Managing professionals through a combination of transformational and
transactional leadership with goal difficulty and goal specificity
Master thesis, MscBA, specialization Human Resource Management University of Groningen, Faculty of Business and Economics
August, 2010 Hilde op de Hoek Student number: 1533487 Address: Pampusstraat 3 8531 KA Lemmer The Netherlands Telephone number: 0031 (0)623266018 E-mail: h.s.op.de.hoek@student.rug.nl Supervisor/ university N. Manheim
Supervisor/ field of study A. Zwart
Zwartnova, Amsterdam
Acknowledgement:
ABSTRACT
INTRODUCTION
The term professional has many meanings and is operationalized in different ways (Kerr & Von Glinow, 1977). In this study I refer to professionals as people who, to a large extent, work with knowledge based skills rather than mechanical skills or use skills that can be learned by rote, even though there are professionals who will use all three (Epstein, 1991). Professionals exercise a substantial amount of independent judgement and discretion doing their job. Professionals generally possess years of special education, training and experience. One example of professionals are craft workers, who are classic professionals, possess quality craftsmanship (skills), have freedom of the profession and are committed to the profession (guilds) (Van der Krogt, 1981). Notables (also classic professionals) have a high status and knowledge, freedom of the profession, are committed to the profession (oath), and ethics, moral authority and social service are very important for them. Most of the classic professionals have disappeared but some of their characteristics can be discovered with the contemporary professionals. Contemporary professionals possess high specialized knowledge/skills, have an autonomy need, are committed to the profession in the form of an oath and associations and ethic and services are important. Architect, surgeon, preacher, accountant, silversmith and industrial designer are examples of professionals (Maas, 2000).
One of the fastest growing sectors in today’s workforce are professionals and related occupations (Sekiguchi, 2006) and the majority of these professionals are employed by organizations. Moreover, the Dutch government has set their own goals to enlarge the knowledge-based economy (Landelijke Jeugdmonitor, 2010). The goal of the Dutch government is that half of the labour force should be higher educated in 2020. These students are potential professionals. Despite an increase of professionals surprisingly little is written about which leadership style fits when managing professionals. While professionals prefer another way of managing (Weggeman, 2007), are different from other workers (Bucher & Stelling, 1969) and a tension exist between managers and professionals (de Bruijn, 2010). This paper gives suggestions which leadership styles should be used to effectively manage professionals because in the future we have to deal with them.
other organizations a career depends on the conditions set by the organization and how well one accepts these conditions and works according to these conditions (Bucher & Steling, 1969). Another difference is that the professional participates in open negotiations and bargaining, whereas this is usually not possible for other workers (Bucher & Stelling, 1969). When professionals exercise their job they invoke specific knowledge and experience. Their job is characterized by dealing with complex information and documentation (Maas, 2000).
Professionals have their own characteristics and also prefer another way of managing. Managers should inspire professionals, they are already intrinsically motivated (Weggeman, 2007) and must create meaning; this helps the professional to find excitement in their work (Maister, 1985). Furthermore, a manager should communicate the collective ambition (Weggeman, 2007). Professionals want to know what the raison d’être of the company is. Also this collective ambition is important to solve a possible conflict between the professional’s career objectives and the goals of the organization (McKelvey, 1969). Moreover, it is important to praise professionals for all victories and good performed work (Maynard, 2000) because their worth is only judged by what they produce (Sveiby, 1997) and professionals have a low self-respect and are insecure (Maister, 1993; van Wanrooy, 2003, Tonkens, 2008).
more specified and difficult goal. When goals are difficult then according to goal setting theory, people are most likely perform well (Locke et al. 1989). I thus expect that goal difficulty mediates the relationship between transformational leadership and individual performance of the professional.
“Transactional leadership refers to the exchange relationship between leader and follower to meet their own self-interests” (Bass, 1999 : 10). Contingency reward, which is one dimension of transactional leadership, communicates the minimal acceptable performance standard (Waldman, Bass & Yammarino, 1990). So a transactional leader provides a lot of clarity by setting these standards and giving rewards after the accomplishment of a clearly defined goal. To amplify this clarity, a transactional leader should use goal specificity. A specific goal reflects a quantity (Frost & Mahony, 1976) and gives thus more clarity. Furthermore, transactional leadership is linked to the accomplishment of goals or objectives (Hater & Bass, 1988). Goal specificity is a part of goal setting theory (Locke et al., 1981) and thus also focuses on performing better on a work task. I thus expect goal clarity to mediate the relationship between transactional leadership and the performance of the professionals.
This study discusses relevant literature about characteristics of the professionals and the effects of transformational and transactional leadership on individual performance. For each leadership style, a hypothesis is developed about the mediating role of goal difficulty/goal specificity in the relationship between the leadership styles and individual performance. In the end, I will present and discuss the results of my study testing the hypotheses on 103 professionals in the Netherlands.
Professionals, a Different Kind of Employees
to public criticism, compete with other professionals, they work in constantly changing organizations and their worth is only judged by what they produce (Sveiby, 1997). Professionals may be insecure, they have a need to constantly prove themselves that they have what it takes (Wanrooy, 2003; Maister, 1993). This insecurity may stem from them working in changing organizations, and changes could lead to insecurity (Reijnders, 2006). Also, professionals want to do things good (Weggeman, 2007) and want to find an answer, but the confirmation or answer does not always exists (Reijnders, 2006). Professionals test their skills with unfamiliar problems which have an uncertain probability of success. “They live in a constant dread that someone will tap them on the shoulder and say: “We have found you out. You have been faking it all these years”.” (Maister, 1993: 168). This fear is not ungrounded because much information can be found elsewhere (on the internet) and clients have become more empowered.
A Perfect Leadership Style for Professionals I: Transformational Leadership
Transformational leadership refers to “leader behaviors that transform and inspire followers to perform beyond expectations while transcending self-interest for the good of the organization” (Avolio, Walumbwa & Weber, 2009: 423). There are six key behaviors coherent with transformational leadership: identifying and articulating a vision, providing an appropriate model, fostering the acceptance of goals, high performance expectations, providing individualized support, and intellectual stimulation (Podsakoff, et al., 1990).
First, transformational leadership is positively related with organizational commitment (a.o. Bono & Judge, 2003; Koh, Steers, & Terborg, 1995; Walumbwa & Lawler, 2003). A transformational leader can ensure that the professional feels more committed to the organization through intellectual stimulation and individualized consideration. Professionals are challenged to think critically and using novel approaches, and in this way they will be more attached to the organizations and they are also encouraged to transcend their self-interest and work towards organizational goals (Bass, 1999). When showing individualized consideration, the leader listens attentively and pays close attention to their followers’ needs for achievement and growth. The leader also encourages the professional to take more responsibilities so that their development increases (Avolio, 1999; Bass & Avolio, 1994; Kark & Shamir, 2002). Providing professionals with several opportunities such as: decision latitude, challenges and responsibility should lead to followers with higher levels of organizational commitment (Wayne, Liden & Sparrowe, 2000). Professionals are more committed to the work and profession then to the organization (Freidson, 1970; French, 1970). When professionals are more committed to the organization is it likely that they align their own personal objectives with the organizational goals. This is better for the individual performance because the professionals will achieve the organization goals instead of their individual objectives.
Second, a transformational leader helps the professionals to appreciate each other and also helps them to deal with and resolve differences (Leggat, 2009). These behaviors are important because professionals compete with each other (Sveiby, 1997) and this could lead to power games (Weggeman, 2007). When the differences have declined and there is more appreciation, the power games are diminished. So the professionals have more time and energy left over to focus on reaching their goals and thus achieve a better performance.
Hypothesis 1: There is a positive relationship between transformational leadership in professional organizations and individual performance.
For example, a difficult goal is to sell 100 telephones within a week, when the average is 70 telephones a week. Usually a goal refers to achieving a specified standard of proficiency on a task within a certain time (Locke et al., 1981). This hypothesis is developed in two parts, first the reasons why transformational leadership leads to goal difficulty is discussed and after that why goal difficulty enhance individual performance.
Professionals set their own goals (Scott, 1977). Therefore transformational leadership could enhance goal difficulty. Transformational leaders appear to be demanding, visionary and intolerant of half hearted effort. Because of these demands most of the professionals set their standards even higher (Quinn, Anderson & Finkelstein, 1996). A transformational leader expects high performance and is visionary (Cassidy & Koroll, 1994). The professionals are invaded by this vision, are intrinsically motivated and have a need for achievement. So they set higher goals to confirm the leader that they are capable of reaching the high performance standards.
Goals affect intensity of effort. An employee will expand effort in rough proportion to the difficulty of the goal (Locke, 2001). Therefore, as goal difficulty increases, the effort, the motivation and the preparedness to try harder to achieve the goal also increase (Carroll, Houghton, Durkin & Hattie, 2008). This is especially true for professionals. Because of their need for achievement (Wanrooy, 2003), they would put in as much effort needed to reach the goals, and their intrinsically motivation. Since the professional sets his/her own goals, he/she derives pleasure from the task and is more willing to try harder to accomplish the goal.
Hypothesis 2: Transformational leadership positively influences individual performance through the mediating effect of goal difficulty.
A Perfect Leadership Style for ProfessionalsII : Transactional Leadership
transactional leadership: rewards, incentives, budgetary control, strategic planning, evaluation and monitoring, and information control (Kezar & Eckel, 2008).
The exchange between leader and professional can be based on contingency reward, active management by exception or passive management by exception (Bass, 1999). Contingent reward spells out expectations and offers recognition when goals are accomplished (Bass, 1985). Management by exception-active, the leader intervenes directly when deviations in the usual patterns occur and when the performance is in danger. The passive form of management by exception means that the leader responds after the problems have occurred. This study will only focus on the first two behaviours because passive management by exception does not have a positive influence on performance (Howell & Avolio, 1993). Several reasons exist why transactional leadership causes a better individual performance of professionals.
First, contingency reward indicated the expectations and active management by exception gives the professional the freedom, just as long as no deviations occur. Contingency reward displays the minimal acceptable performance standard (Waldman, Bass & Yammarino, 1990). Professionals want to have clarity about what is expected from them (Broos & Korte, 2007). With this dimension of transactional leadership this clarity is given. So the professional will achieve the standards set by the transactional leader because of his need for achievement. Professionals also want to have the freedom and autonomy to formalize the work (Broos & Korte, 2007). In this way the professional can decide how to achieve the results and is responsible for the quality of the work. Active management by exception allows the professionals to satisfy this need. With the active management by exception style the professionals are encouraged to maintain the established performance standards (Lyons & Schneider, 2009). When mistakes appear the leader will intervene. In this way the performance is maintained.
Hypothesis 3: There is a positive relationship between transactional leadership and individual performance.
I presume that goal specificity has a mediating role on the positive relationship between transactional leadership and individual performance. Goal specificity can be defined as “the degree of quantitative precision with which the aim is specified” (Locke et al., 1981: 126). In this study a distinction is made between setting specified and unspecified/vague goals. A specific goal is a goal in quantified form (complete 100 reading items) whereas a unspecific goal was of the form “work at the task until told stop” (Frost & Mahony, 1976). First the reason why transactional leadership leads to goal specificity will be discussed and after that why goal specificity enhance individual performance.
According to Corrigan & Garman (1999) transactional leaders focus on several goals i.e. clarifying expectations: provide clear goals in order that employees better understand their work–related responsibilities. Thus, a transactional leader provides a lot of clarity about the expectations for the professional. Moreover, one focus point of a transactional leader is attaining specific goals (Kotter, 1990). So it is likely that transactional leaders prefer to work with specified goals. Professionals want clarity about what is expected from them (Broos & Korte, 2007) and since they set their own goals after consulting their leader, those goals are also specified.
professionals have reached their goals or whether they should put more effort in it. Since they have a need for achievement (Wanrooy, 2003) they want to achieve the goals that are stated in the personnel commitment statement. Also these specific personnel commitment statements serve as a benchmark for professionals. Professionals want recognition for their work and do their best to be the best performer (Wanrooy, 2003). So this benchmark will lead to a higher individual performance.
Hypothesis 4: Transactional leadership positively influences individual performance through the mediating effect of goal specificity.
METHOD Data and Sample
Participants in this study represented 103 professionals working in various sectors in the Netherlands, for example in the education sector, health sector and services organizations. Via an HRM advice office, the contact was made with the professionals.
Questionnaires were sent to the professionals by e-mail. The e-mail addresses were provided by the leaders of the professionals. Those leaders also announced/introduced the arrival of the questionnaires to their employees to increase the willingness to cooperate. The questionnaires were also available on paper because not all of the companies had optimal access to the internet. The questionnaires included an introductory letter, which stated that participation in this study was voluntary and the participants’ anonymity was guaranteed.
The response rate was 41.5% (103 professionals completed and returned their questionnaires of the in total 248 invited professionals). The average age of the participants
was 41 years; with regard to gender, 33 (32%) of the respondents were male and 69 (67%) were female, sex was not indicated on 1 questionnaire.
Measures
The scales in this questionnaire were answered on 5-point Likert scale for the questions regarding leadership styles and on 7-point Likert scale for the remainder questions. Both Likert scales ranging from strongly disagree (1) to strongly agree (5 respectively 7). Data was gathered about transformational and transactional leadership, goal specificity, goal difficulty and individual performance.
Transformational and transactional leadership. Transformational leadership was measured with a 20-item scale developed by Podsakoff et al. (1990). Transformational leadership consist of 6 dimensions int. al. identifying and articulating a vision (“my manager paints an interesting picture of the future for our group”) and providing an appropriate model (“my manager provides a good model for me to follow”). Transactional leadership was determined by a 8-item scale developed by den Hartog, van Muijen and Koopman (1994). Transactional leadership consist of 2 dimensions and include: contingent reward and management by exception active. The Cronbach’s alphas was 0.92 for transformational and 0.79 for transactional leadership.
Goal specificity. Goal specificity was measured with a 5-item scale (e.g. “My goals are very clear and specific. I know exactly what my goals are,” and “I understand exactly what I am suppose to do on my job”) which were deduced from Locke & Latham (1984) and Steers (1975). The Cronbach’s alpha for this construct was 0.74.
Goal difficulty. Goal difficulty was also measured with a 5-item scale based on Steers (1975). Sample items include: “My goals require a great deal of effort from me to achieve them,” and “It takes a high degree of skills and know-how on my part to fully attain my goals.” The 5-item scale of Steers had a negative Cronbach’s alpha. An explanation for this is that the respondents did not note the 2 reversed items. So they answered these reversed items in the same way as the others. Therefore I have deleted 2 items. The Cronbach’s alpha of the remaining 3 items was 0.52.
Control variables. There are two variables which I control for: need for achievement and tenure. When high need achievers are allowed to participate in the goal setting process then they set more difficult goals than low need achievers (Yukl & Latham, 1978). Need for achievement was measured with a 7-item scale based on Janssen & Van Yperen (2004). An item example is “I feel successful on my job when I am clearly the most productive employee”. The Cronbach’s alpha was 0.92. A few studies have investigated tenure as a moderator variable in the goal setting process but with different outcomes (Locke et al., 1981). Some studies found that there is a significant relation between stated goals and productivity for long-tenure employees (1-2 or more years).
Statistical Analyses
In this study I will use regression analysis to test for mediation. Mediation occurs when a variable (in this case goal difficulty and goal specificity) explains the relation between the predictor (transformational and transactional leadership) and the criterion (individual performance) (Baron & Kenny, 1986). This regression analysis has three steps: regressing the mediator (goal difficulty/goal specificity) on the independent variable (transformational/ transactional leadership), regressing the dependent variable (individual performance) on the independent variable and the final one regressing the dependent variable on both the independent variable and on the mediator. The variables were standardized prior to using them in the regression.
RESULTS Descriptive Statics and Correlations
TABLE 1
Means, Standard Deviations, and Correlations, Transformational Leadership Variable M SD 1 2 3 4 5 6 7 8 9 1. Transformational leadership 3.41 .58 - 2. Transactional leadership 2.92 .58 .49** - 3. Goal difficulty 5.21 .91 .30** .30** - 4. Goal specificity 5.64 .78 .38** .27** .37** - 5. Individual performance 5.24 .56 .15 .15 .43** .28** -
6. Need for achievement 3.19 1.31 .05 .28** .17 .02 .23* -
7. Organizational tenure 6.02 5.65 .01 -.19 .08 -.03 -.04 -.07 -
8. Gender 1.66 0.50 -.02 -.19 -.07 -.18 -.13 -.12 .19 -
9. Age 41.03 14.01 -.16 -.06 .06 .09 .04 .04 .34** .05 -
Note * p < .05 (two-tailed test). ** p < .01 (two-tailed test) N= between 103 and 96
Hypothesis Tests
TABLE 2
Unstandardized Regression Coefficients, Transformational Leadership Individual performance
Variable Step 1 2 3
1. Need for achievement .13* .12 * .09
Organizational tenure -.01 -.01 -.03 2. Transformational leadership .08 .02 3. Goal difficulty .22** R² .05 .07 .20 ∆ R² - .02 .13 Note * p < .05, ** p < .01 N= between 103 and 96 TABLE 3 Unstandardized Regression Coefficients, Transformational Leadership Goal difficulty Variable Step 1 2
1. Need for achievement .16 .15
Organizational tenure .08 .08 2. Transformational leadership .26** R² .04 .12 ∆ R² - .08 Note * p < .05, ** p < .01 N= between 103 and 96
between goal specificity and individual performance, is also proved (b = 0.15, p < .01). Again the mediating role of goal specificity in the relationship between transactional leadership and individual performance is not proved because there is not a significant relationship between transactional leadership and individual performance. Therefore, I reject both hypothesis 3 and 4.
TABLE 4
Unstandardized Regression Coefficients, Transactional Leadership Individual performance
Variable Step 1 2 3
1. Need for achievement .13* .11 .12*
Organizational tenure -.01 -.00 -.01 2. Transactional leadership .05 .01 3. Goal specificity .15** R² .05 .06 .13 ∆ R² - .01 .07 Note * p < .05, ** p < .01 N= between 103 and 96 TABLE 5 Unstandardized Regression Coefficients, Transactional Leadership Goal specificity Variable Step 1 2
1. Need for achievement .01 -.05
Organizational tenure -.02 .02 2. Transactional leadership .23** R² .00 .08 ∆ R² - .08 Note * p < .05, ** p < .01 N= between 103 and 96 DISCUSSION
when he/she has a transformational/transactional leader and that this would lead to a better individual performance.
Findings
Literature has given support for the relationship between transformational and transactional leadership and individual performance (Avolio, 1999; Bass, 1998). Also several meta-analyses of transformational leadership have been conducted (Lowe, Kroeck & Sivasubramaniam, 1996; Fuller, Patterson, Hester & Stringer, 1996). But these studies did not have their focus on professionals but on for example military (Bass, Avolio, Jung & Berson, 2003). In contrast to what these studies have found, there is no significant relationship between transformational and transactional leadership with individual performance in this paper. That these relationships are not found can be attributed to fact that professionals are not enthusiastic about being managed at all (Smit, 2004). They like to do the things in their own way without taking into account the ideas and views of colleagues. However, a professional will accept influence and guidance from their manager if they believe that their manager want to help others instead of purely themselves (Smit, 2004). So it is possible that the professionals did not act according to the guidance of their manager because they believed that he/she acted in his/her own interest. Also, during this paper some of the professionals could not endorses with the terms being used, especially the term “leader”. When I referred to a leader as a contact point or someone to discuss your problems with, they all knew who was meant. This indicates that these professionals do not recognize their leader. So it is not strange that transformational and transactional leadership has no influence on individual performance if professionals do not want to be managed or do not recognize their leaders. Managers of professionals should focus more on the self-steering of professionals (Minzberg, 1992; Wanrooy, 2003; Fisscher, 1986) maybe in this way there will exist a significant relationship between leadership and individual performance.
themselves how to achieve the goal and professionals like this freedom (de Groot, 2005). So a transformational or transactional leader must negotiate with the professionals to make sure that he/she will set difficult or specific goals. In this way a transformational or transactional leader has some indirect influence on the individual performance of the professionals.
Theoretical Implications
Since some leadership styles, transformational and transactional, do not have a direct influence on the professional’s individual performance, one should consider whether leadership in general could have an influence on the professionals. Professionals do not like to be managed (Smith, 2004). And professionals do not work in pre-defined tasks anymore, they work on project base or in networks (Vinke & Schouwstra, 2008). So the tasks of the manager might not be to manage the professional towards those pre-defined tasks but to facilitate the professional to achieve the (projects) goals and personal development plans. Given that the jobs of the professional change and are not permanent or guaranteed (Vinke & Schouwstra, 2008) it is important that the professional is self-steering. The professionals know their passion and forces, also they have their own responsibility for their personal development. So they know best which job or tasks fit them (Vinke & Schouwstra, 2008). But the manager/leader should not necessarily be vanished. He/she should only focus on “what” needs to be achieved and not on the “how” (de Groot, 2005). So the manager should only concentrate on a part of setting goals and it should be further investigated whether the manager has an influence on professionals when possessing other managerial tasks, for example managing change or sustaining the culture.
shown (Al-Mailam, 2005). Transformational leaders endorse the satisfaction of the nurses, which adds to their work effectiveness and it motivates them to deliver a high quality of patient care (Al-Mailam, 2005). Another interesting outcome to investigate is professional and/or organizational commitment. Koh et al. (1995) validated that transformational and transactional leadership had an influence on organizational commitment. Moreover, several researchers have confirmed a positive relationship between transformational leadership and organizational commitment (Bono & Judge, 2003; Walumbwa & Lawler, 2003). A professional is more committed to the work or profession than to the organization (Freidson, 1970; French; 1970). So the manager bears the responsibility to align the professional commitment with the organizational commitment. One more outcome that can be looked at is job satisfaction. Dimensions of transformational and transactional leadership are positively related to job satisfaction (Nguni, Sleegers & Denessen, 2006). Professionals work in changing environments and have complex tasks. This could have an impact on the workload. The workload of the professionals is related to job satisfaction (Zangaro & Soeken, 2007). Also is stress related to job satisfaction (Sveinsdóttir, Biering & Ramel 2006).
Practical Implications
Even though the hypothesis of this study are not confirmed it still gives practical implications how to manage professionals. For managers of professionals or the HRM department these findings mean that they should re-examine how their professionals are steered. There is no direct relation found between the leadership styles and individual performance. Thus a transformational or transactional leader does not have a direct influence on the professionals’ performances. However, positive significant relations have been found between transformational/transactional leadership and goal difficulty/specificity. So a transformational or transactional leader stimulates professionals to set difficult/specific goals. Also a positive relationship is found between goal difficulty/specificity and individual performance. All this implies that the manager should ensure that the professional will set specific or difficult goals in order to maintain a better individual performance.
Strengths and Limitations
individual performance. Another strength of this study is the sample size of 103 professionals, this amount of professionals is large enough to make validate conclusions.
A limitation of this study is that the extent to which a leader is transformational or transactional is only based on the subordinates perceptions. A more objective view is obtained if multiple sources are consulted. During the investigation some changes occurred in the organizations that were related to leadership, this could have had an impact on the perceptions of the subordinates. Also in this study different sectors were investigated; education, healthcare and service organizations. A service organization operates very different than a healthcare organization; for example grants, degree of dependence of the customers/patients on the professionals. It might be that a professional of one organization does not need the same leadership styles as a professional of another organization.
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