Transformational and Transactional Leadership in Contemporary Organizational Scenario

In the contemporary global organizational scenario, with increasing integration, inclusiveness as well as inter-connectedness of the business domains across the globe, attributing to international phenomena like Globalization, trade liberalisation and technological innovations, the operational frameworks of the organizations, especially commercial organizations have developed significantly (Brunetto, Xerri and Nelson 2013). With the global business scenarios becoming more competitive and dynamic, it has become immensely crucial for the organizations to incorporate efficiency and increased productivity as well as higher employee performance so as to stay profitable, prospective and sustainable in the long run. In this context, factors like authentic leadership, development of employees; psychological capital and aspects like that of Leader-Member Exchange have been gaining increasing popularity and importance in the aspects of enhancement of employment performance and overall organizational development (Muenjoh and McMurray 2016). The essay, in this context, tries to conduct and extensive review of the existing literatures, present in these domains, so as to observed the relationships between the aspects of authentic leadership, leader-member exchange as well as the psychological capital of the employees, thereby discussion the perceptions and theories present in the aspects of development of psychological capital for different types of employees. The essay also tries to analyse and critically review the reasons behind the influences of emotions on the performances of the employees, as found to be present in different literary and scholarly evidences.

Over the years, with the development of commercial organizational scenario and with the increasing competitiveness, dynamics and complexities in the domains of operational framework of the organizations, considerable changes can also be seen to be occurring in the aspects of the leadership structures within these organizations, in the global framework. In this context, Odumeru and Ogbonna (2013), in their research paper, highlights the two broad types of leadership frameworks currently observable in contemporary organizational scenario, to be those of transactional and transformational leadership. The authors differentiate between these two types of leadership patterns in the sense that while transactional leadership does not intend to change the future and is more focussed to keep the organizational patterns and activities the same, the transformational leaders are more interested in stimulating, inspiring and thereby transforming the activities with positive approaches for achieving extraordinary outcomes.

The above assertions are augmented by McCleskey (2014), who highlight that transformational leadership is a more proactive form of leadership, where higher ideals and moral values are instilled among the employees, thereby motivating them and stimulating their creative and innovative traits, which bring previously non-derived results for the concerned results. However, neither of the two above mentioned scholarly works discuss about the sub-categories of leadership styles or traits which exist under the two broad domains of leaderships and the variations among these sub-groups.

Authentic Leadership and Its Characteristics

In this context, Wong and Laschinger (2013), highlights one of the leadership styles, in the contemporary period, with resemblance to the structure and objectives of transformational leadership, as that of the concept of “Authentic Leadership”. According to the authors, several common attributes of transformational leadership as well as servant leadership can also be found in authentic leadership styles, the attributes being positive morals, self-awareness of the leaders in terms of cognitions, emotions and values as well as positive modelling on parts of the leaders (Laschinger, Wong and Grau 2012). Although the research paper of Wong and Laschinger (2013), discusses the resemblance of authentic leadership structure with that of transformational and servant leaderships, the paper lacks in the aspect of providing a comprehensive and appropriate definition of the notion of “Authentic Leadership”.

?erne, Jakli? and Škerlavaj (2013), define authentic leadership as a new kind of leadership where the primary emphasis is on the legitimacy of the leaders and on the construction of honest relationships with their followers, thereby ensuring the presence of ethical components in the operational frameworks of the organizations as a whole.

Nichols and Erakovich (2013), discusses the Authentic Leadership Model developed by Bill George, in which the five characteristics of an authentic leader are cited with the help of an action wheel which is as follows:

As per this model, the attributes of the authentic leaders are:

Sense of Purpose- Regarding their own and organization goals, which is manifested in the form of passion for their works

Values- Regarding what they are and what they aim to do and the authentic leaders do not tend to compromise on their values which can be seen from their behaviour which is generally in accordance to their values

Robust relationships- The authentic leaders have strong and productive relationships with others, as is generally evident from the connectedness of the same with the followers, characterised by free communications, mutual respects and incorporation of bilateral thoughts and ideas (Leroy et al. 2015)

Self-discipline- Seen in the focus and levels of determination of the leaders and presence of enough motivation and consistency to deal with hurdles and keep on moving towards their goals

Heart- Generally manifested in their levels of compassion, which shows higher sensitivity among authentic leaders, regarding the needs of others and willingness to assist them (Hmieleski, Cole and Baron 2012)

All these aspects, as pointed out by the above-mentioned scholarly works indicates towards the increasing needs for this kind of leadership and its rising relevance in the contemporary period and organizational structure.

Leader-Member Exchange Theory

Leader-Member Exchange Theory

In the context of discussing the relationships between the leaders and other participants of the organizations, in the contemporary global business framework, Rockstuhl et al. (2012), highlight the aspects of Leader-Member Exchange Theory, according to the assertions of which, in an organization, the same leaders can have different types of relationships with different sub-ordinates in the same organization. However, the authors do not clearly indicate the differences which may be present in this aspect, which in turn, can be discussed in the work of Volmer, Spurk and Niessen (2012), where the two broad differentiations of the members, from the perspectives of the leaders are as follows:

In-group- Members are more favoured and communicate more freely with the leader, commands higher attention and have more access to the different resources of the organization

Out-group- Not that much favoured by the leader and play less significant roles in the organizational process

Vidyarthi et al. (2014), in this aspect, augments this argument by asserting that the two-way relationship between the followers and leaders is built based on the following operational activities:

Role taking- In this stage, with the joining of a new member, their talents and abilities are assessed by the leaders and they are accordingly provided opportunities to prove themselves.

Role making- This refers to the stage of informal negotiations between the leaders and the members in the working environment, where those members having similarity in thought process and working traits with that of the leaders generally succeed more than the others.

These aspects are expected to contribute to the employee and organizational performances considerably. Another factor, in this context, contributing to the employee performances in the global organizational framework, is that of the psychological capital of the employees.

Psychological Capital

Newman et al. (2014), in the context of international organizational framework, defines the increasingly popular notion of psychological capital as the psychological developmental state of the individuals in an organization which evolves the overall personality and efficiency level of the concerned individual. The author characterizes the presence of psychological capital of individuals (especially in the organizational environment) to be as follows:

Hope- Having optimistic approach and energy of perseverance and working towards the goals and objectives proactively

Efficacy- Believing in his or herself in the aspects of efficiently working towards achievement of goals and generating positive and beneficial outcomes

Resilience- Keeping a positive attitude in the times of negative situations and coping up with the same by designing positive solutions

Psychological Capital and Its Components

Optimism- Keeping a positive outlook throughout, towards individual success, at present in the future (Roche, Haar and Luthans 2014)

Relationship between authentic leadership, psychological capital and leader-member exchange

The above discussed aspects, as perceived by scholars across the world, have significant inter-relationships and multilateral connections, although the nature of these relationships can be seen to be varying according to the variations in the perceptions of the scholars and their assertions.

Authentic relationship and psychological capital

As per the argument put forward by Erkutlu and Chafra (2013), authentic leadership in an organization in general, having the traits of all forms of positive leadership structures, have considerable similarity with that of the traits which are generally found in positive psychological capital of people. As per the authors, authentic leadership in general is characterized by four primary components- self-awareness, moral perspectives, transparency in relational aspects and balance in the processing activities, which, according to the authors, can only develop in the presence of positive psychological capital among the relevant individuals (Avey 2014).

Psychological capital as a meditator

Wang et al. (2014), in their work, highlights a unique connection between the aspects of authentic leadership and workers’ performance and the role of psychological capital played in this domain, which cannot be seen to be commonly investigated in the literary works or scholarly evidences prior to the same. As per the assertions of the author, the presence of authentic leadership in the organizations help in improving employee performances as the highly ethical and moral behaviour of the leaders are viewed by the followers as inspirations and the same are instilled in the followers by the means of increased transparency, positivity and ethical aspects. Positive and authentic leaders support their followers to enhance their performances (Hsiung 2012).

According to Wang et al. (2014), the psychological capital, in this context, plays a mediating role between the relationship of authentic leadership and performance of the followers or the workers. The authors refer to the complementary congruity theory, according to which, the performances of followers are highly influenced by the leaders when there exists a complementarity between the capabilities of the leaders and needs of the followers (Zhang, Wang and Shi 2012).

In this context, the authentic leadership plays crucial role in enhancing the performance of the workers if the same are in need for psychological capital development. On the contrary, when there is presence of high psychological capital among the workers or followers, the role and significance of authentic leadership decreases as the leaders do not have much to influence. However, the assertions of the authors are considerably generic and deviations can be seen in many cases, where both psychological capital and authentic leadership can be seen to be cumulatively and positively affecting the performance of the followers (Owens, Wallace and Waldman 2015).

Relationships between Authentic Leadership, Psychological Capital, and Leader-Member Exchange

LMX as a mediator

The work of Zhang, Wang and Shi (2012) indicates towards the mediating role of Leader-Member Exchange (LMX) between the relationship of the authentic leadership and productivity and performance of the followers. As per the assertions of the workers, the presence of authentic leadership in an organization leads to a superior quality of communication framework between the leaders and the followers, due to the facilitation of transparency and free flow of ideas, updates and grievances (Zhang et al.2012). This in turn helps in construction of a superior quality LMX, which in turn has positive implications on the performances of the followers, who in presence of a favourable relation with the leaders, feel motivated, positive and encouraged to put in more efforts.

PsyCap as moderator between LMX and follower’s performance

According to Chaurasia and Shukla (2014), the relationship between the LMX and that of the performance of the followers is facilitated by the aspects of psychological capital in the sense that in the presence of low PsyCap, the strong LMX facilitates in greater motivation and dedication among the workers by enhancing their positive attitude and improving their performance of the employees.

There has been considerable research in the aspects of development of psychological capital in the contemporary global organizations, with the processes being varying across different employees and the types of jobs which they do. In this context, Verleysen, Lambrechts and Van Acker (2015), elaborates about the Appreciative Inquiry Structure for the purpose of implementation of Psychological Capital among the workers in global organizational frameworks.

According to the authors, participating in these types of Appreciative Inquiries, which encourage in defining the purpose, discover the workings, dreaming of something new, designing to make it happen and delivering the same, helps the workers to fulfil their Basic Psychological Needs for the aspects like that of autonomy, relatedness and competence, which in turn helps in increasing their psychological capitals. However, this type of model is applicable more for white collared jobs, as per the authors and is thus not a generic model for building psychological capital.

Huang and Luthans (2015), in this aspect, provides several general guidelines for improving he PsyCap of employees in general, the steps being those of clarifying ones’ goals, brainstorming for ways of accomplishments of the goals, incorporate others’ ideas and initiate communications and finally executing the steps in accordance to the plans and self-perceived goals.

Emotions at work: Implications on employees’ performances

There have been significant works in studying the presence of emotions in the workplaces and their implications on the behaviours and attitudes of the employee as well as on their overall performances. In this context, the Ashkanasy and Dorris (2017), uses the Affective Events Theory, thereby analysing the six major emotions (both positive and negative), which are usually prevalent among the individuals in their workplaces, which are triggered by the different events and occurrences in the work places:

As per the authors, these emotions, in their turn have implications on the performances of the employees. According to the authors, positive emotions on part of both the leaders as well as employees, increases the level of positivity and motivation in the organizations as a whole, which in turn, encourages the performances of the employees, who try to put in more efforts. According to Ayoko, Konrad and Boyle (2012), emotions (both positive and negative) have direct implications in the aspects of the feelings of the employees regarding their closeness with that of the organizations and their leaders as well as supervisors, thereby impacting their performances in the organizations.

Conclusion

The above review of the existing literary and scholarly evidences, makes it evident that in the contemporary period, the aspects of authentic leadership, psychological leadership and LMX are gaining increasing importance in the global commercial and organizational frameworks and these phenomena are found to be inter-related with each other. As can be seen both LMX as well as psychological capital play roles of mediators between authentic leadership and performances of the employees. In this context, different theories can also be seen to be discussed by the scholars, regarding the development of psychological capital of the workers, of which one of the primary one is that of the appreciative inquiry. From the discussion, it can also be seen that emotions (both positive and negative) play considerably significant roles in workplaces and have considerable implications on the performances of the workers.

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