Leadership and Management Skills

In the context of Hospitality Management, understanding the distinction between leadership and management is crucial for the effective operation of any hospitality business. While both roles are integral to the success of an organisation, they encompass different skill sets, behaviours, and objectives.

Definition and Scope

Management involves the administration of tasks and the effective coordination of resources to achieve specific goals. It focuses on planning, organising, staffing, directing, and controlling within an organisation. Managers are responsible for ensuring that the day-to-day operations run smoothly, efficiently, and in accordance with established policies and procedures.

Leadership, on the other hand, is about inspiring and motivating individuals to achieve a common vision. Leaders focus on creating a sense of purpose and direction, fostering a positive organisational culture, and driving change and innovation. Leadership is more about influencing people and guiding them towards the achievement of long-term goals.

Key Differences

Approach to Change

• Managers tend to be more risk-averse and focus on maintaining stability and consistency within the organisation. They implement strategies to manage change in a controlled manner.
• Leaders embrace change and encourage innovation. They are often the driving force behind transformational initiatives and inspire their teams to adapt and thrive in dynamic environments.

Focus and Objectives

• Managers concentrate on achieving short-term objectives and meeting specific targets. Their role is to ensure that tasks are completed efficiently and effectively.
• Leaders are oriented towards long-term goals and strategic vision. They work to inspire their teams to pursue these goals passionately and persistently

Decision-Making

• Managers rely on established processes, data, and analytical thinking to make decisions. They use a systematic approach to problem-solving and often follow a top-down decision-making structure.
• Leaders are more likely to use intuition and emotional intelligence in their decision-making. They often seek input from their team members and encourage a participative decision-making process.

Motivation and Influence

• Managers motivate their team through extrinsic factors such as rewards, recognition, and performance metrics. They use authority and formal power to direct and control their team's actions.
• Leaders inspire and motivate through intrinsic factors, such as shared values, vision, and personal example. They wield influence through charisma, trust, and respect

Read more about the differences between leadership and management in this article from Asana.com

Practical Implications in Hospitality

In the hospitality industry, both leadership and management skills are essential. A successful hospitality manager needs to balance managerial tasks with leadership qualities to create a thriving work environment and deliver exceptional guest experiences.

• Operational Efficiency: Managers ensure that operations run smoothly, from front-of-house services to back-of-house functions. They manage schedules, budgets, and resources to meet business objectives.
• Guest Satisfaction: Leaders inspire their teams to provide outstanding service, going above and beyond to meet guests' needs. They foster a culture of excellence and hospitality that enhances the guest experience.
• Team Development: Managers handle recruitment, training, and performance evaluations. Leaders, however, mentor and develop their team members, encouraging professional growth and personal development.
• Innovation and Adaptability: Leaders in hospitality drive innovation by encouraging creative solutions and new approaches to service delivery. Managers implement these innovations in a structured manner, ensuring that changes are seamlessly integrated into daily operations.

Countless experts and researchers have spent years formulating theories on leadership. These theories aim to explain what effective leadership is. Leadership theories refer to explanations of how and why certain people become leaders. These theories focus on the characteristics and behaviours that people can adopt to improve their leadership skills. They can be used to understand what characteristics a person needs to become a good leader. This section will discuss some of the basic universalist leadership theories.

Universalist Theories

Universalist leadership theories focus on the key characteristics held by effective leaders. They argue that if a leader has these characteristics, they can successfully lead a team through any circumstance. These theories are wildly accepted as they were some of the first theories developed in trying to understand leadership.

The Great Man/Woman Theory

This theory proposes that certain people make better and more natural leaders than others. According to this theory, successful leaders such as presidents, conquerors from history, and decorated politicians are great men or women who can replicate that success in different circumstances. It proposes that leadership is intrinsic rather than something that is developed over time.

Trait Theory

The trait theory of leadership was created as a result of several studies on the specific traits of leaders. Those studies have found that there are sets of traits that belong to an effective leader. Those types of traits are:

Physical

• Height
• Appearance
• Energy level

Intellectual

• Intelligence
• Independence
• Ability to reason

Personality

• Extroversion
• Dominance

Social

• Flexibility
• Charisma
• Social intelligence

Contingency Theory

This leadership theory focuses on environmental factors that determine what leadership style would best suit the situation. According to this theory, no leadership style is the best for every situation.

Contingency theory suggests that leaders focus on variables related to the environment to determine the best leadership style suited for the situation. Leaders must:

• Identify and examine the needs of their team members
• Assess the context of their working situation and environment
• Adjust their behaviour based on their findings

Situational Theory

Similar to the contingency theory, the situational theory of leadership suggests that no leadership style is the best for every situation. A situational leader can identify what leadership style and strategies are necessary for the task at hand. According to this theory, a leader must be able to adjust their leadership style according to:

• The objectives of the task
• The nature of the group
• The activities necessary for completing the task
• The resources needed for the task

The company's organisational culture largely determines the role of leadership in management. It has been argued that managers’ beliefs, values, and assumptions are critical to the overall style of leadership that they adopt.

There are several different leadership styles that can be identified within each of the following management techniques. Each technique has its own set of good and not-so-good characteristics, and each uses leadership differently. Watch this YouTube video explaining classic leadership styles. The video is quite long so feel free to watch in segments and come back to it later (26’06”).

Video Title: Leadership Styles
Watch Time: 26:06 minutes
Video Summary: An explanation of classic leadership styles (Autocratic, Democratic, Laissez-faire) shown so you can compare and contrast them all.
Pre Watch Question: What do you already know about different leadership styles?
Post Watch Task: What leadership style do you think you exhibit?
Source: YouTube channel: Organisational Communication Channel

Try out the interactive quiz linked below to see what kind of leadership styles you show:

The Autocrat

The autocratic leader dominates team members, using unilateralism to achieve a singular objective. This approach to leadership generally results in passive resistance from team members and requires continual pressure and direction from the leader in order to get things done. Generally, an authoritarian approach is not a good way to get the best performance from a team.

There are, however, some instances where an autocratic style of leadership may be appropriate. Some situations may call for urgent action, and in these cases, an autocratic leadership style may be best. In addition, most people are familiar with autocratic leadership and therefore have less trouble adopting that style. Furthermore, in some situations, subordinates may actually prefer an autocratic style. Read the following article on the autocratic leadership style

The Laissez-faire Manager

The Laissez-faire manager exercises little control over their group, leaving them to sort out their roles and tackle their work without participating in this process themselves. This approach generally leaves the team floundering with little direction or motivation.

Again, there are situations where the Laissez-Faire approach can be effective. The Laissez-Faire technique is usually only appropriate when leading a team of highly motivated and skilled people who have produced excellent work in the past. Once a leader has established that their team is confident, capable, and motivated, it is often best to step back and let them get on with the task since interfering can generate resentment and detract from their effectiveness. A leader can empower the group to achieve their goals by handing over ownership. Read the following article on the laissez-faire leadership style

The Democrat

The democratic leader makes decisions by consulting their team while still maintaining control of the group. The democratic leader allows their team to decide how the task will be tackled and who will perform which task. The democratic leader can be seen in two lights:

A good democratic leader encourages participation and delegates wisely but never loses sight of the fact that they bear the crucial responsibility of leadership. They value group discussion and input from the team and can be seen as drawing from a pool of the team members’ strong points in order to obtain the best performance from their team. The Democrat motivates the team by empowering them to direct themselves and guides them with a loose rein.

However, the Democrat can also be seen as being so unsure of themselves and their relationship with subordinates that everything is a matter for group discussion and decision. Clearly, this type of ‘leader’ is not really leading at all. Read the following article on the democratic leadership style

The Visionary

The visionary leader mobilises their team members towards a shared goal or objective. Visionary leaders are charismatic, persuasive, and have high emotional intelligence. They are able to see a ‘big picture’ of the future and what needs to happen to achieve it. Compared to the other leadership styles, the visionary leader approach creates a stronger positive impact on the organisation’s culture.

This leadership style is best for managers who are experts in their field of work. That expertise begets respect from team members and is useful for motivating them to follow the leader’s plans and instructions. This style is not ideal for workers requiring more training or close guidance. Read the following article on the visionary leadership style

There are five keys to being an effective leader:

Focus

In order to be a leader who people want to follow, you need to ensure that you are aware of the results you want to achieve and where you want to go. Look at your vision, your mission, and your values and use these to find the most effective strategic goals for your organisation. By focusing on where you want to go, you can be sure that you will actually get there.

Authenticity

People like to follow those people who are always themselves. Be real! Be yourself and manage people in the way that you feel works best. Consider, for example, the way that you want to be managed and manage those under you using similar techniques. By being authentic, you can build people's trust when working with you.

Courage

A leader needs to recognise when they are doing things right and needs to have the courage to admit their mistakes.

Empathy

Empathy is all about showing you understand how others feel. You need to show empathy as much as you can, and you can achieve this by developing your listening skills. Appreciate what others are saying and use this knowledge to gain new ideas and build your relationships to be as strong as possible.

Timing

An effective leader understands the timings behind certain events and knows when and when not to make decisions. They understand the manner needed to make decisions, understand the speed at which to move, and know which decisions to make and when.

Businesses can be structured in different ways depending on the circumstances of the business operation. In New Zealand, different business structures have different legal and financial constraints and the chosen business structure can affect the way a business can grow, or how easy it is to eventually sell the business. The most common business structures used in New Zealand are:

• Sole traders
• Companies
• Partnerships

The following information comes from business.govt.nz, and you can read more details here.

1. Sole Traders

A sole trader is a person who may be starting off in business or is a contractor, and it is a common way for many businesses to start off. Sole trading is the cheapest and easiest option and is an attractive proposition for people who wish to follow their passion, or to work as a contractor.

Advantages

• Quick and easy to set up
• Low startup costs and no legal or registration fees for start up
• Full control over the business
• Retention of all the profits
• Able to offset losses against other income

Disadvantages

• Personal responsibility for paying back debts, which may impact on personal assets
• Getting loans or investments is more difficult as a sole trader
• Selling the business is harder

Tax

Sole traders are responsible for paying tax on all the income earned from the business. Legitimate work expenses can be claimed to offset the income and reduce the tax burden. An individual tax return must be submitted to the Inland Revenue Department (IRD) at the end of each financial year. Sole traders are also liable for all business debts, including ACC levies.

Though a sole trader may be comfortable dealing with their own tax returns, using an accounting service is a good idea to ensure compliance with tax laws and (legally) minimise the tax burden. Watch this video from a company called Hnry, which is an online and mobile-based accounting service set up for sole traders and which operates in New Zealand and Australia. What are the advantages and disadvantages of using an accounting service for sole traders?

2. Companies

Companies are separate legal entities from their directors and shareholders. Many export businesses use this structure as it limits the liabilities and risks for the business owners. Shareholders are people who have bought shares in the company as an investment and are entitled to a portion of any profits the company makes in a dividend. However, shareholders are also responsible for paying a portion of the company’s debts, up to the value of their shares.

Conducting business as a company comes with more regulation than other business structures. For example:

• File annual returns with both the IRD and the Companies Office
• Different rules apply on paying taxes for a company and for its shareholders
• Directors and shareholders details must be provided to the Companies Office

Advantages:

• Shareholder liability restricted to the amount they paid for their shares
• Company tax rate is lower than top personal tax rates
• A company has more leverage than a sole trader
• It is easier to sell a company because it is a separate entity
• Business growth is not limited as it is not tied to an individual person
• Obtaining funding and investment is easier.

Disadvantages:

• There are more regulations for companies than for sole traders or partnerships
• Companies may need more investment to grow
• Directors must understand their responsibilities

Tax:

Companies pay tax on their profits (annual income minus expenses). If dividends are paid to shareholders, those shareholders will pay income tax on that money. If a company makes a loss, it may not have to pay tax for that period.

3. Partnerships

Partnerships are structures in which two or more people or organisations form a business and enter into an agreement which sets out how it will operate and how they will share profits or pay debts. Partnerships are popular with groups of professionals like doctors, architects, lawyers and accountants.

Advantages:

• Partners can share the work of running the business
• Partners can share costs
• Partners can share expertise and specialise on personal strengths within the business and focus on these
• Partners have others they can consult with on the running of the business
• Partners can offset losses against other income

Disadvantages:

• Each partner is liable for all the partnership’s debts and may put personal assets at risk.
• Partners may have to pay their partners’ business debts

Tax:

Partnerships do not pay tax as a company but share all the income amongst the partners. Individual partners are then responsible for paying income tax on their share of the income. Partnerships are required to submit a tax return to IRD at the end of each financial year and individual partners are required to submit their own tax return as well.

4. Other structures

Whilst these structures are the most commonly used in New Zealand, there are other forms which may be more appropriate in some circumstances. Read more about these structures here.

You’ve reached the end of the learning material for this topic. Let’s recap the key points, and then make sure you’ve completed all the forum discussions and activities.

• The difference between the terms “leadership” and “management” with key differences in
  • Approach to change
  • Focus and objectives
  • Decision-making
  • Motivation and influence
• Leadership Theories
  • Universalist Theory
  • The Great Man/Woman Theory
  • Trait Theory
  • Contingency Theory
  • Situational Theory
• Leadership Styles
  • The Autocrat
  • The Laissez-faire Manager
  • The Democrat
  • The Visionary
• Understanding Business Structures