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Nick Saraev In addition to growing larger, companies are also growing more sophisticated in terms of hierarchy. Today, we have chief operating officers, chief marketing officers, chief financial officers, and a veritable smorgasbord of other C-level executives.
But with this growth in organizational complexity also comes a need for better decision making. And that’s where leadership theories come into play.
Leadership theories are important because they help to inform the decision-making process. They provide a framework for thinking about decisions and the various factors that need to be considered.
In this article, we’ll cover five ways that leadership theories influence decision making, including:
1. The Decision-Making Process
2. The Role of the Leader
3. Group Dynamics
4. Organizational Structure
5. Ethics and Values
Let’s get started!
What are leadership theories?
Before we get into how leadership theories influence decision making, let’s first take a quick look at what leadership theories are.
Leadership theories are frameworks that help to explain how decisions are made and the role that leaders play in the process. They provide a way of thinking about decision making and the various factors that need to be considered.
There are a number of different leadership theories, but they can generally be grouped into two categories: contingency theories and transformational theories.
Contingency theories
Contingency theories suggest that the best approach to decision making depends on the situation. There is no one right way to make decisions, and the best approach depends on the circumstances.
Transformational Theories
Transformational theories, on the other hand, suggest that leaders can have a transformative impact on their organizations. They argue that leaders can inspire employees to reach new levels of performance and achieve great things.
Both contingency and transformational theories are important and have their place in the decision-making process. However, in this article, we’ll be focusing on contingency theories.
1. The Decision-Making Process
Simply put, leadership theories help to inform the decision-making process. They provide a framework for thinking about decisions and the various factors that need to be considered in order for a business to make the best possible choice.
The decision-making process can be broken down into five steps:
1. Identify the problem or issue
2. Gather information and assess the situation
3. Develop potential solutions
4. Evaluate the solutions
5. Choose a solution and implement it
Leadership theories can help to inform each of these steps. For example, a contingency theory might suggest that the best way to assess the situation is to look at the company’s resources and its competitive environment.
Or, a transformational theory might suggest that a leader can inspire employees to come up with innovative solutions to problems.
Leadership theories help to inform the decision-making process by providing a framework for thinking about decisions, rather than simply proceeding off-the-belt (as many organizations are unfortunately wont to do).
2. The Role of the Leader
Leadership theories also play an important role in shaping our understanding of the role of the leader.
Leaders are not just decision makers; they are also responsible for guiding and motivating their team. And leadership theories can help to explain how this works and can be accomplished in practice.
Transformational theories, in particular, argue that leaders can have a transformative impact on their organizations. They can inspire employees to reach new levels of performance and achieve great things, subverting the role of ‘worker’ and transcending to one where they’re in charge of making business-critical decisions. Nobody knows how your business works better than those who are actively on the ground — strong leaders acknowledge this and use their acumen to help employees thrive.
Naturally, leadership is an important role and one that should not be underestimated. Leaders play a critical role in setting the tone for their team and helping them to achieve their goals, while managing the inevitable failures (better understood as hiccups) along the way.
3. Group Dynamics
Group dynamics are also an important consideration in the decision-making process. Leaders need to be aware of the impact their decisions have on group dynamics and how it can affect team morale and performance.
Group dynamics are the collective behavior of a group of people as they interact with each other. They can be positive or negative, and they can have a significant impact on team morale and performance.
In addition to structure and leadership, leaders need to be aware of the impact their decisions have on group dynamics and work to ensure that the dynamics are positive. This can be a difficult task, but it is important for the success of the team.
For example, some employees just won’t work well together no matter what the leader does. In this case, the leader may need to make a tough decision and break up the team, or silo departments in order to minimize the negative impact of the group dynamics.
Or perhaps if the leader decides to make a change that the team is not in favor of, it can cause disharmony and negatively affect performance. On the other hand, if the leader makes a decision that the team agrees with, it can help to improve morale and performance. In this way, leaders are democratically elected by their team, and they are able to guide the group’s decisions with better facilitation skills.
4. Organizational Structure
Organizational structure is another factor that needs to be considered in the decision-making process. Organizational structure refers to the way an organization is managed and how it is divided into different departments and levels — think marketing, finance, and more.
Different organizational structures have different implications for decision making. For example, a centralized organizational structure will place more power in the hands of senior executives while a decentralized structure will give more power to lower-level employees.
Organizational structure is an important consideration and leaders need to be aware of the implications it has for decision making.
5. Ethics and Values
Finally, leadership theories also play an important role in shaping our understanding of ethics and values. Leaders are not just responsible for making decisions, they are also responsible for ensuring that those decisions are ethical and reflect the values of the organization.
Leadership theories can help to explain how this works. For example, transformational theories argue that leaders can inspire employees to reach new levels of performance and achieve great things. This is an important responsibility and one that should not be taken lightly.
Leadership theories are an important part of the decision-making process. They provide a framework for thinking about decisions and the various factors that need to be considered. In addition, they help to shape our understanding of the role of the leader and the impact that leaders can have on their teams.
How to use leadership theories in-practice
In reality, leadership theories aren’t just used in the boardroom by high-level executives. They can be used in any organization, at any level.
Applying them effectively starts with learning to embody the theory in question. Once you understand the theory, you can start to apply it in your own life and work — but what does that mean?
Embodying the theory
Embodying a leadership theory doesn’t mean that you have to become a CEO or even a manager. It simply means that you need to understand the theory and how it can be applied in different situations.
For example, the theory of situational leadership suggests that the best approach to decision making depends on the situation. A good leader needs to be able to adapt their approach based on the circumstances, and be flexible in their thinking.
This doesn’t mean that they have to be a chameleon, changing their personality to match the situation. It means that they need to be aware of the different factors that need to be considered and how the decision will impact different people and groups, while retaining a core set of values. With only 48% of companies satisfied with their leadership, that can mean the difference between a successful company and one that fails.
Or perhaps the theory of servant leadership is more your style. This theory suggests that the best leaders are those who put the needs of their employees first. They see themselves as servants to their team, and work to meet the needs of their employees.
This doesn’t mean that they are subservient or do everything their employees ask them to. It means that they are aware of the needs of their team and work to meet them, whether it’s through providing resources, giving direction, or simply being supportive.
The key is to understand the theory and how it can be applied in different situations.
Final thoughts: leadership theories
Leadership theories are important because they help to inform the decision-making process. They provide a framework for thinking about decisions and the various factors that need to be considered.
In this article, we’ve looked at five ways that leadership theories influence decision making, including the decision-making process, the role of the leader, group dynamics, organizational structure, and ethics and values.
While there are a number of different leadership theories, like situational and servant leadership, contingency and transformational theories are the most important in terms of informing decision making.
Contingency theories suggest that the best approach to decision making depends on the situation. There is no one right way to make decisions, and the best approach depends on the circumstances.
Transformational theories, on the other hand, suggest that leaders can have a transformative impact on their organizations. They argue that leaders can inspire employees to reach new levels of performance and achieve great things.
With these tools in mind, leaders can make better decisions that are more informed and tailored to the specific situation.