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 Chapter 7

Other Leadership Perspectives:

Upper Echelon and Leadership of
Nonprofits

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 Learning Objectives

• Differentiate between micro and upper-echelon

leadership and describe the domain and roles of
strategic leaders
• List the individual characteristics of strategic
leaders and consider the role of culture
• Explain how top-level managers affect their
organization
• Analyze the unique challenges of leadership in
nonprofit organizations

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 The Leadership
Question

Do you think there is a difference between

leaders at different levels of the organization and
in different organizations? Besides size and
number of people who report to you, is
leadership fundamentally different at top and
lower levels or in different organizations?

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 Differences Between Micro
and Strategic Leadership

• Who the leader is

• Scope of responsibility
• Focus
• Effectiveness criteria

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The Domain of Strategic
Leaders
Environment

Leadership Culture

Technology Structure

Strategy

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 Dual Role of Strategic
Leaders

Moderating
factors

Strategy Strategy
Leader formulation implementation

Performance

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 Moderators of Executive
Discretion

External factors Internal factors

• Uncertainty • Stability
• Type of industry • Size and structure
• Market growth • Culture
• Legal constraints • Stage of
organizational
development
• TMT

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 Characteristics of Upper
Echelon Leaders
Challenge seeking Need for control
• Risk taking • Delegation
• Openness to • Centralization
change • Uniformity of
• Willingness to practices
innovate • Focus on process
• Future orientation

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 Strategic Leadership Types

Desire for control Low control

High control

High High-control innovator Participative innovator

challenge (HCI) (PI)
seeking Challenge-seeking Challenge-seeking
leader who maintains leader who delegates
tight control of the control of the
Challenge organization organization
seeking
Status quo guardian Process manager (PM)
(SQG) Challenge-averse leader
Challenge-averse leader who delegates control of
Low who maintains tight the organization
challenge control of the
seeking organization

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 Culture and Gender

• Culture
– Different countries have different
implicit leadership theories
• Gender
– Little research on role of gender in
upper echelon
– Fewer women in executive leadership
positions

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How Executives Affect Their
Organization

Environment

Strategy

• Direct decisions
• Allocation of resources Structure
• Reward systems
Leader Processes • Selection of other
leaders
• Promotions Culture
• Role modeling

Technology

Leadership

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 Direct Decisions

• Vision
• Mission
• Strategy
• Structure
• Organizational culture
• Selection of other leaders

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Allocation of Resources and
the Reward System

• Decisions regarding funding and budgets

• Allocation of resources to support goals
• Formal rewards such as salary and
bonuses
• Informal rewards such as recognition
• Promotion of other leaders and managers

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Setting the Norms and Role
Modeling

• Setting decision criteria and rules by

which others make decisions
• Active or subtle role modeling of
wanted behaviors and style

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Responsibilities of Strategic
Leaders
• Organizational performance
• Internal health; organizational culture
• Accountability to internal and external
constituents
• Ethical behavior and role modeling

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 Determinants of Executive
Compensation

• Size of the firm

• Industry competition
• CEO power and discretion
• Internationalization
• High stress and instability

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 Characteristics of
Nonprofits
• Operate without profit
• Public service mission
• Voluntary board of directors
• Funded through various private and
public contributions

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Role of Leaders in Nonprofit
Organizations

Donors
Nonprofit Recipients
Individual organizations
donors Individuals
Members Members
Foundations LEADER Communities
Government Other
grants organizations
Other
contributors

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 Leadership Challenges of
Nonprofits

• Leaders must rely on participatory

leadership to build consensus
• Strong ethical requirements
• Motivating and retaining employees
• Finding and training future leaders

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 The Leadership
Question Revisited
• At some level, leading is leading; you need to take care of the
task and people.
• Upper echelon requires a heavier reliance on cognitive and
interpersonal skills, as well as the ability to juggle many
complex factors.
• Nonprofits face another challenge of both working with
volunteers and having little access to typical rewards for their
employees.
• Connecting with followers is at the heart of leadership.
• Competence and knowledge of the task are essential.
• Each leadership situation is unique, and being effective
requires preparation, knowledge, experience, and styles and
behaviors that fit the situation.
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 What Do You Do?

You are fully aware that change is not your thing. You
are highly successful at creating systems and putting
effective structures in place. You like order and
predictability and have a track record to show how good
you are at your job. You join the leadership team of a
small company that is also highly successful but that
operates very loosely. Everything is decentralized and
the focus is on change and innovation. How can you
contribute? What do you do to succeed?

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Leadership Challenge

• CEO involvement in nomination of board

members helps assure that members with
the right skills and expertise are selected
• Those nominated by CEO may have a
conflict of interest and a positive bias
toward the CEO
• Creation of a balance of members
nominated by different stakeholders is
essential
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Leading Change:
Public Allies
• Leadership is an action (a verb) not a
position (a noun)
• Develop the next generation of community
leaders
• Educate and train community members
• Tied to community organizations; draws from
them and returns trained leaders to them
• Create connections
• Public allies are 67% people of color; 60%
women
• Focus on collaboration, diversity, continuous
learning, and integrity
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 Leadership in Action:
P&G

• P&G is well established in a highly competitive

global market
• Constant need for revitalization to remain
competitive
• Sudden change in leadership (rehire retiring CEO)
in spite of careful succession planning
• Lafley is focused on simple lessons
• Low-key, collaborative, soft-spoken, consensual
• Powerful board

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