Transformational leadership and Other Leadership Theories

This paper will refer to Bass (1985) as the most cited source for transformational leadership theory to discuss the relationship between transformational leadership with other theories.

Transformational Leadership theory

The essence of the transformational leadership theory (Bass, 1985) is the distinction between transformational and transactional leadership that were defined in terms of the component behaviors used to influence followers and the effect of the leader on follower. With transformational leadership, the followers feel trust, admiration, loyalty, and respect toward the leader, and they are motivated to do more than they originally expected to do. The following are the ways of leader to transform and motivate the followers.

• Making them more aware of the importance of task outcomes
• Inducing them to transcend their own self-interest for the sake of the organization or team
• Activating their higher order needs.

In his revised theory, Bass proposed four transformational behaviors as follows.

1. Idealized influence
2. Individualized consideration
3. Inspirational motivation
4. Intellectual stimulation (added in the revision)

The influence processes in transformational leadership theory are not clearly explained but inferred from the description. From those inferred information, we can concluded the following influence processes in transformational leadership.

• Internalization process is inferred in inspirational motivation because it includes the articulation of an appealing vision that relates task objectives to follower values and ideals
• Personal identification is inferred in idealized influence as this process results in attributions of charisma by followers to the leader (Bass argued that charisma is a necessary ingredient of transformational leadership, but by itself it is not sufficient to account for the transformational process).

In relation to the facilitating conditions, Bass argued that transformation leadership is effective in any situation or culture  The theory does not specify any conditions under which authentic transformational leadership is irrelevant or ineffective(Yukl 255). The criterion of leadership effectiveness has included a variety of different types of measures. The evidence supports the conclusion that in most if not all situations, some aspects of transformational leadership are relevant. Exception of situational condition: unstable environment, organic structure, entrepreneurial culture, boundary-spanning units over the technical core; increase the likelihood to be transformational.

            In term of employees needs, transformational leaders incorporate and amplify the impact of transactional leadership (Waldman, Bass, & Einstein, 1985). They recognize and exploit those employee higher-level needs that surpass immediate self interests. By appealing to these elevated needs, the transformational leader motivates employees to perform beyond initial performance goals and objectives (Bass, 1985)

            In term of manager-employee relationships relative to transactional, transformational manager-employee relationship would exhibits more stable influencing activity (greater satisfaction and more balanced).

Transformational and Trait-Based Universal Theories

Trait refers to people’s general characteristics, including capacities, motives, or patterns of behavior. Trait theories assert that leaders’ characteristics are different from nonleaders’. Ralph Stogdill (1948) identifies several categories of important leader traits: 

• Capacity (intelligence, alertness, verbal facility, originality, judgment)
•   Achievement (scholarship, knowledge, athletic accomplishments)
• Responsibility (dependability, initiative, persistence, aggressiveness, self confidence, desire to excel)
•   Participation ( activity, sociability, cooperation, adaptability, humor)
• Status (socioeconomic position, popularity)

            The relationship between trait-based universal theories and transformational leadership theory is the extent to which the two theories provide further insight into the leadership process (figure 1) through an expanded understanding of the leader. We know that traits alone are not sufficient for successful leadership but traits are important “preconditions” giving an individual the potential to be an effective leader.

Figure 1:

The role of Traits and Transformational Leadership Behavior in the Leadership Process

 

The relationship between the basic traits as general prerequisites and the four characteristics of transformational leadership (Bass, 1986) shows that both concepts are closely related as described below.

-          Idealized influence through leader’s charisma is a fundamental trait that is required in the transformational process. This trait could be the extension of the leader status or popularity.

-          Inspirational motivation relates to the capacity (intelligence, verbal facility), achievement (e.g. knowledge) and participation as prerequisite traits (e.g. cooperation, activity).

-          Individual consideration relates to the participation (e.g. sociability, cooperation) as required traits for transformational leaders.

-          Intellectual stimulation is clearly relates to the capacity (intelligence) and responsibility (initiative) traits.

In addition, Jennifer M. George (Pierce 82) suggests another important trait, called emotional intelligence. Emotional intelligence is “the ability to perceive emotions, to access and generate emotions so as to assist thought, to understand emotion and emotional knowledge, and to reflectively regulate emotions so as to promote emotional and intellectual growth (Mayer & Salovey, 1997). George argued that feelings (i.e., moods and emotions) play an important role in the leadership process. George suggests that the strength of the emotional intelligence as an important trait that affects leader effectiveness. The four major aspects of emotional intelligence include

• The appraisal and expression of emotion
• The use of emotion to enhance cognitive processes and decision making
• Knowledge about emotions
• Management of emotions

            In summary, transformational leadership theory has a close relation to the trait-based universal theories in term of traits as prerequisite capabilities that the leader should acquire to be transformational.   

  

Transformational leadership theory and “behavior-based” universal theories

As described above, transformational leadership theory specifically address four behaviors that characterized the transformational leader. So, it is clear that transformational leadership theory is the extension of the behavior based universal theory that known as Ohio and Michigan’s theories.

Both behavior-based and transformational leadership theories are important aspects that moderate the leader within the system of leadership process (Figure 2).

Figure 2

The Role of Transformational Leadership Behavior in the Leadership Proces

Transformational behavior is a specific behavior that is necessary for leaders to augment the impact of transactional leader behaviors on employee outcome variable because employee feel trust and respect toward the leader and they are motivated to do more than they are expected to do (Yukl, 1989). The term transformational has been broadly defined to include almost any type of effective leadership, regardless of the underlying influence processes. The label may refer to the transformation of individual followers or to the entire organization. All of studies about specific behaviors that associate with transformational  leadership, share the common perspective that effective leaders transform or change the basic values, beliefs, and attitudes of followers so that they are willing to perform beyond the minimum levels specified by the organization.

In general the empirical results have verified the impact of transformational leader behaviors on employee attitudes, effort, and “in-role” performance. For example: Bass (1985) reported that transformational leader behaviors are positively related to employees’ satisfaction, self-reported effort, and job performance.

Graham (1988) noted further that the most important effects of transformational leaders should be on extra role performance, rather than in-role performance. Podsakoff and MacKenzie, Moorman, and Fetter (1990) indicated that the effects of these leader behaviors on organizational citizenship (example of extra role) are indirect rather than direct. They are mediated by follower’s satisfaction and trust in their leader. They found that trust influenced OCB, but employee satisfaction did not.

            The four dimension of leader behavior of Bowers, 1964 (support, interaction facilitation, goal emphasis, and work facilitation) will be used to examine the relationship with the six key behaviors associated with transformational leaders (Pierce 373) below.

1.      Identifying and articulating a vision. Part of this behavior (aimed at identifying new opportunities) was not identified in Bowers dimensions, but some other part including developing, articulating, and inspiring others relate to the dimension of interaction facilitation (with the absence of vision that had not been recognized at that time)

2.      Providing an appropriate model. Bowers was not explicitly identified this behavior but we can classify it as the characteristic of interaction facilitation and support dimensions.

3.      Fostering the acceptance of group goals. This behavior relates to the goal emphasis dimension with emphasis on within group cooperation.

4.      High performance expectations. This behavior relates to the interaction facilitation with emphasis on high employees’ performance expectations.

5.      Providing individualized support. This behavior has a similar meaning with support dimension and somewhat implied in work facilitation.

6.      Intellectual stimulation. Although Bowers did not specify this behavior, but it could be implied in support dimension.

            In addition, transformational leadership theory emphasizes the importance of emotional reactions by followers to leaders, whereas the earlier theories emphasized rational-calculative aspects of leader-follower interaction. The new theories also acknowledge the importance of symbolic behavior and the role of the leader in making events meaningful for followers. The earlier did not recognize that symbolic processes and management of meaning are as important as management of things.

As a summary, we conclude that the transformational leadership is the extension of the behavior based universal theory with emphasis to the particular behavior that results in extra role performance (e.g. organizational citizenship behavior). 

Navigating the Badland through Human Touch

I  Introduction

1.1.      Company Overview

            PLN is the only vertically integrated state-owned utility company and the sole distributor of electricity in Indonesia with the following characteristics:

-        Wholly-owned by Republic of Indonesia, represented by the Ministry of State-Owned Enterprises (MSOE).

-        Also regulated by Ministry of Energy and Mineral Resources (MEMR) and finances monitored by the Ministry of Finance (MoF)

-        Holder of the Electricity Business Proxy vested by legislation

-        Largest electricity producer with generation capacity of about 22,725 MW, or about 80% generation capacity market share

-        Sole provider of transmission and distribution (T&D) of electricity

-        Employs around 50 thousands people

-        Serves around 34 million customers over 1,100 systems all over Indonesia

1.2.      The Crisis that Change PLN

            PLN is a growing company but the economical crisis that hit the country in 1998 had challenged PT PLN to the biggest ever financial deficit. At that time, the corporate restructuring program was the only solution that was left to the company to survive. .In early year of 2000, PT PLN top management awarded the headquarters reorganization to remove bureaucracy toward the team-based through the cultural approach. The new structure was expected could improve customer service and operational efficiency, decision speed and quality, and interpersonal communication. It will also motivate the employees the chances to improve creativity and innovation that for decades could not be expressed due to the centralized and autocratic system.

Figure 1: PLN Headquarters Structure Before Restructuring

 

As illustrated in Figure 1, the old structure had five layers of line managers consisted of more than 400 positions. Consequently, all managers wanted to gain power, resulted in a lot of redundant tasks and too much paper-work and unnecessary but time consuming reporting requests. Many clerical employees were needed to support the managers.

The old Structures was characterized by machine Bureaucracy:  highly specialized, routine operating tasks; very formalized procedures in the operating core; a proliferation of rule, regulations, and formalized communication throughout the organization; large-sized units at the operating level; reliance on the functional basis for grouping tasks; relatively centralized power for decision making; and an elaborate administrative structure with a sharp distinction between line and staff. 

Employees were restricted to the functional borders between divisions resulted in unbalance job load. Self creativity was discouraged and teamwork was weak due to the poor communication between function. Manager involved in all operations; on the other hand, specialists focus on individual contribution rather that working as a team. The role of the headquarters as strategic apex contradicted with the role of the business units as operating core, because the headquarters controlled all and conducted some operational activities. As a result, frequent delay in headquarters’ decisions made the front line unit frustrated and worsens the quality of customer services.  PLN had large employees but they were poorly selected and trained, too many administrators not enough technicians, too many senior not enough fresh employees. PLN was over-regulated by government and by itself, resulting in a lack of innovations and inflexibility of decisions.

II.  Cultural Approach to Manage the Change

2.1.      Cultural Dimension of Indonesia

According to Hofstede (1970), Indonesia is a high power distance society and characterized by a strong paternalistic behavior. Therefore, a role of a strong leader who has interpersonal capability and credibility was important to conduct the change that was conducted by relocating about 700 headquarters employees from headquarters to the front line units.

The second cultural dimension of Indonesia is collective society. In order to success, the change must be run through a consensus among the related parties. In case of the relocation process, both the formal and informal leaders in front-line units and the related supervisors in headquarters should be involved in the relocation process.

The third dimension of Indonesian culture is medium uncertainty avoidance. People do not against the change if they see others’ success. So, the management selected the volunteer from those who had a high readiness for change. They were trained and supported to become the change agent that could promote the benefit of relocation

The fourth dimension is that Indonesia is a moderate masculine society. They like an assertive action and they count performance. The role of men is still dominant and money is considered important. So, the management announced that all managers should work toward the program with certain deadline. Compensation and reward for those who actively involved in this program was given.

2.2.      Cultural aspect in PLN change policies

The change focus should be on corporate restructuring with two options of gradual or radical. Eventually, the radical change from the giant pyramid to the pure team based was chosen because the leader thought that the momentum would be lost as soon as the crisis gone. The bureaucratic behavior would come back and the resistance to change would be stronger if the change was only gradual.

Some fundamental change policies are to flatten the pyramid of PLN HQ to be a team-based; to reduce headquarters employees, to delegate operational activities to the unit businesses, and to reassess and renew and core operations managers. During the transition period, the Headquarters organization was run by a pure team-based organization as shown below in Figure 2.

Figure 2: The Team Based Structure during the Transition Period

The intervention was done by bottom up approach, began with diagnosing the existing corporate culture and compelling employees about the benefit of new and required corporate culture. Finally, the consensus of a new vision, mission, and value of the company were attained as follows:

Driven by the new electricity regulation that promoted electricity market competition, the following hybrid organization between simple bureaucracy and team-based structure was then accepted by all parties concerned including employees, management, and the board of commissioners. The final structure that was accepted by stakeholders is shown in Figure. 

Figure 3: PLN Structure Post Restructuring

 

The new team based organization was expected to facilitate the self-created task based on the team goal. So, individual and group innovation and creativity can be encouraged. Employees might work cross functionally in a borderless environment, so, the job load could be kept balanced. Interpersonal and inter-group communication and teamwork was arisen. The managers will be characterized by transformational leader who delegate and provide resources while specialists share their knowledge to other individuals or teams.

            The caveat for the management was that there should always be a tendency to bring back the power to the central office for the sake of personal interest. It might come from the nature of bureaucratic behavior that might be come back and tempting the core group of PLN.  Some critical tasks were to change the human resources mindset at all levels in the organization and setting up a new management principle called competency based human resources (CBHRM).