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The Impact of Transformational Leadership on Organizational Effectiveness


The Impact of Transformational Leadership on OrganizationalEffectiveness

TheImpact of Transformational Leadership on Organizational Effectivenesssuch as Employee Engagement and Organizational Commitment

Organizations are continuously facing global competition and setbacksin finding ways to sustain its competitive advantage in this complexbusiness world. Organizations today, need to seek better alternativesto continue their operations, and at the same time ensure that theyare effective, creative and efficient. To achieve success, theleaders of any organization must focus their energy on ensuring thatthe organization is committed towards its quest for sustainability,innovation and continued relevance (Erkutlu, 2008). It is alsocritical for the leader to be aware of the cultural differences thathave impact on the business, especially in other countries.

Employees are the most valuable assets of an organization, andapparently, most businesses do not realize that employee satisfactionis one of their key motivation in ensuring they work towardsachieving the its overall objectives and long-term goals (Colbert,Barrick, &amp Bradley, 2014). One of the most efficient ways ofwinning employees is by setting the right conditions to ensure thatthey give their best, committed to the goals and values of theorganization, and they are actively contributing its success with anenhanced sense of well-being (Men, &amp Stacks, 2013). Employeeengagement is based on the foundations of integrity, and trust. It isalso crucial for the organization to enhance commitment andcommunication between the organization and its members. This way, itincreases its chances of success, hence contributing toorganizational and individual performance as well as increasedproductivity according to Van et al., 2014.

Leadership is a crucial element in ensuring that the organization’sperformance is achieved and in line with the stated mission andvision. Their ability to inspire confidence and support from thepeople who are working towards achievement of goals cannot beunderestimated. The need for effective leadership is increasing dueto globalization of the market places and competitiveness (Erkutlu,2008). Organizations have been forced to be more flexible andresponsive so as to adjust to the continued fluctuation of theexternal market environment. Leadership is essential not only in thehigh-level position but at all levels of governance. Further, theinfluence of a particular leadership style on organizationaloutcomes, for instance, performance, employee satisfaction and ratesof turnover are being examined by scholars. It has led to thedevelopment of theories that define effective leaders (Colbert etal., 2014). Traits are based on personality, skills, strengths,adaptation among others. Behavioral theories have also been examined,and how it is influenced by the internal and external factors (Wong &ampLaschinger, 2013). The influence of transformational leadershiptheories has been researched extensively, by different scholarsoriginating from diverse backgrounds, and their outcomes show thepositive impact of transformational leadership on the organizationalperformance and outcomes in different cultures.

The aim of this dissertation is to review different literatureresources focusing mainly on trends and research ethical issues andways they can be improved to expand the dialogue further. Also, itseeks to show how the research would contribute to the currentliterature.


Foundationsof transformational leadership

The idea of a transformational leader is built from inspiration andstimulation. The leaders that apply this style involve employeestowards the achievement of the overall goals and motivates themthrough appreciation teamwork and giving them individual attention(Pearson, 2012). Transformational leaders are known to contribute alot towards achieving the desired organizational goals compared toother forms of leadership. This is because they are known to installeffective and efficient processes (Boerner, Eisenbeiss &ampGriesser, 2007). They also invest a lot of efforts to theirsubordinates ensuring that power distance is kept close. Thismotivates the subordinates to work hard towards the achievement ofthe stated goal. These leaders are also known to successfully retainemployees and at the same time, manage workloads in a comfortable andfriendly manner. These leaders are also known to be working togetherwith their subordinates, that way they become more engaged with thegoals and the objectives of a given company (Pearson, 2012).

Transformation leadership is composed of four main elementsinspiration, charisma, intellectual stimulation, and individualconsideration (Pearson, 2012). For a leader to increaseorganizational performance, he/she must have the ability to promotecreativity, and innovation and stimulate the subordinates tochallenge their value systems so as to improve on individualperformance in the long run (Erkutlu, 2008 Hamilton, R., Osborne,M., &amp Tibbitt, J. (2013). Studies indicate that transformationalleadership has a great impact on organizational performance. Further,to achieve the desired performance, it is important to engage thesubordinates actively and providing the ideological explanations thusensuring that they have an identity with their organization and therequired motivation to improve their job performance (Men, &ampStacks, 2013). It is critical to ensure that the subordinateunderstands the importance of values for it has a great impact on theorganizational performance. According to Wong, and Laschinger, 2013.when leaders provide intellectual stimulation to their subordinates,it activates the adaptive and explorative thinking process. Itencourages subordinates to focus on identifying new solutions to theexisting problems in the organization, thus encouraging them tochallenge their values, traditions and beliefs.

Organizational effectiveness and commitment

Organizational effectiveness is important in laying strategies of agiven entity. It is a way of measuring competitiveness. It is throughits effectiveness that a company can estimate if their profit marginwill increase or decrease in the future. Effectiveness has shown tobe affected heavily by an organizational commitment towards a giventask (Boerner, Eisenbeiss, &amp Griesser, 2007). Scholars haveexamined the impact of engagement to ensuring that the companyincreases its performance. They concluded that, organizationalcommitment is that sense of belonging or psychological attachmentthat one has, and also what drives them to work towardsorganizational development. It is that process that employees thinkas their role in fulfilling the moral and ethical responsibility whenthey visualize on the future of that company (Cekuls, 2015). It helpsthem in investing their time towards the realization of developmentwithin that particular organization that would eventually be helpfulin meeting their goals. Commitment has shown to drive organizationaleffectiveness to levels that cannot be underestimated. It connectsthe employees and the companies they work for. It also determines thelevel of attention and involvement that an individual puts into it,and at the same time show how the goals of an individual areintegrated with those of the organization.

According to Hanaysha (2016), employees stay in an organizationbecause they love their jobs, receive high salaries and rewards, orare psychologically attached to the company. When one examines thesefactors, it could point both positive and negative outcomes thataffects the employees’ job satisfaction and self-esteem (Hanaysha,2016). Organizational commitment is a strong indicator of howindividuals are attached to a particular firm, and how much they areinvolved in meeting the goals of that company with extra effort andmotivation (Harrington, Short, &amp Hynes, 2015). Commitmentmeasures the level of association, involvement, motivation andinterest that one has or holds for the organization they are workingfor. According to Erkutlu (2008), for one to retain employees theyhave to focus more on meeting their interests, and examine theorganizational model that is applied in governance. These dimensionsare useful for identification of employee behavioral characteristicsand also examining their levels of commitment and effectiveness(Hanaysha, 2008).

The degree of closeness between a leader and his/her subordinates isalso crucial in the realization of organizational commitment inmeeting its set objectives and goals. According to Hoon et.al.(2012), when a leader is closer to the subordinates, they showelements increased commitment to the organization. The organizationalstructure also impacts a lot in their building or destroying theserelationships (Hoon et.al., 2012). An organization with a moreopen structure, with fewer protocols has shown to be more successfulin maintaining these relationships. This is because the subordinatescan directly report to their managers, hence bridging thecommunication gap. Increased communication, influences theorganization’s commitment (Pandita, &amp Bedarkar, 2015Hamilton,Osborne, &amp Tibbitt,2013). Open communication results tobetter organizational performance (Harrington, et.al, 2015 Kazmi &ampNaaranoja, 2013). A transformational leader should ensure that allcommunication gaps are bridged if he/she wants to develop betterrelationships with the subordinates.

Innovation and organizational learning

With regards to innovation and organizational learning,transformational leadership style has shown to influence positivechange on the well-being of the organization according to Kazmi &ampNaaranoja (2013). This is driven by the fact that employees aremotivated towards their work and it allows them to freely share theirskills and ideas in an open manner. This form of leadershipencourages free association among employees, and it gives them achance to express themselves, (Hanaysha, 2016) and it facilitates aroom for learning and gathering valuable information from others.This has an overall positive effect on the organization, and itdirectly or indirectly affects the effectiveness of the employeestowards it positively (Kazmi &amp Naaranoja, 2013). It also booststheir engagement for it increases their confidence and competency indealing with issues. Learning and innovation are continual andtransformational leaders often see to it that these elements becomepart and parcel of the organization.

Organizational Performance

The behaviors of a transformational leader influence employees andmakes them aware of the outcomes of the tasks assigned to them (Wong&amp Laschinger, 2013). A study performed by a Russian companyexamined the impact of transformational leadership on theperformance, and the findings indicated that there was a strongcorrelation between leadership practices and organizationalperformance (Men &amp Stacks, 2013). Also, effective human resourcemanagement mediates performance and leadership through an increase incommitment, motivation and also intellectual enthusiasm (Nasomboon,2014).

Other studies have also indicated that financial performance of acompany is highly dependent on the leadership style. Findingsindicate that a company ran by a transformational leader has evidenceof increased sales, revenues and also profitability (Hoon et al.,2012). Also, transformational leadership is known to be a strongpredictor of commitment, job satisfaction, and performance. Itdemands the highest degree of respect and trust to the leader. Toimprove organizational performance, it has been established that bothintellectual and inspirational motivation is essential (Erkutlu,2008). Organizations today are increasingly focusing on performanceto meet the expectations of various stakeholders in a more ethicaland transparent manner. Therefore, it is necessary for any leader tointernalize behaviors that are considered transformational inensuring the continued survival of that organization, for it highlydepends on it (Colbert et al., 2014).

It has been established that the work environment plays a crucialrole in determining whether an employee remains employed or forced toquit their jobs. Transformational leaders do not supervise theirsubordinates, but are more focused on explaining and demonstrating tothem what the mission and the vision of the company is, andestablishing ways of ensuring that they achieve them (Cekuls, 2015).Research has demonstrated that transformational leadership drivesorganizational performance, but a mediating variable still has to beexamined, to find out how it does that. This indicates that there arestill gaps in research that need to be addressed in a critical andfocused manner (Zhu, Newman, Miao &amp Hooke, 2013). Seniorleadership style has reported same positive outcomes especially inthe field of innovation and at the same time, it has shown asignificant impact on organizational performance and furtherinvestigations need to establish these relationships (Franke &ampFelfe, 2011).

Organizational behavior and change

Ethics govern the behavior of any institution. Studies that have beencarried out by various scholars indicate that transformationalleaders are unethical because they appeal more to emotions thanreason, hence manipulating and controlling their subordinates’perception of interest (Hoon et.al, 2012). It is also urged that whenthe followers respect a leader, it does not mean that it is done inan ethical way. Ethics and morals guide true transformationalleadership. Transformational leaders can be ethical and authentic, orpseudo-transformational. The former aligns the organization’s corevalues together with those of the subordinates and appeals to thesubordinate’s human nature (Wong &amp Laschinger, 2013). The latercan compromise organization’s integrity. Many factors are bothinternal and external that affect the behavior of a transformationalleader. But it is the responsibility of the leader to ensure thathe/she acts in the best way possible to fulfill the ethicalexpectations of that organization.

Studies indicate that there is a positive association between theidealized behavioral influence of a transformational leader and theeffectiveness of that individual. It suggests that leaders becomeinfluential when followers have high levels of morality, or rathercommitting to the greatest ideas (Hanaysha, 2016). Employeeperceptions are known to increase depending on the effectiveness oftheir leader. When followers of a particular leader recognize him/heras their role model, they start sharing their concerns, and problemspresent when leaders demonstrate superior ethical and moral conduct.Upon fulfilling this characteristic, the followers begin to recognizea given problem or challenge as their own.

Change is one of the central processes of transformationalleadership, and it has a significant impact on organizationaleffectiveness especially in the dimensions of organizationalcommitment and employee satisfaction, hence making it a driving forceof promoting innovation. The creativity and the innovativeness ofemployees are key drivers of change within the organization (Boerner,Eisenbeiss &amp Griesser, 2007). There is a growing interest thatthere is a relationship between transformational leadership andcreativity of the employee together with innovativeness. Studies tendto overlook this relationship. Studies from Taiwanese firms indicatedthat there was a significant relationship between transformationalleadership and organization’s innovativeness (Nasomboon, 2014).Other studies in support for this claim indicate that the drivingforce for innovation within the organization is mediated by theperceived climate of excellence within that organization (Orabi,2016). Change drives organizational performance according to Spitzer,and it is the key element of driving performance. When theorganization commits to change, it becomes easy for it to adapt henceavoiding the loss that comes with wasted resources such as time andfinances (Boerner et al., 2007).

Engaging employee is also crucial, and a transformational leader hasto realize that, change can only be possible when there are activeengagements with subordinates (Erkutlu, 2008). Change is wellperceived and embraced when engagements are done. It also indicatesethical practices, in the organization. It becomes unethical whenorganizational management and leaders pass proposals without engagingthe employees. It creates resistance among these individuals developa feeling that their rights are not being respected. According toCekuls (2015), workers show more commitment to organizationalperformance when they are engaged in crucial issues that have eitherdirect or indirect impact on them.

Transformational leaders have a tendency of trying to analyze andevaluate the current and given situation of a given organization.He/she then identifies critical issues in that case and discussesthem with the subordinates, not as their leader but as part of thecompany (Cekuls, 2015). These types of leaders tend to put themselvesin the position of their subordinates and think along with theirideologies. This ensures that the environment of equity is maintainedand at the same time the employees become comfortable in performingtheir tasks. This act alone has shown to raise organizationalperformance and also commitments towards achieving long-term goals.It is also an important virtue in ensuring that organizationaleffectiveness is achieved through involvement and engagement ofemployees (Boerner et al., 2007). It is also crucial to notethat organizational change through this type of leadership can easilybe achieved if the employees are made to realize that they play asignificant role in driving that change.

The weakest dimension of transformational leadership is the idealizedweakness, and it affects the perceptions that employees have on theeffectiveness of that leadership style. Although leaders can assessprogress in the organization especially if it is meeting itsobjectives and goals even with employee engagement, the employeeswould still be dissatisfied with the information they receiveoriginating from management (Cekuls, 2015 Kazmi &amp Naaranoja,2013). Influence of a leader has been shown to have an overall effecton motivating inspiration and stimulating the intellectual setup.Leaders should be role models, that way they feel a sense ofbelonging and purpose within that team. That drives performance, andat the same time, the employees feel valued and appreciated in thatorganization. In addition to that, studies indicate that when leadersare good role models to their followers, they tend to view thingsfrom a better perspective, ad work towards achieving theirorganizational purpose in a more positive manner.


Training is also a crucial element towards the realization of aneffective and efficient working organization. Transformationalleaders are known for being advocates for behavior change within theorganization. According to Franke &amp Felfe (2012), training is avital process of ensuring that employees remain informed within theorganization especially when there is a change in work processes,strategies, and approaches. Our world is dynamic, and things changeon a daily basis. Therefore, it is crucial for a leader to empowertraining of employees if they want to improve their performance. Thisalone boosts job outcomes of the employees, and at the same time,they minimize losses as a result of wrong procedures and accidentsaccording to Pearson, (2012) an effective transformational leaderrecognizes training as an essential element of driving change andenhancing commitment. They always make a point of investing in itfor they know that the long-term benefits of employee training to theorganization cannot be underestimated (Franke &amp Felfe, 2011).

Howresearch would contribute to the current literature.

Research has proven to be a very efficient tool in identifying theshortcoming of a given topic and providing substantial evidence aboutthat issue. Many scholars have conducted studies in the area ofleadership, and their outcomes have shown almost similar results. Oneof the reasons could be that they tend to focus more on the generalconcept other than investigating one of it in detail. Researches inthe area of leadership are too broad, and they do not give adistinction between different dimensions (Franke &amp Felfe, 2011).Much as the field of transformational leadership has beeninvestigated, the majority of researchers focus on organizationalcommitment and effectiveness. Therefore, research on the chosen topicwould ensure through an understanding of the subject in question.

Existing literature is also important to reference point of researchoutcomes. Scholars have different opinions regarding a particulartopic, and examination of their literature brings a clearunderstanding of the subject and at the same time identifying thevarious shortcomings and the gaps in these studies. Substantialliterature from books are also reference points of proving orrejecting the developed hypothesis for these studies (Geier, 2016).It is crucial to note that the existing literature gives direction tothe researcher in the identification of a problem that needs to beresearched on. It only supports what is in existence, but it is uponthe researcher to dig through, to gather evidence. The gap in atransformational leadership role in enhancing organizationaleffectiveness is not a new topic. There is numerous literaturesupporting its existence, together with a broad range of studies thathave been done on the same field previously (Franke &amp Felfe,2011). But as earlier indicated, the world is dynamic, and change isbecoming part and parcel of our existence. The theories of leadershipare also changing depending on presented cases on the issue. Theextensive need for research is driven towards finding out if theexisting literature is still valid on a given topic for instance, intransformational leadership style, the need for the elder to be moreadaptive and flexible in addressing various issues (Shiva &amp Suar,2010). The old leadership ways have to be modified to fit into thecurrent dynamics of the world is changing very fast.

Further research on the above topic will also address theshortcomings that other researchers have faced in the past, forinstance, the lack of adequate data processing tools, the lack ofconfidentiality among others (Shiva &amp Suar, 2010). Today’stechnology has made it easier for researchers to collect moreaccurate data from the field, and have also improved ways ofanalyzing these data to ensure accuracy and precision. That way, someassumptions can be avoided, by presenting the evidence of a givenphenomenon. Also, one common feature of the previous research is theoverreliance of descriptive studies. Today, it is much easier toconduct controlled studies because companies have become flexible,and at the same time, they have grown the desire for vitalinformation such as this (Walter &amp Bruch, 2010). Vital monitoringof the organizational activities has been made possible throughadvanced technologies that one may not suspect that they areavailable. This enables the researcher to collect data based onactual observations from the fields. Evidence-based practice isbecoming part and parcel of research studies, and it is importantinnovative encodes of collecting that.

The current research on the topic will also expound on the gap thatprevious research failed to identify, for instance, both the internaland the external modifying factors in transformational leadershipthat affect ethical and moral choices of that leader. Others includethe numerous theories and assumptions the researchers make whenconcluding research studies (Orabi, 2016). This has a significantimpact on the overall outcomes and the credibility of that study.Research studies on this studies should minimize assumptions, andfocus on existing facts of that given topic. Where literature isnon-existent, theories can be applied, but they should be minimal.This minimizes bias and boosts credibility.

Research ethics on this subject

Ethics in research is very essential, for it allows for appreciationof other scholar’s work and also using them points of references.It is also essential in ensuring the authenticity and the originalityof given research. Several ethical steps have been addressed in thispaper. First, acknowledging the work of scholars through referencingof their work and citing direct quotes from their works has been madea top priority in this paper. In addition to that, we have ensuredthat, none of the cited works or direct quotes from these subjectshave not been manipulated to change its original meaning. Also,different researches from different scholars have been applied inthis review to ensure bias is eliminated from the paper by focusingon opinions of a single scholar. It also balances the discussionsbased on opinions of the scholars without overstressing oremphasizing on their opinions concerning the topics.

In conclusion, transformational leadership style has a tremendousimpact on organizational performance especially in the fields ofemployee engagement and organizational commitment. Studies by Colbertet.al, 2014 indicates that the inspiration, charisma, intellectualstimulation, and individual consideration drives the behaviors ofthese types of leaders and have shown to impact the performance ofthe organization. The fact that a transformational leader valuesinnovation, creativity and teamwork make them exceptional in drivingchange, and commitment to the organization. The majority of employeesthat work in organizations lead by transformational leaders haveshown higher degrees of job satisfaction and motivation. At the sametime, their commitment to the delivery of their work has shown to bevery high. Organizational effectiveness, in general, seems to be veryhigh, and the outcomes have been mind-blowing. On the issue ofethics, a transformational leader has shown to consider ethicalstandpoints in a majority of their decisions compared to others thishas a serious impact on how the organization performs. This also hasa significant impact on their culture and also among the employees,as well as its reputation. Transformational leaders have to be pacesetters for any organization should it want to ensure improved jobperformance.


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