Leadership is an essential part of the management process; it helps to co-ordinate the activities and process of the individuals, teams and groups for facilitating their efforts to achieve their goals, objectives, mission and vision of the organisation. All of these aspects involve leadership process and the choice of a suitable form of behaviour and action. Leadership remains the key feature in developing the business performance. Therefore, it is immensely important for the businesses to understand the nature of leadership, its influences, parameters, and its effectiveness which determine relationships with other people working in an organisation (Mullins, 2009).
Literature review suggests that there are several definitions on leadership due to several contextual aspects. Therefore, it is difficult to generalise the concept of leadership and its definition. This chapter presents some definitions about leadership, which are mentioned herewith. Bauer & Erdogan (2009) defined leadership as the act of influencing other people to work towards a common goal. Leadership was also defined as “a relationship through which one person influences the behaviour or actions of other people” Mullins (2010, p.273). In other words, this definition suggests that the leadership process cannot be segregate from the group activities and the effective building of the teams. Robbins & Judge (2009, p. 368) defined as “the ability to influence a group toward the achievement of a vision or set of goals” However, the source of this effect can be formal, which is similar to influence offered by managerial or executive ranks in businesses/organisations. This does not necessarily mean all managers are leaders, or in other words all leaders are managers.
In an organisational setting, although, leaders are present in all levels of an organisation, there are two types of leaders which are commonly cited in literature. The first type of leadership is called formal leaders. In formal type of leadership, the leaders may use their power which comes from the positions they hold. The power used from the authoritarian positions can added to their personal power to influence people, teams and groups in an organisational setting. The second type of leadership is known as informal leaders, in this type, the individual can demonstrate leadership qualities, without having any formal position of authority within an organisational setting. They can influence people their personal power and do not necessarily exercise force to influence other people in an organisation. People often follow the goals of the leader and identify their leader’s goals as their own goal (Bauer & Erdogan, 2009).