Chapter 2 LITERATURE REVIEW
2.2 Leadership style
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2.2.1 Transformational leadership style
The concept of transformational leadership was introduced by leadership expert and presidential biographer James Mac Gregor Burns in 1978. Then, Bass & Avolio (1985) developed the theory.
According to Burns (1978), transformational leadership can be seen when "leaders and followers make each other to advance to a higher level of moral and motivation". Through the strength of their vision and personality, transformational leaders are able to inspire followers to change expectations, perceptions, and motivations to work towards common goals.
According to Bass (1985), transformational leadership can be defined based on the impact that it has on followers. Transformational leaders, he suggested garner trust, respect, and admiration from their followers. They are generally energetic, enthusiastic, and passionate transformational leadership behaviors have been found to motivate followers to transcend their own personal interests in favor of the organization. The leader who recognizes the transactional needs in potential followers “but tends to go further, seeking to arouse and satisfy higher needs, to engage the full person of the follower … to a higher level of need according to Maslow’s hierarchy of needs”.
Afterward, Sullivan & Decker (2001) define transformational leadership as a leadership style focused on effecting revolutionary change in organizations through a commitment to the organization’s vision. Subsequently, according to Smith & collegues (2004), transformational leadership was defined as a process of mutual exchange between leaders and followers involving reward-based transactions. It is a model that encourages leaders to raise one another to higher levels of motivation and morality (Kouzes & Posner, 2002). Avolio, Bass & Jung, (1999 ) have shown that transformational leadership is positively associated with important work-related attitudes and behaviors, such as job performance, fewer turnover intentions, job satisfaction, employee commitment, etc. Bass & Avolio (1994) also suggested that there were four different components of transformational leadership: Idealized influence, Individualized consideration, Inspirational motivation, Intellectual stimulation.
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Idealized influence emphasizes that the transformational leader serve as a role model for or her ideals. Simultaneously, it also emphasizes the importance of having a collective sense of mission (Bass, 1985). Leaders are the role models who take the initiative, understand, and have the determination in completing tasks (Tales, 2010).
Individualized consideration encourages and supports to building from the relationship between employee and employer such as a mentor or coach in the process of teaching and sharing ideas or knowledge (Tales, 2010). In other words, the leader builds a one-to-one relationship with his or her followers, and understands and considers their differing needs, skills, and aspirations.
By inspirational motivation, transformational leaders have a clear vision, meaning of task and a challenging task are being given by the leader to the employee; shows the followers how to achieve the goals, and expresses his or her belief that they can do it (Tales, 2010).
By intellectual stimulation, transformational leaders not only challenge the status quo;
they also encourage creativity among followers (Bass & Avolio, 1994). The leader encourages followers to explore new ways of doing things and new opportunities to learn. The leader broadens and elevates the interests of his or her employees (Bass, 1990) and stimulates followers to think about old problems in new ways (Bass, 1985). There are four methods of intellectual stimulation have been identified: Leaders can rationally try to convince workers to solve problems; existential leaders identify many possible solutions to a problem; an acceptable solution is developed by appropriately combining elements from the various possibilities; leaders might use empirical data gathered from other sources to identify a solution; idealist leaders can use intuition with a minimal amount of data to identify solutions problems (Barnes, 2007).
2.2.2 Transactional leadership style
The transactional leadership style was first described by Max Weber in 1947, and again by Bernard M. Bass in 1981. According to Bass (1981), transactional leaders are on the opposite
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theory spectrum relative to transformational leaders. Burns (1978) defined the transactional leadership style that comprises motivation and directing to achieving followers self-interest through rewards and punishment for the exchange. This leadership style is very useful when the organization is in a stable position and the learning objectives aim to refine and restore balance (Bucic, 2010).
Currently, Joe (2012) suggests that the focal points of transactional leadership include:
The nurse leader has complete authority over the staff; employees must comply and follow directives; rewards include compensation in the form of paychecks; punishments include progressive discipline, including termination.
A transactional leader could increase the employees’ performance especially when employees’ performances are being measured quantitatively and reward or punishments are being given fairly (Joe, 2012). The transactional leadership style is very useful when the organization is in a stable position and the learning objectives aim to refine and restore balance (Bucic, 2010).
Tale (2010) also indicated that there are three dimensions of transactional leadership: Contingent rewards, Active management-by-exception and management-by-exception or laissez-faire.
By contingent rewards, employees are being promised to gain something from completing a task. Its forms include benefits, praise, and recommendations (Tale, 2010). Benefits can take several forms such as pay increases, better assignments, a more desirable schedule, or additional time off. To be effective, praise must be based on work well done. Recommendations might take many forms, including additional pay, job advancements, and bonuses. Recommendations can take the form of recognition for outstanding job performance (Judge & Piccolo, 2004).
Active management-by-exception is where leaders examine and monitor for any error or mistakes happen and apply for corrective action once the problems happen (Tale, 2010).
According to Judge & Piccolo (2004), “in general, management by exception is the degree to which the leader takes corrective action on the basis of results of leader – follower transaction”.
Workers are informed of these deviations, and punishments can be implemented.
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Finally, in passive management-by-exception and laissez-faire, leader takes action only when mistakes happen (Tale, 2010). Judge & Piccolo (2004) also stated that, passive leaders wait until the behavior has created a problem before taking action.