The Theories of Leadership: Industrial Organizational Psychology

Organizational Psychology is not a specific topic on the EPPP, rather it is sprinkled throughout the exam and related to other topics.  It has been separated into its own category as understanding the principles of Organizational Psychology on its own can be helpful to answer the questions you may encounter on the EPPP. When it comes to leadership, organizations are particularly interested in organizational psychologists as a way of enhancing the corporations productivity and efficiency.  That’s why there has been so much emphasis and development in the theories of leadership in the category of organizational psychology.

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Theory X,Y,Z

Actually 3 different theories used to describe 3 different views of workers.lazy or motivated?

  • Theory X: One of the approaches described by McGregor and is based on the assumption that all workers are lazy and have no ambition.  Therefore leadership must take an approach which directs the workers (by coercion if necessary) as the workers are unwilling to be responsible on their own.
  • Theory Y: The second approach by McGregor and is based on the assumption people are naturally industrious and are looking for responsibility in their work to increase their own satisfaction.  Therefore leadership does not need to be controlling, but rather collaborative.
  • Theory Z: This theory was developed by Ouchi and highlights the difference between Western and Japanese cultures of work.  The Japanese workforce values loyalty, working in groups, and non-segregated or specialized work.

Trait Theory

This theory is based on the idea that there are certain individual traits that make for a good leader (while other traits equate to a poor leader).  This was one of the initial theories on leadership and has had substantial research on it, with mixed results. It includes traits such as openness, honesty, intelligence, need for power, communication skills, decision making skills and more.  Some qualities typically attributed to good leaders include honesty, self-confidence, emotional stability, and high cognitive ability.

Trait Theory also describes three different types of leaders: Authoritarian leaders are typically very directive and tells employees what to do. Democratic Leaders include employees in the decision making process and ask for feedback.  Laissez Faire leaders let the employees make the decisions and do not oversee the day to day functioning.  Of these types of leaders Democratic appear to produce the best productivity.

Contingency Theories

There are a variety of contingency theories, all with the basic assumption that the best leadership depends on the situation.  Here are the top 4 contingency theories:

  • leadershipPath-Goal Theory: Developed by House in 1971 and works at clearing the path to the employees goals in order to increase productivity.  Depending on the employees goal the leader adopts a specific leadership style to assess strengths and weaknesses and help the employee achieve their goal.
  • Normative Model: Developed by Vroom and Yetton in 1973 and focuses on decision making. The belief is that the style of leadership and the amount the leader involves it’s employees in the decision making process, depends on the importance of the decision, how well the employees will accept it, and the time required to make the decision.
  • Situational Leadership: Developed by Hersey and Blanchard in 1977, and is based on the assumption that leadership is based on how ready the employee is to perform. For employees not ready to perform they need a leader to tell them what to do, but if they are ready to perform the leader can be less directive.
  • Cognitive Resource Theory: By Fiedler and Garcia in 1986, this theory believes that leadership effectiveness is based on the employees cognitive ability, employee stress level, and group support for the leader.  Based on these results it can be determined whether or not a leader will be more effective with a directive or non-directive approach.

Scientific Approach vs Human Relations Approach

In the early 20th century the main focus of leadership was how to improve efficiency, and this was considered the scientific approach by Fredrick Taylor.  Employees were viewed like machines rather than people, and little consideration was given to their satisfaction.  Leaders were often not trained and used forces and aggressiveness to encourage their employees to perform.

Later on the 1930’s arose the human relations approach by Hawthorne, who studied work enviroment and found that psychological factors had a significant impact of improving work environment.  Forming a social group was important, and employees seemed more motivated to be a part of this group than even extra pay on their check.  This study also found that aggressive tactics were not necessary, but rather employees increased productivity simply by being observed, known as the Hawthorne effect.

Transactional vs Transformational Leaders

As developed by Bernard Bass.  Transactional leader go about their day “business as usual” and use conventional means to reach a goal of agreed upon performance from the employees that report to them.  Transformational Leaders on the other hand are more engaging and use charisma and intellect to try to inspire and to broaden the employees own goals.

Other Factors in Leadership

Power, decision making, conflict, and negotiation are all important tools for a leader.

Power: There are 5 different types of power a leader has over their subordinates:

  • powerReward Power: Such as the ability to offer bonuses and promotions
  • Coercive Power: The ability to punish such as suspend or even fire an employee
  • Legitimate Power: Which simply comes from a organizational hierarchy and being a supervisor
  • Referent Power: Comes from being well liked or popular with the employees
  • Expert Power: Such as having experience and knowledge in the particular industry they work in

Decision-Making: There are 2 models for decision making:

  • Rational Economic Model: The is the classical approach, first fully assessing the problem, exploring all options and consequences, and coming to a rational decision for the best solution.
  • Administrative Approach: This is also known as the satsificing style and developed by Herbert Simon. This is often used when there is only some knowledge of a particular problem and it is not possible to weigh out all the option, so instead the first satisfactory alternative is the one that is chosen.

Conflict: There are 4 different types of conflict: interpersonal, intrapersonal, intergroup, and interorganization. There are also 3 different types of resolution for conflict:

  • Lose-Lose: This is the typical compromise where both parties don’t get all of what they want, rather a resolution involves giving both parties some of what they want.
  • Win-Lose: This is typical when there is competition or an authority figure makes the final decision.
  • Win-Win: The most sought after resolution and requires problem solving and collaboration.

Negotiation: Negotiation can involve just 2 parties, a group, intergroup negotiation, and constituency negotiaion (for example employer and a labor union). There are 3 types of negotiation:

  • Distributive Negotiation is when 2 or more parties are trying to divide up one batch of resources (such as salary negotiations).
  • Integrative Negotiation is when a party is trying to acquire additional resources (such as one company trying to purchase another company)
  • Arbitration: Involves a third party judge who decides on the allocation of resources and who’s decision is binding (such as a divorce hearing)

Theories of Motivationmaslow

Maslows Hierarchy of Needs: Maslow developed a list of needs
categories and arranged them from most important to least important starting with physiological needs, safety, social needs (belonging and love), esteem and self-actualization.  He believed that people are motivated to always go to the next level and achieve what they do not yet have, but are unable to do that until their current levels of needs are met.  For example an individual is not concerned about making friends or forming relationships if they currently feel emotionally or physically unsafe.

ERG Theory: Develped by Alderfer in 1979 and builds on Maslows theory.  The assumption is that rather than needs being in a hierarchy, all needs influence a person at any one given time.  He also believed that when people feel frustrated they tend to regress back to needs that have already been met, know as the principle of frustration-regression.

Valence Instrumentality Expectancy Theory (VIE): Developed by Vroom and based on the assumption that people behave based on the expectation of certain rewards, and are motivated to only perform to a level with the greatest payoff.  there are 3 components

  • Expectancy: How likely it is that the employee believes they will succeed at a given task
  • Instrumentality: How likely the reward will follow the performace
  • Valence: How valuable is the reward to the emmployee.

Goal Setting Approach: Developed by Locke in 1968 and based on 5 principles:

  1. Goals should be specific
  2. They should be between intermediate and high difficulty level
  3. Employees should receive feedback
  4. Self-efficacy will increase performance
  5. Employees must accept goals

***After reading this can you identify the style of leadership that your managers utilize?  If you are in a supervisor or leadership role, which styles to you utilize?  If you were to be a manager or supervisor can you guess which style you would adhere to?  Please add your comments below as discussion can be very helpful while studying for the EPPP, and relating these theories to your everyday life can be helpful in memorizing them.

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4 thoughts on “The Theories of Leadership: Industrial Organizational Psychology

  1. As the sales manager for a bicycle retailer, I have both a superior, general manager, and subordinates, sales team. My boss clearly fits into the Laissez Faire category of leadership, as in, really doesn’t lead much. Lucky for him Theory Y seems to be the prevelant attitude of both myself and the service manager so things tend to get done. Maybe that is why he hired us for the jobs…

    1. I have had a Laissez Faire manager in the past and I personally found that this type of leadership is not something that I work bets with. Leadership and job satisfaction are so closely related, that having a leader that can adapt to multiple different styles depending on the employees needs can be really helpful. I would like to think if I was a leader I would be a transformational leader, but we will have to see if I ever have that opportunity! Thanks for your contribution!

  2. As the number of people in the workforce there are personalities. Most are ruled by one part of the personality that takes over all the others, however it makes it quite difficult to manage each unique person to their max potential. I work best in an environment that allows for open communication and learning as a process to achieving max potential and I tend to manage in the same manner. However, that’s the management style I personally appreciate. The key is in the ability to read people and manage accordingly to each. Although there are certain management styles which have been proven to motivate the masses better than others, there is no magic style that hits everyone the same. It is vital for the success of companies to regularly train their management team how to successfully interact with the different personalities and EIQs. I found your article enlightening, interesting, and though provoking. Glad I found my way to your site! Thanks for the insight, there is a lot of information I wasn’t aware of and I can learn a lot from the material you are posting. 🙂

    1. Thanks for your contribution. I believe that there is lots of opportunity for future research on topics related to the workplace as it is something that every working individual can relate to. And I agree with that they key is the ability to be able to manage people. Common Workplace Issues such as communication is covered here. Relating the material to our own lives is such a helpful tool in being able to understand the concepts and help you to pass the EPPP.

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