среда, 30 апреля 2025 г.

Behavioral Theory of Leadership: Definition, Approach in Organisational Behavior

 


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    What makes a great leader? The question has captivated minds and fueled countless discussions throughout history. The quest for effective leadership is a timeless pursuit. As we navigate the complex and ever-evolving landscape of the modern world, the answer to this question becomes increasingly important.


Leadership is not a one-size-fits-all concept; it’s a dynamic interplay of various factors. One prominent theory that has gained significant attention in leadership is the Behavioral Theory of Leadership. This theory focuses on inherent traits in leaders’ tangible actions and behaviors.

In the sections ahead, we’ll explore the Behavioral Theory of Leadership, including its origins, influential studies, leadership styles, key traits, pros and cons, and real-life examples.

Behavioral Theory Of Leadership

To grasp the essence of the Behavioral Theory of Leadership, we must first shift our focus from traditional leadership theories, which often highlight inherent traits such as charisma or intelligence. Instead, Behavioral Theory directs our attention to leaders’ observable actions, behaviors, and responses in various situations.

This theory proposes that leadership is not a fixed trait but a set of learned behaviors. It suggests that anyone can become an effective leader with the right guidance and willingness to adapt. Behavioral Theory views leadership as a skill that can be developed and refined over time.

Unlike other theories that rely heavily on abstract concepts, the Behavioral Theory of Leadership is concrete and practical. It encourages leaders to analyze their actions and adjust their behavior to suit different circumstances and the needs of their team.

One of the key ideas behind this theory is that leadership effectiveness is not determined solely by who you are but by what you do. It’s about the actions you take, the decisions you make, and the way you interact with your team. In this sense, a theory democratizes leadership, suggesting that anyone can improve their leadership abilities through deliberate practice and self-awareness.

As we explore further, we’ll delve into the origins of this theory and discover the studies that laid its foundation, shedding light on how it has shaped our understanding of leadership in various contexts.

Origins Of Behavioral Theory

The roots of the Behavioral Theory of Leadership trace back to the 1940s and 1950s when leadership studies underwent a transformative shift. Researchers, including Kurt LewinDouglas McGregor, and Robert Blakebegan questioning the prevailing emphasis on inherent traits as the primary determinants of effective leadership.


This paradigm shift marked a crucial moment in leadership studies. It led to a realization that leadership effectiveness could not be simplistically attributed to specific personality traits. Instead, scholars started examining the actual behaviors exhibited by leaders across various contexts.

Observations of leaders in diverse settings, such as businesses and the military, revealed a spectrum of behaviors contributing to leadership success. This shift from traits to behaviors laid the foundation for the Behavioral Theory of Leadership, emphasizing the practical actions and responses that make leaders effective.

In the next section, we will dive into influential studies by these researchers, which played a pivotal role in shaping Behavioral Theory, offering valuable insights into leadership behaviors and their impact.

3 Influential Studies on Behavioral Leadership

To fully comprehend the Behavioral Theory of Leadership, it’s crucial to explore the influential studies that laid the groundwork for this theory. Three key studies, in particular, stand out in shaping our understanding of leadership behaviors:

1. Ohio State University Study

Imagine you’re in a high-stakes situation where you must lead a team. Would you choose to be a leader who fosters warmth, trust, and support among your team members, or would you opt for a leader who defines roles, sets clear expectations, and organizes work precisely?


Your decision could make or break the success of your team. This dilemma lay at the heart of a groundbreaking mid-20th century study conducted by researchers at The Ohio State University, which revolutionized our understanding of leadership behavior. Researchers at Ohio State, including Ralph M. Stogdill and Fred Luthans, aimed to identify the fundamental dimensions of leadership behavior.

This study involved extensive surveys and observations of leaders across various organizations. The findings revealed two primary dimensions of leadership behavior: consideration and initiating structure. Consideration refers to the degree of warmth, support, and trust a leader shows their followers. Initiating structure pertains to how a leader defines roles, sets clear expectations, and organizes work.

The Ohio State University study laid the foundation for understanding how leadership styles impact team dynamics and organizational outcomes. It underscored the importance of adaptable leadership behavior, depending on the situation’s needs and the team.

2. University of Michigan Study

Concurrently, researchers at the University of Michigan, including Rensis Likert and Daniel Katz, conducted a study that expanded our understanding of behavioral leadership. This study aimed to identify leadership styles based on leader behaviors.


The University of Michigan study identified two primary dimensions of leader behavior: employee-oriented and production-oriented. Employee-oriented leaders were characterized by their focus on building strong relationships with their team members, while production-oriented leaders prioritized achieving tasks and goals.

This study highlighted the importance of great leaders balancing their focus on people and productivity, depending on the context. It emphasized that effective leaders can adapt their behaviors to meet the evolving needs of their team and organization.

3. Blake And Mouton Managerial Grid

Imagine a grid that can decipher your leadership style, revealing whether you prioritize your team’s well-being or task accomplishment. Would you fall into the category of a good leader who values people above all else or one who emphasizes production and results?


Robert R. Blake and Jane S. Mouton introduced the Managerial Grid, a model that further enriched our understanding of behavioral leadership. This grid-based approach categorized leadership behaviors into different styles based on two dimensions: concern for people and concern for production.

The Managerial Grid identified five primary leadership styles: impoverished, country club, middle-of-the-road, produce or perish, and team leader. Each style represents a unique combination of concern for people and production. For instance, the team leader style balances high concern for both people and production, making it an ideal model for effective leadership.

The Managerial Grid provided a practical framework for leaders to assess and improve their leadership behaviors, aligning them with organizational goals and the well-being of their team.

These studies transformed our understanding of leadership behaviors and formed the basis of Behavioral Theory. Next, we’ll explore these behavioral leadership styles in depth, examining their traits and practical applications.

10 Types Of Behavioral Leadership

The Behavioral Theory of Leadership identifies a spectrum of leadership styles, each characterized by distinct behaviors exhibited by leaders. These styles reflect how leaders interact with their teams and approach their roles. Let’s explore ten types of behavioral leadership:


  1. People-Oriented Leaders: People-oriented leadership gained prominence as researchers observed leaders who built relationships and fostered team harmony. People-oriented leaders are known for their strong focus on interpersonal relationships. These leaders excel in active listening, empathy, and open communication.

  2. Task-Oriented Leaders: Task-oriented leadership emerged during the Industrial Revolution as the need for efficiency and productivity took center stage in organizational settings. Task-oriented leaders excel in setting clear objectives, devising action plans, and closely monitoring progress toward goals. These leaders are highly organized and often skilled at problem-solving.

  3. Participative Leaders: The concept of participative leadership gained prominence during the mid-20th century as organizations began to acknowledge the value of input from all levels of employees. Participative leaders actively involve team members in decision-making, valuing their input and perspectives. Participative leaders often inspire creativity and innovation within their teams by fostering a sense of inclusion and shared responsibility.

  4. Status-Quo Leaders: Status-quo leadership became prevalent when industries such as banking and finance relied on established procedures to maintain consistency and minimize risks. Status-quo leaders are inclined to maintain stability and resist significant changes. They prefer to stick with established routines and processes, often viewing them as tried-and-true methods.

  5. Indifferent Leaders: Indifferent leadership surfaced as a concern when studies revealed that lackluster leadership could lead to decreased employee motivation and organizational performance. Indifferent leaders exhibit a disengaged approach to leadership. They may need more enthusiasm, involvement, or concern for their team and organizational objectives.

  6. Dictatorial Leaders: Dictatorial leadership gained attention in leadership studies as scholars examined its effectiveness in different contexts. This style often became the default when immediate and unwavering decisions were required. Dictatorial leaders are characterized by their authoritative behavior and directive approach. They make decisions unilaterally and expect strict adherence to their instructions.

  7. Country Club Leaders: Country club leadership became more pronounced in the latter half of the 20th century when workplace culture and employee engagement became essential for organizational success. Country club leaders prioritize creating a relaxed and friendly work atmosphere. They often prioritize the comfort and well-being of their team members, which can boost morale and job satisfaction.

  8. Sound Leaders: This concept gained recognition as organizations focused on achieving productivity while ensuring employee satisfaction and collaboration. Sound leaders strike a balance between task-oriented and people-oriented behaviors. They are goal-driven but also recognize the importance of building positive relationships within the team. These leaders excel in setting clear objectives while fostering a collaborative and supportive work environment. 

  9. Opportunistic Leaders: Opportunistic leadership became apparent that leaders needed to adapt their approaches to varying situations. This prompted the study of leaders who demonstrated remarkable flexibility and responsiveness. Opportunistic leaders adjust their leadership style based on the situation and context. This versatility allows them to respond effectively to a wide range of challenges.

  10. Paternalistic Leaders: Paternalistic leadership gained attention as researchers explored the impact of leadership styles on employee loyalty and well-being, particularly in collectivist cultures. Paternalistic leaders take on a nurturing role within their teams. They prioritize their team members’ well-being and personal development, often treating them like family. 

Now that we’ve explored the various types of behavioral leadership , it is also important to understand that a leadership program can exponentially help in upskilling. Now, let’s shift our focus to the core traits that underpin this leadership approach

5 Traits of Behavioral Leadership

Behavioral leadership is characterized by a set of distinct traits and qualities exhibited by leaders who adopt this approach. These traits emphasize the importance of behavior, adaptability, and interpersonal relationship skills. Let’s explore these key traits associated with behavioral leadership:


1. Adaptive Leadership

Behavioral leaders are highly adaptable individuals. They can flexibly adjust their leadership style based on the situation’s specific needs and their team. Whether switching between a participative approach for team collaboration or a more directive style during a crisis, adaptability is a hallmark of behavioral leadership.

2. Effective Communication

Effective communication is at the core of behavioral leadership. These leaders excel in both verbal and non-verbal communication. They convey their ideas, expectations, and feedback clearly and concisely. Moreover, they actively listen to their team members, fostering open and transparent dialogue.

3. Empathetic Connection

Behavioral leaders are empathetic and attuned to the emotions and needs of their team members. They understand that showing empathy builds trust and rapport, enabling them to connect with their team more deeply. This empathy often leads to increased team satisfaction and motivation.

4. Decision Precision

Decision-making is crucial to leadership, and behavioral leaders excel in this domain. They make informed and rational decisions based on data, analysis, and consultation with their team when appropriate. Their ability to consider various perspectives and options contributes to effective decision-making.

5. Team Empowerment

Behavioral leaders empower their team members by providing autonomy and ownership over their work. They believe in the capabilities of their team and delegate responsibilities accordingly. This empowerment fosters a sense of ownership and accountability among team members.

Having examined the key traits of behavioral leadership, let’s now weigh the pros and cons of this leadership style.

3 Advantages Of Behavioral Leadership

Behavioral leadership offers several key advantages contributing to its effectiveness in various organizational settings. Among these advantages, the following three are particularly significant:


1. Adaptability To Diverse Situations

Behavioral leaders excel in adapting their leadership style to meet the unique demands of different situations. Whether facing a crisis, working on collaborative projects, or addressing routine tasks, they can pivot their approach effectively. This adaptability ensures that leadership remains relevant and impactful in a rapidly changing environment.

2. Improved Team Morale And Engagement

Behavioral leaders prioritize building positive relationships with their team members. Their empathetic and supportive approach fosters trust and boosts team morale. Engaged and motivated team members are more likely to be productive, committed to organizational goals, and willing to go the extra mile to succeed.

3. Effective Communication For Collaboration

Effective communication is a hallmark of behavioral leadership. Leaders who excel in communication can convey expectations, provide feedback, and share information clearly and transparently. This leads to better understanding and alignment among team members, reducing misunderstandings and conflicts.

3 Disadvantages of Behavioral Leadership

While behavioral leadership has numerous advantages, it has its drawbacks. Here are the three most essential disadvantages associated with this leadership style:


1. Potential for Inconsistency

Behavioral leaders’ adaptability can sometimes lead to inconsistency in their leadership approach. Team members may experience different leadership behaviors depending on the situation, which can be confusing and create unpredictability. Maintaining a balance between adaptability and consistency can be challenging for some leaders.

2. Time and Energy Demands

Behavioral leadership often requires leaders to invest significant time and energy in building relationships, resolving conflicts, and communicating effectively. While these efforts can yield positive results, they can also be resource-intensive, particularly in fast-paced or high-stress environments where leaders may have limited time and bandwidth.

3. Difficulty In Maintaining Authority

Behavioral leaders who prioritize participative and team-oriented approaches may sometimes need help to assert their authority and make tough decisions. This can be a disadvantage in situations that require clear direction and swift action. Team members may question the leader’s ability to make critical choices when needed.

Now that we’ve discussed the advantages and disadvantages of behavioral leadership let’s turn our attention to real-life examples of leaders who have successfully applied this approach in practical settings.

3 Real-Life Examples Of Behavioral Leadership

Behavioral leadership is not just a theoretical concept; it’s a practical approach many leaders have successfully applied in real-world situations. Here are some noteworthy examples of individuals who exemplify behavioral leadership:


Sheryl Sandberg

Sheryl Sandberg, the Chief Operating Officer of Facebook and author of “Lean In,” is known for her behavioral leadership style in the tech industry. She emphasizes effective communication, empowerment, and mentorship. Sandberg actively promotes gender equality and encourages women to take on leadership roles. Her leadership has contributed to developing a more inclusive and diverse workplace culture at Facebook.

Angela Merkel

Angela Merkel, the former Chancellor of Germany, exhibited behavioral leadership traits during her tenure. She was known for her pragmatic and adaptable approach to governance, particularly during crises such as the European financial and refugee crises. Merkel’s effective communication and willingness to engage in diplomacy with various international leaders earned her respect on the global stage.

Sundar Pichai

Sundar Pichai, the CEO of Alphabet Inc. (Google’s parent company), is recognized for his behavioral leadership style. He emphasizes open communication, transparency, and a collaborative work environment at Google. Pichai also encourages innovation and creativity among employees, empowering them to explore new ideas and initiatives. His leadership has contributed to Google’s continued growth and innovation.


Conclusion

In conclusion, behavioral leadership offers valuable insights and strategies for leaders in today’s ever-changing and interconnected world. By embracing the principles of this behavioral leadership theory and learning from its practical applications, leaders can become more adaptable, empathetic, and effective in guiding their teams toward success.


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Global Asset Management Report 2025 - From Recovery to Reinvention

 


Key Takeaways

To continue on the path to growth, asset managers must adapt to the new market forces that are reshaping the industry.

The global asset management industry reached a record $128 trillion in assets under management (AuM) in 2024, rising 12% from the previous year and marking a strong rebound from its decline in 2022.

Market performance drove 70% of revenue growth in 2024, underscoring the industry’s vulnerability to external conditions during a time of serious uncertainty.

This is the first chapter of a four-part annual report on the global asset management industry and the trends shaping its future. The full 2025 Global Asset Management Report: From Recovery to Reinvention is available as a PDF download.  

The global asset management industry reached a record $128 trillion in assets under management (AuM) in 2024, up 12% from the previous year. The gains marked a strong continuing rebound from the decline that occurred in 2022. Nevertheless, that growth can’t mask the deeper structural challenges that the industry faces, including margin pressures, shifting investor preferences, and intensifying competition.

Notably, market performance drove 70% of revenue growth in 2024, underscoring the industry’s vulnerability to external conditions—especially in a period marked by extreme market volatility, rapid shifts in sentiment, and heightened economic uncertainty arising in part from the disruptive effects of the US tariffs. To remain competitive and to navigate an increasingly uncertain future, firms must move beyond the recovery that has characterized the past two years and focus on reinventing themselves for the future.

Three Forces Reshaping the Industry

Three forces in particular are reshaping the industry: shifts in product offerings and approaches to distribution; industry-wide consolidation; and the need for radically leaner cost structures. In this report, we examine the transformation strategies that asset managers will need to adopt in order to meet these forces head-on and win in the next five to ten years.

Product offerings and distribution approaches are shifting. Increasingly, investors are demanding low-cost, efficient products such as exchange-traded funds (ETFs). Although ETFs command lower fees than legacy mutual funds do, they offer the potential for closer long-term customer ties. This is especially important at a time when the economics of the industry are tilting more and more toward the entity that owns the investor relationship—the distributor. In particular, asset managers might consider developing products in the relatively fragmented and nascent active ETF space.

Managers also have an opportunity to develop private market funds for retail investors, who are eager to tap into the higher risk-return profile that these asset classes offer. When it comes to matching private market assets with the liquidity and regulatory requirements of the retail market, firms must deal with some obstacles. But as a result, those that develop viable products and scalable distribution networks stand to benefit from a largely untapped market.

Industry-wide consolidation activity is increasing. Because no one-size-fits-all approach is available, many asset managers will need to consider enhancing their scale and scope through strategic partnerships or M&A to stay relevant. The consolidation we are seeing tends to revolve around strategies for broadening product offerings, expanding global presence, building technology capabilities, securing more permanent capital, and increasing proximity to clients.

Regardless of deal rationale, the key to success will lie in the execution. For example, as private and public managers converge to leverage their respective expertise in product formation and distribution, they will need thoughtful strategies for integrating their legacy differences in such areas as culture, compensation structures, and value creation.

Cost structures need to be radically leaner. Amidst ongoing pricing pressures and a shifting market landscape, the issue of costs has magnified. In response, many firms are increasingly adopting one of three strategic models to shape their cost structures—focusing their spending on investment management and trade execution; sales, marketing, and operations; or IT.

Although these models differ in focus, all of them can benefit further from a zero-based approach to cost management. This approach entails reexamining all costs and may lead to such changes as outsourcing noncore functions, automating processes with generative AI (GenAI), and avoiding dual-run costs, especially in headcount.

The Year in Review

Global asset management AuM grew by 12% in 2024, reaching a record $128 trillion, with all regions contributing to the increase. (See Exhibit 1.)

Strong market performance drove this growth. Major indexes such as the S&P 500 (up 23% for the year) and NASDAQ (up 29%) rose significantly. Global revenues for the industry rose by $58 billion, and more than 70% ($42 billion) of that gain came from market performance compared to only 30% ($16 billion) from net inflows.

Half of the revenue increase, however, was offset by a shift to lower-priced products and by fee compression. (See Exhibit 2.) Although the industry can celebrate another year of growth, asset managers must be aware of the underlying threats to their legacy products and distribution channels, as well as to the operational models behind them.


Last year, investors continued a long-term trend of shifting from actively managed funds to passively managed products. Active AuM declined from 65% in 2023 to 61% in 2024 for mutual funds and ETFs. Net new flows reflected this trend, with $0.1 trillion in outflows from active funds, excluding money market funds, versus $1.6 trillion in inflows to passive funds. (See Exhibit 3.)


Although mutual fund and ETF ownership skews toward retail clients, institutional investors are shifting to passive products, too. In this market, over the past five years, passive AuM grew from 17% to 20% of assets while active AuM shrank from 44% to 38% of assets.

Breaking down the shift to passive across mutual funds and ETFs by geography, however, reveals a strong regional tilt, in which North America’s $337 billion in outflows from active funds was enough to drag global net flows into negative territory. All other regions saw positive net flows into active funds, driven largely by fixed-income funds and actively managed ETFs. Fixed-income funds attracted $700 billion in net new flows globally, while active ETFs drew positive net new flows of $325 billion, nearly $300 billion of which came from North America.

Revenue growth outpaced cost growth in 2024, resulting in a rise in profits of about 22%. (See Exhibit 4.) However, fees on 2024 net inflows were, on average, about 40 basis points less than fees on 2023 existing AuM across mutual funds and ETFs. The changing fee structure is a clear indication of revenue pressure that asset managers will need to address with product innovation and a search for scale.



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Nick Saban’s 13 Thoughts on being a Transformational Leader vs. a Transactional Leader

 


A Once-In-A-Lifetime Leader

During the Saturday, November 5th edition of ESPN’s College Gameday, legendary head coach Nick Saban was asked how leaders lose their teams.  He then gave a succinct masterclass on the differences between a transformational vs. transactional leader.  Coach Saban even wove his personal story into the comments.



Transcript

“I think you have a greater chance to lose your team when you’re transactional as a leader, which is the way I was until 1998.  In other words, everything was about winning or losing. And when we won I patted people on the back.  But when we didn’t win I was probably too harsh, didn’t use it as a teaching moment. Negative experiences without teaching kills morale.”

“In 1998, we were going to play Ohio State.  They were number one in the country.  We were four and give at Michigan State.  They were getting ready to fire me at Michigan State and I don’t think we can win the game.  So I said, what’s my approach going to be?”

“So I had to change to being a transformational leader.  You know, with somebody who players could emulate – cared about the players for their benefit and not my benefit.  You know, had a vision for what we wanted to accomplish and how we were going to do it, and have value-based principles that were going to help them be successful in life.”

“And play one play at a time.  Everything is about process.  Nothing is about outcomes.  And we became a different kind of team.  We actually won that game.  It turned around.  You know, my coaching career actually changed 360 during that time as well.”

“Everything is transactional in college football right now.  People get into the portal.  Why do they get into the portal?  They want more playing time or they want more money.  And so those things are both transactional.  But transformational means you have passion for what you want to accomplish and are trying to create value for your future.  So you’re not worried about the immediate self-gratification you’re going to get from those things.  So what is your passion when things don’t go well and the team goes bad?”

Nick Saban’s 13 Thoughts on being a Transformational Leader vs. a Transactional Leader

  1. Transactional leaders have a greater chance of losing their teams. – “I think you have a greater chance to lose your team when you’re transactional as a leader, which is the way I was until 1998.”
  2. Transactional leaders focus solely on outputs. – “In other words, everything was about winning or losing.”
  3. Outputs determine the behaviors of transactional leaders. – “And when we won I patted people on the back.  But when we didn’t win I was probably too harsh, didn’t use it as a teaching moment.”
  4. Transactional leaders don’t properly recognize or leverage teaching moments. – “Negative experiences without teaching kills morale.”
  5. Transformational leaders properly evaluate reality. – “In 1998, we were going to play Ohio State.  They were number one in the country.  We were four and give at Michigan State.  They were getting ready to fire me at Michigan State and I don’t think we can win the game.”
  6. Transformational leaders are humble enough to know they need to change. – “So I had to change to being a transformational leader.”
  7. Transformational leaders are people to be emulated. – “You know, with somebody who players could emulate.”
  8. Transformational leaders primarily care about what benefits their teams. – “cared about the players for their benefit and not my benefit.”
  9. Transformational leaders have a clear vision and plan. – “You know, had a vision for what we wanted to accomplish and how we were going to do it”
  10. Transformational leaders are value-based in how they approach to success. – “and have value-based principles that were going to help them be successful in life.”
  11. Transformational leaders elevate the process over the outcome. – “And play one play at a time.  Everything is about process.  Nothing is about outcomes.”
  12. Transformational leaders change their teams’ fortunes… as well as their own. – “And we became a different kind of team.  We actually won that game.  It turned around.  You know, my coaching career actually changed 360 during that time as well.”
  13. Transformational leaders elevate their passion for others over their own self-gratification. – “But transformational means you have passion for what you want to accomplish and are trying to create value for your future.  So you’re not worried about the immediate self-gratification you’re going to get from those things.  So what is your passion when things don’t go well and the team goes bad?”

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