Leadership & Organization Development Journal

Leadership & Organization Development Journal Emerald Article: The impact of leadership on workgroup climate and performance in a non-profit organization Adela J. McMurray, Md. Mazharul Islam, James C. Sarros, Andrew Pirola-Merlo

Article information: To cite this document: Adela J. McMurray, Md. Mazharul Islam, James C. Sarros, Andrew Pirola-Merlo, (2012),"The impact of leadership on workgroup climate and performance in a non-profit organization", Leadership & Organization Development Journal, Vol. 33 Iss: 6 pp. 522 - 549 Permanent link to this document: http://dx.doi.org/10.1108/01437731211253000 Downloaded on: 29-08-2012 References: This document contains references to 133 other documents To copy this document: [email protected]

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The impact of leadership on workgroup climate and performance in a non-profit organization Adela J. McMurray School of Management, RMIT University, Melbourne, Australia

Md. Mazharul Islam Strategy, International Business and Entrepreneurship, Swinburne University of Technology, Melbourne, Australia, and

James C. Sarros and Andrew Pirola-Merlo Department of Management, Monash University, Melbourne, Australia Abstract Purpose – The purpose of this exploratory study is to examine the impact of leadership on workgroup climate and performance in a religious/church-based non-profit organization. Design/methodology/approach – The impact of leadership is investigated using a questionnaire comprised of established scales such as the transformational leadership scales (TLS), team climate inventory questionnaire (TCI), team effectiveness, workgroup cohesion, and interdependence scales. This is a context based study that considers the unique culture comprised of social, political, economic, technologic, personnel, and personal concerns. Descriptive, correlation, hierarchical regression, and SPSS macro developed by Preacher and Hayes were used as statistical techniques to assess the indirect effects (Sobel Tests) of variables. Findings – Transformational leadership was identified as a key variable for the functioning of workgroup performance whilst transactional leadership was identified as a key influencing factor of workgroup climate. In addition, the study found a significant and positive large effect of workgroup climate on workgroup performance whilst both transformational and transactional leadership did not influence workgroup performance through workgroup climate. This finding provides areas in need of further research. Research limitations/implications – There is likely to be posing risks of method variance or response biases as all data were drawn from employee surveys. There is also likely to be selection bias as the authors could not directly compare respondents with non-respondents. The fact that there may be operational differences in other as well as smaller organizations, based on the limited size and the ability to allocate job functions, could limit the generalization of this result to other organizations. Originality/value – This study makes a significant contribution to both scholarly theory and workplace practice in the non-profit sector as the findings indicated that the influence of workgroup climate on workgroup performance provided an enabling context for the delivery of leadership in a religious/church-based non-profit organization. Keywords Transformational leadership, Transactional leadership, Religious/church-based non-profit organization, Non-profit organizations, Workgroup climate, Workgroup performance Paper type Research paper Leadership & Organization Development Journal Vol. 33 No. 6, 2012 pp. 522-549 r Emerald Group Publishing Limited 0143-7739 DOI 10.1108/01437731211253000

1. Introduction The non-profit (NFP) sector is a major contributor to social and economic well-being around the world and is taking on increased responsibilities for delivering programs and services that have traditionally been provided by government (Drucker, 1996).

Non-profit (NFP) organizations are increasingly playing an important role in the provision of welfare, social and other services in Australia as well and contribute to its social capital. The purpose of this exploratory study is to examine the impact of leadership on workgroup climate and performance in a religious/church-based non-profit organization. There has been very little research on leadership and innovation in the Australian nonprofit sector. The lack of empirical evidence on the characteristics of non-profit leaders limits our understanding of the leadership and management in non-profit organizations as a whole, and voluntary associations in particular (Harris, 1998). This gap inspired us to examine the leadership styles of religious/church-based non-profit organization leaders as indicators of their capacity to build innovative and well-performed organizations. This research is therefore significant because it is the first study of its kind in Australia to examine the impact of both transformational and transactional leadership on workgroup climate and performance in a religious/church-based non-profit organization. This study contributes to understanding the relationship between leadership style and workgroup climate. In particular how this relationship affects an organization’s performance and an increased learning about how certain leadership styles work better in certain organizational cultures and workgroup climates. This in turn facilitates in attaining increased organizational performance and assists organizations to identify the best possible candidates for leadership positions in a non-profit organization. As this study was based on a survey that was conducted in a Methodist dynamic church with a worldwide ministry, the produced results may be generalized across the entire population. 2. Literature review 2.1 Non-profit sector Generally, non-profits are organized around a social mission (Quarter and Richmond, 2001) and embrace values such as philanthropy, voluntarism. Their independence provides opportunities to act as advocates and obtainers of services for their clients or members (Alexander and Weiner, 1998; Greenwood and Hinings, 1996; Salamon and Wojciech, 2004). Hudson (1999, p. 37) asserts that non-profit organizations “are at their most effective when the people involved share common values and assumptions about the organization’s purpose and its style of operation.” Acar et al. (2001) found that non-profit organizations place a significantly greater emphasis on their social responsibilities compared with for-profit organizations. But the details addressing the nature of this distinctive form of organization are somewhat scant yet, and, as functioning organizations, most non-profits look a great deal like ad hoc blends of main street business offices and government bureaus (Lohmann, 2007). The Australian non-profit (NFP) sector is comprised of approximately 600,000 organizations (Productivity Commission, 2010) which is the sixth largest in the world after the Netherlands, Ireland, Belgium, Israel and the USA, and is considerably larger than the UK and major European countries. The Productivity Commission’s (2010) recent research report also highlighted the rapid growth of the sector over the past decade: it now contributes more than 4 percent of GDP (just under 43 billion), with nearly five million volunteers contributing an additional $14.6 billion in unpaid work. In addition, this research report stated that non-profit organizations represent 5.7 percent of the nation’s revenue, and 14.5 percent of the Australian workforce. The non-profit organization considered for our study was constituted by a religious organization in the Australia Act 1977, is based in Sydney and has branches located throughout Australia. As society’s challenges have grown more complex and government’s resources more constrained, non-profit sectors have stepped into the breach (Thomas, 2006).

The impact of leadership

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The ability of non-profit organizations to adapt to new funding and service delivery environments is highly dependent upon several key variables, one of which is the leadership of the organization (Howell and Avolio, 1993; Yammarino et al., 1993; Firstenberg, 1996) and another is climate that has been identified as a key mechanism by which leadership affects organizational and team performance (e.g. Koene et al., 2002; Gil et al., 2005). The interaction between the leader and the team climate may have an important effect on the organization’s performance or lack of performance as it seeks to achieve its mission. According to Moore (2000), all types of organizations are created to produce some type of value. However, for-profit organizations focus on strategies to measure this in financial terms, whereas non-profit and government agencies produce value that lies in the achievement of social purposes. Since direct revenue is not usually generated from non-profit firm activities, a different type of cultural context arises within these types of organizations. Therefore, Moore (2000) argues that leaders in non-profit organizations should focus on the public value to be created and the operational capacity to deliver that value, as well as providing general support to the organization. NFP organizations contribute to its social capital yet this sector is traditionally an under-researched sector. Particularly in Australia, scant research exists that shows how leadership is related to workgroup/team climate and performance in non-profit organizations. Hollister (1993) suggests that leadership research has been a neglected area in non-profit studies. A review of the non-profit literature shows that this situation has not changed significantly (Hudson, 1999). Thus there is an increasing need for more leadership studies to be conducted in the non-profit (NFP) sector as more social responsibilities are being passed on to these organizations by governments that are unwilling or unable to afford to continue to fund them. 2.2 Leadership and leadership style According to Dainty and Anderson (1996, p. 116) who quote Burns (1978) “Leadership is one of the most observed and least understood phenomena on earth.” There is no universal leadership definition or style due to “innumerable situational and contextual factors” (Lord et al., 2001, p. 311). The topic is viewed and researched from many perspectives and continues to draw the focus of scholars and management training professionals. Yammarino et al. (2001) discussed leadership as a multilevel process that may encompass numerous perspectives, all of which should be considered in an effort to understand the complex nature of leadership. Traditionally leadership research is primarily based on classic bi-factorial models such as task and relation-oriented leadership (Gil et al., 2005) but in the last three decades “new paradigms” such as charismatic leadership (House, 1977), transactional leadership (Bass and Avolio, 1993), transformational leadership (Bass and Avolio, 1993), visionary leadership (Westley and Mintzberg, 1989) and new leadership (Bryman et al., 1996) have emerged. This study is based on a recent model of leadership with two styles of leadership described as transactional and transformational leadership that can be objectively and consistently measured. Transactional leadership. The transactional model of leadership assumes that leader and followers are engaged in a two-dimensional relationship based on tasks to be accomplished and mutual satisfaction. Hollander (1986) viewed this form of leadership as one in which rewards and benefits are given to subordinates for fulfilling requirements that benefit the leader. Conrad and Poole (2002) supported this theory by arguing that leader involves motivating and directing followers through appealing to

their own self-interest. The leader believes in motivating through a system of rewards and punishment. If a subordinate does what is desired, a reward will follow, and if not then a punishment will follow. Here, the exchange between leader and follower takes place to achieve routine performance goals. Transactional leadership behaviors and their intended utilization for improving performance is what prompted Burns to differentiate between leaders as either transactional or transformational in their leadership style. Bass and Avolio (1993) described transactional leadership in terms of a pure focus on explicit and implicit contractual relationships. Activities are based on contingent reward or disciplinary action for work done, passive management by exception or corrective action and punishment, active management by exception or continuous oversight. In transactional leadership the organizational mission and vision may be clearly stated but are not part of the motivating force to move the organization forward. Transactional leadership typically holds innovation and risk taking in low regard and seeks to maximize output. Transformational leadership. The transformational leadership concept was initiated by Burns (1978) and expanded upon by many scholars, especially by Bass in the 1990s. Burns described transformational leadership as the practice of identifying the motives, values and needs of both followers and leaders, with the goal being satisfaction for the entire group. Bass and Steidlmeier (1999) described transformational leadership as moral leadership based on values, vision, charisma and genuine concern for others in the organization. Transformational leaders are committed to leading with an ethical philosophy, believing that the organization is best served by meeting the needs and satisfying the broadest range of its constituents. Bass and Avolio (1993) studied leadership behaviors in military and business contexts. Transformational leaders have been characterized by four separate components or characteristics. These four factors include idealized influence, inspirational motivation, intellectual stimulation and individualized consideration – that help differentiate transformational leadership from other models and theories. This vision is another characteristic of transformational leaders (Bass, 1990; Kouzes and Posner, 2002). Many descriptions of transformational leadership have evolved since the model was first developed. For example, meaning is described as a key to motivation of work groups brought about by leaders with vision and charisma. Leaders who are transformational in their thinking are able to use day-to-day circumstances of work to help people find a deeper meaning and become more motivated in their daily work routines (Wheatley, 2002). Transactional leaders usually work within existing organizational culture to complete goals, while transformational leaders usually try to change culture to complete the organizational goals and mission (Bass, 1990). Much research has addressed leadership and its impact on profitable organizations (Avolio, 1999; Avolio et al., 2003; Howell and Hall-Merenda, 1999; Jung and Sosik, 2002; Ling et al., 2008; MacKenzie et al., 2001; Walumbwa, 2002). According to Hunt (1999) leadership approaches focus on transformational (Bass, 1985), transactional (Bass, 1985), charismatic (House, 1977), visionary or inspirational (Westley and Mintzberg, 1989) leadership as the qualities of top-level leaders with an emphasis on the leader’s role in the management of meaning and the formation of organizational culture (Bryman et al., 1996). These factors of meaning and organizational culture require leadership studies to be context specific, and are of particular relevance to leadership in non-profit organizations. The challenges facing leadership in non-profit organizations relate to managing the delicate balance between efficiency, effectiveness, mission and passion that drive non-profit organizations (Andrea and


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Michael, 2005). The unique challenges to effective leadership that exist in non-profit organizational contexts are the “spiritualization” of employee discipline issues, unacceptable employee behavior and unacceptable employee performance. Spirituality and how it manifests itself in the workplace are complex issues, and perhaps even more complex in an organization whose mission is based on religious faith, unlike a secular workplace, where spiritual and moral issues are often either black or white or irrelevant to the operation of the organization. The existing research on leadership in non-profit organizations remains focussed on traditional frames of reference and methodological approaches while recognizing the emerging importance of non-profit organizations as major contributors to social and economic well-being. The effects of top-level leaders in organizations was studied by Waldman et al. (2001) who concluded that there were differences in outcome performance in times of uncertainty but not in times of certainty. Their results were based on the leader’s style and the group culture. According to Avolio et al. (1999) outcome performance was moderated by certain characteristics of transformational and transactional leadership style. In addition, in terms of context and leadership challenges, the many differences such as missions, metrics of performance, workforces, constituents and board structure between for-profit, government and non-profit organizations make it inappropriate to assume that research and findings in for-profit contexts apply to non-profit contexts (Dandridge, 1979; Westhead and Cowling, 1998). Moreover, it also is inappropriate to assume that research findings in non-profit contexts such as education, hospitals or military organizations will apply to religious or church-based non-profit contexts (McMurray et al., 2010). For this reason, we assert that studies should provide context-specific analysis and diagnosis in their respective contexts as each will yield distinct and unique context-specific findings. Therefore, our study addressed both transactional and transformational leadership to obtain a more comprehensive understanding of their relevance in the non-profit sector. 2.3 Leadership, workgroup/team climate and workgroup performance Leadership and climate are two variables that are implicitly linked (Gil et al., 2005). While early theoretical and empirical work focussed on the role of leaders in developing organizational climate, more recently there has been a great deal of attention on how leadership affects workgroup climate, and on climate as a mediator of the leadership-performance relationship. Studies of transformational leadership show that this leadership style fosters followers’ motivation to perform beyond their expectations, increases the follower’s sense of the importance and value of tasks and stimulates members to look beyond their own interests and direct themselves to the interests of the team, organization or larger community (Kotter, 1988; MacKenzie et al., 2001). By fostering motivation and a collective orientation towards group performance, transformational leaders help build a work group environment supporting high performance. Consistent with this, Schaubroeck et al. (2007) stated that transformational leadership influenced team performance through the mediating effect of team effectiveness. Other researchers have gone beyond basic team characteristics like group member motivation and team potency, and identified a range of group climate factors linked to performance. West and Hirst (2003) proposed a model in which team climate inventory (TCI) factors such as vision, participation, task orientation and support for innovation mediate the relationship between the broader context (both group and organizational) and innovation. Numerous studies have reported evidence in support of this view.

For example, a longitudinal study of workgroups within a large teaching hospital by Wilson-Evered et al. (2001) found that the effect exerted by transformational leadership on team performance was via the mediating role of the morale aspect of team climate. Similarly, in a sample of airline pilots, Smith-Jentsch et al. (2001) found that transformational leadership, mediated by team climate, had an impact on transfer of training. Pirola-Merlo et al. (2002) found that the effect of transformational leadership on the performance of R&D teams was mediated by team climate. This is consistent with the results of Bass et al.’s (2003) study, which reported a mediation effect of group processes between leadership and outcomes. Gil et al. (2005) found that team climate (in particular as it relates to innovation) mediates the relationship between leadership and group performance/outcomes. Similarly, Hogg (2001) suggests that transactional leadership influences group members’ cognitive states, such as collective identity, which in turn is posited to reinforce unit members’ attitudes and behaviors while Walumbwa et al. (2008) state that transactional leadership is positively and significantly related to unit level procedural justice climate perceptions. In addition, Al-Beraidi and Rickards (2003) suggest that the transactional leader motivates subordinates to perform as expected. Similarly, transactional leadership helps team members maintain effective programs which in turn improve team performance (Corrigan and Garman, 1999). Whether or not the same is true in a non-profit context is unknown. The studies cited above were focussed on commercial research and development organizations with very few studies being conducted in non-profit organizations to examine the relationship between leadership and performance. For example, Leithwood et al. (2008) stated that leadership is a very strong predictor of school performance. He reported that the effective performance of the education sector requires a combination of transactional and transformational leadership. Other researchers concluded that transformational leadership encourages the highest level of staff efficiency and empowerment (Acorn et al., 1997; Keuter et al., 2000). It is likely that work group climate plays a particularly strong role in non-profit organizations, and most especially in religious-based non-profit organizations. In this environment, there is often recognition that staff is attracted to work in the organization because of a personal commitment to the values and beliefs that are espoused in the organization’s mission (Lyons, 2001; Neville, 2009). Thus, traditional remuneration-based incentives and other personnel management systems may be less important in this context than the employee’s experience of their “community of colleagues,” and in particular of their immediate work group. According to Pappas (1996), the culture in non-profit organizations is the result of the organization’s history, the way it is structured, type of management, communication channels and the reward system it has in place. In addition, Jung and Avolio (1999) found that leadership style has different effects on different organizational cultures regarding outcome performance. The transformational and transactional leader affects each organization’s culture differently in regard to performance. Therefore, although strong evidence exists for a leadership-climate relationship in other settings, there is a need to examine this relationship in the non-profit context. Based on the literature discussed above, the following hypotheses were developed: H1. Leadership characteristics have a positive relationship to workgroup climate in a non-profit religious-based/church-based organization.


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H2. Leadership characteristics have a positive relationship to workgroup performance in a non-profit religious-based/church-based organization. H3. The relationship between leadership style and workgroup performance is mediated by workgroup climate in a non-profit religious-based/church-based organization.

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2.4 Workgroup climate and workgroup performance As with leaders, teams and workgroups are increasingly viewed as the building blocks of organizations and a key source of competitive advantage (Tjosvold et al., 2003). A workgroup is viewed as a group of people who work together on a regular basis to produce results. Workgroups include employees in a structured reporting relationship, such as in a department or clinic, and an ad hoc team brought together to carry out specific tasks to develop or refine a service or product. Workgroups and teams form the basic functional unit of many organizations (Mohrman et al., 1995). Teams and team-based structures have become so prevalent in the private sector that some people refer to teams as the cornerstone of modern quality management (Dirks, 1999; Klimoski and Mohammed, 1994). Studies addressing team quality improvement in the private sector have been flourishing (Field and Sinha, 2000; Foster et al., 2002; Howes and Cropanzano, 2000; Pagel and Lepine, 2002; Salas et al., 2004), and help shape the context in which team performance occurs. In their meta-analysis of the teamwork processes literature, LePine et al. (2008) identified that team processes have positive relationships with team performance. Yet there is some evidence that the group context, including climate, might be a more important contingency for team performance than either group composition or group processes (Harter et al., 2002; Koys, 2001; Rucci et al., 1998; Ryan et al., 1996; Kotter and Heskett, 1992; Gelade and Ivery, 2003; Cohen et al., 1996; Forrester and Drexler, 1999; Spreitzer et al., 1999). However, there has been relatively little research examining relationships among workgroup climate and performance, because the majority of studies (i.e. Haakonsson et al., 2008; Garcia-Morales et al., 2008) have used measures of organizational climate rather than specific team climate measures such as those provided by the TCI utilized in this study. Anderson and West (1998) developed a compelling argument for focussing on the proximal work team as a unit of analysis in regards to climate, rather than organizational climate. In brief, they argued that the proximal work group, including attitudes and norms for behavior, exerts the strongest direct influence on the behavior of individuals and hence the performance of work groups. Their model of team climate for innovation, and the TCI instrument that is based on it, have become the most extensively researched and widely adopted approach to studying team climate (Mathisen et al., 2006). The impact of workgroup climate is not restricted to the commercial sector. Workgroup climate might be an even more influential factor in non-profit organizations than it is in industry. For instance, because non-profit organizations lack a profit motive, workgroups in these organizations tend to focus less on efficiency and rely less on hard measures of performance than do private sector teams. Therefore, “softer” controls, such as the norms and social pressures incorporated into a workplace climate, might represent viable substitutes for teams in non-profit organizations. For example, Laschinger et al. (2001) revealed that a positive workgroup climate creates an environment conducive to the development of trust and empowerment, which in turn

leads to high-quality performance. Mayer and Gavin (2005) in their study of employees in a US manufacturing firm found trust is related to in-role performance and organizational citizenship behavior. Specifically, Langfred (2007) found team conflict is associated with lower intra-team trust which influences team structure and reduces individual autonomy among self-managed MBA student teams. West et al. (1998) found links between staff perceptions of workgroup climate and the research excellence of university departments. Positive climate has also been demonstrated to drive academic success in UK schools where a significant link between classroom climate and student academic progress (Hay Group, 2000). Thus a positive workgroup climate has been identified in a variety of environments as a driver of workgroup performance. On the basis of this extant research, our study focusses solely on workgroup climate rather than organizational climate and proposes the following fourth hypothesis:


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H4. Workgroup climate has a positive relationship to workgroup performance in a non-profit religious-based/church-based organization. Due to the scope of this study, we do not focus on “trust” and recommend this is an area for future research. 2.5 Theoretical and conceptual framework for the study The theoretical framework for this study was founded on transactional and transformational leadership theories. The conceptual framework for this research was based on the relationship of leadership and workgroup climate within an organization and its related dimensions as identified by Podsakoff et al. (1990), Anderson and West (1998), Gibson et al. (2003) and Wageman et al. (2005). Of note is that trust was not included as a dimension in these scales and therefore not addressed in this study. Based on the previous discussion, we propose that the relationship between leadership and workgroup performance is mediated by workgroup climate, as shown in Figure 1. 3. Research method 3.1 Sample After gaining formal ethics clearance from the university ethics committee, the study commenced with the first stage consisting of fieldwork where a total of five focus group discussions were held at the participating church/religious-based non-profit organization. The focus group participants were selected by the organization’s HR Department so that the sample was representative across the various levels of the organization including gender as there are more female than male employees. A total of 12 females and six males comprised the sample and were drawn from across the Workgroup climate Participatory safety Support for innovation Vision Task orientation Transformational leadership Transactional leadership

Workgroup performance Team effectiveness Workgroup cohesion Interdependence

Figure 1. Proposed model for the study

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organization’s five divisions, thus being a representative organizational population sample. The themes that were generated by the gender-mixed focus groups confirmed the inclusion of the study’s key concepts and formed the pre-test which then informed this pilot study. The second stage comprised a survey of a selected population sample of the organization, which consists of approx 6,000 employees of which 3,500 are permanent, part-time or casual employees with the remaining 2,500 being volunteers. The sample for this study consisted of 200 randomly selected permanent full-time, part-time and casual employees. The completed survey returns from 43 employees across the various organizational departments (e.g. IT, community services, employment, operation support services, community relations, human resources, aged care services, education and commercial services) yielded a response rate of 21.5 percent, which according to Hair et al. (2006) is acceptable for postal surveys. 3.2 Measures Leadership. Leadership style was measured using the transformational leadership scale (TLS) which was developed by Podsakoff et al. (1990). The TLS examined the six transformational leadership components: (1)

articulates vision (example item: has your manager/supervisor a clear understanding of where we are going?);

(2)

provides appropriate role model (example item: manager/supervisor leads by “doing” rather than simply “telling”);

(3)

fosters the acceptance of goals (example item: manager/supervisor encourages workgroups to share information);

(4)

high performance expectations (example item: manager/supervisor insists on only the best performance);

(5)

provides individual support (example item: manager/supervisor behaves in a manner thoughtful of others personal needs); and

(6)

intellectual stimulation (example item: manager/supervisor stimulates others to rethink the way they do things).

The TLS also measures the transactional leadership components of contingent reward (example item: manager/supervisor praises others when they do a better than average job) and contingent punishment (example item: manager/supervisor shows displeasure when employees’ work is below acceptable standards) behavior (Podsakoff et al., 1984). All the leadership measures used Likert-type scales with responses from 1 (strongly disagree) to 7 (strongly agree). The TLS has shown to have acceptable internal consistency reliability (all Cronbach’s a coefficients 40.70) and evidence of content and construct validity (Podsakoff et al., 1990). The Podsakoff et al. (1990) instrument was selected for our study because it contains factors that better represent the conditions pertinent to non-profit organizations. The TLS does not focus on laissez-faire leadership as does the MLQ, nor does it contain elements of charismatic leadership, or inspirational motivation. On the other hand, it does contain a form of management by exception (active) in its contingent punishment factor. In relation to relevance for non-profit organizations, the factors of “fosters acceptance of goals” and “provides individual support” are very much consistent with the culture of cooperation and mutual respect in non-profit organizations.

Workgroup climate. We utilized the definition of workgroup developed by Anderson and West (1998, p. 236): “A team to which individuals are assigned, whom they identify with, and whom they interact with regularly in order to perform work-related tasks.” These authors developed a short 14-item version of the TCI applied to innovation and identified four factors: vision, participation, task orientation and support for innovation. The TCI is primarily used to evaluate the predictive dimensions of innovation, though it is also considered useful in appraisals of other group outcomes (Anderson and West, 1998). We utilized the same scales as a proxy measure of workgroup climate due to the lack of availability of a published validated measure of workgroup climate. The TCI was tested by Klivimaki and Elovainio (1999) with the results providing evidence of the four-factor structure of the short form, as well as a coefficients range between 0.84 and 0.94 indicating acceptable levels of internal homogeneity and reliability for all four factors. The justification for its inclusion in our study was that the TCI has good psychometric properties (Anderson and West, 1998; Dunning et al., 1998; WilsonEvered et al., 2001) and has shown to be predictive of team innovation and performance in a variety of cultures and industries (Agrell and Gustafson, 1994; Wilson-Evered et al., 2001). In addition, we utilized an overall workgroup climate instrument which was created by calculating averaging scores based on the four workgroup climate scales, in the regression analysis to reduce the type I error rate associated with large numbers of significance tests. This was justified statistically by the large correlation between four workgroup climate scales (r ¼ 0.36-0.69). Workgroup performance. Workgroup performance in non-profit organizations is typically measured by units of service to clients, efficiency and effectiveness of service delivery and other outcomes defined by mission. Although workgroup performance in a non-profit organization can be defined using many indicators and metrics, three scales addressing team effectiveness (Gibson et al., 2003), workgroup cohesion and interdependence (Wageman et al., 2005) measuring different aspects of performance were used to assess workgroup performance in our study. The team effectiveness scale comprised 11 items designed to assess the extent to which the team achieved objectives and met required standards (example item: my workgroup accomplishes its objectives). Interdependence consists of four items on the degree to which the workgroup has interdependent work (example item: generating the outcome or product of this workgroup requires a great deal of communication and coordination among members). Workgroup cohesion refers to the degree to which employees work together closely and harmoniously, and was measured using a four-item workgroup cohesion scale (example items: in my workgroup, there is a lot of “team spirit”; and members of my team are very willing to share information with other team members about our work). For all items, a five-point Likert-type scale was used anchoring 1 ¼ strongly disagree to 5 ¼ strongly agree. The effectiveness, workgroup cohesion and interdependence scales have been shown to have acceptable internal consistency reliability (all Cronbach’s a coefficients 40.70) and evidence of content and construct validity (Gibson et al., 2003; Wageman et al., 2005). Furthermore, this study used the overall workgroup performance instrument which was created by averaging the three workgroup performance scores in the regression analysis to reduce the type I error rate associated with large numbers of significance tests. This was justified statistically by the large correlation between three scales, ranging from r ¼ 0.37 to r ¼ 0.54.


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4. Result analysis 4.1 Demographics The sample was comprised of 72.1 percent female and 27.9 percent male respondents, showing a slight majority of female administrators. The majority of respondents, about 63 percent, were employed in the organization for one to five years. The sample was highly educated, with a breakdown of educational levels as follows: 9.3 percent high school; 27.9 percent technical and further education qualification; and 48.8 percent university degree. The majority (37 percent) of the respondents were aged between 21 to 30 years, followed by 27.9 percent of the respondents being in the 51 to 60 years age group. Occupational division groups included operations (32.6 percent), corporate services (25.6 percent), ministry and mission (14 percent), finance and IT (7 percent), with 20.9 percent in the “missing” category. 4.2 Descriptive statistics Reliability tests were conducted as a measure of the internal consistency on all the research instruments utilized in our study. The Cronbach a scores are shown in Table I. As can be seen in Table I, all the scales utilized in this study had good to excellent values for Cronbach’s a (Nunnally, 1978) except the “support for innovation” scales from workgroup climate and the “interdependence” scale from workgroup performance. We conducted a comparative analysis of leadership scales with Australian norms to identify the relative leadership strength and weakness in the sample of the study. Table II represents leadership scales compared with Australian norms, derived from the Australian Business Leadership Survey-3 (Sarros et al., 2005). The reference sample that the norms were derived from comprised of managers predominantly drawn from private sector companies (n ¼ 1,308), with some from the government sector (n ¼ 472), public sector (n ¼ 275) and not for profit sector (n ¼ 304). The means from the present study were translated into z-scores using the Australian norms as the reference Items

Table I. Descriptive statistics and internal consistency ratings of instruments

Transformational leadership ( five scales, a ¼ 0.97) Articulates vision (five items, a ¼ 0.94) Provides appropriate model (three items, a ¼ 0.89) Intellectual stimulation (four items, a ¼ 0.93) Fosters acceptance of goals (four items, a ¼ 0.93) Provides individual support (four items, a ¼ 0.89) High performance expectations (three items, a ¼ 0.79) Transactional leadership (two scales, a ¼ 0.83) Contingent reward (five items, a ¼ 0.95) Contingent punishment (five items, a ¼ 0.95) Workgroup climate ( four scales, a ¼ 0.78) Participatory safety (four items, a ¼ 0.70) Support for innovation (three items, a ¼ 0.55) Vision (four items, a ¼ 0.83) Task orientation (three items, a ¼ 0.72) Workgroup performance (three scales, a ¼ 0.70) Team effectiveness (11 items, a ¼ 0.94) Workgroup cohesion (four items, a ¼ 0.73) Interdependence (four items, a ¼ 0.55)

n ¼ 43

Mean

SD

43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43 43

5.26 5.22 5.31 5.30 5.30 5.08 5.36 4.87 5.17 4.56 3.94 3.98 3.82 4.16 3.81 3.99 4.02 4.28 3.65

1.29 1.43 1.74 1.33 1.47 1.69 1.07 1.11 1.66 1.44 0.50 0.61 0.53 0.60 0.77 0.50 0.73 0.58 0.50

point. As shown by the pattern of z-scores, this sample was particularly positive (relative to the Australian norms) addressing the “articulates vision” component of transformational leadership; the respondents were less positive about the other leadership components. As can be seen in Table II, the respondents rated their leaders particularly less strongly than the Australian comparison norms for the scales “fosters the acceptance of goals, provides individual support” and “provides appropriate model.” So we may conclude that overall, the leaders in this organization were regarded as being effective at articulating vision, but less effective at gaining staff acceptance of the vision.


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4.3 Statistical analysis The Statistical Package for Social Science (SPSS) (PASW Statistics 18) was utilized for computing descriptive statistics, correlations, internal consistency ratings and for conducting hierarchical regression analyses. For investigating mediation, it is important to make a distinction between various effects and their corresponding weights. The total effect (weight c) of an independent variable (IV) on a dependent variable (DV) is composed of a direct effect (weight c’) of the IV on the DV and an indirect effect (weight a b) of the IV on DV through a proposed mediator (M). Weight a represents the effects of the IV on M, whereas weight b is the effect of the M on DV partially out the effect of the IV. More specifically, an indirect effect is the multiplication of the un-standardized regression weight of the IV on the M and the weight of the M on the DV. The current study employed a bootstrapping method (with n ¼ 5,000 bootstrap re-samples) and used an SPSS macro developed by Preacher and Hayes (2008a) to assess the indirect effects (Sobel tests) on variables. The analysis was repeated with transactional leadership instead of transformational leadership as the IV. Bootstrapping is a computer-based re-sampling method in the broader class of re-sampling methods which is used to estimate how the sample mean of a small sample size from the population varies due to random sampling. In the case where a set of observations can be assumed to be from an independent and identically distributed population, bootstrapping can be implemented by constructing a number of re-samples of the observed dataset (and of equal size to the observed dataset), each of which is obtained by random sampling with replacement from the original dataset. So re-samples from this sample represent what we would obtain if we took many samples from the population thus the bootstrap distribution of a statistic, based on many re-samples, represents the sampling distribution of the statistic, based on many samples. We used the bootstrap distribution to see whether the sampling distribution is approximately normal, rather than just hoping that our sample is large enough for

Leadership scales Articulates vision Provides appropriate model Intellectual stimulation Fosters acceptance of goals Provides individual support High performance expectations Contingent reward Contingent punishment

Reference mean

Reference SD

Sample mean

z-scores

4.63 6.01 5.82 5.99 5.78 5.60 5.82 4.84

0.72 0.68 0.72 0.71 0.71 0.83 0.70 1.05

5.22 5.31 5.30 5.30 5.08 5.36 5.17 4.56

0.82 0.97 0.73 1.01 0.99 0.29 0.93 0.27

Table II. Leadership scales compared with Australian norms

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the central limit theorem to apply. We used the bootstrap distribution as a way to estimate the variation in a statistic based on the original data. It is very useful because it only assumes that the sample is representative of the population. Correlation analysis was performed among the leadership, workgroup climate and workgroup performance scales in order to test our study’s H1: “Leadership characteristics have a positive relationship to workgroup climate in a non-profit religious-based/church-based organization” and H2: “Leadership characteristics have a positive relationship to workgroup performance in a non-profit religious-based/ church-based organization.” One-tailed significance tests were performed due to the expected positive correlations and the limited sample size with the results shown in Table III. The results in Table III reveal that all scales of transformational leadership except the intellectual stimulation scale were positively and significantly ( po0.01) correlated with participatory safety scale of workgroup climate, while the TLS were positively but not significantly correlated with other scales of workgroup climate except high performance expectation with vision (r ¼ 0.36, po0.01). The results also state that the contingent reward scale of transactional leadership was positively significantly correlated with all scales of workgroup climate, with the exception of the “vision” scale, while the contingent punishment scale was negatively and not significantly correlated with the scales of workgroup climate. The results also uncover that both the transformational and transactional scales of leadership were significantly correlated with team effectiveness and workgroup cohesion scales of workgroup performance, except for the interdependence scale. Moreover, the results stated that the contingent punishment scale was not significantly correlated with the scales of workgroup performance. In addition, we carried out correlations among the summary measure (created by averaging scores for the scales) of transformational leadership, transactional leadership, workgroup climate and workgroup performance, the results of which are shown in Table IV. The results reveal that both the transformational and transactional scales of leadership were significantly correlated with workgroup climate and workgroup performance. Transformational leadership had a relatively higher relationship with workgroup performance (r ¼ 0.41, po0.01) than did transactional leadership (r ¼ 0.39, po0.01), while transactional leadership had a stronger relationship with workgroup climate (r ¼ 0.32, po0.05) than did transformational leadership (r ¼ 0.25, po0.05). Overall, this result provided acceptable evidence that both types of leadership impacted on workgroup performance as well as workgroup climate, with all correlations being in the predicted direction. To further analyze H1 and H2, multiple regression analyses were conducted by using a total workgroup climate score and workgroup performance score (created by averaging scores for the all scales). The R2 statistic for the first regression shows that more than 42 percent of the variance in workgroup climate was predictable from all of the leadership scales, while R2 statistic for the second regression shows that more than 41 percent of the variance in workgroup performance was predictable from all of the scales of leadership. These results show a good fit for these data. The F-test showed a significant result (po0.01), which implies that the variables in the models, taken together, are significant predictors of workgroup climate as well as workgroup performance. Table V provides results of the regression analyses, which reveal that contingent reward, high performance expectation and intellectual

1 0.66** 0.83** 0.84** 0.38** 0.86** 0.11 0.38** 0.13 0.13 0.08 0.37** 0.31* 0.17

1 0.88** 0.81** 0.93** 0.82** 0.62** 0.88** 0.14 0.34* 0.11 0.20 0.09 0.36** 0.29* 0.13 1 0.76** 0.68** 0.69** 0.65** 0.27* 0.08 0.06 0.14 0.02 0.27* 0.13 0.05

IS

1 0.85** 0.59** 0.91** 0.09 0.43** 0.11 0.18 0.21 0.41** 0.40** 0.18

FAG

1 0.44** 0.85** 0.14 0.38** 0.14 0.09 0.16 0.51** 0.40** 0.15

PIS

1 0.45** 0.67** 0.29* 0.005 0.36** 0.19 0.32* 0.29* 0.15

HPE

1 0.06 0.51** 0.28* 0.17 0.33* 0.42** 0.45** 0.20

CR

1 0.03 0.20 0.24 0.03 0.09 0.02 0.04

CP

1 0.69** 0.43** 0.56** 0.51** 0.70** 0.55**

PS

1 0.35* 0.45** 0.28* 0.30* 0.49**

SI

1 0.44** 0.24 0.13 0.30*

V

1 0.19 0.41** 0.29*

TO

WC

1 0.41**

TE

1 0.54** 0.37**

1

I

Notes: AV, articulates vision; PAM, provides appropriate model; IS, intellectual stimulation; FAG, fosters acceptance of goals; PIS, provides individual support; HPE, high performance expectation; CR, contingent reward; CP, contingent punishment; PS, participatory safety; SI, support for innovation; V, vision; TO, task orientation; TE, team effectiveness, WC, workgroup cohesion; I, interdependence. *po0.05; **po0.01

AV PAM IS FAG PIS HPE CR CP PS SI V TO TE WC I

PAM

AV


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Table III. Inter-correlations between the variables included in this study analysis

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Table IV. Pearson correlation coefficients between transformational leadership, transactional leadership, workgroup performance and workgroup climate (n ¼ 43)

stimulation scales were significant as predictors of workgroup climate in a non-profit religious-based organization, while the other scales were non-significant predictors. On the other hand, only the intellectual stimulation scale of leadership was significant as a predictor of workgroup performance, while others were non-significant predictors. The leadership scales that had a positive relationship with workgroup climate were contingent reward and high performance expectation. The other scales had a negative relationship with workgroup climate. All leadership scales had a positive relationship with workgroup performance except articulate vision and intellectual stimulation scales. Overall, the result as shown in Table V provided acceptable evidence that both types of leadership impacted on workgroup climate and workgroup performance. Contingent reward made the largest positive impact when predicting workgroup climate (1.063), followed by high-performance expectation (0.747). While intellectual stimulation made the largest negative impact (0.468) when predicting workgroup climate. On the other hand, the provide individual support scale made the largest positive impact (0.476) when predicting workgroup performance, followed by high performance expectation (0.425). While intellectual stimulation made the largest negative impact (0.518) when predicting workgroup performance. So collectively, the present study confirms that the impact of leadership styles are not restricted to the workgroup climate and performance of a non-profit organization. In order to test H3: “The relationship between leadership style and workgroup performance is mediated by workgroup climate in a non-profit religious-based/ church-based organization,” we carried out a set of hierarchical regressions along the

Transformational leadership Transactional leadership Workgroup performance Workgroup climate

2

3

– 0.78*** 0.41** 0.25*

– 0.39** 0.32*

– 0.57***

Notes: *po0.05 level (1-tailed); **po0.01 level (1-tailed); ***po0.001 level (1-tailed)

Independent variables

Table V. Regression analysis for prediction of workgroup climate and workgroup performance

1

Articulates vision Provides appropriate model Intellectual stimulation Fosters acceptance of goals Provides individual support High performance expectations Contingent reward Contingent punishment R2 F-value df Notes: **po0.05; ***po0.01

Workgroup climate (b)

Workgroup performance (b)

0.423 0.069 0.468** 0.055 0.259 0.747** 1.063** 0.295 0.425 3.296*** 8

0.535 0.103 0.518** 0.208 0.476 0.425 0.402 0.060 0.411 3.007*** 8

lines described by Baron and Kenny (1986) as appropriate for such cases. For the first hierarchical regression, we entered transformational leadership into the regression equation. As can be seen in the upper part of Table VI, the transformational leadership accounted for 17 percent of variability in workgroup performance. We then entered workgroup climate, which found that this model was significant and fit (F(2, 40) ¼ 13.05, po0.001). However, when transformational leadership was controlled for, the workgroup climate still accounted for a 23 percent ( po0.001) of the variance in the workgroup performance. The results reflected in Table VI reveal that the effect of transformational leadership on workgroup performance diminishes when the workgroup climate is controlled. For the second hierarchical regression, we first entered transactional leadership into the regression equation. As can be seen in the upper part of Table VII, transactional leadership accounted for 16 percent of variability in workgroup performance. We then entered workgroup climate, which found that this model was significant and fit (F(2, 40) ¼ 11.78, po0.001). However, when transactional leadership was controlled for, the workgroup climate still accounted for a 22 percent (po0.001) of the variance in the workgroup performance. The results reflected in Table VII reveal that the effect of transactional leadership on workgroup performance diminishes when the workgroup climate is controlled. T-test was performed on workgroup climate as well as workgroup performance with division of work of respondents and the results of which are shown in Table VIII and Table IX.

Model Model 1 Constant Transformational leadership Model 2 Constant Transformational leadership Workgroup climate

B

SE B

b

3.19 0.15

0.29 0.05

0.41**

1.52 0.11 0.48

0.49 0.05 0.12


537

Table VI. Hierarchical multiple regression analyses of the 0.28* effect of transformational 0.50*** leadership and workgroup climate on workgroup Notes: Dependent variable: workgroup performance. R2 ¼ 0.17 for Model 1, DR2 ¼ 0.23 for Model 2. performance (n ¼ 43) *po0.05; **po0.01; ***po0.001

Model Model 1 Constant Transactional leadership Model 2 Constant Transactional leadership Workgroup climate

B

SE B

b

3.12 0.18

0.32 0.07

0.39**

1.59 0.11 0.48

0.50 0.06 0.13

Table VII. Hierarchical multiple regression analyses of the 0.24* effect of transactional 0.49*** leadership and workgroup climate on workgroup Notes: Dependent variable: workgroup performance. R2 ¼ 0.16 for Model 1, DR2 ¼ 0.22 for Model 2. performance (n ¼ 43) *po0.05; **po0.01; ***po0.001

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The results in Table VIII show that levels of participatory safety are higher in employees of the ministry and mission division than in other divisions, while employees who worked in the corporate services division reported greater task orientation than employees in the finance and IT divisions. Table IX clearly shows that there was no statistically significant relationship in workgroup performance categorized by the division of work. T-test for mean scale scores of leadership classified by the division of work was performed and test results states that there is no significant difference in leadership approaches categorized by the division of work as shown in Table X. The Preacher and Hayes’ (2008a) approach was considered more appropriate due to the limited sample size in the current study. Preacher and Hayes (2008b) suggest that

Scales Table VIII. Independent sample T-test for mean scale scores of respondents on workgroup climate by the division of work

Participatory safety Support for innovation Vision Task orientation

2 (n ¼ 11)

3 (n ¼ 3)

4 (n ¼ 6)

Significantly different groups

3.82 3.69 3.95 3.55

4.09 3.97 4.27 4.09

3.25 3.56 3.83 3.00

4.29 3.94 4.54 4.11

(2-3)**(3-4)** None None (2-3)**

Notes: 1, operations; 2, corporate services; 3, finance and IT; 4, ministry and mission. *pp0.05

Scales Table IX. Independent sample T-test for mean scale scores of respondents on workgroup performance by the division of work

1 (n ¼ 14)

Team effectiveness Workgroup cohesion Interdependence

1 (n ¼ 14)

2 (n ¼ 11)

3 (n ¼ 3)

4 (n ¼ 6)

3.85 4.16 3.59

4.12 4.30 3.68

3.73 4.25 3.33

4.42 4.46 3.67

Significantly different groups None None None

Notes: 1, operations; 2, corporate services; 3, finance and IT; 4, ministry and mission

Scales

1 (n ¼ 14)

2 (n ¼ 11)

3 (n ¼ 3)

Articulates vision 5.26 5.47 Provides appropriate model 5.21 5.33 Intellectual stimulation 5.59 5.32 Fosters acceptance of goals 5.36 5.32 Provides individual support 5.32 5.18 Table X. High performance expectations 5.38 5.27 Independent sample T-test Contingent reward 5.06 5.67 for mean scale scores on Contingent punishment 4.50 4.25 leadership classified by the division of work Notes: 1, operations; 2, corporate services; 3, finance and IT;

5.00 5.44 4.75 5.08 5.08 4.44 5.00 3.73

4 (n ¼ 6) 5.77 6.44 5.71 5.88 6.13 5.89 5.70 4.57

Significantly different groups None None None None None None None None

4, ministry and mission

“bootstrapping enables researchers to use smaller samples than would be necessary to satisfy the distributional assumptions of other methods.” They said, “Mathematically, the lower limit would be the sample size minus one more than the total number of predictor variables” in the method. The results of the Preacher and Hayes (2008a) method of mediation analyses are presented in Table XI. Transformational as well as transactional leadership were positively and significantly associated with workgroup performance (c weights). In addition, transformational leadership was positively but not significantly related to the workgroup climate (a weights) while the association of transactional leadership was positive and significant. With respect to the effects of the mediator (workgroup climate) on workgroup performance (b weights), workgroup climate was positively and significantly related to workgroup performance. As shown in Table XI, workgroup climate did not significantly mediate the relationship between transformational as well as transactional leadership and workgroup performance, as indicated by the insignificant indirect effects (a b weights). Further, it is noteworthy to mention that the direct effect of transformational leadership still accounted for a significant portion of the variance in workgroup performance while the direct effects of transactional leadership was not significant. These results indicate that transformational leadership had a significant direct effect (c’ ¼ 0.11, po0.05) on workgroup performance and a relatively smaller indirect effect (a b ¼ 0.05) via workgroup climate, while the direct (c’ ¼ 0.11) and indirect (a b ¼ 0.06) effects of transactional leadership were not statistically significant on workgroup performance. In order to test H4: “Workgroup climate has a positive relationship to workgroup performance in a non-profit religious-based/church-based organization,” we conducted a correlation analysis, the results of which are presented in Table III earlier in this paper. The results show that the workgroup climate measures were significantly correlated with almost all measures of workgroup performance apart from vision. The overall positive workgroup climate score (comprising all four scales) had a very strong relationship with workgroup performance (r ¼ 0.57, po0.01) (Table IV). This finding indicates that workgroup climate is an essential contributor to enhancing team effectiveness, workgroup cohesion and interdependence.


539

5. Discussion The results of our correlations, hierarchical regression and the mediation analysis method proposed by Preacher and Hayes (2008a), provide empirical support for H1, which predicted relationships between leadership characteristics and workgroup climate. Furthermore, leadership and total workgroup climate were positively related (transformational r ¼ 0.25, po0.05 and transactional r ¼ 0.32, po0.05). The results of

IV Transformational leadership Transactional leadership

MVDV

Effect of IV on Effect of MV on Direct Indirect effect Total effects MV (a) DV (b) effects (c’) (a b) (c)

WCWP

0.10 (0.06)

0.48 (0.12)*** 0.11 (0.05)*

0.05

0.16 (0.05)**

WCWP

0.15 (0.07)*

0.48 (0.13)*** 0.11 (0.06)

0.07

0.18 (0.06)**

Notes: IV, independent variable; MV, mediating variable; DV, dependent variable; WC, workgroup climate; WP, workgroup performance. *po0.05; **po0.01; ***po0.001

Table XI. Summary of mediation results (SEs in parentheses, 5,000 bootstrap samples)

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regression analysis showed that the high performance expectation (0.747) scale of leadership is an important and significant predictor of workgroup climate and which is positively correlated with workgroup climate. One possible explanation for this finding could be that high performance expectation has created an environment that encouraged teamwork among employees to achieve goals and build motivation. Perhaps employees feel that team skills are essential, for having effective teams where people work with each others’ ideas and points of view increases the team’s effectiveness and thus enhances relationships and promotes a more positive workplace. This finding is in line with existing leadership and team climate studies which identify leaders as change agents; overall leadership combining transitional, and transformational; transformational leadership; supportive leadership; effective leadership; and transactional leadership (Bass, 1998; Bass et al., 2003; Gil et al., 2005; Hogg, 2001; Koene et al., 2002; Pirola-Merlo et al., 2002; Smith-Jentsch et al., 2001; Wilson-Evered et al., 2001; West and Hirst, 2003; Walumbwa et al., 2008). Unexpectedly, the results of our study revealed that transactional leadership has a greater impact on workgroup climate than transformational leadership, which may be a function of working with a largely volunteer workforce that at times requires instruction and transaction as much as it relies on goodwill and values-congruence between workers and the organization’s mission to “complete the job well.” The second hypothesis predicted a positive relationship between leadership characteristics and workgroup performance, and was supported by the results of our correlations, hierarchical regression and the method proposed by Preacher and Hayes (2008a), which are consistent with the findings of other studies (Al-Beraidi and Rickards, 2003; Avolio et al., 2003; Cheung et al., 2001; Jung and Sosik, 2002; Keller, 1992: Ling et al., 2008; MacKenzie et al., 2001; Walumbwa, 2002). Our study confirmed that both types of leadership have a strong impact on workgroup performance, but the effect of transformational leadership (r ¼ 0.41, po0.01, c ¼ 0.11, po0.05) was higher than transactional leadership (r ¼ 0.39, po0.01, c ¼ 0.11, not significant). Consequently our study makes a significant contribution to the existing literature with the same findings which are that transformational leadership has a greater impact on workgroup performance than transactional leadership. Our major contribution to this literature is that our study was conducted in a non-profit organizational context whereas the majority of the literature is conducted in for-profit sectors. Surprisingly, the results of this study revealed that the intellectual stimulation scale of transformational leadership has a greater negative impact on workgroup climate as well as workgroup performance. One potential explanation could be that leaders, who intellectually stimulate their employees, push their employees outside their comfort zone. Employees in a religious organization may be driven by religious values, attitudes and beliefs that are charity driven not competitive driven where intellectual stimulation may be perceived as being a competitive trait. The third hypothesis predicting that both types of leadership would have an indirect (i.e. mediated) effect on workgroup performance via workgroup climate was not supported by mediation analyses (Preacher and Hayes, 2008a). The total effects as well as direct effects of transformational leadership on workgroup performance were positive and significant while indirect effects were not significant. On the other hand, both direct and indirect effects of transactional leadership on workgroup performance were not significant, while total effects were positive and significant. These results indicate that the indirect influence of leadership via workgroup climate was relatively small and not statistically significant on workgroup performance. This finding shows

that workgroup climate is not the specific mechanism by which leadership has an effect on workgroup performance in non-profit religious-based organizations. It is most likely that other constructs, particularly those more directly linked to behavior, such as effort/motivation or the communication of important information among workgroup members, are the specific causal mechanisms driving performance. Although conducted in a for-profit sector, this finding would be supported by Brown and Leigh (1996) who found effort and perceptions of a motivating psychological climate were related to work performance among sales representatives in three different manufacturing companies. The findings in our study identify that leadership individually influences workgroup climate in non-profit church-based organization, but which in turn does not significantly influence workgroup performance. Hence neither transformational nor transactional leadership in a non-profit organization indirectly influence workgroup performance through workgroup climate. How these effects break down into more specific components could be addressed by future studies. Thus our findings do not support the mediating role played by workgroup/team climate between leadership and workgroup/ team performance/outcomes (Bass et al., 2003; Gil et al., 2005; Mackenzie et al., 2001; Pirola-Merlo et al., 2002; Smith-Jentsch et al., 2001; West and Hirst, 2003; Zaccaro and Klimoski, 2001). The contextual difference between private enterprises and non-profit organizations could be the reason for this finding, as could the specific nature of the organization studied in this case (i.e. a church-based charitable organization). In order to test H4, correlations between the workgroup climate scales and workgroup performance scales were conducted. One-tailed significance tests were performed due to the expected positive correlations and the limited sample size. The results revealed that most of the workgroup climate scales were significantly correlated with the scales of workgroup performance. However, correlation between the participatory safety scale of workgroup climate and workgroup member’s cohesion (r ¼ 0.70) was the strongest. It is important to note, however, that this finding does not necessarily mean that workgroup climate is the only driver of workgroup performance. One possible explanation for this finding could be that many employees were from the same religious denomination as the non-profit organization thus shared the same religious values, attitudes and beliefs including practices thereby providing them with a context of “safety.” Besides, using a total workgroup climate score and a total workgroup performance score, inter-correlations conducted on H4 indicate significant strong positive relationships among workgroup climate and workgroup performance (r ¼ 0.57, po0.001). The Preacher and Hayes (2008a) mediation method analysis also found a significant and positive large effect (b ¼ 0.48, po0.001) of workgroup climate on workgroup performance when partialling out the effect of transformational and transactional leadership. These findings are consistent with the literature demonstrating the importance of West’s (1990) model of workgroup/team climate on workgroup/team performance (Bain et al., 2000; Burningham and West, 1995; Laschinger et al., 2001; West et al., 1998). In addition, our study confirms that the impact of workgroup climate is equally important for workgroup performance in nonprofit organizations. 5.1 Limitation and future directions Since data were collected from one non-profit organization at one point in time, causal inferences based on correlations must be guarded, as the small sample size requires the findings to be considered as exploratory in the first instance. The fact that there may be operational differences in other, as well as smaller organizations, based on the


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limited size and the ability to allocate job functions, could limit the generalizability of our study’s result. This operational and size difference could also mean differences in variables that contribute to group performance. In addition, all data were drawn from employee surveys, posing risks of method variance or response biases. As we could not directly compare respondents with non-respondents, we also cannot rule out the possibility of a selection bias. Finally, this exploratory study was conducted in an Australian church/religious-based non-profit organization and could be context specific. A larger sample comprised of multiple religious-based non-profit organizations in Australia and internationally is recommended. Future research may like to consider examining whether our results may be generalized to the public and private sectors. 6. Conclusion This study examined the relationships among transformational and transactional leadership, workgroup climate and workgroup performance in an Australian religious/church-based non-profit organization. The findings indicate that transformational leadership and team climate appear to provide a gateway to workgroup performance because both variables significantly lead to enhanced workgroup performance. Similarly, certain characteristics such as reward, high expectation of performance of both types of leadership have a positive and significant impact on workgroup climate. The findings in this study are twofold in that they make a significant contribution to both scholarly theory and workplace practice in the non-profit sector as they indicate that the influence of workgroup climate on workgroup performance provides an enabling context for the delivery of leadership in a non-profit organization. The study findings contribute to leadership theory as new models of leadership propose that effectiveness in open systems, such as organizations, depends on leadership practices embedded within networks of interdependencies at different organizational levels. These interdependencies consist of various elements, such as groups and units, workplace locations and management roles (Beer, 1999; Heifetz and Laurie, 1999). Our results indicate that leaders were found to contribute significantly to perceptions of participative safety, shared commitment to teamwork and systemic support for cooperation – that is, workgroup/team climate (Klivimaki and Elovainio, 1999). The fact that most of the influence of leadership at all levels was mediated by workgroup/team climate suggests (Ha¨rtel et al., 2002) that the influence of these leaders was not direct but instead was embedded within networks of interdependencies comprised of factors such as communication, relationship building and culture as the newer leadership theories propose (Fletcher, 2002). In terms of the study’s contribution to workplace practice in the non-profit sector, the findings may assist leaders and managers to better understand how workgroup climate provides an organizational context for focussing on the achievement of collective performance goals. Furthermore, if the influence of leadership on workgroup performance is explained by workgroup climate, then the implication may be that it would be desirable for the leader to delay promoting any workplace change unless the workgroup climate is positive. References Acar, W., Aupperle, K.E. and Lowy, R.M. (2001), “An empirical exploration of measures of social responsibility across the spectrum of organizational types”, International Journal of Organizational Analysis, Vol. 9 No. 1, pp. 26-57.

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