Leadership Styles and the Problem of Control

Leadership styles and the problem of control

There is a tendency for firms to expect desired results merely from the use of appropriate techniques, thereby failing to recognize that success in organizational control depends upon the actions of responsible individuals and their appreciation of the importance of sound interpersonal relationships. The manner in which the budgeting process is viewed depends on the leadership style adopted by management. McGregor has characterized the two extremes of management styles as 'Theory X' and 'Theory Y' (McGregor, 2000). According to McGregor, these extreme views are conditioned by the manager's view of man.

Theory X

The Theory X view of man, as summarized below, is supportive of an authoritarian leadership style:

(1) Management is responsible for organizing the elements of productive enterprise-money, materials, equipment and people-in activities directed to economic ends.

(2) As regards people, management is concerned with directing their efforts, motivating and controlling their actions, and modifying their behaviour to fit the needs of the organization.

(3) Without this active intervention by management, people would be passive-and even resistant-to organizational needs. Therefore, they must be persuaded, rewarded, punished, controlled. In short, their activities must be directed, and therein lies the function of management. This view is often summed up by the assertion that management consists of getting things done through other people.

Theory Y

By contrast, Theory Y is supportive of a more democratic and participative leadership style:

(1) Management is responsible for organizing the elements of productive enterprise-money, materials, equipment and people-in activities - directed to economic ends.

(2) People are not by nature passive or resistant to organizational needs. They appear to have become so as a result of negative experiences of organizational needs.

(3) The motivation, the potential for development, the capacity for assuming responsibility, the readiness to direct behaviour towards organizational goals are all present in people. Management does not put these qualities in people. It is the responsibility of management to make it possible for people to recognize and develop these human characteristics.

(4) The essential task of management is to arrange organizational conditions and methods of operation so that people can achieve their own goals best by directing their efforts towards organizational objectives.

There is evidence that the Theory X leadership style is widely prevalent and is clearly operational. Those who prefer the assumptions of Theory Y claim that the Theory X leadership style has a human cost in the frustration and the lack of personal development which results from its application to people. The trend in behavioural research suggests that benefits may be derived from leadership and organizations based on the assumptions of Theory Y. These assumptions recognize, in particular, that the basic motivating forces affecting people at work include biological, egoistic and social factors.

As a person, the employee at whatever organizational level, has certain needs which condition his own objectives. He is seeking compensation for his efforts to enable him to provide some desired standard of life for himself and his family. He needs outlets for his physical and intellectual energies which provide both stimulation and satisfaction. He seeks self-realization in a sense of his own worth and usefulness. He is pursuing further growth and greater personal effectiveness. He seeks the recognition of his fellows, whether his organizational equals, superiors or subordinates. He appreciates his identification with a worthwhile and successful undertaking.

In order to maximize the employee's contribution to organizational activities, it follows that these personal needs and goals should be capable of realization in the task in which he is employed. An awareness of the nature of personal needs, therefore, is an important aspect of control.

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