key leadership theories: trait, behavioural, contingency, power and influence and transformational

7.3 Leadership – Theories of Leadership

Learning Objective

Identify, describe and evaluate the major leadership theories – trait, behavioural, contingency, power & influence, transformational, transactional, servant and authentic – and explain why leadership is required, the main leadership roles, the core qualities of an effective leader, the role of emotional intelligence and the link between leadership, business strategy and organisational culture.

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Why Leadership Matters

Key Leadership Roles in an Organisation

• Directors / Senior Executives – set overall strategy, allocate resources and represent the organisation externally.
• Managers – translate strategic goals into operational plans, organise work and monitor performance.
• Supervisors / Team Leaders – coordinate day‑to‑day activities, motivate staff and ensure quality standards.
• Worker Representatives (e.g., union reps, health‑and‑safety officers) – voice employee concerns, negotiate conditions and help maintain industrial harmony.

Core Qualities of an Effective Leader

Quality	What It Looks Like in Practice	Related Trait(s)
Visionary	Sets a clear, inspiring future direction and communicates it consistently.	Intelligence, Integrity
Integrity	Acts ethically, keeps promises and is trusted by staff.	Integrity
Communication	Delivers clear instructions, listens actively and gives constructive feedback.	Social competence, Self‑confidence
Adaptability	Responds flexibly to change, revises plans when needed.	Determination, Self‑confidence

Emotional Intelligence (EQ) – Goleman’s Four Competencies

Competency	Key Elements	Leadership Example
Self‑awareness	Recognises own emotions, strengths and weaknesses.	A manager admits a mistake in a project plan and seeks team input for improvement.
Self‑management	Controls impulses, stays calm under pressure.	During a crisis, a leader maintains composure, prioritises actions and reassures staff.
Social‑awareness	Understands others’ emotions, shows empathy.	A supervisor notices a team member’s low morale and offers support.
Relationship‑management	Builds trust, resolves conflicts, inspires others.	A director mediates a dispute between two departments and creates a joint action plan.

Leadership, Strategy & Organisational Culture

• Leadership translates strategic intent into concrete actions – the leader interprets the corporate plan, mobilises resources and motivates staff to deliver.
• Leadership style shapes organisational culture:
  • Transformational and servant leaders tend to foster a culture of innovation, learning and employee empowerment.
  • Transactional leaders reinforce a performance‑oriented, compliance‑driven culture.
  • Authentic leaders promote openness, ethical behaviour and psychological safety.
• Effective leaders align the chosen style with the strategic context (e.g., a start‑up may need visionary, transformational leadership, whereas a mature, efficiency‑focused firm may benefit from transactional leadership).

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1. Trait Theory

Trait theory asks “what kind of person becomes a leader?” and assumes that effective leaders possess relatively stable, innate characteristics.

• Classic traits (Stogdill & Mann, 1954):
  • Intelligence – problem‑solving, strategic thinking.
  • Self‑confidence – belief in one’s abilities.
  • Determination – persistence, resilience.
  • Integrity – honesty and ethical conduct.
  • Social competence – communication and relationship‑building.
• Recent evidence: Meta‑analyses (e.g., Judge, Bono, Ilies & Gerhardt, 2020) show that the five classic traits together explain only about 10 % of variance in leadership effectiveness, suggesting that traits are necessary but not sufficient.

Evaluation

Strength	Limitation
Intuitive and easy to remember; highlights the importance of personal attributes.	Empirical studies show low predictive power; ignores situational and behavioural factors.

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2. Behavioural Theory

Behavioural theory shifts the focus from “who” a leader is to “what” a leader does.

• Task‑oriented behaviours – planning, organising, setting clear goals (often called “initiating structure”).
• People‑oriented behaviours – supporting, motivating and developing staff (often called “consideration”).

Key Research Models

• Ohio State Studies – identified Initiating Structure vs. Consideration.
• University of Michigan Studies – distinguished Production‑Orientation vs. Employee‑Orientation.
• Leadership Grid (Blake & Mouton, 1964) – plots concern for production (horizontal axis) against concern for people (vertical axis) to produce five leadership styles (Impoverished, Country Club, Produce‑or‑Pay, Middle‑of‑the‑Road, Team).

Illustrative Example

Ms Patel, a production supervisor, holds weekly one‑to‑one coaching sessions (high consideration) while also publishing detailed shift schedules and performance targets (high initiating structure). Her team meets output targets and reports high job satisfaction – a classic “Team” style on the Leadership Grid.

Evaluation

Strength	Limitation
Provides a clear basis for leadership training and development.	Tends to assume a “one‑size‑fits‑all” approach; does not account for context or follower characteristics.

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3. Contingency / Situational Theories

These theories argue that the effectiveness of a leadership style depends on the interaction between the leader’s behaviour and situational variables.

Fiedler’s Contingency Model

• Leader style measured by the Least Preferred Co‑worker (LPC) scale – low LPC = task‑oriented; high LPC = relationship‑oriented.
• Situational favourability is determined by three variables:
  1. Leader‑member relations (trust, respect).
  2. Task structure (clarity of goals and procedures).
  3. Position power (formal authority).
• Diagnostic matrix – combine the three variables (high/low) to decide which style is most appropriate (see table).

Situation	Preferred Style
High leader‑member relations, high task structure, high position power	Task‑oriented leader (low LPC) is most effective.
Low leader‑member relations, low task structure, low position power	Relationship‑oriented leader (high LPC) is most effective.

Path‑Goal Theory (House, 1971)

• Leader’s role: clarify the path to goal achievement and remove obstacles.
• Four leadership styles – directive, supportive, participative, achievement‑oriented – are selected according to:
  • Subordinate characteristics (ability, experience, locus of control).
  • Task characteristics (ambiguity, difficulty).

Situational Leadership (Hersey & Blanchard, 1969)

• Leadership behaviour is a blend of “task‑behaviour” and “relationship‑behaviour”.
• Four styles – telling, selling, participating, delegating – are matched to follower readiness (ability + willingness).

Evaluation – Common Themes

Strength	Limitation
Emphasises flexibility; encourages leaders to diagnose the situation before acting.	Diagnostic process can be complex and time‑consuming; models sometimes overlap, making selection ambiguous.

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4. Power and Influence

Power is the capacity to affect others’ behaviour; influence is the actual use of that power. Understanding the bases of power helps leaders select appropriate influence tactics.

French & Raven’s Five Bases of Power

Power Base	Source	Typical Use in Leadership
Legitimate	Formal authority of the position	Issuing orders, delegating tasks.
Reward	Control over incentives (pay, promotions)	Offering bonuses, recognising achievements.
Coercive	Ability to punish or sanction	Disciplinary actions, threat of demotion.
Expert	Specialised knowledge or skills	Providing advice, solving technical problems.
Referent	Personal charisma, respect and identification	Role‑modelling, building loyalty.

Common Influence Tactics

• Rational persuasion – logical arguments and data (e.g., presenting market research to justify a new product).
• Inspirational appeals – linking the request to values or aspirations (“We’re shaping the future of renewable energy”).
• Consultation – involving others in decision‑making (e.g., co‑designing a workflow).
• Exchange – offering something in return (“Complete the report early and you’ll get a day off”).
• Pressure – using threats or demands (“If the target isn’t met, bonuses will be reduced”).

Evaluation

Strength	Limitation
Provides a practical framework for organisational politics and everyday leadership.	Over‑reliance on coercive or reward power can create dependence, resentment or a “transactional” climate.

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5. Transformational Leadership

Transformational leaders go beyond managing tasks; they inspire followers, raise motivation and develop people.

• Idealised Influence – acts as a role model; earns trust and respect.
• Inspirational Motivation – articulates a compelling vision that stimulates enthusiasm.
• Intellectual Stimulation – encourages creativity, challenges assumptions and promotes learning.
• Individualised Consideration – provides personalised coaching and support.

Evaluation

Strength	Limitation
Linked to higher employee engagement, innovation and organisational change; aligns well with modern knowledge‑based workplaces.	Difficult to measure objectively; may create over‑dependence on a charismatic leader, risking sustainability.

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6. Transactional Leadership

Transactional leadership focuses on the exchange relationship between leader and follower – performance is rewarded and deviations are corrected.

• Contingent Reward – clear agreements about what will be given in return for meeting objectives.
• Management‑by‑Exception (Active) – monitors performance and takes corrective action when standards are not met.
• Management‑by‑Exception (Passive) – intervenes only when problems become serious.

Evaluation

Strength	Limitation
Clear structures and expectations; effective in stable, routine environments.	Limited in fostering creativity or long‑term commitment; can demotivate when over‑used.

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7. Servant Leadership

First articulated by Robert Greenleaf (1970), servant leadership places the needs of followers and the community first.

• Key characteristics: empathy, listening, stewardship, commitment to the growth of people, and building community.
• Leaders view themselves as “servants” who empower rather than control.

Evaluation

Strength	Limitation
Promotes high levels of trust, ethical behaviour and employee well‑being; aligns with corporate social responsibility.	May be perceived as weak in highly competitive or crisis‑driven settings; difficult to measure impact.

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8. Authentic Leadership

Developed by Avolio & Gardner (2005), authentic leadership stresses self‑awareness, relational transparency, balanced processing and internalised moral perspective.

• Self‑awareness – understanding one’s values, strengths and limitations.
• Relational transparency – presenting one’s true self to followers.
• Balanced processing – objectively analysing information before decisions.
• Internalised moral perspective – guided by internal ethical standards rather than external pressures.

Evaluation

Strength	Limitation
Builds genuine trust and long‑term follower commitment; reduces risk of ethical lapses.	Requires high levels of self‑reflection; cultural contexts that value hierarchy may limit its acceptance.

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9. Theory X / Theory Y (McGregor)

McGregor (1960) proposed two contrasting assumptions about employees that shape managerial behaviour.

• Theory X – assumes people dislike work, avoid responsibility and need to be controlled or coerced. Leads to autocratic, directive leadership.
• Theory Y – assumes work can be as natural as play, people are self‑motivated and seek responsibility. Leads to participative, empowering leadership.

Evaluation

Strength	Limitation
Provides a simple lens to examine managerial attitudes and their impact on motivation.	Over‑simplifies human behaviour; real organisations often exhibit a blend of both assumptions.

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Comparison of the Main Theories

Theory	Primary Focus	Key Proponents	Strengths	Limitations
Trait	Leader’s personal characteristics	Stogdill, Mann	Intuitive; highlights importance of personal attributes.	Low predictive power; ignores context.
Behavioural	Observable leader actions (task vs people)	Ohio State, Michigan, Blake & Mouton	Basis for training; clear behavioural categories.	Can be overly “one‑size‑fits‑all”.
Contingency / Situational	Fit between leader style and situation	Fiedler, House, Hersey & Blanchard	Emphasises flexibility; diagnostic tools.	Complex diagnostics; models can overlap.
Power & Influence	Bases of power & tactics of influence	French & Raven	Practical for everyday leadership.	Risk of over‑using coercive/reward power.
Transformational	Inspiring change & development	Bass, Burns	Boosts engagement, innovation.	Hard to measure; reliance on charisma.
Transactional	Exchange‑based leader‑follower relationship	Bass	Clear expectations; effective in routine settings.	Limited in fostering creativity.
Servant	Leader as servant of followers	Greenleaf	High trust, ethical climate.	May be seen as weak in competitive contexts.
Authentic	Self‑awareness & moral consistency	Avolio & Gardner	Builds genuine trust; reduces ethical risk.	Requires deep self‑reflection; cultural constraints.
Theory X / Theory Y	Assumptions about employee motivation	McGregor	Simple lens for managerial attitudes.	Over‑simplifies human behaviour.

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Putting It All Together

Effective leaders select, combine and adapt styles to suit the strategic context and organisational culture. For example, a technology start‑up pursuing rapid innovation may rely on a transformational style to energise staff, while also using transactional mechanisms (contingent rewards) to meet short‑term milestones. In a mature manufacturing firm focused on efficiency, a blend of transactional and situational leadership (high task‑behaviour, low relationship‑behaviour) may be most appropriate.

By understanding the strengths and limitations of each theory, future managers can diagnose the situation, choose the most suitable approach, and reflect on their own traits, behaviours and ethical stance – the core of successful leadership at A‑Level Business.