Leadership: Transformational or Transactional

Part 1
1. What are the differences between in-groups and out-groups?
2. How do quality leader-member exchange relationships influence follower behavior?
3. How does a leader's first impression and perception of a follower influence the quality of their relationship?
4. The development of a high-quality LMX relationship has been described as a "life-cycle model" that grows and matures over time. Discuss how this works.
5. How can a follower's perception or attribution of a leader influence their relationship?
6. Describe the inherent bias of LMX theory and how it can lead to unintended consequences.
7. How do education and experience, described as follower-influencing characteristics, affect effective
follower ship?
8. What are some of the benefits of delegating?
9. What are some things that a leader should not delegate?

Read Case Study on W.L. Gore & Associates and complete questions 1-3 immediately following.

Founded in 1958, W. L. Gore & Associates has become a modern-day success story as a uniquely managed, privately owned, family business. Founders Bill and Vieve Gore set out to create a business where innovation was a way of life and not a by-product. Today Gore is best known for its Gore-Tex range of high-performance fabrics and Elixir Strings for guitars. Gore is the leading manufacturer of thousands of advanced technology products for the medical, electronics, industrial, and fabrics markets. With annual revenues of $2.5 billion, the company employs approximately 9,000 associates at more than 50 facilities around the world. Terri Kelly replaced Chuck Carroll as the president and CEO of W. L. Gore & Associates in April 2005. Gore has repeatedly been named among the "100 Best Companies to Work For," in the United States by Fortune magazine. In a recent interview, Ms. Kelly was asked what would be the most distinctive elements of the Gore management model to an outsider. She listed four factors: "We don't operate in a hierarchy; we try to resist titles; our associates, who are all owners in the company, self-commit to what they want to do; and our leaders have positions of authority because they have followers." According to CEO Kelly, these four attributes enable Gore to maximize individual potential while cultivating an environment that fosters creativity and also to operate with high integrity. She is quick to remind everyone that all of Gore's practices and ways of doing business reflect the innovative and entrepreneurial spirit of its founders. CEO Kelly attributes Gore's success to its unique culture. How work is conducted at Gore and how employees relate to one another sets Gore apart. There are no titles, no bosses and no formal hierarchy. Compensation and promotion decisions are determined by peer rankings of each other's performance. To avoid dampening employee creativity, the company has an organizational structure and culture that goes against conventional wisdom. W.L. Gore & Associates has been described as not only unmanaged but also unstructured. Bill Gore (the founder) referred to the company's structure as a "lattice organization."Gore's lattice structure includes the following features:

• Direct lines of communication—person to person—
with no intermediary
• No fixed or assigned authority
• Sponsors, not bosses
• Natural leadership as evidenced by the willingness of
others to follow
• Objectives set by those who must "make them happen"
• Tasks and functions organized through commitments
• Complete avoidance of the hierarchical command and control structure

The lattice structure as described by the people at Gore encourages hands-on innovation and discourages bureaucratic red tape by involving those closest to a project in decision making. Instead of a pyramid of bosses and managers, Gore has a flat organizational structure. There are no chains of command, no predetermined channels of communication. It sounds very much like a self-managed team at a much broader scale. Why has Gore achieved such remarkable success? W. L. Gore & Associates prefers to think of the various people who play key roles in the organization as being leaders, not managers. While Bill Gore did not believe in smothering the company in thick layers of formal management, he also knew that as the company grew, he had to find ways to assist new people and to follow their progress. Thus, W. L. Gore & Associates came up with its "sponsor" program. The sponsor program is a dyadic relationship between an incumbent, experienced employee and a newly hired, inexperienced employee. Before a candidate is hired, an associate has to agree to be his or her sponsor or what others refer to as a mentor. The sponsor's role is to take a personal interest in the new associate's contributions, problems, and goals, acting as both a coach and an advocate. The sponsor tracks the new associate's progress, offers help and encouragement, points out weaknesses and suggests ways to correct them, and concentrates on how the associate might better exploit his or her strengths. Sponsoring is not a short-term commitment. All associates have sponsors, and many have more than one. When individuals are hired, at first they are likely to have a sponsor in their immediate work area. As associates' commitments change or grow, it's normal for them to acquire additional sponsors. For instance, if they move to a new job in another area of the company, they typically gain a sponsor there. Sponsors help associates chart a course in the organization that will offer personal fulfillment while maximizing their contribution to the enterprise. Leaders emerge naturally by demonstrating special knowledge, skill, or experience that advances a business objective. An internal memo describes the three kinds of sponsor- ship and how they might work:

• Starting sponsor—a sponsor who helps a new associate get started on his or her first job at Gore, or helps a present associate get started on a new job.
• Advocate sponsor—a sponsor who sees to it that the associate being sponsored gets credit and recognition for contributions and accomplishments.
• Compensation sponsor—a sponsor who sees to it that the associate being sponsored is fairly paid for contributions to the success of the enterprise. An associate can perform any one or all three kinds of sponsorship.

Quite frequently, a sponsoring associate is a good friend, and it's not uncommon for two associates to sponsor each other as advocates. Being an associate is a natural commitment to four basic principles articulated by Bill Gore and still a key belief of the company: fairness to each other and everyone we come in contact with; freedom to encourage, help, and allow other associates to grow in knowledge, skill, and scope of responsibility; the ability to make one's own commitments and keep them; and consultation with other associates before undertaking actions that could affect the reputation of the company. Over the years, W. L. Gore & Associates has faced a number of unionization drives. The company neither tries to dissuade associates from attending organizational meetings nor retaliates against associates who pass out union flyers. However, Bill Gore believes there is no need for third-party representation under the lattice structure. He asks, "Why would associates join a union when they own the company? It seems rather absurd." Commitment is seen as a two-way street at W. L. Gore & Associates—while associates are expected to commit to making a contribution to the company's success, the company is committed to providing a challenging, opportunity-rich work environment, and reasonable job security. The company tries to avoid laying off associates. If a work force reduction becomes necessary, the company uses a system of temporary transfers within a plant or cluster of plants, and requests voluntary layoffs. According to CEO Kelly, Gore's structure, systems, and culture have continued to yield impressive results for the company. In the more than 50 years that Gore has been in business, it has never made a loss.

1. What theories from this chapter are revealed through the case?
2. How did Gore's "sponsors" program facilitate the creation of high-quality relationships among leaders, sponsors, and associates?
3. Evaluate followership at W. L. Gore & Associates. What company actions and/or policies account for the quality of followership?

Part 2: Address the following questions
1. What is groupthink, and under what conditions is it most likely to occur?
2. Describe the factors that generally contribute high levels of team cohesion.
3. Creativity is usually thought of as a characteristic of individuals, but are some teams more creative than others?
4. What is team-centered leadership, and how does it differ from the leader-centered approach?
5. Describe how a leader can avoid conducting nonproductive meetings.
6. What is the depth of decision-making latitude commonly found in self-managed teams?
7. Briefly discuss some of the potential benefits and drawbacks of using self-managed teams.

Read Case Study on Frederick W. Smith and complete questions 1-5 immediately following.

Since 1971, Federal Express, now known simply as FedEx, remains the market leader in an industry it helped create. The name FedEx is synonymous with overnight delivery. The person in charge of providing the strategic direction for all FedEx Corporation companies is its founder, Frederick W. Smith, the Chairman, President, and Chief Executive Officer. To position the company for the 21st century, Smith has organized FedEx into the following Strategic Business Units: FedEx Express, FedEx Ground, FedEx Freight, FedEx Office, FedEx Custom Critical, FedEx Trade Networks, FedEx Supply Chain, and FedEx Services. These companies serve more than 220 countries and territories with operations that include 697 aircraft and more than 80,000 vehicles. With more than 290,000 team members worldwide, FedEx handles more than 8.5 million shipments each business day. FedEx has expanded far beyond what Smith started with back in 1971. FedEx has continued to strengthen its industry leadership over the past 40 years and has been widely acknowledged for its commitment to total quality service. Federal Express was the first service company to win the Malcolm Baldrige National Quality Award in 1990. In addition, FedEx has consistently been ranked on Fortune magazine's industry lists, including "World's Most Admired Companies," "America's Most Admired Companies," "100 Best Companies to Work For," and "Blue Ribbon Companies." In 2011 Fortune ranked FedEx No. 8 among the "World's Most Admired Companies." With growth come difficulties of coordination, maintaining efficiency, meeting customer expectations, and managing employees. Smith realized that a rigid hierarchy of command-and-control leadership would only magnify these difficulties. To give his employees the flexibility and freedom they need to move quickly and help FedEx remain the dominant overnight delivery service in the world, Smith decided to restructure FedEx by emphasizing the team approach to getting work done. He directed his executive team to create and empower more teams by giving them the authority and the responsibility to make the changes needed to improve productivity and customer satisfaction throughout the FedEx system. This directive is consistent with the operational strategy of the corporation put forth by Mr. Smith and his executive team. It is evident from the corporation's Web site that teamwork is a core component of its strategic orientation as revealed in this statement: The unique FedEx operating strategy works seamlessly and simultaneously on three levels:

• Compete collectively by standing as one brand world-wide and speaking with one voice.
• Operate independently by focusing on our independent networks to meet distinct customer needs.
• Manage collaboratively by working together to sustain loyal relationships with our workforce, customers, and investors.

An example of the successful implementation of Mr. Smith's directive can be found in Springfield, Virginia. With strong support from their managers, employees formed the Quality Action Team to overhaul their package-sorting techniques. The improvements they introduced put couriers on the road 12 minutes earlier than before, and halved the number of packages they delivered late. The success of teams at departmental or local levels encouraged Smith and his leadership team to also assign employee teams to companywide projects. Facing growing competition from United Parcel Service, the U.S. Postal Service, and Airborne Express, FedEx organized its clerical employees into "super-teams" of up to 10 people. These teams operated as self-managed teams with little direct supervision from managers. One team cut service glitches, such as incorrect bills and lost packages by 13 percent. Another team spotted—and worked until they eventually solved—a billing problem that had been costing the company $2.1 million a year. FedEx teams have worked so well because Fred Smith sets standards and reinforces them. He spearheaded the concept of the "golden package," the idea that every package FedEx handles is critical and must be delivered on time. Whenever there's a crisis, whether due to competitive pressure or to Mother Nature threatening to ground the company's planes, the team with the golden package takes charge to figure out how to make the delivery on time. Smith reinforces group performance by presenting a monthly Circle of Excellence award to the best FedEx station. He encourages innovative thinking by creating a "job-secure environment." He takes the position that "if you hang people who try to do something that doesn't quite work, you'll get people who don't do anything." Managers are by no means obsolete at FedEx. Smith has redefined their roles. There has been a shift in mindset from the traditional leader-centered to the team-centered leadership approach. Managers are expected to formulate clear, attainable goals for their teams, solicit employee ideas, and act on the best employee suggestions. FedEx managers perceive their role as facilitators—and sometimes they are players. During emergencies at the Memphis hub, senior managers have been known to hurry down from the executive suite to help load packages onto the conveyor belts that feed the company's planes. They practice team leadership by doing, not by telling. According to one company executive, "FedEx has built what is the most seamless global air and ground network in its industry, connecting more than 90 percent of the world's economic activity." It is evident that FedEx's open, flexible, and team-based organizational structure and culture has been instrumental in keeping the company's lead position in overnight package service. CEO Smith's team leadership deserves much of the credit.

1. How do the standards set by Fred Smith for FedEx teams improve organizational performance?
2. What motivates the members of FedEx to remain highly engaged in their teams?
3. Describe the role FedEx managers play in facilitating team effectiveness.
4. What type of teams does FedEx use? Provide evidence from the case to support your answer.
5. Leaders play a critical role in building effective teams. Cite evidence from the case that FedEx managers performed some of these roles in developing effective teams

Part 3: Address the following Questions:
1. Describe the various sources from which one can draw his or her personal meaning.
2. Citing specific examples, explain how charismatic leaders of the past used vision and superb communication skills to make their case.
3. Describe the leading characteristics of charismatic leaders.
4. Martin Luther King, Jr., Gandhi, John F. Kennedy, Adolph Hitler, Nelson Mandela, David Koresh (of the Branch Davidians), Herb Kelleher (of Southwest Airlines), and Richard Branson (of the Virgin Group) are/were charismatic leaders. Can you associate with each name a characteristic of charisma you think best describes the individual? Note: If you are not familiar with these individuals, do library or Internet research on them before attempting an answer.
5. Why is the theory of charisma described as a double edged sword?
6. Describe the limitations of charismatic leadership theory.
7. Describe four key behaviors characteristic of transformational and charismatic leaders.
8. Describe some key attributes/qualities of transformational leaders.
9. What is servant leadership?

Read Case Study on Ursula Burns and complete question 1-5 immediately following.

In July 2009, Ursula Burns became the Chairwoman and CEO of Xerox, taking over from her former boss Ann Mulcahy. Xerox Corporation, a $22 billion global enterprise for business process and document management, is ranked No. 121 on the 2011 list of Fortune 500 companies. Her elevation marked two milestones: the first time an African-American woman was named CEO of a major American corporation, and the first time a woman succeeded another woman in the top job at a company of this size.84 Ms. Burns's story is the quintessential tale of the American Dream. She has defied the odds. She was raised in a housing project on Manhattan's Lower East Side by a hard-working single mother who cleaned, ironed, did child care, anything to see that Ursula and her siblings got a good education. She attended an all-girls Catholic High School in New York. She then went on to obtain a BS in Mechanical Engineering from Polytechnic Institute of NYU in 1980 and a master's in Mechanical Engineering from Columbia University a year later. She joined Xerox as a summer intern in 1980. Ms. Burns, who is now 52, has never been shy about speaking her mind. On more than one occasion, her outspokenness caught the attention of higher-ups in the Xerox corporate office. It's how she ended up working with two of Xerox's former CEOs early on in her career. Referring to Ms. Burns, Mr. Hicks (former CEO) said, "She was enormously curious," she wanted to know why we were doing some things at the time, and she was always prepared in a way that I thought was very refreshing." Her hard work, determination, and dedication paid off. After a number of mid-level assignments, she eventually entered the executive ranks of Xerox. She was named a senior vice president in 2000 and became president of two different business groups over the next two years. Ann Mulcahy, the CEO at the time, told Ursula that she needed her help on the turnaround team. The pair worked closely together for almost a decade in a relationship that both women describe as a true partnership. Ms. Burns was named president of Xerox in 2007, a signal to investors and employees that she was the heir apparent. African-Americans with Burns's background were not common at Xerox, but she never saw her race or low socioeconomic status as a liability. "My perspective comes in part from being a New York black lady, in part from being an engineer," she said. "I know that I'm smart and have opinions that are worth being heard." When asked who her big influences were before joining Xerox, Ms. Burns had this to say: "150 percent my mother. My mother was pragmatic, focused and exceedingly practical and she was the ultimate self-determining person." Burns describes her mother as a value-driven single mother who believed in the mantra, "where you are, is not who you are" and who viewed a good education as a way "up and out."85 It is obvious that Ms. Burns is not comfortable being in the spotlight or getting all the recognition and praise that the media and others have heaped on her since being named to the top job at Xerox. "The accolades that I get for doing absolutely nothing are amazing—I've been named to every list, literally, since I became the CEO," Ms. Burns says. "In the first 30 days, I was named to a list of the most impressive XYZ. The accolades are good for five minutes, but then it takes kind of a shine off the real story. The real story is not Ursula Burns. I just happen to be the person standing up at this point representing Xerox." She is taking over at a time when investors are eager to see Xerox build both revenue and earnings. She wants its 130,000 employees to get over the past, take more initiative, and become more fearless. She is encouraging them to take risks but not be reckless. She defines Xerox's culture as one of teamwork and the entrepreneurial spirit. Another contributing factor to Team Xerox's success is a shared vision. As Ms. Burns explains it, "The importance of having the people in the company completely aligned around a common set of goals, and using that alignment to drive a sense of urgency, focus and commitment, is crucial." Imploring all her followers to step up and take more initiative in solving problems, she said, "I cannot be viewed as the solution to all problems in this company." About accomplishments that have taken place since she became CEO, such as major product announcements, launches of new businesses, acquisitions, and major operational efficiencies, she said they are all the "collective accomplishments of Team Xerox." This in fact is an example of her modesty and desire to share credit for an action that many analysts and investors criticized her for taking. According to the Wall Street Journal, the cornerstone of Ms. Burns's strategy, which she dubbed Xerox 2010, was the acquisition of Dallas-based service company Affiliated Computer Services (ACS) for $6.4 billion. At the time critics said it was the wrong move because it was too costly in the midst of a recession and too large—ACS had 74,000 employees compared to Xerox's 54,000 at the time. A year later, Ms. Burns is being lauded for the move. The service sector of Xerox is now bringing in nearly half of the company's total revenue.88 In a recent speech to investors and analysts at the New York Stock Exchange, Ms Burns talked about "the new Xerox." "A lot has changed. We have been working on transforming the company. We're confident we have the right strategy, the competitive advantage and a disciplined focus on executing," she said. She is intent on transforming Xerox into a service-based business. This is a defensive strategy aimed at protecting the Xerox from the growing threat posed by digital technology to its traditional hardware line.89 There is no doubt that her influence inside and outside Xerox is growing. She was recently named by President Barack Obama to help lead the White House national program on STEM (science, technology, engineering, and math) in November 2009 and was appointed vice chair of the President's Export Council in March 2010.

1. In your opinion is Ursula Burns more of a charismatic leader, transformational leader, or both?
2. Exhibit 9.5 identifies transformational and charismatic leader behaviors. In your opinion, which of the behavioral components does Ms. Burns exemplify?
3. A key attribute of servant leadership is that it transcends self-interest to serve the needs of others. Does Ursula Burns fit this bill?
4. Exhibit 9.4 identifies the qualities of charismatic and transformational leaders. Based on your knowledge of Ms. Burns, which of the 12 qualities can you directly attribute to her?
5. Every leader has a sense of his or her personal meaning, described in the text as the degree to which people's lives make emotional sense and to which the demands confronted by them are perceived as being worthy of energy and commitment Based on the facts of the case, what is/are the sources from which Burns derives her personal meaning? (Note: personal meaning is discussed in the chapter as one of the factors used to differentiate between charismatic and transformational leadership).

Review for Thought:
* Think of a leader from your work or education experience you think has charisma. Explain why you think he or she has charisma and how it is demonstrated.
* With respect to this leader, how did he or she impact your work ethic, job satisfaction, or performance? Explain.
* Was this leader a transformational leader or a transactional leader? Explain.