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THE EFFECT OF TRANSFORMATIONAL AND
TRANSACTIONAL LEADERSHIP STYLE ON CHANGE
IN PERFORMANCE, A LONGITUDINAL STUDY
Master thesis, Msc BA, specialisation Change Management &
Msc HRM
University of Groningen, Faculty of Economics and Business
Final version: June 21, 2013
TIRZA DE ROND
Studentnumber: 1700375
Vrydemalaan 424
9713 WV Groningen
Phone: +31 61 7540126
E-mail: tirza.de.rond@student.rug.nl
Supervisor university
Prof. dr. G.S. van der Vegt
3 TABLE OF CONTENTS
ABSTRACT ... 5
INTRODUCTION ... 7
THEORETICAL BACKGROUND ... 8
The effect of transactional leadership on performance over time ... 10
The effect of transformational leadership on performance over time ... 11
Transformational leadership compared to transactional leadership ... 13
The moderating effect of initial performance ... 14
METHODS ... 16
Data collection and procedure ... 16
Measures... 18
Data Analysis ... 18
Sample ... 19
RESULTS ... 19
Preliminary Analysis ... 19
Test of research framework ... 20
DISCUSSION ... 27
Findings and theoretical contributions ... 27
Practical implications ... 29
Strong points, limitations and suggestions for further research ... 30
CONCLUSIONS... 31
REFERENCES ... 32
APPENDIX A ... 38
5 ABSTRACT
This study focuses on the contribution of transactional and transformational leadership to performance over time. It is proposed that the contribution of transformational leadership is stronger than the contribution of transactional leadership. This longitudinal research is conducted in an addict-healthcare company and contributes to the field of knowledge by linking leadership to change in performance and by contrasting both leadership styles in a single study.
Results indicate that there are six dimensions of leadership, of which three are positively related to performance over time: contingent reward; active management by exception; and high performance expectations. Furthermore, it was found that contingent reward is positively related to performance over time, but only when initial team performance was low. In contrast, it was found that active management by exception and high performance expectations are positively related to performance over time, but only when initial team performance was high.
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INTRODUCTION
Performance increase is one of the key goals of organisations today; there is a constant strive to perform better than the previous period. In order to realise this performance increase, organisations often adopt a team-based structure. These teams receive feedback on their performance levels, in the hope that they will perform better in a next period. Thus, organisations benefit from a deeper understanding of what makes teams successful in changing their team performance.
Over the past two decades, researchers have identified many factors that affect the ability to change team performance. Factors that are often mentioned are: having a clear vision, using the right communication, proper planning, and empowering others (Beer & Nohria, 2000; Kotter, 1995; Kotter & Schlesinger; 2008; Merell, 2012). Although multiple factors have emerged from research in the past, researchers do not always agree on all of them. However, within literature there is one broad consensus: a leader can make all the difference (Santora & Esposito, 2011). Yukl (2003, 23) defines leadership as “the process of influencing others to understand and agree about what needs to be done and how to do it, and the process of facilitating individuals and collective efforts to accomplish shared objectives”. In this working definition, the process of influencing others seems to be the most important element.
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studies focus on this relationship, all with their own limitations. As a result, it is hard to draw conclusions. More research is needed in this area in order to further establish a theoretical grounding.
The second gap relates to the majority of studies focusing on TFL, while leaving out TAL (Judge & Piccolo, 2004). These studies often found that TFL is positively related to performance. However, it is debatable whether or not this can be fully explained through only TFL, since no integrated approach is used. Furthermore, by solely focusing on TFL, it is not possible to analyse the impact of different leadership styles at varying levels of performance. By including both TAL and TFL, comparisons can be made between the two leadership styles. The third gap relates to the majority of studies that focus on for-profit organisations. This gap is also addressed by Rowold & Rohmann (2009), who mentioned that there is little understanding of the effects of TAL and TFL in non-profit organisations. Since these types of organisations differ from each other, it is difficult to generalise the findings from for-profit research to non-profit organisations. Therefore, research is needed in the non-profit sector, to confirm the findings as found in for-profit research.
This study incorporates transactional and transformational leadership, and examines how these leadership styles influence performance over time. More specifically, it tries to address the mentioned gaps in several ways. First, by making use of a longitudinal design, it is possible to study leadership in relation to performance over time. Secondly, by incorporating both TAL and TFL, comparisons between the two can be made to see if one leadership style is more effective at different performance levels. And finally, by making use of data from a non-profit company, it attempts to contribute to the understanding of TAL and TFL in a non-profit organisations.
THEORETICAL BACKGROUND
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The three dimensions of transactional leadership are contingent reward, passive management by exception, and active management by exception. Contingent reward is defined as the degree to which the leader sets and agrees goals with subordinates. When a particular goal is completed, the subordinate receives a reward for achieving that goal. Management by exception is the degree to which the leader intervenes when something goes wrong (Judge & Piccolo, 2004). The difference between passive and active management by exception lies in the timing of the intervention. When a leader uses passive management by exception, the leader waits to take corrective actions until serious problems have emerged. In contrast, when active management by exception is used, the leader monitors progress precisely, so that he can intervene directly, when small deviations of the plan are identified (Howell & Avolio, 1993). Early research by Podsakoff et al., (1990) proposed six dimensions of TFL. More recently, the number of dimensions has been narrowed down to just four, as described by Judge and Piccolo (2004). This study uses these four dimensions, since most research is built on these labels. To make sure that the domain of TFL is adequately covered, the extra two dimensions that are proposed by Podsakoff et al., (1990) are explained as well.
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members in a way by which higher performance levels are reached (Wang, Oh, Courtright & Colbert, 2011).
The effect of transactional leadership on performance over time
Research found a positive relationship between TAL and performance (Lowe et al., 1996; Judge & Picollo, 1996). As explained in the previous section, there are three dimension of TAL. Only one of these dimensions, contingent reward, proved to be significantly related to performance (Avolio & Bass, 1988; Bass, 1990).
Through the dimension of contingent reward, a transactional leader motivates a team to achieve a higher level of performance by clarifying the team goals and explaining the rewards for achieving that goal (Howell & Avolio, 1993). This dimension is strongly related to goal-setting theory, which describes three ways through which the relation between contingent reward and performance are strengthened (Evans, 1974; House, 1971; House & Mitchell, 1974). First of all, specific quantitative goals lead to higher performance levels than non-specific goals. Secondly, the highest level of performance and effort can be attained when the goal is moderately difficult. In contrast, the lowest level of performance and effort are measured when the goal is very easy or very hard to achieve (Atkinson, 1958). Finally, goal-setting theory suggests that goals with a low time frame will result in higher performance, since they impose time pressure. In this sense, deadlines can be seen as a stimulating mechanism that results in higher motivation and more effort (Kelly & Loving, 2004).
The downside of this goal-setting behaviour of contingent reward is that it leads to lower satisfaction of employees. In general, subordinates are more satisfied with a broad, non-specific goal in which they have room to find ways and give substance to the goal. This can be seen as a constraint for reaching excellent performance using TAL (Carton, 2008). This is consistent with the general notion that TAL will result in the expected level of performance, but will not result in extra performance (Bass, 1985). Therefore this paper proposes the following hypothesis:
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The effect of transformational leadership on performance over time
This section is divided into two parts. The first part will explain in more detail how TFL contributes to performance in a given point in time. The second part will explain how a transformational leader is able to increase performance over time, by focusing on the change orientation of TFL.
TFL and performance. Research found a positive relationship between TFL and performance (Burnes, 2009; MacKenzie, Podsakoff & Rich, 2001; Russ, McNeilly & Comer 1996; Yukl, 2013). A transformational leader has a positive effect on performance by demonstrating the six dimensions. Table 1 explains in more detail the effect of the six dimensions on performance. In the left column, the six dimensions are listed. In the middle column, the different mechanisms trough which each of the dimensions influences performance are described. In the right column, the supporting studies are mentioned. Intellectual stimulation was the only dimension that was not directly related to performance. This dimension seems to influence creativity and innovation (Wang et al., 2011; Judge & Piccolo, 2004). The other dimensions are all positively related to performance.
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TABLE 1
Transformational leadership related to performance
Dimension Mechanism Literature
Idealised influence Through charisma, the motivation of team members is increased and subordinates get a sense of purpose, which ultimately leads to increased performance.
Avolio & Bass, 1988; Burns, 1978; Bycio, Hackett & Allen, 1995; Degroot, Kiker & Cross, 2000; Howell & Avolio, 1993. Inspirational
motivation
By communicating an inspiring vision, team members are motivated to work harder and are willing to put in extra effort, which results in higher task performance.
Bass, 1985; Bycio et al., 1995; Fu, Sui, Liu & Li, 2010; Judge & Picollo, 2004; Koh, Steers & Terborg, 1995; Kotter, 1995.
Intellectual stimulation
Not directly related to performance, but it contributes to creativity and innovation through a constant challenging of assumptions and of the status quo of a team.
Wang et al., 2011; Judge & Piccolo, 2004
Individualised consideration
Paying attention to each individual and acting as a mentor are key determinants for both trust in the leader and satisfaction with the leader. Overall, this dimension has a very high correlation with leadership effectiveness and leadership satisfaction. In turn, these contribute to subordinate motivation, effort and performance.
Podsakoff et al., 1990; Lowe et al., 1996.
Fostering the acceptance of group goals
With congruence on a goal, [1] subordinates share interests, [2] commitment towards the goal is increased and [3] mobilisation is enhanced. These are all factors that in turn have a positive effect on performance.
Cawsey, Deszca & Ingols, 2012; Hill, Zhang, Tesluk & Oreg & Berson, 2011; Podsakoff et al., 1990; Seo, Taylor, Hill, Zhang, Tesluk, & Lorinkova 2012 High performance
expectations
It is expected that an individual will transcend his own interest, leading to higher performance. Moreover, goal-setting theory confirms that high performance
expectations can lead to superior performance, although the downside is that people will feel less satisfied by it.
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Change orientation. The change orientated behaviour of a transformational leader,
explains how TFL is related to performance increase over time. It seems that transformational leaders have a greater interest in changing organisations, people and situations (Bass, 1985). As a result, they are better able to change a team so that a higher performance over time is possible (Burnes, 2009). This is enabled through several dimensions of TFL.
Through the first dimension of TFL, idealised influence, a leader can create strong and positive responses and willingness to change. The appeal of charismatic behaviour proves to be powerful in a change situation (Bycio et al., 2012; DeGroot et al, 2000).
Through a second dimension of TFL, inspirational motivation, a leader communicates an inspiring vision (Bass, 1985; Judge & Piccolo, 2004). By creating a sense of urgency, emphasising the need for change, and, providing the motivation to unfreeze, an environment for change is enabled (Cawsey et al., 2012; Burnes, 2009; Kotter, 1995). Furthermore, an inspiring vision stimulates the individual to make a contribution beyond themselves; to contribute to a greater cause (Fu, Sui, Liu & Li, 2010). In addition, an inspiring vision pulls people towards an ideal image of the future, which results in more motivated team members that are willing to work harder and to put in extra effort (Bass, 1999; Kotter, 1995).
Finally, a transformational leader can overcome resistance by focusing on a third dimension of TFL; fostering acceptance of group goals. This can avoid resistance and may result in shared interest, commitment and mobilisation (Cawsey et al., 2012). Other studies reported similar effects; with a transformational leader as opposed to a transactional leader, people are less likely to resist a change (Oreg & Berson, 2011; Seo et al., 2012) and people feel more committed to the change, (Hill, Seo, Kang, & Taylor, 2012; Nemanich & Keller, 2007; Seo et al., 2012). Concluding, it can be stated that TFL is strongly related to performance and is change oriented, therefore the following hypothesis is proposed:
Hypothesis 1B: Transformational leadership results in an increase in the performance of teams
Transformational leadership compared to transactional leadership
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transformational leadership traits (Bass, 1999; Howell & Avolio, 1993). This implies that TFL adds to the basic expected performance of TAL; it can achieve a higher performance level beyond the performance level of TAL (Judge & Piccolo, 2004).
The augmentation effect has been tested and confirmed in multiple studies. Geyer & Steyrer (1998) analysed how transactional and transformational leadership relate to objective performance indicators in branches of banking organisations. They found that transformational leadership has an effect on performance above and beyond the effect of transactional leaders. Furthermore, the study of Russ and colleagues (1996) found that high performance was strongly related to leaders who exhibit both a transactional and a transformational leadership style. A more recent meta-analytic regression and relative importance analysis of Wang et al., (2011) confirmed this notion of Bass; TFL has an augmentation effect over TAL. Therefore the following hypothesis is proposed:
Hypothesis 1C: Transformational leadership results in a higher performance increase, than transactional leadership
The moderating effect of initial performance
Although there is a general notion that TFL contributes more to performance than TAL, this study proposes that there is a condition when TAL could be more appropriate than TFL. This condition is characterised by low initial team performance, and as a result the only solution is to adopt a TAL style.
So far, limited research focused on TAL in relation to different performance levels for these kinds of situations. However, there are certain guidelines in literature concerning low-performance teams that describe how team members could be motivated in order to increase their initial performance levels. These guidelines are very similar to transactional leadership behaviours. For instance, they state that a clear plan should be made in which measurable goals must be included (Karsh, 2013). Furthermore, the team should be given a particular reward when this goal is reached (Caruso, 2003).
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performance and effort are shown when the goal is very easy of very hard (Atkinson, 1958). More specifically, this goal should be given a low time frame, since this imposes time pressure (Carton, 2008).
It can be concluded that low-performance teams are in need of a transactional leader that presents a clear plan with concrete and clear intermediate difficult goals. Through this, an initial low-performance team can increase their performance level. Therefore this study proposes the following hypothesis:
Hypothesis 2A: Transactional leadership leads to an increase in performance, especially when the initial performance is low.
In contrast, this study proposes that a high-performance team would benefit more from a transformational leader than from a transactional leader. High-performance teams already know what their goals are and how to achieve those goals. Therefore they are not in need of a transactional leader. These teams are in need of a transformational leader that can give them an extra challenge, to bring their performance to an even higher level. A team is considered to be a high-performance team when the performance is above the required performance level. A transformational leader is able to motivate his high-performance team to put in extra effort. This extra effort is referred to as extra-role behaviour or organisational citizen behaviour (OCB). OCB is defined as “individual behaviour that is discretionary, not directly or explicitly recognised by the formal reward system, and that overall promotes the effective functioning of the organisation” (Organ, 1988; 4). This behaviour results in a positive contribution to the organisational effectiveness (Organ, 1988).
Another reason that explains how TFL can result in even higher performance is through the augmentation effect; TFL seems to add to the basic expected performance level of TAL. Since the high-performance teams are already performing beyond the basic expected performance levels, the only way to further increase performance, is by adopting a transformational leadership style (Bass, 1985; Bass,1999; Comer,1996; Howell & Avolio, 1993; Judge & Piccolo, 2004; Russ et al., 1996; Wang et al., 2011).
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TAL, as a result a high-performance team can achieve an even higher performance through TFL. Therefore, this study proposes the following hypothesis:
Hypothesis 2B: Transformational leadership leads to an increase in performance, especially when the initial performance is high.
The four hypotheses are visible in figure 1 presented below.
FIGURE 1 Conceptual model
METHODS
Data collection and procedure
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order to increase performance. This was done through different change plans and interventions. In March 2013 (t2) the survey was repeated and this second measurement enables a comparison between t1 and t2, to see if the desired results have been accomplished.
The organisation-wide survey includes healthcare teams as well as staff function teams. In total 81 teams participated, ranging in team size between 3 and 31 members. The second survey was sent to employees by email in February 2013, participation was on voluntary basis. After two weeks, the team manager and researcher encouraged teams with a low response rate to participate by sending a reminder. To ensure that reliable statements were made, a minimum number of three respondents for every team was necessary to be included in both t1 and t2.
At t1, a total of 1003 questionnaires were distributed across 85 teams. This resulted in 724 fully completed questionnaires and 44 incomplete questionnaires. The response rate was respectively 72% and 77% at the individual level and 100% at the team level. The average age of the participants was 44 years (SD = 10.81), ranging from 23 to 65. Of all participants, 35% were male and 65% were female. In total, 99% of the participants were of Dutch nationality. The majority (54%) had a higher education (HBO) and 11% had a university degree. The average tenure was 6.58 years (SD = 5.67). This demographic data were extracted from the management information system of the organisation.
18 Measures
Leadership: Team members answered questions about their team leader. These questions
determined if their team leader is a transactional or a transformational leader. Example questions of transactional leadership style are: makes clear what our reward will be if we do what is required; imposes rewards for good work; draws attention to irregularities and anomalies in performance. Example questions of a transformational leadership style are: “our team leader displays an attractive vision of the future; our team leader inspires us with his/her plans for the future; our team leader is capable of binding others to his dream”. The scale developed by Podsakoff, MacKenzie, Moorman and Fetter (1990) was used and respondents could answer on a 7-point Likert scale, running from totally disagree, to totally agree (see Appendix A).
Performance: Team managers were asked to rate their team performance compared to
other teams. Items that were included are: reaching team goals; reaching deadlines; work speed; quality of work; productivity and efficiency. The scale that was used was developed by Van der Vegt and Bunderson (2005). Respondents could answer on a 7-point Likert scale, running from 1 (far below average) to 7 (far above average).
Control variables: The control variable used in this study is team size. The information
was gathered through the HR department of the company, which provided a list of the teams and their sizes.
Data Analysis
One of the objectives of this study is to investigate to what extend TAL and TFL contribute to changes in performance over time. To test these relationships, this study makes use of a set of leadership questions. An exploratory factor analysis, using direct oblimin rotations, was used to identify the underlying constructs of those questions. To check if these factors display a reliable construct, the internal consistency of the factors was analysed using Cronbach’s Alpha. New variables were created on basis of the explorative factor analysis and the internal consistency of the items. The individual data were aggregated to team level.
19 Sample
After the data had been aggregated to team level, teams were selected for the regression analysis based on three criteria. The first criterion was that teams had to be operational at both t1 and t2. Five teams were disbanded after t1, and one new team was introduced at t2. The second criterion was that team members had to work together on a regular basis. One team did not meet this criterion, and was therefore discarded. The last criterion was a minimal response of three people per team to ensure representativeness. In total three teams did not meet this criterion and were discarded.
In total 7 teams were discarded in the t1 dataset, resulting in a final sample of 736 people across 71 teams. The average age of participants was 43.6 years (SD = 10.86), and 34.5% were male and 65.5% were female. Of this group 99% had Dutch nationality. For the t2 dataset, four teams were deleted, resulting in a final sample size of 71 teams. These teams were rated separately by the 47 team managers. The average participant age was 43.6 years (SD = 10.86), and 59% were male and 41% were female. Of this group all had Dutch nationality.
RESULTS
Preliminary Analysis
Factor analyses. All leadership questions were first explored using factor analysis with a
Direct Oblimin rotation. The results of this analysis are presented in Appendix A. The analysis extracted six factors. Both TAL and TFL are not visible as one construct; they are divided over the six factors. TFL is spread over factor 1, 2 and 4 and TAL is spread over factor 3, 5 and 6. One question was deleted, since it differed too much from the other questions and the loading was only .541. This particular question was: “Our leader tells us, what our reward will be if we do what is required from us”. A second factor analysis was performed on all the remaining questions. The results of this second factor analysis are presented in Appendix 2. Only a few factors had cross loadings, ranging from .303 to .478. Since the cross loadings were low, it was decided to group the questions based on the theoretical construct and their highest loading.
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The factors that represent TAL are 3, 5 and 6. Factor 3 represents contingent reward; factor 5 presents passive management by exception; and factor 6 active management by exception. Together these six factors explain 73,2% of the variance.
Reliability analysis. The reliability of the factors was assessed using Cronbach Alpha;
Table 2 shows the results of this analysis. All Cronbach alphas range between .82 and .97, indicating a good to excellent internal consistency. Based on the theoretical distinctions and the high internal consistencies, six separate variables are kept for analysis of TAL and TFL.
Descriptive statistics. Table 2 provides the mean, standard deviation and correlations between all variables. Of the six leadership dimensions, individualised consideration has the highest mean (5.49); this leadership dimension was recognised most by subordinates. Passive management by exception scored the lowest mean (3.23); this leadership dimension was recognised the least by subordinates. It is interesting to note the difference between the mean of performance at t1 (4.68) and the mean of performance at t2 (5.00). This increase in performance aligns with the goal of the organisation; increase performance through self-directed teams. Also, the standard deviation of performance at t2 (.79) is lower than the standard deviation of performance at t1 (.95). This indicates a decrease in variation in team performance. Other notable correlations are between [1] performance t1 and inspirational motivation & intellectual stimulation (r = -.35, p < .05); [2] performance t1 and high performance expectations (r= -.34, p < .05); and [3] performance t1 and management by exception active (r = -34, p <.05). No variables are significantly related to performance at t2. Since the control variable is not significantly related to the dependent variable, the control variable cannot be used in the further analyses. Other control variables were tested, to see if they are significant. This is not the case; therefore no control variables will be used in the analysis below.
Test of research framework
A regression analysis will be used to test the framework. In the literature section, both TAL and TFL were presented as a single concept. Since the factor analyses show that they both consist out of three factors, the framework will be tested using these underlying dimensions. Two separate regression analyses will be performed.
Regression analysis 1. Regression analysis 1 examines the underlying dimensions of
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exception; and passive management by exception. The dependent variable is performance. Model 1 explains 20% of the variance. Performance t1 is significant (p < .00) and passive management by exception is marginally significant (p = .08). The other variables are not significant. In step 2 of the regression analysis, the following interaction terms are entered: continuous reward x performance t1; passive management by exception x performance t1; and active management by exception x performance t1. The results of this second step are visible in Table 3 under the heading model 2. By including these interaction terms, the model explains 30% of the variance. Performance t1 remains significant (p < .00) and none of the moderating variables are significant. Of the interaction terms, continuous reward x performance t1 is significant (p = .03) and active management by exception x performance t1 is marginally significant (p = .06). Figures 1 and 2 illustrate these findings.
FIGURE 1
High-low plot – Continuous reward
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Mean, standard deviation (SD), Cronbach’s Alpha (r) and correlations
VARIABLES MEAN SD N r 1 2 3 4 5 6 7 8 9 Control Variable 1) Team size 12.49 7.21 77 Performance 2) Performance t1 4.68 .95 73 -.05 3) Performance t2 5.00 .79 71 -.16 .40** Transformational leadership
4) Inspirational motivation &
Intellectual stimulation 5.07 .73 77 .97 -.35** .11 -.11 5) Individualised consideration 5.49 .61 77 .82 -.13 .10 .02 .44** 6) High performance expectations 4.57 .60 76 .85 -.34** .07 -.06 .59** -.05
Transactional leadership
7) Continuous reward 3.30 .63 76 .94 -.08 -.07 -.09 .40** .08 .27* 8) Passive management by exception 3.23 .79 76 .85 .19 .01 .22 -.66** -.18 -.42** -.21
9) Active management by exception 4.72 .67 76 .87 -.34** .04 -.05 .85** .23* .65** .41** -.63**
*p < .10 **p < .05
23 TABLE 3
Regression analysis 1: dimensions of transactional leadership
R² model 1 = .20 R² model 2 = .3
Model Factors
Unstandardized coefficients Standardized
coefficients t Sig.
B Std. Error Beta
1 Performance t1 .29 .09 .39 3.40 .00
Continuous reward -.02 .10 -.03 -.23 .82
Passive management by exception .22 .12 .26 1.80 .08
Active management by exception .13 .12 .16 1.03 .31
2 Performance t1 .33 .09 .45 3.54 .00
Continuous reward -.11 .10 -.13 -1.01 .32
Passive management by exception .18 .12 .22 1.45 .15
Active management by exception .14 .13 .17 1.04 .30
Continuous reward x Performance t1 -.25 .11 -.30 -2.27 .03
Passive management by exception x performance t1
.13 .15 .15 .89 .38
Active management by exception x performance t1
24 FIGURE 2
High-low plot – Active management by exception
Figure 2 shows that a high-performance team at t1 benefits when their leader focuses on active management by exception. In contrast, focusing on active management by exception in low-performance teams will result in a drop in performance. With the simple slope test (Dawson, 2013) the significance of the slopes in Figure 2 was tested. The increase of performance is significant (B = 0.43, t = 2.89, p = 0.01, and the decrease in performance is not significant (B = 0.07, t = -0.40, p = 0.69). So, in order to maximize performance at t2, a leader should take into account initial performance when deciding whether or not to adopt active management by exception.
Regression analysis 2. Regression analysis 2 focuses on the underlying factors of
25 TABLE 4
Regression analysis 2: dimensions of transformational leadership
R² model 1 = .17 R² model 2 = .24
Model Factors Unstandardized coefficients Standardized
coefficients
t Sig.
B Std. Error Beta
1 Performance t1 .31 .09 .41 3.52 .00
Inspirational motivation & Intellectual stimulation
-.07 .15 -.08 -.45 .65
Individualised consideration .03 .11 .05 .31 .76
High performance expectations -.03 .14 -.04 -.23 .82
2 Performance t1 .31 .09 .42 3.41 .00
Inspirational motivation & Intellectual stimulation
-.04 .15 -.05 -.28 .78
Individualised consideration .00 .11 .00 .02 .98
High performance expectations -.06 .14 -.06 -.40 .69
Inspirational motivation & Intellectual stimulation x Performance t1
-.12 .14 -.15 -.88 .39
Individualised consideration x Performance t1 .01 .09 .01 .10 .92
High performance expectations x Performance t1
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The variables within model 2 explain 24% of the variance. In this model, performance at t1(p < .00) and high performance expectations x performance t1 (p = .03) are significant. With the simple slope test (Dawson, 2013) the significance of the slopes in Figure 2 was tested. The increase of performance is not significant (B = 0.28, t = 1.49, p = 0.14) and the decrease in performance is significant (B = -0.39, t = -2.39, p = 0.02).
Figure 3 shows that a high-performance team at t1 benefits when their leader focuses on high performance expectations. In contrast, focusing on high performance expectations in low-performance teams will result in a drop in low-performance. A p-value of .140 shows that the decrease and increase of the lines are not significant.
FIGURE 3
High low plot – High performance expectations (HPE)
27 DISCUSSION
The purpose of this study was to see how TAL, TFL, and initial performance interact, in order to determine their impact on performance at t2. It was expected that both TAL and TFL positively contribute to performance at t2. More specifically, it was proposed that the contribution of TFL to performance at t2 was stronger. Finally, this study proposed that TAL is more suitable for low-performance teams, and in contrast TFL was expected to be more suitable for a high-performance teams.
The theoretical background focused on TAL and TFL as separate concepts. However, the factor analyses showed that they both consist out of three different dimensions. Therefore, the discussion will focus on these dimensions.
Findings and theoretical contributions
This study found three non-significant relations, which will be discussed briefly. The first non-significant relationship was found between passive management by exception and performance. This is consistent with previous studies that also did not find any significant relation between these two factors (Hunt & Schuler, 1976; Klimoski & Hayes, 1980; Podsakoff & Schriesheim, 1985; Podsakoff, Todor & Skov, 1982; Reitz, 1971; Sims, 1977). The second non-significant relation was found between inspirational motivation & intellectual stimulation and performance. Finally, the third non-significant relation was found between individualised consideration and performance. These findings are in contrast with previous research that found a positive relationship between these factors (Avolio & Bass, 1988; Bass, 1985; Bycio et al., 1995; Degroot et al., 2000; Howell & Avolio, 1993; Fu, Tsui, Liu, & Li, 2010; Judge & Picollo, 2004; Koh et al.,1995; Kotter, 1995).
Contingent reward. This study found that contingent reward was significantly related to
performance. This finding is consistent with the expectations of this study and it is supported by other studies. The general notion is that contingent reward is the only dimension of TAL that is significantly related to performance (Hunt & Schuler, 1976; Klimoski & Hayes, 1980; Podsakoff & Schriesheim, 1985; Podsakoff et al., 1982; Reitz, 1971; Sims, 1977). This contributes to the literature by confirming previous findings.
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effect on performance at t2 for high-performance teams. So far, little research has focused on this topic. Therefore this finding is of high theoretical value.
The first finding is consistent with literature used for the theoretical reasoning. Low-performance teams are in need of a leader that exhibits TAL aspects: establishing clear team goals; criteria for measuring progress (Bragg, 1999); and the rewarding of teams when goals are accomplished (Beersma, Hollenbeck, Humphrey, Moon, Conlon, & Ilgen, 2003).
The second finding is also consistent with literature used for the theoretical reasoning. High-performance teams benefit more from TFL than from TAL, since TFL augments the effect of TAL and results in organisational citizen behaviour (Rowold & Heinitz, 2007; Erez & Zidon, 1984). For high-performance teams, contingent reward results in a significant drop in performance. An explanation can be found in the literature domain of motivation. High performance is strongly related to intrinsic motivation (Deci & Ryan, 1991; Sheldon, Ryan, Rawsthorne & Ilardi, 1997; Hugh, 1985; Matei & Abrundan, 2011). This implies that high-performance teams motivate themselves to perform beyond expectations. Furthermore, literature mentions that team members with high intrinsic motivation and performance levels experience a decrease in performance when direct rewards systems are used (Deci, Koestner & Ryan, 1999). Other aspects that cause a decrease in performance were deadlines, directives, and imposed goals (Deci & Ryan, 1985). These elements are all strongly related to the contingent reward dimension of transactional leadership. Concluding, a high-performance team has intrinsic motivation to perform beyond expectations. As a result, these teams are not in need of a leader who focuses on contingent reward, in fact, this will result in an adverse effect.
Active management by exception. This study found a marginally significant relation
between active management by exception and performance. This is not consistent with previous research, which found no significant relation (Greence, 1976; Hunt & Schuler, 1976; Podsakoff et al., 1982; Yammarino & Bass, 1990).
Furthermore, this study found that [1] active management by exception has a positive effect on performance for high-performance teams. In contrast, [2] active management by exception has a negative effect on performance for low-performance teams. These findings are in contrast with what was expected based on the theoretical reasoning. However, since the results were marginally significant, they should be interpreted with caution.
high-29
performance teams receive much positive confirmation as a result of their high performance level. Therefore, their confidence level increases (Deci & Ryan, 1991; Sheldon et al., 1997). As a result, they are better able to cope with negative feedback resulting from active management by exception (Seijts & Latham, 2001) and therefore they are more capable of increasing their performance.
A second line of reasoning, is that because of the high performance level of a high-performance teams, it can be expected that corrective actions as a result of active management by exception do not occur frequently. Therefore, in the rare occasion that a corrective action does occur, the teams are better able to capture the benefits of active management by exception, resulting in higher performance. In contrast, it is expected that low-performance teams receive much negative feedback concerning their low performance. As a result their team confidence is very low and therefore, these teams will have difficulties processing negative feedback (Seijts & Latham, 2001).
High performance expectations. This study found that high performance expectations
are significantly related to performance. This finding is supported by other studies (Locke, Motowidlo & Bobko, 1986).
Furthermore, this study found that [1] high performance expectations has a positive effect on performance at t2 for high-performance teams. In contrast, [2] high performance expectations has a negative effect on performance at t2 for low-performance teams. These findings are consistent with the expectations of this study and previous research (Locke et al., 1986).
Using high performance expectations within low-performance teams can quickly result in a gap between the ambitious goal and the limited team ability. Reaching the limits of a team’s ability will result in a decrease in performance. Furthermore, overambitious goals lead to a drop in commitment, resulting in a drop in performance (Erez & Zidon, 1984). Finally, high performance expectations can make teams so anxious to succeed that they fail to learn what is effective (Earley, Connolly & Ekegren, 1989).
Practical implications
30
leadership styles are relevant and contribute most to performance. More specifically, it offers insights into which leadership dimensions to use for a given team performance.
If the performance of a team is low, it is best for leaders to focus on a transactional leadership style. More specifically, contingent reward seems to be the most powerful dimension of TAL to realise a performance increase over time. If the performance of a team is high, it is best for leaders to focus on a transformational leadership style. More specifically, high performance expectation is the most powerful dimension of TFL to realize a performance increase over time. Organisations could offer their leaders a training course about leadership. Through this course, leaders can become aware of their own leadership style, other leadership styles and the effect of leadership style on performance over time. Furthermore, they can learn to focus on and adapt to a particular style that is effective in their team, in order to realise a performance increase over time.
Strong points, limitations and suggestions for further research
This study has several strong points. First of all, it made use of a longitudinal design, which allowed a comparisons between the TAL and TFL in relation to performance over time. Secondly, it linked leadership to change, a domain that is underexposed in literature. Thirdly, it looked specifically at how low and high initial team performances are influenced by TAL and TFL. This has not been done in research before. Finally, it focused on the non-profit sector, in a research area that is dominated by studies that focus on the for-profit sector.
There are some limitations to this study which directly lead to room for further research. The main limitation is that this study exclusively made use of subjective performance data. Team managers assessed their team on reaching team goals; deadlines; work speed; quality of work; productivity and efficiency. It was not tested whether these subjective performance data were consistent with the objective performance data. Further research should make use of objective performance data to enable a comparison between objective and subjective performance data and to further strengthen the research.
Secondly, this research focused only on performance as an outcome indicator. It is possible that some of the insignificant dimensions would relate significantly to other outcome criteria, like innovation or creativity. Future research should make use other outcome criteria’s, to see if they can be related to the dimensions of leadership.
31
there are multiple other variables at play that predict performance over time. Future research could include more variables; this increases the accuracy.
Finally, this study assumes that leadership is stable over time. Team leaders were classified as either transactional or transformational at t1. It was assumed that this leadership style did not change over time. However, since team leaders received feedback concerning their leadership style at t1, it could be that some leaders attempted to change their leadership style. Future research should control for leadership style changes over time.
CONCLUSIONS
The research question of this study was to see how TAL, TFL, and initial performance interact in order to determine performance over time. Both TAL and TFL do not contribute to performance as a separate construct, however, some dimensions of TAL and TFL do contribute to performance over time. Three dimension were found: contingent reward (TAL) and high performance expectations (TFL) relate significantly to performance over time. Active management by exception (TAL) was found to be marginally significant.
32
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38 APPENDIX A Factor analysis 1 – Factor loadings - All questions
Component
1 2 3 4 5 6
Intellectual stimulation & Inspirational motivation
Onze leidinggevende inspireert ons met zijn/haar toekomstplannen ,808 Onze leidinggevende houdt ons team een interessante toekomstvisie voor ogen ,808 Onze leidinggevende heft duidelijk voor ogen waar we heen gaan ,799 Onze leidinggevende stelt vragen die ons aanzetten tot nadenken ,796 Onze leidinggevende brengt het team ertoe samen te werken aan een gezamenlijk doel ,785 Onze leidinggevende is in staat anderen te binden aan zijn/haar droom ,782 Onze leidinggevende is altijd op zoek naar nieuwe kansen ,774 Onze leidinggevende stimuleert ons om ons optreden vanuit verschillende
invalshoeken te bekijken
,764 Onze leidinggevende heeft ideeën die ons er toe aanzetten onze aannames over het
werk te herzien
,752
Onze leidinggevende vormt een goed rolmodel voor mij ,750
Onze leidinggevende daagt ons uit om oude problemen in een ander daglicht te stellen ,742 Onze leidinggevende ontwikkelt teamgeest en een teamgevoel onder de teamleden ,737 Onze leidinggevende stuurt aan door het goede voorbeeld te geven ,735 Onze leidinggevende spoort werknemers aan om “team players” te zijn ,722 Onze leidinggevende zorgt voor samenwerking tussen teams ,705 Onze leidinggevende leidt door te “doen” in plaats van te “zeggen” ,631 Onze leidinggevende maakt duidelijk wat het ons zal opleveren als we doen wat vereist
is
,541
Individual consideration
39
Onze leidinggevende houdt rekening met persoonlijke wensen ,323 ,726 Onze leidinggevende behandelt ons zonder rekening te houden met persoonlijke
gevoelens (recoded)
,789
Continuous reward
Onze leidinggevende geeft aan welke beloning we kunnen verwachten als we doen wat er gedaan moet worden
,925 Onze leidinggevende stelt bepaalde beloningen voor goed werk in het vooruitzicht ,909 Onze leidinggevende vertelt ons wat we moeten doen om voor onze inspanningen
beloond te worden
,887
High performance expectations
Onze leidinggevende wil alleen maar de beste prestaties ,890
Onze leidinggevende wil altijd het maximaal haalbare ,302 ,824
Onze leidinggevende laat ons zien dat hij/zij veel van ons verwacht ,369 ,699
Management by exception passive
Onze leidinggevende grijpt pas in als het hoogstnoodzakelijk is -,802
Onze leidinggevende komt pas in actie als het fout gaat
-,373
-,801 Onze leidinggevende komt pas in actie als problemen chronisch worden
-,427
-,740
Management by exception active
Onze leidinggevende vestigt de aandacht op onregelmatigheden en afwijkingen in het functioneren
,369 ,781
40 APPENDIX B Factor analysis 2 – Factor loadings – 1 deleted question
Component
1 2 3 4 5 6
Intellectual stimulation & Inspirational motivation
Onze leidinggevende inspireert ons met zijn/haar toekomstplannen ,807 Onze leidinggevende houdt ons team een interessante toekomstvisie voor ogen ,807 Onze leidinggevende heft duidelijk voor ogen waar we heen gaan ,797 Onze leidinggevende stelt vragen die ons aanzetten tot nadenken ,800 Onze leidinggevende brengt het team ertoe samen te werken aan een gezamenlijk doel ,784 Onze leidinggevende is in staat anderen te binden aan zijn/haar droom ,780 Onze leidinggevende is altijd op zoek naar nieuwe kansen ,774 Onze leidinggevende stimuleert ons om ons optreden vanuit verschillende
invalshoeken te bekijken
,768 Onze leidinggevende heeft ideeën die ons er toe aanzetten onze aannames over het
werk te herzien
,756
Onze leidinggevende vormt een goed rolmodel voor mij ,748
Onze leidinggevende daagt ons uit om oude problemen in een ander daglicht te stellen ,745 Onze leidinggevende ontwikkelt teamgeest en een teamgevoel onder de teamleden ,736 Onze leidinggevende stuurt aan door het goede voorbeeld te geven ,733 Onze leidinggevende spoort werknemers aan om “team players” te zijn ,721 Onze leidinggevende zorgt voor samenwerking tussen teams ,704 Onze leidinggevende leidt door te “doen” in plaats van te “zeggen” ,629
Individual consideration
41
Onze leidinggevende behandelt ons zonder rekening te houden met persoonlijke gevoelens (recoded)
,787
Continuous reward
Onze leidinggevende geeft aan welke beloning we kunnen verwachten als we doen wat er gedaan moet worden
,926 Onze leidinggevende stelt bepaalde beloningen voor goed werk in het vooruitzicht ,910 Onze leidinggevende vertelt ons wat we moeten doen om voor onze inspanningen
beloond te worden
,887
High performance expectations
Onze leidinggevende wil alleen maar de beste prestaties ,891
Onze leidinggevende wil altijd het maximaal haalbare ,303 ,825
Onze leidinggevende laat ons zien dat hij/zij veel van ons verwacht ,369 ,701
Management by exception passive
Onze leidinggevende grijpt pas in als het hoogstnoodzakelijk is -,801
Onze leidinggevende komt pas in actie als het fout gaat
-,374
-,801 Onze leidinggevende komt pas in actie als problemen chronisch worden
-,429
-,741
Management by exception active
Onze leidinggevende vestigt de aandacht op onregelmatigheden en afwijkingen in het functioneren
,370 ,785
