The Leadership Factor: A study of leadership-styles in transformation

Introduction

This study explores the influence of leadership as the main topic for organisational success: it covers the leadership influence in organisational change, in line with two of the three essential conditions (Market orientation is not covered here) for organisational success as stated by Porter (1991): 

These competencies must be aligned to an always-changing competitive environment.

Leadership styles in transformational efforts 

Introduction to leadership and change 

This section provides a selection of relevant literature regarding how leaders initiate and sustain transformational efforts in their organisation and how the organisation; an evaluation is made of which leadership styles and competencies could support a possible change.

Leadership – leadership styles

Any Leadership style must be deliberately chosen and adapted by the leader of an organisation and/or a subunit (i.e. a Department or team). A selection of literature about leadership and leadership styles is discussed. Most of these articles draw on previous literature, which is then expanded through the individual 
authors by case studies and also verified by quantitative research (mainly questionnaires). 

Different leadership styles in transformational efforts 

One of the most important questions in a change-process should be: What leader and what leadership style is the most efficient to achieve the proposed goal? While the leader as a person concentrates on skills and traits (characteristics), the leadership style focuses on what leaders do and how they act (Northouse, 2007). 

Leadership consists of the different behaviour patterns both of the leader as well as the followers. Blanchard et al. (1985, cited in Northouse, 2007) use both directive (Task-oriented) as well as supportive (Relationship-oriented) elements in Leadership to guide other people. The emphasis and level of support vary according to the individual need and maturity of the follower. Even though this approach could support a leader working with individuals, this study concentrates on both transactional as well as transformational leadership style as a means to steer a bigger group of people such as a company. 

The Transformational leadership style (Burns, 1987, cited in Vito et al., 2014) is based on trust, confidence and an emotional bond between the leader and the employees, using the charisma, inspiration and individual consideration of the leader and promoting the intellectual stimulation of their followers (Bass, 1981, cited in Vito et al., 2014). It is focused on a commitment-culture, in which all stakeholders are pursuing the goals of the organisation, looking for long-term success (Hughes, 2018). Followers are empowered to make the decisions by the delegation of authority and responsibility to the lowest operational level (Empowering leadership – Amundsen and Martinsen, 2013). Northouse (2009) described this as a democratic leadership style with the moderate involvement of the leader. A great emphasis is placed on the leader as a coach and mentor; it requires life experience, industry-and intellectual knowledge to be shared with the followers (Vito et al., 2014). Yuki (1999, cited in Northouse, 2007:193) critiqued the Transformational leadership style as having a ‘heroic leadership-bias’, as in transformational leadership the followers still look to the leader for inspiration and change-initiative, instead of acknowledging that followers can influence leaders in the same way. It is also necessary to have a healthy challenge to a company’s vision by the followers and stakeholders in order to avoid power misuse (Bass and Steidlmeier, 1999). 

However, both the heroic/transactional as well as the transformational leader lead from a position of authority, while the difference is in regards to how much they involve their staff in their decisions (McCrimmon, 2010: online). The table in Figure 1 illustrates some differences: 

Figure 1 – Table: Comparison of leadership styles - McCrimmon (2010: online)

How much can leadership influence an organisation towards a focus on market orientation? In one study, Abebe and Angriawan (2013) sent out 350 Questionnaires with a response rate of 55 (15,7%). They discovered that the deeper the level of market orientation in an organisation was pursued, the more innovation capabilities and resources were unlocked inside of the organisation along with a new degree of customer orientation. Companies following this model not only satisfied their need of their current customers but also introduced new products/services and entered new markets. This approach requires not only the top-down leadership support but also the support of project managers and other mid-level leaders. Often, these people do not see themselves as ‘leaders’ nor their leadership style as a contributor to common success (McBain, 2005). McBain (2005), as well as Avolio and Bass (1995) before him, researched the behaviour of individual leaders during transitions in relation to transactional/transformational leadership styles. Some of their discoveries included the fact that some leaders can use both transactional as well as transformational elements in their leadership style during changes. For example, Treacy and Wiersema (1995) placed a high value on a mixture of a transactional leadership style with clearly expressed expectations and deadlines but also on a transformational culture, incorporating employees to use their talents and abilities. This aligns with the perspective of Bass and Avolio (1995, cited in Cheung and Wong, 2011) that it is mainly the responsibility of a transformational leader to unlock the creativity through encouragement, motivation and intellectual stimulation of their followers. This idea is in contrast to Porter, who used a more abstract approach towards changes, initiated by a more heroic type of leadership. This idea of a more firm steering type of leadership is echoed by Antonakis and House (2014), who challenges transformational leadership as too much concerned with positive relationships between leaders and followers while neglecting to get their job done. However, in the study by Avolio and Bass (1995), those leaders who used a predominant transformational leadership style were reported to be more effective. They also concluded that the more transformational leadership is practiced at a higher level in an organisation, the more it is likely that other (lower) units will adapt to this type of leadership in smaller units as well. 

To conclude this section on leadership styles, it can be said that both the transactional as well as the transformational leadership style have their positive as well as their negative aspects. While transactional/direct components are necessary, especially at the beginning of a change process, the reviewed authors prioritised the transformational elements. The main reason for this was that a possible change and transformation needs the inclusive, cooperative and creative components in order to tackle an often intangible change of the focus towards downstream business. It needs deliberate and extra efforts on the side of a new leader (both from inside or outside of an organisation) to adopt/drive change and immerse him/herself into the company culture. If the company culture is hostile towards a change it is one of the most important tasks of a leader to change, or at least influence, the ‘… basic values, beliefs, and attitudes of followers so they are willing to perform beyond the minimum levels specified by the organization…’ (Podsakoff et al., 1996, cited in Eisenbach et al., 1999:83). It further needs emotional intelligence to discern what leadership style will be effective with the individual team member as well as the endurance to sustain a change effort over time and against internal/external resistance. 

Leadership – driving and restraining forces in the transformation

Given the above, what could the leadership of an organisation do to support change and what are possible hindrances to success? 

Self-confidence, vision, and decisiveness of a leader 

Sönderhjelm et al. (2018) identified the self-confidence to make decisions and push them through a (sometimes) hostile culture in an organisation as being an important aspect. The researchers studied the importance of confidence in leaders among 120 participants, concluding that the self-confidence, intrinsic motivation and attitude of a leader, together with the motivation to lead and the willingness to accept feedback was pivotal for their success. They quote participants:

…to believe in myself and …to implement my decisions without worrying about being disliked… I drive my points all the way… how and that I give constructive feedback. That I shall listen to others, not only to myself…"

(Sönderhjelm et al. 2018:119)

Crittenden and Crittenden (2008) observed more of a gap between formulation and actual performance, as two-thirds of corporate strategy is never implemented. Their case study among 124 organisations revealed leadership shortcomings in change, including the critical fact that 95% of the companies’ employees are not aware of or do not understand their company’s strategy, while 66% of corporate strategy is never implemented. This is confirmed by a study of O’Reilly et al. (2010), which indicates a correlation between the success of change and the leadership commitment towards strategic implementations; connecting the level of the leader's identification with the proposed change with the different stakeholder groups involved. To succeed in such a process, it requires the confidence of a leader, together with some successes in previous roles, as well as the realistic self-expectations of the leader (Hill and Ritchie, 1977). 

Communication 

Kotter (1996), in his 8-stages of organisational change and Merrell (2012) specified communication as a success factor not only in terms of the literal means to communicate a change vision top-down but also to align members of the organisation to a sense of urgency which should lead to a guiding coalition. Embedded in self-confidence, the leader can now connect his idea of a vision in communicating with and to his followers what the possible benefits of the change are for them and the organisation (Kouzes and Posner, 2010), thus giving them an idea of the ‘what might be’ in the future and their potential participation in the change (Hughes, 2018:43). 

The communication and the following actions involve both transactional components (clear, measurable goals and firm steering) as well as transformational forms of leadership (empowerment, training, involving). Nevertheless, it is not enough to only communicate; rather, a leader should introduce appropriate actions to support the talk. Graetz (2000) suggested empowering, energizing and providing tangible support as well as structure; otherwise, the communication of the leader will be dismissed as “just talk” among employees. 

Culture 

What is the most important role of a leader in a change process? Besides the ideas mentioned previously, it could be the assessment of the existing organisational culture and the transformation, at least of the points, which are opposing a possible change (Burke, 2018). Matzler et al. (2010), for example, studied sustainable corporate success through leadership abilities and the right core competencies of their leaders, sending out 3.000 questionnaires while receiving only 700 responses (a ratio of approximately 1:4). They, and later Huikkola and Kohtamäki (2017) discovered that leadership has to identify internal resources, transform the existing (most likely manufacturing-centered thinking culture) to a more open/intense culture of entrepreneurship, which leads to innovation and value creation. Further important learning was that a holistic view in transformation has to affect every part of a company, as it is not enough only to change one aspect (i.e. logistics) without improving the other parts of the value chain as well. The cultural aspect is not only against or in favour of a change but rather touches the identity of the company and the way in which it is perceived and valued by their customers (Barrett, 2017). Barrett goes on to mention that all procedures, policies, and structures not supporting the company’s mission have to be addressed and changed. How far personal values, current company culture, and a possible desired culture can be apart is shown in Figure 2 below (Barrett, 2017:28):

Figure 2 – Values plot of a low-cultural health, high-cultural-entropy organisation – Barrett (2017:28)

How can such a culture transformation be implemented? Avery and Bergsteiner (2011) researched over 50 companies to find common sustainable leadership practices to change a culture while awakening resources within the company in order to help individuals to participate in change rather than just command it top-down. Even their results appear to be ‘black and white’, advocating their position of sustainable leadership; yet they concentrate on long-term value for the organisation while identifying key performance drivers to create a value-based, social responsible shareholder-value-oriented form of leadership. Meanwhile, Heide et al. (2002), Miller et al. (2008), Hakonsson et al. (2012) and Radomska (2014) researched barriers in leadership in connection to the executive style which prevents the successful implementation of change. Their common findings included missing leadership skills (i.e. good and frequent communication both on a vertical as well as on horizontal level), poor management skills (i.e. setting the right priorities or contradicting ones) and not aligning the company culture to the proposed goals. This thought is similar to Avolio and Bass (1995), as they mention that the individual behaviour of a leader can become normative for an entire group, either positive or negative. While transactional leaders are more externally directed, driven by rules and their application (Howell and Avolio, 1993, cited in Avolio and Bass, 1995), this is also true for their followers, who expect clear direction (Western, 2008). Transformational leaders are more internally guided (self-defining according to their values – Kuhnert 1994, cited in Avolio and Bass, 1995) when attempting to change an organisation/culture towards a more satisfying alternative (Bass, 1985, cited in Avolio and Bass, 1995). 

Alvesson (2002, cited in Western, 2008:113) analysed how transformational leaders '…are said to work on rather than in [an organisational] culture…' instead of trying to change '…existing cultural patterns or even contribute to the creation of a culture…' from the inside-out. As leaders are often hired from outside an organisation, they need to understand and evaluate both the current official as well as the unofficial company culture (Fisher, 2004), address any hindering issues and adopt the organisation accordingly in order to be successful. Even from the outside, they need to align an organisation with the external environment, using available resources efficiently and providing strategic guidance, which forces transformational leaders to adopt a more directive leadership-style. These strategic issues have to be addressed in order to meet organisational goals and are the core responsibilities of a leader, independent to what leadership-style they use in normal day-to-day activities (Antonakis and House, 2014). 

Conclusions 

Markets, technology, and the competitive environment are changing. A transformation requires the leaders to evaluate their current business model, products and services in order to operate further in their respective markets as a valuable player. A possible transformation-process of both the company focus and strategy is not easy to achieve, as it requires the participation of all stakeholders, along with the right ideas and commitments. It is mainly the responsibility of the leader to kindle and sustain these actions and emotions. It is also clear that without the support of the employees, a leader cannot transform an organisation.

© Christian Kastner, 2019