Leadership over Management 1

Leadership and Management:

Leadership is more important than management in contemporary organizations.

Bidit Rawal

Ace Institute of Management

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Introduction

The debate on leadership and management has persisted for decades. As the changes take

place in business environment, the idea of leadership versus management becomes prominent. In

this contemporary era, comparing leadership and management is a challenging task to do as both

the phenomena goes side by side in an organization. This concept has been aptly conveyed by an

American educator through his statement “Management is efficiency in climbing the ladder of

success, leadership determines whether the ladder is leaning against the right wall” (Covey.

2015, p. 109). It is now accepted fact that a business will not survive if it is operated by leaders

or managers alone.

In addition, the 21st century is the age of evolution and innovation where the environment

is dynamic and competitors are ruthless than ever. The social environment is changing rapidly

along with the outburst of economic and technical change. Due to this reason, challenges and

assignments of organizational management are changing as well. Today, modern organizations

should be managed with a new attitude towards the manager’s work. A modern manager must be

a leader who is able to empathize with their employees and direct them to collaborate and work

in a team. A famous French diplomat, Charles Maurice de Talleyrand explicitly said that, “I am

more afraid of an army of 100 sheep led by a lion than an army of 100 lions led by a sheep” (as

cited in Robbins, Judge & Vohra, 2012, p. 361). Thus, in response to this changing environment,

it is the contemporary need of a manager to possess lion like characteristics such as being

inspiring, fearsome and having ability to articulate vision.

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Understanding leadership

Firstly, it must be acknowledged that leadership is one of the four major functions of

management. Leadership is a complex, multidimensional phenomena which has been defined as:

a behavior; a style; a skill; a process; a responsibility; an experience; a position of authority; an

influencing relationship; a characteristic; and an ability (Algahtani, 2014, p. 75). More

specifically, leadership is understood as an act of aligning people to the vision which includes

buy-in and communication, motivation and inspiration. However, leadership has not yet received

the importance that it should get. Burns (1978) supports this by remarking that “Leadership is

one of the most observed and least understood phenomena on the earth” (p. 2).To further

understand the concept of leadership in contemporary organizations, many leadership theories

have been developed to define the concept of leadership yet they are still in search for the apt

answer to explain key question: What makes an effective leader? In comparison, traditional

approaches of leadership were considered narrower in perspectives. The trait and behavior theory

of leadership placed emphasis on distinct characteristics and behaviors of leaders which

separated leaders from non-leaders. But in certainty, classical approach failed to present

substantial evidence of a leader’s particular trait or behavior that contributed to the emergence of

the concept of leaders and leadership.

Adding on to the traditional theories, due to the complexities arising from business

environmental changes, there has been intensive research conducted on this subject addressing

leadership from a variety of perspectives. For instance, the Leader–Member Exchange (LMX)

theory conceptualizes leadership as a process of interaction between leader and follower and

centers on the dyadic exchange relationships between both (Winkler, 2010, p. 47). Likewise,

social learning theory of leadership conceptualizes leadership as a mutual process of social

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learning which contains reciprocal interaction between behavior and its controlling environment

(Winkler, 2010, p. 85-91). Thus, there are mainly two approaches; one who can articulate what is

needed and one who sets examples by getting into complex situation and ultimately inspiring

followers (Borkowski, 2009).

Distinction between leadership and management

Management and leadership terms have been used differently by different people. Some

believe it to be used interchangeably while others view them as two completely different words.

However, the majority appreciate some similarities and differences between them. The word

management itself is connected with the history of mankind. If we look back at our history it

shows that management has been practiced for centuries. For instance, from the time of

Sumerians in the early 3000 B.C to Venetians in 500 A.D, essence of management has been used

for book keeping, governance, organizing, communication and control (George Jr. 1972). Thus,

we cannot ignore the fact that the existence of management in the human history is long in

comparison to leadership.

However, Leadership and management entail a unique set of activities or functions. On

one hand, management is the allocation of scarce resources to achieve organization’s objective,

the setting of priorities, the design of work and the achievement of results (as cited in Covey,

2015, p. 363). Leadership, on the other hand, focuses on the creation of a common vision. It is all

about motivating people to contribute to the vision and encouraging them to align their self-

interest with that of the organization (Weathersby, 1999, p. 5).Moving on, some important

differences that set leaders apart from managers are shown in the table (Arruda, 2016).
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Leaders Managers

Create a vision Create goals

Are the change agents Maintain status quo

Unique from others Copy existing patterns

Take risk Control risk

Grow personally Rely on existing, proven skills

Build relationships Build system and processes

Coach Direct

Create fan/followers Have employees

Are long-sighted Are short-sighted

Have influential power Have authoritarian power

Tend to explore beyond horizon Tend to be within horizon

Focus on effectiveness Focus on efficiency

Keeping in mind all these differences, the environment in which the organization

operates also plays an important role in aiding to strike a balance between the need for

management and leadership in an organization. Today, in this continuous changing global

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economy with massive technological transformation, leadership and management both are

essential. The task is not just to manage people but to lead the people towards the right direction.

The traditional manager’s functions like planning, organizing and controlling to manage back

office jobs is essential, but at the same time, strong leadership is needed to cope with the above-

mentioned changes. To have a better understanding, let us consider some examples pointed by

Stansberry (2010) on how contemporary organizations exhibiting influential leadership abilities

embrace changes and fight against the prevailing crises.

IBM encourages blogging

The concept of business blogging was once new in the business world. No one was ready

to take the initiative. IBM, a multinational technology company took the initiative and

encouraged their 320,000 employees to start writing company blogs. IBM’s leader’s drafted a

corporate blogging policy that encouraged employees to be themselves, speak in the first person

and respect their coworkers. As a result, their company blogs are now some of the most trusted

technology blogs that generates tons of page views and links back to IBM. Instead of fearing the

new technology, IBM embraced and embarked it, making their customers and employees very

happy. Cass (2007) stated “ IBM blog has been successful in terms of thought leadership,

building a community, and getting information out to audience quickly, thus IBM has a sales of

more than $90 billion a year”(p. 146).

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Starbucks tragedy

Starbucks, an American coffee company is known for its outstanding treatment towards

their employees. In 1997, tragedy struck in one of the Starbucks outlet situated in Washington

D.C as three of their employees were killed in a bungled robbery. Instead of issuing a press

release or calling a legal counsel, CEO Howard Schultz flew straight to D.C. and spent the entire

week with the employees and their families in the area. Schultz's empathy, compassion and

incredible leadership helped heal those closest to the tragedy.

Behar (2008) described Starbucks leadership move as:

Every organization can survive catastrophe if its people are honest, open and accept

responsibility. At that time, what Starbuck’s CEO did was simple, he was a human being

first and his heart went out to all the people affected. When you follow the principles of

personal leadership, you open yourself up and you can deal with anything. That’s what

leaders do. They influence, inspire and lead and set an example to the world.

Costco CEO an authentic leader

Costco, one of the strong rivals of Wal-mart in the retail industry is run by a man known

for his influential leadership traits, CEO Jim Sinegal. In an age where CEOs are paid in millions,

Sinegal pays himself a yearly salary of $35000. While other CEOs are spending thousands of

dollars just decorating their offices, Sinegal’s plain office at the company headquarters did not

even have walls. He states that he should not be paid more than 12 employees working on the

floor. He frequently visits a dozen Costco stores a day and states, “no staff in any business feels

very good if the boss is not interested enough to come and see them” (Goldberg & Ritter, 2006).
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With such strong humility and honest relationships, his employees are highly motivated at work.

Employees genuinely love him for his simplicity and openness.

As a result, Costco’s employee turnover rate is the lowest in the retail industry, over five

times less than its rival Wal-mart (Stansberry, 2010). Costco’s stock price has doubled over the

past five years and revenue continues to grow at an impressive rate. Today, Costco is one of the

three giants in the U.S. retail industry.

All the above examples show how a strong and influential leadership can bring fruitful

changes in an organization. Like those CEOs, leaders are the one who drive organization towards

success by influencing others. They have strong visions, goals and a unique style of approaching

problems and uncertainties. Considering all the complexities and competitiveness in today’s

world, managers need to renew their traditional attitudes, managerial skills, behaviors and should

possess strong leadership traits to cope with the inevitable changes in the business environment.

In short, being a leader and a manager are two different things, but it is for sure that where there

is management, there is leadership. Henceforth, in this contemporary era where social, economic

and technological factors are changing, the faces of leadership and management should also

change.

Conclusion

Good leadership is essential to businesses as they transform potential into reality. It has

been said that without leadership, all other business elements lie dormant. Leadership acts as a

catalyst that makes all other elements work together. However, in a time of technological driven

business environment, it is a requisite of effective leaders to have efficient managerial skills as

well. Whether it related to a start-up or a multinational company with many subsidiaries, one
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needs to possess leadership qualities along with appropriate managerial competences for true

effectiveness. On one hand, leadership creates a road map to a common vision through

motivating and inspiring employees. On the other, management allocates the limited resources,

sets up the priorities and designs the work to reach the common vision set by the leaders

(Weathersby 1999, p.5).Therefore, to sum it up; contemporary organizations need a perfect blend

of both leadership and management to deal with the complexities and uncertainties that the ever-

changing business environment throws at them.

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