CHAPTER II THEORETICAL DESCRIPTION

2.1 Definition of Leader and Leadership The leaders may influence morale and satisfaction at working, security, the quality at working and the achievement in the organization. The leaders have critical role in helping those groups, organization and community for achieving their objective. The capability and skill of the leader in giving direction is an important factor. If the organization has the capability in identifying the quality related to the leadership, the capability in selecting the effective leaders will be increased. If the organization is able to identify the attitude and effective leadership techniques, the organization may learn various techniques of the attitude. Hence, it may achieve the development of effectiveness for one organization. Here, it should be also emphasized that a leader is mot for sure with leadership spirit. Conversely, one spirit leader is not for sure to act as a leader. A group of people who work together for achieving the objectives requires one person as a leader. The goal is for having effective and efficient results. In achieving the certain objectives, there are many ways which can be done. One and another may be different. However, all are as a unity. Every different business which is done by two or more people, then there must be someone to manage the implementation of work. It is called as leader. A leader is to lead, and not to encourage. A leader influences the subordinates to get certain achievement and it may be initially that according to their opinion, the target can not be achieved.

A leader must have the capability to create the spirit either emotional spirit or rational spirit for the subordinates. In fact, it is actually that leadership tends to be more emotional that rational. To describe the meaning of leader in more detailed, several definitions from the famous authors will be given below. Henry Pratt Fairchild started : Leader can be widely described as a leader who direct by influencing other behaviors according to his intentions at certain time. Some people in the group will lead mostly of the person available.1 The conclusions which may be taken from the above definition is that a leader is someone with capability and special skill in influencing other people to work together in implementing certain activities for achieving the objective. Leadership is A managerial activity in order to direct and influence other activities related to the subordinates tasks.2 Seeing from management side, leadership can be defined as the capability to influence and motivate other people in order to follow the managements wishes to achieve established target effectively and efficiently. Here, it is clearly seen that leader has an important role to assist group, organization or community in achieving the target.

George R. Terry & L.W. Rue., Principle Of Management, Eight Edition, Published

by Bumi Aksara, Jakarta, 2003, page 192.

2

Indriyo Gitosudarmo., The Introduction of Business, Second Edition, Published by

BPFE, Yogyakarta, 2001, page 328.

Leadership skill is very important to direct and lead an organization and it is also to make managerial effectiveness. Some definitions regarding leadership are as the following. James A.F. Stoner said that Leadership is a process of directing and influencing activities related to the tasks of group members.3 According to Stoner, Leadership can be defined as the a process of giving guidance and influences to the activities of group of people related to the tasks.4 According to Stoner, there are three implications from the statement. 1. Leadership is related to other people (superior and subordinate). Without them, all quality of leadership cannot be seen. In fact, from them, there will be the process of accepting guidance and assistance in determining status and position of leader. 2. Leadership is related to authority division that is unbalance among leaders and group members. Leader has the authority that is directly related to subordinates, whereas subordinates cannot give guidance to the leader directly. 3. Leader is not merely to give order, but also to give influences to their subordinate in performing certain tasks and to influence the subordinates in order the task can be done on timely manner.5

Amin Widjaja Tunggal., The Management Escort, First Edition, Published by

Rineka Cipta, Jakarta, 2003, page 308.

4

Gugup Kismono., The Introduction of Business, Frist Edition, Published by BPFE,

Yogyakarta, 2001, page 217.

5

Ibid., pages 217-218.

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From the definition, it can be found that leading is related to influencing other parties in the related groups. In addition, the influence may appear among leaders and members of group. It means that there is interaction or converse reaction in a group.

2.2 The Principles & Style of Leadership Basically, leadership can be credited by having a group who intend to solve something. Researchers have identified five leadership styles in grid managerial, namely: 1. Impoverished leadership 2. Country Club leadership 3. Task leadership 4. Middle of the road leadership 5. Team leadership6 Ad.1. Impoverished leadership means that low attention of the leader either to the personnel or production. Minimum efforts to solve the works are a precise manner to defend the membership in an organization. Ad.2. Country Club leadership means that low attention of the leader to the production and high attention to the personnel. Full attention to need of the people in fulfilling its relationship leads to comfortable and friendly circumstance.

Ulber Silalahi., The Comprehension Practical of Management Principles, Second

Edition, Mandar Maju, Bandung, 2002, pages 322-323.

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Ad.3. Task Leadership means that high attention of the leader to the production, but low attention to the personnel. Efficient in work can be caused by the good arrangement in work. It makes the human element can be included in minimum degree. Ad.4. Middle of the road leadership means that attitude of the leader in giving balance attention to the personnel and production. Adequate organization achievement may be done through the equilibrium of problem solving by the way of maintaining working spirit and satisfactorily moral on related people. Ad.5. Team leadership means that the attitude of the leader in giving high attention to the personnel and production. The works are accomplished by those people who commited to works, mutual dependence, and mutually respecting. Whereas, classic leadership styles are as the following: 1. Authoritarian leadership style 2. Democratic leadership style 3. Laissez-Faire leadership style7

Ad.1. Leader focuses the attention on the authorities and decisions to himself. Leader has full authority and fully responsible for the works. The subordinate are merely given the task and adequate information in order to perform the work.

Gugup Kismono., Op.cit, pages 220-221.

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Ad.2. Leader delegates his authority widely. Decision-making is always discussed with subordinates. Here, leader and subordinates are in a team. Leader gives information as much as possible to the subordinates regarding their tasks. Ad.3. Leader participates only on minimum works. Subordinates determine by themselves regarding the achieved target and problem solving. Although there are many leadership styles, it does not mean that each has exclusive characteristics. Leader with similar style does not have other style. The style depends on the encountered problems. Here, leader may apply democratic leadership style in the other situation. Special conditions determine the way of leader in leading and determining the style to be used by considering: time, organization and available personnel in organization (expertise, skill and others). As for leadership style according to some experts can see at tables of following :

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TABLE 1 LEADERSHIP STYLE ACCORDING TO SOME EXPERTS

White and Ronald Drs. Malayu S.P. Hasibuan Haris Lipitt Authoritarian Participative Delegative The Autocratic Leader The participative Leader The free Rein Leader Paul Hersey and Ken Rensis Likert and Lewind Blanchard Telling Exploitative autocracy Autocratic Benevolent Autocracy Style Selling Consultative Leadership Style Paternalistic Participative Group Leadership Participating Style Democratic Delegating Robert Blake and William J. Reddin G.R. Terry Mouton Deserter Bureaucrat Personal Leadership Missionary Non personal Leadership Developer Autocracy Leadership Autocrat Democraty Leadership Benevolent Autocrat Paternalistic Leadership Compromiser Indegenous Leadership Executive Executive Compromiser Autocrat Missionary Deserter Charismatic Militaristic Sondang P, Siagian Autocratic Democratic Laissez Faire

Data Source : Hasibuan, Human Source Management, Revision Edition, Bumi Aksara, Jakarta, 2003, page. 171.

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2.2.1 Principles of Leadership The principles of leadership consist of: 1. Contribution principle from individual to target achievement 2. Principle of target harmonization 3. Principle of efficient in giving guidance 4. Principle of unity of order 5. Principle of direct supervision 6. Principle of precise guidance techniques 7. Principle of managerial communication 8. Principle of comprehensive 9. Principle of information 10. Principle of informal organization used strategically 11. Principle of leadership8

Ad.1. To effectively set up and supervise the subordinates, the requirements in accomplishing tasks must be remarkably communicated to the subordinates so that they are will be highly motivated to perform the tasks consistent with the established goals of group. Ad.2. To set up and supervise the subordinates, the manager has to ensure that efforts to keep the goals of individual subordinates consistent with the goals of group are maintained

Winardi., The Principles of Business Administration, First Edition, Mandar Maju,

Bandung 2002, pages 204-205.

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Ad.3. Efficient direction is set when the techniques, communication and activities related to it result in the achievement of group goals with minimum dissatisfaction, cost or other undesirable consequences. Ad.4. Giving direction will be most effective when the subordinates are only responsible for one superior. Ad.5. Interpersonal, relationship of superior and subordinates characteristics require manager to demonstrate supervision and monitoring methods involving directly personal contact to build activities from subordinates and monitor their implementation. Ad.6. Effective direction requires that the technique used must be properly set to the supervised part and tasks to be accomplished. Ad.7. Managerial positions are the center of communication in which the organization and manager become major communication medium in an organized company. Ad.8. Effective communication requires that the receiving parts must comprehensively preserve the information delivered. Ad.9. Direct information flow is the most effective way in communication. Ad.10. It is significantly important for the manager to know and constructively employ the informal organization. Ad.11. Competency to effectively lead is essential for giving effective direction (guidance).

2.3 Effective Leader The successful of an organization to achieve the determined objectives will largely depend on capabilities of the members in using available sources and tools so

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that the use can run in efficient, economic and effective ways. When the available sources and tools employed by its members are efficiently and effectively used, it means that the leaders success can be measured referring to the obtained outcomes, successfully pushing the organization. Here, efficient means unavoidable sacrifices. More effective interaction of leader and subordinates through humanity approach will result in higher likelihood and chance to build close relationship and mutual understanding and cooperation between the leader and the subordinates or devotee, and this situation can be potentially used to achieve common goals. Finally, implementing effective leadership functions makes employees more effectively working to attain the objectives and, therefore, the organization will be effective.

Several factors affecting the effectiveness in leadership are: Past experiences-shape personality and expectation of the leader Expectation and behavior of superior Characteristic, expectation and behavior of subordinates Task requirements, climate and organization policies Expectation and behavior of coworkers9

These factors also influence management. A process to influence is reversible leader and group members, for example, intensely influence one to another and affect the overall effectiveness in group.

James A.F. Stoner., Management., Second Edition, Published by Erlangga, Jakarta,

2002, page 126.

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In this case there is three critical variable influencing leadership style, that is : 1. Leader 2. Subordinate 3. Situation

2.4 Role of Leadership Styles in Company In this case, the role of leadership styles can be categorized into 3 models: 1. Role of leadership style as leader 2. Role of leadership style related to the information 3. Role of leadership style in making decision

Ad.1. Role of leadership style as leader In this role, leader acts as a leader. He demonstrates interpersonal relationship with the subordinates through carrying out such major functions as a leading, motivating, developing and controlling the subordinates as the efforts to attain company objectives.

Ad.2. Role of leadership style related to the information This role will identify the leader as acceptor and collector of the information and, thus, he will be able to develop a good appreciation about the company, and run the company that committed to its surroundings. Management collect information to look at changes, identify problems and available opportunities to improve the understanding of its

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environment and know how and when the information shall be delivered for the purpose of making decision.

These allow the management to acquire as much as the possible information from various sources either inside or outside the company. And obligation of the subordinates is to accomplish terms and condition prevailing in the company circumstance such as: a) Fulfilling tasks delegated to them in high quality and accountability manner. b) Performing determined duties/orders associated with their tasks. c) Retaining all things regarded as the confidential information of company. d) Caring and maintaining company-owned properties. e) Respecting management and employees.

Rights and obligation of the company/management to the employees are: a) Providing reasonable tasks during working hours. b) Assigning employees to work over time as necessary. c) Determining working rule/regulation. d) Appointing employees in all areas of working environment. e) Terminating work relationship based on the estabilished rules. f) Giving salary/wage, additional wage, health insurance and other allowances. g) Leading, caring and maintaining safety and healthy of the workers.

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The role appears because a leader realizes that he himself does not work individually in the company, and management at the top, middle and low level have equal and comparable role with only differences in the position, eventually creating the very unequal role weight.

Ad.3. Role of leadership style in making decision It is the complicated role since the leader needs to be involved in the strategy making stages in the company. This involvement occur because the leader is the only man who is permitted to think important and novel actions, and, thus, making the decision.

As a source of information, management can provide guarantee or best decision reflecting recent improvement and values of the company. The presence of an individual who are taking control over the company will make the strategic decisions easier to achieve in integrated way. Leadership style also can play a part in to motivate employees. Motivation is one of management functions between the other management functions. Therefore, motivation is a function that related to the human being. Therefore, motivation is an important element in a management. Generally, motivation is defined as an encouragement to enable anyone to do works or action. Motivation is activity that involves, distribute and maintain the human behavior i.e. process to influence anyone to do anything required by us. Motivation is related to the prosperity and identical to tangible goods and can be felt such as bonus, incentive, another facilities that required by employee in addition to motivation as intangible motivation.

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In order to encourage and move the people to do any work maximally, communication and the role of any parties are very necessary. Motivation ask a manager to know how to practice the subordinate with more information, how to have a time to get more suggestions and recommendation about an issue or problems. The Liang Gie defines motivation as follows : Motivation is a job of a manager in provide his/her subordinates with inspiration, spirit and encouragement to take any actions this motivation aims to encourage people or employee to have spirit and to achieve the determined goal of the people10 Machfoedz also defines motivation as follow : Motivation is an internal encouragement of anyone to do anything and has certain behavior11 Generally, the motivation is divided into two types, i.e. 1. Negative motivation 2. Positive motivation The application of these motivations must consider the situation and condition of anyone, because did not all of people or individual has the same characters. The people are differed. An effective motivation for anyone is not effective for another one.

10

Susilo Martoyo, Manajemen Sumber Daya Manusia, BOFE, Yogyakarta, 2006,

page 155.
11

Mahmud Machfoesz, Pengantar Bisnis Modern, First Edition, Andi, Yogyakarta,

2007, page 189.

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Implementation of positive motivation is hold by any incentives such as : 1. Material incentive 2. Non material incentive

Ad.1. Material incentive Is an incentive or premium with a money value. Money is a motivation tool to satisfy the economic need of employee. If we ask anyone or employee why he/she take a work, the answer is to get more money. The using of money as motivation is aims to satisfy the physiological need.

Ad.2. Non material incentive Is any incentives without money value. Such as : Award for an achievement. This method is always neglected as useful motivation tool in which anyone like a respect on their achievement. A Honest attention to employee as an individual. This is very difficult because a honest attention can not do as well as. In this sense, a manager or superior must care in provide the employee with attention because there is a Concept individual differences in which the attention will cause a different consequences to the different people. Competition. Generally, anyone like for a competitors honestly. This basic need used by management to provide a health competition in a work. Participation. The involvement of individual in decision making in a company is a competitive motivation with an important role. This is indicated by the replacement of employee representative in a decision making. This is an effort

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to minimize the misunderstanding and build a mutual cooperation between the management and employee to build a mutual responsibility and attention to the company. Further more, a comfort work condition will improve the morality of employee and seriousness. A good equipments, a comfort work room, sufficient lighting will increase the spirit for a work in addition to increase the work affectively. Distribution of information to the employee of company about the condition of company is a need of employee. The distribution of information is realized by hold a special meeting, through magazines, circulars, etc. this action will build a mutual understanding between superior and subordinate. This information will confirm the progress of company, any obstacles, the implementing project, etc. Motivation consists of material and non material motivation. In providing motivation either material or non material, must based on the principles of motivation. The material motivation based on the principles as follows: 1. There is guarantee for minimum wage/salary 2. Accuracy in an addition compensation 3. Motivation system must be formulated to avoid the decreasing of wage/salaries 4. Motivation system must create a self confidence of employee

Ad.1. There is guarantee for minimum wage/salary Guarantee on wage/salaries is an important thing that must considered by management. Usually, employee do the work for a regular wage/salaries. They did not like to work in uncertain wage/salaries. In addition, the minimum

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wage/salaries will avoid unsuitable wage to the old employee who moved from one work to another one.

Ad.2. Accuracy in an addition compensation In the providing of additional compensation, the accuracy in time has a psychological effect, because the employee did not wait the proof of the additional compensation. Their spirit is respected although it has not yet produce a concrete outcome.

Ad.3. Motivation system must be formulated to avoid the decreasing of wage/salaries Motivation system must be formulated carefully to avoid any discount or decreasing of wage/salary rate. A company must provides the employee with opportunity to increase their income, but did not over than the maximum rate. For the effectively, a motivation must based on a requirement and need of employee by consider the capability of company. Therefore, there is not losses for both of sides and the motivation system will applied successfully.

Ad.4. Motivation system must create a self confidence of employee For a success, a system must build a trust of employee. The system must simple to enable employee calculate their income according to their wage/salaries. Therefore, employee consider that company did not apply complex method to get the profit from themselves. Waging system that cause the suspicion of the employee is a bad condition. In this condition, it is better to did not apply any system.

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Non material motivation based on : 1. Recognition on a qualified work 2. Management attention up to the lower level continuously 3. Personnel contact that must be developed between superior and subordinate 4. To satisfy the individual and collective interest 5. Personnel loyalty between manager and executive

Ad.1. Recognition on a qualified work Each people need a recognition on each work that have be conducted and feel a deceived if there is a recognition on his work. If his/her efforts did not recognized the employee will loss an interest and spirit for work. Although the recognition only a price, it can motivate a responsibility of employee.

Ad.2. Management attention up to the lower level continuously In a goodwill chain that distribute information from the upper level to the lower level, the important chain in the middle manager who related to the management and the employee. A middle manager must consider the attitude of top manager while to motivate the employee for a work. If a middle manager did not able to teach and train the employee and to get their trust, he is a problem solver to avoid any confused in a company.

Ad.3. Personnel contact that must be developed between superior and subordinate Personnel contact between manager and employee and intra- personnel will create a self confidences and will develop an effective goodwill. Manager as a friend of employee has a loyalty that believe by the employee. It is not a good idea to treat

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the employee extremely as a friend, in which the job achievement and authority are scarified. Therefore it is important to care in the establishment of personnel relationship.

Ad.4. To satisfy the individual and collective interest Behavior of employee influenced by any problems such as a problem as member group and personnel problem. By consideration of work schedule, work condition and the amount of wage/ salary, the individual and collective interest of employee are satisfied. For example, there is a group of employee who will change their living standard out of their permanent work, therefore a superior must pay a friendly attention to the employee for the loyalty development to the company.

Ad.5. Personnel loyalty between manager and executive We seldom know that loyalty only as non personnel affair. What a loyalty to the company is not a loyalty to the management of company. Therefore, a manager must motivate his subordinates to have a high loyalty either to company or to himself as manager. In another word, a high loyalty of subordinate depend on the executive who have personality and capability to recognize and respect to another one.

Motivation must be according to the requirement of department or section to achieve determined objectives of the firm. Nevertheless, each company in provides the employee with motivation must has one perception to encourage them to do the work effectively and efficient to achieve the goal of company. The method, type and the amount of motivation are various to another ones.

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Motivation can be implemented into two method, i.e 1. Direct motivation 2. Indirect motivation

Ad.1. Direct motivation Direct motivation is a motivation that provided directly and intentionally according to the need of the motivated employee.

Ad.2. Indirect motivation Indirect motivation is activity in management that directed implicitly to the internal motive and satisfaction of the individual need in an organization. These activities are realized in any efforts to : a. Synchronization of individual aspiration and the objective of organization through socialization of employee to the objective of organization that did not opposed to the individual aspirations. b. Building of organization condition toad favorable condition for a job achievement. This efforts implemented in the facts of social condition in which there is a satisfied social condition in an organization according to individual perception and association condition in which there is a mutual cooperation and understanding of employee to do their work.

Based on above description, a direct and indirect motivations are important in encourage the work spirit. Based on the cost and power used in motivation, a direct motivation will applied if the indirect motivation is not sufficient.

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There are some opinion of the experts related to the theories of motivation such as follows : 1. A.H. Maslows Theory Maslow says that the theory of motivation is called the theory of hierarchy of the needs. The hierarchy of needs follows the plural theory. That is someone with attitude to work by the existence of courage to fulfill various needs.

According to A.H.Maslow, there are five needs in a needs hierarchy, i.e a. Psychological Need b. Safety Need c. Social Need d. Respect Need e. Self Actualization Need12

Ad.a. Pscyhological Need Psychological need is a basic need for survive such as foods, house and clothes. In the work context, this need is satisfied by the sufficient wage or salary. For the psychological need in a higher level is a motivation for employee.

12

Mahmud Machfoedz, Op.Cit, page 194-195

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Ad.b. Safety Need Safety need is a next need after the psychological need is satisfied, include the safety in work, protection on job accident either physically or psychis, health insurance , pension and safety work condition.

Ad.c. Social Need The satisfaction of psychological and safety needs create a social need such as love , attention. In a certain limited, this need is satisfied by the work environment and informal organization.

Ad.d. Respect Need A respect need is difficult for satisfaction. Each people need a respect and want to receive his/her existence. This need is satisfied by the individual achievement, promotion and honor.

Ad.e. Self Actualization Need Self Actualization is a need that assigned in the higher level in the needs hierarchy . This need is a need for growth and developed as a human being and achieve the desires according to capability and self competency.

2. Douglas Mc. Gregors Theory Douglas Mc. Gregor is a professor in Massachusetts Engineering Institution for management. He is popularly known by his theory X and Y. The theory is based on the assumption that human can be clearly differentiated form

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followers of theory X (traditional theory) and followers of theory Y (democratic theory).

The main characteristics of theory X and theory Y : Working as little as possible and it is against to the change. It must be influenced, sanctioned, punished and supervised in order to make their attitude may fulfill the needs of organization. Expecting the direction and avoiding the responsibility. Whereas, the main characteristics of theory Y are as follows: Lazy to work and it is not automatically occurred. Having the capability to manage the work and with responsibility as well as with the potential in building. But the management with their action must make them to realize the capability. Expecting to get the appreciation of social and satisfaction from their work.

Hence theory Y concerns with the base characteristics of human who are lazy. Without initiative, and they must be managed. If the manager consider that his subordinates are lazy and are not able to do work well, hence he has spend much time in realizing the potential of subordinates. Here, the leader resembles as the autocratic leader. Theory Y means the base assumption concerning with the characteristics of human with responsibility and they are honestly to work their potential, with initiatives and creativity. They follow the principle of working climate creation for maintaining harmonious relationship and for achieving the objectives. In fact, the subordinates are not always foolish, and even they are cleverer than a leader on

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certain thing. Hence, there is the confession that subordinates are as human who are diligently working, taking initiatives and responsibility. A leader with the assumption is called as democratic leader.

3. Frederich Herzbergs Theory Frederich Herzberg says that one theory is related to the working satisfaction. It is based on the theory in Pitsburg and Surrounding. Based on the theory, then it emerges the theory of motivation with two factors, namely : a. The needs for health. The needs is continuously occurred and will return to zero point after its fulfillment. b. The maintenance factor related to the psychological needs of someone. It includes a set of intrinsic condition and working satisfaction.

4. David Mc. Clelands Theory David Mc. Cleland is director of personal research center in Harvard university. He and his colleagues learn about the issue related to the success of someone. His theory as called as achievement Motivation Theory. According to him, the characteristics of someone who has the needs to get success in working are as follows : They have reasonable objectives They determines the target to achieve precisely and well-done. They like the work They prefer to work in those area which may give them the description related to the condition of the work.