Dimensions of Transactional and Transformational Leadership - Literature review Example

Introduction and aim of chapter

A flurry of literature has so far been written concerning leadership, organizational performance, and job satisfaction. Each of these works has provided an understanding of these concepts that have been pursued by other writers. This chapter will explore various pieces of literature on leadership, organizational performance, and job satisfaction. Additionally, this chapter will explore the relationship between the three concepts.

Leadership and management

The two terms, leadership, and management, have continued to prompt several debates among scholars as to their agreed definitions. The most contentious of these debates has been the interchangeable use of the terms by a flurry of researchers (Bass 1997; Kotter 2001).

Kotter (2001) argues that leadership and management are interchangeable roles, although asserts that one cannot function without the other; nevertheless that management is a formally appointed position with designated authority. Kotter insists that augmenting strong leadership and sound management is the primary issue. Leaders and managers must be able to communicate the organization’s vision with a planned and balanced view, while organizing particular persons to execute specific plans. According to Northouse (2007), the overlapping leadership and management purposes are centred on how they both encompass swaying a group, in one way or another, to achieve specific goals. Besides, Kotter (2001) proposes that managers stimulate stability and cope with complexity while leaders press for change. Establishments that discern the incongruities of leadership and management equally prosper (Northouse, 2007), which can lead to attaining optimal outcomes for the organization.

Stanley (2006) suggests that leaders and managers espouse role clashes. The contests of role create tension within the person and the position. Fairholm (2004) remarks that leadership and management have experienced limited scholarly attention to observe and name this tension, and contend that the interchangeably used terms define several purposes or behaviours. Thus, developing understanding and application through the academic disambiguation of the leadership and management concepts may be an essential act of resolving the tension by understanding the conflict. The resolution of the inherent conflict between management and leadership will also help prepare those who hold the positions to animate their roles to satisfactory degrees of efficacy.

Howatt (2008) posits there are some critical traits that are shared by both leaders and managers. These traits include execution of a vision, ability to direct, process management, as well as focus on people. Both leaders and managers set out visions for their organizations and see to it that the organization works towards the vision. Besides, leaders and managers also execute the role directing their organization towards the achievement of set goals. Both leaders and managers also manage processes that occur within their organizations. Every organization has a reason for being in existence; both the leader and the manager ensure that the processes and activities that will lead to the realization of the organization’s reason for existence are well-executed. Finally, both leaders and managers focus on people. It is people who animate organizational processes under the direction of a manager or a leader.

Dimensions of Transactional and Transformational Leadership

According to Bass’s (1985) theory, there are four dimensions that underlie transformational leadership. These four components include idealized influence, inspirational motivation, intellectual stimulation, and individual consideration.

Idealized influence refers to the service provided as a charismatic role model to followers. This dimension popularly called “charisma,” is the single-most important aspect.

Inspirational motivation is the second facet of transformational leadership. It encompasses the articulation of clear, appealing, and inspiring vision to followers. However, vision is theoretically dissimilar to charisma. Studies have shown that inspirational motivation is highly correlated with idealized influence and are always combined in practice (Bass 1985).

The third dimension of transactional leadership is intellectual stimulation that involves the arousal of follower creativity by questioning assumptions, as well as challenging the existent status quo. As Bass (1985) noted, “By the transformational leader’s intellectual stimulation, we mean the arousal and change in followers of problems awareness and problem-solving, or thought and imagination, and of beliefs and values” (p. 99).

The final dimension of transactional leadership is an individual consideration. Individual consideration encompasses attending to and supporting the individual needs of followers, contrary to the traditional consideration factor. However, individualized consideration dwells more on a follower’s progress and less on shared decision-making (Bass 1995).

Bass (1985) and Stewart (2006) also posited that three dimensions characterize transactional leadership. Through the full-range-of-leadership model(Bass 1998), the connection between the transactional orientations, outside the fact that they are, to varying degrees, aligned towards leader-follower interchanges, is that they epitomize comparatively low forms of leader activity and involvement, especially, when compared with the transformational dimensions. These three dimensions of transactional leadership include; contingent return, management by exception - passive, and laissez-faire (Bass 1997).

Contingent reward refers to inclination of a leader to exchange prized benefits for follower support. Contingent reward is the most active form of transactional leadership but is less active than transformational leadership since one can engage in contingent reward without ever being closely engaged with followers.

Management by exception passive implies the inclination of a leader to intervene only when problems become exacerbated. Both active and passive management by exclusion encompass enforcing rules to avoid mistakes (Bass 1997). They maintain the process of transacting and preserve the leader’s attention.

The laissez-faire dimension, on the other hand, refers to non-leadership and is characterized by avoiding leadership duties and responsibilities. Laissez-faire is the failure of transactional and transformational leadership to take centre stage. Nevertheless, since the full-range-of-leadership model (Bass 1998) views all transactional leadership as less-active, it follows that laissez-faire is the best example of inactive leadership.

Charismatic leadership in organizations

The charismatic realm of leadership emanated in the aftermath of the advent of the scientific facet of leadership in the later parts of the 20th century which encompassed an increase in publications on leadership theory (Conger & Hunt 1999). Conger and Kanungo designed a model of charismatic leadership components in organizations in 1987, to delineate the idea. This model was later endorsed by a factorial analysis with strongly convincing outcomes (Conger & Kanungo 1994). From their findings, charismatic leadership can be defined by distinct behaviours that occur in three sequential phases. In the first period of assessing the environment, a charismatic leader perceives the needs of their followers and expresses their discontent with the status quo. The second stage is when charismatic leaders articulate a vision and communicate this vision succinctly to their followers. Animation of the vision happens in the third juncture, which demands that leaders act in a precarious and unorthodox way to get the commitment of the workers, such as eagerly exposing themselves to situations with uncertain results and taking chances (Conger & Kanungo 1994).

Other scholars also agree that charismatic leadership can be discerned from other forms of leadership (Avolio & Yammarino 2013; Hunt & Conger 1999). For instance, the most discussed distinction between leaders is the manner of charismatic leaders and transactional leaders. While charismatic leadership is animated by the addition of meaning to ensure employees put more effort, transactional leaders lay more emphasis on the trading processes between leaders and workers, where leaders reward employee efforts (Burns 1978). There is also autocratic leadership where the leader controls all the power and dictates everything in the organization. Moreover, there is the laissez-faire system where the leader exerts no authority at all, leaving the subordinates to make all decisions in the organization.

Communicative Leadership

Communicative leadership has been discussed by a number of scholars. Communicative leadership emphasizes the value of communication to the prosperity of any organization run by a leader (Fairhust 2009). Communication, being both a medium and a means by which organizational values, creeds, goals, and objectives are passed from the leader to the subordinates, bears a supreme significance to a leader, as well as the led. To this end, a communicative leader ensures that employees have understood, as well as clearly internalized the goals of the company and are in a position to succinctly execute these goals. Additionally, communication is leadership is significantly influenced by the prevailing contexts at the point of communication (Hamrefors 2010).

Team and leadership

The concept of team has been studied by many scholars especially with regard to organizational performance. As Katzenbach and Smith (1993) remark, a team refers to “a small number of people with complementary skills who are committed to a common purpose, performance goals and approach for which they hold themselves mutually accountable” (p. 112). Furthermore, the achievement of a common group goal reverberates through all the definitions placed forward for teams. Leaders are responsible for leading teams to achieve shared goals; hence, it is imperative that a leader understands the dynamics of team workings (Katzenbach & Smith 1993).

Scholars agree that the understanding of team leadership is highly correlated to the proper internalization of the nature of team operations (Katzenbach & Smith 1993). Teams possess different dynamics that must all be brought into consideration when the workings of a team are considered. Team work incorporates a lot of highly-dependent interactions which a leader must effectively understand in order to successfully lead a team (Luthans 2005). Also, teams face myriad challenges due to the various personalities and traits of members who characterize teams. Additionally, all teams must be oriented towards the animation of goal-directed activities which then ensure that the organization achieves its set roles.

Leadership behaviour theories

Scholars have identified several leadership behaviour theories, as well as how they influence the quality of leadership. The common agreement is that leadership behaviours fit into four categories that include change-oriented behaviours, task-oriented behaviours, relational-oriented behaviours, and passive leadership. The two most studied leadership behaviour theories are initiating structure-consideration (IS-C; Halpin 1957; Stogdill 1963) and transformational-transactional (T-T; Bass 1985; Burns 1978). These two theories follow the four dimensions of behaviour patterns mentioned above.

The initiating structure-consideration model encompasses two phases which are structure initiation and consideration. Structure initiation refers to the way a leader defines a leader’s role, as well as the role of his subordinates. Consideration, conversely, refers to the capacity to which a leader exhibits concern for the welfare of group members. A combination of initiating structure-consideration thus ensures that a leader animates both direction and care for the team (Avolio, Bass, & Jung, 1999).

Bass (1985) and Burns (1978) came up with the transactional – transformational behaviour theory of leadership. This theory implies that leaders will act in a transactional manner by exchanging tangible rewards for the loyalty and work of followers. Moreover, leaders will work in a transformational manner to interact with followers, focus on higher order intrinsic needs, and raise consciousness about the implications of particular results and new ways in which those results might be accomplished (Hay, 2012).

Organization performance Theories

Organizations work to pursue and realize specific goals for which they exist. To this end, studies focusing on the performance of organizations through the achievement of set organizational goals have been common. Scholars have developed various theories of organizational performance. These theories include left-brain-right-brain theory, content theory, and process theory (Jones et al. 2000; Keuning 1998; Mullins, 1996). The left-brain right brain theory posits that for organizational performance to be realized, management theories that engage both the left brain and the right brain must be employed. Content theories give significance to the ability of the content of work to drive performance. Process theories take performance as a realm contributed to by the systems in place to an organization (Jones et al. 2000; Keuning 1998; Mullins, 1996).

Scholars also agree that when considering performance, it is critical to differentiate between behavioural and outcome angles of performance (Howatt 2008). Behavioural aspects relate to what an individual does in the work situation. Moreover, only behaviour that is relevant to the achievement of organizational goals can be considered under organizational performance. Several actions are animated in an organization but not all of those actions contribute towards the performance of the organization. The outcome side of performance refers to the consequences that result from an individual’s behaviour. To this end, outcome aspects of performance may be a consequence of factors other than the individual’s behaviour.

Job Satisfaction Theories

Job satisfaction has been a primary area of interest to several scholars interested in the workings of organizations (Dugguh &Dennis 2014). Job satisfaction focuses on employees who are an integral point of an organization’s ability to achieve the goal for which it was set. Scholars have fronted several theories of job satisfaction. Studies have shown that there is a significant overlap between theories that explain job satisfaction and those that describe motivation (Locke 1969). The theories for job satisfaction include content theories, process theories, and situational theories. Content theories focus on the fact that job satisfaction can only be realized when an individual’s need for self-actualization and development are met. Process theories, on the other hand, suggest that workers select the behaviour they animate in order to meet their needs. Situational theories posit that job satisfaction is a product of both situational factors and situational occurrences.

Researchers have also agreed that job satisfaction takes the scientific approach. To this end, ‘Taylorism’ has been fronted as a great marker for job satisfaction theories (Dugguh & Dennis 2014). The underlying principle is that man is an ‘economic being’ and, as such, money is the greatest motivator when it comes to job satisfaction theories. The proponents of man as an economic being motivated by money insist that once individuals are significantly empowered economically through their work in the organization, they will definitely achieve satisfaction in their jobs. However, other researchers dissent the view that money is the greatest motivator of job satisfaction by positing that several other factors exist that affect job satisfaction (Luthans 2005). They contend that these other factors include leadership based on the proper internalization of individual and group behaviour, positive interrelationships, as well as internal morale espoused by an individual.

Scholars also agree that the theories of job satisfaction are limited in their application to significant extents (Luthans 2005). These limitations stem from the fact that most of the job satisfaction theories were developed in America thus ensuring a vast chasm in the application of these theories to other continents and countries. Culture has a significant role to play when it comes to job satisfaction. Each culture presents with an array of characteristics that affect job satisfaction. These characteristics are influenced by the values that a society animates. To this end, the theories of job satisfaction vary significantly based on the culture in which they are applied.

Hofstede (1980), fronts four cultural dimensions that help in explaining the how, as well as the why of how people from different cultures behave. These dimensions include power distance, individualism, uncertainty avoidance, and masculinity. In terms of power distance, Hofstede (1980) fronts that people in societies where authority is respected without question reside in a high power distance cultures where managers have the tendency to make autocratic decisions, which their subordinates follow without any dissent. Uncertainty avoidance refers to the capacity to understand the tendency of individuals to be risk takers or risk evaders (Hofstede 1980). Uncertainty avoidance also plays a significant role when it comes to job motivation. For instance, Latin countries are risk averse while people in countries like America and Denmark like ambiguity. Individualism, the tendency to only be concerned with oneself and immediate family only, is also a key determinant of job satisfaction and it varies from region to region. The final cultural pillar is masculinity. A Society is classified as masculine if their dominant values are masculine in contrast to feminine.

Scholars also agree that there are more differences, as opposed to similarities in the animation of several of the job satisfaction theories (Hofstede 1980; Luthans 2005). For instance, when Maslow’s hierarchy of needs is applied to societies with strong ambiguity avoidance traits, safety needs would occupy the top of the needs hierarchy which is the converse of applying the theory to America. Nevertheless, regardless of these myriad differences, all job satisfaction theories share some notable similarities. For instance, all job satisfaction theories encourage managers to blend lower-level factors with higher-order factors in order to significantly satisfy their workforces (Newstrom 2007).

Combination of the three dimensions of study

Not much research has been done to determine the relationship between leadership, organizational performance, and job satisfaction. However, it is clear that the three concepts are related to one another in very significant ways (Braun, Peus, Weisweiler & Frey 2013). Leadership is important in charting out the ways and means for the realization of organizational goals. The accomplishment of the aims of an organizational entity in an efficient manner with the involvement of minimum resources is what is considered to be organizational performance (Lebas & Euske 2002). Moreover, an organization’s performance ensures longevity in the lifespan of the enterprise. Job satisfaction, on the other hand, is essential in ensuring that organizational goals are pursued and realized. When workers are satisfied with their working environment, possible distractions are negated thus all focus is placed towards organizational success (Staples and Higgins 1998).

Despite the limited research, scholars have observed that the interplay between leadership, organizational performance, and job satisfaction towards the posterity of a corporate entity cannot be understated (Lebas & Euske 2002). Each of these three facets of organizational leadership, organizational performance, and job satisfaction borrow significantly from one another. Additionally, the three concepts complement one another in the way the organization runs in order to achieve its set mandate. For instance, employees who espouse significant satisfaction with their jobs have a tendency to spur organizational performance to new dimensions. Besides, where good leadership is animated, the probability of employees getting satisfied to the extent of providing good organizational performance is very high. Therefore, it can be concluded that leadership, organizational performance, as well as job satisfaction are strongly correlated entities (Newstrom 2007).

Chapter Summary

This chapter has dwelt on reviewing of literature concerning leadership, organizational performance, as well as job satisfaction. Different scholars have espoused divergent views relating to the three concepts (Kotter 2001: Braun et. al. 2013). However, there are common areas that scholars agree on when it comes to the three terms of leadership, organizational performance, and job satisfaction. These areas of agreement include the relevance of leadership and job satisfaction to the amelioration of organizational performance, as well as theories that pervade leadership, job satisfaction, as well as organizational performance (Braun et. al. 2013; Bass 1997). This chapter also delves into the review of studies that address the theories which underlie leadership, organizational performance, as well as job satisfaction. Additionally, this chapter also tries to examine works of literature that seek to resolve the conflict between the understanding of leadership and management as concepts. Most scholars have resorted to using management and leadership interchangeably while other scholars have worked on distinguishing the two terms. Finally, literature on the concept of “teams” in organizations has also been reviewed to a significant degree. Teams are essential to the pursuit of organizational goals and hence the importance of leaders understanding teams and the dynamics on which teams are hinged.