Distinguishing the characteristics of leadership and management is important to any organisation. But being able to clearly outline the differences between the two fields is often difficult due to the synergy that exists when performing both leadership and management activities. Despite their cooperative relationship, leadership is distinctively different to management. This article looks to identify the characteristics of each field and how they relate.

"There is nothing as useless as doing efficiently that which should not be done at all."
~ Peter Drucker

WHAT IS BEING LED & MANAGED?

The present variables in any organisation are those of ‘people’ and ‘technology’. Both variables are considered to be components of a system that, when working together, help to deliver expected outcomes. When expected outcomes are met, or when they are not, these two variables are considered to be responsible for an organisation’s success or failure. It is therefore the performance of ‘people’ and ‘technology’ that invokes the need for leadership and management.

WHAT IS LEADERSHIP?

The function of leadership is change. Whether it’s a new direction for an existing system or the creation of a new system, leadership requires movement to a new position and often encourages ‘people’ and ‘technology’ to follow. Decision-making is a precept for leadership, which is an activity that should be performed by those with the skills to understand the dynamics and impact of change. In being a decision-maker for an organisation, those in leadership positions inherit the responsibility to know (1) what to change; (2) when to change it; and (3) the impacts of planned change. For decision-makers to acquire this knowledge, they rely on management to share accurate data on system performance. Leadership therefore cooperates with management in order to be effective in decision-making and change.

WHAT IS MANAGEMENT?

The function of management is control. Where management exists, a system is already in-place with set parameters for its operation and survival. Management is applied to these organisations to (1) monitor performance of variables against parameters; (2) apply corrective action and support when performance deviates from its parameters; and (3) maintain information on system performance for leadership decision-making. With these three fundamentals in-mind, management’s purpose is to ensure system variables, being ‘people’ and ‘technology’, are efficient in performing their functions.

RELATIONSHIP BETWEEN LEADERSHIP & MANAGEMENT

MANAGEMENT
When considering the two activities being performed in an organisation, it is evident that management supposes leadership. More specifically, those in management positions anticipate the decisions made by those in leadership roles. Noting this, the two main types of changes that managers engage in are (1) when variables are performing outside the system parameters; and (2) when leadership has decided to change an organisation’s system operating parameters. In the first instance, managers take corrective action to bring variables back into-line with expected system performance. In the second, managers look to assist each system component through its individual changes, which is often required when leadership sets new management parameters. To perform management activities, the skills required by managers largely depend on the culture of an organisation. But in spite of cultural influence, the two main approaches for management are (1) ‘Management by Exception — Active’, and (2) ‘Management by Exception — Passive’. The example below illustrates their differences and introduces an associated management concept known as ‘contingent reward’.

LEADERSHIP
With leadership relying upon management for information on system performance, the relationship between the two becomes obvious. The vital link in maintaining this relationship is communication. Communication then becomes a variable itself in the organisation and its presence relies on the two main variables being ‘people’ and ‘technology’. The frequency and volume of communication between leadership and management can vary and is usually relative to (1) impending changes to an organisation; and (2) performance failures as a result of variable deviance from operating parameters. Ultimately in either instance, management is supportive of leadership by funneling through information on ‘system performance’. Without this support, leadership becomes less informed, which usually results in poorer decision-making in an organisation. Further to skills in change and decision-making, leadership positions require incumbents to possess a wider set of capabilities and general skills. This wider skill-set is needed to support managers in performing their role. Leaders therefore require both leadership and management qualities to lead their organisation. By having both qualities, they are in a position lead and make decisions on behalf of an organisation, but they can also support their managers in performing their roles. Without possessing management skills, leaders have difficulty communicating with their managers, which results in decision-making becoming less effective. With this in-mind, there are two views on ‘leadership skills requirements’, the table below illustrates those as (1) General Skills, and (2) General Capabilities; both with their own set of ‘sub-skills’.

How Managers Work

With being responsible for the control of a system, managers engage in particular activities to keep performance on-track. These activities maintain control of a system by influencing its variables, they also look to connect with leadership who need regular communication to make decisions. To better understand managerial activities and their value, a study of over 450 managers observed the difference between ‘average’, ‘successful’, and ‘effective’ managers. The following table and charts illustrate the results of performing particular management activities.

The most obvious difference between 'successful' and 'effective' managers is the emphasis placed on the particular activity, 'networking'. But what is more interesting is that 'successful' managers placed almost the opposite level of emphasis on activities to those engaged by 'effective' managers. In learning how managers work and the activities they perform, it becomes clear that this evidence challenges traditional notions that promotions are based on performance. What it does show is the value of engaging in politics and networking to 'get-ahead' in organisations.

When managers take-on leadership

With management’s function being control of a system, determining how best to control ‘system variables’ gives guidance as to what is considered good and bad management. In any organisation, managers will be required to spark change in system variables. This need for ‘change’ often emerges when attempting to achieve the second fundamental of management: ‘apply corrective action and support when performance deviates from its parameters’. With ‘change’ being the function of leadership, managers are required to possess ‘interpersonal skills’ to apply corrective action to system variables, in most cases the variables are ‘people’ and ‘technology’. These interpersonal skills and its sub-skills (as detailed in the ‘Essential Leadership Skills’ table), help to achieve management’s goal of ‘applying corrective action’. But correcting staff performance can be more complicated than correcting technological components of a system. To effectively apply corrective action to people’s performance, appropriate communication is needed. A manager’s communication needs to be highly attuned to the system environment and appreciate how people operate within it. This means understanding the major functions of communication, then deciding the best exchange for correcting performance of a person or group. More often than not, managers engage in what is known as ‘transactional leadership’ to apply corrective action to staff performance. The approaches for transactional leadership are those previously described in the Management-by-Exception table. But going beyond corrective action and transactional leadership, managers can use communication to engage in ‘transformational leadership’ for motivating people’s performance. Unlike transactional leadership that changes performance to align with a system’s expectations, transformational leadership looks to motivate and encourage staff. It promotes development and increases value to an organisation by advocating performance that goes further than those limited by the system. The factors that make-up transformational leadership are listed in the table below.

How to lead & manage together

All organisations apply both management and leadership to improve performance. Management is applied to control and monitor a system’s operation; leadership is applied to change the status quo. Their objectives are distinctly different, but when applied together, system performance can accelerate dramatically. In the case of a German public transport company, a 2007 study of 220 employees found that using ‘transformational leadership’ amplified managers’ success in applying corrective action. People were observed to respond better to receiving corrective action, as part of ‘transactional leadership’, which saw an increase in system performance and resulted in higher company profits. Another separate example of augmented transactional leadership is found in a large multinational company that underwent a merger. After using transformational leadership during their integration with a new organisation, over 400 employees responded positively to questions regarding feelings of job satisfaction and performance. The use of ‘transformational leadership', in conjunction with ‘transactional leadership’, ultimately resulted in people's acceptance of the company's merger after being acquired by a former market competitor. The additive effect of transformational leadership is concurrent across a range of industries. The image below illustrates the components that contribute to its successful results.

The bottom line

In practice, leadership and management are rarely defined. But for optimal effectiveness, organisations need people that can exhibit strong management and leadership, while understanding the relationship that connects them both. That said, not all managers are good leaders, and for that matter, not all leaders are good managers. But being able to identify the difference between leadership and management will help organisations make better decisions in appointing staff to direct and control their systems. By assigning people to leadership and management positions, organisations are effectively implementing sanctioned leadership. But non-sanctioned leadership, outside an organisation’s formal structure, reveals natural leaders and their skills as previously highlighted in the Essential Leadership Skills table. More simply, leaders can surface from within a group and organisations should capitalise on the emergence of these people. This article serves as an introduction to leadership and management, and should support those who contribute to the respective fields of work. For those inquisitive of related concepts, the areas of ‘decision-making’ and ‘systems thinking’ contribute to gaining a comprehensive understanding.

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Leadership vs Management: What's the difference?