and listen.
• Complexity can be met with clarity by facing chaos using deliberative thinking.
• Ambiguity can be countered by agility, which is defined as the ability to communi-
cate throughout the entire organization and apply speed in implementing solutions.
 Unit 3 37

New Leadership Approaches

In this context, vision, understanding, agility, and clarity are not understood as com-
pletely independent of each other, but rather as intertwined. Lawrence (2013, p. 6) sug-
gests the same points as recommendations for action in talent management. Firstly,
hire Agile leaders by taking agility and the ability to think through complex issues into
account as early as the selection process.

Secondly, develop managers to be Agile leaders by promoting adaptivity, innovative-

ness, collaboration, communication, and openness to change, as well as critical think-
ing strategies. Scenario planning tools are ideal for this and aid in mentally implement-
ing different scenarios in order to react to changing framework conditions. Virtual
simulations are particularly well-suited to this purpose. Job rotation is an example of
enhancing adaptivity since it promotes thinking outside the box and cross-functional
thinking.

Finally, develop an organizational culture that fosters Agile capabilities and retains
Agile leaders. To this end, Lawrence suggests creating incentives for innovation, Agile
behavior, and taking calculated risks while being flexible in their design. This can be
done by offering leaders inducements that appeal to them, such as vacation days,
bonuses, and stock options, in order to communicate agility in the design of incentives,
as well.

3.2 Empowering Leadership

Leaders who have a strong focus on empowerment “share power with their employees
by delegating authority to employees, holding employees accountable, involving
employees in decision-making, encouraging self-management of work, and conveying
confidence in employees’ capabilities to handle challenging work” (Chen et al., 2011, p.
541). If leaders show a low willingness to empower, they tend to micromanage and
monitor (Chen et al., 2011, p. 541).

Leaders with a strong or weak commitment to empowerment impact their teams in dif-
ferent ways. If leaders permit empowerment, they promote motivation within the team
and ensure that employees can contribute fully. They have more confidence in their
teams and trust them more overall. They are also more open to involving their employ-
ees in decision-making and giving the team more autonomy and decision-making free-
dom (Chen et al., 2011, p. 541). In turn, empowerment by a leader results in self-confi-
dence, a sense of self-determination, and an awareness of creating value, autonomy,
opportunities for development, and self-efficacy with regard to the required work
results (Chen et al., 2011, p. 541). Alongside this, commitment is strengthened, which fur-
ther contributes to employee engagement and subsequently lowers the labor turnover
rate.
38 Unit 3

3.3 Sociocracy and Holacracy

Sociocracy Sociocracy and holacracy describe organizational structures that represent alternatives
The term “socio- to the conventional hierarchy. Sociocracy is based on four cornerstones:
cracy” goes back to
the French philoso- 1. Consensus takes precedence. Decisions are made when there are no serious reser-
pher Auguste Comte vations in the decision-making body. Reservations and counterarguments are highly
(1798—1857), who was valued and must be presented rationally.
a proponent of 2. Organization in circles. The organization consists of semi-autonomous circles, each
sociologically driven of which is responsible for the implementation, measurement, and monitoring of
politics. their respective processes. They are also responsible for the development of the cir-
cle and its members. The circle should find its own knowledge gaps and close them
autonomously.
3. Double link. The operational leader of each circle is automatically a member of the
next circle up. In addition, each circle elects another representative who is also a
member of the next circle up. Thus, there are two “links” up (and down, if there are
subordinate circles).
4. Election by consensus. This principle complements the first principle in that individ-
uals are elected for responsibilities by consensus, as described above. Again, dis-
senting votes are weighted particularly heavily. Members of the circle may nominate
themselves or others. After discussion, nominations may be changed, and the dis-
cussion leader proposes the person with the strongest nominations for election.

Holacracy was developed by Brian Robertson, the founder of a tech company in Penn-
sylvania. It is strongly based on the ideas of sociocracy and follows these principles:

• roles instead of job descriptions. Here, holacracy distinguishes between person and
role, meaning that one person can hold multiple roles. A role follows a unique for-
mat with title, purpose, control domains (if applicable), and responsibilities that are
updated on a regular basis.
• circular structure. Holacracy consists of several circles that are hierarchically struc-
tured. Each circle is assigned a clear purpose and responsibility by the superordi-
nate circle. Circles are self-organized and determine their own deadlines, the
assignment of roles within the circle, and the execution of work. The circles are
linked with each other by a “rep link” and a “lead link” who represent their respec-
tive circles in meetings with higher-level circles to ensure communication flow and
ensure strategic alignments.
• management guidelines. Each circle is free to formulate its own management guide-
lines.
• operational processes. In holacracy, processes are designed around operational
constraints and keep all members of the respective circle working together effec-
tively and efficiently. In this process, each member has a high degree of autonomy
and self-determination in their roles, as well as permission to innovate. Instead of
asking for extra, holacracy gives people a “blank check,” as it were, to do and initiate
everything to fulfill their role(s) in the best possible way. The principle of holacracy
is freedom and autonomy, which is only restricted in the event of misconduct.
 Unit 3 39

New Leadership Approaches

One prominent representative of holacracy is the US shoe and fashion retailer Zappos.
A number of tech companies, such as Mercedes-Benz.io GmbH and Rising Systems AG
in Germany, and Liip in Switzerland, among others, are committed to holacracy.

Summary

Sociocracy, which originated in philosophy and sociology during the nineteenth

century, is a more democratic form of organization than a hierarchy. It follows the
four principles of consensus, organization in circles, double links, and election by
consensus.

Holacracy, which emerged from the software industry in the 2000s, can be under-
stood as a further development of sociocracy. It also follows four principles and
features roles, instead of job descriptions, whereas holacracy distinguishes
between person and role. This means that one person can also hold multiple roles.
Holacracy consists of several circles, which are hierarchical in themselves. The cir-
cles are connected to each other by a “rep link” and a “lead link,” who represent
their respective circles in meetings with higher-level circles to ensure communica-
tion flow and implementation of the strategic direction. Each circle is free to design
its own management guidelines. In a holacracy, processes are designed around
operational necessities. There is little empirical research to date to assess the
effectiveness of these new organizational forms.

Knowledge Check

Did you understand this unit?

You can check your understanding by completing the questions for this unit on the
learning platform.

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Unit 4
Stresses, Work-Life Balance, and Self-
Management

STUDY GOALS

After completing this unit, students will be able to ...

… explain how the increasing demands of work contribute to the deterioration of work-life
balance.

… explain job-related effort and enjoyment based on the job demands-resources model.

… improve work-life balance with effective self-management.

… asses how perceived musts create stress and how prioritization can reduce stress.

DL-E-DLMBLSE01-01-U04
42 Unit 4

4. Stresses, Work-Life Balance, and Self-Man-

agement

Introduction
Work and family are an integral part of human life. Until the twentieth century, many
people in Western countries, for example, had a predestined life path that was clearly
divided into gendered roles. There was often an intact extended family in the back-
ground that helped look after the children and relieve the burden on the core family
itself.

However, this picture gradually changed after the Second World War, as more women
entered the workforce. Women gained increasingly better education and technical pro-
gress increased rapidly. The share of women in the workforce grew steadily. Work also
became increasingly global and mobility requirements expanded, too. Vocational train-
ing began to take somewhat longer to complete, due to increasing qualification
requirements. In the meantime, people began to acknowledge a “rush hour,” in which
careers, the construction or purchase of one’s own home, and the desire to have chil-
dren are to be made a reality. Alongside this, burdens due to aging relatives were also
likely to arise.

Technological progress, in the form of smartphones, has contributed to the dissolution

Dissolution of work of work boundaries by progressively mixing work with private life. Employees and lead-
boundaries ers increasingly took their constant availability for granted until a few years ago when
Work is increasingly unions and works councils at larger corporations intervened and demanded that
mixing with private emails not be forwarded to smartphones.
life.
In addition to the dissolution of boundaries, an increasing work intensification was
Work intensification observed at the same time. The replacement of letters with emails has rapidly acceler-
What were previ- ated communication and the introduction of easy-to-use computers has shifted many
ously several sepa- support functions, such as secretarial tasks, archiving, and research to employees and
rate jobs are com- leaders. The following sections discuss the effects of the dissolution of boundaries and
bined and assigned work intensification and possible measures to counteract the overburdening they
to one employee. cause.
This process is
called work intensifi-
cation.
4.1 Stresses
According to Section 5 of the German Occupational Health and Safety Act, employers
are obligated to conduct workplace risk assessments, i.e., to clarify which sources of
danger could harm employees. In this context, an endangerment is understood as a
person’s potential physical or time-related encounter with a source of danger that may
result in harm (Hofmann et al., 2002, cited in Kastner, 2014, p. 105). While chemical and
mechanical stresses have decreased in recent decades due to better filtering, cleaner
processes, lower limit values, and automation, psychological stresses have increased
due to the dissolution of work boundaries and work intensification.
 Unit 4 43

Stresses, Work-Life Balance, and Self-Management

In recent years, the average absence due to illness was twelve days, while the average
absence due to mental illness was 30 days. Unfortunately, these “[p]sychosocial
stresses are barely addressed within the statutory regulations on occupational safety
and health. Older workers in particular are often exposed to such stressors” (Kastner,
2014, p. 108). These include “deadline and performance pressure, disturbances, inter-
ruptions, high levels of concentration, different tasks simultaneously, minor errors with
serious consequences, etc.” (Kastner, 2014, p. 108). These new stressors, combined with
a lack of ability to recover from previous stressors, means that employees put an inap-
propriate amount of effort into their work (Kastner, 2014, p. 108).

An endangerment exists when the person concerned does not have sufficient coping
strategies or the physical and psychological resources to cope successfully.

The most common burden in the workplace is stress (Stock-Homburg, 2013, p. 777).
Stress can be defined as a “negative emotional condition in connection with increased
(work) demands” (Stock-Homburg, 2013, p. 777). The occurrence of stress can be
explained by means of the job demands-resources model (JD-R model) below.

The model is a simplified representation of how positive and negative forces affect
employees. Activities place different demands on an employee, whether cognitive,
physical, or emotional. In a foundry, for example, physical demands are high because it
is usually noisy and hot. A doctor’s job in a hospital can be emotionally as well as
physically demanding when shifts are long, hectic, and many patients are struggling. As
a counterweight to this, there are also occupational resources that have a positive
effect on an employee’s motivation. For example, this can be good team cohesion,
autonomy in organizing one’s own activities, a strong sense of purpose in activities, or
support and backing from a leader. In the JD-R model, a distinction is made between
two processes that can also run in parallel under certain circumstances:
44 Unit 4

1. The effort-driven process is induced by high demands. In the short term, employees
can increase their commitment and work performance. However, excessive demands
over extended periods of time lead to overload and a decline in work performance.
2. The motivation-driven process is induced by occupational resources and sufficient
support that allow employees to happily manage their work, which increases satis-
faction and performance in the long term.

Moreover, occupational resources can also absorb the negative effects of high
demands, which is what the expression “work hard, play hard” essentially means. Like-
wise, mastering high demands can also be an enriching experience and even provide
new (creative) strength.

Different occupations and activities have very different levels of demand in themselves.
Doctors in hospitals will generally be exposed to higher emotional and physical
demands than customer-facing clerks in a bank. Likewise, executives with a great deal
of responsibility and travel activities will experience higher demands than internal
sales staff. It is important for human resource (HR) management to take these
demands into account and, if necessary, further expand occupational resources for
affected employees. Examples of measures include preventing conflicts and harass-
ment, averting role conflicts due to multiple workloads, providing clear responsibilities,
and avoiding task-related uncertainties. Specialized training courses, self-management
training, and relaxation techniques can be used to build up resources.

4.2 Work-Life Balance

The term “work-life balance” describes the balance between work and private life and
is often used to refer to the compatibility of work and family. Stock-Homburg and Bauer
(2007) define the facets of work-life balance as follows:

• Work describes the value of work for the employee, job satisfaction, and the poten-
tial conflict between work and private life.
• Life describes the value of private life, life satisfaction, and the conflict between pri-
vate life and work.
• Balance describes the extent to which the work-life interface is adequately struc-
tured, as well as satisfaction with the work-life balance.

A distinction can be drawn between two types of conflict when conflicts arise between
private life and work. A work-family conflict occurs when private life is neglected due to
the employee’s workload, while a family-work conflict occurs when private commit-
ments (e.g., illness of a child) cause problems with the performance of occupational
duties.

The different approaches to avoiding these conflicts are summarized in the figure
below.
 Unit 4 45

Stresses, Work-Life Balance, and Self-Management

The work-life balance of employees and leaders is becoming increasingly relevant with
the recent dissolution of work boundaries and work intensification. If the work-life bal-
ance tips to one side, to the detriment of private life and recreation, the risk of burnout
quickly arises. Three components are typical of burnout (Stock-Homburg, 2013, p. 794):
emotional exhaustion, reduced performance, and depersonalization. The latter includes
perceptions of being outside oneself, as if the body is heavier than usual, or as if mem-
ory is failing. It also includes a derogatory or cynical attitude toward the occupational
environment.

In this respect, the work-life balance of employees and leaders should be a high prior-
ity for a company’s leadership. This not only serves to observe the general and special
duty to undertake protective measures in accordance with Section 618 of the German
Civil Code (BGB), but also to secure a company’s human capital in the long term and to
act in a socially responsible manner.

4.3 Self-Management
Self-management is of particularly high importance for leaders. Performing a leader-
ship position requires the leader to use their own resources responsibly and prioritize
successfully in order to complete daily tasks. It also requires the leader to act as a role
model. This section addresses how to handle stress and a high workload, as well as
how to identify possible solutions for common issues.
46 Unit 4

Stress through Perceived Musts

Perceived musts What are known as perceived musts are at the core of many stress-related problems
The pressure for per- (Hansch, 2009, p. 95). These can relate to an individual, other people, or society. A per-
fection creates ceived must in relation to an individual could read as follows: “I must be perfect[,] . . .
stress. This drive is perform at a high level, . . . [and] not show weaknesses . . . [I] must always be entirely
expressed through certain when making decisions. If something does not work out for me, I should con-
perceived musts. ceal it” (Hansch, 2009, p. 109). Perfection, however, is an abstraction of the mind and
more of an object of desire and a goal than something that is realistically attainable.
Wanting to be perfect is not expedient.

Instead, it is beneficial to thoroughly know one’s own personal idiosyncrasies and uti-
lize personal strengths wherever possible. In the long term, an occupational environ-
ment that makes use of each individual’s strengths will be healthier and create greater
occupational satisfaction. Mistakes should be interpreted as learning opportunities
rather than failures because they often turn out to be helpful for development in the
long run. For example, the glue used in Post-it® notes was created when 3M was con-
ducting research into an extremely strong adhesive. Although their research did not
produce an ultra-strong industrial adhesive, it did result in an unbeatably successful
product.

Perceived musts in relation to other people can be expressed in thoughts such as:
“Other people must always behave well, decently, considerately, and fairly. They [...]
must fulfill their tasks and obligations perfectly” (Hansch, 2009, p. 118). This perceived
must is inextricably connected to stress because there is no global definition of what
constitutes good, decent, or considerate behavior. Rather, it depends heavily on subjec-
tive ideas—other people are also not perfect and make mistakes, too.

Perceived musts in relation to society or the environment often refer to safety culture
or fairness, for example: “My living environment [.….] must be completely intact, or at
least develop positively, and this must be assured for the foreseeable future. I can only
enjoy life and be happy under these conditions” (Hansch, 2009, p. 124). In order to cope
with such thought patterns, it is helpful to keep in mind that people pay more atten-
tion to negative news than positive news, and negative aspects tend to linger more
strongly in the memory. Attention must be very consciously directed toward positive
messages in order to avoid stress. Furthermore, in the Buddhist philosophy of mindful-
ness, the solution to these thought patterns is to pay more attention to the moment at
hand instead of brooding about the past or the future.

Prioritization and Time Management for Stress Management

Stephen Covey’s book The 7 Habits of Highly Effective People (Covey, 2005) describes a
successive approach to more effective self-management by means of stress reduction
and prioritization. While this is not an academic work, it does provide a number of
practical pieces of advice that have proven effective for time management. With the
first habit, the reader is encouraged to separate their circle of concern from their circle
 Unit 4 47

Stresses, Work-Life Balance, and Self-Management

of influence. Perceived musts in relation to others and the world, as described, refer to Circle of influence
what is called the “circle of concern,” that is, a circle that affects us, but over which we In contrast to the cir-
have no direct influence. Covey, therefore, advises focusing energy on the direct “circle cle of concern, peo-
of influence” and putting aside anger and complaints about events in the circle of ple are only able to
interest. The second habit describes the importance of having a clear conceptualization actively change
of the goal or vision in question. Covey suggests to first clearly define the goal and things in their circle
work backward from there to the present, thus determining all the necessary steps and of influence.
actions.

The third habit relates to clearly prioritizing goals and tasks, with the Eisenhower Prioritizing
Matrix proposed for this. The matrix is named after the US General and later President The concept of pri-
Dwight D. Eisenhower, who neither created it nor followed it, but inspired its creation oritization requires a
with a famous distinction: “I have two kinds of problems, the urgent and the important. distinction to be
The urgent are not important, and the important are never urgent.” drawn between
important and
Following this thinking, tasks and goals are prioritized by assigning them to one of the urgent.
following four fields:

1. Important and urgent

2. Important, but with less time pressure
3. Urgent, but not so important
4. Not particularly important and with little time pressure

Tasks in the first category are “emergencies” that cannot be postponed. As a result, it is
not possible to actually prioritize them at all; a multitude of such tasks inevitably leads
to pronounced stress. They should be prioritized with an initial clean-up so there is
time for tasks that are not immediately urgent, but are nevertheless important. Other-
wise, the tasks in the second category often remain undone. However, these tend to be
elementary management tasks (employee appraisals, feedback rounds, etc.) that
require the necessary care.

The fourth through sixth habits revolve around relationships with others, and in the
seventh habit, Covey describes the principle of self-renewal, which is about sustaining
work performance over the long term through healthy and strategic choices.

Handling Stresses

Kastner (2014) developed starting points for handling stresses on three levels (work)
situation, individuals, and organization, as shown in the table below.
48 Unit 4

Starting Points for Stress Management

Level Starting points

(Work) Situation • Facilitate work activity, workload,

work intensity, and scope of action
• Improve work organization, informa-
tion, and participation
• Eliminate harassment and distur-
bances in the workplace
• Reduce time pressure

Individuals • Promote internal resources such as

health awareness, control convic-
tions/perceived musts, and compe-
tencies
• Promote well-being, life and work
satisfaction, and health
• Create coherence for a sense of pur-
pose, manageability, and explicabil-
ity

Organization • Creation of a culture of health, sys-

temic leadership, social support,
and fair work distribution
• Increasing autonomy in work sched-
uling and self-determination of work
pace
• Job security
• Recognition of performance and
effort, opportunities for advance-
ment

Summary

Work and family have always been integral parts of adult life. A growing number of
challenges to a healthy work-life balance have emerged with the rising employment
of women, decline of extended families, and increasing mobility. Work-family con-
flicts, in which personal life is neglected, and family-work conflicts, in which the job
 Unit 4 49

Stresses, Work-Life Balance, and Self-Management

is neglected due to private problems, can occur. The job demands-resources model
describes how effort-driven and motivation-driven processes contribute to
employee satisfaction and performance.

Different interface tactics between work and private life can contribute to an
improvement in work-life balance. A distinction can be drawn between behavioral,
physical, communication-related, and time-related tactics.

Healthy and sustainable self-management requires turning away from perceived

musts. To reduce stress, clear prioritization is recommended and can be transferred
to individual time management. Steven Covey’s book offers a variety of approaches
for successful self-management. Various approaches to dealing with stress can be
used at the levels of situations, organizations, and individuals.

Knowledge Check

Did you understand this unit?

You can check your understanding by completing the questions for this unit on the
learning platform.

Good luck!
Unit 5
Motivation, Communication, and
Appraisal

STUDY GOALS

After completing this unit, students will be able to ...

… explain what motivation is built upon and how it is created.

… differentiate the models of motivation that exist with specific implications for
leadership.

… understand the importance of communication in leadership.

… explain misunderstandings and coflicts using relevant communication models.

… know what requirements and functions appraisal processes (should) have in a company
and which framework conditions contribute to their success.

DL-E-DLMBLSE01-01-U05
52 Unit 5

5. Motivation, Communication, and Appraisal

Introduction
The task of leadership is to influence relationships with employees in such a way that
organizational goals are achieved and, ideally, everyone involved is satisfied with the
way these goals have been reached. The fine art of leadership, so to speak, is to recon-
cile the individual interests of employees with organizational goals. This results in lead-
ers being required to motivate employees to achieve those goals. This is based on com-
munication between leaders and employees in the form of bottom-up feedback and
appraisal interviews. Motivation, communication, and appraisal are discussed succes-
sively in the following sections.

5.1 Motivation
Human action is characterized by a striving for effectiveness and is based on a variety
of individual and temporal motives. Motives refer to characteristic value systems and
dispositions toward action, which can be related to experience, performance, power, or
aggression (Huber, 2018). In this respect, motives represent the reasons for specific
actions. They are not immediately identifiable, but are consistent over time and across
different situations. For example, if a person has a strong status motive, they are likely
to attach importance to a fancy car, being well dressed, ensuring that they are not
passed over for a promotion, and may compete with colleagues for a corner office.

Needs According to Maslow

The hierarchy of needs or motives concept distinguishes between deficiency and

growth needs, which can be classified into five levels of needs.
 Unit 5 53

Motivation, Communication, and Appraisal

The four deficiency needs are physiological needs, such as food, sleep, and a safe liv- Deficiency needs
ing or working environment. These are followed by safety needs, such as protection The desire to elimi-
from danger, stable living conditions, and minimum income. Safety needs are followed nate a lack of some-
by social needs, such as affection, group belonging, and communication. The deficiency thing is referred to
needs finish with esteem needs, e.g., self-confidence, competence, respect, opportuni- as a deficiency need.
ties for advancement, and status symbols.

Growth needs are motives for self-actualization. These include, for example, the desire Growth needs
for personal development, a challenging job, top performance, participation, and coop- The desire for self-
erative leadership (Huber, 2018, p. 105). actualization is
referred to as a
The idea of a hierarchy among needs comes from the assumption that needs at the growth need.
lowest levels must first be satisfied before the needs on the next level up gain rele-
vance. So, hunger and thirst must be satisfied before job security gains importance. It is
only when all the deficiency needs have been met that the desire for self-actualization
comes to the forefront.

Leaders should be familiar with this model to better assess the motivational situation
of their employees and be able to establish adequate incentives.
54 Unit 5

ERG Theory

Alderfer’s existence, relatedness, and growth (ERG) theory represents a further develop-
ment of Maslow’s hierarchy of needs (Huber, 2018). It does not distinguish between five
classes of needs; instead, it identifies a mere three categories:

1. Existence needs
2. Relatedness needs
3. Growth needs

In addition to these relationships, which are also hierarchically arranged, Alderfer pre-
sumes that the lower the degree of fulfillment, the more strongly those needs are acti-
vated (Huber, 2018, p. 106).

Basic Motivation Model

Motivation can be understood as an individual’s activating willingness to behave in

such a way that enables them to achieve specific goals. It is merely a hypothetical con-
struct and cannot be measured. In aptitude diagnostics, however, the strongest motives
of a person can be determined through psychological testing. If a person has a strong
health motive, it is likely that they will develop motivation for healthy eating and fit-
ness.

Situations that address needs or motives are called incentives, and a behavioral ten-
dency can be expressed through a drive or avoidance tendencies. If a task is perceived
as being very demanding (for example, delivering bad news to a difficult customer), the
“peace and quiet” motive (low effort) can create an avoidance tendency, which involves
delaying and shifting tasks. Based on the peace and quiet motive, the employee has an
incentive to delay the unpleasant conversation as long as possible and hope that a col-
league will take care of the matter.

Volition is necessary for motivation to be reflected in concrete actions. This term refers
to the transformation of motivational tendencies into concrete actions and is referred
to as an act of will. In relation to the health motive, volition means packing a bag with
sports clothes and going to the gym after work, for example.
 Unit 5 55

Motivation, Communication, and Appraisal

As shown in the figure above, the environment in question provides certain incentives
in a given situation, such as performing at a high level in the case of variable compen-
sation or postponing unpleasant tasks in the absence of control. The motivational
structure anchored in an individual’s personality provides the motives, which can be
related to power, status, leisure, performance, or aggression, depending on the individ-
ual. The combination of incentives and motives yields motivation, i.e., the reasoned
intention to act. When volition is added, these intended actions are carried out and
manifested in behavior.

Intrinsic and Extrinsic Motivation

People frequently talk about motivation problems among employees when the ach-
ievement of goals leaves much to be desired. As mentioned, individuals have an intrin-
sic motivation structure that is based on specific likes and dislikes. However, these Intrinsic motivation
intrinsic goals and values are often in competition with externally imposed goals and If an activity is per-
values at work. Extrinsic motivation comes into play when employees pursue certain formed for its own
goals and values because external incentives motivate them to do so. For example, car sake, it is intrinsi-
salespeople would have strong extrinsic motivation if a higher commission was offered cally motivated.
for each car sold in a given month. Intrinsic motivation occurs when a particular activ-
ity is performed for its own sake and not because of the expected results (Weibler, Extrinsic motivation
2012). For example, if a car mechanic switched to sales because they much prefer talk- If an activity stems
ing to people, are good at financing cars, and love customer contact, this would be from external incen-
intrinsic motivation for the activity. If an activity has a strong intrinsic motivation, the tives, it is extrinsi-
person can also enter what is referred to as the flow state. This is described as the cally motivated.
“oblivious, pleasurable absorption in a smoothly running activity” (Weibler, 2012, p. 172).

VIE Theory

In the valence, instrumentality, and expectancy (VIE) model, motivation is viewed as a

function of the components of goal achievement. This means that efforts are only
accepted if they appear to generate a reward in terms of goal achievement. According
to Vroom, three factors have an effect on the motivation situation (Huber, 2018, p. 108):
56 Unit 5

1. Valence describes the value of an action outcome in terms of a positive (or nega-
tive) affective meaning of the outcome. Anything that has positive valence for a per-
son is pursued, while outcomes with negative valence are avoided.
2. Instrumentality describes a value for the degree of connection between action out-
come and action consequence.
3. Expectancy describes the subjectively perceived probability of a specific action out-
come. This expected probability lies between 0 (completely improbable) and 1 (cer-
tain to occur).

The theory assumes a connection between the three factors, which then make it possi-
ble to draw a conclusion about a person’s motivation or action tendency.

Action Tendency = Valence of Result · Expectancy

This makes it clear that a motivating effect requires an outcome with a positive valence
and an expectancy greater than zero. This mathematical connection has made VIE
theory one of the most interesting motivation theories. It is widely used in empirical
research.

5.2 Communication
Conversations represent the most essential form of human communication and are
central to any relationship. Thousands of words are used every day during our commu-
nication with each other. Conversations actually take up the majority of leaders’ time
during their daily work; many of them are spontaneous and brief. Alongside this, how-
ever, more formal feedback and appraisal discussions are often held and are more
time-consuming to prepare for and conduct.

In addition to quantity, quality plays a crucial role in shaping employee leadership.

Nevertheless, many leaders are unaware of the complexity and multi-layered nature of
communication processes. The essential models of communication are now therefore
discussed to enhance this understanding: the iceberg model, the communication
square, and transaction analysis.

The Iceberg Model

The iceberg model postulates that only about one-seventh of all communication is
conscious and spoken, comparable to the tip of an iceberg sticking out of the water.
The remaining six-sevenths of communication remain unspoken, with agents often not
conscious of them. However, this unspoken communication can manifest itself non-
verbally, such as through facial expressions, gestures, body posture, and distance from
the conversation partner in question. Silence can also communicate something, e.g.,
“You’re annoying me” or “I don’t want to make myself vulnerable.”
 Unit 5 57

Motivation, Communication, and Appraisal

The Communication Square

Friedemann Schulz von Thun further developed the iceberg model into what is known
as the communication square. The intention is that communication and messages not
only contain a factual statement, but also three other levels (Schirmer & Woydt, 2016, p.
141).

The communication square is a very helpful tool for understanding how misunder- Communication
standings come about. For example, if your boss says, “The coffee pot is empty” in a square
meeting, this can be interpreted as: “Please refill it as quickly as possible!” The four The communication
sides of a statement say the following: square offers start-
ing points for clarify-
1. Factual content. The pure information content of a statement that can be classified ing misunderstand-
as true or untrue, such as the fact that the coffee pot is empty or the traffic light is ings.
green.
2. Relationship. This provides information about how the speaker relates to the other
person and what they think of them, at least in relation to the current conversation.
This is supported by facial expressions and gestures, such as frowning, touching, or
smiling. For example, “A nice, fresh cup of coffee would make our meeting even
more pleasant for both of us.”
3. Self-disclosure. This provides information about the speaker. If it is noticed that the
coffee pot is empty, this could indicate that the speaker takes coffee seriously and
expects it at the meeting. It resonates with an indication of an individual state: “I’d
like to have a coffee.”
4. Appeal. This term refers to the intention with which a statement is made. If a
reproachful undertone comes with holding out the pot to a coworker to remark that
the coffee is empty, it is likely that an appeal is being made to bring more coffee. As
another example, when the passenger in a car says, “It’s green,” the appeal is usually
that the driver should continue driving through the light.
58 Unit 5

Misunderstandings occur when a statement is assigned to a different side of the

square from the one the sender was trying to convey. For example, the information “the
coffee pot is empty” can be meant on the factual level, to prevent others from reaching
for the pot in vain. However, it can be understood on the appeal level (“Please go get
some”), or also on the relationship level (“As a boss, I don’t go get coffee, one of you
does that”).

Sensitivity to the different perceptions of statements is extremely important for lead-

ers. No matter how carefully words are chosen, some statements may be received by
employees in a completely different way than intended.

Transactional Analysis

Transactional analy- Transactional analysis also provides insight into how misunderstandings or conflicts
sis occur in interactions. Eric Berne (1910–1970) developed this model by observing that
Transactional analy- people communicate from three different “ego states” and react to specific ego states
sis offers starting of their counterparts when communicating with them (Schirmer & Woydt, 2016, p. 143).
points for clarifying There are three ego states with a total of six characteristics:
conflicts.
1. In the parent ego state, learned value judgments are applied. “You shouldn’t do
that,” and “What will others think?” are typical ways of thinking and statements that
indicate this state. The parent ego resorts to social control and emotional norms.
It is possible to distinguish between two states in the parent ego state:
• The critical parent ego (“Of course you’re going to hurt yourself!”) leans toward a
know-it-all attitude and talking down to people.
• The caring parent ego (“Shouldn’t you go to a doctor for that?”). Statements from
this state can easily be interpreted as patronizing.
2. In the childhood ego state, the focus is on a person’s feelings and needs. It is about
getting what is wanted and less about giving something. The main motive is to
receive attention from others. Three additional states can be distinguished in the
childhood ego state:
• The free childhood ego state is characterized by imagination, wittiness, love, and
creativity (“If I win the lottery, I’ll go on vacation for six weeks, buy a Ferrari, and
invite all my friends over for a big party”).
• The rebellious childhood ego state is about gaining attention and escaping a
perceived dictatorial situation. Problems with authorities often arise from this
ego state.
• The conformist childhood ego state is about avoiding tension with authority, yiel-
ding, and trying to make “everything right.”
3. The adult ego state is predominantly concerned with fact-gathering, weighing proba-
bilities, and decision-making. The state is active, probing, objective, and fair. Good
leaders predominantly act in this ego state.

As indicated, conflicts can arise through what are referred to as crossover or concealed
transactions. Ideally, leaders and employees (or people in general) act in the same ego
state. In leadership situations, this would preferably be the adult ego state. A transac-
tion could proceed as follows:
 Unit 5 59

Motivation, Communication, and Appraisal

Conversation example 1

Boss: “Are there any problems with the XY project?”

Employee: “Yes, it was slightly delayed due to technical problems. Everyone is pit-
ching in so we can still meet the deadline.”

Problematic crossover transactions occur when the interaction partners act from diffe-
rent ego states. In the following example, the boss is acting from the adult ego and the
employee from the rebellious childhood ego:

Conversation example 2

Boss: “Are there any problems with the XY project?”

Employee: “Is it always my fault when something doesn’t go right?!”

Crossover transactions usually take one conversation partner by surprise. In this case,
the boss who asks an open question is probably surprised by the employee’s aggres-
sion. In terms of the communication square, the boss has asked the question on the
factual level, but the employee has taken it on the relational level (i.e., “You must be
incapable”). Crossover transactions can be very frustrating for one or both parties. If
one party reacts from the childhood ego, they can be difficult to persuade. External
help, e.g., mediation, may be appropriate here.

Concealed transactions can occur when partners believe they are communicating on a
factual level, i.e., in the adult ego state, but are actually meeting on a different level.

Conversation example 3

Managing director: “We won’t achieve very much with this team. They’re all lazy and
calling in sick.”

Production manager: “All worthless. Production could be running much more

efficiently with a new team.”

What both presumably perceive as a factual exchange is a concealed transaction in the

critical parent ego state, which is about social control and a belief that they know bet-
ter about everything.

The figure below provides an overview of the different transaction forms.

60 Unit 5

5.3 Appraisals
The objective of appraisal interviews is to make the performance and potential of both
leaders and employees transparent (Stock-Homburg, 2013, p. 360). The appraisal inter-
view is a thorough feedback discussion that is conducted according to a set plan and
usually carried out at periodic intervals. In many companies with negotiated remunera-
tion agreements, the appraisal interview is decisive for remuneration. However,
appraisals also play a significant role for employees without negotiated remuneration
agreements. Appraisal interviews fulfill various functions.

• information function. According to Section 82 (2) of the German Works Constitution

Act (BetrVG), every employee has the right to learn the extent to which their own
performance contributes to the success of the company from their supervisor.
• diagnostic function. Performance and potential, as well as strengths and weak-
nesses, of the person to be appraised are analyzed.
• coordination function. Defining uniform quantitative and qualitative performance
standards facilitates coordination between leaders and employees and enables
employees’ performance to be compared.
• motivational function. Coordination makes employees’ needs and motives more
transparent, enabling leaders to identify effective incentives to achieve goals.
According to ERG theory, the feedback employees receive in the appraisal interview
forms a key factor in the motivation process.
 Unit 5 61

Motivation, Communication, and Appraisal

• control and monitoring function. Appraisal interviews offer an opportunity for differ-
entiated insights into the activity of employees and allow comparative appraisals
(coordination function).
• decision support function. Appraisals provide information for other human resource
(HR) management processes, such as compensation, personnel development, or
team and employee leadership.

Requirements

Personnel appraisal measures must also meet several requirements (Stock-Homburg

2013, p. 364), including

• systematic implementation,
• clear reference values,
• relevant content covered,
• high acceptance by those appraised,
• adaptation to different reference objects, and
• high competence of the individuals performing the appraisal.

The identity of the individual conducting the personnel appraisal must be determined
before it occurs. Various groups of people can be considered as appraisers: leaders,
experts, or supplementary information providers (Stock-Homburg, 2013, p. 366). In the
leaders group, the direct leader or a circle of leaders can be considered appraisers,
while the group of experts includes psychologically trained specialists, coaches, or
human resources (HR) personnel. Colleagues or team members, employees or custom-
ers, and suppliers can be considered supplementary sources of information.

360-degree feedback is a “process for assessing leaders in which the led employees,
colleagues, superiors, and customers provide structured feedback with regard to selec-
ted behaviors of the person being assessed” (Stock-Homburg, 2013, p. 367). The surveys
on which 360-degree feedback is based are generally conducted anonymously and in
writing. The main advantages of 360-degree feedback are the rich information that is
brought to the assessment by the multiple appraisers and the objectivized appraisals.
Its primary disadvantages are the considerable effort required to realize the advantages
and potential distortions due to certain interests, such as those of employees or sup-
pliers who have had to accept uncomfortable decisions.

Time Reference

Appraisal interviews often refer to the past, i.e., the employee’s performance since their
most recent appraisal is taken into account, but they should also make reference to the
future, to be fair in terms of the motivational and coordinating functions. Employee
potential is a typical criterion that is assessed in relation to the future.
62 Unit 5

For example, development potential for tasks with more responsibility is assessed
(motivation function) or development needs for taking over a specific job succession
(coordination function) are identified. Weißenrieder and Kosel have combined the past
and future references of an appraisal in a performance potential matrix (Weißenrieder
& Kosel, 2005, p. 106).

“Problem cases” are employees who are currently performing poorly and have low
future potential. In the case of these employees, it is the leader’s task to research the
causes of these deficits and eliminate them. These are often employees with rather low
maturity in the sense of the situational leadership model according to Hersey and
Blanchard. In this respect, typical causes are often a lack of experience in the job, tech-
nical overload, capacity overload, or insufficient qualifications.

Although the potential of stable performers is rather weak, they reliably support opera-
tions with medium to high performance. For this group, the focus should be on main-
taining performance.

If employees have average potential and moderate performance, the focus should be
on finding the causes of this, as in the case of problem employees, in order to evaluate
whether they can be developed into talented employees. “High performers with poten-
tial” are extremely high-performing employees, but they still have potential that needs
to be exploited. This is why it is necessary to evaluate the extent to which they can be
developed into high-potential employees.

Talent is about turning uncut diamonds into brilliant ones. Often, talents are found
among career starters and career changers who need specific support in the form of
mentoring or development measures in order to be able to realize their full potential.
 Unit 5 63

Motivation, Communication, and Appraisal

Reference Values for Personnel Appraisal

In practice, companies use the employee’s performance in the period since the most
recent appraisal, the goals to be met, and the performance of other employees for
comparison.

When assessing past performance, the goal is to identify positive or negative deviations
compared to previous periods. An appraisal model as shown in the figure below is suit-
able for an appraisal and can, for example, be applied to support the appraisal of a
sales manager.

Exemplary Assessment Scheme

Exemplary Perform- Perform- Deviation Weight Points

character- ance ance (cur-
istics (before) rent)

Special- 11 11 0 1 0
ized
knowledge

Productiv- 9 12 +3 2 +6
ity

Customer 7 7 0 2 0
satisfac-
tion

Leader- 6 8 +2 2 +4
ship
behavior

Subtotal +10

However, it must be considered that there is little room for improvement in the case of
outstanding employees or leaders, which is why positive deviations may only be very
small. In this case, the potential of the employee in question is the decisive factor, and
they should be classified as a high performer, a high performer with potential, or a high
performer with high potential.
64 Unit 5

Summary

To motivate employees effectively, knowledge of the motivational and need struc-

ture is crucial in order to establish incentives. According to Maslow or Alderfer,
needs can be divided into different levels.

Conversations represent the most essential form of human communication and are
central to the shaping of any relationship. The iceberg model, Schulz von Thun’s
communication square, and Berne’s transactional analysis all illustrate how misun-
derstandings and conflicts can arise based on different perspectives of what is
communicated.

Performance and potential are the key values for employee appraisals. Essential
requirements must be met in order to provide a fair and goal-oriented appraisal.
Specifically, these include highly systematic implementation, provision of clear ref-
erence values, the inclusion of relevant content, and a high level of acceptance by
those appraised. The appraisal must also be adapted to different reference objects
and the individual performing the appraisal must have a high level of appraisal
competence.

Knowledge Check

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You can check your understanding by completing the questions for this unit on the
learning platform.

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Unit 6
Teams

STUDY GOALS

After completing this unit, students will be able to ...

… distinguish a group from a team.

… decide which constituent foundations are relevant for a team.

… describe the life cycle phases of a team.

… explain how organizational culture affects cooperation.

… describe what shared leadership is based on.

… assess what matters in successful change management.

DL-E-DLMBLSE01-01-U06
66 Unit 6

6. Teams

Introduction
Are teams and groups the same thing? Consider two soccer teams as an example
(Birker & Birker, 2007, p. 9): On Team A, the players try to put themselves in the limelight
as much as possible to potentially receive a lucrative transfer offer. In risky situations,
they prefer to pull back to avoid getting injured, otherwise game bonuses could be lost.
They prefer to score goals themselves because it puts them on newspapers’ front pages
and earns them bonuses.

On Team B, the players perform their tasks according to their position (striker, defender,
midfielder, etc.) for the benefit of the overall result. In addition, each player shares
responsibility for other positions, so the defender helps out in an attack and the goal-
keeper pushes forward to help the striker.

Team A would be considered a group of soccer players. In contrast, Team B would be

considered a team, based on the description of teamwork “as the optimal design of
structures based on the division of labor, making use of the special skills of the team,
particularly in the accomplishment of complex tasks” (Birker & Birker, 2007, p. 9).

6.1 Team Leadership

Not every collection of individuals can be considered a team. Specialized literature
applies constituent and descriptive characteristics to distinguish teams from groups
(Stock-Homburg, 2013, p. 555).

Team Characteristics

Characteristics Description

Constituent characteristics of teams

Multi-personality A team consists of at least three mem-

bers.

Goal orientation Team members work together with the

purpose of achieving common goals.

Interdependence Team members depend on each other

to achieve goals.

Descriptive characteristics of teams

 Unit 6 67

Teams

Characteristics Description

Interpersonal interaction Team members exchange professional

and interpersonal information.

Perception of membership Team members feel they belong to a

social unit within the company.

Structured relationships Roles, rules, and norms exist to guide

and control the behavior of team mem-
bers.

Mutual influence Team members influence the attitudes

and behaviors of other team members.

Individual motivation Membership of the team satisfies per-

sonal needs.

There are various types of teams that differ in terms of their performance and cohe-
sion. The expressions of the factual and relationship levels at hand are of essential
importance.
68 Unit 6

In a “lone wolf” group, there is hardly any emotional cohesion and professional cooper-
ation. In this kind of constellation, leaders must work in parallel to improve the factual
and relationship levels in the team. In a “sociable” group, too much time is spent on
relationship maintenance or power struggles. It is therefore the leader’s task to encour-
age the team to strengthen the factual level. If the factual level is high but the relation-
ship level is low, a team is said to be an “expert team.” Performance is then impaired by
the fact that team members only support each other to a very limited extent in per-
sonal matters, and difficult situations can cause the team to tear apart due to a lack of
emotional cohesion. A “true team” has highly developed factual and relationship levels.
In this case, it is the task of the leader to not yield to the motto of “never change a
winning team” and, by extension, to inflexibility. Instead, the leader should keep their
team flexible.
 Unit 6 69

Teams

To create the most productive team possible, it is important to recognize group dynam-
ics and guide them in productive directions. One dynamic process in groups that can
have a negative impact on productivity is what is known as the groupthink process. Groupthink
Groupthink describes the dynamic of a group in which high loyalty and solidarity pre- There is a stronger
vail to give keeping peace within the team a higher priority than constructive disagree- focus on harmony
ment (Stock-Homburg, 2013, p. 556). This means that teams with strongly pronounced than on productivity
groupthink have a higher motivation to place peace and unanimity in the team above in this form of group
alternative approaches and discussions. dynamics.

Leaders can counteract groupthink among team members by

• preventing excessive striving for harmony in the team,

• encouraging critical professional discussions about the work process,
• promoting an open approach to professional conflicts, and
• changing the team composition occasionally.

The opportunities and risks of teamwork for a company are summarized in the table
below.

Opportunities and Risks of Teamwork

Opportunities Risks

Better decision quality due to multiple Groupthink

individuals

Greater efficiency through the use of Increased coordination effort

different skills and strengths

Bundling of competencies Increased risk of conflicts

Risk reduction through frequent com- Development of a subculture in the

munication and mutual control team, differentiating it from the com-
pany as a whole

Leadership of Different Types of Teams

Teams can either be divided into different types according to their phase in the life
cycle (i.e., according to how long the team has existed) or according to the characteris-
tics of the factual and relationship levels in the team.
70 Unit 6

Team life cycle concept

One of the goals of teamwork is to increase the effectiveness of a group of employees
compared to their individual performance. This begs the question, therefore, as to
when a group becomes a team and increases in effectiveness can be recorded.

The life cycle concept of teams is based on the assumption that newly formed teams
are not effective immediately. Instead, they go through different phases in which effec-
tiveness and productivity develop gradually (Tuckman, 1965, p. 384). The progression of
the relationship between time and effectiveness is illustrated in the figure below.

The four phases each focus on different things. In the forming phase, the focus is on
relationship building and thus on the relationship level between the team members. A
relatively long time is needed to get to know each other and to build relationships
among each other. Initially, the working or factual level is therefore of secondary
importance. In the storming phase, the relationship level remains in the foreground,
because this is about the distribution of roles and who is in charge within the team. In
the norming phase, expectations are set for the team members and the effectiveness
of the team increases noticeably because the factual level gains weight and the rela-
tionship level loses such weight. Finally, in the performing phase, all the necessary
group dynamic processes have been completed and the team can work together effec-
tively: the factual and relationship levels are balanced.

The central statement of the life cycle model is that teams must be managed differ-
ently in the various stages, as shown by the table below.
 Unit 6 71

Teams

Life Cycle Phases Model

Phase Leadership

1. Forming Role of the leader: Relationship man-

ager
Appropriate measures: Informal meet-
ings to get to know each other, identifi-
cation of strengths and potential

2. Storming Role of the leader: Mediator

Appropriate measures: Deployment of
individuals according to their respec-
tive strengths and potential, identifica-
tion of informal authority figures, de-
escalation of conflicts

3. Norming Role of the leader: Coordinator

Appropriate measures: Agreement on
goals and tasks, definition of guidelines
and communication processes, selec-
tive performance checks

4. Performing Role of the leader: Coach

Appropriate measures: Transfer of com-
petencies to the team, support through
structuring aids, provision of resources

6.2 Organizational Culture

Leadership always occurs within the context of an organization. A company’s culture
and values, as well as its lived identity and image, are important here (Schirmer &
Woydt, 2016, p. 123). While a leader can be effective and successful in one company,
they may fail in another.

Company culture is often understood as the “social glue” that holds organizations
together. The culture of a company manifests itself in many areas, such as the fact and
nature of a Christmas party or how tardiness in meetings is handled. Is the latecomer
ignored, attacked with sharp comments, greeted in a friendly manner, or welcomed
with companionable banter? Is the Christmas party a dull, obligatory event that many
stay away from, or are employees excited about it and swap stories from it for months
afterward?
72 Unit 6

The following elements can be seen as the constituent parts of an organizational cul-
ture (Schirmer & Woydt, 2016, p. 110):

• behaviors (e.g., work schedules, rituals such as casual Fridays, after-work drinks, or
bringing in a cake to mark a team member’s birthday)
• group norms (e.g., tardy fund and cell phone ban in meetings)
• professed values (e.g., set down in a company’s vision)
• philosophy (e.g., “work hard, play hard” or “make the world a better place”)
• rules of the game (e.g., leaders are hired from outside or must have first gone
through a “school of hard knocks” as an executive assistant)
• climate (e.g., formal Mr./Mrs./Ms. or casual first name culture, businesslike or cheer-
ful interaction)
• symbols (e.g., company car policy, office furnishings, art, and gym)

Schein (1995) summarizes these elements in a three-level system.

 Unit 6 73

Teams

As shown in the model, the externally proclaimed values and assumptions do not nec-
essarily need to match the prevailing basic assumptions within the company. It is com-
mon for the mission statement to be changed when there is a change in leadership or
when a company is taken over. This is because there is usally an attempt made to alter
the assumptions and behaviors that have developed over the long term. However, this
often only has the effect of being superimposed (Schirmer & Woydt, 2016, p. 110) if
these proclaimed basic assumptions are perceived by employees as being forced and
are therefore not implemented and lived.

At the level of values, rules, and standards, there are norms and guidelines for behav-
ior that are implemented in a company, such as the requirement that meetings always
start and end on time. The actual behavior of employees can be observed at the sym-
bolic level, e.g., how employees present themselves to the outside world, how they
interact with each other, and how employees see themselves as part of an organization.

6.3 Shared Leadership

The shared leadership concept emerged after the turn of the century following increas-
ing disillusionment with personality-based, hero-focused leadership theories. In many
cases, leaders and employees still cling to the romantic ideal of the great leader who
makes resolute decisions. However, this is at least partially outdated, since various
studies show that the contribution of an individual leader to the success and perform-
ance of their team is not as essential as once presumed (Bolden, 2011).

Uhl-Bien et al. (2007) define shared leadership (SL) as a collective, social process that
occurs through the interaction of multiple players. Shared leadership can also be
understood as a counter-design to traditional hierarchical top-down leadership. In
essence, it is about employees taking on parts of the leadership function that would
otherwise be connected with the responsible leader. Shared leadership should not be
confused with “leadership from below,” which is a rather conspiratorial action by
employees aimed at weakening or overruling their leader.

Shared leadership considers the fact that increasingly complex and highly technical
work also requires highly qualified employees. If a team of highly qualified specialists
is led, the knowledge and experience gap between the leader and the employees is
often only marginal or even non-existent.

The following aspects can be stated as prerequisites for the shared leadership concept:

• minimal technical and competence-based advantages of a leader

• democratic or participative leadership style
• willingness of employees to take responsibility
• high maturity of employees
• positive climate in a company that promotes shared leadership instead of attribut-
ing leadership weakness
74 Unit 6

6.4 Change Management

Organizations are constantly exposed to a variety of internal and external change pro-
cesses. Although they have always experienced fluctuating environmental influences,
they are currently facing increasing pressure to change. One reason for this is the
increase in complexity (Weibler, 2012, p. 26), which is characterized by increased diver-
sity, nonlinearity, dynamism, and the introduction of new technologies. Unclear situa-
tions also heighten the need for coordination when greater variety and geographic
expansion are pursued at the same time. Change can be accelerated further by ram-
pant technological progress and shorter development times, creating more uncertainty
and insecurity. Moreover, there are increasingly paradoxical requirements, such as
cooperation and competition (e.g., in the joint engine development by Daimler and
Audi), as well as stability and flexibility. Customer requirements are also continually
changing. In particular, increased quality awareness in saturated markets and higher
service demands from customers intensify the pressure on organizations to adapt,
Change management which requires change management. In this respect, change management encom-
This describes the passes the strategic and operational repositioning and restructuring of a company at
strategic and opera- the content and process level.
tional repositioning
and restructuring of A good example of change management is Apple’s successful turnaround that began
a company. when Steve Jobs rejoined the company as CEO in 1997. Jobs ended the longstanding
enmity with Microsoft and made Microsoft applications work on Apple’s Macs. The
introduction of iPods, and later iPhones and iPads, crowned the change process with
extraordinary financial success.

Employees often initially reject major, albeit necessary, changes. After Microsoft had
long been built up as an enemy in the minds of Apple employees, it was difficult to
convince employees of the meaningfulness of cooperating with them. Long-held con-
victions are at odds with imminent uncertainty, feared chaos, and possibly insufficient
communication and transparency. This very often leads to resistance among the work-
force. Imagine that a leader is driving a car and their employees are passengers. What
looks harmless from the driver’s point of view or is a logical maneuver can trigger
uncertainty among the passengers. Therefore, communication and transparency are
two very essential components of successful change management.

However, in practice, a great number of change processes fail. A prominent example of

this is Nokia’s slide from its position as the global market leader in cell phones follow-
ing the advent of smartphones. The same applies to Motorola and Blackberry, which
failed to keep pace with technological change.
 Unit 6 75

Teams

Solution Approaches in Change Management

The first step in the change process is to identify the need for change within a company
and to collect ideas and suggestions for adaptations (Welbourne, 2014). In the next
step, it is important to bring along the employees and provide them with information
and training available, so they are convinced of the necessity and meaningfulness of
the change measures and accept them.

Kotter developed an eight-stage model for change management that is considered a

classic for change processes (Kotter, 1995):

1. Establish and communicate urgency

2. Form coalitions that initiate change
3. Create a strategic vision
4. Empower an army of willing supporters
5. Reduce barriers and obstacles
6. Strive for quick wins
7. Maintain momentum
8. Anchor change

Success factors in leading change processes include the creation of a very clear vision
that anticipates the outcome of the change in a business case. In addition, effective
communication is extremely important, as described in the example above. It explains
and describes the reasons for the change to employees, as well as the benefits to be
gained by individuals from the improvement.

Summary

Not every group is automatically a team, since teams must have certain constituent
characteristics. After a new team has been formed, it goes through four typical pha-
ses that are characterized by varying degrees of effectiveness: forming, storming,
norming, and performing.

Organizational culture has a significant influence on cooperation within a company

and is evident in various areas such as behavior, climate, philosophy, and symbols.
Shared leadership, which is a collective, social process, will only be successfully
implemented in an open, partnership-based culture.

If changes are necessary due to repositioning and restructuring, certain aspects

must be considered, for which Kotter proposes an eight-stage process.
76 Unit 6

Knowledge Check

Did you understand this unit?

You can check your understanding by completing the questions for this unit on the
learning platform.

Good luck!
Unit 7
Current Trends and Debates

STUDY GOALS

After completing this unit, students will be able to ...

… connect personality and leadership.

… identify promising personality traits for leaders.

… explain how narcissism and psychopathy affect occupational careers.

… identify toxic workers and assess their impact on a company.

… describe “management derailment” and “counterproductive work behavior” and their

implications.

… explain forms of power and what they mean for leadership.

… assess how Generations X, Y, and Z are shaping working life.

DL-E-DLMBLSE01-01-U07
78 Unit 7

7. Current Trends and Debates

Introduction
Several topics in leadership research have attracted controversy in recent years and
even piqued the interest of popular media and daily newspapers. Two of these topics
are the phenomena of narcissists and psychopaths in leadership positions. Research
has focused on how people with these personality traits come to hold leadership roles
and to what extent they can succeed or fail despite, or because of, their particular per-
sonality structure (i.e., leadership derailment).

The next aspect that is a point of contention in research is the phenomenon of the
“toxic worker.” Many people have groaned about a colleague who causes nothing but
discord in a team. Recent research has produced econometric findings and approaches
to identifying and catching toxic workers at an early stage.

In addition, a detailed examination of power and status in leadership positions and

their effects on leaders themselves, their employees, and the wider environment is
presented. As a final point in this unit, Generations X, Y, and Z and their respective
expectations and influences on working life are discussed.

7.1 Personality and Leadership

Trait theory, also known as the “great man theory,” was one of the early leadership the-
ories that shaped the focus on certain traits held by leaders.

Mai et al. (2015) summarize the main findings of personality research related to leader-
ship as follows:

Note

Boudreau et al. (2001) link the correlation between personality requirements and
success by citing the traits of successful managers. The authors explain that the
personality of a top manager has a direct and indirect effect on career success via
motivation and human capital. Boudreau et al. (2001) also identify a high level of
optimism, self-confidence, and self-awareness, as well as the pursuit of success
and decisiveness, as predictive personality traits of managers and thus support a
deeper examination of personality. Moreover, Giberson et al. (2005) and Bono and
Judge (2004) focus on the analysis of dominant personality profiles based on vari-
ous character traits.

Shao and Webber (2006) and Judge and Bono (2000) examine the dominant profiles
among leaders on the basis of the Big Five, which produces a profile similar to
those described above. In each case, dominant types emerge from these studies
that nevertheless differ in direct comparison within their trait expressions and are
 Unit 7 79

Current Trends and Debates

rarely only found in one type. With regard to analysis of a dominant profile, Stogdill
(1948) concluded early on that it is not possible to derive a uniform personality
profile, that is, a generalizable set of traits, on the basis of trait theory.

Depending on the psychological tests applied in each case, various studies have
revealed different personality traits that are supposed to make successful leaders. The
table below provides an overview of selected studies on this subject.

Judge et al. (2002) conducted a meta-analysis due to the inconsistent results of indi- Meta-analysis
vidual studies. In this process, the correlations of several studies are combined and These are studies
converted into the meta-correlation coefficient ρ. Judge et al. (2002) drew a distinction that summarize pre-
between two leadership variables in their analysis: the first is “leadership emergence,” vious studies on the
i.e., the likelihood that someone will be promoted to a leadership position, and second, same or a similar
“leadership effectiveness,” i.e., the effectiveness of a leader in their role. topic and thus pro-
vide an overview of
an entire field of
research.
80 Unit 7

The results of the meta-analysis showed a slightly different picture of the probability of
being promoted to a leadership position and the subsequent effectiveness of this
leader. While emotional stability, extraversion, and conscientiousness played a central
role in promotion, extraversion, creativity, and adaptability emerged as the most impor-
tant traits for the effectiveness of a leader.

This discrepancy in the promotion to and effectiveness as a leader is doubtless sur-

prising and should lead to scrutiny of the methods applied when selecting leaders. If it
is proven that adaptability and creativity play a significant role in leadership success,
then, of course, leaders should be selected accordingly.

Personality abnormalities, such as narcissism and psychopathy, are being increasingly

discussed in more recent literature as traits of leaders.

Narcissism

The term “narcissism” comes from Greek mythology, inspired by a myth about a young
man, Narcissus, who fell in love with his own reflection. Since then, narcissism has
stood for an exaggerated love of self and the idea of thinking of oneself as the greatest.
Campbell et al. (2011) define narcissism as a stable individual personality trait based on
some degree of delusions of grandeur, self-love, and exaggerated self-worth. Narcis-
sism manifests itself in three ways (Campbell et al., 2011, p. 269):

1. Narcissistic self-perception is characterized by positive self-evaluations and the

perception of being special, as well as vanity and the desire for power and achieve-
ment.
2. Narcissists typically have little empathy and are incapable of establishing genuine
closeness with their fellow human beings. Instead, they often have numerous
acquaintances and superficial friendships, many of which are exciting, but are often
also manipulative and focused on the benefits to be expected from the other per-
son.
3. Narcissists adopt certain strategies to maintain their exaggerated self-worth. For
example, they specifically look for opportunities to excel and show off, and they
rarely shy away from taking credit for the work of others. When they can do this
without negative consequences, they have high self-esteem and a strong sense of
life satisfaction. However, if they cannot justify their excessive self-esteem, they
often become aggressive or their self-esteem turns into depression and anxiety.

Narcissists can be divided into two subtypes: “grandiose narcissists” and what are
known as “vulnerable narcissists.” Grandiose narcissists are often found among top
leaders (board members, CEOs) who are self-confident, extroverted, dominant, atten-
tion-seeking, and charismatic, but can also be incapable of receiving criticism, as well
as being aggressive, arrogant, and exploitative. In contrast, vulnerable narcissists tend
to behave in a hostile manner because they feel that the whole world is conspiring
against them. They are often also arrogant, but have low self-esteem, and are some-
what depressed and withdrawn.
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Current Trends and Debates

Narcissism plays a special role in leadership and management because grandiose nar-
cissists often strive for power and influence, which is why an above-average number of
narcissists are found in leadership positions. Since they often perform well at assess-
ment centers, narcissism also contributes to leadership emergence: they like to talk a
lot, dominate group discussions, and are only too happy to present and stand at the
flip chart. However, the traits that make them stand out positively in assessment cen-
ters are not exactly those that make them a pleasant colleague or boss. Campbell et al.
(2011) describe this as the “chocolate cake effect,” i.e., something that can be particu-
larly pleasant in very small doses quickly becomes unpleasant in large doses. Yet, given
that assessment centers became increasingly popular in the 1990s and early 2000s, a
particularly large number of narcissists are now to be found in leadership positions,
precisely because they stood out at that time.

Recent meta-analyses have looked at the circumstances under which narcissism helps
or hinders leaders (see Grijalva et al., 2015). The results showed an inverted U-shaped
progression of narcissism and leadership effectiveness, which is also shown in the fig-
ure below.

As the figure shows, the most effective leaders (across many different studies) are
those who exhibit a moderate level of narcissism. Both poles, very high and very low
narcissism, lead to comparatively low effectiveness as a leader to the same extent.

Psychopathy

Psychopathy, or antisocial personality disorder, is defined as a profound pattern of dis-

regard for and violation of the rights of others that begins in early adolescence and
persists into adulthood (Dutton, 2013). The Diagnostic and Statistical Manual of Psy-
82 Unit 7

chiatry (DSM) identifies seven factors, at least three of which must have occurred
before the age of 15 to make a reliable diagnosis (American Psychiatric Association,
2018):

1. Inability to conform to social norms, repeated criminal acts

2. Dishonesty, repeated lying to gain advantage
3. Impulsiveness and lack of caution
4. Irritability and aggression, fights, or assaults
5. Recklessness
6. Long-term irresponsibility with regard to work or financial matters
7. Lack of remorse, indifference, or rationalization of one’s own missteps

Hare (1991) presented the first empirical measurement instrument for the clear identifi-
cation of psychopaths (Psychopathy Check List Revised, PCL-R). A distinction is drawn
between four dimensions: interpersonal, affective, lifestyle-related, and antisocial. The
table below provides a more detailed overview of the PCL-R according to Hare.

The Psychopathy Check List

Factor 1 Factor 2 Factor 3 Factor 4

Interpersonal Affective Lifestyle-related Antisocial

Tricky, articulate, Lack of con- Constant feeling Uncontrolled

superficial charm science of boredom behavior

Inflated self- Superficial feel- Parasitic lifestyle Early behavioral

esteem ings conspicuities

Constant lying Lack of empathy Aimlessness Delinquency in

youth

Deceptive con- Rejection of Impulsivity Violation of

duct responsibility instructions and
restrictions

Dutton (2013) conducted a descriptive study in which participants were asked about
their occupation and their psychopathy score was subsequently measured. The results
of this study are summarized in the table below.
 Unit 7 83

Current Trends and Debates

Occupation and Psychopathy

Rank Occupations with above- Occupations with below-

average psychopathy average psychopathy
scores scores

1 CEO Care aide

2 Lawyer Nurse

3 Media (television/radio) Therapist

4 Salesperson Craftsperson

5 Surgeon Hairdresser

6 Journalist Charity worker

7 Police officer Teacher

8 Clergyperson Creative artist

9 Chef Doctor

10 Civil servant Accountant

The table shows that highly paid occupations, such as CEO and lawyer, seem to attract
more psychopathic individuals or that they can flourish in such occupations. Psychop-
athy also seems to be more of an advantage in sales. Dutton (2013) explains this phe-
nomenon: “Psychopathy . . . is like a medicine for modern times . . . in moderation, it
can . . . alleviate a lot of existential ailments that we would otherwise fall victim to
because our fragile psychological immune systems just aren’t up to the job of protect-
ing us” (p. 203). But, as is the case with many medicines “if you take too much of it, if
you overdose on it, then there can . . . be some rather unpleasant side effects” (Dutton,
2013, p. 203).
84 Unit 7

7.2 Leadership Derailment

The term “leadership derailment” refers to failure in a leadership role. Time and again,
the media reports on top managers who were once highly celebrated, but then crashed.
Examples include Thomas Middelhoff, who is associated with the bankruptcy of Arcan-
dor and Karstadt/Quelle; Jürgen Schrempp, who is blamed for the failure of the Daim-
ler-Chrysler merger; Ron Sommer, who is responsible for Deutsche Telekom’s bumpy
IPO; and Klaus Zumwinkel, who sat on the board of Deutsche Post for 18 years, but
whose integrity became questionable when he was targeted by a tax investigation.

Various descriptive studies have identified behaviors, motives, and personality factors
that are associated with leadership derailment. These factors are also referred to as
“counterproductive work behavior.” Across multiple studies, interpersonal difficulties
are shown to be a prominent indicator of leadership derailment (Hogan et al., 2010). In
particular, the inability to create a true team with cohesion, mutual trust, and a com-
mon goal seems to foster derailment. Lack of management skills, arrogance, egoism,
and the pursuit of one’s own agenda instead of a company’s goals are other possible
factors (Hogan et al., 2010).

Hogan and colleagues (2010, p. 564) distinguish between three strategies in the inter-
personal domain with varying degrees of promise:

1. “Moving away” by avoiding contact with others and using intimidation to achieve
goals
2. “Moving against” by using manipulation and charm to achieve goals
3. “Moving toward” by striving for goals through integration of others and partnerships

The three strategies are each preferred by specific personality types. For example, the
moving away strategy is preferred by unstable, suspicious, shy, and pessimistic types.
The moving against strategy is particularly favored by people who are arrogant, manip-
ulative, eccentric, attention-seeking, and egocentric. In contrast, the moving toward
strategy is more likely to be applied by people who are careful, conscientious, reliable,
and even perfectionistic (Hogan et al., 2010). It can be concluded that the moving
toward strategy is likely the most promising approach to building and maintaining sus-
tainable interpersonal relationships. Consequently, the selection process for leaders
should be designed in such a way that candidates with the above-mentioned traits,
who prefer a moving toward strategy, are hired.

In addition to the moving toward strategy, the following cross-cultural factors have
been shown to be protective against leadership derailment (Hogan et al., 2010):

• successful management of complexity

• effective guidance and motivation of employees
• sense of honor
• pursuit of excellence
• adeptness in terms of organization and management
• self-control and dignified appearance
 Unit 7 85

Current Trends and Debates

• sensitivity and empathy

• smart personnel decisions

7.3 Toxic Workers

Toxic workers are those members of a team who frequently display counterproductive
work behavior. Houseman and Minor (2015) describe them as employees who, in the
mildest case, are a poor fit for the company and the position at hand, resulting in
costly backfilling. In the worst case, sexual harassment, workplace violence, fraud, or
other rule violations can occur. In addition, toxic workers often generate more output
than average contributors—but this output tends to be of a lower quality (Houseman &
Minor, 2015).

The reasons for toxic behavior are diverse. However, it is often due to incentive systems
that are not necessarily in line with ethical guidelines. Equally relevant, however, is the
selection process to filter out toxic individuals from the beginning (Houseman & Minor,
2015). Houseman and Minor (2015) identify the following factors that lead to more toxic
behavior:

• weak service orientation, reflecting disdain for others

• excessive optimism and a particularly high opinion of oneself
• multiple contacts with other toxic individuals
• low supervision and monitoring of position by supervisors

Houseman and Minor (2015) provide a comparison of savings when either a superstar
performer is hired or a toxic worker is fired, based on an estimation model with actual
company data. The savings from removing a toxic worker come from preventing a fur-
ther outflow of average or good employees, since colleagues of toxic workers usually
feel annoyed by them and leave the company after a certain period of time. In each
case, eliminating a toxic worker in the Houseman and Minor (2015) model leads to sav-
ings of $12,489. In contrast, hiring a superstar performer who is among the top 25 per-
cent of performers in a company results in savings of only $1,951. Savings from hiring a
top performer should be understood to mean that the performer is as productive as 1.3
to 1.5 “average” employees, but costs only one salary (instead of 1.3 to 1.5 times the sal-
ary). If a company hires a superstar performer who is in the top percent of performers,
$5,303 is saved because they are significantly more productive than average employees,
but still only cost one salary.

However, as the table below shows, firing a toxic worker is more than twice as efficient
as hiring an outstanding employee in terms of cost savings (Houseman & Minor, 2015, p.
22).
86 Unit 7

Comparison of Top Performers and the Cost of Toxic Workers

Superstar rank (in per- Hire a superstar (cost Avoid a toxic

centage) savings) worker (cost savings)

Top 25 $ 1,951 $ 12,489

Top 10 $ 3,251 $ 12,489

Top 5 $ 3,875 $ 12,489

Top 1 $ 5,303 $ 12,489

7.4 Power in Organizations

Power, status, and influence in companies and organizations can emerge in different
ways, with the various types of power available to an individual also determining the
degree of influence they have. In essence, the concept of power in companies can be
broken down into two subdimensions: positional or organizational power, and personal
power. The figure below shows the different power dimensions.

Positional or organi- Organizational power is divided into three subtypes:

zational power
Positional, or organi-
zational, power
refers to the share of
influence that can
be exercised through
 Unit 7 87

Current Trends and Debates

1. Hierarchical power occurs through a position in the hierarchy. The placement of the the position
position in the organizational chart shows the extent to which the position is assigned by the
assigned to management, coordination, or supervision functions. company and the
2. Power through reward occurs when a leader has a majority or complete control over tools available.
employees’ variable salary components and can, therefore, directly influence their
amount.
3. Enforcing power occurs through direct authority. This often results from the organi-
zational chart but is specifically never written in a job description.

Personal power is also divided into three subtypes: Personal power

This is not depend-
1. Expert power occurs through broad specialist knowledge. Power is therefore alloca- ent on the position
ted on the basis of a disparity in knowledge and experience. in the hierarchy and
2. Identification power is often accompanied by charisma and is described as an influ- the available resour-
ence that occurs when other people prefer to identify and associate with this per- ces, but only comes
son. Identification power is a key component of transformational leadership, which from the individual’s
is based on the fact that the leader is perceived by their employees as a role model characteristics and
and convinces them with charisma. efforts.
3. Power through networking comes from the fact that the leader has many sustaina-
ble relationships in different areas of the company and beyond. This can result in
an information advantage, symbioses can arise, and synergies can be utilized.

7.5 Generations X, Y, and Z

Leading people of different age groups with different preferences represents a chal-
lenge for leaders. The (real or perceived) differences between Generations X, Y, and Z
are frequently discussed. Generation X refers to those born between approximately
1970 and 1980. The Millennials of Generation Y are those born between 1981 and 1996,
and finally, Generation Z consists of those born after 1997 (Bresman & Rao, 2017).

A large-scale study of the values and aspirations of the members of these three gener-
ations revealed not only a number of differences, but also many similarities. In their
comparative study of 18,000 people worldwide, Bresman and Rao (2017) found that
geography, background, and gender often play at least as important a role as belonging
to one of the three generations.

This means that leaders must approach their employees individually and should not
simply lump them into one “generation box.” Rather, special cultural and personal char-
acteristics, behind which generational affiliation can be secondary, must also be con-
sidered. Their findings regarding leadership ambitions, entrepreneurial ambitions, and
the targeted match between personality and work are of particular interest.
88 Unit 7

Leadership Ambitions

A full 61 percent of respondents from Generations Y and Z and 57 percent of respond-

ents from Generation X see the assumption of leadership responsibility as important.
However, there were major regional differences. For example, only 47 percent of the
Generation Y Norwegians surveyed had leadership ambitions, while over 75 percent of
Mexicans and US Americans of the same age did. Of course, this is significant for com-
panies. In labor markets with less pronounced leadership ambitions (such as Denmark,
Sweden, and France), the challenge may lie more in finding suitable young leaders,
while in the other countries, the focus may be more on managing expectations and
finding alternative motivators.

Fundamentally, Generations X and Y are particularly attracted to the coaching and men-
toring required of a leader during leadership. In contrast, Generation Z is focused on
increased responsibility. But here, too, there are strong regional differences: For Gener-
ation X in Spain, playing the role of coach is the most important component of their
leadership ambitions, while in Germany, the UK, and the US, the challenging scope of
the position is in the forefront. There are also gender-specific differences: Across all
generations surveyed, men have stronger leadership ambitions than women. However,
the respondents in the younger Y and Z generations are strongly converging. Here, 63
percent of the men and 61 percent of women have a corresponding leadership ambi-
tion.

Entrepreneurial Ambitions

All three generations show a strong interest in their own entrepreneurial activities. As
many as one in four Generation Z students surveyed would like to become self-
employed. Here, too, there are major regional differences. For example, the desire to
become self-employed was by far the strongest in India and Mexico, irrespective of
generation.

It certainly must be considered that the respondents in the more developed economies
of Europe and North America have more attractive employment opportunities than in
second and third-world countries. Regardless of age, the lack of alternatives in such
countries means that the share of company founders is higher there than, for example,
in Germany, where the deliberate choice to start a company is at the forefront (entre-
preneurial activity out of necessity versus choice), as shown by the annual “Global
Entrepreneurship Monitor” from the Babson School of Management.

Targeted Match between Personality and Work

For younger generations, it is more important to have a good fit with a company in
terms of personality and values (50% of Generation Z versus 40% of Generation X).
 Unit 7 89

Current Trends and Debates

Across all generations, 70 percent of respondents say that making working hours and
work more flexible represents the greatest opportunity over the next ten years. It is
worth noting that more respondents from Generation X would take part in an online
course than those from Generation Z. In fact, only 13 percent of Generation Z would
choose an online course if they had the alternative of a classroom course.

Summary

Leadership is strongly influenced by personality. However, the exact cause-and-

effect relationship has not been clearly established, since different studies have
identified various promising personality traits. However, the empirical situation is
striking with regard to leadership derailment, which is often due to interpersonal
problems. Narcissism and psychopathy, although frequently responsible for derail-
ment, are surprisingly common among top leaders. Counterproductive work behav-
ior is often exhibited by toxic workers.

Empirical studies show that it is much more effective to remove a toxic worker from
a team than to hire a particularly productive employee.

Leaders have various forms of power at their disposal that should be utilized
according to the situation.

Different generations have various preferences with regard to the world of work.
Nevertheless, other parameters such as gender and background must also be con-
sidered, since belonging to a generation alone does not establish a definitive dif-
ference in terms of a particular work attitude.

Knowledge Check

Did you understand this unit?

You can check your understanding by completing the questions for this unit on the
learning platform.

Good luck!
Unit 8
Intercultural Leadership

STUDY GOALS

After completing this unit, students will be able to ...

… understand the meaning of culture.

… differentiate between the understanding of leadership in the East and West.

… build competencies to master intercultural challenges.

… assess the intervention options available to leaders when confronted with multicultural
team challenges.

DL-E-DLMBLSE01-01-U08
92 Unit 8

8. Intercultural Leadership

Introduction
In an increasingly globalized world, new terms and concepts are being created to
describe how organizations, and the people within them, fit into these structures. In
this unit, the different types of intercultural leaders and their roles are introduced.

Culture not only describes the habits and traditions found across different geographi-
cal regions, but also the nuances of social groups, including organizations. They include
basic taken-for-granted social expectations that influence and guide our day-to-day
dealings. Indeed, business is not removed from such influences and directly affected
with its own special customs and expectations.

As will be explored, increasing our sensibilities to cultural differences both at home

and around the world allows us to contribute to a more understanding work environ-
ment and productive culture where we create intercultural leaders. Intercultural leaders
require a global mindset, cultural intelligence, and multicultural competence to effec-
tively lead multicultural teams, as well as intervene when challenges arise.

8.1 Intercultural Leaders and Culture

Intercultural Leaders

The times when leadership took place in a homogeneous cultural context are long
gone. And today, even the context of intercultural leadership typical to the onset of
Expatriates modern globalization—namely through expatriates (managers sent abroad by the
These are people employer; the term comes from the Latin ex patria, meaning outside the home country)
who permanently —is now only one context among many (Steers & Osland, 2020, p. 8). Expatriates are
live and work abroad sent by their companies to work temporarily or permanently in another country, and
—either at their own thus in another culture. They often speak the local language, have a special affinity for
request or as the local culture, and, over time, often become intermediaries between the home and
employees who have host countries.
been dispatched by
their employer. As Steers and Osland (2020) explain, expatriates represent only one of four groups of
leaders who today face the challenges of intercultural leadership (p. 8). These days,
many leaders find themselves in one, or even several, of four roles that require them to
successfully operate across cultural boundaries. These are: expatriates, frequent flyers,
global entrepreneurs, and home country managers.

Expatriates
Expatriates are traditionally deployed for various reasons. For example, it is often the
case that their company seeks to establish a representative office abroad, wants to
exert greater control over an existing local company, or cannot find qualified employ-
 Unit 8 93

Intercultural Leadership

ees locally. Of course, there are also expatriates who seek to go abroad on their own
initiative, however, they do not always possess the necessary cultural intelligence for
this.

Frequent flyers
Frequent flyers are leaders who are not stationed abroad but spend a great deal of Frequent flyers
time commuting between different locations where their employees are working. In These people spend
global companies, it is not uncommon for organizational units to be distributed across a great deal of time
different countries or even continents. For example, a sales manager for the Europe, traveling between
Middle East, and Africa (EMEA) region of a large mechanical engineering company may different countries
manage departments in Germany, Lebanon, and Nigeria. They will then visit all these where their employ-
locations regularly in order to effectively agree on and achieve goals with their employ- ees are located.
ees. In addition, the generation and care of important business contacts and the final
negotiation of important contracts can be conducted on-site. All of this usually cannot
be handled purely online. Instead, it requires the manager in question to travel in per-
son to the countries involved. During this process, frequent flyers must engage with a
variety of different cultures, both among their employees and their business partners.
Nevertheless, they are typically much less capable of becoming true experts on a single
different culture than expatriates due to the shorter amount of time that they spend at
location.

Global entrepreneurs
Steers and Osland (2020) refer to company founders who establish and orient their
business internationally from the outset as global entrepreneurs. Unlike in earlier Global entrepreneurs
times, it is no longer essential to find suppliers and other business partners near a They do not limit
company’s headquarters. Investors can be located all over the world and finance com- their activities to
panies from wherever they are. The decline of political and economic barriers to trade, their home country,
as well as the availability of a great deal of significant information worldwide, allows but rather look for
global entrepreneurs to choose the best production locations and business partners— their investors,
even if they are located in other countries. employees, and
business partners
Home country managers worldwide.
Today, intercultural competence is often also expected of home country managers who
do not leave their home country at all. They also work in a globalized economy and Home country man-
interact frequently, perhaps even daily, with people and companies from other cultures, agers
communicating with colleagues, customers, suppliers, and other stakeholders all over They often face
the world from their office or home office. The employees for whom they have profes- intercultural chal-
sional or disciplinary responsibility may also come from very different cultures, too. As lenges because their
a result, even “at home,” they must face the challenges of intercultural leadership if employees—local or
they want to master their task successfully. expatriate—come
from different cul-
Regardless of which of these four categories a leader falls into, they must handle the tural backgrounds.
cultural differences that they encounter in order to be able to discover the right
approach for their own most promising behavior.
94 Unit 8

8.2 Culture
Culture What exactly is meant by culture when “intercultural leadership” and “cultural differen-
It is a distinguishing ces” are discussed? This term is not uniformly understood by experts from various dis-
characteristic of ciplines. The pioneer of intercultural organizational research, Geert Hofstede, has
human groups and offered an understanding of culture that is widely accepted. He describes culture as
is expressed in their “the collective programming of the mind that distinguishes members of one human
values, habits, and group from another” (Hofstede, 2001, p. 1). It is not only about the values of these
customs. groups, but also about more superficial factors, such as habits and customs. For exam-
ple, in some cultures, it is customary to kiss each other in greeting, in others to bow,
and in others to shake hands (Brett, 2014, p. 26). Many human groups, not just nations,
exhibit distinguishable cultures; for instance, it is quite common for different cultures
to exist in the same country. Likewise, businesses and other social organizations often
exhibit their own cultures.

Characteristics of Cultures

Steers and Osland (2020) name three characteristics that exemplify cultures (p. 35):

1. Culture is shared by members of a group and often defines precisely who belongs to
that group. Cultural preferences are not the same or even universal around the
world. At the same time, not all members of a culture necessarily have the same
preferences. Of course, the fact that most Koreans and Mexicans appreciate spicy
foods does not mean that all Koreans and Mexicans do. Nor does it mean that all
Canadians or Dutch people avoid spicy foods.
2. People learn culture through membership of a group or community. Cultures entail
rules of living together, and these are taught by parents, elders, teachers, superiors,
and society. We acquire the values and behaviors of our culture by observing others’
behavior in society.
3. Culture influences the attitude and behavior of its members. Neuroscience has
found that cultural experience physically shapes the brain of a growing child. Many
of our attitudes, values, and behaviors are not innate, but acquired (consciously or
unconsciously) throughout our lives. People in other communities acquire their
own, sometimes quite different, culture.

Understandings of Leadership in the East and West

There are entirely different understandings of what leadership means in the East and
West. The concepts and insights presented in this course book naturally tend toward
the tradition of the West.

The foundations of Western civilization and the understanding of science that came
from them go back to ancient Greece in many aspects. For example, they developed the
concept of “eidos (ideal) as a perfect form that humans should aspire to and achieve
 Unit 8 95

Intercultural Leadership

as telos (goal). In this scheme, the work of a leader consists of bridging the gap
between telos as an ideal state and reality . . . with the goal of achieving perfection”
(Steers & Osland, 2020, p. 195).

In Asia, other civilizations and traditions of thought emerged which also date back to
ancient times. In ancient China and much of Asia, however, this did not involve a con-
cept similar to the Greek ideal, focusing instead of the forces of yin and yang, which Yin and yang
oppose and complement each other. This concept in Eastern thinking “did not result The concept of yin
from an ideal to be accomplished but from a natural propensity of processes already in and yang was devel-
motion. . . . [It] focused on very concrete and specific situations of everyday life, rather oped in the cultural
than abstractions of the essence of an ideal form” (Steers & Osland, 2020, p. 195). tradition of ancient
China.
Alongside these two great traditions, there is naturally a multitude of additional funda-
mental cultural understandings—and the most diverse forms even exist within the West
and Asia. Nevertheless, it is possible to draw a distinction here between the two basic
trends that have led to different understandings in the East and West. In terms of
trends, the understanding of leadership differs with regard to four core components:
task, goal, logic, and preference, as shown in the following table.

Understanding of Leadership in the East and West

Western cultures Eastern cultures

Task The search for the ideal The search for a balance
final state (eidos and of opposing forces (yin
telos) and yang)

Goal Establishing and pursu- Creating the conditions

ing desirable goal states that enable success and
and managing the out- managing the process
comes

Logic Articulating goals and Clever positioning to

identifying the means to take advantage of oppor-
achieve them tunities as they arise

Preference A preference toward A preference toward

action and initiative patience and the utiliza-
tion of opportunities

Leaders must keep these factors clearly in mind. But what does the skillset that ena-
bles them to successfully engage in intercultural activity look like?
96 Unit 8

8.3 Intercultural Leadership

Intercultural leader- What special characteristics are required of intercultural leaders? Steers and Osland
ship (2020, p. 21) emphasize three qualities in particular: a global mindset, cultural intelli-
This requires a com- gence, and multicultural competence.
bination of mindset,
intelligence, and
practical compe- A Global Mindset
tence.
A global mindset combines an open-mindedness toward different cultural realities with
the ability to mediate between those different cultural circumstances and reconcile
them. It is a matter of recognizing differences in local and global realities and strategi-
cally handling them in the right way. Above all else, this requires an openness to such
differences.

Cultural Intelligence

Steers and Osland (2020, p. 21) refer to the ability to act effectively in situations charac-
Cultural intelligence terized by cultural diversity as cultural intelligence. The economists Earley and Mosa-
This is characterized kowski coined the alphabetism “CQ” for this, drawing on the abbreviation of the intelli-
by the ability to per- gence quotient (IQ). CQ makes it possible to recognize cultural differences as such and
ceive culturally to handle them appropriately (Earley & Mosakowski, 2016). The latter may suggest a
determined differen- very different approach than one is familiar with in their own culture. Research has
ces and to handle shown that high cultural intelligence reliably predicts success in intercultural constella-
them intelligently. tions (Ang & van Dyne, 2015). However, people possess CQ to widely varying degrees.
The good news is that cultural intelligence is not innate but can be learned and
increased over a lifetime. Earley and Mosakowski (2016, p. 4) have studied the CQ of
thousands of leaders and conclude that, to a large extent, it can be learned.

Researchers have identified three factors that contribute to a person’s CQ: cognitive
ability (head), physical behavior (body), and motivation (heart; Earley & Mosakowski,
2016).

Head
When an awareness exists that human behavior all over the world is shaped by culture,
the actions of others can be better interpreted and understood. This is a cognitive skill
that is acquired through conscious reflection. It often requires distancing from one’s
own intuitive “gut feeling” about cultural matters—and, by extension, developing a
potentially more appropriate strategy for action. Countries or people are not the only
entities to have different cultures: companies do as well, albeit to a lesser extent. Here,
too, it is important to make conscious use of the cognitive component of cultural intel-
ligence. For an example of this concept, see Earley and Mosakowski (2016, p. 5).
 Unit 8 97

Intercultural Leadership

Body
The cognitive dimension of CQ is joined by another: an understanding and, where
appropriate, mirroring of behaviors in order to engage with the other culture. This
engagement with the other culture often has a physical component (as in the different
greeting rituals or the different perceptions of how much physical distance is appropri-
ate in a personal conversation).

Heart
Finally, CQ also requires the willingness to engage with another culture in the first place
and alongside this, to question one’s own culture and, where sensible and desirable, to
leave it behind. This does not necessarily mean adopting the other approach entirely.
Rather, it often makes the most sense for all involved to find a middle ground.

Multicultural Competence

In addition to the right mindset and intercultural intelligence, it is also important for a
leader to acquire practical competence in engaging with different cultures. It is com-
monly necessary for leaders to engage with more than just one or two cultures; this
ability is referred to as “multicultural competence.” This is not a situation where the
leader either has this ability or not. Rather, it is a matter of gradation. The more of it a
person has, the better. Why? Steers and Osland (2020) answer this question succinctly:
“Simply put, better trained managers – especially those with higher levels of multicul-
tural competence – tend to succeed in challenging foreign environments more often
than those with lower levels of competence” (p. 21).

Leading Multicultural Teams

Four challenges
Brett, Befahr, and Kern identify four challenges that leaders of multicultural teams
often face (Brett et al., 2020).

1. Insufficient language skills

Team members do not always have comparable language skills. Thus, it is not uncom-
mon for individual employees to lack sufficient command of the dominant team lan-
guage. Apart from practical problems, this often leads to their other competencies
being underestimated by others. This can cause barriers and even gridlock.

2. Different communication styles

The way people talk to each other can vary greatly. In many Western countries, for
example, very direct and explicit communication is the norm. By contrast, in Asian
countries, communication is often indirect, and the content that is intended to be com-
municated is sometimes derived from what is not said. In negotiations between inter-
national leaders from the East and West, say, it is often easier for Asians to understand
what the other side means than it is for Europeans or Americans. In Germany, for
instance, people are often not afraid to express their rejection of an offer by saying
98 Unit 8

“no.” Conversely, a Japanese person’s “yes” does not necessarily mean agreement, but
may merely express, “Yes, I’m listening to you and understand what you’re saying (but
don’t agree with it).”

3. Different understanding of hierarchy

In some cultures, there is a more egalitarian understanding of hierarchy. In other cul-
tures, leaders are accorded a higher status. For instance, in the Arab world, as well as in
the USA, superiors are often expected to give clear instructions and make clear deci-
sions—and they do not necessarily expect to be questioned. Such differences can lead
to team members only wanting to contribute very cautiously, or not at all, in joint
brainstorming sessions with their boss. However, the enthusiasm for discussion that is
common in their home country can come across as unpleasantly demanding and argu-
mentative on these kinds of occasions abroad.

4. Different standards of decision-making

Cultures sometimes differ greatly in the way decisions are made. This becomes clear,
for example, when carrying out group tasks in leadership workshops. For instance, a
group of German leaders is presented with a task to be carried out together (such as
the production of a physical object using specified means). It is typical for this group to
first develop a well-thought-out plan for its approach and only start putting it into
practice after that. In contrast, British teams may take a completely different approach
—here, the implementation often begins immediately—and is adjusted “along the way,”
following the idea of trial and error. Remarkably, both approaches often lead to a simi-
lar end result. The approach of these teams is also likely to differ on a day-to-day
basis. As a result, a working group composed of members from different cultural back-
grounds often does not automatically have the right approach for the task.

Four Intervention Options

Brett, Befahr, and Kern identified four intervention options available to leaders facing
the challenges of multicultural teams (Brett et al., 2020):

1. Adaptation. A team acknowledges the existing differences and consciously attempts

to find ways to handle them. Their leader encourages them to adjust and adapt to
each other.
2. Structural intervention. If certain employees find it difficult to work together on a
sustained basis, team responsibilities and workflows can be reorganized.
3. Management decision. A team cannot solve a problem on its own. For example, a
team of experts with different language skills may be instructed to work only in lan-
guage-skilled subgroups within certain teams. This should be an exception, rather
than a rule.
4. Exit. Sometimes, the last resort is the voluntary or involuntary removal of a member
from the team if, for example, too much damage has been caused by a conflict for
reasonable cooperation to still be possible.
 Unit 8 99

Intercultural Leadership

Summary

Leaders today work in increasingly complex environments whereby they balance

different cultural frameworks along with social expectations.

There are different types of intercultural leaders, including expatriates (living and
working abroad), frequent flyers (not stationed, but working abroad), global entre-
preneurs (founders with a global outlook), and home country managers (local with
international staff).

Cultural characteristics influence attitudes and behaviors. Discussion in this unit

applies understandings of leadership in the East and West based on tasks, goals,
logic, and preferences, highlighting their importance for leaders.

Today, a global mindset is open-mindedness toward different cultural realities; the

ability to mediate different cultural circumstances with cultural intelligence, i.e., act-
ing effectively with cultural diversity, cultural intelligence, and practical compe-
tence.

Leading multicultural teams presents various challenges that can be resolved using
intervention options, such as adaption, structural intervention, management deci-
sion-making, and exit strategies.

Knowledge Check

Did you understand this unit?

You can check your understanding by completing the questions for this unit on the
learning platform.

Good luck!
 Evaluation 101

Congratulations!

You have now completed the course. After you have completed the knowledge tests on
the learning platform, please carry out the evaluation for this course. You will then be
eligible to complete your final assessment. Good luck!
Appendix 1
List of References
104 Appendix 1

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Appendix 2
List of Tables and Figures
110 Appendix 2

List of Tables and Figures

The Leadership Style Continuum

Source: Tannenbaum & Schmidt (1958, p. 96).

Contingency Theory According to Fiedler

Source: Stock-Homburg (2013, p. 495).

The Maturity Model According to Hersey and Blanchard

Source: Stock-Homburg (2013, p. 423).

Reinforcement Types
Source: Nerdinger et al. (2014, p. 90).

Role Behaviors of Leaders

Source: Stock-Homburg (2013, p. 464).

Triad Leadership Ethos Model According to Karl Berkel

Source: Berkel (2007, p. 219).

The Job Demands-Resources Model According to Bakker and Demerouti

Source: Bakker & Demorouti (2007, p. 213).

Avoidance of Conflicts to Promote Work-Life-Balance

Source: Kreiner et al. (2009, p. 711).

Starting Points for Stress Management

Source: Kastner (2014, p. 109).

The Needs Hierarchy According to Maslow

Source: Regina Cordes (2019), based on Huber (2018, p. 105).

Basic Motivation Model

Source: Regina Cordes (2019), based on Weibler (2012, p. 171).

The Communication Square According to Schulz von Thun

Source: Schirmer & Woydt (2016, p. 141).
 Appendix 2 111

List of Tables and Figures

Transaction Forms in the Sense of Transaction Analyses

Source: Regina Cordes (2019).

The Performance-Potential Matrix

Source: Regina Cordes (2019), based on Weißenrieder & Kosel (2005, p. 106).

Exemplary Assessment Scheme

Source: Regina Cordes (2019), based on Stock-Homburg (2013, p. 383).

Team Characteristics
Source: Stock-Homburg (2013, p. 555).

Types of Teams
Source: Regina Cordes (2019), based on Stock-Homburg (2013, p. 559).

Opportunities and Risks of Teamwork

Source: Stock-Homburg (2013, p. 557).

The Life Cycle Model of Teams

Source: Regina Cordes (2019), based on Tuckman (1965, p. 390—394).

Life Cycle Phases Model

Source: Stock-Homburg (2013, p. 584).

The Three-Level System According to Schein

Source: Regina Cordes (2019), based on Schein (1995).

Studies on the Effectiveness of Leaders

Source: Judge et al. (2002, p. 768).

Connection between Narcissism and Effectiveness as a Leader

Source: Regina Cordes (2019), based on Grijalva et al. (2015).

The Psychopathy Check List

Source: Dutton (2013, p. 163).
112 Appendix 2

Occupation and Psychopathy

Source: Dutton (2013, p. 210).

Comparison of Top Performers and the Cost of Toxic Workers

Source: Houseman & Minor (2015, p. 22).

Sources of Power
Source: Regina Cordes (2019), based on Colquitt et al. (2011).

Understanding of Leadership in the East and West

Source: Georg Berkel (2022), based on Steers & Ostland (2020, p. 195).
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