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Master thesis

The Impact of Leadership Behaviour

on Performance

During Different Stages of Dramatic Change

A case study during the energy transition

MSc. Business Administration – Strategy Track

Student contact information Supervisor Amsterdam Business School Emile Ripke dr. ir. J. Kraaijenbrink

UvA Student #11206047 Adjunct Associate Professor

Contact though emile@ripke.net Executive Master in Business Administration Submission date 31-08-2018 Business School Amsterdam

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Statement of Originality

This document is written by Emile Ripke who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

This study, comparing transformational, transactional, and laissez-faire leadership styles, found that follower behaviour differences during change are linked to leadership styles and different stages during dramatic change of the organisational structure. From the first stage of change, leaders performing transformational leadership have the overall best scoring follower behaviour, compared to transactional or laissez-faire. This effect is reported repeatedly in existing literature on leadership behaviour. Academic literature also describe a notable negative impact of dramatic change on follower behaviour, meaning follower behaviour scores decline as a result of change. Questionable is how follower behaviour is influenced during change.

To answer this question, the outcome of 500 employee surveys were analysed and compared with leadership surveys of 14 team leads and managers. Within these 12 months two events took place: the announcement of a reorganisation and the reorganisation itself, dividing the period over time in the unfreeze-transition-refreeze stages.

The major finding concerns the direction in which variation of follower behaviour develops during the different stages of changes. In this research there is a net decline in follower behaviour for leaders performing transformational leadership. But for leaders performing a transactional leadership there is a net growth in follower behaviour after all stages of change have passed.

Not only does this new information to the known impact of leadership styles on follower behaviour during change; team leads and managers can make beneficial use of this information. Leaders and managers who know their leadership style can predict their follower’s behaviour during and after change. Leaders performing transactional leadership can expect declines in employee behaviour, which eventually meet previous scores after all stages of change.

Further studies are advised to explain the difference in direction of follower behaviour, and the influence of transformational and transactional leadership styles.

Keywords: transformational leadership, leadership behaviour, follower behaviour, dramatic change, stages of change, MLQ, survey, nps, enps, engagement, satisfaction.

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Index

Statement of Originality 1

Abstract 2

1. Introduction 5

1.1 Background 5

1.2 Academic and Managerial Relevance 5

1.3 Scope 6

1.4 Structure of this thesis 7

2. Literature review 8

2.1 Performance 8

2.2 Change 9

2.3 Leadership and Follower Behaviour 11

3. Methods 17

3.1 Ontological motivation of research design 17

3.2 Data collection 18

4. Results 21

Leader questionnaire 21

4.1 Employee survey 22

5. Discussion 27

5.1 Follower behaviour by leadership style 27

5.2 Academic implications 30 5.4 Managerial implications 30 5.5 Impediments on validity 31 5.5 Conclusion 32 Acknowledgements 33 References 34 Appendix 38

Appendix A - Employee survey 38

Appendix B - Multifactor Leadership Questionnaire 39

Appendix C - Semi structured interview - Leader 40

Appendix D - Mind garden licence 41

Appendix E - Additional results 42

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Table of figures

Table 2.1: Definitions of Transformational, Transactional, and Laissez-Faire Leadership styles in the MLQ-5x

Figure 1.1: General relations between subjects Figure 2.1: Premises from literature

Figure 2.2: Conceptual model

Figure 3.1: Timeline of events in different stages during change Figure 4.1: Boxplot Leadership styles

Figure 4.2: Boxplots Followers April 2017 Figure 4.3: Boxplots Followers July 2017 Figure 4.4: Boxplots Followers Dec 2017 Figure 4.5: Boxplots Followers May 2018

Figure 4.6: Follower behaviour (eNPS) during various periods during the rhythm of change, divided by leadership style

Figure 4.7: Follower behaviour (Satisfaction) during various periods during the rhythm of change, divided by leadership style

Figure 4.8: Follower behaviour (Engagement) during various periods during the rhythm of change, divided by leadership style

Figure 4.9: Follower behaviour (eNPS) during various periods during the rhythm of change, showing average of all included versus excluded leaders

Figure 4.10: Follower behaviour (eNPS) during various periods during the rhythm of change, by leadership styles and averages

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1. Introduction

1.1 Background

Announcing a reorganisation in an organisation can be seen as the start of organisational change. This brings a direct end to the current status and announces a new future which is unclear and uncertain. Uncertainty has negative influences on

followers, with a direct impact on job satisfaction and strain (Bordia, Hunt, Paulsen,Tourish, & DiFonzo, 2004). How followers behave can be influenced by behaviour of leaders within the organisation, by displaying aspects of Transformational Leadership Behaviour (TLB), during different stages of change. This behaviour and its impact has been researched intensively (Bass, 1990; Boerner, Eisenbeiss, & Griesser, 2007; Bommer, Rich, & Rubin, 2005; Karp & Helgø, 2008; Wan, Law, Hacke, Wang, & Chen, 2005) and has proven to reduce experienced uncertainty for the future (Bommer et al., 2005) and increase performance (Boerner et al., 2007).

1.2 Academic and Managerial Relevance

While many academics researched TLB, performance, and employee behaviour, less is known about the the effect over time. Kernan and Hanges (2002) describe effects of change on followers after change passed. This study on follower behaviour during change is academic relevant because it takes time during change and the influence of leadership behaviour into account. This study within N.V. Nuon is socially relevant since the energy transition is one of the fundamental long-term changes in energy production of the 21st century, triggering the social awareness of consumption and costs. The energy transition is one example of the organisations’ continuous need to change in order to adapt to their environment (Burns & Stalker. 1961; Morgan, 2006). Results of this thesis will hold practical behaviours based on grounded theory, which managers and team leads can use in their challenging role as leaders in an ever changing environment.

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The proposition is that leaders performing TLB, during dramatic change, influence employee behaviour, which influences performance. Less is known about these interactions and variances over time. Therefore, I propose the following research question:

What Attributes of Leadership Behaviour Affect the Firm Performance through Employee Behaviour, During Dramatic Change?

1.3 Scope

To be able to answer the research question, I will conduct surveys within one organisation. One organisation specifically, N.V. Nuon (N.V. Nuon, 2018 May 30). Nuon is an energy company active in the Netherlands and part of the Swedish energy company Vattenfall. A brief overview of Nuon’s history (N.V. Nuon, 2013 November 30) explains why this organisation is interesting and why it is subjected to multiple environmental changes forcing the organisation to adapt (Morgan, 2006). The organisation Nuon was created in 1995 in a continuous sequence of mergers between public utility services. Nuon grew larger in organisational size until the liberalisation of the energy market in 2004, and was acquired by Vattenfall in 2009. One decade after the introduction of competition, management vocals a dramatic change in the energy market (N.V. Nuon, 2015 July 1), growing social awareness of responsible energy consumption and the signing of the Paris agreement in 2016 lead to a decreasing customer portfolio and decreasing economic profits (N.V. Nuon. 2018, March 28). These effects are perfectly explainable by the assumptions of perfect competition, e.g.: Energy is perfectly mobile, Free entry or exit since power can be sold without owning power plants; Increasing number of sellers due to market liberalisation; Large number of buyers. But surprisingly, these effects where most noticeable within the smaller (Large number assumption) and more complex (Product homogeneity assumption) Business-to-Business (BtB) market, in comparison to the larger Business-to-Consumer (BtC) market with more generic products. Pushed by Vattenfall to remain profitable and show sustainable growth (N.V. Nuon, 2018 March 28), Nuon BtB needed to change; by means of operational cost cutting. As a result, the management of Nuon BtB announced a reorganisation in June 2017, by means of changes in the organisational structure and reducing the size (employee workforce) of the organisation (business area Nuon BtB) by thirty per cent, starting May

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2018. This announced change and its timing make Nuon BtB an interesting subject for answering this thesis’ research question.

My employment within Nuon BtB, where I am working on tactical and operational improvements, places limited restrictions on people and information regarding this subject.

1.4 Structure of this thesis

This thesis begins with a literature review highlighting theory about performance, change and behaviour. Different studies show relations between these concepts. These theoretical relations are stated as a premise, at the end of each paragraph, and will help to build the conceptual model. The next chapter will explain the methods, materials, procedure, and analytical methods used to conduct the surveys and perform the analysis. The following chapter is an objective report of the results from processed data. The chapter containing the discussion will go into the understanding of the results, and connecting these results to the literature.

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2. Literature review

This chapter will highlight the theory about performance and the influences on performance. This will continue on literature about the different concepts concerning change within the organisation. These paragraphs end with hypotheses, on the influence of change within the organisation and the influence of TLB on performance. The last part will focus on the research gap, which concerns how these combined effects vary in performance.

2.1 Performance

Performance is a popular topic, which has been studied extensively by academics (Boerner et al., 2007). Measuring and managing performance can be viewed from different perspectives, often linked to one’s professional function within the organisation. An engineer, controller, HR-manager or vice president would respectively have the perspective of system, process, financial, employee and organisational performance. This study will focus on the last two subjects, since these are often connected to researches concerning Transformational Leadership Behaviour (TLB is explained in the upcoming paragraph). Performance - job or company - can be measured by multiple outcomes: Finance- related like profit or market share, organisation- related like productivity or quality, and HR -related like attitudinal and behavioural factors such as satisfaction, commitment and engagement (Dyer et al., 1995). This study will focus on the last mentioned, HR-related outcomes. Another populair measurement to measure performance from an HR perspective is the Net Promoter Score (NPS). The NPS is a scoring method executed by the end user, which can be external agents (clients) and internal agents (employees). The NPS is seen as a predictor for customer loyalty and, ultimately, organisational growth [Premise X1] (Reichheld, 2003). Respondents can answer the question ´How likely is it that you would recommend our company/product/service to a friend or colleague?´ with a score from zero to ten. The scores nine and ten represent the promoters who are likely to be loyal, returning customers and who will enable other buyers. On the other side of the spectrum are scores from zero to six, which stand for the detractors. Those insights are of strategic essence to Nuon (N.V Nuon, 2018 May 30).

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Another way to measure organisational performance is through engagement. Engagement is the level of satisfaction with employment or loyalty to the employer, and the willingness to put in an effort to help the employer succeed (Macey & Schneider, 2008). According to Harter, Schmidt and Hayes (2002) engagement is the level of commitment the follower shows to their work. The commitment and effort put in the work and goals of the work give the organisation a competitive advantage.

This definition assumes a relation with performance of the organisation. Rich, Lepine and Crawford (2010) repeat the assumption of the relationship between employee engagement and competitive advantages of the organisation. In their research Rich et al. (2010) provide a link between job engagement towards task performance [Premise X2] (.25). Harter et al. (2002) add the meaningful impact of satisfaction [Premise X3] on performance outcomes. But the link between performance and engagement proves to be twice as strong as job satisfaction [Premise X2] (resp. .14 & .15). Macey and Schneider (2008) divides employee engagement over trait state and behaviour, which but the first are positively influenced by TLB [Premise 1]: Performance is related to engagement, and have influence on profitability through higher production, sales and satisfaction [Premise 2] (Macey & Schneider, 2008). Engagement is measured through surveys in which employees evaluating their selfs physically, cognitively and emotionally, in varying degrees (Kahn, 1990). One of these surveys is the Gallup Workplace Audit (GWA).

Premise 1: Employee engagement related to TLB (Macey & Schneider., 2008) Premise 2: Employee satisfaction related to TLB (Macey & Schneider, 2008)

Premise X2: Engagement related to firm performance (Rich et al., 2010; Harter et al.,2002) Premise X3: Satisfaction related to firm performance (Rich et al., 2010; Harter et al.,2002)

2.2 Change

The word “reorganisation” is commonly used when people talk about change in the organisational structure. Change in the organisational structure may be divided in the determinants: strategy, size, technology, environment and power-control (Robbins & Barnwell, 2002). The necessity of organisational change originates from the notion of

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continuous interaction between the organisation and its environment. Similar to an organism, in order to survive, the organisation must adapt to changes in the environment (Morgan, 2006). To understand what change is and to be able to analyse change, some aspects of change must be identified differently, namely stage and rhythm. Lewin (1955) sets three stages that can be identified during change (of the organisational structure) unfreeze-change-refreeze. Dunphy and Stace (1988) challenge this model for organisational development and set two mutually exclusive types of change which are different in respect of the setting in which the change happens; it is either incremental or transformational. Incremental change is used when there is enough time for planning upfront and for execution in small steps. Transformational change is more common when time for planning is scarce and execution is forced upon the organisation due to large environmental mismatches.

Weick and Quinn (1999) later identify this as the rhythm of change, which can be continuous and episodic. Continuous change is an endless series of small modifications. This continuous process is embedded within the culture of the organisation. Episodic change is not embedded within the culture but forced from the environment when the organisation is no longer able to adapt. This interruption is a punctuation of an equilibrium leading to a change in organisational strategy; it is often big and it is usually revolutionary.

Weick and Quinn (1999) incorporate Lewin’s model and state that the divisions in three stages are alike while the rhythm may differ. These stages are freeze-rebalance-unfreeze for continuous change and unfreeze-transition-refreeze for episodic change.

The rhythm in which the organisational changes occur as explained by Weick and Quinn (1999) is further developed by Huy and Mintzberg. (2003) According to Huy and Mintzberg (2003), change can be organic, systematic or dramatic. These differences give more nuances in the rhythm and the actors steering the change. Organic change is often driven bottom-up by employees (followers) and constitutes small changes. Systematic change is formalized within the organisation and driven by specialists who continually make improvements as part of their job. Dramatic change is driven by a formal leader who aims for restructuring and a new situation. Organisations need all three forms of organisational change to work together, for a successful adaptation of behaviour and performance to the environment. This change affects performance within the organisation through its leaders and followers.

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2.3 Leadership and Follower Behaviour

Leadership behaviour: Styles of Leadership

Leaders show behaviour that can be described in different styles. Burns (1978) developed two styles of leadership in his book Leadership. Burns follows an agency theory approach with two mutually exclusive leadership styles, transactional and transformational. Bass (1985) applied these ideas about leadership to organisational management. Instead of an agency approach, Bass is following an organisational psychology approach, in which the leadership styles are complementary. From this approach the non-directive (Laissez-Faire) leadership style was added to the leadership styles. Both Burns’ (1978) and Bass’ (1985) transactional and transformational leadership styles were developed based on the actions leaders perform and the impact those actions have on their followers. These three leadership styles formed the basis for many studies about leadership in organisational management.

Transactional (“promise and reward for good performance”) leadership focuses on the transaction or exchange between leader and follower, motivating the follower to meet the leader’s goals beneficial to his self-interest (Bass, 1999). Transformational leadership focuses on inspiration and intellectual stimulation elevating beyond the self-interest from the leader, maturing its followers in doing so. Leaders performing transformational leadership enhance commitment, involvement, loyalty and performance of followers (Bass, 1999). Laissez-faire (French for “Leave it alone”) leadership focuses on the lacking of leadership, due to absence of interaction between the leader and follower. Leaders give complete freedom and power, but provide little guidance to their followers. Followers are expected to solve problems on their own. There is much focus on the downsides of this leadership style, because it it linked to low job performance and negative outcomes. Laissez-faire can be seen as beneficial to followers who can utilize given freedom and power because they are highly skilled, motivated and capable, which could lead to thriving satisfaction and engagement.

To measure these three leadership styles Avolio and Bass (2004) developed and validated the Multifactor Leadership Questionnaire (MLQ). This tool distributes the range of leadership over three styles and five dimensions, as shown in table 2.1. It implies that transactional, transformational and laissez-faire are styles every leader displays, at various levels. Leaders that are more transformational and less transactional are more effective and more satisfying to their followers (Avolio & Bass, 1991).

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Table 2.1: Definitions of Transformational, Transactional, and Laissez-Faire Leadership styles in the MLQ-5X

Other theories like Lewin’s (1930) leadership styles using autocratic and democratic leadership form a different framework to explain leaderships behaviour and its effect on followers. But since the three leadership styles used in the MLQ (Bass, 1999) are more popular in theories about follower behaviour, this thesis will focus on these leadership styles.

Follower behaviour

Changes, especially reorganisations with layoffs, have an impact on the legal contract defining the exchange between employer (contractually, the leader and employer can be a different person) and employee. Next to a legal contract stating the exchange and boundaries of employment and salary, followers have a perception of what they owe to their employers and what their employers owe to them. This unwritten expectation of exchanges is the psychological contract. Unexpected changes leading to unmet expectations can cause the psychological contract breach. This breach leads to a reduction of trust and contributions to the organisation (Robinson, 1996).

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For employees, change can feel unjust, which they experience on different levels. This can be procedural, interpersonal, and informational justice, which are influencers of employee reactions towards reorganisations. These emotional reactions during reorganisations have an effect on employees and their performance. These effects can be seen directly in the present with current employees and on the long term, long after dramatic change. Kernan and Hanges (2002) refers to this long- term effect as survivor reactions. Amongst other feelings experienced by employees is job insecurity. Job insecurity is negatively linked to performance (Ashford Lee, & Bobko, 1989; Bommer et al., 2005; Bordia et al., 2004; Dent & Goldberg, 1999; Kernan & Hanges, 2002).

Job satisfaction experienced by followers is based on followers’ unique circumstances like needs, values and expectation. Job satisfaction has a great impact on followers’ emotional wellbeing, social life (Sempane, Rieger, & Roodt, 2002), trust, and commitment towards the organisation (Karnan & Hanges, 2002)

The relation between transformational leadership and organisational performance has been studied abundantly (Boerner et al., 2007). Performance differences can be found on the individual and on a team level as a result of transformational leadership. Mediating factors between TLB and follower performance appear to be in Organisational Citizen Behaviour (Boerner et al, 2015) and the leader-follower relationship (Wang et al., 2005). The mediating impact TLB has on performance of subordinates has been less of a research topic (Wang et al., 2005) and what behaviour can be linked to is not clear. Boerner et al. (2007) suggest further research of which leadership behaviour is suitable to trigger desired follower behaviour.

Premise 3: Engagement is negatively related to change (Macey & Schneider, 2008) Premise Y: Time has an impact on follower behaviour (Kernan Hanges, 2002)

Based on the literary review several related variables are found.

Change has three different stages: unfreeze-transition-refreeze (Lewin, 1955)

Change has three different rhythms: organic, systematic, dramatic (Huy & Mintzberg, 2003)

Leadership has three different styles: transformational, transactional, laissez-faire (Avolio & Bass, 1991)

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The premises from the literary review are visualised in figure 2.1, the blue boxes can be simplified, as shown by the red boxes.

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Repetition of previously stated theoretical premises, used to create figure 2.1. Premise 1: Employee engagement related to TLB (Macey & Schneider, 2008) Premise 2: Employee satisfaction related to TLB (Macey & Schneider, 2008) Premise 3: Engagement is negatively related to change (Macey & Schneider, 2008) Premise X1: NPS is related to Performance (Reichheld, 2013)

Premise X2: Engagement related to firm performance (Rich et al., 2010; Harter et al.,2002) Premise X2: Follower behaviour is a reliable predictor for firm performance (Boerner et al.,2007, Harter et al., 2002)

Premise X3: Satisfaction related to firm performance (Rich et al., 2010; Harter et al.,2002) Premise Y: Time has an impact on follower behaviour (Kernan et al., 2002)

Change has three different stages: unfreeze-transition-refreeze (Lewin, 1955)

Change has three different rhythms: organic, systematic, dramatic (Huy & Mintzberg, 2003)

Leadership has three different styles: transformational, transactional, laissez-faire (Avolio & Bass, 1991)

While the theory from reviewed research provides proof for relations between organisational performance, employee performance, employee behaviour and leadership behaviour, less is known about the impact of leadership behaviour on performance during different stages of a dramatic change.

From a theoretical perspective transformational leadership has the best effect on employees behaviour during change (Avolio & Bass, 1991; Bordia, 2004). But from a managerial perspective it is interesting to know if there is any difference in the effect on employee behaviour during and after the change. Because a manager wants employee behaviour to be predictable and continuously positive, in order to maintain a stable and positive firm performance.

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The managerial challenge can be formulated in two questions. During the dramatic change rhythm,

what is the best leadership style to execute, so firm performance stays highest? During the different stages of change,

what is the best leadership style to execute so firm performance stays highest?

To answer these questions, two hypotheses will be incorporated in the conceptual model. H1: Change influences employee behaviour depending on its stage.

H2: Leadership style moderates the impact of change on employee behaviour.

The conceptual model in figure 2.2 is deducted from figure 2.1. While Figure 2.1 shows relations found in the literature, Figure 2.2 does not. Figure 2.2 includes the hypotheses H1, H2, and relations which are tested in this research.

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3. Methods

3.1 Ontological motivation of research design

To answer the research question, a quasi-experiment is used. Participants are not randomized nor double blind, no (control) group is excluded from the intervention. Both qualitative and quantitative data is collected.

Quantitative historic data from periodic employee surveys is used to identify and measure mediating and dependent variables. This will show the impact of change, and the variance over time during the stages of change. The TLB survey will form ordinal and some nominal data. Both data sets from employees and leaders can be linked, explaining variance in the quantitative data. Most of the analysis can be done objectively through quantitative analysis. To limit the amount of interpretation and interviewer bias, the survey will be guided by a semi-structured interview for additional information about variance between leaders. These quantitative results form the basis on which the qualitative research will continue. Eventually, these analyses and relations will be explained by existing research on these topics to explain social behaviour.

The relations (figure 2.1) are premises based on existing theory explained in the literary review, eventually resulting in the independent, dependent variable, moderator (figure 2.2). Since this research consists of multiple variables in a longitudinal single case study, it is hard to pre-define generalizable relations expected to be found. This inductive approach has an interpretivist character. This approach assumes unexpected relations between the variables can be found. Due to the explorative character of this research, the research design and methods are further developed during the course of this research.

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3.2 Data collection

Employee surveys

The employee survey (Appendix A) is a survey executed within N.V. Nuon. The HR department invites all internal contracted and external hired employees to execute the survey over the intranet. The questionnaire is composed by Blauw Research B.V (2018, August 18), consisting of 32 questions. The survey returns three different valuable dimensions: employee Net Promoter Score (eNPS) scoring 1-10, Satisfaction proxy (Satisfaction), Engagement proxy (Engagement) scoring 1-4 (respectively rarely-sometimes-frequently-often). For every question, 4 (often) is a high and positive score which requires no recording. The eNPS is a single answer given bij the employee on a scale of 0-10. For Satisfaction and Engagement a proxy is used, since not all questions of a validated survey are included. Satisfaction is based on eleven questions, Engagement is based on ten questions.

Engagement

A selection of questions is used in order to measure variance in engagement. Since multiple tools for engagement measurement exist, ten questions are selected from the questionnaire, mimicking the Gallup Workplace Audit The Gallup organisation Q12 questionnaire. The total sum of scores given on these ten questions is divided by ten. The Gallup’s Q12 shows a correlation between high survey scores and high job performance (Cataldo, 2011). Because the exact questions weren’t used in this survey, the measured variable is not scientific validated. Therefor the measurement will be an intermediary and the definition will carry the pronounce proxy in this thesis. Questions Q7, Q8, Q13, Q14, Q16, Q20, Q27, Q28, Q29, Q30 are used from the employee survey (Appendix A).

Satisfaction

A selection of questions is used to measure satisfaction. From the survey eleven questions are selected, based on tools used by TINYpulse (Raynolds, 2017 April 20). Since the exact questions weren’t used, the measured variable will be a intermediary. The dependant variable will have to pronounce proxy. Questions Q8, Q9, Q10, Q11, Q14, Q16, Q18, Q20, Q25, Q27, Q29 are used from the employee survey (Appendix A).

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eNPS

The NPS is seen as a predictor for customer loyalty and, ultimately, the organisation's growth (Reichheld, 2003). Respondents can answer the question ´How likely is it that you would recommend our company/product/service to a friend or colleague?´ with a score from zero to ten. The scores nine and ten represent the promoters who are likely to be loyal returning customers and who will enable other buyers. On the other side of the spectrum are scores from zero to six, which stand for the detractors.

Since reorganisation within solely concerned the Business-to-Business (BtB) department, which is operating independently within N.V. Nuon, only the completed surveys from respondents within BtB were subject of the analysis. Surveys from the Business-to-Consumer department or other Business Areas were excluded. The data contained information from four surveys. These surveys (figure 3.1: yellow flags) were spread-out to cover different stages (figure 3.1: blue flags) during the change. Blue flag 1: start of unfreeze, blue flag 2: start of transition, blue flag 3: refreeze (Weick & Quinn, 1999). April 2017, 143 respondents | July 2017, 220 respondents | December 2017, 93 respondents | May 2018, 194 respondents. Not all invited (around 250) respondents have completed the survey, this may have resulted in some level of bias.

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Leadership questionnaire

Several types of the Multifactor Leadership Questionnaire Leader questionnaire exist, most popular is the MLQ 5X-Short (Appendix B). The MLQ 5X-Short consists of 45 questions, is a validated (Avolio & Bass, 2004) survey measuring the leadership scales explained in table 1 and is licensed by Mind Garden to conduct this thesis (Appendix C). Over the past two decades this survey has been the basis for multiple publications, seeking to assess transformational, transactional and non-directive (Laissez-Faire) leadership scales. This survey is used frequently by academics quoted in the literature review of this thesis. In order to avoid making invalid assumptions between literature this same survey is used, rather than another.

All employees with direct reports (team leads and managers) were contacted in June 2018 through email, containing a brief introduction naming the topic and assuring anonymity. Additionally, an incompany agenda invite was sent to participate for one hour. Management assistants scheduled the meetings for managers. Non-responding teamleads were invited twice more, and contacted personally. The one- hour surveys were executed in June and July 2018. During these surveys the interviewer was present and gave a brief introduction about the general goal of the survey. All surveys and conversations were recorded, with consent.

Interviews

Directly following the MLQ, a semi- structured interview (Appendix D) was conducted. Some questions were prepared to make sure the same topics were discussed with all team leads and management. This semi- structured interview is used to get more detailed qualitative information about motivations and actions performed by team leads and managers. In order to get useful information, most questions were constructed beforehand. An independent HR-manager was consulted to formulate questions which could guide the interview and would provide meaningful information about the person and his characteristics. The HR-manager has no access to the leaders, followers nor to the acquired information. Additional questions were gradually formulated, based on recurring topics, during the first interviews with the team leads.

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4. Results

Leader questionnaire

Out of eighteen team leads and managers invited, a total of fifteen Multidimensional Leadership Questionnaire 5X-short (MLQ) were returned. In total 11 managers of which 3 female and 4 team leads of which 2 female. The survey questions were recorded into eight dimensions, according to the MLQ guidelines. Each dimension is the sum of four predefined answers, divided by four. The dimensions were recorded into three leadership styles; Transformational, Transactional, Passive Avoidant (laissez-faire). Respectively the sum of four corresponding dimensions divided by four, the sum of two corresponding dimensions divided by two, the sum of two corresponding dimensions divided by two.

The transformational and transactional scores were used to calculate an additional score. Transactional scores were subtracted from transformational (difference) to identify leaders scoring extremes (distribution in Appendix E). This gave insight in which leaders showing high and low scores on different leadership styles. Resulting in six groups of leaders: Transformational high, Transformational low, Transactional high, Transactional low, Difference positive high - mostly transformational, Difference negative high - mostly transactional. For further analysis of follower behaviour the three highest and lowest scoring leaders were selected and placed in each group.

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4.1 Employee survey

The survey returns three different valuable dimensions: employee Net Promoter Score (eNPS) scoring 1-10, Satisfaction proxy (Satisfaction), Engagement proxy (Engagement) scoring 1-4 (respectively rarely-sometimes-frequently-often), resulting in scores influencing follower behaviour. The eNPS is a single answer given by the employee. For Satisfaction and Engagement a proxy was used, since not all questions of a validated survey are included. Satisfaction is based on eleven questions, Engagement is based on ten questions.

Figure 4.2: Boxplots Followers April 2017 (n279)

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Figure 4.4: Boxplots Followers Dec 2017 (n=220)

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4.2 Data visuals based on Leader questionnaire and Follower survey

Each line represents a group of followers connected to the three leaders scoring similarly in the leadership questionnaire. The horizontal line represents measurements over time during the stages of change. The vertical line represents the score on employee behaviour.

The shape of the lines in figures 4.6, 4.7, 4.8 represent the same type of data selection based on leadership. Figure 4.9 shows averages of included, excluded and all data. Figure 4.10 combines the averages and data grouped by leadership style.

Figure 4.6: Follower behaviour (eNPS) during various periods during the rhythm of change, divided by leadership style.

Figure 4.7: Follower behaviour (Satisfaction) during various periods during the rhythm of change, divided by leadership style.

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Figure 4.8: Follower behaviour (Engagement) during various periods during the rhythm of change, divided by leadership style.

Figure 4.9: Follower behaviour (eNPS) during various periods during the rhythm of change, showing average of all included versus excluded leaders

Figure 4.10: Follower behaviour (eNPS) during various periods during the rhythm of change, by leadership styles and averages.

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4.2 Leadership attribute visuals based on interview

According to the MLQ scores, leaders were ranged over three dimensions of leadership styles (figure 4.1). Every three highest and lowest scoring leaders were grouped. Three interviews from the highest scoring transformational leaders were used for this analysis on attributes from transformational leadership. The recorded interviews are visualized in a separate mind map and combined in figure 4.11. This visualization tool makes a diagram by drilling down on and connecting similar topics. Connections between topics become more clear this way.

Figure 4.11: Mind map of attributes transformational leaders discussed

All conversations were revolving around the topic of leadership. The interviews can be combined into one mind map containing the main topics. Conversations were evolving around the following main topics: Personal profile, Personal development, Management Team, Identifying upcoming problems, Managing change, and Employees. These topics were not predefined (Appendix C) by the interviewer.

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5. Discussion

5.1 Follower behaviour by leadership style

Inspection of the data visualized in figure 4.6, figure 4.7, figure 4.8 and figure 4.9 leads to a couple of assumptions.

Transformational leadership scores highest follower behaviour

Figure 4.1 shows overall higher scores from transformational leadership behaviour, compared to transactional or laissez-faire. Other measurements (figures 4.6 - 4.10) show the relation between performing transformational leadership and high scores in follower behaviour, when compared to transactional or laissez-faire. This relation is visible through all stages of change. This relation between transformational leadership and follower behaviour has been repeatedly cited in existing literature (Bordia et al., 2004).

Organisational change decreases scores of follower behaviour

Academic literature also describes a notable negative impact of dramatic change on follower behaviour. Meaning followers’ behaviour scores decline as a result of organisational change (Bordia et al., 2004).

Changes in follower behaviour are most notable in Employee NPS

Visual inspection of the graphs shows less variation during the different stages of change, for satisfaction (proxy) and engagement (proxy) compared to eNPS (respectively figure 4.7, figure 4.8 and figure 4.6). Some of the groups that share a resemblance move in the same direction. But in general there seems to be no trend. It is notable that scores are dropping in the last measurement. For satisfaction and engagement averages from multiple scores from the survey are combined and averaged. Using multiple scores could have lead to averaging each other out, reducing the total variance. Before further assumptions and analyses are made based on satisfaction and engagement, statistical significance of these scores must be provided.

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Averages of excluded leaders compared to averages of included leaders

Out of all 18 planned interviews with team leads and manager, three interviews were not conducted. To measure the relevance of missing these three interviews the direct reports of these team leads and managers were compared to the total selection of direct reports.

In figure 4.10 the black lines represent the averages. Visual inspection shows large differences between the three averages, before the stages of change (Average scores included leaders 7.6, Average scores excluded leaders 8.4, Average scores whole BtB population 7.9) which eventually all end on a score of 7.4 at the end of all stages of change. Interestingly, the three leaders did not participate in the leadership interview suffered a dramatic drop (2.4 eNPS points) in follower behaviour during the stages of change. There could be a relation between the dramatic follower behaviour scores and not being willing or having the time to participate.

Variance of groups compared to the average

Employee NPS shows the most variance during the different stages of change. Besides comparing the variance between groups, variance seen in the average of the whole population is interesting. Trend lines of groups are most interesting if they diverge from the total average. When inspecting figure 4.9 a clear decline in follower behaviour (eNPS) is visible, with a increase towards the end of all stages of change. Interesting is the decline of spread between the groups in this graph. In Figure 4.10 follower behaviour (eNPS) between averages (uninterrupted line) and based on leadership styles (interrupted) are combined. This graph clearly shows a different direction for groups. For a better visualisation some data is removed in figure 5.1, comparing transformational and transactional leadership styles with the average.

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Follower behaviour (eNPS) related to transformational leadership is clearly outperforming transactional styles and the organisational average. Interesting follower behaviour scores are related to the leadership styles of mostly transformational and mostly transactional (striped lines). These lines stand for leaders showing one dominant leadership style. Leaders with a (dominant) mostly transformational leadership style have followers with a positive trendline throughout all stages of change. Leaders with (dominant) mostly transactional style have followers who end similarly at the start and end of the stages of change. The negative impact of change on followers, called survivor reactions (Kernal & Hanges, 2002), seems to be less of an issue. This increase in follower behaviour can be explained by Bordia´s theory on uncertainty (2004); after the refreeze stage of change, the new situation should be clear to all followers, removing previous uncertainty. This should lead to more positive follower behaviour.

Leadership attributes

The attributes expressed by the leaders in their surveys have been divided over: Personal profile, Personal development, Management Team, Identifying upcoming problems, Managing change, and Employees.

Attributes displayed under Identifying upcoming problem, Managing change and Employees show similar aspects explained as quality of change communication, by Bordia et al. (2004). Quality of change communication as defined in the literature and Identifying upcoming problem, Managing change and Employees as visualized in figure 4.11, reduce follower uncertainty during change. The attributes Management Team and Personal profile reflect on their interaction with peers. This level of reflection on peer and themselves could origin within the topic of personal development. Personal development often involves professional training in interaction and reflection on communication styles.

Leaders showing high transformational leadership seem to have an history within the same firm holding different positions. In all three interviews the leaders spoke about intrinsic motivation and loyalty towards the organisation. This intrinsic motivation reflect on their drive to empowered their followers.

It seems to be that leaders performing high level of transformational leadership have picked up the traits by personal/professional development, and have the intrinsic motivation to

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5.2 Academic implications

Academics advocated transformational leadership as the best performing leadership style. Leaders performing (aspects of) transformational leadership during organisational change have better scores in follower behaviour. This research reflects this claim but adds new information to the field. While transformational leadership is connected with the highest scoring follower behaviour, transactional leadership is connected to the best development of follower behaviour during change. This means academics should take time (stages of change) into perspective in research about leadership styles´ impact on follower behaviour.

5.4 Managerial implications

Behavioural metrics have limited scientific validity

Metrics on follower behaviour are repeatedly challenged on validity. Managers must acknowledge the limited value and prevent a situation where these metrics on follower become the goal.

Performing transformational leadership behaviour leads to high behavioural scores

Leaders performing transformational leadership have highest follower behaviour scores, compared to transactional or laissez-faire. The stage of change does not have an impact.

Performing transactional leadership leads to high variation in behavioural scores

Leaders performing transactional leadership will most likely struggle with follower behaviour during the stages of change. Managers must acknowledge that the negative effects of change are only temporary until the stages of change are passed. Leaders performing transactional leadership might be tempted to perform (aspects of) transformational leadership to compensate for decreasing follower behaviour during change. Since at the end of all stages of change there is a only .4 point difference between transactional high (7.5) and any other not transformational leadership score, it may be assumed that the efforts cause stress on the leader but have little effect on the followers’ behaviour.

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5.5 Impediments on validity

Evolvement of personal leadership styles

Each leader completed the questionnaire once in June or July 2018, after the refreeze stage. Leadership style is assumed to be quite stable, possible variations in leadership styles during the stages were not measured and do not form part of this research.

Impact of organisational changes on the analysis

The changes in size of the organisation triggered changes in the organisational structure. Structure change was executed by replacing the vice-president of the business area BtB by one of his direct reports, on 17 April 2018, and having one of this managers reports fill his now vacant position on 17 April 2018. These changes meant leaders became responsible for other followers. When inspecting the data (to correct for these changes), old and new managers were in the same leadership profile. This meant, there was no impact on the data selections and data did not need to be excluded.

Respondent bias

The Multifactor Leadership Questionnaire (MLQ) is a self- evaluation form. Respondents can be biased based on recent events and personal preferences, influencing an objective measurement of their leadership styles. Respondents could have influenced each other by discussing the questionnaire or advocating transformational leadership within the organisation. In future research the answers of the MLQ Leader Form could be compared with answers of the MLQ Rather Form, executed by their direct reports or even all other colleagues. Comparing the MLQ Leader and Rather Form would prove the reliability of provided answers.

Reproduction of the research

To answer the ontological question of this social construct, the first part of this research leans towards a positivist approach, while the latter part of this research has an interpretivist approach. This might lead to other conclusions when reproduced, since new articles or new insights concerning the subject will develop over time.

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Validity

Reichheld (2003) challenges the validity of satisfaction as a predictor for organisational performance and introduces the Net Promoter Score as a better predictor. Schneider, Berent, Thomas and Krosnick (2008) challenge the validity of the Net Promoter Score promoted by Reichheld on its validity for predicting organisational performance.

Causality

It is dangerous to make assumptions about the causality. Transactional leaders could have a positive influence on the behavioural development of followers. On the other hand, organisational change could have a positive influence on the behavioural development of followers who are subjects of a leader with a transactional leadership style.

5.5 Conclusion

Taking the stages of change into account, while measuring the impact of change on follower behaviour, the data shows shifts in follower behaviour scores. During these stages of change, follower behaviour varies when grouped in different leadership styles. While there is variance in follower behaviour during the different stages of change, leaders performing transformational leadership have higher scores of follower behaviour during all stages. Attributes of leaders performing transformational leadership include loyalty to the organisation, intrinsic motivation, the ability to reflect on the impact of their communication and interaction with peers and followers, traits often trained in the early stages of their professional career.

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Acknowledgements

Dedicated to you: my father, for countless coffee table discussions about academic relevance and social impact; my mother, for the continuous reminder to do no evil; my friends, for a decade of ridiculing my engineering degree; drs. M. Mittendorff, for managing and challenging my professional ambition; dr. ir. J. Kraaijenbrink, for lighting the spark on the topic of change management during lectures; Tara, Veerle, Sanne, Mark, for beating me in asking bright questions, making class more interesting.

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Appendix

Appendix A - Employee survey

For assessing follower behaviour the Flow questionnaire used. This questionnaire is build by Blauw Research B.V Rotterdam and executed by N.V. Nuon. Its goal is to provide useful feedback for team leads and management. Questions are scored on a 1-4 scale (respectively rarely - sometimes - frequently - often). The eNPS is a single answer given bij de employee on a scale or 0-10. For every question the higher number represents a higher score, which requires no recording.

Q1 : Employee Net Promotor Score (eNPS):Hoe waarschijnlijk is het dat je Nuon als werkgever zou aanbevelen? Q2 : Employee Net Promotor Score (eNPS):We horen graag waarom je deze score hebt gegeven:

Q3 : Employee Net Promotor Score (eNPS):Hoe waarschijnlijk is het dat je de producten en diensten van Nuon zou aanbevelen? Q4 : Employee Net Promotor Score (eNPS):We horen graag waarom je deze score hebt gegeven:

Q5 : Flow:Hoe vaak ervaar jij persoonlijk zo'n gevoel van 'flow' in jouw werk?

Q6 : Positieve feedback:Geef aan in hoeverre je het eens bent met de volgende stellingen:Er wordt stilgestaan bij behaalde successen/resultaten binnen Klanten BtB

Q7 : Positieve feedback:Geef aan in hoeverre je het eens bent met de volgende stellingen:Mijn (formeel) leidinggevende verwoordt kritiek op een opbouwende manier

Q8 : Positieve feedback:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik ontvang complimenten van anderen uit mijn werkomgeving Q9 : Positieve feedback:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik geef zelf complimenten aan anderen in mijn werkomgeving Q10 : Positieve feedback:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik ontvang feedback van anderen in mijn werkomgeving Q11 : Positieve feedback:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik geef zelf feedback aan anderen in mijn werkomgeving Q12 : Positieve feedback:Een toelichting op je antwoorden kan je hier kwijt

Q13 : Hoger doel:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik heb de ruimte om klantgericht te werken Q14 : Hoger doel:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik heb het gevoel dat mijn werk ertoe doet Q15 : Hoger doel:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik vind dat bij Klanten BtB de klant op 1 staat Q16 : Hoger doel:Geef aan in hoeverre je het eens bent met de volgende stellingen:Het is voor mij duidelijk hoe ik klantgericht kan werken Q17 : Hoger doel:Een toelichting op je antwoorden kan je hier kwijt

Q18 : Ruimte en vertrouwen:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik voel me vrij om ideeën in te brengen

Q19 : Ruimte en vertrouwen:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik krijg voldoende ruimte om zelfstandig beslissingen te nemen Q20 : Ruimte en vertrouwen:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik ervaar waardering voor het werk dat ik doe binnen mijn werkomgeving

Q21 : Ruimte en vertrouwen:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik heb genoeg ruimte om zelf klanten te helpen Q22 : Ruimte en vertrouwen:Een toelichting op je antwoorden kan je hier kwijt

Q23 : Plezier:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik heb plezier in mijn werk Q24 : Plezier:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik word uitgedaagd in mijn werk Q25 : Plezier:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik ben trots op wat ik bereik met mijn werk Q26 : Plezier:Een toelichting op je antwoorden kan je hier kwijt

Q27 : Meesterschap:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik weet wat er van mij verwacht wordt in mijn werk Q28 : Meesterschap:Geef aan in hoeverre je het eens bent met de volgende stellingen:Ik ervaar dat ik mezelf continu kan verbeteren

Q29 : Meesterschap:Geef aan in hoeverre je het eens bent met de volgende stellingen:Klanten BtB biedt mij voldoende mogelijkheden om te groeien

Q30 : Meesterschap:Geef aan in hoeverre je het eens bent met de volgende stellingen:Klanten BtB zorgt voor een goede begeleiding in de uitvoering van mijn werkzaamheden

Q31 : Meesterschap:Een toelichting op je antwoorden kan je hier kwijt Q32 : Team:Wie is jouw (formeel) leidinggevende?

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Appendix B - Multifactor Leadership Questionnaire

For assessing the leadership styles the Multifactor Leadership Questionnaire Leader form (5X-short) is used. This questionnaire is licenced by Mind Garden, Inc to Emile Ripke for execution of this thesis. Licence for this survey is provided in Appendix D. Answers are distributed a five point scale (0,1,2,3,4 respectively Not at all, Once in a while, Sometimes, Fairly often, Frequently, if not always). Under the Mind Garden licence five examples of questions can be provided.

As a leader ....

I talk optimistically about the future. I spend time teaching and coaching. I avoid making decisions.

Copyright © 1995 by Bernard Bass & Bruce J. Avolio. All rights reserved in all media. Published by Mind Garden, Inc. www.mindgarden.com

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Appendix C - Semi structured interview - Leader

The semi structured interview is conducted after the MLQ. Questions were prepared to make sure the same topics were discussed with all team leads and management.

Hoe beschrijf je je kledingstijl op het werk? formeel | semi-formeel | neutraal | casual | informeel Hoe beschrijf je je communicatiestijl op het werk? formeel | semi-formeel | neutraal | casual | informeel Hoeveel uren ben je fysiek aanwezig voor je medewerkers? 40 -30 | 30-20 | 20-10 | 10-0

Disk profiel kleuren? geel | groen | blauw | rood

Wat zijn je werktijden ? Gevolgde opleidingen?

Wat heb je aan sport gedaan, en voor welke periode? Gevolgde trainingen, voordat je in je huidige rol actief was Gevolgde trainingen, sinds je in je huidige rol actief bent Werkervaring opgedaan voor indiensttreding bij Nuon? Werkervaring opgedaan sinds indiensttreding bij Nuon? Wat voor reorganisaties heb je al meegemaakt?

Wat is je leeftijd?

Hoe lang ben je samen met je partner? Hoeveel kinderen heb je?

Hoe oud is je oudste kind?

Wat zijn TL vaardigheden die jij goed vindt?

Wat zijn TL vaardigheden die jij onderontwikkeld of slecht vindt?

Ben je inhoudelijk specialist (in hoeverre kan je het werk van je team zelf uitvoeren)

Wat voor deel besteed je aan je eigen team(hiërarchisch onder je), en wat doe je dan? Wat voor deel besteed je aan MT (hiërarchisch boven je), en wat doe je dan?

Wilde je 5 jaren geleden de positie die je nu hebt? Weet je wat je over 5 jaren als positie wilt hebben?

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Appendix E - Additional results

Transformational mean 2.7875 st.dev .29296 / Transactional mean 2.7875 st.dev .29296 Passive Avoidant mean 1.125 st.dev .59 / Difference mean .4308 st.dev .4067

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Appendix F – Mind map

These mind maps display the three leaders performing the highest transformational leadership. The order in which the mind maps are displayed does not represent the actual MLQ score.

Mind map leader 1 – performing high transformational leadership

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