The path-goal theory of leadership effectiveness specifies what a leader must do to achieve high productivity and morale in a given situation. In general, a leader attempts to clarify the path to a goal for a group member so that the group member receives personal payoffs. At the same time, this group member’s job satisfaction and performance increase. Similar to the expectancy theory of motivation on which it is based, path-goal theory is multifaceted and has several versions.

The major proposition of path-goal theory is that the manager should choose a leadership style that takes into account the characteristics of the group members and the demands of the task. Furthermore, initiating structure will be effective in situations with a low degree of subordinate task structure but ineffective in highly structured task situations. The rationale is that in the first situation, subordinates welcome initiating structure because it helps to provide structure to their somewhat ambiguous tasks.

Instead of just flailing around, the leader provides guidance. In the situation of highly structured tasks, more structure is seen as unnecessary and associated with overly close supervision. For leaders to be effective, they should engage in behaviors that complement subordinates’ environments and abilities. Two key aspects of this theory will be discussed: matching the leadership style to the situation and steps the leader can take to influence performance and satisfaction.