The Benefits of Transformational Leadership - Literature review Example

Transformational Leadership Name: Course: Tutor: Date: Introduction The performance and the strategic decisions made by individuals in an organisation are partially determined by the features of those who participate in administration. Numerous studies have shown that the leadership style adopted in an organisation affects group work processes, the social climate and the desired end result within the organisation (Hall et al, not dated). From this perspective, the style of leadership adopted in an organisation affects the organisation climate and the climate affects productivity and creativity, and in some cases, leadership affects productivity directly. This explains the fact that leadership style is critical to all organisations given that it affects their performance and effectiveness. According to Covey (2007), for an organisation to achieve the desired performance and overall effectiveness, it has to adopt a transformational type of leadership. Transformational leadership is a leadership process in which leaders broaden and elevate the interests of their subordinates. That is, they stimulate the subordinates to look beyond their own self interest for the good of an organisation and generate awareness and acceptance of the mission and purpose of the organisation (Covey, 2007). In regard to this, this essay seeks to explain the concept of transformational leadership and its role in enhancing an organisation’s effectiveness. Specifically, it looks in detail into the meaning of transformational leadership. As well, the paper discusses the four components of transformational leadership that an organisation’s leadership needs to adopt in order to attain effectiveness in the aforementioned process. Finally, it looks at some of the benefits that transformational leadership can bring to an organisation if effectively implemented. To enhance better understanding of this, the paper gives focus on the transformational leadership adopted by Toyota Motor Company, which has enabled the company to attain operational excellence in the automotive industry and even to attain iconic status in many nations in the world. The meaning of Transformational Leadership Transformational leadership simply refers to a leadership process that transforms and changes individuals. Hall et al (not dated) define transformational leadership as the ability by a leader to get his/her followers to want change, to improve and to be led. This requires a critical assessment of people’s motives, satisfying their needs and valuing them. The concept of transformational leadership was initially introduced by a leadership expert, James MacGregor Burns in his book, Leadership (1978). He conceptualized leadership as either transformational or transactional. According to Burns (as cited in Bass & Riggio, 2006), transactional leadership involves leading through social exchange. For example, as Burns noted, politicians lead by “exchanging one thing for another: jobs for votes or subsidies for campaign contributions” (p. 4). In the same way, transactional organisational leaders give financial rewards for good performance or they deny rewards for lack of productivity. On the other hand, Burns perceived transformational leadership as a process in which leaders and their subordinates support each other to advance to a higher level of morality and motivation (Cherry, 2011). Thus, through the strength of their personality and vision, transformational leaders are able to inspire individuals to change their perceptions, motivations and expectations and encourage them to work towards common goals. Later, researcher Bernard M. Bass came up with the concept of ‘Transformational Leadership Theory’ which expanded upon Burn’s original ideas. Bass suggested that transformational leadership can be defined based on the implications it has on the followers (Cherry, 2011). Thus, according to him, transformational leaders are those who are able to earn respect, trust and admiration from their followers. In general, it can be argued that transformational leadership is a process in which a leadership influences the followers to achieve a common objective. Toyota Motor Company Ltd is a good example of an organisation that has attained consistency in transformational leadership and philosophy of excellent performance. The corporation, which has its roots in Japan, is a well known carmaker in the world and in fact, it has been an icon in automotive industry during the last few decades owing to its operational excellence (Hill, 2009). Currently, as Hill notes, Toyota is realising the highest annual profits, its sales are continuously growing and its shares in the World stock market are increasing steadily. Importantly, the corporation is a number one car seller in many countries in the world. According to Hill (2009), much of Toyota’s success can be attributed to its efficient operational and management system named Toyota Production System (TPS), which was developed by the founders of Toyota Company in 1920s. One remarkable thing about the company’s leadership style is that it is consistently a transformation type of leadership and the company holds a philosophy to always do things with excellence. Components of transformational leadership Bass (as cited in Covey, 2007) suggested that there are four factors of transformational leadership: idealised influence, inspirational motivation, intellectual stimulation, and individual consideration. Idealised influence or charisma refers the ability of a leader to behave in admirable ways that cause followers to identify with him or her (Covey, 2007). Such leaders are able to convince their followers, take their stand and appeal to their followers on an emotional level. According to Covey (2007), a charismatic leader makes a clear set of values and demonstrates them in every action and thus, acts as a role model to the followers. That way, a solid moral and ethical foundation is built and this creates a genuine trust between a charismatic leader and the followers. Inspirational motivation on the other hand involves articulation of a vision that is appealing and inspiring to the followers. A leader with inspirational motivation challenges his/her followers with communication and optimism about future objectives with high set standards and thus, gives meaning to the task at hand. Hence, effective transformational leadership involves motivating followers to gain a strong sense of purpose, which motivates them to act. Again, this aspect of leadership needs to be supported by effective communication skills, which enable a leader to be powerful and precise in a persuasive way (Covey, 2007). According to Covey (2007), intellectual stimulation is the ability of a leader to take risks, challenge assumptions and to solicit the follower’s ideas. In other words, effective transformational leadership implies the ability to encourage and stimulate creativity in the minds of the followers. Leaders with this trait provide a framework for the followers to connect to them, to each other, to the organisation and to the objectives of the organisation. This allows them to overcome any obstacles in the way of their mission. Finally, individualized consideration or individualized attention involves the ability of a leader to listen to the concerns of the followers, to attend to the needs of each of one them and act as a mentor or a coach to them (Hall et al, not dated). Further, this requires respecting and celebrating the contributions of each follower to the team. This aspect of transformational leadership helps to propel the followers to further growth and achievement. According to Hill (2009), the consistency in transformational leadership at Toyota Motor Corporation emerges from the company’s ability to attract, develop, engage, and inspire people. As Hill notes, Toyota Company has a long history of respecting all people including employees, customers and supply partners. The top management of the company makes every effort to enhance understanding among each other and with subordinates and takes responsibility to build trust within the organisation. According to Hill (2009), this is embedded in the organisation’s culture and as a result, it acts as a key ingredient in the company’s success as the global leader in operational excellence. Further, Hill (2009) establishes that Toyota employs a very important tactic through encouraging problem solving at all levels. Further, it makes management accountable to the employees as it undertakes its managerial tasks and encourages leadership to inspire the subordinates to be committed to the company. To achieve this, the company makes sure that its human resource department is and always remains an arbitrator of fair and consistent daily practices. Further, it employs the top-down and bottom-up planning process to involve all of its employees in achieving its goals. John (2002) notes that Toyota establishes and always communicates key business performance indicators at every organisational level. In addition, according to John, this corporation trains its employees to solve problems and to continuously improve processes within the organisation in their daily work. According to Mills (2007), Toyota encourages the top management to live and teach the company’s philosophy of respecting all people and doing things with excellence to the subordinates. Another approach taken by the company is that it enhances training and socialisation of employees as they are being hired into the organisation. Homrig (2001) examined the leadership style of Toyota Motor Corporation in its branch located in Australia and found out that the company enhances motivation, morale and motivation of employees in various ways. According to Homrig, this includes “connecting the manager’s sense of identity and self to the mission and the collective identity of the organisation, being a role model for followers that inspires them, challenging followers to take greater ownership for their work and understanding the strengths and weaknesses of management, so the leader can align followers with tasks that optimise,” (Homrig, 2001). In summary, this implies that Toyota employs the valuable aspects of transformational leadership in its operations, which partly explains the source of its excellence in the automobile industry. The benefits of transformational leadership to an organisation Transformational leadership is very important to organisational performance. To start with, transformational leadership helps to save costs related to high turnover rate in an organisation. According to Cox (not dated), the cost of hiring new employees is usually higher compared to the cost of retaining old ones. In many cases, people leave organisations due to poor cultural fit or because they are dissatisfied with their leader or leaders. This leads to high organisational costs related to high turnover rate, which can be reduced through enhancement of effective transformational leadership. Also, as noted earlier, transformational leadership has the potential to empower the employees in an organisation to realise their full potential and to show higher commitments to organisational goals. Homrig (2001) notes that employees who are satisfied with the leadership are likely contribute significantly to the organisation as in the case of Toyota Motor Corporation. Otherwise, they will shift to a more environment. Either way, a transformational leader will be the winner. In addition, the process of transformational leadership is helpful in fostering organisational effectiveness as a centre for learning. Specifically, it enhances improvement in individual support, vision building, intellectual stimulation, culture building and modelling (Cox, not dated). As mentioned earlier, a transformational leader acts as a role model to be emulated by the followers. In an organisation, this creates high levels of cohesion between bosses and their subjects, which lubricates the flow of information and trust (Cox, not dated). Further, this relationship helps to communicate a strong and common vision between leadership and other employees. In addition, in an organisation, transformational leadership enables employees to be enthusiastic, engaged and challenged in a way that they would perceive to be personal and appropriate to their specific requirements. As such, transformational leadership enables the goals and objectives of an organisation to be clearly communicated and enhances their tangibility to the leaders (Cox, not dated). By actively stimulating the followers, transformational leadership encourages formulation of new ways of doing things (Mills, 2007). This increases the potential for individual development and for addressing the concerns of followers in an organisation, which encourages more creativity, cohesiveness and productivity in an organisation. Further, Bass (as cited in (Mills, 2007) explains that the four elements of transformational leadership have the foundation to move followers beyond what is expected. In other words, transformational leadership brings about more than the set up agreements and exchanges between people. Thus, when it is practiced within an organisation, it is easier to address high cost retention issues and other high dynamics which have a large impact on an organisation’s working culture. Bass and Riggio (2006, p. 53) state the relationship between transformational leadership and effective mentoring and argue that “Both mentors and transformational leaders act as role models who encourage learning and development, and work to develop others’ self-confidence, personal identity and well being. Thus, transformational leaders serve as mentors as they exhibit various degrees of transformational leadership behaviour.” In short, transformational leadership enables the development of the followers to enhance their capabilities and capacity to lead. Bass and Riggio (2006) further explain that transformational leadership helps to reduce feelings of stress and provides tools to help individuals cope with stress and crisis. For instance, highly committed employees in an organisation, who take their work home to work at night, are likely to experience more stress compared to those who are indifferent to their work. Nonetheless, transformation leadership enhances employees’ commitment and serves to reduce their feelings of stress. Also, transformational change has been associated with producing change in organisations. In a recent study conducted by Waldman, Javidan and Varella (as cited in Bass & Riggio, 2006), it was established that the charismatic elements of transformational leadership and intellectual stimulation as measured by MLQ were related to company performance and strategic organisational change. Thus, transformational leadership enhances effectiveness of the process of change in an organisation. In summary, transformational leadership has a great potential to promote the performance of organisations. Conclusion In conclusion, this discussion demonstrates the importance of transformational leadership in enhancing organisational effectiveness. As noted, the term transformational leadership means a leadership process in which leaders broaden and elevate the interests of their followers, stimulate them to look beyond their own self interest for the good of an organisation, and generate awareness and acceptance of the mission and purpose of an organisation to the followers. This style of leadership is an opposite of the transactional leadership style in which leaders give financial rewards for good performance or deny rewards for lack of productivity. As demonstrated by Toyota Motor Company, for an organisational leadership to be effective, it has to efficiently implement of the four components of transformational leadership, namely idealised influence, inspirational motivation, intellectual stimulation, and individual consideration. There are various merits of transformational leadership, the crucial one being that it enhances effectiveness of organisational performance as demonstrated in this discussion. Notably, transformational leadership helps to minimize employees’ turnover rate and hence, this saves costs related to high turnover rate in an organisation. Second, it empowers employees in an organisation to realise their full potential and to show higher commitments to organisational goals. Third, this style of leadership is helpful in fostering organisational effectiveness as a centre for learning. Fourth, transformational leadership enables the goals and objectives of an organisation to be clearly communicated and enhances their tangibility to the leaders in an organisation. In addition, it increases the potential for individual development and for addressing the concerns of followers as well as to move followers beyond expectations. Further, transformational leadership helps to reduce employees’ stress and improves their wellbeing. Finally, this style of leadership enhances effectiveness of the process of change in an organisation. In general, the different merits of transformational leadership significantly increase organisational effectiveness. References Bass, B. M. & Riggio, R. E., (2006). Transformational leadership, Routledge, New Jersey Cherry, K. (2011). “Transformational leadership.” Retrieved 4 September 2011, from http://psychology.about.com/od/leadership/a/transformational.htm Covey, S., (2007). “The transformational leadership report.” Retrieved 4 September 2011, from http://www.transformationalleadership.net/products/TransformationalLeadershipReport.pdf Cox, R. (not dated). “The Benefits of Transformational Leadership.” Retrieved 3 September 2011, from http://www.transformationalleadership.net/imarticle.php?articleid=210055 Hall, J., Johnson, S., Wysocki, A. & Kepner, K. (not dated). “Transformational Leadership: The Transformation of Managers and Associates.” Retrieved 4 September 2011, from http://edis.ifas.ufl.edu/pdffiles/HR/HR02000.pdf Hill, M. (2009). “Toyota culture.” Retrieved 3 September 2011, from http://www.lean.org/Bookstore/ProductDetails.cfm?SelectedProductID=270 Homrig, M. A. (2001). “Transformational Leadership.” Retrieved 3 September 2011, from http://leadership.au.af.mil/documents/homrig.htm John, D. (2002). Organisational Learning and Effectiveness. New Jersey: Routledge. Mills, G. E. (2007). “Transformational leadership and employee retention: An exploratory investigation of the four characteristics.” ProQuest, Capella University. Read More