BUSINESS MANAGEMENT & STARTUPS

I Semester - NEP

Module No. 2: Leadership & Motivation (14 Hrs )

Leadership: concept – Importance – Major Theories of leadership (Likert’s scale Theory, Blake &
Mouton's Managerial Grid theory, House Path Goal theory, Fred Fielder’s situational leadership).

Modern Leadership styles in the changing world (Charismatic leadership, Transformational leadership,
Visionary Leadership, Transactional Leadership, Servant Leadership, Situational Leadership).

Motivation: Concept & importance of Motivation – Contemporary Motivation Theories (Expectancy

Theory, Equity Theory, Goal Setting Theory, Reinforcement theory)

Introduction
Leadership is the key element of any organization and a part of directing function. Leadership is the
relationship in which one person influences others to work together willingly on a related task to
attain goals. It is the ability to build confidence and zeal among people and to create an urge in
them to be led.

Meaning
Leading means influencing others to follow the direction which has already been set.
Leadership is a process by which an executive can direct, guide and influence the behavior and
work of others towards accomplishment of specific goals in a given situation. Leadership is the
ability of a manager to induce the subordinates to work with confidence and zeal.
Leadership is the potential to influence behaviour of others. It is also defined as the capacity to
influence a group towards the realization of a goal. Leaders are required to develop future visions,
and to motivate the organizational members to want to achieve the visions.

Definition
According to George R Terry, “The relationship in which one person or leader influences others to
work together willingly of related tasks to attain that which the leader desires”
According to Keith Davis, “Leadership is the ability to persuade others to seek defined objectives
enthusiastically. It is the human factor which binds a group together and motivates it towards
goals.”

Characteristics of Leadership
1. It is an interpersonal process in which a manager is into influencing and guiding workers
towards attainment of goals.
2. It denotes a few qualities to be present in a person which includes intelligence, maturity and
personality.
3. It is a group process. It involves two or more people interacting with each other.
4. A leader is involved in shaping and moulding the behaviour of the group towards
accomplishment of organizational goals.
5. Leadership is situation bound. There is no best style of leadership. It all depends upon
tackling the situations.
Importance of Leadership

Leadership is an important function of management which helps to maximize efficiency and to

achieve organizational goals. The following points justify the importance of leadership in a concern.

1. Initiates action- Leader is a person who starts the work by communicating the policies and
plans to the subordinates from where the work actually starts.

2. Motivation- A leader proves to be playing an incentive role in the concern’s working. He

motivates the employees with economic and non-economic rewards and thereby gets the
work done from the subordinates.

3. Providing guidance- A leader has to not only supervise but also play a guiding role for the
subordinates. Guidance here means instructing the subordinates the way they have to
perform their work effectively and efficiently.

4. Creating confidence- Confidence is an important factor which can be achieved through

expressing the work efforts to the subordinates, explaining to them clearly their role and
giving them guidelines to achieve the goals effectively. It is also important to hear the
employees with regards to their complaints and problems.

5. Building morale- Morale denotes willing cooperation of the employees towards their work
and getting them into confidence and winning their trust. A leader can be a morale booster
by achieving full cooperation so that they perform with best of their abilities as they work to
achieve goals.

6. Builds better work environment- Management is getting things done from people. An
efficient work environment helps in sound and stable growth. The leader should treat
employees on humanitarian terms.

7. Coordination- Co-ordination can be achieved through reconciling personal interests with

organizational goals. This synchronization can be achieved through proper and effective
coordination which should be the primary motive of a leader.

Qualities of a good leader

● Patience and tolerance
● Good personality
● Coaching and guidance
● Self confidence
● Human skills
● Initiative
● Intelligence
● Innovative
● Communication skills
● Proper judgement
● Administrative skills
● Discipline
Likert’s Behavioral Theory of Leadership:

• The Likert’s Management System was developed by Rensis Likert in the 1960s.
• Rensis Likert with his associates observed the different patterns and styles of management
in various fields. He observed the styles for around three decades and came up with the
Likert’s Management System.
• After years of observation and research, he outlined four styles of management which
described the relationships, involvement and roles of managers and subordinates in an
industrial setting.
• The observation of Likert was carried out at Michigan University, USA

Style-1: Exploitative-Authoritative Leadership Style

In the Exploitative-Authoritative Leadership Style, the manager has no confidence or trust in
subordinates. Subordinates feel no freedom to discuss things about the job with their superior.
In solving job problems, manager seldom gets ideas and opinions of subordinates.

Style-2: Benevolent-Autocratic Leadership Style

In Benevolent-Autocratic Leadership Style, the manager has confidence and trust in
subordinates, motivates with rewards and some punishments, permits some upward communication,
solicits some ideas and opinions from subordinates, and allows some delegation of decision making
but with close policy control. The leader-employee relationship for him is like a master- servant
relationship.

Style-3: Consultative Leadership Style

Consultative Leadership Style indicates that Manager has substantial but not complete confidence
and trust in subordinates but still wishes to keep control of decisions.
Subordinates feel free to discuss things about the job with their superior. The manager gets ideas
and opinions and tries to make constructive use of them.

Style-4: Democratic Leadership Style

In the Democratic Leadership Style, the manager has complete confidence and trust in subordinates
and allows them to equally participate in decision making.
Subordinates also feel completely free to discuss things about the job with their superior. The
manager always asks the subordinates for their ideas and opinions and makes constructive use of
them.
Blake and Mouton’s Managerial Grid
This theory of effective management is also popularly known as the “Managerial grid.” Developed
by Blake and Mouton, it focuses on various combinations of leadership styles.

According to Blake, there are two critical dimensions of effective leadership:

(i) Concern for people, and
(ii) Concern for production.

According to Blake, a manager can rate high on either of the two, or both or any other combination
of these two dimensions that are independent. He can rate high on one dimension and low on the
second.

The two dimensions of the grid show concern for production on one side and ‘concern for people’
on the other side, indicating the extent of concern for production and people. With varying
permutation and combination of these two dimensions i.e., concern for production and concern for
people, 81 styles of leadership are possible. However, out of these, only five styles are emphasized
by Blake; the one in the centre of the grid and the four in the corners

(i) The 1,1 – Manager shows very little concern for production as well as people. He exerts
minimum effort to get the required work done in an appropriate manner and let matters drift. His
efforts are merely aimed at sustaining organizational membership as he neither satisfies employee
needs nor the production requirements.

(ii) The 1, 9 – Manager Functions with the belief that if he takes care of the employees, then they
will take care of the production. So, he gives his full attention to the needs of the employees and
keeps them happy by providing an atmosphere that is comfortable and friendly with satisfying
relationships. He shows little care for production and sacrifices the work tempo in his aim of
satisfying employees.

(iii) The 9, 9 – Manager is the optimal management according to Blake, This type of leader, places
equal emphasis on production and the people working for the organization. Committed employees
with individual goals linked to organization goal facilitate work accomplishment. This model
focuses on interdependence of employee involvement, need satisfaction and production for the
development of relationships of trust and respect, development of team spirit and development of
managers as effective leaders.
(iv) The 9, 1 – Manager is production oriented as he shows maximum concern for production and
minimum concern for the people who will be enabling this production. He demands efficiency in
work operations by his authoritarian leadership, using threats and coercion to get work done.

(v) The 5, 5 – Manager emphasizes on adequate organization performance by balancing employee

needs as well as production requirements. ‘Maximum’ is not the effort put it, rather in both the
dimensions, only a satisfactory level is maintained. This middle ground management involves the
employees in decision making and provides an environment for need satisfaction of employees. It
greatly lacks in its efforts to optimize on either of the two dimensions.

House’s Path Goal Theory

• The theory was developed by Robert House and has its roots in the expectancy theory of
motivation.
• The theory is based on the premise that an employee’s perception of expectancies between
his effort and performance is greatly affected by a leader’s behavior.
• House’s theory advocates servant leadership. As per servant leadership theory, leadership is
not viewed as a position of power. Rather, leaders act as coaches and facilitators to their
subordinates.
• According to House’s path-goal theory, a leader’s effectiveness depends on several
employee and environmental contingent factors and certain leadership styles.

Leadership Styles
The four leadership styles are:
• Directive: Here the leader provides guidelines, subordinates know what is expected of
them, leaders set performance standards for them, and controls behavior when performance
standards are not met. He makes judicious use of rewards and disciplinary action. The style
is the same as task-oriented one.

• Supportive: The leader is friendly towards subordinates and displays personal concern for
their needs, welfare, and well-being. This style is the same as people-oriented leadership.

• Participative: The leader believes in group decision-making and shares information with

subordinates. He consults his subordinates on important decisions related to work, task
goals, and paths to resolve goals.
 • Achievement-oriented: The leader set challenging goals and encourages employees to
reach their peak performance. The leader believes that employees are responsible enough to
accomplish challenging goals. This is the same as goal-setting theory.

According to House’s path-goal theory, these leadership styles are not mutually exclusive and
leaders are capable of selecting more than one kind of a style suited for a particular situation.

Fiedler’s Situational theory of Leadership

• This theory, developed by Fred. E. Fiedler, is also known as the Contingency Approach.
• According to Fiedler, the type of leader attitude required for effective group performance
depends upon the degree up to which the group situation is favorable or unfavorable to the
leader.
• Fiedler’s model for leadership effectiveness proposes that the qualities necessary for
effectiveness of a leader, vary according to the situations.

In order to achieve group effectiveness, Contingency Model requires the following three-step
process:
1. Assess a leader’s leadership style; - Least Preferred Co-worker scale.
According to Fiedler, the leadership style depends on two dimensions, task-oriented and
human-relations oriented. Fiedler developed a “Least Preferred Co-worker Scale (LPC)”,
wherein the leaders are asked to rate a person on a scale ranging from lowest (1) to highest (8)
on several parameters to identify the worker with whom they least like to work. The leaders
with high LPC scores are said to be relationship-oriented whereas the ones with the low LPC
scores are considered as task-oriented.

2. Assess the situation that leader faces

Fiedler has talked about three critical dimensions:
 Leader’s Position Power: This element is concerned with the power or authority a leader
derives from the position held by him in the organization. It has been observed, that a
manager with absolute power influences the behaviour of others more than the ones
without power.
 Task Structure: With the clear definition of task structure the actions of the subordinates
can be well directed and their performances can be well controlled, which may not be
possible in case of unclear task structure.
 Leader-member Relations: This dimension talks about the degree to which the members
have trust, confidence and faith in their manager.

3. Match the situation with the leader’s leadership style.

The leadership effectiveness depends on the situation, as one style favouring one
situation may not necessarily be appropriate in any other situation. Thus, it is the situation
that gives an opportunity to the leader to influence his subordinates through the right kind of
leadership style.
Modern Leadership styles in the changing world
Charismatic leadership
 The charismatic leadership style relies on the charm and persuasiveness of the leader.
Charismatic leaders are driven by their convictions and commitment to their cause.
 Charismatic leaders also are sometimes called transformational leaders because they share
multiple similarities. Their main difference is focus and audience. Charismatic leaders often
try to make the status better, while transformational leaders focus on transforming
organizations into the leader's vision.
 Dr. Martin Luther King Jr. was a charismatic leader who used powerful oratory skill, an
engaging personality, and unwavering commitment to positive change in the lives of
millions of people.

Characteristics of leaders with charisma

 Sensitivity to their environment and the needs of their employees or followers
 Articulate and visionary
 Inclined toward personal risk taking
 Adept at using unconventional behaviour

Transformational leadership
• It is a leadership style in which the leaders encourage, inspire and motivate employees to
innovate and create change that will help grow and shape the future success of the company
• It is the management style that designed to give employees give more space to be creative,
look to the future and find new solutions to the old problems.

Characteristics of transformational leadership

 Encourages the motivation and positive development of followers
 Be an example of moral standards within the organization
 Fosters an ethical work environment with clear values, priorities and standards.
 Holds an emphasis on authenticity, cooperation and open communication
 Provides coaching and mentoring by allowing employees to make decisions and take
ownership of tasks

Visionary Leadership

 Visionary Leadership is defined as an operation to influence others in order to create a better

future and solve problems in an innovative way.
 Visionary leaders are those which have the ability to see the capabilities in others.
  This type of leadership style creates a positive momentum and endurance in an organization.
 Visionary leaders are somewhere different from other leaders as they always inspire,
encourage, empower and equip their team members for a better outcome.

Characteristics:
1. Passion and obsession.
2. A concrete vision that may even seem insane to smaller minds
3. Poor managerial decisions and wasted resources if this individual is not tempered by
experience or a team of pragmatic managers.
4. Ambitious and empathetic.
5. Innovative and collaborative.

Transactional Leadership
 Transactional leadership, also known as managerial leadership, focuses on the role of
supervision, organization, and group performance.
 Leaders who implement this style, focuses on specific tasks and use rewards and
punishments to motivate followers.
The work of leader is:
i. To reward the subordinates who achieved the tasks assigned to them
ii. Clarifying things to the subordinates
iii. focuses on the plans, schedule and budgets

Features of transactional leadership

 Discourage, independent thinking
 Resistant to change
 Rewards performance
 Directive
 Extrinsic motivation – reward and punishment

Servant Leadership
• In this type of leadership main goal of the leader is to serve.
• A servant leader shares power, puts the needs of the employees first and helps people
develop.
• In this leadership, instead of the people working to serve the leader, the leader exists to
serve the people
Features of the servant leadership
 Listening
 Empathy- know your employees
 healing
 Foresight
 Commitment to the growth of the people
 Stewardship – leading by example Ex: Mahatma Gandhi, Mother Theresa

Situational Leadership
 Situational leadership is described as an adaptive style that encourages leaders to take stock
of their team members and make adjustments as per their needs and desires.
 It does not ask the leader to put his onus on workplace factors instead suggests them to adapt
their styles as per their follower’s ability and style.
 The situational leadership model categorically states that it is impossible to find one
leadership style that is better than the other. Hence, it is better to encourage relationship-
 relevant and task-relevant leadership that is flexible and adaptive.

Characteristics of situational leadership

The basic characteristics of situational leadership are-
1. Flexibility
2. Integrity
3. Courage
4. Adapt to change
5. Ability to diagnose
6. Good communication skills

Motivation
 Motivation is a factor which encourages person to give their best performance and help in
reaching goals.

Definition
According to Koontz and O’Donnell, “Motivation is a general term applying to the entire class of
drives, needs, wishes and similar forces”

Importance and benefit of motivation

 Puts human resources into action
 Improves level of efficiency of employees
 Leads to achievement of organizational goals
 Builds friendly relationship
 Leads to stability of work force

Types of motivation
Positive Motivation
Positive motivation is the process in which a manager attempts to influence the employees’
behaviour in such a way that could enhance the courage and zeal towards the job. Positive
motivation is virtually a kind of technique to inspire subordinates. It is concerned with the
incentives such as an increase in salary, allowances, benefits, provision of promotion, rewards, and
others; achievement such as praise, encouragement, acceptance by group and respect by the
management. Positive motivation may be financial or non-financial or individual or group
motivation.

Negative Motivation
Negative motivation is understood as the act of forcing the staff members to work by holding out
threats or punishment such as reprimands, disciplinary actions, demotion, loss of a job, dismissal
from the post, deduction of salary, group rejection. Any kind of deterioration may be included in
negative motivation.

Motivation theories
1. Expectancy theory
One of the most widely accepted explanations of motivation is offered by Victor Vroom in his
Expectancy Theory” It is a cognitive process theory of motivation. The theory is founded on the
basic notions that people will be motivated to exert a high level of effort when they believe there
are relationships between the effort they put forth, the performance they achieve, and the outcomes/
rewards they receive.
The Expectancy theory states that employee’s motivation is an outcome of how much an individual
wants a reward (Valence), the assessment is likely that the effort will lead to expected performance
(Expectancy) and the belief that the performance will lead to reward (Instrumentality).

Advantages of the Expectancy Theory

 It is based on self-interest individual who want to achieve maximum satisfaction and who
wants to minimize dissatisfaction.
 This theory stresses upon the expectations and perception; what is real and actual is
immaterial.
 It emphasizes on rewards or pay-offs.
 It focuses on psychological extravagance where final objective of individual is to attain
maximum pleasure and least pain.

Limitations of the Expectancy Theory

 The expectancy theory seems to be idealistic because, quite a few individuals perceive high
degree correlation between performance and rewards.
 The application of this theory is limited as reward is not directly correlated with
performance in many organizations. It is related to other parameters also such as position,
effort, responsibility, education, etc.

Implications of the Expectancy Theory

 The managers can correlate the preferred outcomes to the aimed performance levels.
 The managers must ensure that the employees can achieve the aimed performance levels.
 The deserving employees must be rewarded for their exceptional performance.
 The reward system must be fair in an organization.
 Organizations must design interesting, dynamic and challenging jobs.

EQUITY THEORY
J. Stacey Adams’ equity theory is a process model of motivation. It says that the level of reward we
receive, compared to our own sense of our contribution, affects our motivation. The theory
considers the concept of equality and fairness as well as the importance of comparison to others.

Equity theory of motivation tries to address the problem of unequal treatment among employees in
a company and its effect on the overall motivation of the employees because slight unequal
treatment is present everywhere. But when this unequal treatment becomes excessive then it
hampers the motivation of the employees in a negative way which can be disastrous for the
company as a whole

The theory says that people want fair compensation for inputs across the working population of
which they are members. In this is the case, individuals may remain motivated. When it ceases to be
the case, individuals may lose their motivation.

Assumptions of equity theory

 Employees in a business organization expect “equity norm”, a concept that declares
expectation of fair return against the contribution of an employee to the job
 The equity theory demonstrates that people are concerned with their rewards and also about
what others are getting in comparison
 It is the employees that will determine what an equitable return should be. This is after
making a viable comparison between their input and outcomes with those of the other
 employees or colleagues. This concept is referred to as “social comparisons”.
 A key assumption is that the employees who feel are in an inequitable position will try to
minimize the perceived inequity via twisting outcomes or inputs in their minds by altering
outputs/inputs or by leaving the company.

Advantages of Equity Theory of Motivation

 Helps in Reducing Exploitation
 Source of Motivation
 Better Relations between Workers
 Employee retention

Disadvantages of Equity Theory of Motivation

 Difference of Perception
 Exact Comparison is difficult
 Dynamics of change
 All other Factors are Ignored

Goal-setting theory of motivation

In 1960’s, Edwin Locke put forward the Goal-setting theory of motivation. This theory states that
goal setting is essentially linked to task performance. It states that specific and challenging goals
along with appropriate feedback contribute to higher and better task performance.

In simple words, goals indicate and give direction to an employee about what needs to be done and
how much efforts are required to be put in.

Features of goal-setting theory 

 The willingness to work towards attainment of goal is main source of job motivation.
 Specific and clear goals lead to greater output and better performance.
 Goals should be realistic and challenging.
 The more challenging the goal, the greater is the reward generally and the more is the
passion for achieving it.
 Better and appropriate feedback of results directs the employee behaviour and contributes to
higher performance than absence of feedback.
 Employees’ participation in goal is not always desirable.
 Participation of setting goal, however, makes goal more acceptable and leads to more
involvement.

Advantages of Goal Setting Theory

 Goal setting theory is a technique used to raise incentives for employees to complete work
quickly and effectively.
 Goal setting leads to better performance by increasing motivation and efforts, but also
through increasing and improving the feedback quality.

Limitations of Goal Setting Theory

 At times, the organizational goals are in conflict with the managerial goals. Goal conflict
has a detrimental effect on the performance if it motivates incompatible action drift.
 Very difficult and complex goals stimulate riskier behaviour.
  If the employee lacks skills and competencies to perform actions essential for goal, then the
goal-setting can fail and lead to undermining of performance.
 There is no evidence to prove that goal-setting improves job satisfaction.

Reinforcement Theory of Motivation

Reinforcement theory of motivation was proposed by BF Skinner and his associates. It states that
individual’s behaviour is a function of its consequences. It is based on “law of effect”, i.e,
individual’s behaviour with positive consequences tends to be repeated, but individual’s behaviour
with negative consequences tends not to be repeated.

Reinforcement theory of motivation overlooks the internal state of individual, i.e., the inner feelings
and drives of individuals are ignored by Skinner. This theory focuses totally on what happens to an
individual when he takes some action.
Thus, according to Skinner, the external environment of the organization must be designed
effectively and positively so as to motivate the employee.

The managers use the following methods for controlling the behaviour of the employees:

 Positive Reinforcement- This implies giving a positive response when an individual shows
positive and required behaviour. For example - Immediately praising an employee for
coming early for job. This will increase probability of outstanding behaviour occurring
again. Reward is a positive reinforce, but not necessarily. If and only if the employees’
behaviour improves, reward can said to be a positive reinforcer. Positive reinforcement
stimulates occurrence of a behaviour. It must be noted that more spontaneous is the giving
of reward, the greater reinforcement value it has.

 Negative Reinforcement- This implies rewarding an employee by removing negative /

undesirable consequences. Both positive and negative reinforcement can be used for
increasing desirable / required behaviour.

 Punishment- It implies removing positive consequences so as to lower the probability of

repeating undesirable behaviour in future. In other words, punishment means applying
undesirable consequence for showing undesirable behaviour. For instance - Suspending an
employee for breaking the organizational rules. Punishment can be equalized by positive
reinforcement from alternative source.

 Extinction- It implies absence of reinforcements. In other words, extinction implies lowering

the probability of undesired behaviour by removing reward for that kind of behaviour. For
instance - if an employee no longer receives praise and admiration for his good work, he
may feel that his behaviour is generating no fruitful consequence. Extinction may
unintentionally lower desirable behaviour.

Implications of Reinforcement Theory

Reinforcement theory explains in detail how an individual learns behaviour. Managers who are
making attempt to motivate the employees must ensure that they do not reward all employees
simultaneously. They must tell the employees what they are not doing correct. They must tell the
employees how they can achieve positive reinforcement.

Advantages of Reinforcement Theory

  Reward for Positive Behavior
 Punishment to Repeat Offenders
 Improve Workplace Environment

Disadvantages of Reinforcement Theory

 Ignores Workers Inner Feeling and Individual Problems
 Curbs Creativity of Employees
 Forced Motivation

ANNEXURE

Traditional leadership styles

1. Autocratic leadership style- Autocratic leadership, also known as authoritarian leadership,
is a leadership style characterized by individual control over all decisions and little input
from group members. Autocratic leaders typically make choices based on their ideas and
judgments and rarely accept advice from followers.

Benefits of autocratic leadership style

o Allows quick decision making especially in stress filled situations
o Offers a clear chain of command
o Works well where strong, directive leadership is needed.

Drawbacks of autocratic leadership style

o Discourages group input
o Hurts morale and leads to resentment
o Ignores creative solutions and expertise from subordinates

2. Democratic leadership styles

• Here leader takes decision in consultation with his subordinates.
• It is a type of leadership style in which the members of the group take a more participative
role in the decision making process.
• Also called as participative leadership
• He also seeks advice and opinions on the matters which affect the job of subordinates

Advantages of democratic leadership style

o Helps to solve complex problem
o Increases the morale of the people
o Improves relevant knowledge of the team
o Reduces the grievances of the employees
Disadvantages of democratic leadership style
o Lower level of employees may not understand the complex nature of organisation
o Can cause disharmony if it is misapplied
o May never reach a true consensus
 3. Free rein leadership styles
• Also called as laisse faire leadership
• Under this style, a manager gives complete freedom to his subordinates. The entire decision-
making authority is entrusted to them.
• There is least intervention by the leader and so the group operates entirely on its own. There
is free flow of communication. In this style manager does not use power but maintains
contact with them.
• Subordinates have to exercise self-control. This style helps subordinates to develop
independent personality.

Advantages of free rein leadership

• Positive effect on job satisfaction and moral of subordinates.
• It gives chance to take initiative to the subordinates.
• Maximum possible scope for development of subordinates.

Disadvantages of free rein leadership

• Under this style of leadership, there is no leadership at all
• Most of people avoid their responsibility
• Subordinates do not get support of the leader

4. Level-5 leadership
 .Jim Collins and his research team were exploring the factors that made good companies
great way back in the 1960s. It was then that they stumbled upon the Level 5 leaders who
were invariably at the helm of affairs of all the companies which went on to become great in
their respective fields. Powerful mixture of personal humility and will
 These leaders are modest, shy and fearless and possess the capability to transform an
organization from good to great
 The Level 5 leadership clearly re-establishes the facts about a simply living and high
thinking with an emphasis on personal humility taught by the older generations.
Level 1: Highly Capable Individual
A leader that makes a productive contribution through talent, skills, and expression of good work
discipline is in level 1 that is the bracket of Highly Capable Individuals.

Level 2: Contributing Team Member

At this level, the leader is an active group member. They contribute significantly to the group’s
shared goals and work effectively under the influence of their peers.

Level 3: Competent Manager

The third level of leadership is Competent Manager. At this stage, they can effectively organize all
the team members to motivate them to achieve shared goals that are pre-determined. However, they
do not define these objectives of the team.

Level 4: Effective leader

At Level 4, the leader shows optimum levels of leadership. This is usually the stage where most of
the leaders are found. Here, they can create a commitment to the perusal of clear goals and a
strategic vision. A high-performing team is also trained by the leader that aids their process of
attaining success. They manage to inspire their team constantly to produce effective results.

Level 5: Executive/ Great Leader

Level 5 is the last level where the true leaders who stood the tests of time are found. It is not a
precondition that a Level 5 leader moves sequentially in this hierarchy to attain Level 5 Leadership.
It implies that this leader has the best qualities of all the four levels plus a set of his fine qualities of
humility and strong will.

TRADITIONAL MOTIVATIONAL THEORIES

Maslow’s need hierarchy theory
Abraham Maslow is well renowned for proposing the Hierarchy of Needs Theory in 1943. This
theory is a classical depiction of human motivation. This theory is based on the assumption that
there is a hierarchy of five needs within each individual. The urgency of these needs varies.

Assumptions
 An individual’s behaviour is influenced by his/her needs.
 Needs have priority and they are arranged according to hierarchy of importance.
 Individuals need at any level on the hierarchy emerge only when the person is well satisfied
with the lower-level needs.

Physiological needs- These are the basic needs of air, water, food, clothing and shelter. In other
words, physiological needs are the needs for basic amenities of life.

Safety needs- Safety needs include physical, environmental and emotional safety and protection.
For instance- Job security, financial security, family security, health security, etc.

Social needs- Social needs include the need for love, affection, care, belongingness, and friendship.
Esteem needs- Esteem needs are of two types: internal esteem needs (self- respect, confidence,
competence, achievement and freedom) and external esteem needs (recognition, power, status,
attention and admiration).

Self-actualization needs- This include the urge to become what you are capable of becoming / what
you have the potential to become. It includes the need for growth and self-contentment. It also
includes desire for gaining more knowledge, social- service, creativity and being aesthetic.

Theory X and Theory Y

In 1960, Douglas McGregor formulated Theory X and Theory Y suggesting two different views of
individuals (employees): one of which is negative, called as Theory X and the other is positive,
called as Theory Y. According to McGregor, the perception of managers on the nature of
individuals is based on various assumptions.

Theory X
Companies have negative and pessimistic assumptions regarding employees
Assumptions:
 The average human being is lazy and dislikes work and avoids work as far as possible
 Most of the people lack ambition and they are not interested in achievement. They like to be
directed
 Only fear can force workers into action
 Lack initiative and do not come forward to shoulder any responsibility
 Avoid decision making and do not want to take decision on their own
 Autocratic leadership is suitable
 Worker is only one of the factors of the production and does not deserve any special
treatment
 Monetary rewards or incentives are the only way in which they can be motivated
  Concerned with the retaining of jobs – does not perform well or takes more time to perform
the job- may lose the job.

2. Theory Y
This is optimistic approach and assures positive assumptions regarding employees
Assumptions
 Work can be as natural as play if the conditions are favorable
 People will be self-directed and creative to meet their work and organizational objectives if
they are committed to them.
 The worker wants his achievement to be noticed by others and expects recognition for the
successful accomplishment of responsibility
 For a worker, financial reward is not the only inspiration. He works efficiently even for non-
financial rewards like recognition, greater participation in decision making, increased
responsibility
 Democratic leadership is suitable.

Herzberg’s hygiene two factor theory

The two-factor motivation theory, otherwise known as Herzberg’s motivation-hygiene
theory or dual-factor theory, argues that there are separate sets of mutually exclusive factors in the
workplace that either cause job satisfaction or dissatisfaction.

Hygiene Factors: Herzberg identified ten maintenance or hygiene factors, that are not
intrinsic parts of a job, but are related to the conditions in which the job has to be performed. These
are company policy and administration, technical supervision, job security, working conditions,
interpersonal relationship with peers, subordinates and supervisors, salary, job security, personal
life, etc.

Motivational factors: These factors have a positive effect on the functioning of the
employees in the organization. There are six factors that motivate employees: Achievement,
Recognition, Advancement, Work-itself, Possibility of growth and Responsibility. An increase in
these factors satisfies the employees and the decrease in these will not affect the level of
satisfaction.

The Herzberg’s motivation hygiene theory has been extensively criticised. The findings of
this theory cannot be considered valid for those employees whose lower level needs have not been
reasonably satisfied. Herzberg’s conclusion that hygiene factors cause dissatisfaction and
motivators lead to satisfaction and productivity seems to be an over-simplification of complex
process of human motivation. It is difficult to conclude that only motivators increase the satisfaction
and productivity.