Compare and Contrast Any Two Theories of Leadership Essay Example

Compare and Contrast Any Two Theories of Leadership Essay Compare and contrast any two theories of leadership In the following essay I will look at leadership, its definition and compare and contrast two theories behind it. I will firstly see if there is a distinction between leadership and management as suggested by John Kotter(1990) who goes on further to stress that organisations require both a leader and a manager but the function can be provided by a single individual. I will then look at some definitions of leadership such as that by Bryman(1999), â€Å"The process of influencing the activities of an organized group in its efforts toward goal setting and goal attainment†. The two leadership theories which I will compare and contrast are transactional and transformational. I will also look at other factors such as organisational type and gender and see what impact they have on the above theories. I will finally conclude with what I have found and understood from researching this topic. What is leadership and is it different from management? Before I examine any theories on this subject it is important to understand what is meant by leadership. The Cambridge Advanced Learners Dictionary (2010), givesâ€Å"the set of characteristics that make a good† as one of its three definitions for leadership. We will write a custom essay sample on Compare and Contrast Any Two Theories of Leadership specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Compare and Contrast Any Two Theories of Leadership specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Compare and Contrast Any Two Theories of Leadership specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Belbin (1981) suggests that leadership is not only about the job but also about the quality that could be brought to the job through leadership. I understand leadership to be a method or process by a group or individual to produce desired outcomes. This is on par with Bryman’s (1999) definition as quoted in the introduction. So how does this differ from management? The dictionary definition of â€Å"the technique or practice of managing or controlling†, Collins (2003) and this is similar in other references. Adair (1997) asks â€Å"What does it matter if the cat is black or white, as long as it catches mice†. Perhaps the two terms are interchangeable as they both rely on the application of influence to get a workforce to commit to accomplishing a given task. From Adairs statement it could be argued that they are different descriptions of the same thing. Transactional leadership relies on the workers behaviour being influenced by means of reward by the leader. There is co-dependency between the leader and the worker, one has to offer the other something for a desired outcome. A real life example of transactional leadership is the use of commission in the sales industry. Performance to the leader’s requirement or expectation is rewarded. This could be seen as one of the advantages of this type of leadership, that is it provides a clear idea of what is required. Watch any episode of the BBC television programme ‘The Apprentice’ and this theory is clearly demonstrated throughout. The main disadvantage becomes clear, the assumption is everyone is motivated by monetary rewards and this is simply untrue. In contrast transformational leadership is the infusion of motivation and inspiration into the workers to do the work by their leader as suggested by Anita(2008)â€Å"You have to look at leadership through the eyes of the followers and you have to live the message. What I have learned is that people become motivated when you guide them to the source of their own power and when you make heroes out of employees who personify what you want to see in the organisation. † The election campaign that was run by the now US President, Barak Obama, was transformational. Obama influenced the voters with his charisma and motivated them by addressing issues that appealed to them. This highlights another disadvantage of transactional leadership. It does not engage the worker into dialogue with the leader to come up with alternate solutions. Transformational leadership inspires individuals and groups to think more openly about what affects them and solutions that would resolve their issues. However this level of freedom could result in a lot of different directions to develop a single vision given by the leader. Does the type of organisational sector, private or public, have an impact on the type of leadership theory that can be applied? It could be argued that a leader’s level in an organisation and the type of organisation will have an impact on both their behaviour and their leadership style. Bass(1985) argues that organic, less constrictive, environments such as the private sector would most likely produce transformational leaders. This is in contrast to the transactional leadership found within the public sector which is more constrictive, mechanistic. Public entities such as local councils and the Metropolitan Police Service, MPS, have policy and procedures as well as organisational traditions and values. The MPS changes its values and goals each time the Commissioner changes. Similarly local councils will change their targets and goals according to the political party running them locally and nationally. Changes in these organisations are often due to high level decisions being made and the results to be followed and achieved by the lower ranks. In contrast private companies such as Semco, manufacturing, have more flexible arrangements. Employees were given the freedom to arrange their working hours with their co-workers and have taken responsibility over everything from the canteen food menus to the location of new plants and new product designs. This highlights some advantages of this type of leadership. It creates learning opportunities and looks forward into the future. This is in contrast to the dealing of present issues that transactional leadership addresses by setting short term goals. Also unlike transactional leadership it motivates workers to work beyond self- interests. As women gain positions of influence and power in business due to varying factors, ranging from gender and equality legislations to shifts in attitudes, the possible relationship between gender and leadership comes up. Does gender have an impact on leadership? I would expect there to be an impact due the socialisation, cultural beliefs and expectations of the society we live in. Peters and Waterman(1982) reported that ‘irrational intuitive qualities which they describe as feminine are required for management success. The British Institute of Management (1994) argue that the female ways of managing will be more appropriate in the millennium†. They go on further to say that â€Å"organisational structures will be less hierarchical, will rely more on teamwork and consensus management, and ‘feminine’ skills of communication and collaborative work will come to the fore†. I understand this to be transformational leadership. However there is belief that the gender of a leader does not really affect their leadership style. .. The association of women with nurturance, warmth and intuition lies at the heart of traditional and oppressive conceptions of womanhood values ascribed to women in a world where men are more powerful than woman† (Wajcman 1998). In conclusion Transactional and transformational leadership theories are differ ent in their approaches. While they can be stereotyped as belonging to a specific gender the leader requires a balance of both as suggested by Bass(1985). This essay has been limited by a number of things. The word limit has not allowed me to look at all aspects of transactional and transformational leadership. I have not fully looked at or develop the Multifactor Leadership Questionnaire (MLQ) that Bass(1985) developed to assess the different leadership styles and the research that has been carried out on this. My research in the subject indicated that both leadership types are relatively new concepts with information available being limited to mainly certain types of industry such as the military for transactional leadership. In regard to research carried out on links between gender and leadership it needs to be noted that western cultural beliefs and perception of women have an impact on the results. The fact that women bear children stereotypes them as maternal, caring and transformation in the leadership. From personal experience of working in retail and in the civil service both with women managers I can say this is not always the case. In both cases they used both styles of leadership depending on situation. The same applies to male managers I have worked with in both sectors who would normally be transactional leaders until they need to negotiate solutions at which point they become transformational. The drawbacks of one style are the strengths of the other. I think the two complement each other and should be as such. References Adair , J. (1997), Leadership Skills, Chattered Institute of Personnel and Development, London. Anita (2008) Bass B. M. (1985), Leadership and performance beyond expectations. New York: The Free Press. Belbin, R M (1981), Management Teams: Why they succeed or fail, Butterworth/Heinemen, Oxford. Boddy, D (2008), Management: An Introduction,4th Ed,Financial Times/Prentice Hall, Harlow. Colonel Homrig, M A (2001), Retrieved from Kotter, J P (1990), A force for Change: How leadership differs from management, Free Press, New York. McCrimmon, M (2008), Transformational Leadership; Benefits and Limitations of Transformational Leadership from

Cost-Push Inflation vs. Demand-Pull Inflation

Cost-Push Inflation vs. Demand-Pull Inflation The general increase in the price for goods in an economy is called inflation, and it is most commonly measured by the consumer price index (CPI) and the producer price index (PPI). When measuring inflation, it is not simply the increase in price, but the percentage increase or the rate at which the price of goods is increasing. Inflation is an important concept both in the study of economics and in real life applications because it affects peoples purchasing power. Despite its simple definition, inflation can be an incredibly complex topic. In fact, there are several types of inflation, which are characterized by the cause that is driving the increase in prices. Here we will examine two types of inflation: cost-push inflation and demand-pull inflation. Causes of Inflation The terms cost-push inflation and demand-pull inflation are associated with Keynesian Economics. Without going into a primer on Keynesian Economics (a good one can be found at Econlib), we can still understand the difference between two terms. The difference between inflation and a change in the price of a particular good or service is that inflation reflects a general and overall increase in price across the whole economy.   Weve seen that inflation is caused by some combination of four factors. Those four factors are: Supply of money goes up  Supply of goods and services goes downDemand for money goes downDemand for goods and services goes up Each of these four factors is linked to the core principles of supply and demand, and each can lead to an increase in price or inflation. To better understand the difference between cost-push inflation and demand-pull inflation, lets look at their definitions within the context of these four factors. Definition of Cost-Push Inflation The text Economics  (2nd Edition) written by American economists Parkin and Bade gives the following explanation for cost-push inflation: Inflation can result from a decrease in aggregate supply. The two main sources of a decrease in aggregate supply are: An increase in wage ratesAn increase in the prices of raw materials These sources of a decrease in aggregate supply operate by increasing costs, and the resulting inflation is called cost-push inflation Other things remaining the same, the higher the cost of production, the smaller is the amount produced. At a given price level, rising wage rates or rising prices of raw materials such as oil lead firms to decrease the quantity of labor employed and to cut production. (pg. 865) To understand this definition, we must understand the aggregate supply.  Aggregate supply is defined as the total volume of the goods and services produced in a country or the supply of goods. To put it simply, when the supply of goods decreases as a result of an increase in the cost of production of those goods, we get cost-push inflation. As such, cost-push inflation can be thought of like this: prices for consumers are pushed up by increases in cost  to produce. Essentially, the increased production costs are passed along to the consumers. Causes of Increased Cost of Production Increases in cost could relate to labor, land, or any of the factors of production.  It is important to note, however, that the supply of goods can be influenced by factors other than an increase in the price of inputs. For instance, a natural disaster can also impact the supply of goods, but in this instance, the inflation caused by the decrease in the supply of goods would not be considered cost-push inflation. Of course, when considering cost-push inflation the logical next question would be What caused the price of inputs to rise? Any combination of the four factors could cause an increase in production costs, but the two most likely are factor 2 (raw materials have become more scarce) or factor 4 (demand for raw materials and labor have risen). Definition of Demand-Pull Inflation Moving on to demand-pull inflation, we will first look at the definition as given by Parkin and Bade in their text Economics: The inflation resulting from an increase in aggregate demand is called demand-pull inflation. Such inflation may arise from any individual factor that increases aggregate demand, but the main ones that generate ongoing increases in aggregate demand are: Increases in the money supplyIncreases in government purchasesIncreases in the price level in the rest of the world (pg. 862) Inflation caused by an increase in aggregate demand  is inflation caused by an increase in the demand for goods. That is to say that when consumers (including individuals, businesses, and governments) all desire to purchase more goods than the economy can currently produce, those consumers will compete to purchase from that limited supply which will drive prices up. Consider this demand for goods a game of tug of war between consumers: as demand increases, prices are pulled up. Causes of Increased Aggregate Demand Parkin and Bade listed the three primary factors behind increases in aggregate demand, but these same factors also have a tendency to increase inflation in and of themselves. For instance, an increase in the money supply is factor 1 inflation. Increases in government purchases or the increased demand for goods by the government is behind factor 4 inflation. And lastly, increases in the price level in the rest of the world, too, causes inflation.  Consider this example: suppose you are living in the United States. If the price of gum rises in Canada, we should expect to see fewer Americans buying gum from Canadians and more Canadians purchasing the cheaper gum from American sources. From the American perspective, the demand for gum has risen causing a price rise in gum; a factor 4 inflation. Inflation in Summary As one can see, inflation more complex than the occurrence of rising prices in an economy, but can further be defined by the factors driving the increase. Cost-push inflation and demand-pull inflation can both be explained using our four inflation factors. Cost-push inflation is inflation caused by rising prices of inputs that cause factor 2 (decreased supply of goods) inflation. Demand-pull inflation is factor 4 inflation (increased demand for goods) which can have many causes.