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PSYCHOLOGICAL UNCERTAINTY AND STRESS IN

TIMES OF ORGANIZATIONAL CHANGE AND THE

ROLE OF LEADERSHIP BEHAVIOR

An examination of the influence of Frequency, Impact and Planning Involved in Change on an Individual’s Stress Level through Psychological Uncertainty and

the Role of Leadership Behavior

by

Kevin de Brock

Master Thesis

MSc. Business Administration- Change Management MSc. Human Resource Management

University of Groningen Faculty of Economics and Business

Supervisors Dr. J. Jordan Prof. dr. J.I. Stoker

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ABSTRACT

That organizations need to initiate change in order to drive growth or to cope with the environment is something on which many authors and practitioners agree. However, it is the employees who will need to adopt these changes and embrace them. Hence, it is essential to consider what the effects of these change initiatives are on an individual, in particular, what the effects are on an individual’s stress level. The current thesis provided insight in this process, namely by studying how various change aspects, salient to individuals, indirectly influenced an individual’s stress level, through psychological uncertainty. The change characteristics I examined are the frequency of change, the impact of change, and the planning involved in change. Moreover, I examined if leadership behavior moderated the relationship between psychological uncertainty and individual’s stress level, as many authors agree that leadership has a significant influence on employees during a change process. Finally, I also conducted a moderated mediation analysis to test the entire model. The results showed that all change characteristics had a significant influence on psychological uncertainty and that the frequency of change and impact of change were positively related to an individual’s stress level. The results of the moderating analysis were not supportive of the hypothesized effects. Finally, results of the moderated mediation analysis showed that psychological uncertainty mediated in most cases both relations of frequency of change and impact of change with an individual’s stress level. Only when a high level of participative leadership was present, the relationship between impact of change and an individual’s stress level was not mediated by psychological uncertainty. Implications of these results are discussed and limitations are provided.

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TABLE OF CONTENTS ABSTRACT ... 2 TABLE OF CONTENTS ... 3 LIST OF TABLES ... 4 INTRODUCTION ... 5 THEORETICAL FRAMEWORK ... 7 STRESS ... 7

STRESS AND ORGANIZATIONAL CHANGE ... 8

Frequency of Change ... 9

Impact of Change ... 10

Planning Involved in Change ... 10

Psychological Uncertainty ... 11

LEADERSHIP BEHAVIOR ... 13

CONCEPTUAL MODEL ... 16

METHODOLOGY ... 17

PARTICIPANTS AND PROCEDURES ... 17

MEASURES... 17

RESULTS ... 20

DESCRIPTIVE STATISTICS AND CORRELATION ANALYSIS ... 20

Descriptive Statistics ... 20

Correlation Analyses ... 20

HYPOTHESES RESULTS ... 21

Results Hypotheses 1a-c ... 21

Results Hypothesis 2a-c ... 22

Results Hypotheses 3a-c ... 23

Results Hypothesis 4a-c ... 23

Other findings ... 25

DISCUSSION & CONLCUSION ... 26

SUMMARY OF FINDINGS &THEORETICAL IMPLICATIONS ... 26

PRACTICAL IMPLICATIONS ... 28

LIMITATIONS AND FUTURE RESEARCH ... 28

CONCLUSION ... 29

REFERENCES ... 31

TABLES ... 37

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LIST OF TABLES

Table 1 Means, Standard Deviations, and Correlations of the Variables ... 37

Table 2 H1a: Regression Frequency of Change – Psychological Uncertainty ... 38

Table 3 H1b: Regression Impact of Change - Psychological Uncertainty ... 39

Table 4 H1c: Regression Planning Involved in Change - Psychological Uncertainty ... 40

Table 5 H2a: Regression Frequency of Change - Stress Level... 41

Table 6 H2b: Regression Impact of Change - Stress Level ... 42

Table 7 H2c: Regression Planning Involved in Change - Stress Level ... 43

Table 8 H5a: Moderating effect Participative Leadership ... 44

Table 9 H5b: Moderating effect Ethical Leadership ... 45

Table 10 H5c: Moderating effect Intellectual Stimulating Leadership ... 46

Table 11 Regression Results for Indirect Effect of Frequency of change x Participative Leadership via Psychological Uncertainty on an Individual's Stress Level ... 47

Table 12 Regression Results for Indirect Effect of Frequency of change x Ethical Leadership via Psychological Uncertainty on an Individual's Stress Level ... 48

Table 13 Regression Results for Indirect Effect of Frequency of change x Intellectual Stimulation Leadership via Psychological Uncertainty on an Individual's Stress Level ... 49

Table 14 Regression Results for Indirect Effect of Impact of change x Participative Leadership via Psychological Uncertainty on an Individual's Stress Level ... 50

Table 15 Regression Results for Indirect Effect of Impact of change x Ethical Leadership via Psychological Uncertainty on an Individual's Stress Level ... 51

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INTRODUCTION

We live in an era where change is considered to be vital and that organizations need to engage in organizational change in order to survive (Burnes, 2011). These change efforts not only put a lot of stress on organizations but also on individuals (Vakola & Nikolaou, 2005). Yu (2009) has argued that the development of employee perceptions of organizational change is strongly related to the behaviors and decisions of leaders, as they affect the atmosphere within the organization. However, most of the research in the area of organizational change has been dominated by a macro, system-oriented focus, whereas the micro-level research stays limited (Judge, Thoresen, Pucik, & Welboune, 1999). Additionally, research conducted on identifying the characteristics of change that are salient to individuals and how they influence individual outcomes remains scarce, specifically in the area of stress (Rafferty & Griffin, 2006). Therefore, the current investigation seeks to understand the effect of stress deriving from general features of change in an environment where organizational change occurs. Specifically, I propose that the change characteristics salient to individuals influence their psychological uncertainty associated with change, and, ultimately, stress. I will adapt the same characteristics of organizational change identified by Rafferty and Griffin (2006) as being salient to individuals: frequency of change, impact of change, and planning involved in change. This study also explores the role of different leadership behaviors, namely participative leadership, ethical leadership, and intellectual stimulation as moderating variables in the relationship between the psychological uncertainty, and an individual’s stress level. Hence, a key assumption in this thesis is that leaders affect the well-being of their employees.

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to change: frequency of change, impact of change and the planning involved in change.

The role of leaders, those individuals who are responsible for managing others, should also not be underestimated; they have a vital role during the change process and have a major influence on their subordinates (Bass, 1990). Moreover, they carry a great amount of responsibility, often need to make frequently unpopular decisions as they are in a position of power, and are at the center of attention (Skakon, Kristensen, Bang, Lund, & Labriola, 2011).

There is clear and growing evidence that leaders in a change process impact the success of organizational change (Elrod II & Tippett, 2002; Higgs, Rowland, Higgs, & Rowland, 2005; Kotter, 1990). However, the majority of studies on organizational change center around the importance of a leader in ensuring the successful implementation of change and rarely put the emphasis on the importance of leadership for subordinates’ health and well-being (Bernstrøm & Kjekshus, 2012). Leithwood, Menzies, Jantzi, and Leithwood (1999) argue that the influence of leadership on perceived stress and burnout have been underestimated. Also Van Dierendonck, Haynes, Borrill, and Stride (2004)state in their study that leaders have an important role in enhancing subordinate’s well-being. Hence, considering the role of leadership behavior in moderating the relationship between the individual’s psychological uncertainty associated with change and stress is vital.

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THEORETICAL FRAMEWORK

In, this section I will elaborate more closely on the previous research conducted with regards to the concepts central to this thesis. First of all, I will review relevant studies with regards to stress and organizational change. Secondly, I will elaborate on the role of leadership behavior on subordinates’ health and well-being in change situations. Finally, I will present a conceptual model that will guide the current investigation.

Stress

The impact of stress can have serious consequences for individuals, organizations and even countries. First of all, the stress that employees are experiencing can lead to decreased individual performance (Jamal, 1990), it can lead to illness and failing health of individuals (Ganster & Rosen, 2013), and it has also been linked to increased organizational healthcare costs (Manning, Jackson, & Fusilier, 1996). Secondly, for a country, the cost of stress can rise up to 10 percent of the gross domestic product (Newton & Teo, 2014). These consequences give an indication of the width of the problem of stress.

Stress has been conceptualized in many different ways; however, Lazarus and Folkman (1984) developed the most comprehensive theoretical framework (Zakowski, Hall, Klein, & Baum, 2001). They refer to this framework as the transactional or cognitive phenomenological model of stress and coping (Lazarus & Folkman, 1984). This model is developed on the assumption that stress depends on a couple of subjective cognitive judgments arising from the dynamic interaction between environment and person. In this thesis, stress is defined as “a person-situation interaction which the individual appraises as relevant to his or her well-being and as taxing his or her coping resources” (Zakowski, et al., 2001: p. 158). This means that a situation or event in itself is not considered to be inherently stressful, but that it is the individual’s subjective judgment of such an event or situation as harmful or threatening that defines the stressor (Zakowski et al., 2001). Hence, stress is more likely in some individuals than others and in some situations than others.

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will affect employee attitudes (e.g., organizational commitment and job dissatisfaction) and employee behaviors (e.g., turnover, absenteeism, and job performance) (Motowidlo, Packard, & Manning, 1986; Newton & Teo, 2014). Besides influencing the attitudes and behaviors of the individual experiencing stress, it has also been shown to be contagious and affect the human relationships with co-workers (Nagesh & Murthy, 2008).

The workplace is a key source of both pressures and demands causing stress for individuals (Michie, 2002). Workplace factors can be categorized as to those to do with the organizational and social context of work and those to do with the content of the job itself. The ones that are related to the content of the job include work overload, time pressure, lack of breaks, lack of variety, complex or difficult tasks, and poor physical work conditions (e.g. temperature, space, and light) (Michie, 2002). Moreover, role conflict, ambiguity and overload are factors that cause stress for individuals (Motowidlo et al., 1986). Finally, also having responsibility for people has been associated with increased levels of stress (Michie, 2002).

Stress and Organizational Change

Organizational change, or change, is a term used in almost every organization these days. Burnes (2009) argues that for society in general, and for organizations in particular, the speed, magnitude, impact and especially the unpredictability of change are greater than ever before. Some organizations change because they are trying to realize a growth strategy, while others need to consolidate as a result of the economic recession. Hence, some changes are driven from the organization itself, while others are as reaction to the pressures coming from the external environment. Organizational change thus occurs for a variety of good reasons, but also presents a paradox of sorts (Bernerth, Walker, & Harris, 2011). It requires for employees to adapt to new circumstances, but at the same time some stability enables employees to maintain a sense of understanding and identity (Huy, 1999). Part of human nature is that humans have an intrinsic need for order and predictability (Bernerth et al., 2011).

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decreased intention to stay within the organization, job insecurity, increased worry, and decreased organizational commitment (Riolli & Savicki, 2006). However, as already stated in the introduction, comparing these different changes situations and the effects on stress is difficult, as the properties of these change events that lead to these negative employee outcomes are not identified (Rafferty & Griffin, 2006).

What distinguishes one change from another can be explained by the characteristics of the change itself. These characteristics need to say something about the nature of the change and should be found in any organizational change, so that comparison becomes possible. Lazarus and Folkman (1984) outlined a number of formal properties of situations that make them potentially harmful or damaging for individuals. Rafferty and Griffin (2006) draw on their work and were able to derive three characteristics of change events that are significant to individuals namely the frequency of change, the impact of change, and the planning involved in change. These characteristics are likely to influence individuals’ responses to change (Rafferty & Griffin, 2006).

Frequency of Change

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Impact of Change

The impact of change is another important property of a change event or situation. Every change is different from another, and is likely to have diverse impact. Employees are often concerned about what the impact will be of the change on themselves, on their colleagues, and on their job (Cawsey, Desczca, & Ingols, 2012; Rafferty & Griffin, 2006). If organizational change is challenging, then it should be more problematic when trying to implement change across multiple dimensions at the same time, than when smaller changes are implemented (Dahl, 2010). Even though authors have used different terms to differentiate impacts of change, the main distinction that can be made is between incremental and transformational change (Dunphy & Stace, 1993). Incremental change involves modifications and adjustments within existing business processes and management, while organizational structure, cultural values, and strategic goals remain the same (Robinson & Griffiths, 2005). With transformational change a dramatic shift occurs in the foundation of an organization and a new blueprint or template is created (Levy, 1983; Senior & Swailes, 2010). In order to remain consistent with the study of Rafferty and Griffin (2006), I will adopt the same definition to address the impact of change. Rafferty and Griffin (2006) define transformational change as “an individual’s perception regarding the extent to which change has involved modifications to the core systems of an organization, including traditional ways of working, values, structure, and strategy” (p.1155). More employees are affected when more core and central parts of the organization are targeted (Dahl, 2010). When an individual experiences a transformational change this means that he or she will need to adapt to new circumstances (Huy, 1999), adopt new values, and behave in new ways. A small change on the other hand is less damaging, as the adjustment costs for employees are lower (Dahl, 2010). Various studies that took a specific transformational change situation have indicated that employees perceive high levels of stress (Cascio, 1993; Kalimo et al., 2003; Schweiger & Denisi, 1991). Rafferty and Griffin (2006) link this to the novelty of an event, described Lazarus and Folkman (1984), which is considered to be a property of situations that makes them threatening or harmful for individuals. Hence, transformational change is considered as a highly novel event.

Planning Involved in Change

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models of implementing change can be considered as a form of planned change (e.g., the Kotter eight-step model). These organizational changes can trigger a sense-making process within individuals to assess which gains and losses are expected (Rousseau & Tijoriwala, 2005). The planning of organizational change allows employees to understand the nature and purpose of the change (Sapienza, Carolina, Schweiger, & Carolina, 1997). In a later study, Korsgaard, Sapienza, and Schweiger (2002) even concluded that when organizations plan their change efforts, the well-being of employees will be enhanced. Rafferty and Griffin (2006) relate the planning involved in a change to predictability, a property of events identified by Lazarus and Folkman (1984), which can be possibly harmful for employees. Lazarus and Folkman (1984) state that the extent to which a situation or event is unpredictable can have potential negative effects on individuals. Hence, when a situation is highly unpredictable, this unpredictability has the potential to be damaging for individuals, whereas when a situation is predictable it is less damaging due to their ability to see it as a discrete event with a specific start and end point (Rafferty & Griffin, 2006). Moreover, the novelty of the situation is less, as the change is being planned.

Psychological Uncertainty

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Hypothesis 1a (H1a): The perception that organizational change is occurring frequently is positively related to psychological uncertainty.

Hypothesis 1b (H1b): The perception that change involves modifications to the core systems of an organization is positively related to psychological uncertainty.

Hypothesis 1c (H1c): The perception that change has been undertaken after planning and deliberation is negatively related to psychological uncertainty.

In addition to the direct effects of the characteristics of change on an individual’s stress level, I also propose that there will be a direct effect of these characteristics on the stress level of individuals. Hence, the following hypotheses have been formulated:

Hypothesis 2a (H4a): The perception that change is occurring frequently is positively related to an individual’s stress level.

Hypothesis 2b (H4b): The perception that change involves modifications to the core systems of an organization is positively related to an individual’s stress level.

Hypothesis 2c (H4c): The perception that change has been undertaken after planning and deliberation is negatively related to an individual’s stress level.

In the literature on organizational change uncertainty has been repeatedly noted as a major source of stress (Ashford, 1988; Nadler, 1982; Schweiger & Denisi, 1991). Moreover, psychological uncertainty has been identified as an important factor that mediates between change and individuals’ well-being (Moyle & Parkes, 1999; Schweiger & Denisi, 1991). Hence, the following hypotheses have been proposed:

Hypothesis 3a (H3a): The perception that change is occurring frequently affects an individual’s stress level through psychological uncertainty.

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Hypothesis 3c (H3c): The perception that change has been undertaken after planning and deliberation affects an individual’s stress level through psychological uncertainty.

Leadership Behavior

How supportive a work setting is perceived to be is influenced by the behavior shown by the leader (van Dierendonck et al., 2004). Leadership behavior that is characterized by recognition, trust, confidence and feedback increases the well-being of subordinates. Subordinates that perceive social support from a leader experience less stress and burnouts (Lee & Ashforth, 1996). On the other hand, leaders that show more controlling behaviors and are less supportive, who exert undue pressure, who fail to provide supportive feedback and do not clarify responsibilities, may be expected to have subordinates who report lower levels of well-being (Cartwright & Cooper, 1994; Offermann & Hellmann, 1996; Sosik & Godshalk, 2000).

In a change situation, the manner in which leaders treat (ethical) and involve employees (participative) during the change has received the most amount of attention and studies have demonstrated that leadership behavior is a powerful determinant of individuals’ reactions to organizational change (Brockner et al., 1994). Effective leadership during times of change plays an important role in reducing the level of stress associated with the change (Schweiger, Ivancevich, & Power, 1987). Herold, Fedor, Caldwell, and Liu (2008) argue that there is a considerable overlap between practitioners’ and academics’ recommendations on effective change-leadership behaviors. Behaviors that involve features such as communicating about the change and providing individuals opportunity for inputs are key aspects in studies on justice and in the recommendations that practitioners give for change leaders (Herold et al., 2008). Schweiger and Denisi (1991) state that leaders who fail to communicate leave employees uncertain about their futures, and that it is often that uncertainty, rather than the change itself, that creates stress. However, if leaders are able to deliver a clear vision of the future and vision of the changed organization, employees will consider the event as lower in threat and will feel more in control (Terry & Jimmison, 2003). According to the cognitive phenomenological model of stress and coping by Lazarus and Folkman (1984), this should then decrease the level of stress experienced by the employee. Hence, leadership behavior can have a significant influence on the relationship between psychological uncertainty and stress.

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of employees, by acting charismatic and inspiring employees, or by intellectually stimulating employees (Bass, 1990). Kotter (1996), for example, shows that also a lot of the transformational leadership behaviors are essential for the success of change implementation. For example, whereas academics in the area of transformational leadership argue that it is important to empower individuals in general, change leadership academics state that it is important to involve others for the sake of improving their ownership and understanding of the change initiative and to gain commitment (Herold et al., 2008).

Brown, Treviño, and Harrison (2005) argue that ethical behaviors are partially embedded in transformational leadership but also clearly empirically distinguishable from it. Brown et al. (2005) placed ethical leadership in a social learning perspective and see ethical leaders as role models for their followers showing normative appropriate behaviors. They consider leaders to be ethical when they are trustworthy, honest, caring, and fair (Brown et al., 2005). One of the ethical leadership dimensions that needs to be highlighted is participative leadership or power-sharing behavior (Kalshoven, Den Hartog, & De Hoogh, 2011). In particular in a change context, this type of behavior can create involvement and understanding for employees. Kalshoven et al. (2011) found that when employees consider their leader to be participative or power sharing, they are likely to behave responsibly, become involved in the organization, and help others.

Thus, various types of leadership have been considered in the change management literature as important. Therefore, I will investigate the following leadership behaviors and their influence on the relationship between psychological uncertainty and stress: participative leadership, ethical leadership, and transformational leadership, in particular the intellectual stimulation dimension of transformational leadership.

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Hypothesis 4a (H4a): Participative leadership moderates the relationship between psychological uncertainty and an individual’s stress level such that when participative leadership is high, it reduces the negative effects of psychological uncertainty and an individual’s stress level.

Hypothesis 4b (H4b): Ethical leadership moderates the relationship between psychological uncertainty and an individual’s stress level such that when ethical leadership is high, it reduces the negative effects of psychological uncertainty and an individual’s stress level.

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Conceptual model

Figure 1 presents the conceptual model that has been constructed based on the theory stated above.

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METHODOLOGY Participants and Procedures

I collected data within a large government institution based in The Netherlands. Participants were employees of one branch of the government. The participants all worked at the same office building of the governmental institution. After receiving the approval from the director responsible for that branch of the government institution, the two directors responsible for the specific office location were briefed on the procedure of distributing the surveys. They provided me with a list containing all e-mail addresses of employees.

Each Monday a meeting is held and facilitated by the two directors of that location with all team leaders. In this meeting they discuss progress, the issues they run into and the objectives for that week. During one of these week starts, where all team leaders were present, I introduced the study, its purpose, and the questionnaire categories asked to their direct reports. In the following week these team leaders received an e-mail with an explanation of the study and the procedure for filling-out the online survey. These team leaders distributed that specific e-mail to their direct reports and informed them in-person about the study. The reason for choosing this approach was that it increased the probability of direct reports participating in the study, as directors and team leaders supported it and functioned as sponsors of the study. I guaranteed participants that individual-level data or confirmation of their participation would not be shared with their employer. Moreover, I assured direct reports that their individual responses would not be shared with their leaders.

One week after the introduction e-mail was sent to the team leaders, I distributed the personalized invitations to participate in the study to employees. This personalized invitation included a unique link to the online survey. I distributed an invitation to participate in the study to 438 direct reports; 329 completed the online survey (75% participation rate).

Measures

I translated all measures from English to Dutch, which was all participants’ working language. Any differences found between the original and back-translated versions were discussed until agreement was reached regarding the most appropriate translation. The questionnaires for employees can be found in the Appendix.

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frequency of change (α = .81), the impact of change (α = .73), and the planning involved in change (α = .68). The subscale frequency of change encompassed an individual’s perception as to how often change has occurred in their work environment. An example item was: “It feels like change is always happening”. The impact of change subscale measured an individual’s perception regarding the extent to which change has involved alterations to the core of the organization, such as the traditional ways of working, strategy, values, and structure. An example item was: “Changes have affected my work unit’s structure”. The subscale, planning involved in change, reflected the degree to which an individual perceived that preparation and discussion had taken place prior to the implementation of change. An example item was: “Change has involved prior preparation and planning by my manager or unit”. The response options for all items ranged from 1 (strongly disagree) to 7 (strongly agree).

Psychological Uncertainty. To measure psychological uncertainty, I used a 4-item scale (α = .79) from Rafferty and Griffin (2006). The psychological uncertainty scale explored the degree to which an individual perceives and appraises change as uncertain. I followed Rafferty and Griffin (2006) in their definition of uncertainty, which referred to “the psychological state of doubt about what an event signifies or portends” (p. 1155). An example item was: “I am often uncertain about how to respond to change”.

Job stress and satisfaction. I measured job stress and job satisfaction using Dubinsky and Yammarino's (1994) 7-item scale (α = .79). The scale for job satisfaction measured the affective reactions, positively or negatively, that individuals have toward their job. The scale for job stress measures the extent to which individuals felt undue job pressures and demands. The response options ranged from 1 (strongly disagree) to 7 (strongly agree). An example item is: “I feel a great deal of stress because of my job”.

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extent to which a leader demonstrates normatively appropriate conduct through individual actions and interpersonal relationships and encourages such conduct by two-way communication, decision-making, and reinforcement. Response options ranged from 1 (strongly disagree) to 7 (strongly agree). An example item was: “My supervisor has the best interests of employees in mind”.

Intellectual stimulation. I used a 4-item scale (α = .95) from Podsakoff, Mackenzie, and Moorman (1990) to measure the extent to which leaders challenged direct reports to re-examine some of their assumptions about their work and reconsidered how it could be performed. The response options ranged from 1 (strongly disagree) to 7 (strongly agree). An example item was: “My supervisor challenges me to look at problems from a whole new perspective”.

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RESULTS

Descriptive Statistics and Correlation Analysis

Table 1 provides an overview of the means and standard deviations for the control variables and main constructs used in this thesis. These statistics give a global interpretation of the results. Moreover, this table provides the bivariate correlation statistics for all variables used in this thesis.

Descriptive Statistics

Several conclusions can be drawn from these descriptive statistics. First of all, the control variables that stand out are the average age of the employees (M = 52.21, SD = 10.62) and the years of experience with the current employer (M = 28.97, SD = 14.26). From these control variables it becomes clear that, on average, it is an older workforce, who has a lot of experience with their current employer, the governmental institution. Secondly, from the change characteristics, the one that was perceived most by employees, on average, is the frequency of change (M = 5.23, SD = 1.28). In terms of perceived leadership behavior, employees found, on average, that their leader showed most ethical leadership (M = 5.09, SD = 1.16).

Correlation Analyses

The correlation table showed a large number of significantly correlated variables (see Table 1). A strong positive correlation was found between the frequency of change and the impact of change (r = .48, p < .0001). Both change characteristics also strongly positively correlated with the cognitive appraisal of the change, psychological uncertainty (respectively: r = .43, p < .0001; r = .41, p < .0001), and with the individual’s stress level (respectively: r = .25, p < .0001; r = .24, p < .0001). A marginally-significant correlation was found between the planning involved in the change and the two other change characteristics. The planning involved in change also marginally correlated with the experienced stress level (r = -.11, p <.1). Moreover, psychological uncertainty was strongly positively related to an individual’s stress level (r = .26, p < .0001).

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Another noticeable correlation is that all leadership behaviors strongly positively related with the planning involved in a change.

Besides the correlations between the main constructs, the control variables also showed various significant correlations. A negative correlation existed between the level of education and the psychological uncertainty that one experienced (r = -.19, p < .01). Another remarkable correlation was found between an individual’s years of experience with the current employer and the stress level he or she perceived (r = .24, p < .0001). Moreover, age was also positively related to an individual’s stress level (r = .12, p < .05).

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Hypotheses Results

Results Hypotheses 1a-c

A regression analysis was conducted to test Hypothesis 1. The hypothesized positive relationship (H1a) between frequency of change and psychological uncertainty was supported (b = .48, SE = .08, t(265) = 6.44, p < .0001). The model explained 19% of the variance in psychological uncertainty (Table 2).

--- Insert Table 2 about here

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Secondly, as predicted by Hypothesis 1b, the impact of change also is positively related with psychological uncertainty (b = .48, SE = .07, t(265) = 6.46, p < .0001). This model also explained 19% of the variance in psychological uncertainty (Table 3).

--- Insert Table 3 about here

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p < .05). The model explained 8% of the variance in psychological uncertainty (Table 4).

--- Insert Table 4 about here

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Results Hypothesis 2a-c

Regression analyses were also conducted to test the direct relationships between the change characteristics and an individual’s stress level. Hypothesis 2a (H2a) predicted that the perception that change is frequently occurring would be positively related with an individual’s stress level. Based on the results from the regression analysis this hypothesis can be supported (b = .24, SE = .08, t(265) = 2.92, p < .01). This model explained 14% of the variance in an individual’s stress level (Table 5).

--- Insert Table 5 about here

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The hypothesized positive relationship between impact of change and an individual’s stress level (H2b) can also be supported based on the results from the regression analysis (b = .27, SE = .08, t(265) = 3.34, p < .01). This model explained 14% of the variance in an individual’s stress level (Table 6).

--- Insert Table 6 about here

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Hypothesis 2c (H2c) predicted that the perception that change has been undertaken after planning and deliberation would show a negative relationship with an individual’s stress level. Results from the regression analysis (Table 7) showed however that this hypothesis was not supported (b = -.11, SE = .06, t(265) = -1.33, p = .18 ).

--- Insert Table 7 about here

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Results Hypotheses 3a-c

Hypothesis 3a (H3a) predicted that the perception that change is occurring frequently is indirectly positively related to an individual’s stress level mediated through psychological uncertainty. The frequency of change increased an individual’s stress level (b = .24, SE = .82, t(299) = 2.90, p < .0001) and the psychological uncertainty (b = .41, SE = .06, t(299) = 7.43, p <.0001). Furthermore, psychological uncertainty was positively related to an individual’s stress level (b = .24, SE = .08, t(299) = 3.10, p < .0001). The indirect effect of frequency of change on an individual’s stress level via psychological uncertainty was significant (z = .10, p = .04, CI 95% LL = .03, CI 95% UL = .19, N = 299; 10,000 re-samples). These results are consistent with my hypothesis that psychological uncertainty mediates the effect of frequency of change on an individual’s stress level.

The second mediation Hypothesis (H3b) predicted that the perception that change involves modifications to the core systems of an organization is indirectly positively related to an individual’s stress level mediated through psychological uncertainty. The impact of change increased an individual’s stress level (b = .23, SE = .08, t(299) = 2.89, p < .0001) and psychological uncertainty (b = .38, SE = .05, t(299) = 6.95, p < .0001). Likewise, psychological uncertainty was positively related to an individual’s stress level (b = .25, SE = .08, t(299) = 3.21, p < .0001). The indirect effect of impact of change on an individual’s stress level via psychological uncertainty was significant (z = .09, p = .04, CI 95% LL= .04, CI 95% UL = .18, N = 299; 10,000 re-samples). These results are consistent with my hypothesis that psychological uncertainty mediates the effect of impact of change on an individual’s stress level.

Finally, Hypothesis 3c (H3c) hypothesized that the perception that change has been undertaken after planning and deliberation is indirectly negatively related to an individual’s stress level mediated through psychological uncertainty. Results showed that there was no significant negative relationship between the planning involved in change and an individual’s stress level (b = -.10, SE = .07, t(299) = -1.45, p = .15), as concluded with Hypothesis 2c (H2c). Hence, the results do not support my hypothesis that psychological uncertainty mediates the effect of the planning involved in change on an individual’s stress level.

Results Hypothesis 4a-c

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uncertainty and an individual’s stress level. A positive effect was found for psychological uncertainty on an individual’s stress level (b = .26, SE = .07, t(265) = 3.27, p < .01) and a marginal negative effect for participative leadership on an individual’s stress level (b = -.15, SE = .08, t(265) = -1.96, p < .1). For the interaction, no significant effects were found (b = -.06, SE = .07, t(265) = -.84, p = .40). Hence, there was no support Hypothesis 4a.

--- Insert Table 8 about here

---

The second moderation model (H4b) predicted that ethical leadership moderated the relationship between psychological uncertainty and an individual’s stress level such that when ethical leadership was high, it reduced the negative effects of psychological uncertainty and an individual’s stress level. Both, psychological uncertainty (b = .26, SE = .07, t(264) = 3.64, p < .01) and ethical leadership (b = .20, SE = .08, t(264) = -3.00, p < .01) showed direct effects on an individual’s stress level. The interaction of psychological uncertainty and ethical leadership did not yield significant effects (b = .02, SE = .07, t(264) = .16, p = .80). Thus, Hypothesis 4b is not supported.

--- Insert Table 9 about here

---

Finally, Hypothesis 4c (H4c) predicted that intellectual stimulating leadership behavior moderated the relationship between psychological uncertainty and an individual’s stress level such that when intellectual stimulating behavior was high, it reduced the negative effects of psychological uncertainty and an individual’s stress level. Both psychological uncertainty (b = .26, SE = .07, t(265) = 3.67, p < .01) and intellectual stimulation (b = -.16, SE = .08, t(265) = -2.49, p < .05) showed direct effects on an individual’s stress level. For the interaction no significant effects were found (b = -.01, SE = .07, t(265) = -.87, p = .87). Hence, there was no support for Hypothesis 4c.

--- Insert Table 10 about here

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Other findings

Besides the tested hypotheses, I also conducted a moderated mediation analysis to examine whether the mediating effect of psychological uncertainty on the relationship between the characteristics of change and an individual’s stress level depended on the type of behavior of the leader.

The first moderated mediation analysis was conducted to examine whether the mediating effect of psychological uncertainty on the relationship between frequency of change and an individual’s stress level depended on the level of participative leadership. Results showed that psychological uncertainty mediated at all levels of participative leadership (Table 11). Secondly, I tested whether this mediating relationship depended on the level of ethical leadership. In this case results also showed that there is a mediating relationship at all levels of ethical leadership (Table 12). Next, I examined whether this mediating relationship depended on the level of intellectual stimulating behavior. Results showed that showed that psychological uncertainty mediated at all levels of intellectual stimulating leadership (Table 13).

The fourth moderated mediation analysis was conducted to test whether the mediating effect of psychological uncertainty on the relationship between impact of change and an individual’s stress level depended on the level of participative leadership. Results showed that psychological uncertainty mediated in all cases expect when participative leadership is high (Table 14). Next, I tested whether this mediating relationship depended on the level of ethical leadership. In this case results showed that there is a mediating relationship at all levels of ethical leadership (Table 15). Finally, I examined whether the relationship between impact of change and an individual’s stress level depended on the level of intellectual stimulating leadership. Results showed that showed that psychological uncertainty mediated at all levels of intellectual stimulating leadership (Table 16).

Based on the previous results, in particular Hypothesis H2c, I did not conduct the analysis for the characteristic of the change: planning involved in the change, as there was no relationship of this variable with an individual’s stress level.

--- Insert Tables 11 - 16 about here

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DISCUSSION & CONLCUSION

With the present thesis, I aimed to make a contribution to the literature on organizational change and stress by providing a deeper insight in how the characteristics of organizational change affects an individual’s stress level through psychological uncertainty and considering the role of leadership behavior in this relation.

Drawing from literature from organizational change (e.g., Dahl, 2010; Rafferty & Griffin, 2006; Riolli & Savicki, 2006), stress (e.g., Lazarus & Folkman, 1984; Michie, 2002; Zakowski et al., 2001) and leadership (e.g., Brockner et al., 1994; Herold et al., 2008), I hypothesized that there was a direct effect between the characteristics of change (i.e., frequency, impact and planning) and psychological uncertainty (Hypothesis 1a-c). I also expected that similar direct effects would exist between the characteristics and an individual’s stress level (Hypothesis 2a-c). Additionally, I predicted that an individual’s stress level would be affected by the characteristics of organizational change through psychological uncertainty (Hypothesis 3a-c). Finally, I expected that when there was a high degree of leadership behavior (i.e. participative, ethical or intellectual stimulation) it would reduce the negative effects of psychological uncertainty and an individual’s stress level (Hypothesis 4a-c). To test these hypotheses, I collected the data within a large government institution based in The Netherlands. In the following paragraphs I will discuss the results, the theoretical and practical implications, reflect on the limitations of this thesis, provide directions for future research, and close with a conclusion.

Summary of Findings and Theoretical Implications

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into ‘chunks’, before it is tackled. Additionally, this finding supports for example a ‘Long March’ approach to change, defined by (Kanter, Stein, & Jick, 1992) as incremental change leading to a transformation of the organization over an extended period of time, instead of rapid overall change (referred to as a ‘Bold Stroke’ approach). The negative relationship between planning the involved in a change and psychological uncertainty implicitly supports the argument of Sapienza et al. (1997) that through planning employees will understand the nature and the purpose of the change.

I also found that the perceived frequency of change and the impact of change are positively related to an individual’s stress level. The suggested negative relationship between the planning involved and an individual’s stress level, however, could not be supported. This was a surprising result, since planning a change was related to enhanced well-being (Korsgaard et al., 2002). A first possible explanation for this finding might be, keeping in mind that planning involved in change is related to psychological uncertainty, that through the time between the planning and the actual implementation of the change, the consequences of the planning cannot be linked to the stress an individual experiences. Another explanation might be that, as individuals engage in their sense-making process (Rousseau & Tijoriwala, 2005), they already affiliate the planning of the change with the failures of change in the past and have become indifferent. Consistent with previous research (e.g., Ashford, 1988; Nadler, 1982; Schweiger & Denisi, 1991), I was also able to find support for the prediction that psychological uncertainty is positively related to an individual’s stress level. This means that when an individual has more psychological uncertainty, he or she also experiences a higher level of stress.

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Finally, contrary to my predictions, I was not able to find support for the hypotheses that the different leadership behaviors moderated the relationship between psychological uncertainty and an individual’s stress level. In contrast, all leadership behaviors were negatively related to both psychological uncertainty and an individual’s stress level. Thus, the more an individual experienced participative, ethical, or intellectual stimulating leadership behavior the less psychological uncertainty and stress he or she experienced. Hence, although there was not enough evidence to support the hypothesis, this study did show that leadership behavior is an important for the psychological uncertainty experienced and employee well-being. This is in line with what Epitropaki and Martin (2005), Kalshoven and Boon (2012), and Van Dierendonk et al. (2004) concluded in their studies; certain leadership behaviors influence employees’ well-being.

Practical Implications

Various practical implications derived from and need to be discussed. Especially for change practitioners, value can be gained from this thesis. First of all, when an organization considers initiating a change, it is useful to consider the frequency by which they introduce change. As a lower frequency of change is related with lower psychological uncertainty and lower levels of reported stress, it is advisable to make change events more explicit and make it as discrete as possible, with a specific start date and an expected end date. Another practical implication is regarding the impact of the change. Decreasing the impact of change is related to lower psychological uncertainty and lower stress levels. Hence, organizations should consider breaking a transformational change into smaller incremental changes.

Furthermore, the role of leadership should not be underestimated in a change process. Although a significant moderating relationship was not found, the direct relations all had an effect. Therefore, it is imperative that ethical, participative, and intellectual stimulating leadership behaviors are stimulated and used to successfully implement change initiatives. Additionally, as the years of experience with the current employer were positively related to stress level, it advisable to devote extra attention during change initiatives to the more experienced employees.

Limitations and Future Research

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stress level through psychological uncertainty. However, it is also possible that reverse relationships are present. Additionally, the issue of generalizability needs to be discussed. The data for this thesis was conducted in a governmental institution only and therefore the results may vary when conducted in a for-profit organization. It is possible that in a for-profit organization the relations between the perceptions of change and an individual’s stress level are less significant because these organizations are changing more frequently and with a higher impact on a regular basis in order to cope with pressures from the environment. The employees involved might be accustomed to the frequency and impact of change and therefore it may be related to less significant levels of stress. Hence, one needs to be careful not to generalize these results too quickly and it is advised that future research focus on conducting a similar study but then across various industries, including both non-profit and for-profit organizations, to measure the difference between them. On the other hand, I was solely analyzing the characteristics of organizational change within the organization, which minimized possible effects of aspects inherent to governmental institutions. Hence, at least to a certain degree, cautious generalization should be possible. Nevertheless, future research should focus on conducting a study where comparisons are made between the different organizations and a longitudinal study would be of value in providing us with insights into causal relationships. Furthermore, the data was collected at an operational level only, which means that different effects might be discovered when a different layer in the hierarchy is studied. For example, it is possible that in higher levels, towards the upper echelon level, these relations are less significant as individuals in these positions have more often the power to initiate change and perceive higher levels of control (Sherman et al., 2012). Hence, future studies should investigate these different layers and the influence of these change characteristics on stress. Additionally, I demonstrated that uncertainty mediates in all cases except when participative leadership was high. Future research should be devoted on what factors mediate this relation when participative leadership is high. Possibilities include, but are not limited to, anxiety, perceived control, tension, and cognitive avoidance (Oreg, Vakola, & Armenakis, 2011).

Conclusion

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TABLES Table 1 Means, Standard Deviations, and Correlations of the Variables

Mean SD 1 2 3 4 5 6 7 8 9 10 11 12 13

1. Gender .46 .89 -

2. Educational Level 3.83 1.32 -.50 -

3. Age 52.21 10.62 .41*** -.39*** -

4. Experience with current employer (YR) 28.96 14.26 .37*** -.44*** .80*** -

5. Direct report of supervisor (YR) 1.75 4.00 .07 -.07 .18** .16** -

6. Frequency of Change 5.23 1.28 .02 -.09 .14* .23*** -.06 (.81)

7. Impact of Change 4.76 1.38 .03 -.12* .19** .26*** .01 .48*** (.73)

8. Planning Involved in Change 3.86 1.39 -.17** -.02 -.13* -.15** .03 -.10-.02 (.68)

9. Psychological Uncertainty 4.06 1.24 .01 -.19** .06 .16** -.04 .43*** .41*** -.11(.79) 10. Stress Level 3.80 1.28 .01 .07 .12* .24*** .06 .25*** .24*** -.11.26*** (.79) 11. Participative Leadership 4.49 1.30 .03 .08 .05 -.01 .08 -.13* -.25*** .20*** -.21*** -.17** (.92) 12. Ethical Leadership 5.09 1.16 .08 -.04 .10† .03 .04 -.09 -.24*** .23*** -.11* -.19** .75*** (.95) 13. Intellectual Stimulation 4.40 1.35 .03 0.04 -.05 -.10† .02 -.12* -.17** .33*** -.11-.17** .64*** .68*** (.95) Notes: N = 329 † p < .1, * p < .05, ** p< .01, ***p<.0001

Cronbach’s alpha coefficients are in the parentheses along the diagonal Gender: 1 = Male, -1 = Female

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Table 2 H1a: Regression Frequency of Change – Psychological Uncertainty

Dependent Variable

Predictor variables Model 1 Model 2

Control

Gender -.03 (.10) -.01 (.09)

Educational Level -.14* (.06) -.14* (.06)

Age -.02† (.01) -.02 (.01)

Experience with current employer (YR) .02* (.01) .01 (.10)

Direct report of supervisor (YR) -.02 (.02) -.01 (.02)

Independent Frequency of Change .48*** (.08) R2 .06** .19*** Δ R2 .06 .13 Notes: † p < .1, * p < .05, ** p< .01, ***p<.0001

B coefficients are reported in bold, between parentheses the standard error Gender: 1 = Male, -1 = Female

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Table 3 H1b: Regression Impact of Change - Psychological Uncertainty

Dependent Variable

Predictor variables Model 1 Model 2

Control

Gender -.03 (.10) -.01 (.09)

Educational Level -.14* (.06) -.13* (.06)

Age -.02 (.01) -.02 (.01)

Experience with current employer (YR) .02* (.01) .01 (.01)

Direct report of supervisor (YR) -.02 (.02) -.01 (.02)

Independent Impact of Change .48*** (.07) R2 .06** .19*** Δ R2 .06 .13 Notes: † p < .1, * p < .05, ** p< .01, ***p<.0001

B coefficients are reported in bold, between parentheses the standard error Gender: 1 = Male, -1 = Female

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Table 4 H1c: Regression Planning Involved in Change - Psychological Uncertainty

Dependent Variable

Predictor variables Model 1 Model 2

Control

Gender -.03 (.10) -.04 (.10)

Educational Level -.14* (.06) -.14* (.06)

Age -.02 (.01) -.02 (.01)

Experience with current employer (YR) .02* (.01) .02* (.01)

Direct report of supervisor (YR) -.02 (.02) -.02 (.02)

Independent

Planning Involved in Change -.15* (.08)

R2 .06** .08*

Δ R2 .06 .01

Notes:

† p < .1, * p < .05, ** p< .01, ***p<.0001

B coefficients are reported in bold, between parentheses the standard error Gender: 1 = Male, -1 = Female

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