"Examining The Lack Of Application Of Path Goal Theories Of Leadership In Corporate Panama".

UNIVERSITY OF LOUISVILLE

LEADERSHIP & ETHICS

By: Dr. Dallas Kratzer

Term Paper

Presented by:

Navarro, Adriбn

May 14, 2006

"Examining the Lack of Application of Path Goal Theories of Leadership in Corporate Panama".

Since 1903, after Panama's independence from Colombia, corporations have played a vital role in the country. It was after the establishment of the first banks (Citibank & Chase Manhattan Bank in 1904) that the Panamanian society experienced the hassles and huddles that come with corporate management. Since then, the Panamanian corporations have tried to deal with these problems facing managers across the country. However, the development of corporate culture and philosophy regarding leadership has been overlooked, to say the least. Even today, in Panama, there are no formal studies regarding the behavior of leaders in corporations in the country.

This paper analyses the Leadership Path Goal Theory, and the Leader Member Exchange theory in contrast with their application in Panama's Banking Industry. Also, includes a discussion of the deficiencies managers at Towerbank (a local bank private bank) faced during the application, execution, and pursue of a goal. At the end, we present an introspective view of the of the leadership concepts learned, adapted to our lives, and the possible changes they will make in our daily business lives.

The first Leadership Theory that we will discuss is The Path Goal Theory (PGT). As we have analyzed in class and our findings, we can state that Leadership theories, seen from the perspective of motivation, and Goal Pursuance within a group, is susceptible to constant changes, development, and radical evolution. Having said that, Path Goal Theory can be described as the constant evolution of the Expectancy Theory which translates into the ability of the leader to inject motivation into his/her subordinates based on the ability to create a picture clear image of the Goal at hand, validation on the subordinates capabilities to perform the tasks at hand, and the rewards to be obtain once the Goals are met.

Before we can continue dissecting the Path Goal Theory, it is important to note that evolution has taken its token on the Path Goal Theory. Recent studies have derived a latter theory called the Hope Theory (HT) which is also based on Positive Psychology. Positive Psychology is interested in the study of the drivers that has made individuals, societies, and civilizations to prosper and Flourish (Helland & Winston, 2005). The interrelation of the Positive Psychology, the Hope Theory, and the Path Goal Theory is a very symbiotic one. On one hand the PGT is based on a broader scope of action, mainly because PGT is concerned with the interaction of three major factors: Leader behavior, Subordinate Characteristics, and Task Characteristics. Instead of defining each one of them, we will say that PGT has to do with the interaction and assessment of the best combination of the three possibilities in order to achieve the best possible outcome. These interactions among the realms of possible courses of action all have HT at the back bone of them, regardless of the situation. PGT is not a locked down theory that makes Leaders walk a thin line. Instead, it permits leaders to move, given them lost of wiggle room to adjust to different situations, and different subordinates' characteristics.

The PGT recognizes 3 different types of leaders' behaviors. The Directive Leadership Behavior can be compared to a dictatorial regime in which the leader gives clear instructions to the subordinates in order to accomplish a specific task. By this, the leader sets standards of best practices within the organization for the subordinates to follow. This type of approach is best used when there is an ambiguous task, or just the rules are too unclear and complicated for the subordinates to see the big picture. However, the characteristics of the subordinates play a role in the path the leader undertakes. It is said that directive leadership style works better for subordinates with a dogmatic and authoritarian background. Their need to have rules set out before hand forces the leader to take the directive approach.

The supportive leadership style is characterized by the nurturing like process, in which the leader needs to support his/ her people in order to obtain the wanted results.

For this type of approach to be successful, there is the need for two conditions to be met: on one hand, the subordinates need to feel unsatisfied, need of human touch (to perceive their leader as a human capable of understanding personal, and work related problems).

The second condition needed for the usage of this venue is the task characteristics. The task characteristics necessary for the use of the supportive leadership style are unchallenging, mundane, and overly mechanical work. When subordinates are faced against repetitive work, their morale tends to go down dramatically fast. This type of work, for example, can be perceived frequently among back office personnel at any local bank. It is a very challenging job for the managers to maintain high morale in people is those types of jobs. Therefore, the manager needs to take a paternal type of attitude, which in some way alleviates part of burden the subordinate is feeling.

When the task at hand is ambiguous, unclear, or understructure, and the subordinates are autonomous, need control of their actions, the participative approach is the best way to go. The biggest difference between the directive and the participative is in the subordinates' attitudes. For this typo of approach to be effective the subordinates need to be autonomous enough to want to be able to participate ad contribute to the greater good of the group.

Last, the Achievement Oriented Approach which consists of giving the subordinates high expectations on their assigned tasks. For this type of approach you need to KNOW YOUR PERSONNEL well enough to identify their ambitions, since a high degree of expected personal achievement is always present. At the same time, the task the need to perform need to be very demanding, ambitious and very complex.

Despite the easy way to explain the PGT, in real life, its implementation