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3   E XCHANGE T RADED F UNDS - ETF S

3.1   E STRUCTURA Y NORMATIVA DE LOS ETF S

3.1.1   D ESCRIPCIÓN DEL VALOR Y GENERALIDADES

 

The literature relating to leadership is included to recognise my role as leader and insider researcher on this real world project. It provides some underpinning literature to inform the appropriate approach for the leadership process whilst also establishing the context for critical reflection at each stage of the research process.

Some of the key themes briefly explored here include leadership as a process of change, transformational leadership, authenticity, followership and learning.

2.14.1 Defining Leadership

Leadership has been a significant subject for reflection during the programme of study. Leadership is extensively written about and commented on both in the academic literature as well as in popular books proclaiming novel approaches to management and leadership that adorn the shelve of bookstores throughout the world. Much of the traditional writing of leadership has focused on the leader as an individual who exhibits certain measurable traits. A more modern view of leadership is to acknowledge the role of not only the leader but also the followers as part of a process. Northouse (2007) provides a widely accepted definition of leadership as;

…a process whereby an individual influences a group of individuals to achieve a common goal. Northouse (2007, p3).

Northouse (2007) goes on to describe a number of leadership styles, initially focusing on theories that concentrate on the individual as leader, such as the trait approach (p15 – 36) and then moving on to more modern theories such as transformational

leadership (p175-205) sometimes referred to as the new leadership paradigm (Bryman 1992).

There is much written about styles of leadership being contingent on the situation and these fall into the contingency or situational schools of thought described in the literature (Fielder, 1967 and Hersey & Blanchard, 1977). The situational context will have a bearing on goal in terms of its immediacy that can influence the approach taken. An emergency situation where time is of the essence may call for a more autocratic transactional approach whereas the creative development of a new product may allow for and indeed benefit from a more democratic approach. Tannenbaum and Schmidt (1958) when considering the individual’s style, present a continuum from autocratic, through persuasive to consultative and finally democratic styles of leadership that may be favoured by individuals in certain circumstances depending on the immediacy of the issue at hand. In considering the group being led there needs to be some consideration as to how transformational the process needs to be. As Hawkins and Smith (2006) explain;

Leadership is not just a role we inhabit – it is also an attitude to life and its challenges. Leadership begins when we stop blaming others and making excuses when things go wrong. Leadership begins when we start to explore ‘How can I best make a difference?’ (Hawkins & Smith 2006, p239).

2.14.2 Followership

Obholzer and Millar (2004) bring the follower into focus stating that;

…followership is and must be an actively participative process. It needs to be differentiated from a passive, dependant state of mind of the individual or the group, and also from an uninvolved or not responsible state of mind…Obholzer and Millar (2004, p.43)

For example, in Storey (2004) the suggestion is of an implied lesser status of the follower and in texts such as Northouse (2007) the word ‘subordinate’ is often used to describe followers. This status issue for followers could have a significant impact on

the organisational culture and ultimately the success of leadership where followers are perceived in this way.

Drath (2001 p.9) states:

Someone who was a follower can become a leader if he or she has gained the most relative influence in the context of a changed environment.

Hersey and Blanchard (1977) indicate that the level of maturity of followers should be considered when adopting a style. At low levels of maturity more directive behaviour would be favoured and as maturity increases the style can move to a more relationship orientated approach

The relationship dimension in the leader-follower exchange is discussed in the literature on Leadership Member Exchange Theory (LMX) (Liden et al, 1997) where leaders often create special relationships with followers, often using tacit exchanges to develop these relationships with the goal of securing enhanced commitment to the overall objectives. Members are often part of an inner circle which in some cases can have a negative effect for those on the outside.

2.14.3 Transformational Leadership

The academic and presidential biographer James MacGregor Burns initially introduced the concept of transformational leadership. Burns defines leadership as:

Leaders inducing followers to act for certain goals that represent the values and the motivations – the wants and needs, the aspirations and expectations – of both leaders and followers (Burns, 1978, p.19).

Transformation leadership is not necessarily distinct from other theories on leadership. Bass and Riggio (2006 p.4) make the case for transformational leadership being an extension of the transactional leadership process. There is a continuum ranging from simpler leader follower transaction based on contingent

reward to higher levels of idealised influence, motivation, stimulation and consideration of the follower (p.5-9).

The charismatic aspect of the leader is also part of the transformational process and can have a positive impact. As Yukl (1999) suggests, although charisma and transformational leadership are often seen in much of the published literature as distinct processes, they are clearly linked. Charisma alone is unlikely to have a transformational effect, however the highly charismatic leader equipped with the right transformational skills will have a positive outcome on both followers and the organisation.

2.14.4 Authenticity

As Bass and Steidlmeier (1999) point out when considering the transformational leadership perspective, authenticity can be seen as a moral compass by which the intentions of transformational leaders can be determined. Bass and Steidlmeier (1999) go onto describe pseudo-transformational leaders where the leader is deceptively appearing to be moral. This feigned authenticity can have an impact on what Lord et al (1999) calls identity levels (individual, relational and collective) of both the leader and followers with reduced leadership effectiveness where there is mismatch between leader and follower identity levels. Authenticity is not an absolute state and as Argyris and Schön (1978) point out, an individual may be unaware of the incongruence between the theory in use and espoused theory. Leaders may therefore be unaware of their lack of authenticity, as followers perceive it. Authentic leadership as a distinct area is increasingly discussed in the literature with Avolio et al., (2004) providing a useful working definition of leaders who are authentic as;

…those who are deeply aware of how they think and behave and are perceived by others as being aware of their own and others' values/morale perspectives, knowledge, and strengths; aware of the context in which they operate; and who are confident, hopeful, optimistic, resilient, and of high moral character. Avolio et al., (2004, p.4)

 

Transformational leaders should create an authentic atmosphere and leave a lasting impression, as Grout and Fisher (2007, p.195) go on to say quite elegantly “in the

short term the artist may get the attention but it is the quality of the painting that really has the lasting effect.”

2.14.5 Distributed Leadership and Sustainability

There are many leaders, not just one. Leadership is distributed. It resides not solely in the individual at the top, but in every person at everylevel who, in one way or another, acts as a leader (Goleman, 2002:14)

A defining aspect of distributed leadership is that decisions about who leads is not dictated by where one sits in a hierarchy but rather by the situational needs of the problem or task (Timperley, 2005). It is based on this leadership model that theIOSH Professional Committee operates with members taking the lead on projects with the collaborative input of others on the Committee including the chair. Decision making in this environment is not derived from a single individual but from the input of all interested parties. There is a potential foreseeable inherent risk that leadership becomes thin and ineffectual. To avoid this, continual monitoring is required to monitor and evaluate the effectiveness of the project and make adjustments as required.

Sustainability in this context is about creating long-lasting success through effective leadership. The connection here to a distributed model of leadership is clear and the project may transfer to a new leader as it progresses to new stages of development and implementation. To have complete and unique ownership of the project and its product would potentially put in jeopardy the long-term sustainability of the project. Hargreaves and Fink (2006) writing on sustainable leadership in educational settings discuss 7 principles, listed in Table 2.4, below, that when followed can help ensure positive results.

Table 2.4: Hargreaves and Fink (2006) 7 Principles of Sustainable Leadership Principle Explanation

Depth It preserves, protects, and promotes deep and broad learning for all…(p.23)

Length It preserves and advances the most valuable aspects of learning and life over time, year upon year, from one leader to the next (p.55) Breadth It sustains as well as depends on the leadership of others (p.95) Justice Sustainable leadership does no harm to and actively improves the

surrounding environment by finding ways to share knowledge and resources…(p.141)

Diversity It fosters and learns from diversity and creates cohesion and networking…(p.159)

Resourcefulness Sustainable leadership develops and does not deplete material and human resources…(p.191)

Conservation Sustainable leadership respects and builds on the past in its quest to create a better future.. (p.225)

2.14.6 Concluding Thoughts on Leadership

The charismatic aspect of the leader can still however have an impact on transformational process, as Yukl (1999) suggests although charisma and transformational leadership are often see in much of the published literature as distinct process they are however often overlapping processes. Hannah et al., (2008) paper on leadership efficacy proposed an expanded framework that included not just the leaders’ effectiveness but also efficacies as they related to followers and indeed collective efficacies. The attention therefore should be on the leadership process efficacy and not simply leaders’ efficacy. The literature on authentic and transformational leadership, in particular May et al (2003), conclude that authentic moral leaders need to act with consistent moral behaviour to sustain effective leadership by demonstrating that they are both humble and are capable of recognising moral dilemmas.

 

Organisational cultures and the authenticity of the leadership process are connected. However, as Schien (2004 p.8) makes clear, culture is a phenomenon that is below

the surface; it can be a powerful force but is often invisible and unconscious. Various theories have arisen around motivating followers and developing successful teams to improve organisational culture. Path-goal theory for example (Evens (1970) and House (1971)), looks at leadership styles as they relate to followers as a way of motivating them. Leader-member exchange theory (Dansereau, Graeu and Haga 1975) examines the complex interactions between leader and follower, and team leadership models (Zaccaro et al 2001) discusses how leaders of teams construct a mental model of the situation that reflects the components of the problem but also the environmental and organisational contingences that define the context.

Leadership can also offer learning opportunities, as Antonacopolou and Bento (2004) state;

…leadership presents a window to inner learning. (Antonacopolou and Bento,2004, p95)

Leaders can be learners who not only impart knowledge to followers but are also capable of seeking and learning knowledge from their followers.

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