DO TRANSACTIONAL, TRANSFORMATIONAL AND SPIRITUAL ...

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JOURNAL OF GLOBAL BUSINESS AND ECONOMICS JANUARY 2011. VOLUME 2. NUMBER 1

DO TRANSACTIONAL, TRANSFORMATIONAL AND SPIRITUAL LEADERSHIP STYLES DISTINCT? : A CONCEPTUAL INSIGHT Zaini Jamaludin Lecturer, Faculty of Management and Muamalah, Selangor International Islamic University College, Malaysia. [email protected] Nik Mutasim Nik Ab. Rahman Zafir Khan Muhammad Makhbul Fazli Idris Associate professor, Malaysian National University. ABSTRACT Leadership is a critical element in ensuring the sustainability of an organization. Research in the field of leadership has never been saturated with theoretical and conceptual quests for leadership styles that work with any situation and followers’ condition. Bernard Bass, for instance has adopted the political leadership paradigm of transactional and transformational leadership styles introduced by Burn to the social science fields. Efforts by Bass were well accepted by other researchers and enormous studies have been done to test the applicability of the leadership paradigm in many sub-fields of social sciences for the past 30 years. Studies have found that transformational leadership style leads to increased productivity, employee morale, job satisfaction, organizational commitment and organizational citizenship behavior. The findings also suggest that the latter compliments the transactional leadership style. However, recently scepticism was raised on the ability of the transformational leadership style to effectively fulfil follower’s inner need and with respect to the lack of spiritual element in the ethical conduct of leaders. Hence, this brings interest in research on a new leadership paradigm which takes into account the spiritual element in leadership. In spiritual leadership, questions are raised about what it means to be human, what we really mean by growth and what value and power distributions are needed to enhance both organizations and society as a whole. This paper attempts to investigate further these questions in the context of the various leadership styles mentioned. In due course, the results of a pilot study will be offered to support the argument.

Keywords:

Transactional Leadership, Transformational Leadership, Spiritual Leadership, Leadership Paradigm, Leadership Insight, Leadership Style.

---------------------------------------------------------------------------------------------------------------------------------1.0 INTRODUCTION One of the important atributes of leaders that attracts the interest of many researchers is their leadership styles (Adeyemi-Bello 2001). According to Lok and Crawford (2004), leadership contributes significantly to the success or failure of an organisation. The psychological profile of leaders could be reflected in the performance of the organisation (Adeyemi-Bello 2001). Consistent with this observation, Al-Mailam (2004) argued that high-quality leadership is regarded as vital in bringing success to any

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group activity. He further added that enthusiasm, charisma and dedication are some of the characteristics of leadership that transform an organisation into a successful entity (Al-Mailam 2004). Strong and effective leadership creates high involvement and shared commitment that stimulates people to overcome obstacles to achieving maximum results (Blake and Mouton 1985). Some studies have found that leadership style has positive impact on workers work commitment (Bycio et.al. 1995; Koh et.al. 1995; Karrasch 2003; Sun 2004; Ross and Gray 2006; Nguni et.al. 2006). Sheh (2002) argued that in a number of organisations, overall bad performance might not always occur because of poor administration systems but might also be due to poor organisational leadership. In complex social interactions, leadership provides the integrating capacity for moulding social institutions: governmental, business or religious (Kakabadse et.al. 2002). Mullin (2005) suggest that today’s leaderships are no longer dependent on the controlling and directing skills but rather on the inspirational concept of working together with others and developing vision that is generally accepted. Yulk (2006) stated that the ability to influence is the core to leadership and powerful leaders have significant impact on the life of their followers and future of the organisation. Thus, the objective of this paper is to examine whether the transactional, transformational and spiritual leadership are conceptualy distinct. It is important to know if any of this leaderships style are overlaping between each other especially among transformational and spiritual leadership style. It’s will be able to answer the scepticism that was raised on the ability of the transformational leadership style to effectively fulfil follower’s inner need and with respect to the lack of spiritual element in the ethical conduct of leaders. Hence, this brings interest in research on a new leadership paradigm which takes into account the spiritual element in leadership. 2.0 LOCUS OF LEADERSHIP The strength of a leader depends on the way he or she gains support from the followers. Therefore, the essence of the leader-follower relationship is the interaction between persons with different levels of motivation and power potentials, in pursuit of common or at least a joint purpose (Banerji and Krishnan 2000). The success of an organisation relies on the leadership style practiced by it’s leader. Enthusiasm, charisma and dedication are some of the characteristics of leadership that transform an organisation into a successful entity capable of meeting its own goals and objectives while giving value to customers, clients and other stakeholders. (Al-Mailam 2004). By employing appropriate leadership styles, leaders can influence followers job satisfaction, commitment and productivity (Mosadeghrad and Yarmohammadian 2006). Research by Parish et.al. (2008) found that there are positive relationship between organisational change and workers commitment. They argue that factors such as vision, leader-follower relationship, job motivation and role autonomy influence commitment to change. Thus, leaders who intend to make any changes must consider not only the organisational performance but also its impact on the followers. Tannenbaum and Schmidt (1973) offered a formula for effective leadership, that is E = f (l, f, s) where E (effective leadership) is a function of l (leader), f (followers) and s (situation). Based on this formula, it was argued that effective leaders are influenced by the traits or behavior of the leaders, their followers’ support and the micro and macro situation of the organisation they led. Klein and House (1995) described that leaders act as spark, followers represent the flammable element and the situation resembles oxygen. Thus, charismatic leaders motivate their followers with the support of condusive situation. However, as a word of caution, the nature of the leader and follower relationship is said to be

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vulnerable to the corrupting influences in the form of power abuse and chaos associated with change (Storr 2004). In relation to the above formula of effective leadership, Hur (2008) maintains that leadership is an interaction between leader, follower and the social and task environment. He further added that leader’s personality traits have been a major concern when determining leadership effectiveness, where as follower’s personal characteristics and the task environment have not been as often considered in any study of overall leadership effectiveness. This statement is strengthen by his findings that suggest that leadership style is not being influenced by the characteristics of follower and task environment. In support of this, Allio (2009) agreed that the ’evil’ behavior is more on the consequence of the situation and system (the lucifer effect) rather than the character of the individual. Factors such as environmental and individual depression might influence one’s behavior even though it is not reflective of their real self. On another note, Palmer (1994) stressed that, the majority of books or material related to leadership discuss about power and the ability of leaders to lead their organisation towards positive achievement. Effective leaders are said to use their power and act in ways that bring benefits to their followers and the organisation. Palmer also noted that there are only small portion of knowledge that shows that some effective leaders can bring the follower and organisation towards the negative direction and promoting social disaster. This statement is supported by Washbush and Clements (1999) who claim that people who employ personal power see followers as utilitarian tools, incapable of independent thought and captured by the magnetism of an overwhelming personality. They also argued that this ’dark face’ of effective leadership is not being discuss in the leadership books and training. Washbush and Clements (1999) added, it is important to realize that not all these counterproductive behaviors emanate from leaders. However, inspired and empowered followers can take action that produce decidedly negative consequences for the leader. For example, followers who have strongly authoritarian personalities are likely to conform unquestioningly of they may react to the charismatic qualities of the leader by mimicking or idealizing. Additionally, followers may seek to ingratiate themselves with leaders to be valued and rewarded. Such reaction can deprive leaders of important feedback and alternative perspective. Thus, competence alone does not sufficient to be effective leader. It must be supported by good followers and also conducive organisation environment.

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Figure 1 shows the Locus of Leadership which consist of three factors, i.e., the leader, the followers and the situation (Wagner and Hollenbeck 2005). Ability, experience and knowledge play a big role in contributing to effectiveness of a leader. However, this does not deny the importance of the followers as supporters and people who help accomplish the leader’s mission. The situation is equally important to ensure a conducive environment for execution of action plans. Mahatma Ghandi is known as a charismatic leader in India and the same goes to Adolf Hitler in German. Both, however, have different leadership styles. Hence, the key success factor among these the three elements in the locus of leadership would be other than the leadership style. A leader should have the necessary skills that allow them to use the appropriate leadership style based on the situation or tasks (Howard 2005) 3.0 TRANSACTIONAL AND TRANSFORMATIONAL LEADERSHIP PARADIGM James Burns (1978) in pioneering the transformational and transactional leadership paradigm argued that transactional leadership is characterized by a ”swapping” or ”trading” or ”bargaining” motive in an exchange process and lacks durable engagement between leader and the led. Transformational leadership on the other hand, involves the mutual ”rising” of both sides to higher levels of motivation and morality. In support of Burns’ opinion on the latter, Bass (1997) further clarified that transformational leadership paradigm move the followers beyond their self-interests for the good of the group, organisation and society. According to this author, this new leadership paradigm does not replace the conceptions of leadership as exchanges that are contingent on followers’ performance, rather, it enhances the role of leaders in enlarging and elevating followers’ motivation, understanding, maturity and sense of self-worth. Bernard Bass and his colleague in several of their works (Bass 1981;1985;1990;1997; Bass and Avolio 1993;1994; Avolio et.al. 1999; Bass et.al. 2003) have offered lots of effort to enhance the transactional and transformational leadership paradigm introduced by Burn (1978) to the organisational management discipline (Chakraborty and Chakraborty 2004). According to Burn, the main distinction, and the central feature of transformational and transactional leadership is based on the process by which leaders motivate followers or how leaders appeal to the followers’ values and emotions (Nguni, Sleegers and Denessen 2006). The transaction – transformational paradigm views leadership as either a matter of contingent reinforcement of followers by a transactional leader or the change within the followers beyond their self-interests for the good of the group, organisation, or society by a transformational leader (Bass 1997). Transactional leadership is grounded by an exchange relationship and refers to a situation where leaders provide rewards to followers who achieve good performance and, on the contrary put on punishment to those who are not. Transformational leadership, on the other hand increases followers’ motivation to achieve higher performance, commitment and trust to the organisation (Bass 1985). Thus, while rules and regulations dominate the transactional organisation, adaptability forms the important characteristic of the transformational organisation (Bass 1997). On another note, Simola, Barling and Turner (2010) stressed that transformational leadership is strengthened by accrued benefits while transactional leadership is solely based on the economics exchange. Additionally, Bass and Avolio (1994) argued that although the transformational and transactional leadership are different paradigms, they are not mutually exclusive. The authors suggest that an effective leader should posses both transactional and transformational leadership styles. According to Al-Mailam (2004), through adoption of transactional leadership style, a leader acts as an agent of change and makes meaningful exchanges with employees. Accordingly, these result in

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improvements in productivity (constructive transaction). On the other hand, he maintains that a transformational leader empowers workers to achieve an articulated vision of the organisation and its mission, leading to increases in productivity, employee morale, job satisfaction as well as heightened personal and professional growth. The effects of transformational leadership style on job satisfaction, commitment, efficiency and organisational improvement has been empirically supported a number of researchers (Sahin 2004). Mullin (2005) added that the process of transformational leadership would result in highly motivated and committed followers, develop a vision that is able to transform the organisation and increase followers’ idealism and values apart from than inculcating feelings of justice, loyalty and trust. The positive impact of transformational leadership on numerous performance indicators and job satisfaction is a value added over and above the impact of transactional leadership (Bass 1985). Despite, the positive observations with respect to the impact of transformational leadership, several scholars have raised certain points of weaknesses on the leadership paradigm. These include aspects of unidirectional influence flowing emanating from the leaders to the followers, and the issue of over identification with the leaders which creates overdependence on the leaders (Yulk 1999). Antonakis et.al. (2003) suggest the need to explore other leadership constructs that more comprehensively cover the shortcomings within the Full Range Leadership (FRL) model introduced by Bass and Avolio (1997). Besides the above, the transformational leadership paradigm was also criticized for lacking the morale and ethical elements (Bass and Steidlmeier 1999). Transformational leadership is deemed to cause followers to give their trust, admiration, loyalty and obedience to leaders and to do directed tasks without questioning (Yukl 2006). However, Quatro et.al. (2007) argued that transformational leadership theory may be particularly relevant to the spiritual domain. Bass has refered to leaders such as Mahatma Ghandi and Martin Luther King Jr. as a real transformational leader but their goal is too narrow; maintaining the followers (Odom and Green 2003). Thus, Quatro et.al. (2007) reminded that not all leader with charismatic’s appeal will have strong moral value, and indeed some may have motives leaning more toward personal power and selfaggrandizement. Chakraborty and Chakraborty (2004) has relate the transformational leadership with spiritual element. According to them, the background of transformational leadership as proposes by Burns (1978) has left the spiritual element as the human ultimate goal. Even the index of Bass-Avolio book does not show any entries for spirituality or transcendence or consciousness (Chakraborty and Chakraborty 2004). However, Fairholm (1996) found that 63% from his respondents mentioning the spiritual aspect as fundamental in developing their value, trust and ethical behavior. 4.0 IS SPIRITUAL LEADERSHIP A NEW PARADIGM? Spirituality is a long-neglected phenomenon in studies on leadership (Kakabadse, Kouzmin and Kakabadse 2002). However, recently there is increasing interest in incorporating spirituality in management theories, management development and practice. Some authors cited increased pressures of society, development of IT, increased globalisation, including the pressures of population, environment and food demands, as elements also contributing to the increased interest in examining the concept (Kakabadse et.al. 2002). While work is critical to economic wellbeing, it is insufficient to effectively fulfil the needs of human beings (Fairholm 1996). In this respect, Fry (2003) argues that spiritual leadership taps into the fundamental needs of both leaders and followers for spiritual survival in order to be more organisationally committed and productive.

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Fry (2003) mentions that people have to satisfy certain needs in order to survive and he considers spirituality as one of the basic needs. It is shown that, in the situation where spirituality were not given sufficient emphasis, workers seem to lose meaning, motivation and further to these, the excitement in completing tasks (Kriger and Seng 2005). Therefore, leaders have an important role in ensuring that the spiritual needs of the workers are fulfilled in order to enhance their work quality and productivity. Matured leaders as well as workers in organisations do not merely search for economic rewards with resapect to work done but also seek the spiritual satisfaction (Fairholm 1996). Hence, the role of leaders is more crucial to the survival and adaptation of social institutions than the management of control systems or efficiency audits (Kakabadse et.al. 2002). Spirituality in leadership is conceived by many as awareness within individuals of a sense of connectedness that exists with their inner selves and the world (other people and environment) (Kakabadse et.al. 2002). In this context, Fry (2003) define spiritual leadership as comprising the values, attitudes and behaviours that are necessary to intrinsically motivate one’s self and others so that they have a sense of spiritual survival through calling and membership. Hence, the purpose of spiritual leadership is to create vision and value congruence across the strategic, empowered team and individual levels and ultimately, to foster higher levels of organisational commitment and productivity (Fry, Vitucci and Cedillo 2005). Spirituality is an inherent characteristic of all human being, which encompasses the sacredness of everything, is nondenominational, broadly inclusive and embracing everyone, and involves experiencing or achieving a godlike self through connection (Fernando et.al. 2009). According to Dent et.al. (2005), spirituality should constitute a new paradigm in leadership. Fry et.al. 2005 noted that spiritual leadership paradigm provides an integrating framework for the Army’s transformation effort, especially as it relates to increasing levels of intrinsic motivation, commitment, productivity and well-being. In practice, spiritual leadership is driven by inner life or spiritual practice (Fernando et.al. 2009). However, early empirical attempts at testing the relationship between spirituality and leadership have found that the characteristics of leaders do not commonly include notions of spirituality (Dent et.al. 2005). Without desire to manipulate others, spiritual leaders can be distinguished from transformational leaders by motives such as altruistic love, a sense of wholeness, harmony and wellbeing (Fernando et.al. 2009). As the studies continue on this leadership paradigm, some scholar has place a critique on the weaknesses of transformational leadership paradigm. Researchers has come out towards deeper ”softness” or ”subjectivism” in the development of leadership theory (Chakraborty and Chakraborty 2004). There is a part of us is not just physical, a part that we are comfortable in calling spirit; it integrates guiding principles of wholeness, relationship, inner wisdom and inner authority (Fairholm 1996). Fry (2003) has mentions that people have to satisfy some certain needs to survive and he considers spirituality as one of the basic needs. Thus, a growing chorus of scholarly voices is arguing that spirituality is necessary in organisation (Benefiel 2005). He added that organisational science can no longer avoid analyzing, understanding and treating organisation as spiritual entities. Spirituality goes beyond these ideas and provides the underpinning necessary to make them work in our personal and professional lives; spirituality implies a relationship with something intangible beyond the self (Fairholm 1996). Dent et.al. (2005) stated that deliberations on the concept of spirituality is still in its infancy state and as such is marked by differences in definitions and other basic characteristics. Dent et.al. (2005) and Fry (2003) propose that studies are required to further develop its conceptual distinctions. While spirituality can make ones’ lives more meaningful, promoted connection and generally make the world a better

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place, more research and theoretical classification is needed to prevent spirituality from becoming just another management fad (Fernando et.al. 2009). 5.0 PILOT TEST The authors conducted a pilot test to determine whether the spiritual, transformational and transactional leadership styles are distinct constructs. The instrument used for the transactional and transformational leadership styles was the Multifactor Leadership Questionnaires (MLQ) developed by Burns (1978). These measures include two dimensions of transactional leadership style (contingent rewards and management by exceptions) and three dimensions of transformational leadership style (charismatic, intelectual simulation and individual consideration). As for the spiritual leadership style, questionnaires develop by Fry et.al. (2005) were used which consists of three dimensions; altruistic love, leader vision and hope/faith. The questionnaires were distributed to political workers from a political party. 36 questionnaires were gathered and analysed. The reliability procedure carried out on the measures revealed Cronbach Alphas of .808 for transformational leadership, .841 for transactional leadership and .906 for spiritual leadership. These values indicate that the instruments are reliable. Further to the reliability test, discriminant analysis was conducted to ensure that all the three constructs are distinct from each other. Table 5.1 shows the result of the Collinearity Diagnostics and Coefficient test. There would be an issue of multicollinearity should the variance proportions exceed 0.9 for any row that has condition index greater than 30 (Gaur and Gaur 2006). Table 5.1 Collinearity Diagnostics Variance Proportions

Model Dimension Eigenvalue

Condition Index

(Constant) TRNSFRM

TRNSK

SPRTL

1

1

3.957

1.000

.00

.00

.00

.00

2

.034

10.816

.01

.02

.86

.02

3

.006

24.728

.10

.14

.00

.98

4

.003

38.119

.89

.83

.14

.00

Besides, multicollinearity problem can also be detected via the collinearity statistics. There is no multicollinearity problem if the tolerance is smaller than 1.0 and variance inflation factor (VIF) less than 10 though it is better to have a value which approximates to 1.0 (Gaur and Gaur 2006). However, low tolerance value contribute to lack of information toward the model and result in error in statistical test (Kinnear and Gray 2004). Thus, the pilot test results prove that all three leadership styles are distinct between one another.

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JANUARY 2011. VOLUME 2. NUMBER 1

Table 5.2 Coefficients Output of SPSS Unstandardized Coefficients

Standardized Coefficients

Collinearity Statistics

Model

B

Std. Error Beta

T

Sig.

Tolerance

VIF

1

(Constant)

1.134

1.207

.939

.355

TRNSFRM

.117

.199

.084

.587

.561

.835

1.198

TRNSK

.515

.104

.665

4.944 .000

.945

1.058

SPRTL

.083

.139

.085

.599

.854

1.171

.554

6.0 DISCUSSION Result from this study has strengthened the point that all three leadership are distinguish between each other. The multicollinearity test proved that none of the leadership styles are overlaping. The finding is inline with Zwart (2000), who’s found no significant relationship between spirituality and transformational leadership within the workplace. Therefore, it is suggested that more research needs to be done especially in distinguishing the spiritual leadership from other leadership paradigm such as transformational and transactional leadership.

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Figure 6.1 showing the graph of leadership paradigm and it’s motive to explain the differences of each paradigm using Maslow Hirarchy of Needs. There is no arguement that transactional leadership focus on the exchange relationship between leader and follower. Clarification, completion and compliance are factors that underlie transactional leadership (Bass 1985). Transactional leaders motivates followers by appealing to their self-interest and it is based on exchange relationship, whereby follower compliance is exchanged for expected rewards (Nguni et.al. 2006). While the transactional leader motivates followers to perform as expected to own the rewards, the transformational leader typically inspires followers to do more than originally expected (Den Hartog et.al. 1997). Transformational leadership creates change by offering a vision that attracts followers and appealing to high ideals and moral value in order to change workplace culture and productivity (Friedman 2004). Transformational leadership entails raising the levels of motivation of their followers beyond exchange values and thus achieve a higher levels of performance and followers ”self-actualisation” (Nguni et.al. 2006). This term was used by Abraham Maslow in his article, A Theory of Human Motivation. Maslow explicitly defines self-actualization to be "the desire for self-fulfillment”; the tendency for the individual to become actualized in what his/her potential is. This tendency might be phrased as the desire to become more and more what one is, to become everything that one is capable of becoming. Maslow used the term self-actualization to describe a desire, not a driving force that could lead to realizing one's capabilities. Maslow did not feel that self-actualization determined one's life; rather, he felt that it gave the individual a desire, or motivation to achieve budding ambitions. A more explicit definition of selfactualization according to Maslow is growth-motivated rather than deficiency-motivated. This explanation emphasizes the fact that self-actualization cannot normally be reached until other lower order necessities of Maslow's hierarchy of needs are satisfied; in this issue is the economic stability. As work has become the centerpiece of our lives. We spend too much of our time at work or in workrelated social and leisure activities. While work is critical to economic wellbeing, it is not meeting our needs as human being (Fairholm 1996). In many cases, economics achievement does not bringin joy and excitement in live. The emptiness is always related to the lack of spirituality needs. Spirituality implies a relationship with something intangible beyond the self (Fairholm 1996). The self-actualization is only a part of achievement in our live. What more important according to Benefiel (2005) is “the second half of the journey”, which it is more towards our own transformation than about material gain (spirituality). Theories of leadership focus on motivation followers (Bass 1990). Motivation includes the forces, either external or internal to a person, that arouse enthusiasm and persistence to pursue a certain course of action (Fry 2003). He argued that extrinsic motivation satisfy lower order needs (i.e. money, material) and intrinsic motivation satisfy higher order needs (i.e. meaning of life). Spirituality means beginning to become aware of a consciousness higher than that of the body-mind centered ego, and the ability to live more and more in it under its guidance (Chakraborty and Chakraborty 2004). The effect of spiritual leadership in establishing the sense of leader and follower spiritual survival is to create value congruence across the strategic, empowered team and individual levels to ultimately foster higher levels of organizational commitment, productivity and employee well-being (Fry et.al. 2005) with the guidance of the ‘ultimate power’ 7.0 CONCLUSION Though the spiritual element has been identified to be significant to leadership more than 20 years ago, the key reason of excluding it from the leadership and other management practice is due to the confusion and confounding surrounding the distinction between religion and spirituality. The study has brought new insight in distinguishing leadership paradigm especially among transformational and

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spiritual leadership. The discussion on the motive of motivation based on Maslow Hierarchy of Needs shows the differences between each leadership paradigm. Nevertheless, the paradigms as mentioned by Bass (1990) are not mutually exclusive. Leaders would still have to consider the other elements in the leadership locus (leader, follower and situation) to choose the appropriate leadership style, especially the motivation factor of follower either extrinsic or intrinsic. Benefiel (2005) has discussed the route of the journey from the first half (fulfilling the Maslow hierarchy) to the second half of the journey (maintaining relationship with the higher power). Therefore, the leader has to consider each follower condition and level in order to be an effective leader.

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