The significance and application of transformational Leadership

University Degree Business and Administrative studies

THE SIGNIFICANCE AND APPLICATION OF TRANSFORMATIONAL LEADERSHIP

INTRODUCTION

An essential part in the running of an organisation is directing the efforts of their members towards goals and objectives. This involves the process of Leadership. “In simple terms leadership can be interpreted as ‘getting others to follow’ or ‘getting people to do things willingly’, or more specifically, ‘the use of authority in decision-making’” (1). Although there has been a huge amount of literature on the subject, it has been extremely difficult to give a precise and agreed definition of leadership among the writing’s. This report will consider theoretical accounts of ‘model’ leadership behaviour and more specifically transformational leadership theory. The report will also look into how real Managers evaluate their own performance in a leadership role.

An organisation requires leadership at all levels, from the Directors board down to the Shop floor and cleaners. However, leadership is not a uniform command, for example the Waitress’ on the Shop floor will not receive identical commands and relationships from their manager as someone working in the finance department would from his or her manager. There are different forms of leadership and behaviour from which manager’s can implement to what they feel best suits the situation. The type of leadership adopted at different levels is a crucial part in achieving the aims and objectives and thus the success of the company.

It is significant to state that leadership is not a one-way process as the definitions given may suggest. The process requires followers as well as the leaders, for example a manager cannot just set out the objectives and expect his or her followers to achieve them. Anyone can set out those objectives but in order to gain the respect and the desired effort it is important that followers understand that the leader “has certain attributes or characteristics which enable him or her to exert influence over them (Jago 1982)” (2).

LEADERSHIP THEORY

The word ‘leader’ first appeared in the English language in the 1300’s. It comes from the root leden meaning to ‘to travel’ or ‘show the way’. The term ‘leadership’ followed some five centuries later. People have examined leadership skills from a variety of perspectives. Early analysis of leadership, from the 1900s to the 1950s, differentiated between leader and follower characteristics, this was known as trait theory. The next stage of studies were style theories, which focused more on the behaviours that are closely associated with effective leaders. Three categories of behavioural styles were identified and leaders were either an autocratic, democratic or laissez-faire leader.

Trait and style theory studies attempted to determine which leadership behaviours were portrayed by effective leaders. To understand what contributed to making leaders effective, researchers used the contingency model in examining the connection between personal traits, situational variables, and leader effectiveness. In general these theories “deal with the circumstances that are likely to make one leadership style more appropriate than another” (3). Although the contingency models furthered the understanding of leadership it did not clarify what combination of personality characteristics, leaders’ behaviours and situational variables are most effective.

The latest in significant leadership development came from the research made in the 1970’s and 1980’s and in particular Burns (1978) and Bass (1985). These studies focused on effective leaders and revisited personal traits as determinants of leadership theory. The studies introduced a new leadership characteristic – vision. “Along with having vision, effective leaders are said to facilitate the development of a shared vision and value the human resources of their organisation. In addition to thesese insights on leadership, a new theory emerged – Transformational Leadership” (4).

THE TRANSFORMATIONAL LEADERSHIP MODEL

Burns (1978) developed the initial ideas on transformational and transactional leadership and Bass (1985) further refined them and introduced them into an organisational context. Transactional leadership is known to be best suited under stable conditions. In general a transactional leader identifies the needs, wants and expectations of his or her subordinates then due to the stability of the situation these preferences can be met. As a result of the satisfaction, the subordinates will enter into a transaction with the leader in which they increase productivity and effort to reach the aims and objectives of the leader.

Theories mentioned up to now do not recognise in depth the impact of how personal characteristics can exert influence on others. “The transformational leader is endowed with qualities that cause followers to accept the leader as a role model and as a person to be followed” (5). Transformational leadership behaviours go beyond transactional leadership and the main skill required is the ability to visualise what has to be done and then transfer this vision to the subordinates in an attempt to physically change the way things are being done. Bass summarised the ability required by a transformational leader to ...

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Individualised Consideration (IC)

This generally means leaders pay close attention to individuals’ needs and abilities. It is an ability to recognise what skill or ability needs to be improved among the followers and also selecting the right person that meets the requirement. The leader will spend time coaching and mentoring each individual to develop them and in return from this particular attribute, “group members are likely to obtain satisfaction of higher order psychological needs, such as achievement and recognition (Kotter 1990)” (6).

Intellectual Stimulation (IS)

Leaders with intellectual stimulation encourage followers to actively look at problems and issues in a new way, in other words encouraging creativity and innovation in order to challenge the normal ways and views of the group.

Idealised Influence (II)

This is better known as charisma. By definition charismatic leaders are self-confident, self-determined, and generally held in high esteem by their group. Bass commented that such leaders "can generally inspire (subordinates through) emotional support and appeals that will transform their level of motivation beyond original expectations" (7). In Professional Football terms, manager Kevin Keegan, known for his charisma and influence in the dressing room has inspired average teams to perform beyond their natural abilities and expectations.

Inspirational Motivation (IM)

Leaders with inspirational motivation encourage team spirit to reach goals of increased revenue and market growth for the organisation; this will increase subordinates’ optimism and enthusiasm to commit to the vision of the organisation.

Figure 2 shows the additive effect of transformational leadership, this shows that transformational leadership has to work effectively to result in performance beyond expectations. Bass’ four key characteristics have to all been part of the leaders character in order for transformational leadership to work effectively. It is certainly part of a leaders job to motivate (IM) followers but it involves more than this. Subordinates also need development (IC) and guidance (IS) in other words; they need to be motivated to perform well in the right areas. The leader has a responsibility to see that subordinates are effective (IS) as well as efficient (IC).

FIGURE 2: ADDITIVE EFFECT OF TRANSFORMATIONAL LEADERSHIP

Source: Adapted from Hall J, Johnson S, Wysocki A, Kepner K (2002), Transformational Leadership: Transformation of Managers and Associates

One example of a transformational leader is Sam Walton, founder of Wal-Mart. “There’s no better way to keep someone doing things the right way than by letting him or her know how much you appreciate their performance” – Sam Walton (8). Walton visited Wal-Mart across United States to meet with associates to show his appreciation for what they did for the company. This type of behaviour emphasises the value (II) and contributions (IC) of others. “According to Bass (1995), charisma, attention to individualized development, and the ability and willingness to provide intellectual stimulation are critical to leaders whose firms are faced with demands for change” (9). Today, Wal-Mart Stores, Inc., employs more than 1.2 million associates worldwide. The company has more than 3,000 stores and offices across the United States and more than 1,000 stores internationally.

ORGANISATIONAL CHANGE IN 2002

Leadership theory grows as the area of responsibility becomes greater and wider, not just geographically but financially and in terms of people. This may be due to a sudden change in the environment or current aims and objectives. That growth requires changes and from a theoretical perspective, transformational leadership may be a way to enact change. “Peter Northouse (2001) defines transformational leadership as a process that changes and transforms individuals. It involves assessing associates' motives, satisfying their needs, and valuing them” (10). In other words, this style of leadership is the ability to get followers to want to change, to improve and to be led.

Leadership, and change are the top two challenges facing organisations in today's highly competitive environment. Changes in the business and political environment may include “workforces with a greater degree of demographic diversity, technological change and increased international competition which will place new demands on the leaders of tomorrow (House 1995)” (11). Transformational leadership focuses on such changes.

When an organisation is going through rapid changes, the leaders tasks and objectives are altered and because of the fluctuating environment the subordinates cannot continue to work under a structured day-to-day environment. In this situation Bass (1985) believes the leader should adopt a transformational leadership style of behaviour. The survival of an organisation depends on the company’s ability to continually change. An industry that requires rapid continuous change in terms of product innovation is the computer industry; this type of industry is extremely competitive and requires effective creative and active minds to maintain the company’s survival. These types of attributes depend heavily on the correct leadership to be enacted.

In order to attract followers to the development of the organisation, the leader or the organisation must provide a vision, which fundamentally takes into consideration the needs and values of the company and once this vision is developed, the leader must implement the change. With intellectual stimulation and inspirational motivation the leader sets challenging goals for the followers and motivates them to rethink old ways of doing business. Also if the leader shows individualised consideration, where he or she can provide coaching, guidance and show support then this will help in an attempt get the follower to find the change attractive and thus provide the organisation with effective and efficient work.

FIGURE 3: COMPATIBILITY OF ORGANISATIONAL DEVELOPMENT AND TRANSFORMATIONAL LEADERSHIP

Source: Adapted from Bass B M (1997), KLSP. The Ethics of Transformational Leadership (Bibl.8)

Change is really about managing the transitions and Figure 3 shows that certain transformational leadership qualities are uniquely appropriate for leading change and also displays the appropriate behaviours at the appropriate stage in the transformation process.

APPLICATION OF LEADERSHIP

In terms of theories transformational leadership is conceived to be the most effective type of leadership behaviour a leader should adopt in 2002. However theses type of leaders are only found in big organisations. Although the model is there for all leaders to learn from and instil in themselves, it is still understandable to an extent as to why all leaders are not transformational leaders. Certainly you cannot expect a manger at say, Curry’s, having the same leadership qualities as a manager in a blue chip organisation. The idea of visualising ideas and putting them in place is certainly not a skill required from supervisors at a retail store.

Mr. Blundell who is a customer service manager at Toys r us, was interviewed (appendix p 11-16) on the subject matter. He has sixty subordinates working under him and in his answer to question 13 he stated that his subordinates are not really working for the success of the company but primarily for themselves. This is probably the case in all corners of the retail industry and in particular companies such as Toys r us and Tesco, who have many stores nationwide. With so many managers and staff in each individual store it is unlikely that any one manger is going to make a significant difference to the annual turnover of the company and with this in mind staff and managers will not exert their efforts beyond their day-to-day standard procedures.

However, Mr. Newman, who is the Managing Director of Petroleum Management Services Ltd. Has only 6-10 subordinates working under him. The company specialises in oiling equipment services and in reaction to question 6 he said:

“I can think of many instances of situations where ive had to inspire people to show them the way, well people like to sit down and do their 8-9 hours a day but you really need to show them that for your benefit its your bonus, your holiday whatever you need to put in 15 hours a day”.

Every member of his team and more significantly, himself, can make a contribution to the company’s success or failure. In conclusion to this particular point, transformational leadership is required in situations where the leader and his or her staff can make a difference to the company. A transformational leader at a retail store for example is arguably a wasted talent because getting followers to commit to the ‘vision’ is certainly a non-starter.

“One recent study found that only 54% of companies felt they had leadership necessary to respond to change, and only 8% of executives rated overall leadership as excellent” (12). Mr. Blundell indicated that (question 12) at Toys r us all employees are given training and put on courses in an attempt to produce future mangers. Transformational leadership in particular covers a broad range of aspects within leadership and therefore there are no specific steps for a manager to follow. Becoming an effective transformational leader is a conscious process; the leader must make an effort to adopt the style starting by understanding the basics and the four I’s.

Many modern day literature on leadership theory state that leadership in organisations is “moving into a new era of post-modernity and globalization in which most previous formulae for leadership effectiveness is likely to be found wanting” (13). With this in mind is it worth bedding a certain leadership system or theory within someone when cultures and organisations are evolving constantly? It is not certain that what is around the corner can accommodate current theories. The writer Argyris, who is associated with organisational learning, is critical of using fixed theories to overcome problems. He stated that people “tend to be unaware of the theory –in-use they use for leadership” (14). This statement is certainly backed up by Mr. Newman (questions 2 and 12), he stated that he personally did not go on any leadership course and did not learn from any theories or textbooks, instead it has been through experience alone that has given him the ability to lead.

CRITICISMS OF TRANSFORMATIONAL LEADERSHIP

There are always strengths and weaknesses to all theories, there is no such thing as the perfect theory in leadership since every situation is different and changing all the time. It has already been discussed up to now the effectiveness of each characteristic required to become a transformational leader and also its compatibility to organisational change. In addition to this “transformational leaders create learning opportunities for their followers and stimulate them to solve problems in their own way” (15). This means that followers are capable of becoming leaders themselves and thus there is less hassle for the company to go and find a replacement leader.

However, the theory has been the subject of critisicm as late, with many questioning its ethics.

“Transformational leaders encourage followers to go beyond their own self-interests for the good of the organization and even emotionally engages followers irrationally in pursuits of evil ends contrary to the followers’ best interests (e.g. Stevens, D’Intino, & Victor, 1995)” (16). Stevens, D'Intino and Victor accuse transformational leaders of changing the values of the employees of an organization so they will adopt them as their own, this is no doubt a form of manipulation on the leaders part. Thus transformational leadership is seen as unfair and therefore unethical when employees set aside their own life plans for the good of the organisation.

Transformaitonal leadership has the potential to abuse power. “It lacks the checks and balances of countervailing interests, influences and power to avoid dictatorship and oppression of a minority by a majority (Keeley, 1995)” (17).

The model treats leadership more as a personality trait than as a learned behaviour, therefore it is something that you have got or you haven’t and thus cannot be learned. It goes back to the trait theory studies where the cliché ‘people are born leaders’ was thought to be the idea behind effective leadership.

However, one critisicm of not only transformational but leadership theory as a whole is the fact that not everyone and in fact most leaders in todays competitive markets do not follow leaderhip ideas and theories in order to aid them to lead. “It’s a natural progression” states Mr. Newman (question 2), “everyone has got those skills to lead but it depends on how they really stimulate themselves and to carry that forward” (Newman 2002).

THE REAL LEADERS

Both Mr.Newman of Petroleum Management Services Ltd. and Mr. Blundell of Toys r us have shown two very similar styles of leadership behaviour. They both point out they are very much democratic leaders and also portray similar characteristics. Certainly a democratic style is more efficient, while autocratic and laissez-faire style show serious weaknesses. “I think autocracy within an organisation is extremely dangerous. Being an autocrat really you disallow, prohibit any delegation of authority” (Newman, in reply to question 2).

The philosophy’s undertaken by both parties can certainly be used by other organisations. Mr. Blundell’s “don’t ever make anyone do anything you won’t do yourself” is ethical and would be respected by members. Mr. Newman’s “don’t be afraid of hard work” philosophy will remind members the rewards that lies in putting the extra effort in.

Although both men choose a similar style of behaviour, I believe that Mr. Newman is very much a transformational leader in that he complies the characteristics of the model and that his business requires him to be a transformational leader. His role as a leader and a manager is more flexible than that of Mr. Blundell, of whom I believe is in a more structured role.

The problem with interviewing leaders is that you can only end up assuming he or she is a certain type of leader. Naturally the answers given are to suit the interviewee and thus a truth perspective on the leaders character, behaviour and ability is hard to attain.

However, what has become clear from the interviews, is what separates transformational leaders and leaders, whom want to become transformational. It is not only the type of industry you are involved in but also the number of subordinates that he or she has to work with. As discussed before, it is very hard for Mr. Blundell to have his sixty followers to put all their efforts equally into this one man’s vision and ideas. People have to believe that they can, as an individual make a difference, but with 59 other members around it is unlikely and therefore it is down to the character and the stimuli of the members to achieve the vision.

CONCLUSION

Transformational leadership is a vital role for effective managers because leader effectiveness determines the success level of the organisation. By becoming familiar with this approach and combining the four I’s, managers can become effective leaders.

In terms of significance, certainly in today’s competitive market and the continuous changes that occur within organisations it should be a top priority for mangers to show effective leadership not only for the success of the company but also its survival. Transformational leadership takes into consideration every aspect of what a leader should be from a follower point of view. The combination of characteristics a transformational leader processes is desirable within a working environment and more importantly respected by staff.

In terms of application, not all leaders can be transformational leaders due to environment factors such as the type of business he or she is in and as concluded previously the number of subordinates they work with.