1.1 Transformational leadership is defined as a leadership approach that causes a change in individuals as well as social systems. In its ideal form, it creates value as well as a positive change in the followers with the end goal of developing followers into leaders (Antonakis, House,2014). Enacted in its authentic form, transformational leadership enhances the motivation, morale as well as the performance of followers through a variety of mechanisms. These include connecting the follower’s sense of identity as well as self to the mission as well as the collective identity of the organization; being a role model for followers that inspires them; challenging followers to take greater ownership for their work, as well as understanding the strengths as well as weaknesses of followers, so the leader can align followers with tasks that optimize their performance (Burns 1978, Andersen, 2015) James MacGregor Burns (1978), first gave the concept of transforming leadership in his descriptive research upon political leaders, but this term is now utilized in organizational psychology as well. According to Burns, transforming leadership is a process in which “leaders, as well as followers, help each other to advance to a higher level of morale as well as motivation”. Burns related to the difficulty in differentiation amongst management as well as leadership as well as claimed that the differences are in characteristics as well as behaviours. He established two concepts: “transforming leadership” as well as “transactional leadership”. According to Burns, the transforming approach creates significant change in the life of people as well as organizations. It redesigns perceptions as well as values, as well as changes expectations as well as the aspirations of employees. Unlike in the transactional approach, it is not based upon a “give as well as take” relationship, but upon the leader’s personality, traits as well as the ability to make a change through example, articulation of an energizing vision as well as challenging goals. Transforming leaders are idealized in the sense that they are a moral exemplar of working towards the benefit of the team, organization and/or community. Burnstheorized that transforming as well as transactional leadership was mutually exclusive styles. Transactional leaders usually do not strive for cultural change in the organization but they work in the existing culture while transformational leaders can try to change organizational culture.
Another researcher, Bernard M. Bass (1985), extended the work of Burns (1978) by explaining the psychological mechanisms that underlie transforming as well as transactional leadership; Bass also utilized the term “transformational” instead of “transforming.” Bass added to the initial concepts of Burns (1978) to help explain how transformational leadership could be measured, as well as how it impacts follower motivation as well as performance. The extent, to which a leader is transformational, is measured first, in terms of his influence upon the followers. The followers of such a leader feel trust, admiration, loyalty as well as respect for the leader as well as because of the qualities of the transformational leader are willing to work harder than originally expected. These outcomes occur because the transformational leader offers followers something more than just working for self-gain; they provide followers with an inspiring mission as well as vision as well as give them an identity. The leader transforms as well as motivates followers through his or her idealized influence (earlier referred to as
charisma), intellectual stimulation as well as individual consideration. In addition, this leader encourages followers to come up with new as well as unique ways to challenge the status quo as well as to alter the environment to support being successful. Finally, in contrast to Burns, Bass suggested that leadership can simultaneously display both transformational as well as transactional leadership. Now 30 years of research, as well as a number of meta-analyses, have shown that transformational, as well as transactional leadership, positively predicts a wide variety of performance outcomes including individual, group as well as organizational level variables (Bass.2008).
It probably happens to be the most positive type of leadership style. If followed as well as adhered to appropriately this style of leadership can have a very positive as well as inspirational effect upon an individual or any firm. Due to this positivity of this form we feel that this would be the most powerful as well as effective style of leadership for a SME. Transformational leadership is a kind of leadership style that brings about positive changes in all those who follow such a leader, a transformational leader. Transformational leaders are usually active, full of zeal as well as passionate. Apart from being focused as well as directed, these leaders are concerned as well as involved in the process of development; they are also focused to assist every member of the group excel in whatever they do.
The leader in this form of leadership is responsible to identify the required change, create a vision to guide, bring about a change through inspiration as well as execute this change in association with committed members in the group (Menon, M. E. 2015). The leaders here aspire to motivate, boost the morale of the group members, inspire an increase in the job performance through various vehicles and be a role model for the group as well as to challenge the members to take up greater responsibilities.
The idea of transformational leadership was first brought in by a leadership expert as well as presidential biographer James MacGregor Burns. According to Burns, Transformational Leadership can be viewed as well as felt when “leaders as well as followers make each other to advance to a higher level of moral as well as motivation.” Through the forte of their visualization as well as persona, transformational leaders are able to inspire followers to change outlooks, insights as well as motivate them to work towards common goals (Menon, M. E. 2015). This common goal is the completion of the task to increase the turnover of the firm.
At a later stage, Bernard M. Bass expanded Burns’ original ideas. These ideas were developed by Bass to what is today referred to as Bass’ Transformational Leadership Theory. According to Bass, transformational leadership can be defined based upon the impact that it has upon its followers/members. Transformational leaders, Bass suggested, bring in trust, respect as well as admiration from their followers/members of the group.
Transformational leaders allow employees to think creatively, analyse their problems from numerous angles and explore new and better solutions for problems by using technology (Sosik et al., 1998; Schepers et al., 2005; Gumusluoglu and IIsev, 2009). Earlier, research on transformational leadership has demonstrated a significant relationship between transformational leadership and subordinates’ performance and commitment (Masi and Cooke, 2000; Sparks and Schenk, 2001; Goodwin et a/., 2001). Dubinsky et al. (1995) found that a transformational leadership style used by managers led to employees being more committed, more satisfied and less stressed. Gill et a/. (2006) claimed that organizations can reduce job stress and burnout by applying transformational leadership. Thus, transformational leadership was found to be related to increased organizational performance (Boerner et al.,2007); increased employee motivation (Bono and Judge, 2003); and greater employee commitment, loyalty, and satisfaction (Bass and Riggio, 2006).
1.2. Components of Transformational Leadership
During the primary stages of inception, the transformational style of leadership is built of three components mainly. These components are:
- Idealized influence
- Inspirational motivation
- Intellectual stimulation
- Individual consideration.
On the other hand, more recent factor analyses proposed that the factor “charisma”, what subsequently has been called an Idealized Influence, had been detached with the charismatic- inspiration as well as Inspirational Motivation too. Due to these separations, four components had been introduced that are known today as the 4I’s. Apart from this, the very first component, which is known as “idealized influence” has also been sub-divided into the attribute as well as behaviour in order to form the five components, which could be measured utilizing the
Multifactor questionnaire of leadership (Bass 2006).
This means the leader contributes to the vision and mission; inspires pride; develops trust and respect among employees. The leaders motivate the workers with the idea that they can achieve great things by with some more effort.
A transformational leader practices inspirational motivation, encourage his/her subordinates in generating the enthusiasm as well as by challenging the individuals too. Such leaders create a clear understanding of the expectations as well as demonstrate higher commitment towards the organizational goals, in addition to a shared vision (Stewart 2006). The transformational leaders function in such a manner that motivates as well as inspires individuals in as well as around them through the facilitation of meaning as well as a challenge towards the work of their followers. “Team spirit gets stimulated. Leaders get their followers involved within the conceptualization of attractive future course of action; they create such expectations that are communicated in a clear way as well as the followers aspire to meet as well as demonstrate the commitment towards goals including their shared vision” (Bass 2006).
The primary indicators of the inspirational motivation happen to be the setting of the organizational vision, communication of such vision, challenging the workers, providing continuous encouragement as well as the application of the principles concerning the shared power (Sarros 2001).
1.2.3. Intellectual Stimulation
Innovation, as well as creativity, forms the core of the intellectual stimulation. The leaders motivating creativity as well as challenging the old methods of doing being a part of the regular job have been found to exercising the intellectually stimulated part of the transformational leadership. Such leaders develop a similar kind of skill in their subordinates. “Leaders, who are intellectually stimulating, work through the difficulties, in the meantime utilizing their techniques for deriving solutions to problems in order to reach such decisions that demonstrate a mutual consensus amongst the leaders as well as employees” (Sarros 2001).
(Ahanger 2009), in his recent study proposed that those transformational leaders who utilize the intellectual simulation are very much capable of challenging the present conditions as well as stimulate the effort of their followers, thereby leading them to become innovative. Followers, henceforth become positively encouraged for trying new approaches. In due course, ideas of the followers are also welcomed in the events of reflecting different stands. As a consequence, along with this two-way communication, a bottoms-up kind of influence is generated. Both the leaders as well as followers cultivate their own abilities for recognizing, understanding as well as eventually solving the problems in the future.
For citation use this reference:
- Mampra, M. J. (2017). The Effect of Transformational and Transactional Leadership Styles on the Financial Performance of an Organisation. Alliance University. Retrieved from: http://hdl.handle.net/10603/202191