Transformational Leadership on Employee Adaptability to Change in an Organization
Employees’ resistance to change is one of the major impediment to organizational growth. Unfortunately, change is an inevitable reality in the current dynamic and competitive business environment. To a great extent, resistance to change normally stems out of uncertainties such as the fear of the loss of work, incompetence, redundancies, and frustration on learning the new tasks. Appropriate organizational management, such as transformational leadership can provide employees’ with insight and information needed to make them adopt the new changes in their organization. This paper examines the relationship among transformational leadership, adaptability to change, reactions to change, and frequency of change in an organization.
Keyword: Transformational leadership, change, organization citizenship behavior (OCB), employee task performance.
Organizations all over the world must progressively change for them to survive and remain competitive in the volatile business environment. Burke (2002) notes that companies compete by continuously making incremental changes that comprise of frequent, small, and purposeful adjustments that have an overall positive effect. Further, changes in business operations stem from various internal and external sources such as technological, social, and economic factors. Feldman and Pentland (2003) opine that when adapting to change, workers selectively retain their effective characters of their performance routines and combine them with new and more efficient ones. In recent times, the rapid changes in modern organizations have been punctuated with adjustments in management styles, industry, and structures, which have enhanced local and international competition (Wainaina, 2014). Accordingly, businesses must have the appropriate leadership to enable their employees to adopt these changes, which will effectively enable them to reconfigure their operations so that they can enhance their efficiency and effectiveness.
Ordinarily, changes in any organization always result in tension and fear as some employees think they may lose their work or become redundant. As such, managers must have appropriate leadership styles to prevent the emergence of unnecessary tension and ensure effective performance among workers. Bass and Riggio (2006) note that transformational leadership is an effective managerial style during organizational change. Importantly, transformational leaders share compelling visions with their employees, inspire them to accomplish challenging goals, and guide them in the adaptation process (Carter, Armenakis, Field, & Mossholder, 2012). Therefore, transformational leaders enable employees to become more productive as individuals or when working as a team (Judge & Piccolo, 2004).
Hurvey (2010) opines that although it is simple to change processes and things, changing people is much complicated, and resistance is one of the main hindrances that businesses can face. Organizational change normally brings about stress, increased work pressure, redundancies, employees resistance, and the fear of the unknown such as a possible job loss (Wang, 2005). Through proper leadership tactics, organizations may reduce the level of anxiety among workers that is brought by the emergence of changes. Therefore, a dynamic leadership that can establish structures and work processes for employees to adhere to during the uncertainty and turbulence of transition change is necessary for smooth adaptability to organizational changes (Stacy, Griffin, & Show, 2002).
Our study contributes to the transformational leadership and employee adaptability to change in two ways. Firstly, this paper provides an empirical explanation of how transformative leadership influences change outcomes in an organization. In this case, the paper examines employee reactions to change-oriented leadership during a period of organizational change. Importantly, this analysis gives insight into the relationship between leadership, employee adaptability to change, and effects of changes among employees. Secondly, this paper focuses on transformative leadership and change at lower hierarchical level. This analysis provides insight on the impact of upper management directing changes to organizations using formal restructuring and the subsequent downward influence. It also provides insight as to where transformative leaders facilitate change at lower levels by actively providing supportive relationships to their juniors. Thirdly, the paper provides insight on the role of transformative leadership in enabling employees to adapt to the change processes in their organization easily.
Transformative leaders create a strong vision of growth, confidence, initiative, and critical thinking among their employees (Carter, Armenakis, Field, & Mossholder, 2012). Importantly, these attributes help the employees to have the confidence of adapting to changes and emphasize the importance of performance that transcends self-interest motives (Bass, 1999). Accordingly, transformational leadership helps individuals to react favorably regarding their attitude and behavior to change (Carter, Armenakis, Feild, & Mossholder, 2012). Liu and Batt (2010) assert that transformative leadership makes employees commit to organizational changes. Further, Deter and Burris (2007) opine that transformative leadership enables organizational changes to result in enhanced job productivity at the unit level.
Although change attempts at a strategic level are usually broad and they tend to be formal, in written form, and always have a larger audience, transformative leaders, at managerial levels, use unscheduled and informal methods when implementing change (Carter, Armenakis, Feild, & Mossholder, 2012). Rafferty & Restubog (2010) note that the use of unscheduled, face-to-face employee conversation enable employees to express their views on the change process and ask appropriate questions. Wainaina (2014) asserts that this communication makes employees believe that their opinions have been heard and carefully consideration by the management. Similarly, Levay (2010) states that employees’ participation in the change process can help in resolving some change-related issues by enabling a bottom-up input on the work processes. Importantly, this process can make workers develop positive reactions and become motivated in establishing organizational changes. In conformity, Bennis (1969) opines that a leader plays a vital role in communicating, preparing, motivating, and encouraging employees to accommodate change. Further, Waceke (2013) notes that managers, immediate supervisors, and department heads of banks have a significant influence in encouraging their juniors to embrace organizational change.
Employees’ reaction to change varies greatly in both unintended and intended ways. If employees’ misinterpret the management purpose in implementing change, there may experience uncertainties on the behavior needed to achieve the desired change objectives (Carter, Armenakis, Field, & Mossholder, 2012). Wrong behavior among employees coupled with a reduction in their confidence can divert their energy, which may affect their job performance. Kanfer and Ackerman (1989) also note that in such an environment, there can be a rise in tension as employees attempt to learn new work routines. Therefore, it is essential for managers to maintain a stable relationship and communication with their employees so that they can be assured of their guidance and support. In support of this view, Howell and Hall-Merenda (1999) established that transformative leaders could help positively workers with whom they have close interactions.
Carter et al. (2012) note that transformational leaders dedicate much time to the training of their employees. Wainaina (2014) notes that training of employees enables them to participate in the change processes easily. Further, Carter et al., (2012) opine that training of employees makes them more creative and empowers to adapt to change processes effectively. Liu and Batt (2010) also note that as transformative leaders spend more time training their employees, they also grow the relationships they have with them. These relationship ties include respect, trust, interpersonal support, and mutual obligations. From the social exchange theory, employees engage in behaviors that reciprocate tangible and intangible benefits that are provided by managers (Wilson, Sin, & Conlon, 2010). In this case, the tangible benefits are financial and other physical rewards whereas the intangible ones include respect, trust, and loyalty. As such, employees who have strong relationships with their managers are more productive and committed to implementing changes than their colleagues with weak relationships (Cropanzano & Mitchell, 2005). Therefore, transformational leadership enables the high-quality formation relationships that are essential for the establishment of favorable change outcomes.
Relationship Quality, Change Frequency, and Job Performance
Typically, changes in the business operations result in employees changing their initial work routines by adopting more efficient and socially benefiting approaches (Carter, Armenakis, Field, & Mossholder, 2012). Nonetheless, the number of changes should not be so many since they will make it difficult for employees to adopt their new work procedures and social norms (Rafferty & Griffin, 2006). Shaw, Ashcroft, & Petchey (2006), also note that higher frequency of changes raises the doubts of employees. Accordingly, these changes can disrupt the employees’ previously shared responsibilities and negatively affect their job performance.
In organizations that have low frequencies of change, they have a relatively stable operational system. Carter, Armenakis, Field, and Mossholder (2012) opine that employee’s work routines are not frequently interrupted and the need for them to adopt new schedules is usually less demanding. Importantly, the employees become more confident in performing their tasks and reduces the need for continuous managerial guidance.
Managers usually engage in quality relational behaviors with their employees when there is smooth running of work routines and processes. As such, they can provide resources and information support for work adjustments to their workers. Additionally, they can also offer formal and informal rewards to workers to motivate them in their efforts of adapting to their work environment (Weick & Quinn, 1999). Yukl (2010) opines that quality relationships between employees and their managers make the former more receptive to their managers’ influence. As such, they become more devoted to their work and maintain their high performance. Similarly, Kim, Hornung, & Rousseau (2011) observed that managers’ efforts to foster the trust and social support to their employees could enable easy adaptability to change among the latter.
Leadership entails persuading individuals to work towards achieving a common objective. Accordingly, leaders inspire their followers to work towards achieving their common vision (Armstrong & Murlis, 2005). In this regard, a transformative leader motivates people to rise above their interests and work for the good of the company or their team. For a transformative leader to nurture employees with such an attribute, he/she must have a fair, rewarding system. Wainaina (2014) postulates that a fair and just rewarding system may make employees more motivated. Employees’ motivation on their work is influenced by the resources they can access, the leadership style in their organization, type of work, compensation, and personal drive (Wainaina, 2014). Carter, Armenakis, Field, and Mossholder (2012) opine that one of the primary importance of having motivated employees is that they are less resistance to change during the implementation process. Wainaina (2014) notes that appropriate rewarding of employees makes them motivated, increases their commitment, engagement, and enhances their personal development. Further, Ndungu (2011) asserts that efficient use of rewards and recognition is a practical and cost-effective means of motivating performance and enabling workers to accept changes in their work environment. Therefore, an appropriate reward system is both a cost-effective solution for enhancing employee performance enabling them to adopt transformative change.
Hypothesis in This Research
Hypothesis 1 (a-b): Relationship quality will mediate the association of transformational leadership with (a) task performance and (b) OCB (Carter et al., 2012).
Hypothesis 2 (a-b): Change frequency will moderate the positive association of relationship quality with (a) task performance and (b) OCB. That is, high change frequency will increase the positive association. (Carter et al., 2012).
Various studies have identified numerous determinants of employees’ adaptability to change. According to Waceke (2013), employees need training, effective transformative leadership, and motivation to help them overcome their fear and resistance to change. An empirical review of the research done by Carter et al. (2012) shows how transformative leadership affects relationship quality and employee performance during a change in the organization. Accordingly, it gives a detailed view of how transformational leadership affects employees’ adaptability to change.
Carter et al. (2012) collected data from two organizations that are in the service industry in China. Both companies; Company A and Company B, used work teams in their business operations. A work team, in this case, referred to a group of individuals who had interdependent work interactions and also mutual responsibilities that aimed at achieving common objectives. Following the economic recession that began in mid-2008, the two companies made similar strategic decisions in December of the same year, by initiating incremental organization changes to improve customer relations and quality services. In particular, both companies implemented training programs to create a customer-oriented culture and improve the quality of service. Additionally, team leaders met with other leaders and discussed various change initiatives, which informed them on modifications they would make in their teams to help them achieve their objectives.
In Company A, the teams decided on establishing a 24/7 customer service call center. They also promised customers that they would have a 24-hour customer care support. The change initiative established entailed delegating authority assigning responsibilities to teams to make each team member have better coordination of call center service contacts.
In Company B, the teams decided to increase their commitment to customer satisfaction. Additionally, the firm decided to include customer satisfaction results as an incentive in its pay structure. The company used reviews from its website and paper surveys to get the scores for customer satisfaction. Also, a new department was established to review the paper and web-based customer satisfaction surveys and also other quality control functions in the company (Carter, Armenakis, Field, & Mossholder, 2012).
Participants and Procedures
Data was collected from full-time employees working for both Company A and Company B in early 2009. Each team member filled a confidential survey, which was categorized into two; employee survey, manager survey. The participants returned the completed questionnaires through the post. The transformational and relationship quality between employees’ and managers were assessed using a coding scheme that matched employee-manager responses. An assessment of employee’s perception of change frequency was done using reports where team-members self-reported their demographic information and answered questions that assessed their perception of change frequency.
In Company A, there was an average of 4.6 team members and a team leader. 60% of the team members (143 teams) and 83% team leaders (43 leaders) responded to our interview. The response rate was on average 72%. The average age of team members was 26.4 years, and their average organizational tenure was 2.2 years. 81% of the team members were male, 34% had an associate degree, and 66% had a graduate degree. Among the team leaders, their average age was 31.3 years, and they had an average organizational tenure of 5.4 years. 77% were male; 19% had an associate degree, 77% had a graduate degree, and 5% had a postgraduate degree.
In Company B, the average team size was 3.9 individuals and a team leader. 108 team members, which is a 64% response rate and 35 team leaders, which is a 78% response rate, completed the survey. The average age of the team members was 26.1 years, and their average organizational tenure was 3.4 years. 66% of the team members were male; 30% had an associate degree, 69% had a bachelor degree, and 1% had a master degree. Among team leaders, the average age was 34.5 years, and their average organizational tenure was 10.9 years. 51% of them were male, 14% had an associate degree, 69% had a bachelor degree, and 17% had a master degree.
The responses were assessed using a seven cell response format ranging from 1= ‘strongly disagree’ to 7= ‘strongly agree’ in all questions. The back-translation method was used when a Chinese version of the scale was unavailable (Brislin, 1980). Additionally, a referent-shift consensus composition approach was used to modify the original scale items and enable easy measurement of the two team-level variables (Chan, 1998).
Transformational leadership was assessed using a modified Chinese version of the Multi-Factor Leadership Questionnaire (MLQ) Form 5X (Avolio & Bass, 2004). The MLQ-5X consisted of 20 items with 5-cell response format that ranged from 0= not always to 4= ‘frequently, if not always’ (Bass, Cascio, & O’Connor, 1974). The coefficient alphas and the dimension for the measure were: idealized attribution (0.76), idealized behavior (0.74), inspirational motivation (0.78), intellectual stimulation (0.76), and individualized consideration (0.79).
A confirmatory factor analysis (CFA) was conducted to assess if the five transformational leadership dimensions fit the data (Wang et al., 2005). From the test, it was clear that the fit indices were within the acceptable range, which implied that the data was consistent with the higher order model. As a result, transformational leadership was treated as a global construct. The assessment of the appropriateness of aggregating individual scores of the team using intra-class and within-group indices showed there was sufficient statistical reason for aggregation (ICC1= 0.43; ICC2= 0.71; mean rwg(j)= 0.98).
According to Graen and Uhl-Bien (1995), the leader-member exchange (LMX) is what frames the social exchange relationship between leaders and employees. The research used the LMX-multidimensional scale (LMX-MDM) to test the relationship quality construct. In the LMX-MDM dimensions and coefficient, alphas were affected (0.73), loyalty (0.70), contribution, (0.75), and professional respect (0.8) (Carter et al., 2012). The CFA test of the four LMX-MDM dimensions and the higher-order factor model fit the test data (Carter et al., 2012). Additionally, the fit indices fell within the acceptable range, which showed that the data was consistent with those of higher order model.
Rafferty and Griffin (2006) note that employees are always unable to perceive a change in events as discrete if their organization frequently experiences changes. As a result, the team leaders were used to assess the frequency of change in the study. Carter et al. (2012) note that firstly, the team leaders are the ones that drove the change initiatives. Secondly, the also obtained feedback from employees when they were implementing the changes, which influence their subsequent change modification. Lastly, the use of team leaders helped to avoid a bias caused by over-relying on one source for all information. The change frequency was assessed using a modified three-item scale by Rafferty and Griffin (2006).
Task performance was measured using the Farh and Cheng (1999) four-item in-role task performance scale. The task performance was found to be acceptable. It was measured using the CFA.
Organizational Citizenship Behavior
The organizational citizenship behavior (OCB) was measured using the Podaskoff, MacKenzie, Moorman, and Fetter (1990) 24-item scale. The dimensions and coefficient alphas of the OCB were altruism (0.78), conscientiousness (0.78), courtesy (0.79), sportsmanship (0.75), and civic virtue (0.78) (Carter et al., 2012). The CFA test, which was done to show if the five dimensions and higher-order factor model fit the data, showed that the fit indices fell within the acceptable range. As a result, the OCB was treated as a global construct.
In the research, the control variables were the employee tenure at work and in the organization. Noteworthy, information on years of tenure was provided by the team members, and the team leaders reported on their team size and members supervised. The organization membership was coded as 0= Company A and 1= Company B. According to Kirkman et al. (2009), there is a correlation between the length of time that leaders have managed employees and the employees’ leadership perception. There is also a relationship between team size and team performance (Wang et al., 2005).
The hierarchical linear modeling (HLM 6.0) was used to test the study hypothesis. Importantly, the HLM was able to factor the multilevel nature of the study model and data (Cater et al., 2012). The Zhang, Zyphur, and Preacher (2009) 2-1-1 model was used to test the multilevel mediation. Additionally, the moderation hypothesis was tested by considering the slopes-as-outcome models. The model also had a group-level interaction between relationship quality and change frequency, which was necessary in avoiding confounding cross-level and between-group interactions effects (Hofmann & Gavin, 1998). The analysis was performed by entering the controls, main effect variables, and between-group interaction term in their appropriate equation (Level 1 or Level 2) (Carter et al., 2012).
Test of Mediation
From the test, there is an association between transformational leadership and task performance (ᵧ= 0.85, p< 0.001). There is a relationship between transformational leadership and OCB (ᵧ= 0.53, p< 0.001). Finally, there is a relationship between transformational leadership and relationship quality (ᵧ= 0.77, p< 0.001). The test also shows that the association between relationship quality and task performance is significant (ᵧ= 0.60, p< 0.001). On the converse, the association between transformational leadership and task performance is significantly reduced (ᵧ= 0.43, p< 0.01) (Appendix 1). The results of this analysis support there is a partial mediation of hypothesis 1a.
The tests results further showed there was a significant association between relationship quality and OCB (ᵧ= 0.59, p< 0.001). However, there was no relationship between transformational leadership and OCB (ᵧ= 0.10, ns). Additionally, the study showed that the indirect effect of the transformational leadership on OCB was significant (Appendix 2, 3). Therefore, the study supports hypothesis 1b.
Test of Moderation
The test showed that the cross-level interactions effect were significant for task performance and OCB (Appendix 4). Therefore, the results supported hypothesis 2a and 2b. The research showed that the association between the relationship quality and OCB was strongest when change frequency increased (Carter et al., 2012).
Carter et al. (2012) research addressed the research gap on the context in which transformational leadership operates. According to Bass and Riggio (2006), most research on the effect of transformative leadership on organization change does not consider the context in which these leaders operate. This research established that transformative leadership was related to employee’s performance (task performance and OCB) primarily on the quality of the relationship that existed between managers and employees (Carter et al., 2012). The research also established that frequency with which changes occur in teams is a significant moderator of the link between relationship quality and performance. In particular, the moderation effect revealed that the link is stronger when the change frequency is high.
Carter et al. (2012) note that in organizations that have frequent changes that require employees’ to continually adapt to their new work duties, transformational leaders always personalize the change vision and work with their team to achieve their new objectives. According to Ford, Ford, and D’Amelio (2008), the relationship quality in any organization is an essential indicator of the social support that employees have when working under incremental change conditions. Therefore, strong interpersonal relationships between employees and their transformative leader encourage frequent information sharing, especially on the required changes. In conformity, Wang et al. (2005) assert that relationship quality is essential in linking transformative leader behavior with employee performance. Similarly, Waceke (2013) opines that employees need continuous training and motivation from their transformative leaders to help them transcend their frustrations, fears, and resistance to change.
The quality of the leader-member relationship is essential in influencing employee’s performance, especially during a change in the organization (Carter et al., 2012). The research by Carter et al. (2012) showed that positive relationship quality between leaders and employees resulted in high employee performance regardless of the change frequency (Appendix 4). Higgs and Rowland (2011) also established that change efforts were more successful when employees worked with transformative managers since they were more engaging and facilitating. Therefore, managers must exhibit transformative leadership and actively engage in high-quality relationships with their employees for them to facilitate successful adaption of changes, especially if the frequency of change is high (Carter et al., 2012).
Limitations of the Study
It is important to highlight the shortcomings of the Carter et al. (2012) research to give insight on some possible biases. Firstly, the research included multilevel and multisource data, which offered various benefits and limitations. In future research, there should be a longitudinal separation of the independent, mediator, and dependent variables to identify the casual direction and address the role of organizational change progress (Kim et al., 2011; Carter et al., 2012). Secondly, the Carter et al. (2012) research only assessed the transformational leadership and ignored the importance of transactional leadership in change processes. The use of transactional leadership would have enabled the researchers to have better discrimination between transformation and transactional leadership effects (Judge & Piccolo, 2004). Thirdly, the researchers used data from two companies located in China, which is a conservative country and therefore social ties and obligations have a significant influence on individuals’ behaviors (Gelfand, Bhawuk, Nishii, & Bechtold, 2004). As such, it is possible that the Chinese cultural context may have influenced the participants’ behavior. Noteworthy, however, recent research have shown that transformational leadership in non-Western cultures have similar outcomes as those in Western cultures (Wang et al., 2005). Furthermore, cross-cultural research on the effects of transformational leadership in Chinese and United States contexts are similar (Kirkman et al., 2009).
The research suggests that lower level managers should be transformative leaders, especially when an organization is experiencing continuous changes. In particular, strong interpersonal relationships between employees and their managers foster strong positive change outcomes such as task performance and OCB. Furthermore, frequent changes in an organization demand employees to have stronger relationships with their employees to result in high-performance levels during the change processes. Importantly, these findings can inform organizations on the effective management practices to enable easy employee adaptation to change.
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