Management and Organizational Structure
A significant portion of I-O research focuses on management and human relations. Douglas McGregor (1960) combined scientific management (a theory of management that analyzes and synthesizes workflows with the main objective of improving economic efficiency, especially labor productivity) and human relations into the notion of leadership behavior. His theory lays out two different styles called Theory X and Theory Y.
Theory X
Theory X managers assume that most people dislike work and are not self-directed. They view employees as preferring to be told what to do and needing close supervision to ensure adequate effort.
In Theory X workplaces, employees punch a clock, tardiness is punished, and supervisors make decisions about schedules and overtime. Managers operating from this perspective tend to ignore employee suggestions, blame individuals rather than systems for failures, and rely on punishments and threats rather than rewards. They are suspicious of employees’ motivations, assuming that pay is their sole reason for working.
Theory Y
Theory Y managers, by contrast, assume that most people seek satisfaction and fulfillment from their work. They believe employees function better when they can participate in goal-setting and provide input on their work.
In Theory Y workplaces, employees help prioritize tasks, work in teams that decide how to accomplish goals, and provide input on efficiency and safety. A classic example is Toyota’s production system, which allows any employee to stop the assembly line if they spot a defect, so it can be fixed and its cause addressed.
McGregor characterized Theory X as the traditional American management approach and argued that Theory Y was needed to improve both organizational outcomes and employee well-being.
| Theory X | Theory Y |
|---|---|
| People dislike work and avoid it. | People enjoy work and find it natural. |
| People avoid responsibility. | People are more satisified when given responsibility. |
| People want to be told what to do. | People want to take part in setting their own work goals. |
| Goals are achieved through rules and punishments. | Goals are achieved through enticements and rewards. |
Strengths-Based Management
Donald Clifton developed an approach called strengths-based management, based on interviews with 8,000 managers. This approach emphasizes focusing on employees’ strengths rather than their weaknesses. A strength is an enduring talent that allows a person to provide consistent, high-quality performance in tasks involving that talent—such as public speaking or event planning. Clifton argued that strengths provide the greatest opportunity for growth (Buckingham & Clifton, 2001).
The strengths-based approach has become popular in organizations, though research on its effects is mixed. Kaiser and Overfield (2011) found that managers often neglected their weaknesses and overused their strengths, both of which could interfere with performance—suggesting that balance matters.
Leadership Styles
Leadership is a critical element of management and has been a major focus of I-O research. Researchers have proposed numerous theories of leadership, with considerable attention devoted to distinguishing effective from ineffective leadership behaviors.
Transactional and Transformational Leadership
Bass (1985) developed the influential distinction between transactional and transformational leadership.
transactional leadership
In transactional leadership, the focus is on supervision and organizational goals, which are achieved through a system of rewards and punishments (i.e., transactions). Transactional leaders maintain the status quo: They are managers.
This is in contrast to the transformational leader.
transformational leadership
People who have transformational leadership possess four attributes to varying degrees: They are charismatic (highly liked role models), inspirational (optimistic about goal attainment), intellectually stimulating (encourage critical thinking and problem solving), and considerate (Bass, Avolio, & Atwater, 1996).
Research on Leadership Effectiveness
Transformational leadership has become one of the most extensively studied topics in organizational psychology. Meta-analyses consistently show that transformational leadership is positively related to follower performance, job satisfaction, organizational commitment, and team effectiveness. A comprehensive evidence review (2022) found that transformational leadership demonstrates medium to large effect sizes across individual, team, and organizational outcomes.
Importantly, research suggests that newer leadership models—such as authentic leadership, servant leadership, and ethical leadership—show considerable empirical overlap with transformational leadership. This suggests that organizations may benefit most from focusing on well-established transformational leadership practices rather than pursuing the latest leadership trend.
Recent cross-cultural research confirms that transformational leadership positively affects performance regardless of national culture, though effects may be stronger in societies with higher individualism, uncertainty avoidance, and power distance.
Gender and Leadership
As women have increasingly moved into leadership roles, researchers have examined whether men and women lead differently—and whether they face different evaluations for similar behaviors.
Do Men and Women Lead Differently?
Early meta-analyses (Eagly & Johnson, 1990) found small but significant differences: women tended toward more interpersonal, relationship-focused styles, while men tended toward more task-oriented styles. Women were also more likely to use democratic rather than autocratic approaches. Subsequent research (Eagly, Johannesen-Schmidt, & van Engen, 2003) found that women were somewhat more likely to exhibit transformational leadership characteristics, while men were more likely to use transactional approaches—though differences were relatively small.
A comprehensive 2024 meta-analysis reviewing 50 years of research provides the most current picture. Where gender differences exist, women are generally rated as engaging in more of the leadership behaviors that research suggests are effective—including both communal (relationship-focused) and agentic (task-focused) behaviors. However, this does not translate into proportional representation in leadership positions.
The Persistence of Gender Gaps
Despite evidence that women lead as effectively as men—and may excel in certain leadership behaviors—women remain underrepresented in senior leadership. As of 2023, women held approximately 40% of management roles in the U.S. but only about 29% of senior management roles worldwide. In Fortune 500 companies, women CEOs remain rare.
Research points to several factors: gender stereotypes continue to create a perceived mismatch between “feminine” traits and leadership expectations; women who display agentic (assertive, directive) behaviors may face backlash and be rated as less likable; and women in male-dominated fields face particular scrutiny (Tremmel & Wahl, 2023). These patterns suggest that the gap is less about leadership capability than about persistent bias in how leadership potential is perceived and rewarded.
For more information on women in the current workforce, visit the Lean In website.
Followership
An emerging area of research examines leadership from the follower’s perspective. Followership research recognizes that effective leadership depends not only on leader behavior but also on the characteristics and needs of followers—and that there may be no single “best” leadership approach for all individuals.
Individual Differences in Followers
Research suggests that follower characteristics influence how they respond to different leadership styles:
- Extroversion. Some research suggests that highly extroverted employees may need more interaction with leaders to function well, though findings are mixed (Phillips & Bedeian; Bauer et al., 2006).
- Need for growth. Followers with a strong desire to learn and develop may respond better to leaders who provide developmental opportunities. Those with lower growth needs may feel frustrated by leaders who push them toward further training—potentially interpreting it as a signal that their current performance is inadequate (Schyns, Kroon, & Moors, 2008).
- Need for leadership. Some individuals are highly autonomous and may not respond well to highly structured, directive leadership. Others prefer clear guidelines, defined responsibilities, and minimal ambiguity. For these employees, leaders who provide clear direction foster stronger relationships and better outcomes (Felfe & Schyns, 2006).
The followership perspective suggests that effective leadership requires flexibility—adapting one’s approach to the needs and characteristics of different team members rather than applying a one-size-fits-all style.