LEADERSHIP, MOTIVATION, AND STRATEGIC HUMAN RESOURCE MANAGEMENT:LEADERSHIP OUTCOMES

LEADERSHIP OUTCOMES

My message was, and will always be, ‘‘There are no limits to the maximum.’’

—T., an exemplary infantry platoon commander in the Israel Defense Forces 

‘‘Transformational leaders encourage follower to both develop and perform at levels above what they may have felt was possible, or beyond their own personal expectations’’ (Bass and Avolio 1990, p. 234, emphasis in original). Thus, achieving certain levels of performance as well as development become a targeted outcome. The linkages between transformational leadership, employee develop- ment, and performance are presented in Figure 4.

Performance

Numerous studies have examined the relationships between various components of the full range leadership model and performance outcomes. Overall, these studies confirmed the positive impact of transformational leadership on perceived effectiveness as well as on hard measures of performance.

The most commonly studied perceived outcomes were perceived effectiveness of the leader and the work unit, extra effort, and satisfaction with the leader. In the majority of the studies, both transformational / transactional leadership and the outcome variables were evaluated by the same source, usually the immediate followers. For example, Hater and Bass (1988) found positive high correlations between transformational leadership and perceived effectiveness and satisfaction, both rated by the leaders’ immediate followers, whereas the correlations between the transactional factors and followers’ ratings were low to moderate. Seltzer and Bass (1990) studied 138 followers and 55 managers and confirmed that transformational leadership adds to transactional leadership (as repre- sented by the dimensions of initiating structure and consideration) in explaining the variance of followers’ satisfaction and ratings of leader effectiveness. Several studies have expanded the spectrum of outcome variables. Thus, for example, Bycio et al. (1995) conducted a study among 1376 nurses who evaluated both their superior’s leadership style and the outcome variables. They found that in addition to the strong positive relationships between transformational leadership and followers’ extra effort, satisfaction with the leader, and perceived leader effectiveness, transformational leadership also had positive correlations with followers’ organizational commitment and negative correlations with followers’ intentions to leave the profession and the job. Podsakoff et al.’s (1990) study among 988 exempt employees of a large petrochemical company confirmed that ‘‘core’’ transformational lead- ership behaviors and individualized support had positive effects on followers’ trust and satisfaction with the leader. Bass and Avolio (1993) summarize the findings of this type from studies conducted in industrial, military, educational, and religious organizations. The pattern of relationships was con- sistent across 17 independent samples and pointed to a clear hierarchy. The correlations with per- ceived effectiveness and satisfaction with the leader typically ranged from 0.60 to 0.80 for transformational leadership, from 0.40 to 0.60 for contingent reward, from -0.30 to 0.30 for man- agement-by-exception, and from -0.30 to -0.60 for laissez-faire leadership.

Fewer studies have collected survey measures of both leadership and outcomes from multiple sources. In these studies, different sources subjectively evaluated transformational / transactional lead- ership and organizational outcomes. The most frequent additional source used was the evaluation of managers’ performance by their superiors. For example, Keller (1992) studied 66 project groups containing professional employees from three industrial research and development organizations. He showed that transformational leadership, as rated by immediate followers, was more predictive of project quality, as evaluated by the management, in research vs. development teams. Yammarino and Dubinsky (1994) collected leadership and perceived effectiveness data from various sources, including 105 salespersons and their 33 sales supervisors, in a $1 billion multinational medical products firm. They confirmed an individual-level positive relationship between transformational leadership, as per- ceived by followers, and extra effort and perceived performance of followers, as perceived by their superiors.

A growing number of studies have examined the impact of transformational leadership on objec- tive performance measures. For example, Onnen (1987, in Bass and Avolio 1993) reports that trans- formational leadership of Methodist ministers, as evaluated by their district members, was positively related to Sunday church attendance and to growth in church membership. Avolio et al. (1988) found that transformational leadership and active transactional leadership were positively related to financial measures and productivity among MBA students engaged in a complex, semester-long competitive business simulation. Bryant (1990, in Bass and Avolio 1993) confirms that nursing supervisors who were rated by their followers as more transformational managed units with lower turnover rates. Howell and Avolio (1993) found positive relationships between transformational leadership and ob- jective unit performance over a one-year interval among managers representing the top four levels of management in a large Canadian financial institution. German bank unit performance over longer vs. shorter time periods was higher in banks led by leaders who were rated by their employees as more transformational (Geyer and Steyrer 1998 in Avolio 1999).

However, ‘‘even when predictions regarding objective performance outcomes support the model, we are still faced with plausible alternative cause-and-effect relationships’’ (Bass and Avolio 1993, p. 69). Therefore, to establish causal effects, several experiments (Barling et al. 1996; Crookall 1989; Dvir et al. in press; Howell and Frost 1989; Kirkpatrick and Locke 1996; Sosik et al. 1997) were conducted either in the field or in the laboratory. Overall, these experiments confirmed the causal impact of transformational or charismatic leadership on performance outcomes. Such an experimental design can confirm that the direction of causal flow is indeed from transformational leadership to the hypothesized performance outcomes as opposed to instances where enhanced follower performance cause the higher transformational leadership ratings. Howell and Frost (1989) found that experimen- tally induced charismatic leadership positively affected task performance, task adjustment, and adjustment to the leader and the group. Kirkpatrick and Locke (1996) manipulated three core components common to charismatic and transformational leadership in a laboratory simulation among 282 students. They found that a vision of high quality significantly affected several attitudes, such as trust in the leader, and congruence between participants’ beliefs and values and those communi- cated through the vision. Vision implementation affected performance quality and quantity. Barling et al. (1996), in a field experiment among 20 branch managers in a large Canadian bank, confirmed the positive impact of transformational leadership training on employees’ organizational commitment and on two aspects of branch-level financial performance. Dvir et al. (in press) conducted a longi- tudinal randomized field experiment among military leaders and their followers. They confirm the positive impact of transformational leadership, enhanced through a training intervention, on direct followers’ personal development and on indirect followers’ objective performance.

Two meta-analytic studies have been conducted recently. Lowe et al. (1996) found that signifi- cantly higher relationships were observed between transformational scales and effectiveness than between transactional scales and effectiveness across 47 samples. This pattern held up across two levels of leadership and with both hard (number of units) and soft (performance appraisals) measures of performance (see Figure 5). Coleman et al. (1995) found that, across 27 studies, the transforma- tional leadership styles were more strongly related to performance than the transactional styles. The average relationship across studies for the transformational leadership factors and performance ranged from 0.45 to 0.60; for transactional leadership, 0.44; for management-by-exception—active, 0.22; for management-by-exception—passive, 0.13; and for laissez-faire, -0.28.

To sum up, there is sufficient empirical evidence to conclude that transformational leadership has a positive impact on both perceived and objective performance and that this impact is stronger than the effects of transactional leadership.

Employee Development

Rather than solely focusing on the exchange with an eye toward performance, transformational leaders concentrate on developing employees to their full potential. Indeed, one of the most prominent aspects of transformational leadership compared to transactional leadership concerns employee developmental processes (Avolio and Gibbons 1988). The transformational leader evaluates the potential of all employees in terms of their being able to fulfill current commitments and future positions with even greater responsibilities. As a result, employees are expected to be more prepared to take on the responsibilities of the leader’s position, and to be ‘‘transformed,’’ as Burns (1978) originally argued, from followers into leaders. In contrast, working with the transactional leader, employees are expected to achieve agreed upon objectives but are not expected to undergo a developmental process whereby they will assume greater responsibility for developing and leading themselves and others. Follower

developmental variables were classified here into the three broad categories of personal development, development of attitudes toward the leader, and group development.

Employee Personal Development

Most general references in the literature to follower development actually refer to an intrapersonal, developmental change that followers of transformational leaders presumably undergo; the leader transforms followers by serving as a coach, a teacher, and a mentor. Dvir et al. (in press) propose a conceptual framework for examining developmental aspects of transformational leadership theory on the basis of the sporadic theoretical discussions and empirical examinations in the literature. Their framework for follower personal development includes the three domains of motivation, morality, and empowerment. Dvir et al. found evidence of the impact of transformational leaders upon their direct followers’ development in at least one measure of each category.

Motivation The emphasis in transformational leadership theory on employee motivational de- velopment can be traced back to Burns’s (1978) references to two continuums of follower develop- ment. The first dealt with motivation and was based on Maslow’s (1954) hierarchy of needs. Maslow conceived a hierarchy of human needs according to the following order: physiological, security, social, self-esteem, and self-actualization needs. Self-actualization, the realization of one’s potential to be- come what one has the capacity to become, is at the highest level of need. According to Maslow, only upon satisfaction of the lower level needs does the motivation to satisfy a higher level need arise, and self-actualization needs are infinite. Burns (1978) proposes that transforming compared to transactional leaders motivate followers to achieve the highest possible level of need satisfaction such that the primary motive becomes the desire to satisfy self-actualization needs rather than lower needs. Based on Burns, Bass (1985, 1996) suggests that transformational leaders elevate the level of needs along Maslow’s hierarchy or expand the employees’ portfolio of needs. Unlike transactional leaders, who concentrate on fulfilling current employee needs, transformational leaders arouse needs that may have lain dormant.

Another motivational aspect associated with transformational leadership is the emphasis on em- ployees’ extra effort. Bass (1985) originally posited extra effort as a manifestation of employee motivation. He claimed that employees’ extra efforts show how highly a leader motivates them to perform beyond expectations. Thus, it can be concluded that the emphasis on satisfying self- actualization needs reflects the type of need underlying the employees’ motivation, whereas extra effort reflects the level of their motivation. Shamir et al. (1993), in discussing the motivational effects of charismatic leadership, propose that charismatic leaders increase employee effort by increasing the intrinsic value of their efforts through links to valued aspects of the employee’s self-concept. Forming these linkages to the employee’s self-concept helps to harness the motivational forces of self- expression, self-consistency, self-esteem, and self-worth. Extra effort is one of the most widely con- firmed correlates of transformational leadership. Dvir et al. (in press) conducted a randomized field experiment in a military organization and confirmed the positive impact of transformational leader- ship, enhanced through training, on direct followers’ perceived extra effort.

Morality Burns’s (1978) second developmental continuum relates to the employees’ moral de- velopment, based on Kohlberg’s (1973) theory. Burns summarizes that ‘‘transforming leadership ultimately becomes moral in that it raises the level of human conduct and ethical aspiration of both leader and led, and thus it has a transforming effect on both’’ (p. 20). Bass (1985) purposely omitted the moral element from his original theory, apart from emphasizing the importance of collective interests. Recent articles have decried the omission of the moral element from transformational and charismatic leadership theories, and have called for its inclusion as part of the developmental process undergone by employees of transformational leaders. Bass (1996) came to agree with Burns that to be transformational, a leader must be morally uplifting. One of the difficulties in applying this part of the theory is that, according to Kohlberg, moving from one moral stage to the next may take years, a time span too long to wait for results to appear in typical leadership studies. Therefore, moral development in the short-term can be represented by the employees’ internalization of organizational moral values (Dvir et al. in press).

The transition from a desire to satisfy solely personal interests to a desire to satisfy the broader collective interests is part of moral development, according to Kohlberg (1973). Bass (1985) places special emphasis on this aspect of moral development and suggests that transformational leaders get their employees to transcend their own self-interest for the sake of the team or organization. In Shamir’s (1991) self-concept theory, the collectivistic orientation of the employees is one of the central transformational effects of charismatic leaders. Dvir et al. (in press) confirm the causal impact of transformational leaders on their direct followers’ collectivistic orientation.

Empowerment Transformational leadership theory, in contrast to early charismatic leadership theories (e.g., House 1977), never assumed that leadership relationships are based on regression or weakness on the part of the employees. On the contrary, transformational leadership theory has consistently emphasized employees’ development toward autonomy and empowerment over automatic followership. Neocharismatic leadership theories have ceased conceptualizing the employees as weak (House 1995; Shamir 1991).

The literature has referred to critical-independent thinking as one of the essential empowerment- related processes undergone by employees of transformational leaders. Bass and Avolio (1990) state that transformational leaders enhance employees’ capacities to think on their own, develop new ideas, and question operating rules and systems that no longer serve the organization’s purpose or mission. Avolio and Gibbons (1988) posit that a primary goal of transformational leadership is to develop employee self-management and self-development. Shamir’s (1991) self-concept theory emphasized the transformational effects of charismatic leaders on employee autonomy, independence, and em- powerment. A critical-independent employee as an outcome of transformational leadership also ac- cords Kelley’s (1992) conceptualization regarding styles of followership perceived within organizations as good followership. Kelley’s respondents described the best followers as those who ‘‘think for themselves,’’ ‘‘give constructive criticism,’’ ‘‘are their own person,’’ and ‘‘are innovative and creative.’’ The worst followers were characterized as ‘‘must be told what to do’’ and ‘‘don’t think.’’ In between were the typical followers who ‘‘take direction’’ and ‘‘don’t challenge the leader or group.’’ Although Kelley labels this dimension critical-independent thinking, he actually refers to thinking and action, or in his words, ‘‘to become a full contributor, you need to cultivate independent, critical thinking and develop the courage to exercise it’’ (p. 114, emphasis added). Thus, it is more appropriate to label this developmental outcome of transformational leadership critical-independent approach. Howell and Avolio (1989) confirm the hypothesized relationships between transformational leadership and employee innovation, risk-taking, and creativity among Canadian executives. Dvir et al. (in press) found a positive effect of transformational leadership on direct followers’ critical- independent approach toward the self, peers, superiors, and the organizational system.

Kelley’s (1992) review of best, worst, and typical follower characteristics reveals a second di- mension, namely active engagement in the task. The best followers ‘‘take initiative,’’ ‘‘participate actively,’’ ‘‘are self-starters,’’ and ‘‘go above and beyond the job.’’ The worst ones are ‘‘passive,’’ ‘‘lazy,’’ ‘‘need prodding,’’ and ‘‘dodge responsibility.’’ The typical followers basically ‘‘shift with the wind.’’ Active engagement in the task involves the investment of energy into the followership role, usually toward a mutually shared dream or goal. Thus, active engagement in the task is defined as the energy invested in the employee role as expressed by high levels of activity, initiative, and responsibility taken by the employee, and is expected to be positively affected by transformational leadership.

Transformational and charismatic leadership theorists have emphasized the impact of the leader on employees’ self-perceptions. Shamir et al. (1993) specify increased employee self-efficacy as one of the transformational effects of charismatic leaders. According to Conger and Kanungo (1988), self-efficacy can be tied to charismatic leadership through empowerment. Avolio and Gibbons (1988, p. 298) stated that ‘‘a significant part of developing or transforming followers is developing their feelings of self-efficacy.’’ Eden (1988) argues about the difference between general and specific self- efficacy (GSE and SSE, respectively). GSE is relatively a stable trait and is resistant to change, whereas SSE represents a more labile state. Direct followers of transformational leaders were found to have higher levels of SSE (Dvir et al. in press). Based on the importance given to self-efficacy as an empowerment-related outcome of transformational and charismatic leadership, we posited specific self-efficacy as a malleable developmental outcome that is enhanced among employees of transfor- mational leaders.

Development of Employee Attitudes toward the Leader

According to Yukl (1998), transformational leaders influence followers by arousing strong emotions and identification with the leader. The notion of follower development going in the direction of strong emotional attachment or favorable attitudes toward the leader is deeply rooted in charismatic and transformational leadership theory. For example, House (1977) asserts that followers in charismatic relationships feel affection toward the leader. According to Conger and Kanungo (1987), charismatic leaders are more likable and honorable than noncharismatic leaders. Shamir et al. (1993) suggest that personal commitment to the leader is part of the transformational effects of charismatic leaders. Favorable attitudes toward the leader have been the most commonly studied outcomes of transfor- mational leadership. There is a considerable amount of evidence to conclude that transformational leadership enhances employees’ satisfaction with the leader and perceived effectiveness of the leader (Bass and Avolio 1990).

The full range leadership model (Avolio and Bass 1988) suggests that having a shared sense of purpose and common norms between follower and leader should assist transformational leaders in successfully completing and communicating their mission. Furthermore, if norms are not common to both leader and follower, then the first step toward transforming followers may involve the leader’s unfreezing followers’ attitudes and values and then gaining conformity with his or her own value system. Many writers have emphasized the importance of the similarity between leaders and follow- ers. For example, House and Baetz (1979, in Conger and Kanungo 1987) postulate that the followers of charismatic leaders are characterized by the similarity of their beliefs to those of the leader. The self-concept theory (Shamir 1991; Shamir et al. 1993) posits that the values and identities of followers within charismatic relationships are congruent with the leaders’ vision. According to this theory, one of the two classes of charismatic leaders’ behaviors is frame alignment, which refers to the linkage of follower and leader interpretive orientations so that the followers’ interests, values, and beliefs and the leaders’ activities, goals, and ideology become congruent and complementary. Some level of demonstrated and moral superiority is likely to be necessary for the leader to become a representative character, but the leader should also emphasize his or her similarity to the followers on certain dimensions. The main processes of psychological attachment through which the leader’s behaviors of frame alignment influence their followers in the charismatic relationships are personal identification and value internalization. Personal identification refers to the followers’ desire to emulate or vicari- ously gain the qualities of the leader. Such identification increases with the extent to which the leader represents desirable identities, values, and attributes in his or her behaviors. Value internalization refers to the incorporation of the leader’s or group’s values within the self as guiding principles. The self-concept theory stresses that personal identification is consistent with the theory, but a stronger emphasis is put on value internalization.

Several empirical studies have been conducted on the relationships between leader–follower sim- ilarity or value congruence and various outcome variables. Turban and Jones (1988) found that superior–follower similarity was related to followers’ perceived performance. Megalino et al. (1989) showed that workers were more satisfied and committed when their values were congruent with the values of their superior. Enz (1988) found that perceived value congruity between department mem- bers and top managers, examined from the perspectives of both groups, accounted for unique variance in departmental power. Kirkpatrick and Locke (1996) found in a laboratory experiment that articu- lation of a vision emphasizing quality by the leader positively affected the followers’ perceived congruence with the beliefs and values communicated through the vision.

Employee Group Development

Several models have explicitly considered leadership to be one determinant of team effectiveness. In addition, recent references to transformational and charismatic leadership have begun to emphasize the importance of group-level outcomes (Avolio 1999; Shamir et al. 1998). For example, Guzzo et al. (1993) suggest that transactional leadership might have indirect effects on group potency and effectiveness, whereas transformational leadership has both indirect and direct effects. Klein and House (1995) recently extended charismatic theory to the group level by conceiving groups as con- stellations of dyadic relationships. In their extension, groups and organizations vary along the di- mension of homogeneity or heterogeneity of group members’ charismatic relationships with the leader. Shamir (1990) suggests that leaders can enhance collectivistic motivation, that is, the individ- ual contributions to collective work efforts, through calculative considerations, the internalization of values and personal norms, or the maintenance and affirmation of relevant identities. In his self- concept theory, Shamir (1991) posits collectivistic orientation as an important transformational effect on followers of charismatic leaders. In spite of the emphasis on follower group development in recent frameworks of transformational leadership, very few empirical investigations have connected trans- formational and transactional leader behaviors and group-level outcomes. Sivasubramaniam et al. (1997, in Avolio 1999) found that transformational leadership directly predicted the performance of work groups while also predicting performance indirectly through levels of group potency. In a longitudinal laboratory experiment, Sosik et al. (1997) largely confirm that transformational leadership affected group potency and group effectiveness more strongly than transactional leadership. Shamir et al. (1998) confirm that the leaders’ emphasis on the collective identity of the unit was associated with the strength of the unit culture, as expressed in the existence of unique symbols and artifacts, and with unit viability as reflected by its discipline, morale, and cooperation. More research is needed on the effects of transformational leaders on follower group development.