Transformational Leadership Approach Enhance Motivation Management Essay

“A leader is best when people barely know that he exists, not so good when people obey and acclaim him, worst when they despise him. ‘Fail to honour people’ they fail to honour you.’ But of a good leader, who talks little, when his work is done, his aim fulfilled, they will all say, ‘We did this ourselves.'” (Lao Tzu, 500 BC)

This ancient quote of Lao Tzu shows that leadership is immensely important and highly discussed since centuries. Additionally, nowadays the pace of change challenging organizations resulted in requests for more adaptive, flexible leadership (Bass, Avolio, Jung, & Berson, 2003). The fast changing and more than ever diverse environment causes today’s leaders to face many challenges.

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“A growing body of evidence supports the common sense belief that leadership matters” ((Hogan, R., Curphy,G.J. and Hogan,J., 1994, p.4) Effective leadership will help companies to achieve objectives first-time right. Over the last century the area of leadership has evolved immensely. Diverse theoretical perspectives are generated, but some fundamental themes and principles remain significant for leadership. Especially transformational leadership being one of those and reflecting the quote above is interesting, since it emphasizes emotions and values, which are necessary to understand how a leader can influence followers to make self-sacrifices, commit to ideological objectives, and achieve much more than they initially believed was possible (Yukl, G., 1999). Furthermore it is a popular concept among both scientists and practitioners and is often linked to performance measures.

Another topic that has received a lot of attention among the wide array of leadership and management discussions is motivation. Since effective leadership affects motivation immensely these two are connected in some way – HOW?. Although both topics are often discussed individually, the connection between the two is an interesting and fertile opportunity for further research. Employees are an organization’s most valuable resource, often labeled as ‘human capital’. They have to be motivated to achieve maximum performance level. It is the leaders’ responsibility and task to bring their employees to the highest possible output. However, organizational climate studies from the mid-1950s to the present routinely show that 60% to 75% of the employees in any organization report their immediate supervisor to be the most stressful aspect of their job (Hogan, Raskin and Fazzini, 1990). “Abusive and incompetent management create billions of dollars of lost productivity each year” (Hogan, R., Curphy, G.J. and Hogan, J., 1994, p.2). To be concrete, a lot of studies prove the unpleasant finding of failure rate and managerial incompetence among leaders to be at least 50% (Hogan, R. et al., 1990, De Vries, 1992). The influence of transformational leadership on the performance of an individual is

This literate review investigates the influence of the transformational leadership style on the performance of an individual. Furthermore it examines whether motivation affects this relationship.

1.2 The problem statement and research questions

The purpose of this thesis is to examine the relationship between leadership styles and motivation, as well as the relation between motivation and the performance of the individual. The problem statement is as follows:

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To what extent does the transformational leadership approach enhance motivation and thereby influence the performance of an individual?

This problem statement will be answered with the help of three research questions:

What is the relationship between the transformational leadership approach and motivation?

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What are the crucial motivation principles for management and how are they related to individual performance?

How does transformational leadership style influence the performance of the individual?

1.3 Demarcation and definitions

Leadership

First of all, we assume in this thesis that leadership can be developed and is not inherited. Leadership can be defined as “the influence that particular individuals (leaders) exert upon the goal achievement of others (subordinates) in an organizational content.”(R. Nader) Leaders thus have a strong impact on performance, since they should, among others, inspire their employees to let them achieve their maximum performance level.

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In chapter 2 on leadership styles the transformational leadership approach will be discussed since it is a useful mechanism for explaining the linkage between leadership style and motivation as well as between leadership style and individual performance. One more reason is that transformational leadership is defined as influencing subordinates by “broadening and elevating followers’ goals and providing them with confidence to perform beyond the expectations specified in the implicit or explicit exchange agreement” (Dvir, Eden, Avolio, and Shamir, 2002: 735). Thus, transformational leaders raise the performance expectations of their followers (Bass, 1995) and “seek to transform followers’ personal values and self-concepts, and move them to higher level of needs and aspirations” (Jung, D.I., 2001, Gumusluoglu, L. & Ilsev, A., 2009). According to Bass & Avolio (1995), transformational leadership has four components; charismatic role modeling, individualized consideration, inspirational motivation, and intellectual stimulation.

The trait Theory will not be considered since we assume that leadership can be developed.

Motivation

As described above, a firm’s success is dependent on several factors, of which the input of the employee is one of the most important ones. To reach full potential, the employee must be motivated. According to Campbell et al., motivation can be defined as “the extent to which persistent effort is directed towards a goal.” Effort refers to the amount of effort invested in a job, which should be defined in relation to the appropriateness to the tasks being fulfilled. This implies that no effort should be invested in inappropriate objectives, which do not contribute to the achievement of the business goals. The second aspect, persistence, expresses the degree of willingness of the employee to complete a task. The characteristic direction is explained by questioning whether the employees’ effort is directed towards the organizations goal or to the self interest of the employee. The fourth aspect, goals, can be divided into two kinds, which are individual goals and organizational goals. They may produce different outcomes if they are not compatible.

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In chapter 3, two important motivation theories, Goal Setting Theory and Expectancy Theory will be discussed since first of all, they are arguably two of the dominant theories in organizational behavior (e.g., Locke & Latham, 1990; Naylor, Pritchard, & Ilgen, 1980). Secondly, they offer significant guidelines that can assist managers and supervisors in creating motivating environments for their employees.

The Goal Setting Theory implies the expectation that employee efforts and performance in organizations will be influenced by the goals assigned to, or selected by, these employees. Theorists argue that, to maximize employees’ efforts and subsequent performance, performance goals should be challenging rather than easy, but they should also be achievable. (Fried, Y. & Haynes Slowik, L., 2004) In the minds of employees, the experience of success in the pursuit of challenging but attainable goals is associated with positive and valued outcomes. These outcomes are both internal – for example, a sense of accomplishment, escape from feeling bored or useless, and proving oneself-and external-for example, higher income, job security, and opportunities for promotions. (Mento, Klein, & Locke,1992). The theory further asserts that people’s commitment is important to maximize the relationship between goal and performance. Finally, the theory asserts that consistent and timely feedback is needed for successful pursuit of goals. (Locke & Latham, 2002)

Expectancy theory is a process theory of motivation according to which motivation is a function of individuals’ perception of their environment and the expectations they form based on these perceptions. (Fried, Y. & Haynes Slowik, L., 2004) One of the reasons why this theory is chosen is that after rigorous academic testing it has been shown to have strong support. Additionally, despite its complexity, the theory is straightforward and well applicable for any organization.

To be concrete, leaders should strive to gain a deeper understanding of motivation as they work to develop key relationships with employees. (Schaffer, 2008)

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Furthermore it will be investigated whether there is a link between motivation and individual performance.

All other theories like for example Herzberg’s two-factor or motivator-hygiene theory will not be considered, due to the limited amount of words of the bachelor thesis and since the information on the theories above will be thoroughly discussed.

Performance

Often performance is directly linked to pay, where individual performance is appraised or evaluated using sets of job-related criteria (Dick, P. & Ellis, S., 2006). However, e.g. Maslow or Herzberg see pay as less important than other more intrinsic factors in producing motivation. According to Turner and Lawrence (1965) different types of job effect employee satisfaction and absenteeism. They predicted that many employees prefer more complex and challenging jobs. Their research and the continuative research by Hackman and Oldham (1976) about the job characteristics model (JCM) will be further discussed in Chapter 3.

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1.4 Relevance

For organizations it is of utmost importance that their employees are motivated in order to deliver maximum performance. Managers from all organizations are confronted with the responsibility of leading employees and motivating them to succeed. (Fischer, 2009)

The practical contribution implies that leadership does not automatically lead to motivation and vice versa. This means it is important to find out which principles can support management to influence motivation.

Leadership and motivation are two of the most popular topics today in both psychology and business. Although there is much known about these topics individually, since these concepts are investigated frequently, little is known about the possible relation between these two. Organizations spend large amounts of money to train their leaders so that they improve their skills to motivate their employees, which implies sustaining organizational success.

1.5 Research Design

In order to answer the research questions a literature review will be executed.

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Therefore, the following theoretical framework will be used:

Transformational Leadership

Motivation

Individual

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Performance

This framework displays how Transformational Leadership has an influence on employees’ Individual Performance. Sequentially, Motivation serves as a moderator between the independent variable- Transformational Leadership Style, and the dependent variable- Individual Performance.

1.6 Data Collection

The purpose of this thesis is to find out to what extent leadership style can enhance motivation and thus influence the performance of an individual? To answer this question an exploratory research will be undertaken and secondary data will be used.

This data will mainly be collected by using the library of the University of Tilburg and the databases on their website. To ensure the quality of the data, mainly high quality papers will be used. Next to this, books concerning the contents matter will be used for the research. Furthermore the internet will be optionally consulted to prove practical examples or general statements, although this search approach will be kept at a minimum.

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1.7 Outline of the rest of the thesis

The second chapter will be about different leadership styles and the relationship with motivation will be researched. By investigating the theories mentioned above, the question ‘what leadership styles do exist’ will be clarified.

During the third chapter different motivation theories will be compared to find out which ones are crucial for management. Furthermore the relationship with individual performance will be investigated.

The fourth chapter will give an answer to the question how the independent variable, leadership styles relates to the dependent variable, individual performance.

Finally, in the last chapter, an answer to the problem statement will be given and conclusions as well as limitations will be stated.

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Chapter 2 – Leadership

Under construction

What is the relationship between the transformational leadership approach and motivation?

2.1 Distinction transactional and transformational leadership

While Burns (1978) introduce the transformational leadership theory, Bass and Avolio (1995) further developed the theory. Why transformational?

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2.2 Transformational leadership

Burns (2003) attributes the verb “change” to transactional leadership and “transform” to transformational leadership. He distinguishes between these two as “change” meaning “something is substituted for another, to give and take, to exchange places, to pass from one place to another” (Burns, 2003, p.24). Whereas to “transform” is something more comprehensive, which includes “a radical change in outward form or inner character” (Burns, 2003, p.24) as when a single clothing shop transforms to a global operating retailer.

Transformational leadership implies that followers exceed agreements and expectations where the leader-follower relation goes further than with the transactional leadership where the economic exchange in order to fulfill self-interests is in the foreground. It is the charismatic leaders who earn loyality, trust, admiration and respect from subordinates. Additionally, a transformational leader makes an effort in elevating his followers’ level of maturity and ideas so that they can get satisfaction from their job and maybe even fulfill higher-order tasks. Long-term focus is essential, since personal identification with subordinates is critical, such that additional dedication is created through a shared future vision.

While Burns (1978) introduce the transformational leadership theory, Bass and Avolio (1995) further developed the theory. Transformational leadership consists of the following four components (Bass & Avolio, 1995; Bass et al., 2003; Colbert et al., 2008)

charismatic role modeling

individualized consideration

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Transformational leadership

inspirational motivation

intellectual stimulation

Using charisma, the leader acts like a role model and is respected, admired, and trusted by his followers, and emphasizes the importance of having a collective sense of mission. By individualized consideration, the leader becomes a mentor through understanding and considers their differing needs, skills, and aspirations and ultimately building a one-to-one relationship with the subordinates. By inspirational motivation, the leader communicates the vision of the future, shows the followers ways how their effort can contribute to achieve that vision and demonstrates his or her belief that they can do it (Colbert et al., 2008). By intellectual stimulation, the leader stimulates followers in problem solving and broadens and elevates their interests (Bass et al., 2003). If these four components are used by transformational leaders, higher efforts and exceeded expectations of subordinates will be the result.

As determinants of innovation and creativity at the workplace are vision, support for innovation, autonomy, encouragement, recognition, and challenge, transformational leadership behaviors closely relate to these parameters (Elkins and Keller, 2003). This leader’s behaviors are likely to act as “creativity enhancing forces”: individualized consideration “serves as a reward” for the followers by providing recognition and encouragement; intellectual stimulation “enhances exploratory thinking” by providing support for innovation, autonomy, and challenge; and inspirational motivation “provides encouragement into the idea generation process” by energizing followers to work towards the organization’s vision (Bass and Avolio, 1995; Sosik et al., 1998: 113). The resulting intrinsic motivation felt by the followers is an important source of creativity (Tierney et al.,1999).

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FROM: Lale Gumusluoglu, L. & Ilsev, A., Transformational leadership, creativity, and organizational innovation

2.3 Full range of leadership model

text

Figure xxx: Model of full range leadership (Storey, 2004)

The model shows a suboptimal and an optimal profile, from which it can be deducted laissez faire to be the least optimal leadership style, in research they are rarely viewed as effective leaders. While the four I’s generally result in the most motivated followers. However, the most appropriate leadership style is still dependent on the situation. The full range leadership model consists of the following leadership styles:

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• Laissez-faire (LF). In essence, the laissez-faire leader is a non-leader.

• Management-by-exception passive (MBE-P). This leader waits passively for deviances, mistakes, and errors to occur before taking action.

• Management-by-exception active (MBE-A). The MBE-A leader actively monitors

deviances from standards, mistakes and errors and takes action when necessary.

• Contingent reward (CR) (see 2.2.2 Transactional Leadership, Leaders try to develop exchanges or agreements with their followers.)

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• The four I’s (see 2.2.1 Transformational Leadership, i.e. Idealized influence, Inspirational motivation, Intellectual stimulation, Individualized consideration)

2.4 Link between transformational leadership and motivation

2.5 Conclusion

Chapter 3 – Motivation

Under construction

What are the crucial motivation principles for management and how are they related to individual performance?

3.1 Goal Setting Theory

The Goal Setting Theory implies the expectation that employee efforts and performance in organizations will be influenced by the goals assigned to, or selected by, these employees. Theorists argue that, to maximize employees’ efforts and subsequent performance, performance goals should be challenging rather than easy, but they should also be achievable. In the minds of employees, the experience of success in the pursuit of challenging but attainable goals is associated with positive and valued (high-valence) outcomes. These outcomes are both internal-for example, a sense of accomplishment, escape from feeling bored or useless, and proving oneself-and external-for example, higher income, job security, and opportunities for promotions. (Mento, Klein, & Locke, 1992). The theory also states that goals should be specific (e.g., increase productivity by 5 percent in the next year), rather than general (i.e., “do your best”). However, in complex jobs, “do your best” goals are likely to be more effective (Latham & Seijts, 1999; Locke, 1996). The theory further asserts that people’s commitment is important to maximize the relationship between goal and performance. Moreover, commitment can be enhanced by two categories of factors that (1) make the goal attainment important and (2) enhance individuals’ belief that they can attain the goal (high self-efficacy). Finally, the theory asserts that consistent and timely feedback is needed for successful pursuit of goals (e.g., Locke & Latham, 1990, 2002)

–from:

Fried, Y. & Haynes Slowik, L. (2004). Enriching Goal-Setting Theory with Time: An Integrated Approach. The Academy of Management Review vol. 29, No. 3 (July) pp. 404-422

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3.2 Expectancy Theory

Figure 1: Expectancy Theory of Motivation (Vroom, V.H., & Yago, A.G., 1978)

3.3 Link between motivation and individual performance

3.4 Conclusion

Chapter 4 – Link between transformational leadership and motivation

Under construction

How does transformational leadership style influence the performance of the individual?

4.1. Influence of transformational leadership on individual performance

Only a few studies

4.2 Conclusion

4.3 Reflection/ Limitations

Employee outcomes

Although the literature on transformational leadership has grown rapidly, few studies

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have assessed the effectiveness of transformational leadership based training with respect to employee performance outcomes. For example, Barling et al. (1996) conducted a field experiment to assess the effects of transformational leadership on employees’ commitment to the organization and financial performance of the business unit. Their study showed the effectiveness of combining transformational leadership training and personal feedback, such that training branch managers in transformational leadership led to changes in employees’ commitment to the organization and financial performance. Studies supporting causal statements about the positive effects of transformational leadership are rare;

From: Mullen&Kelloway, Safety leadership: A longitudinal study of the effects of transformational leadership on safetyoutcomes

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