The Value Based Leadership Theory

The Value Based Leadership Theory

Managers do things right

Leaders do the right things…

Value Based Leadership Theory

Moscow 1999

“Leaders are dealers in hope” Bonaparte Napoleon

“We will build a winning tradition” Vince Lombardi to the Green

Bay Packers

Consider the above quotations. These statements of leaders reflect

commitment to a value position. In this paper I am going to describe a

brand new theory of leadership, developed by Professor House - the Value

Based Leadership Theory. I will also present a preliminary test of several

hypotheses derived from Value Based Theory. The tests of hypotheses are

based on data descriptive of 25 relationships between chief executives and

their immediate subordinates. As a concrete example, I am going to present

the results of the real interviews, which took plase in Russia in 1999

among the CEOs. In the process of testing these hypotheses I replicate the

study of charismatic leadership in the U. S. presidency conducted by House,

Spangler & Woycke (1991) using a sample of chief executive officers and

different measurement methods. What I am trying to prove in this paper is

the following: It was considered to think that managers are always the

leadres in the organization. This opinion was proved to be wrong. According

to the first research which appaered in press in the end of 70-s: manager

is the position, and leader is the person who leads others to the desired

result. According to the personal trends and characteristics, managers

should be leaders, and they are, but not always. The question of leadership

is a very interesting topic for me, personally.

I am deeply interested in the question of leadership, and I do think,

that this question and the existing theories have a long life to live.

Leadership is a real fact, which has already been proved. You can be a born

leader, but you also can create the leader in yourself. You can manage to

influence, motivate and enable others. You can succeed, because there is

nothing impossible for a human being. Especially, if he is intelligent on

the one hand and really wishes to achieve something on the other.

A BRIEF HISTORICAL REVIEW

During the period between the mid-seventies and the present time a

number of theories have been introduced into the leadership literature.

These new theories and the empirical research findings constitute a

paradigm shift in the study of leadership. The theories to which I refer

are the 1976 Theory of Charismatic Leadership (House, 1977), the

Attributional Theory of Charisma (Conger & Kanungo, 1987), and the

Transformational Theory (Burns, 1978; Bass, 1985), and Visionary Theories

of Leadership (Bennis & Nanus, 1985; Sashkin, 1988; Kousnes & Posner,

1987).

I believe these theories are all of a common genre. They attempt to

explain how leaders are able to lead organizations to attain outstanding

accomplishments such as the founding and growing of successful

entrepreneurial firms, corporate turnarounds in the face of overwhelming

competition, military victories in the face of superior forces, leadership

of successful social movements and movements for independence from colonial

rule or political tyranny. They also attempt to explain how certain

leaders are able to achieve extraordinary levels of follower motivation,

admiration, respect, trust, commitment, dedication, loyalty, and

performance.

The dependent variables of earlier theories are follower expectations,

satisfaction, and normal levels of performance. The dependent variables of

the more recent theories include a number of affective consequences such as

followers’ emotional attachment to leaders; followers’ emotional and

motivational arousal, and thus enhancement of follower valences and values

with respect to the missions articulated by leaders; followers’ trust and

confidence in leaders; and values that are of major importance to the

followers. These more recent theories also address the effect of leaders

on several follower conditions not addressed in earlier theories, such as

followers' self-worth and self-efficacy perceptions, and identification

with the leader’s vision.

Earlier theories describe leader behavior that are theoretically

instrumental to follower performance and satisfy follower needs for

support, generally referred to as task-and person-oriented leader behaviors

(Fleishman & Harris, 1962; Katz & Kahn, 1952; Likert, 1961; Feidler, 1967;

House, 1971, House, 1996). In contrast, the more recent theories stress

the infusion of values into organizations and work through leader behaviors

that are symbolic, inspirational and emotion arousing.

Earlier theories take follower attitudes, values, desires, and

preferences as given. The more recent theory claim that leaders can have

substantial, if not profound effects on these affective and cognitive

states of followers. Accordingly, leaders are claimed to transform both

individuals and total organizations by infusing them with moral purpose,

thus appealing to ideological values and emotions of organizational

members, rather than by offering material incentives and the threat of

punishment, or by appealing to pragmatic or instrumental values.

Also, McClelland (1975) introduced a theory intended to explain leader

effectiveness as a function of a specific combination of motives referred

to as the Leader Motive Profile (LMP). As will be shown below, this theory

complements the newer theories referred to above.

Since the early 1980s, more than fifty empirical studies have been

conducted to test the validity of the more recent theories of leadership.

Empirical evidence is discussed in more detail below. First, however, the

valued based leadership theory will be described.

VALUE BASED LEADERSHIP THEORY

The theory is intended to integrate the newer theories and the

empirical evidence alluded to above. Value based leadership is defined as

a relationship between an individual (leader) and one or more followers

based on shared strongly internalized ideological values espoused by the

leader and strong follwower identification with these values. Ideological

values are values concerning what is morally right and wrong. Such values

are expressed in terms of personal moral responsibility, altruism, making

significant social contributions to others, concern for honesty, fairness,

and meeting obligations to others such as followers, customers, or

organizational stakeholders. Value based leadership is asserted to result

in: a) exceptionally strong identification of followers with the leader,

the collective vision espoused by the leader, and the collective; b)

internalized commitment to the vision of the leader and to the collective;

c) arousal of follower motives that are relevant to the accomplishment of

the collective vision; and d) follower willingness to make substantial self

sacrifices and extend effort above and beyond the call of duty.

The title Value Based Leadership Theory has been chosen to reflect the

essence of the genre of leadership described by the theory. The 1976

theory of charismatic leadership is a precursor to the value based

leadership theory. The title “charismatic leadership” has been chosen

because of its cavalier popular connotation. The term charisma is often

taken in the colloquial sense, rather than the somewhat technical sense

conceived by Max Weber. The word charisma commonly invokes impressions of a

person who is charming, attractive, and sometimes macho, flamboyant, and

sexually appealing. In contrast, Value Based Leadership is intended to

convey the notion of a leader who arouses follower latent values or causes

followers to internalize new values. Such value communication can be

enacted in a quiet, non-emotionally expressive manner or in a more

emotionally expressive manner. Examples of leaders who have communicated

values to followers in an emotionally expressive manner are Winston

Churchill, Lee Iacocca, Martin Luther King, and John F. Kennedy. Examples

of leaders who have communicated values to followers in a less emotionally

expressive manner are Mother Teresa, Mahatma Ghandi, and Nelson Mandela.

A second reason for abandoning the term charisma is that in current

usage it implies that the collectivities led by charismatic leaders are

highly leader-centered and that the leader is the source of all, or almost

all, organizational strategy and inspiration of followers. One popular

conception of charismatic leadership is that it is necessarily highly

directive and disempowering of followers (Lindholm, 1990). In this paper,

I hope to demonstrate the huge potential for value based leadership to be

empowering and effective.

The Process and Effects of Value Based Leadership

In this section, an overview of what Value Based leadership is and how

it works is presented. There is both theory and empirical evidence to

suggest that value based leadership has a substantial effect on

organizational performance. Waldman and his associates reported two studies

of value based leader behavior as an antecedent to organizational

profitability (Waldman, Ramirez & House, 1996; Waldman, Atwater & House,

1996). In these studies value based leadership accounted for between

fifteen and twenty five percent of firm profitability over the three years

following the time at which value based leadership was assessed. The

design of these studies controlled for executive tenure, firm size,

environmental turbulence, and prior firm profitability.

The theoretical process by which value-based leadership functions is

described in the following paragraphs. Evidence for this process is

presented in more detail in later sections in which the specific theories

contributing to value based leadership theory is discussed.

Value based leaders infuse collectives, organizations, and work with

ideological values by articulating an ideological vision, a vision of a

better future to which followers are claimed to have a moral right. By

claiming that followers have this right, the values articulated in the

vision are rendered ideological - expressions of what is morally right and

good. Ideological values are usually, if not always, end values which are

intrinsically satisfying in their own right. In contrast to pragmatic

values such as material gain, pay, and status, end values cannot be

exchanged for other values. Examples of end values are independence,

dignity, equality, the right to education and self-determination, beauty,

and a world of peace and order. Ideological values theoretically resonate

with the deeply held values and emotions of followers.

Acccording to value based leadership theory the visions articulated by

this genre of leaders are consistent with the collective identity of the

followers, and are emotionally and motivationally arousing. Emotional and

motivational arousal induces follower identification with the collective

vision and with the collective, results in enhncement of follower self-

efficacy and self-worth, and have powerful motivtional effects on followers

and on overall orgnizational performance.

Leaders of industrial and government organizations often articulate

visions for their organizations. Such visions need not be grandiose.

Visions of outstanding leaders in the normal work world can embrace such

ideological values as a challenging and rewarding work environment;

professional development opportunities; freedom from highly controlling

rules and supervision; a fair return to major constituencies; fairness,

craftsmanship and integrity; high quality services or products; or respect

for organizational members, clients or customers and for the environment in

which the organization functions. Whether conceived solely by the leader,

by prior members of the collective, or jointly with followers, the

articulation of a collective ideological vision by leaders theoretically

results in self-sacrifice and effort, above and beyond the call of duty, by

organizational members and exceptional synergy among members of the

collective.

Follower respect, trust, and self-sacrifice are stimulated by

identification with the values inherent in the leader's vision and the

leader's demonstration of courage, determination and self-sacrifice in the

interest of the organization and the vision. According to this

perspective, value based leaders use follower value identifiction, and the

respect and trust they earn to motivate high performance and a sense of

mission in quest of the collective vision, and to introduce major

organizational change. For some individuals, latent values are brought to

consciousness as a result of the vision articulated by value based leaders.

Also, some individuals change their values to be consistent with those of

the leader.

Visions articulated by value based leaders need not be formulated

exclusively by a single leader. The collective vision may have been

initially conceived by leaders and members of the collective who preceded

the current leader. In this case, the leader is one who perpetuates the

vision by continuing to communicate it and institutionalizing it through

the establishment and maintenance of institutional means such as

strategies, policies, norms, rituals, ceremonies, and symbols.

Alternatively, organizational visions can be formulated by leaders in

conjunction with organizational members.

The effects of the articulation of and emphasis on ideological values

are rather profound. Organizational members become aware of ideological

values that they share with the leader and as a collective. Members

identify with the collective vision and with the organization--thus a high

level of collective cohesion is developed. Collaborative interactions

among organizational members is enhanced. Individuals experience a sense

of collective efficacy and a heightened sense of self-esteem as a result of

their cohesion and the leader's expressions of confidence in their ability

to attain the vision. Further, motives relevant to the accomplishment of

the vision are aroused and organizational members come to judge their self-

worth in terms of their contribution to the collective and the attainment

of the vision.

The result is strongly internalized member commitment, and intrinsic

motivation to contribute to the organization and to the collective vision.

Members are more inclined to support changes in technology, structure and

strategies introduced by top management, which may result in an

organizational culture characterized by values oriented toward teamwork and

meeting customers', clients', constituents' and competitive needs. There

ensues a marked reduction in intra-organizational conflict and a high

degree of team effort and effectiveness. As noted above, members expend

effort above and beyond the call of duty, and sacrifice their self-interest

in the interest of the organization. As a result, individual motivation,

organizational culture, strategy and structure are likely to become aligned

with the collective vision.

A reinforcing process may also occur whereby organizational members

increase their respect for and confidence in the leader and each other

based on the resulting organizational success. As a result, their initial

confidence and motivation is further reinforced. Such effects are

consistent with the notion of romanticized leadership (Meindl, Ehrlich &

Dukerich, 1985). The resulting increased confidence in the leader in turn

gives the leader more influence and thus contributes to the leader's

ability to further influence organizational performance.

This is an “ideal type” theoretical scenario. Clearly all the aspects

of this scenario will not always come to fruition in response to value

based leadership. No such claim is made. Rather, it is argued that

organizational members will be motivated on the basis of shared

internalized values and identification with the leader and the collective,

which are far more motivational than alternative bases of motivation.

It is possible that value based leaders may introduce flawed

strategies and that the result may be organizational decline or failure

rather than improvement and success. It is also possible that the leader

may stand for socially undesirable values such as ethnocentrism, racism,

persecution, dishonesty, or unfair or illegal competitive practices

(Lindholm 1990). Regardless of the strategy or values expressed by the

leader, it is argued that a relationship based on value identification

between leader and organizational members will result in increased member

commitment and motivation, as well as increased organizational cohesion.

EMPIRICAL EVIDENCE

There is extensive empirical evidence with respect to the effects of

behaviors specified by value based leadership theory. Charismatic,

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