Situational Leadership model is a popular model of leadership which is formed by Paul Hersey and Ken Blanchard; this leadership model is based on the idea that effective direction depends on leader’s ability to be flexible as per the requirement of a situation in the organization.

Situational leadership refers to the styles of leadership in an organization which leaders manage as per demand of a situation. They need to show lot of flexibility while managing challenging and difficult situations. They need to command, demand, inspire, prompt, mentor, guide, coach, sell ideas, take part, act, build, and sometimes even reprimand. Often the leadership style may change as per need of the hour. Following are four styles which are common.

Telling and Directing:

James F. Parker, the Ex-Southwest Airlines CEO is a great example of telling & directing leadership. He has earned reputation for always putting the customer first, no matter what the situation. The September 11, 2001 tragedy led to an unmatched situation of forcing all airlines to shut down for days, which led to stranding passengers, pilots and flight attendants at airports across US. While other airlines sat and waited, Southwest employees took the passengers for bowling or to the movies to pass the time. The customer loyalty earned owing to this quick thinking, resourcefulness, and flexibility to make the most out of a bad situation helped Southwest’s popularity soar leaps and bounds. Parker also announced Southwest would not only retain all their employees but also start a profit sharing payment to employees just three days after 9/11, when other airlines were contemplating a 20 percent cut in staffing. Southwest handled the crisis much better than any other airline.

In telling and directing, the leader of the organization makes the decisions and informs others in the organization of the decision; this style of leadership also refers as micro-management because the leader is very involved himself in the crisis or situation and closely supervises the people who are working. The leader calls the shots by getting closely involved and his subordinates follow him with faith.

Selling and Coaching:  

Effective leadership in change process is particularly important because the leader can make great effect during the organizational change process. The leader’s competencies such as emotional intelligence, integrity, drive, leadership motivation, self confidence, intelligence and knowledge of business are essential for effective leadership for transforming organization. Ratan Tata started his career as a chairman to Tata Group of Companies in 1991. He took charge from J.R.D. Tata. India was going through a period of economic reforms such as liberalization, privatization and globalization of business. The constantly changing business environment needed the business leaders like Ratan Tata first to manage the environmental change. Ratan Tata during the nation’s transitional phase led the Tata Group of Companies for 21 years and established Tata as a world brand. He used the various leadership styles such as transformational, transactional. He also used product orientation as well as people orientation concern – selling and coaching. He led the Tata Group with the qualities such as courage, creativity; risk bearing ability, social sense, sense of employee training and development and ultimately having a quality concern about the product. Leaders when they use the selling and coaching style of leadership get   involved in the day-to-day activities as they are aware of critical inputs. However, input is requested from the employees before the decision is implemented. With this style of situational leadership, employees are still supervised but it is in more of a coaching manner rather than a management manner.

Participating and Supporting:

Virgin Airline’s Richard Branson’s informal style and unconventional attitude has earned him fame. His affinity to the hippie movement, particularly of the sixties, simply reflects his knack for being in tune with the feeling of the times. This is one of Branson’s greatest business attributes. This allows him to project the Virgin brand as a “cool” alternative. Besides, Branson is not motivated by money. Money may be a measure of his success, but for him the excitement is in the challenge. Virgin staffs are often paid a little less than market rates yet they are happy to work for Virgin because they enjoy being in the team. In this regard, I will like to draw your attention to the fact that when organizations struggle today on the employee retention issue for Virgin Airline loyal employees are their core competence. Losing skilled and experienced employees is the biggest loss to companies. Branson leads his organization with self-example; he tells his people to do “the impossible possible”. For Branson, the Virgin experience has been a magical mystery tour. That is the reason people can’t resist joining the Virgin adventure. It is a way of life than a job.

The participating and supporting style of situational leadership passes more responsibility to the employers or followers. While the leader still provides some direction, the decisions ultimately lie with the follower. The leader is there to provide feedback and to increase their confidence and motivation with praise and feedback for the tasks completed.

Delegating style:

Delegating leadership requires appointing managers who are competent and do not need day-to-day supervision. Warren Buffett hires executives who are highly skilled and independent and then trusts them to perform. Within this environment, Buffett’s staff is self-assured and driven to achieve. They not only feel they are in charge; they do have full responsibility. Consequently, supervisors are motivated to reach their goals. Buffet believes in the abilities of his employees, but he does not keep that to himself. He communicates his trust and respect to the people he hires. If someone makes a mistake, Buffett often uses it as a learning experience and does not believe in penalizing the worker. Although he does not interfere with his executives’ functions, Buffett is accessible and willing to advice, if he is sought out. He is open and honest in his interpersonal dealings and is willing to acknowledge his own mistakes. Buffet is approachable, because he projects a mixture of modesty, confidence and appreciation.

Delegating is the situational leadership style where the leader is involved the least amount with the employees. The employees are responsible for choosing the tasks and the directions they will take. Although the leader may still be involved for direction or feedback purposes, it is on a much lower level than with other situational leadership styles. With this style of leadership, the employees know their role and perform it with little supervision required.

Conclusion: The Situational Leadership Model suggests that there is no sure-shot solution or “one size fits all” approach to leadership. Depending on the situation, varying styles of leadership is required.  However, leaders must first identify their most important tasks or priorities. Second, leaders must consider the readiness level of their followers by analyzing the group’s ability and readiness. Depending on the level of these variables, leaders must apply the most appropriate leadership style to fit the given situation. Change is pertinent and each change brings along with it different challenges. Leaders are supposed to grasp the situation and use relevant keys to solve problems.

Warren Buffett

While studying his graduate studies at Columbia, Warren Buffett was the only student ever to earn an A+ in one of Graham’s classes. But, both Ben Graham and Warren’s father advised him not to work on Wall Street after he graduated. Warren Buffett was so determined to start his work soon after graduation that he offered to work for the Benjamin Graham’s partnership for free. Ben turned him down. He preferred to hold his spots for Jews who were not hired at Gentle/goof firms at the time. Warren was crushed. Returning home, he took a job at his father’s brokerage house.

Graham, who is well known as Warren Buffett’s mentor, learnt his investment lessons with many obscurities; his losses in the stock market crash of 1929 and the subsequent bear market during the Great Depression led Graham to sharpen his investment techniques. These techniques sought to profit in stocks while minimizing downside risks. He did this by buying shares of companies whose shares traded far below the companies’ liquidation value. In simple terms, his goal was to buy a dollar’s worth of assets for 50 cents, and he did that very well, both in theory and in practice. There were two general ways that Graham used to do this. The first method was the use of market psychology; that is, using the fear and greed of the market to earn profits and the second was to invest by the numbers.

Like his mentor, Warren Buffett restricts himself to businesses he can fairly understand and analyze. Investment success is not a matter of how much you know but rather how sensibly you define what you know and what you don’t know. Buffett considers this wisdom of understanding for the operating business. It is a prerequisite for a feasible forecast of future business performance. After all, if you don’t understand the business, how can you project performance? Buffett’s each business beliefs support the goal of producing a robust projection. First, analyze the business, not the market or the economy or investor sentiment. Next, look for a consistent operating history. Finally, use that data to ascertain whether the business has positive long-term prospects or not.

Warren Buffett has amassed a personal multibillion dollar fortune mainly through investing in stocks and buying companies through Berkshire Hathaway. Shareholders in Berkshire Hathaway who invested $10,000 in the company in 1965 are above the $50 million mark today. Now in his 80s, Warren Buffett has yet to write a single book, but among investment professionals and the investing public, there is no more respected voice.

His advice to the world of investors is very straightforward “be wise while investing but don’t fall in love with your stocks” In one of his interviews on CNBC which lasted for about 3 hours he shared his wisdom with the world which is worth million dollars. The excerpts are as follows:

1. Don’t let world events affect your investments

Warren Buffett says even if you realize a big war is about to take place and is unavoidable, still buy stocks. You’re going to invest your money in something over time. One thing you can be sure of is if a war broke, the value of money would go down. … That happens virtually in every war. The last thing anybody should do is hold money during a war; because after the war you might want to own a farm, you might want to own an apartment house, you might want to own securities. By holding you money without investing it somewhere, you are simply declining its growth. During World War II the stock market advanced. The stock market will have its ups and downs as it is, but eventually it is going to advance some time.

2. Don’t get affected when your stocks go down

Warren Buffett only likes to buy stocks for a lot less than he thinks they are really worth, this suggests you can get a bargain or two—although, as always, there is no guarantee. Instead when your stocks go down, buy more. Some day they have to be revived. Precision in stocks is just not possible. Have patience; give some time to your investment. Get associated with your stocks by watching their movement.

3. You don’t have to be an expert

The stock market offers you so many opportunities to invest in thousands and thousands of different businesses. You don’t have to be an authority on every one of them. You don’t need to be an expert on 10 percent of them even. You just have to have some conviction that a given company or a group of companies are likely to make more money 5, 10 or 20 years down the line from now on. Read up, gather information, discuss with your friends, some professional and that is not so difficult to make a decision. Warren Buffett advices to be watchful and use common sense; and if you have no expertise at all, Warren Buffett recommends a low-cost index fund. Keeping costs to a minimum is enormously important in investing. If you’re in effect paying out 1 or 2 percent annually of your portfolio, that’s a big tax that you don’t have to pay.

4. Don’t go for immediate gratification of quick profits  

• Generally speaking, everyone is interested in making a quick profit and there’s no law against making quick profits. But while investing one needs to be wise; invest in stocks of companies which are there to stay, not the ones who are established for cheating investors. Grow with the company you have invested in. Don’t make money by selling the company. … The answer isn’t to sell the company. The answer is to keep running the company well. Take pride in your stocks; see the growth of the companies, therefore, understand its revenue, expenses, growth potential, assets, liabilities, and a host of other information.

5. Bulls markets are fun for little time

Warren Buffett warns against the whimsical and irrational bullish market behavior of stock market. Prices in the bullish face make an investor “behave irrationally as well” he says. He also urges nervous or beginners in investment against going into stocks at a time of extreme exuberance and becoming disillusioned when paper losses occur. A Bull market is when everything in the economy is great, people are finding jobs, gross domestic products (GDP) is growing, and stocks are rising. Things are just plain rosy! Picking stocks during a bullish phase is easier because everything is going up. Bull markets cannot last forever though, and sometimes they can lead to dangerous situations – especially when stocks become overrated. If a person is optimistic and believes that stocks will go up, he or she is called a “bull” and is said to have a “bullish outlook”.

The remedy to that kind of mistiming is for an investor to accumulate shares over a long period and never sell when the news is bad and stocks are well off and elevated. Warren Buffett’s bottom line fundamental advice: “Ignore the gossip, keep your costs minimal, and invest in stocks as you would in a farm.” He also advises investors forming macro opinions or listening to the macro or market predictions of others is a waste of time.

Some of the illustrative investments that fuelled Warren Buffett’s (Berkshire Hathaway) fortune include the kinds of companies that he called ‘inevitables’ they are cash generative brands such as Gillette, Coca Cola and American Express. In the case of American Express, Berkshire first bought its shares in the company in 1964, adding weight to one of the Sage’s famous observations; in his words “our favorite holding period is forever.”