A Theoretical Discussion of Motivation and Leadership In the Danish Public and Private Sector

Transcription

1 BscB(IM) 6 semester Institution of Management Bachelor Thesis Author: Rikke Krogh Counsellor: Thomas Nagbøl Mejlgård A Theoretical Discussion of Motivation and Leadership In the Danish Public and Private Sector Aarhus School of Business 2010

2 TABLE OF CONTENT 1 SUMMARY INTRODUCTION PROBLEM STATEMENT LIMITATIONS DEFINITIONS METHODS AND STRUCTURE MOTIVATION THEORY HISTORY INTERNAL MOTIVATION MASLOW NEEDS HIERARCHY VROOM S EXPECTANCY THEORY EXTERNAL MOTIVATION HERZBERG TWO FACTOR THEORY New Wage System Motivation and money in the private sector HACKMAN AND OLDHAM S JOB DESIGN SUM UP LEADERSHIP THEORY BEHAVIOURAL THEORIES ACV SITUATIONAL THEORIES Real life examples LEADERSHIP BY TRUST SUM UP PUBLIC AND PRIVATE SECTOR LEADING AND MOTIVATING CHALLENGES Unimerco Page 1 of 58

3 5.2.2 THE USE OF MONEY TO MOTIVATE MOTIVATION AND TIME FUTURE LEADING IN DIFFERENT SECTORS WELFARE MANAGEMENT NPM AND VALUE BASED LEADERSHIP SUM UP CONCLUSION DISCUSSION LITERATURE LIST ENCLOSURE 1 ARTICLES NO MORE VIEWABLE ON THE GIVEN WEBPAGE Page 2 of 58

4 1 Summary The society changes rapidly at the moment and this also means, that peoples wants, needs and expectations changes. This puts a pressure on the leadership and motivational aspect in the society. Companies and organizations have to follow the trend and continue to follow the changes. These changes give challenges both in the public and in the private sector and for Denmark to keep being one of the best competitive countries in the world, a strong focus on leadership and motivation is needed. The purpose of the thesis is to answer the following problem statement: 1) What is the difference between leadership and management? Why is there a need to move from management to leadership? 2) What is the link between leadership and motivation in the public and the private sector? 3) What are the main challenges of increasing employee motivation for leaders in the public and private sector? 4) What are the current challenges in managing people in public and private sector and how can leadership and motivational theories overcome these challenges? To answer these questions an examination of different theories within the concepts of motivation and leadership has been made and furthermore seen in relation to the public and private sector. Motivation and leadership are connected and are very important in our society. Motivation is what drives us and what gets us up in the morning. It is the intrinsic factors which have an impact. This means that in general people are motivated to work when they are passionate about their job and satisfied. This is seen in relation to the feelings of being challenged, having meaning and getting rewards from the job. The concept of motivation has been gone through with the use of different theories such as Maslow s Hierarchy of Needs, Vroom s Expectancy theory, Herzberg s Two Factor theory, and Hackman and Oldham s Job Design. Leadership on the other hand, is what should create and increase the motivation. Therefore it can be seen that there is a strong link between the two concepts and for it to be optimal, it should be a positive link. In this thesis, three aspects of leadership are looked at namely behavioural, situational and trust. When talking about leadership, it is important to consider all of these aspects. It is not enough Page 3 of 58

5 only to consider one or two of them. The behaviour has to be seen in relation to the specific situation and furthermore the new concept of trust has also to be incorporated. When having to lead and motivate it can sometimes be a bit difficult due to all the aspects that have to be considered. It could moreover be argued that it is more difficult to do it in the public sector, than in the private. The reasoning behind this is the different context the public sector is in, mainly the relationship with the politicians. The concepts of motivation and leadership have therefore been seen in relation to the two sectors and how it is used in these sectors. How does it work and is there a difference in how it is used? What was found was that there is a difference, and this is mainly due to the public sector s relationship with politics. This means a different control system, power system, impact on how fast things can be done and changed and who decides what. This means that the private sector in some way has more freedom to do what they want, opposite the public sector where everything has to be decided by the politicians. Page 4 of 58

6 2 Introduction Now and perhaps more than ever, we have a need of good leadership and motivational methods. To get through the financial crisis we are experiencing at the moment, a strong focus on these two concepts has to be made. As of today in Denmark 2010, we are having the highest unemployment rate in 4 years of 4,4% (Epn, 2010, jan). In the latest years we have experienced an increase in firings and it has become more difficult to get a job. This is a problem both for the newly educated but also for the established career person who has been fired. Therefore especially in a situation of crisis, concepts such as leadership and motivation are important. This does not mean that they have to be forgotten when the crisis is over. Leadership and motivation are two of the most important concepts when talking about a company being successful. The companies and organizations in the public and private sector depend on having good leadership and leaders that are able to motivate in the right way. In relation to the crisis, but also just in general to the changes in the society, there have come different aspects or worries up to the surface, for people both in the private but also in the public sector. This is also seen in relation to leadership and motivation. When time changes and the society is in a crisis, there might also be a need for change in the leadership and the way the leaders are motivating the employees. In organizations both public and private, the aspect of uncertainty has come up. This has to do with all the firings and closed down companies. Many employees do not feel that they are safe anymore in their job. According to Maslow s Hierarchy of Needs, security is one of the lowerlevel needs and for an employee to strive to the higher levels and perhaps in that way perform optimal, the lower levels have to be satisfied (Brooks, 2009, p ). If people do not feel secure and safe in their jobs, it will be a challenge to find a way to motivate and lead them. The topic of leadership and motivation is interesting because it is very relevant and also very present in the media. Through time the two issues have been much discussed and there is a lot of theory. From the beginning, with the focus on theory, there were the traditional approaches which stated that work was unpleasant and if paid enough, the workers would do anything. Money was the driving force (Brooks, 2009, p. 81). Through time there have been some changes in the viewpoints and new theory has come up, as new situations have come. This is also one of the things that make leadership and motivation interesting issues because it is not static but new theory come up and new ways at looking at things. On the personal level, the issues of leadership and motivation caught my interest in the course of Or- Page 5 of 58

7 ganizational Behaviour at BscB(IM). I found it fascinating that different methods and ways of leading would give different result and is demanded in different situations. The same goes for motivation. Different people need different motivation and different organizations use different motivational methods. Therefore I find it interesting to see what the theory says and how it works in practice. 2.1 Problem Statement This thesis is going to be a theoretical paper, discussing the issue of leadership and motivation seen in relation to the public and private sector in Denmark. The thesis will answer these questions: 1) What is the difference between leadership and management? Why is there a need to move from management to leadership? 2) What is the link between leadership and motivation in the public and the private sector? 3) What are the main challenges of increasing employee motivation for leaders in the public and private sector? 4) What are the current challenges in managing people in public and private sector and how can leadership and motivational theories overcome these challenges? 2.2 Limitations The thesis will have its stand in the course of Organizational Behaviour and will have the focus on the problem statement which will be answered in a theoretical manner with the use of description, discussion, setting things in perspective and making conclusions. Since this is a theoretical thesis, I delimit myself from using primary data and literature such as personal research, interviews, questionnaires and the like. The thesis will be based on secondary data and the problems will be looked at from a theoretical point of view. One of the reasons that I am limiting myself from using primary data is because this kind of data is often time consuming and I do not believe that for this kind of paper, there is enough time to really benefit from it. Even though the financial crisis will be mentioned in the thesis, the thesis will not have an economical point of view but focus on the softer areas of leadership and motivation. Although we in Denmark have experienced the crisis for some years now, it does not change the fact that there is still a need for leadership and also motivation and perhaps an even stronger need for good leadership and Page 6 of 58

8 motivational methods in crises. People have been fired and therefore it is important to keep the employees motivated, especially when the job situation is uncertain. Since leadership and motivation are broad topics, there are certain areas that I have delimited myself from covering. When talking about leadership and motivation the aspect of culture would also come to mind. In the world we live in today many companies and organizations are international or in other ways have a mix of cultures. Therefore it is important to be aware of this and have it in mind when you are a leader and need to find ways of motivating your employees. However in this thesis, to narrow down the field, I have chosen not to focus on the culture in the organizations but see it as one general. Furthermore the thesis is seen in relation to the public and the private sector. When focusing on this and looking at the differences and challenges, it will not be a one-to-one comparison. When doing this, it can easily become very small and complicated and lead to other little areas which is difficult to get out from again. Therefore it will be looked at in broader terms, however still with a clear indication of the differences in each sector. Moreover in connection to the public sector, the political aspect will be mentioned, however this aspect will not be a main focus and therefore it will not be explained in details. In the thesis different theories will be used. This is theories both from the point of leadership and from the point of motivation. Since leadership and motivation is very broad topics and something that have been studied for many years, a lot of theories have been made and therefore not possible or relevant to have all of them represented in this thesis. Some theories are also very alike because they are built from the same basis and some built their theories further from others such as Porter- Lawler from Vroom s. I have chosen to deal with theories such as Maslow, which date all the way back to 1943 and theories up till now, such as Leadership by Trust and Welfare Management. Theories that I have delimited myself from are among others the theory of Frederick Taylor and Scientific Management and the reasoning behind this has been made under the heading 3. Motivation. Furthermore in the section of leadership I mention there are broadly three schools of thoughts; Trait theory, Behavioural theory, and Situational theory. Here I have delimited myself from Trait theories because it does not have the same kind of relevance as the others and furthermore the theory does not give the full picture, only superficial (Brooks, 2009, p. 165). Page 7 of 58

9 2.3 Definitions Before beginning the main part of the thesis there are some things that has to be defined and explained so no misunderstanding will occur and everything will be clear from the start. When mentioning the private sector it should be seen in its general form. When looking up the definition of the private sector, you can read that it is part of the national economy, which is made up of resources owned by private enterprises. It is both dealing in the personal sector and in the corporate sector (Business dictionary). Therefore when mentioning the private sector, it is not a specific area or business which is being referred to. Furthermore when mentioning the public sector the same goes. It is meant in its general form and when looking up its definition, it is part of the national economy which provides basic goods and services. It includes the national and local governments and public corporations. Moreover the public sector is the largest sector of any economy (Business dictionary). Another word that might need some deeper explanations is the word of an employee. In the thesis I will be using the word employee and this is meant in its general form. When talking about employees I see it as a homogeneous group. This means that there is no difference when it comes to age, sex, profession, job title, or anything in that manner. This is the case both in the public and in the private sector. When focusing in more detail on one of these points, it will be stated explicit, e.g. a discussion of age and motivation will be made and it will be clear that employees are differentiated according to age. Furthermore a definition of the concept fringe benefits is needed. In the thesis this concept has been used in relation to motivation of employees. In connection to the thesis, fringe benefits are additions to the basic wage. This could be bonuses for a job well done, medical insurance, pension, food/fruit arrangement, free car, free telephone and stock option opportunities. 2.4 Methods and Structure In relation to my thesis and to be able to answer my problem statement, I have a theoretical part based on motivation and leadership with some examples relating to the theories from the public and the private sectors. There will also be a more analytical part, which will connect the theories and relate them to the aspect of public and private sector. From this it will be possible be extract conclusions and give fulfilling answers to the problem statement. Page 8 of 58

10 I have chosen to show models when describing the different theories. The models in this thesis has been made with the use of different sources and then drawn by myself. This gives the thesis a more harmonious layout. Within the motivational theories I have chosen to deal with the internal motivation and the external motivational. Theories within internal motivation I have chosen to focus on are Maslow Hierarchy of Needs and Vroom s Expectancy model. These I have chosen because even though they are not the newest theories, they still in one way or another count. Something might have changed, but it is still the basic terms that these theorise introduced that is used today. For example what Maslow put in his hierarchy is still relevant, however just rearranged, which will be seen later. Furthermore we have all expectations. Especially today we have very high expectations and we expect that certain actions will lead to certain rewards, which motivates you. It is not only internal motivation that exist but also external. Here I have chosen to deal with the theories of Herzberg and Hackman and Oldham. These theories have been chosen because they give a good overview of the external factors that have an impact on motivation such as money, the job itself, responsibility and variety. Moving into the theories of leadership I have chosen to focus on Behavioural theories, Situational theories and a rather new theory built on trust. Within the Behavioural theories, I have chosen to focus on the Ohio State University Model and the model of Blake and Mouton. These have been chosen because they give a good picture of the different kind of behaviours a leader can have and where the focus of the leader is, whether it is more towards the people or more towards the production. However the behaviour of the leader is not enough to understand a leader. The situation also has to be accounted for. This is why Situational theories are important. One cannot look at a leader without looking at the situation the leader is in. The theories that have been chosen in this context are the theories of Hersey and Blanchard and the theory of Fiedler. These have been chosen because they both state that the situation is important however they have different view on the flexibility of the leader, which is quite interesting. Furthermore the models are rather good at simplifying and showing what kind of leader there is needed in different kind of situations. Lastly I have chosen the theory built on trust. This is a rather new theory, which is partly why I have chosen it. Things changes over time and therefore theories made in the time we live in could have some interesting points. This is the case with the theory chosen here. Page 9 of 58

11 As can be seen from figure 1 of the structure, after having gone through the theories of motivation and leadership, the thesis will more specific focus on the differences in the two sectors in our society. This has mostly been done by extracting information from the two sections before and with information from different articles related to the topic. In relation to the theory part of motivation and leadership, mostly books and e-books have been used with articles supporting the examples. Figure 1 Structure of thesis Introduction Motivation Internal External Leadership Behavioural Situational Trust Public and private Leading and motivating Challenges Leading in different sectors Conclusion Discussion Page 10 of 58

12 3 Motivation Motivation has been important for many years both in the personal life but also in the work life. When looking at motivation from a psychological point of view, it is about achieving a goal, and leading towards goal-directed behaviour. In relation to the concept of motivation there are two aspects present. The first aspect is the drive, which is an innate biological mechanism that determines ones activity/instinct. It covers the biological needs, such as hunger. The other aspect is the motive, which is an innate mechanism that is built and made personal by learning. Motives satisfy needs that are not directly based on the requirements of the body, such as companionship. Motives can be used to achieve greater satisfaction and stimulation (The Columbia Encyclopedia, 2008). Since this thesis is about the public and private sector in Denmark it would also be interesting to see what motivation means in relation to business. Therefore when looking up the word motivation in a business dictionary, one gets this definition: Source: Business dictionary 2 Internal and external factors that stimulates desire and energy in people to be continually interested in and committed to a job, role, or subject, and to exert persistent effort in attaining a goal. Motivation is the energizer of behavior and mother of all action. It results from the interactions among conscious and unconscious factors such as the (1) intensity of desire or need, (2) incentive or reward value of the goal, and (3) expectations of the individual and of his or her significant others. Motivation has many aspects. There is the internal and the external motivation. Within these two concepts there are further sub points. In relation to internal motivation there are rational factors such as expectation, self-confidence and goal management. Furthermore there are the irrational factors such as needs, qualities, and personality. Looking at the external motivation, there are the sub points of job design, which account for motivations factors and job characteristic. The other sub point, being economic and social factors, such as rewards, justice, and personally wages (Lægaard, 2008, p. 13). These aspects will be looked at in the next section of theory. The effect motivation has on the behaviour of employees is that it creates a focus on specific assignments, persons or topics that might be in question. Furthermore it creates energy, effort, and a de- Page 11 of 58

13 termination which creates more persistence. Lastly it affects the job, in the sense that the employees will make plans for how the given job will succeed (Lægaard, 2008, p. 11). The effect motivation has on people is why motivation has been and still is an interesting topic to focus on. Motivation is needed in every aspect of life from the basics of getting up in the morning to the more specific of getting a particular job done. Throughout the years there have been a lot of different theories about motivation. It all started with the traditional or the classical theories such as the Scientific Management, developed among others by Frederick Taylor ( ). The assumption behind this theory is that people act rationally in an attempt to maximise the economic return to their labour. At that time it was believed that working was not fun and something you would not chose if you had a choice. Furthermore the reason behind people wanting to work was money. If people were paid enough, they would perform any job (Brooks, 2009, p. 81). This view on motivation is no longer valid or at least not the full view. It is outdated due to differences in the society but also more aspects have been found and motivation is no longer as simple as that. This is what will be discussed in the next section. Here different theories developed after the Scientific Management will be looked at and seen in relation to different aspects. 3.1 Theory In this section of motivation the different theories that have been chosen will be discussed and applied to different real life examples. To begin with, a brief introduction of the background of motivational theories will be given. Thereafter internal motivation will be discussed with the use of Maslow s Hierarchy of Needs and Vroom s Expectancy theory. A discussion of the external motivations will also be made. This is with the use of Herzberg s Two Factor theory and the theory of Hackman and Oldham. The example of the New Wage system in the public sector will be given, followed by a short discussion of the use of money to motivate in the private sector History After the time of Frederick Taylor and the Scientific Management, came the time of more focus on behavioural theories. Lots of the theories that we know today and have experienced in newer times is developed out from the studies made by Elton Mayo, the so call Hawthorne studies from Page 12 of 58

14 1943. The reason why he and these studies are important to mention, is that a lot of later studies are build out from what was found at that time. The study was carried out on Western Electric Company in California. What came out of the studies were the experimenter effect and the social effect. What the experimenter effect did was making changes and these changes were then seen as a caring and interest of the employees by the management and it gave a boost to the morale and productivity. What the social effect did was develop a bond and a different kind of friendship then just colleagues, which also increased productivity due to the special treatment (Scheuer, 2000, p. 44). The Hawthorne studies most important result was the demonstration of the significant influence social relations had on productivity. This was a major step away from the Scientific Management and its idea of the economic man. The interpretation of the Hawthorne experiments is the understanding of the man as the social man. Therefore these studies and experiments formulated the concept of Human Relations. Among others, Maslow and Herzberg were inspired by Mayo and the Hawthorne studies in relation to Human Relations (Scheuer, 2000, p ). 3.2 Internal motivation Maslow Needs Hierarchy Within internal motivation an interesting theory to discuss, is the theory of the American psychologist Abraham Maslow ( ), who came up with the Hierarchy of Needs in One might ask why this theory is still relevant. It is after all 67 years ago and a lot have happened since. However the basic ideas behind the Hierarchy of Needs are still present in today s society. Perhaps just in a different order and/or having different importance to people. However to understand how the Hierarchy of Needs might look like today, a brief description of the original model is needed. What Maslow came up with, was a set of needs that were ranked hierarchically in relation to satisfying motivation. Looking at the pyramid in figure 2a, we see the five steps. In the bottom there are the basic needs and for a person to move up the steps, the step before has to be satisfied and fulfilled (Brooks, 2009, p ). To say it in another way, it is only the unsatisfied needs that work as motivation. Furthermore the needs have different meanings for people. This means that the hierarchy should be used in specific situations and therefore the leader need to built the motivational behaviour out from the needs of the employees and not on the leaders own needs or interpretations of the employees needs (Lægaard, 2008, p. 20). Page 13 of 58

15 As seen from figure 2b, the pyramid has been put upside down. This has been done because this is perhaps more what it looks like today, at least in the western part of the world and in the developed countries such as Denmark. The reason for the upside down hierarchy is that, the basic needs from the original model, has moved away from being a need and moved on to be something that is already present. It is something that is there and not something that is needed. The motive to work today is no longer only income for consumption but it is the job in itself that is motivating (Christensen, Ibsen, 2001, p 36). Therefore one could say that the needs for people in the society today begin at the second or third level and upwards. What people want from their job today is to be respected, valued, recognized, appreciated, grow as a person, have status and success. This is what counts the most and therefore the pyramid is upside down, so that these needs are represented with the largest space. Furthermore it can be seen that the income do not count as much as before. The income (money) was the most important, when the basic needs in the original model needed to be satisfied. However now that we have moved upwards in the hierarchy, it is other things than income (money) that counts (Christensen, Ibsen, 2001, p. 37). This is also what will be seen in the theory of Herzberg later in the thesis. The idea behind Maslow s model can be seen in other theories and in theories that are present in Some theories and models hav build further on Maslow s theory and some have use different aspects from the theory. This is why this particular model has been chosen and not models such as Aldefer and McClelland s (Brooks, 2009, p ). Later in the thesis, the use of Maslow s theory will be seen in examples related to people employed in organizations. Page 14 of 58

16 3.2.2 Vroom s Expectancy theory This theory is important because it is a good tool for a leader and an employee to see which factors are decisive, when it comes to choosing ones actions to get a specific outcome, whether intrinsic or extrinsic (Christensen, Ibsen, 2001, p. 100). This is both important in the private and in the public sector. This can be seen especially in the public sector in Denmark with the New Wage system which came in This is furthermore connected to the theory of Herzberg. Before going into more detail about the New Wage system from 1997, a description of Vroom and Herzberg s theory will be made. The Expectancy theory saw its light in the 1930 s and was another way to look at things. Vroom is one of the well known names in the theory of motivation. Vroom continued developing from the theory from the 1930 s and his theory, as we know it today, came out in This theory tries to explain and predict the motivated behaviour. It is a framework which has different levels of motivation, performance, employee turnover and absenteeism, in addition to leadership effectiveness and career choice (Brooks, 2009, p. 83). In Ian Brooks book the explanation is: From this, the expectancy equation can be formulated: Motivation (M) = Expectation (E) x Valence (V)....the motivation to behave in a particular way is determined by an individual s expectation that behaviour will lead to a particular outcome, multiplied by the performance or valence that person has for that outcome. In Expectancy theory it is argued that the expectations of the humans are conscious and furthermore the behaviour is directed by subjective probability. To say it in another way, it is the expectations of one s behaviour that will lead to a certain outcome. As the example in Brooks (2009, p. 83), when a person works long hours, that person expects to get a certain outcome. Rationally the person will behave in this way because the person would like to be promoted or get a higher wage in the future. Furthermore the theory states that the equation will be different from person to person. Therefore according to the theory, the motivation is only present if there is a connection between the prob- Page 15 of 58

17 abilities of success, the expectations of rewards and that these rewards have a value to the person (Lægaard, 2008, p. 14). As stated above, the theory is based on conscious and rational thinking however we are human and as it is well known, we do not always behave in a rational way and it is not always easy to find out the precise connection between efforts, results and reward values (Lægaard, 2008, p. 14). As mentioned, Vroom s theory is connected to the theory of Herzberg. This can be seen in the way that the wanted result can either be an internal reward or an external reward. More specific it is either the satisfaction of doing the job (internal) or an increase of salary, promotion or recognition from the leader (external). In Vroom s theory the motivational aspect of income (money) is depended on the individual person and what he/she prefers to have as a reward. When he/she knows what kind of reward he/she wants, then they can take different actions to get the reward. Christensen, Ibsen, 2001, p ). Now that Herzberg s theory has been mentioned a couple of times, a more thorough examination of the theory will be made in the next section. 3.3 External motivation Herzberg Two Factor theory In 1968 Frederick Herzberg ( ) came up with his theory of intrinsic and extrinsic rewards, the so called Two Factor theory. This theory was based from the motivation in the workplace and is able to show the influence of the factors on performance and job satisfaction (Brooks, 2009, p. 93). The reason for this theory being mentioned is, that one of the things that this theory states is that money do not motivate. This is something that has been and still is a debate about. Before going more into depth about this, an explanation of the theory will be given. Page 16 of 58

18 Figure 3 Herzberg s Two Factor theory Hygiene factors Status Security Relationship with subordinates Personal life Relationship with peers Salary Work conditions Relationship with supervisor Company policy and administration Supervision Personal growth Advancement Responsibility Work itself Recognition Achievement "Motivators" Source: businessballs As can be seen from the figure above, Herzberg has shown two factors. The motivaters and the hygiene factors. The reasoning behind this theory is that the hygiene factors (left hand side), are extrinsic factors. This means that it is influences from the outside that are affecting you. These hygiene factors do not give any motivation. The extrinsic factors will be dissatisfying if they do not live up to the expectations by the people. On the other hand when they do live up to the expectations and are satisfying, they will not give anything to be more motivated. Therefore the hygiene factors have to live up to the expectations otherwise people will be dissatisfied. To give an example, one could mention the salary. If one believes that the salary is too low for the effort they put in, they will be dissatisfied, however if the salary lives up to the expectations, it will not necessarily result in more motivation (Brooks, 2009, p. 94). In figure 3 on the right hand side, the motivators are shown. These are the factors that will lead to satisfaction and thereby motivation, also called the intrinsic factors. It is factors that are directly connected to the work. If managers/leaders want to get the most out of their employees, fulfilling the intrinsic factors is a good way to do it. Looking at the Two Factor theory and the Hierarchy of Needs, one could say that the intrinsic rewards are the higher level needs in the hierarchy and the extrinsic rewards are the lower level needs (Brooks, 2009, p ). From Herzberg theory it can clearly be seen that this is almost the opposite from what Taylor stated. According to Taylor money was the best way to motivate employees, where Herzberg states the more or less opposite, that money do not increase motivation. Money can either effect negatively or neutral in the long run. Page 17 of 58

19 However was Taylor, back in 1911, all that wrong when it is seen in relation to today? Is it as black and white as Herzberg and Taylor make it to be or is there a gray? To find an answer to this question one might look at the public sector. Even thought there is a lot of theory saying that money do not motivate and there are other factors and tools that work better, then within the public sector the belief is that money motivates. They are convinced that there is a positive connection between bonus, allowance and increased motivation and that it is the key factor when it comes to motivating the employees to make an extra effort (Christensen, Ibsen, 2001, p. 87, 101). This is among other things what can be seen with the New Wage system in Denmark New Wage System Back in 1997 in Denmark a New Wage system saw its light in the public sector. It is known that working in the public sector, it is perhaps more the job itself that counts and not the money. However the New Wage system is very focused on motivating with the use of money and this might take the motivation of joy for the job away and replace it with just working to get money. In the new system there is a basic wage and for doing an extra effort there are different types of additions such as qualification bonus, function bonus, and result-wage (Christensen, Ibsen, 2001, p. 44, 153). In a study from Denmark there has been looked at whether bonuses motivates to do an extra effort. What was found was that 62% of leaders believe that it motivates and 54% of employees believe so. This is the majority however there are still 38% leaders who does not believe that it motivates and 46% employees (Christensen, Ibsen, 2001, p. 344). When looking at these percentages, one might question whether money really does not motivate like the theory states. A fact that might contradict this is when asked what motivates people most in the daily. The result was that it was not money. Instead it was the job itself and the work environment (Christensen, Ibsen, 2001, p. 355). Therefore one might question why the public sector has chosen this method to motivate their employees. It might be another way of copying the private sector where there are many different types of wage systems, which gives personal bonuses (HK, 2009). This could perhaps also be interpreted from what the ministry of finance stated about the New Wage in According to the ministry there were two overall purposes with this new system; contribute to a larger effectiveness and quality in the governmental sector and create better work places, among other things to secure the opportunities of recruiting and maintaining employees (Finansministeriet, 1998). Page 18 of 58

20 Motivation and money in the private sector Now that the public sector has been looked at, it could be interesting to see how the private sector looks at money. It could be said that the private sector looks at money as a motivational factor rather than a hygiene factor. At least there has for many years been a strong focus on money and the use of money to motivate the employees. After all, it is from the private sector, that the public sector has taken the ideas of the different kinds of ways to pay employees, such as the result based salary and bonuses. Furthermore in the private sector there is a so called free formation of salary, which means you have the right to participate in the setting of your salary (Krifa). In the private sector the focus is on the end result and making money. Therefore they reward employees with extra money when making an extra effort and giving good results. In relation to the bonuses there is no rule for how high they can be, and in the private sector some really exceptionally cases has been seen. To mention a few there have been the case of Flemming Østergaard, former president of Parken Sport & Entertainment, who in 2006/2007 got DKK 10,2 millions in salary as president of the corporation and DKK 11 millions as a consultant (Politikken, 2010, 9. marts). Furthermore in the Bank sector there are different examples of high salaries and bonuses also in relation to the stock option opportunity they have (Politikken, 2010, 24. marts). Just to mention an example of a salary, Peter Straarup, the director of Danske Bank, got DKK 8,6 millions in This was without a bonus but pension included (Politikken, 2009, 5. feb) Hackman and Oldham s Job Design Moving back to theory and to a theory, which is based on the theory of Herzberg, is Hackman and Oldham s theory. They wanted to give more details to the understanding of how job characteristics are related to job satisfaction. Therefore they suggested five characteristics which have an influence on the psychologically relationship towards the job. They suggested that there should be a wide range of the use of the employee s skills, the job should be meaningful and therefore the employee should feel responsible for the job. Moreover the job should have some degree of positive influence on others lives and welfare, the degree of freedom and independence when doing the job. Lastly there is feedback, which works as the result for the employee (Lægaard, 2008, p. 26). These five characteristics should have a positive influence on the three psychological states, which they suggest to be experienced meaningfulness, experienced responsibility, and knowledge of results. This can all be put into a model which can be seen below in figure 4. Page 19 of 58

21 Figure 4 Hackman and Oldham s Jobdesign Core Job Characteristics Critical Psychological States Outcomes Skill Variety Task Identity Task Significance Autonomy Feedback from Job Experienced Meaningfulness of the Work Experienced Responsibility for Outcomes of the Work Knowledge of the Actual Results of the Work Activities High Internal Work Motivation High "Growth" Satisfaction High General Job Satisfaction High Work Effectiveness Moderators: 1. Knowledge and Skill 2. Growth Need Strength 3. "Context" Satisfaction Source: Brooks, 2009, p. 105 As can be seen from the model, the outcome will be that the employees will be motivated and satisfied and they will experience growth and an increase in effectiveness (Brooks, 2009, p. 105). When looking at these characteristics, one can see a resemblance to the intrinsic rewards of Herzberg. This is of cause also due to the fact that Hackman and Oldham built their theory from the theory of Herzberg. Furthermore one might notice that in the theory of Hackman and Oldham, money as a Core job characteristics is not present. Moreover the result is not based on being more satisfied by getting more money. The belief behind the end result in this theory is in the same direction as Herzberg and also Maslow. When looking at the top of Maslow s hierarchy, in both the original model and in the upside down model, it is more or less the same end result. When looking at this model, one can see that it really fits the examples given under the theory of Herzberg. As mentioned according to studies, people want to have variety in the job, have a job that means something and have an impact on others, to follow it trough, yourself being in control of what you are doing, and lastly you want to have feedback on your work, so you know you are appreciated. Page 20 of 58

22 3.4 Sum up With these four theories about motivation, similarities can be seen. They all point in the direction that motivation should be something associated with intrinsic factors, such as the job itself, personal growth, recognition, and the ability to keep advancing. None of these theories count extrinsic factors as factors that are able to motivate. Extrinsic factors are referring to money in this situation. There has been taken a distance to the theory of Taylor and the statement that money is the most important form of motivation. However this is at least done in theory, another thing is what is done in reality. As could be seen in Denmark with the New Wage system, the focus is on money when it comes to motivating people. Either it is the theories that do not want to see money as a motivating factor or else it is the sectors both public and private that make it difficult not to count money as the reason why we work. It might be more of a question of how much or how important money is, when talking about motivation seen in relation to other factors. It was the majority in the public sector that answered that bonuses would motivate them to do an extra effort. However when asked which factors that motivates them the most in the daily, it was not money. Instead it was the job. It is having a diversified and independent job, and having a good work environment. However in the private sector the focus from both the leader and the employees is more on money. In the private sector it is more common to motivate with a high salary or extra bonuses than in the public sector. Therefore in relation to the theories described in this section, it can be said that in general, people are motivated to work when they are passionate about their job. This also means that they are satisfied and this is related to the feelings of being challenged, having meaning, and getting rewards from the job (Burke and Fiksenbaum, 2009). 4 Leadership One cannot talk about motivation and then not talk about leadership. The two are interlinked and when talking about one of them, you have to talk about the other. Both in the public and in the private sector leadership is very important. There is always a need for someone to take a lead and lead others. Otherwise things might not be done or perhaps it will be done, but not necessarily in a pace or way that is wanted by everyone. Leadership is about getting things done the right way and to do that, you need people. Furthermore to get people to follow you, you need to have them trust you. And if you want them to trust you and do things for you and the organization, they need to be moti- Page 21 of 58

23 vated (Baldoni). Therefore it is the leader s job to constantly have their employees motivated and that is not always easy. There are different factors depending on the outcome of the behaviour of a leader and the motivation of the employees. In this section three theories has been chosen and they are Behavioural, Situational and Trust based leadership. The theories described in this section have been chosen because they give a good picture of the well known theories that have been used for many years and also theories which are new and may, may not be a better match for the time we are in now. However it will be shown that there is a basic understanding of what leadership is and how it should work. The issue is perhaps more whether it fits entirely to reality and the time we are in or not. To start up looking at what leadership is and how it works some different questions could be asked such as; what is leadership? What is a leader? Is it the same as management and a manager? In English the word leadership and management have two different meanings. Both are used to represent a person who has employees. In other languages such as Danish, we only have one word which broadly can be translated to leadership. However in literature there have been made a distinction between a manager and a leader from the English terms (Lægaard, 2008, org, p. 7-8). In Brooks the definition of a manager and a leader is (2009, p. 163): Managers perform functions in organisations and hold a particular, formal, title and/or fulfil a role. * Leaders, on the other hand, aim to influence and guide others into pursuing particular objectives or visions of the future and to stimulate them into wanting to follow. A further distinction is made by John Kotter (Kotter) who is a well known professor with focus on leadership and change. He puts it up like seen below: Management makes systems of people and technology, work well day after day, week after week, year after year. o Planning & budgeting Page 22 of 58

24 o o o Organizing and staffing Controlling & problem solving Taking complex systems of people and technology and making them run efficiently and effectively, hour after hour, day after day Leadership creates the systems that managers manage and changes them in fundamental ways to take advantage of opportunities and to avoid hazards. o o o o o Creating vision & strategy Communicating & Setting direction Motivating action Aligning people Creating systems that managers can manage and transforming them when needed to allow for growth, evolution, opportunities and hazard avoidance Broadly the difference between the two is that management is for the short run and leadership is for the long run. Furthermore managers seek to do things right, whereas leaders seek to do the right things (Lægaard, 2008, org, p. 9). The points that describe leadership and management are all important when having a company. Therefore to be a good leader you need to have both good leadership and good management. To run a company and have the optimal outcome, a mix of leadership and management is the best (Lægaard, 2008, org, p. 9). The reasoning behind this can also be seen in the definition of management and leadership by Kotter above. With leadership you have the visions and directions and by combining with management you still have control and planning. This has become necessary in today s society which can be seen next. As stated above a mix of leadership and management would be optimal. This also means that it is not enough to manage. Then one could ask why it is not enough to manage? Why is there a need to move over to more leadership? According to different persons within the field of management and leadership there are good reasons why. According to Kouzes and Posner, employees look for leadership instead of management because in the world today, employees want to be a part of what is going on in the company with decisions, planning, and evaluations. Furthermore according to Lynch due to constant changes, there is a need for leadership and he even states that those companies or organizations who continue only to manage will have problems. So managers have to be able to lead as well as manage. To elaborate on what Kouzes and Posner said, when managing you want to create Page 23 of 58

25 order, stability, and make sure things run like they should with the use of control. However when leading it is more as a sort of guide or helper who provide information, resources, trust, and have an overview (Merrill associates). When looking at the theories of leadership, there are quite a lot. There are broadly three schools; Trait theory, Behavioural theory, and Situational theory. In the next section different theories within Behavioural and Situational theory will be looked at and discussed. The reason behind not looking at Trait theory has been argued for under limitations. 4.1 Theory In this section of leadership the different theories that have been chosen will be discussed and applied to different real life examples. To begin with, the Behavioural theories will be discussed, with the use of Ohio State University Model and Blake and Mouton with their Managerial Grid. Furthermore an example from the public sector will be given. Thereafter the Situational theories will be discussed, with the use of Hersey and Blanchard and their Leader Behaviour model and Fiedler with his contingency theory. Here examples of different leaders in the private sector have been given. Lastly there is the Leadership by Trust which is mostly based on the theory of Stephen M. R. Covey, who has written the book The Speed of Trust. Here an example from a Danish bank has been given Behavioural theories Behavioural theory focuses on the behaviour of the leader in relation to motivation of the employees. In the 1940 s and 1950 s, the Ohio State University found two types of leader behaviours. The first one is initiating structure, where it is the behaviour which focuses on the achievement of objectives and includes clear supervision and role clarification, planning of work and a results orientation. The second is consideration where it is the behaviour which encourage collaboration and focus on supportive networks, group welfare and the maintenance of the job satisfaction. The University of Michigan found similar things at that time. In their findings they just call it task and people orientations (Brooks, 2009, p ). The theory of the Ohio State University is shown in a model below. Page 24 of 58

26 High Low Consideration A Theoretical Discussion of Motivation and Leadership in the Danish Public and Private Sector Figure 5 Ohio State University Model Ohio State University Model Less emphasis is placed on structuring employee tasks while the leader concentrates on satisfying employee needs and wants The leader provides a lot of guidance about how tasks can be completed while being highly considerate of the employee needs and wants The leader fails to provide necessary structure and demonstrates little consideration for employee needs and wants Low Primary emphasis is placed on structuring employee tasks while the leader demonstrates little consideration for employee needs and wants High Initiating Structure Source: From class, Week 12 Motivation, management and leadership, Dias 27, made by Carsten Bergenholtz From the model, it is seen that the best leader is one with high consideration and a high level of initiating structure (Brooks, 2009, p. 167). Some of the same can be seen from another study by Blake and Mouton in the 1960 s, called the Managerial Grid. In the model of Ohio State University, it was stated that it was possible to identify the best leadership style. This is where the theory and model from Blake and Mouton differs a bit. In their theory and model there is no worst and best style. They state that no leadership style is best for every situation, which means that as a leader you need to understand them all and use the different styles to the right situations. However some leaders are from the beginning either very people oriented or very task oriented or both. So either interested in making the employees feel good, wanting to set and enforce schedules or setting schedules from the basis of the employees needs and wants (Mindtools). In the model of Blake and Mouton, there are five leadership styles that can be pointed out, which can be seen in figure 6 below. Two of the points in the model refer to another theory, namely the theory of X and Y by Douglas McGregor. From the model it can be seen that Produce or perish leadership, is where you have high focus on production and low focus on people. This is where the needs of the employees come after efficiency and production. The leader is very autocratic. It is his way or the highway. This is the same view there is on the X-type leader. On the other hand there is the Team leader, where there is high focus on production and high focus on people. Here the two things are equally rated. It creates an environment which focuses on team, thrust, and respect, which in the end will motivate the employees and give high production. This is the Y-type leader (Mindtools). Page 25 of 58

27 High Low Concern for People A Theoretical Discussion of Motivation and Leadership in the Danish Public and Private Sector Figure 6 Blake and Mouton, Managerial Grid Blake and Mouton Managerial Grid Country Club Team Leader Middle of the Road Impoverished Low High Produce or Perish Concern for Production Source: From class, Week 13, Management and leadership, Dias 4, made by Carsten Bergenholtz What this model can be used for, is for a leader to realize that there are different styles and help understand the different styles and the end result the different actions will give. Therefore leaders need to understand, when focusing more on people, it is at the cost of production and vice visa ACV To relate these theories to reality, an example will be given. This example is from the public sector. Autisme Center Vestsjælland (ACV), has been elected as the best public working place in Denmark in This is a center for children, young and adults with behavioural problems and also in the form of autism. The election has of cause something to do with the leadership and the style which is used or at least how the leader wants it to be like. Relating to the behavioural theories in this case, the goals, leadership politics and personnel politics have been looked at. As mentioned, this is a public company and public leaders have had a tradition of being anonymous. This means that the public leaders do not, like a lot of the private leaders, express personal opinion or show their personality to the public (Ledelseskanon, 2008). Therefore instead of looking at how the leader behaves publicly, the organizations different politics and goals will be analyzed. From ACV personnel handbook, it can be seen that the leadership is mostly in the upper right corner in both Ohio State University Model and in Blake and Mouton s Managerial Grid. The statements in the handbook, leads to the impression that the leadership is high in both Consideration/Concern for People and Initiating Structure/Concern for Production. To give a few examples of the reasoning behind this; in their goals they want visible leadership based on common values, trust rather than con- Page 26 of 58

28 trol, delegating responsibility and competence. From their leadership politics, guidelines for the company has been given, such as developing clear goals, define structures and plans and having visible expectations to the employees. From the personnel politics, expectations for the employees are given. A few examples which can be given are seeing themselves as part of the team, taking responsibility, being loyal to the company and prepared to develop both professionally and personally. From this it can be derived that, The leader provides a lot of guidance about how tasks can be completed while being highly considerate of the employee needs and wants (statement from Ohio State University Model upper right corner). Also as mentioned in connection to the Team Leader in Blake and Mouton s model, the Team Leader creates an environment which focuses on team, thrust, and respect, which in the end will motivated the employees and give high production. When talking about leadership it is not always enough just to look at the behaviours of the leaders. The Behavioural theories have been criticized for being incoherence with situation or context. So because of this criticism the leadership behaviours were beginning to be looked at in connection with a situation such as in an organization or another context (Brooks, 2009, p. 165) Situational theories Situational theories are about the development of employees through effective leaders. Therefore it is the relation between the level of development of employees, the job, and the leadership style. A very good model was developed by Hersey and Blanchard which shows this connection. The model can be seen below (Hersey and Blanchard, 1996). Page 27 of 58

29 Figure 7 Hersey and Blanchard, Leader Behaviour High Leader Behaviour 3 Share ideas and facilitate in decision making 2 Explain decisions and provide opportunity for clarification Participating Selling Relationship Behaviour Delegating High Relationship Low Task Low Relationship Low Task High Task High Relationship High Task Low Relationship Telling Low 4 Turn over responsibility for decisions and implementation 1 Provide specific instructions and closely supervise performance Low Task Behaviour High Follower Readiness High Moderate Low R4 R3 R2 R1 Able and willing or confident Able but unwilling or insecure Unable but willing or confident Unable and unwilling or insecure Source: From class, Week 13 Management and leadership, Dias 22, made by Carsten Bergenholtz As in the theory by Blake and Mouton, this theory also states that there is no best leadership style (Hersey and Blanchard, 1996). This can perhaps also be interpreted by the title Situational theory. It is the situations that decide which leadership style that is most efficient. Like in the Behavioural theories there are two dimensions. In this theory it is called Task and/or Relationship oriented. What Hersey and Blanched states, is that leadership style should be adapted to the employees and thereby said, not what the leader feels most comfortable with or is used to. Therefore whether the leadership is going to be successful, depends on the follower s readiness, meaning how able and willing the employees are. Moreover it can be said that leadership style can be changed and therefore is flexible (Hersey and Blanchard, 1996). From the model it can be seen that when the task readiness for the employees is low (R1), the leader should focus on the task and not so much on the relationship towards the employees. However as Page 28 of 58

30 Characteristics of the situation or context A Theoretical Discussion of Motivation and Leadership in the Danish Public and Private Sector the employees move more over to moderate task readiness (R2, R3), the more the leader should focus on the relationship than the task. When employees have a high task readiness (R4), the leader can be low in both relationship and task because the employees are able to do the job without the leader telling them what to do every minute. Here the leader just delegate instead of telling them what to do (Hersey and Blanchard, 1996). Another Situational theory is the theory of Fiedler. Back in the 1950 s, Fiedler was the first in the field of contingency theory. One of the interesting reasons for talking about this theory and also in relation to the theory of Hersey and Blanchard is that where Hersey and Blanchard s leadership style is flexible, Fiedler s is unchangeable or fixed. An interesting discussing would then be whether or not a leadership style is changeable or not in today s society. However before such a discussion a more detailed examination of Fiedler s theory will be given. Figure 8 Fiedler s contingency theory Leader-member relations: poor/good Task structure: structures/unstructured Power positions: weak/strong Situation favourability Most effective leader orientation Fiedler s contingency theory G G G G P P P P S S U U S S U U S W S W S W S W Highly favourable situation Task oriented Average situational favourability Relationship oriented Highly unfavourable situation Task oriented Source: From class, Week 13, Management and leadership, Dias 13, made by Carsten Bergenholtz Above in figure 8, Fiedler s model can be seen. From this model it is seen that the effectiveness is determined by the behaviour of the leader and the situation. There are three situations that are looked at and they are; the relationship between the leader and the member, whether the task is unstructured or structured, and whether the power is weak or strong. Depending on this, the leader is either task oriented or relationship oriented. What this model does is mapping the leader s leadership style. This means, if a leader is in a highly favourable situation then an effective leader is one who is task oriented. This means that he/she already have good relations with the employees and can therefore focus on the task. On the other hand if the leader is in an average situational favoura- Page 29 of 58

31 bility, an effective leader is one who is relationship oriented. This also means that the relationship with the employees is not the best and the leader needs to rebuild that relationship. The last situation is the highly unfavourable situation where everything is bad and therefore before concentrating on relationship, the task has to be focused on and the situation has to be turned around. What this theory states is that the leadership style cannot be changed, so an organization should not try to change the leaders style or personality, but should instead chose leaders who fits the situation s favourability (Brooks, 2009, p. 172). What this means is that if the leader does not fit the situation any more, for example if the situation have changed for the better or the worse, a new leader should be found, a new leader who fits the new situation. However one might question whether this is always a good idea. Another question is if the statement of the leadership style being fixed is correct or if it is changeable as Hersey and Blanchard states. Where Fiedler believes that leaders (humans) have a somewhat stable view of human nature, which means that a leader is either task oriented or relationship oriented (Brooks 2009, p. 172), Hersey and Blanchard believes that the most effective leader is a leader who adjust his/her style to the situation and the needs of the employees (Hersey and Blanchard, 1996) Real life examples Perhaps one should not see it as black and white as that. Perhaps both of the theories are right depending on the leader in question. Some leaders especially in the private sector have very strong personalities and have a certain way of being and leading. To give an example of a leader that might not change his style is the former president of Parken Sport og Entertaintment, Flemming Østergaard. He is a very charismatic and controversial person and there has been a lot of debate about him as a person. He has been called the godfather and he is seen as full of initiative and energy but also a risk taker (Information, 2009). In his time as president of Parken Sport og Entertainment, the company s turnover has been increase more than ten times. However now the situation is another and perhaps therefore a new leader is needed. Now it is believed that the capital is negative with several hundred million Danish kroner (Politikken, 2010, 22. feb). Therefore it can be seen that Flemming Østergaard, did not adjust to the new situation but stopped being the president. He perhaps could not or would not change his style and others in the company perhaps saw that a new leader was needed. This is what could be seen in the theory of Fiedler. A leader cannot be changed so therefore a new leader has to be found who fits the new situation. Page 30 of 58

32 Flemming Østergaard is not the only one in that situation. Other companies have experienced the same. There are actually quite a lot of companies and organizations that have used the method of changing the leader if the situation has changed. Most often it is when the situation has changed to the worse. Other examples are B&O, which have had a rough time in the last years. Therefore in 2008, they got a new director to hopefully turn it around, Kalle Hvidt Nielsen. Last example that will be given is the example of LEGO. In LEGO s history there have been some ups and downs. Through the down times the company have changed CEO a few times. The latest appointed CEO in LEGO is Jørgen Vig Knudstrop in He was also hired because they had a new situation of a down turn, which needed to be fixed and therefore they changed leader (Business, 2006). From this one can see that it is most often the person in charge, the leader, who is replaced when the company comes in a new situation. This is what Fiedler states but what about Hersey and Blanchard? In reality is it possible to find leaders who change style so that it fits to the situations? An answer to this could be that it is possible to find, however perhaps not when the situations are as drastic as when the company or organization have big financial problems. Hersey and Blanchard s theory is perhaps more used in the daily. Meaning that depending on the employees and their readiness, the leader should be able to handle different styles such as, Telling, Selling, Participating, and Delegating. As also stated by Hersey and Blanchard (1996), to change a style is difficult and takes a long time and it has to be done gradual. However this might be the problem, when companies or organizations are in big problems. These problems have to be dealt with right away and not when the leader between 1-7 years has been able to change his/her style. This is too late and perhaps therefore it is needed that a new leader is found. What the theory of Hersey and Blanchard can be used for is perhaps to get aware that they have to be able to have different style to lead, depending on the employees they have. These theories described until now are theories that are quite old. Therefore it would be interesting to look at a theory, which is new and therefore can be argued as very present and based on the reality we are living in now Leadership by Trust The most resent theories on leadership are based on trust. This concept of trust has arisen because of the employees abilities to lead themselves. Employees today are very knowledgeable and demands individual treatment and a certain degree of freedom. This also means that a tight control will Page 31 of 58

33 in no way motivate the employees because tight control will only signal distrust from the leader. It will be a great challenge and take a lot of trust for the leader to release the control. Vallentin et al. believes that there are five understandings of leadership, Scientific Management, Human Resource Management, Human Relation Management, Vision leadership, and Value based leadership. These are the understandings that leaders today can consult, but according to Vallentin et al., these do not give trust a chance. They believe that these leadership styles exclude trust. Therefore leaders most think outside these understandings and incorporate trust (Vallentin et al., 2008, p ). With the concept of trust in leadership, comes also the concept of self-management. Because the employees are very independent and do not need tight control from the leaders, the employees become self-managed. Therefore leaders are leading self-managed employees. Giving room to the employees to be self-managed, is a very good thing because this gives room for them to be innovative. This can also be seen with the example of Goggle, Vallentin et al. gives. At Google the employees have 20% people time or the so called Innovation Time Off. This means that 20% of the employees working time, they can decide what to focus on and what they believe in and thinks is interesting (Vallentin et al., 2008, p ). However sometimes it can be difficult in organizations to incorporate trust because leaders of today have their focus on the future and the future is uncertain. Furthermore according to Vallentin et al. (2008, p. 39), leadership is still based on the idea of power and putting the leader in the position of controlling, and this will in the end not give much room for any trust. Another author who believes that trust is the foundation of a successful company, organization or just life in itself is Stephen M. R. Covey, who has written the book The Speed of Trust. You can t have success without trust. The word trust embodies almost everything you can strive for that will help you to succeed. You tell me any human relationship that works without trust, whether it is a marriage or a friendship or a social interaction; in the long run, the same thing is true about business, especially businesses that deal with the public Jim Burke, Former Chairman and CEO Johnson and Johnson Source: Covey, 2006, p. 6 Page 32 of 58

34 In this quotation from Covey s book, Jim Burke expresses that trust is everything and is needed for anything to be a success. Having said that it is not under the best conditions, trust exits. According to a study in different countries, people do not have that much trust in other people. Examples can be given of Americans who only have 34% trusts in other people. In Great Britain it is only 29%. However in Scandinavian countries it is 68% of people, who have trust in others (Covey, 2006, p. 11). When people do not have trust in others, that of cause also counts in the business world and this will make it more difficult for the concept of trust to become a way of leading. However according to Covey, trust can do remarkable things. In his book he is in some way showing a guide to implement trust and showing how important it is to have. As Covey explains, by having high trust things will be done quicker and thereby also decrease the cost (Covey, 2006, p. 13). Covey s theory or model of trust is built from two concepts; character and competence. From this he has made a model called the 5 Waves of Trust. This model specifies the five levels that establish trust and the model can be seen below (Covey, 2006, p. 33). Figure 9 5 Waves of Trust Self Trust Relationship Trust Organizatio nal Trust Market Trust Societal Trust Source: Covey, 2006, p. 33 Trust is one of the most important things in life and therefore also in business life. It does not take much knowledge to know that in a business situation, trust is extremely important. If you do not trust your employees, your leader, your co-workers, partners, stakeholders and such, what kind of business do you have? Most, if not all companies and organizations, would agree that trust is important. Now more and more companies and organization have also implemented trust. When looking at different web sites for companies and organizations, the concept of trust is easy to find. Looking at a company, which in Page 33 of 58