Original OB Project

ORGANIZATIONAL BEHAVIOUR PROJECT

NATIONAL LAW UNIVERSITY ODISHA


ON

TRANSFORMATIONAL LEADERSHIP, EMPLOYEE ENGAGEMENT AND PERFORMANCE: MEDIATING EFFECT OF PSYCHOLOGICAL OWNERSHIP- AZKA GHAFOOR, TAHIR MASOOD QURESHI, M.

ASLAM KHAN AND SYED TAHIR HIJAZI.

PROJECT WORK SEMESTER – IV B.A. LL.B.

UNDER THE GUIDANCE OF:

MRS. ARJYALOPA MISHRA

ASSISTANT PROFESSOR OF MANAGEMENT

NATIONAL LAW UNIVERSITY ODISHA

SUBMITTED BY:

NAKUL KUMAR BAJPAI

2013/B.A. LL.B./028

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1. EXTENDED ABSTRACT

The transformational leadership style has long been shown to elicit above average performance

in followers; however, the reasoning behind why this process occurs is unclear. The present

study investigates whether follower engagement mediates the relationship between perceived

transformational leadership and performance on a task. Although the relationships between

transformational leadership, employee engagement, and job performance have been studied

before, they have been studied at a macro level that seems to go against the original

conceptualization of engagement as being task-related. Therefore, the present study explores

these relationships at a micro task-related level, in a specific interaction between leader and

follower in which the leader delegates a task to the follower. Results provide evidence that

follower task engagement mediates the relationship between perceived transformational

leadership and task performance. By better understanding how leaders build engagement and

drive performance in regard to a specific task, organizations can take advantage of the influence

that leaders have on everyday interactions with their followers.

Several studies have examined the relationship between leadership and employee engagement,

however, only a few have attempted to study the linkage specifically between the

multidimensional constructs of transformational leadership and employee work engagement.

Avolio, Bass and Jung (1999) define transformational leaders as being charismatic in their ability

to influence employees to go above and beyond what is expected of them, for the greater good of

the organization. Schaufeli, Salanova, GonzalezRoma and Bakker (2002) discuss engagement in

terms of employee vigor, dedication, and absorption at work. The main purpose of is to explore

the relationship between transformational leadership and employee job engagement. Specifically,

it is hypothesized that transformational leadership will have a positive relationship with

engagement, and will also be most predictive of job engagement over and above the control

variables discussed in this study, namely, social support received by employees, and job

resources available to them at work.

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2. REVIEW OF LITERATURE

“Expressed Humility in Organizations: Implications for Performance, Teams, and

Leadership”. Bradley P. Owens, Michael D. Johnson and Terence R. Mitchell, Organization

Science, Vol. 24, No. 5 (September-October 2013), pp. 1517-1538.

We draw on eight different lab and field samples to delineate the effects of expressed humility on

several important organizational outcomes, including performance, satisfaction, learning goal

orientation, engagement, and turnover. We first review several literatures to define the construct

of expressed humility, discuss its implications in social interactions, and distinguish expressed

humility from related constructs. Using five different samples, Study 1 develops and validates an

observer-report measure of expressed humility. Study 2 examines the strength of expressed

humility predictions of individual performance and contextual performance (i.e., quality of team

member contribution) relative to conscientiousness, global self-efficacy, and general mental

ability. This study also reveals that with regard to individual performance, expressed humility

may compensate for lower general mental ability. Study 3 reports insights from a large field

sample that examines the relationship between leader-expressed humility and employee retention

as mediated by job satisfaction and employee engagement as mediated by team learning

orientation. We conclude with recommendations for future research.

“Leadership and Organizational Citizenship Behavior: OCB-Specific Meanings as

Mediators”. Author(s): Changquan Jiao, David A. Richards and Kai Zhang Source: Journal of

Business and Psychology, Vol. 26, No. 1 (March 2011), pp. 11-25.

This study seeks to examine how perceived organizational instrumentality (the extent to which

employees believe that OCB contributes to the functionality and effectiveness of their work unit

or organization) and perceived individual instrumentality (the extent to which employees believe

that OCB is important to their own interests) relate to employee engagement in OCB and how

these perceptions mediate the effects of leadership on OCB. Results revealed that perceived

organizational instrumentality was related to and explained variance in OCB beyond perceived

individual instrumentality. Moreover, perceived organizational and individual instrumentalities

partially mediated between leadership (transformational leadership and contingent reward) and

OCB. Implications Elevating OCB-specific instrumentality beliefs and educating employees

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about the importance of OCB for the functionality and effectiveness of their work unit or

organization can help promote OCB. Effective leadership can contribute to the development of

stronger perceptions of organizational and individual instrumentalities, and lead to greater OCB.

This study represents the first attempt to empirically examine perceived organizational

instrumentality and consider both organizational and individual instrumentalities in mediating

the association between leadership and OCB.

“An Empirical Study of Leader Ethical Values, Transformational and Transactional

Leadership, and Follower Attitudes Toward Corporate Social Responsibility”. Author(s):

Kevin S. Groves and Michael A. LaRocca Source: Journal of Business Ethics, Vol. 103, No. 4

(November 2011), pp. 511-528.

Several leadership and ethics scholars suggest that the transformational leadership process is

predicated on a divergent set of ethical values compared to transactional leadership. Theoretical

accounts declare that deontological ethics should be associated with transformational leadership

while transactional leadership is likely related to teleological ethics. However, very little

empirical research supports these claims. Furthermore, despite calls for increasing attention as to

how leaders influence their followers' perceptions of the importance of ethics and corporate

social responsibility (CSR) for organizational effectiveness, no empirical study to date has

assessed the comparative impact of transformational and transactional leadership styles on

follower CSR attitudes. Data from 122 organizational leaders and 458 of their followers

indicated that leader deontological ethical values (altruism, universal rights, Kantian principles,

etc.) were strongly associated with follower ratings of transformational leadership, while leader

teleological ethical values (utilitarianism) were related to follower ratings of transactional

leadership. As predicted, only transformational leadership was associated with follower beliefs in

the stakeholder view of CSR. Implications for the study and practice of ethical leadership, future

research directions, and management education are discussed.

“Work Life Balance, Employee Engagement, Emotional Consonance/Dissonance &

Turnover Intention”. Author(s): Tara Shankar and Jyotsna Bhatnagar Source: Indian Journal of

Industrial Relations, Vol. 46, No. 1 (July 2010), pp. 74-87.

This paper reviews the literature in the domain of Work-Life Balance. It accentuates the

importance of broadening the current narrow focus which looks at balance, primarily between

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"work" and "family". The paper proposes a conceptual model to be tested empirically. The

construction of a robust scale for measurement of Work-Life Balance is emphasized. The

proposed model focuses on the correlates of Work-Life Balance construct and its relationship

with other variables such as employee engagement, emotional consonance/dissonance and

turnover intention. Theoretical and practical implications of research in this domain are

discussed with a focus on areas for future research.

“Transformational leadership, goal difficulty, and job design: Independent and interactive

effects on employee outcomes”, J. Lee Whittington, Vicki L. Goodwin, Brian Murray:

A field study of 209 leader–follower dyads from 12 different organizations was conducted to test

the moderating effects of job enrichment and goal difficulty on the relationship between

transformational leadership and three follower outcomes: performance, affective organizational

commitment, and organizational citizenship behaviour. Moderated regression analyses were

conducted to test for direct and moderated relationships. Transformational leadership and job

enrichment each had significant main effects. In addition, we found that job enrichment

substituted for the effects of transformational leadership on affective commitment, whereas goal

setting enhanced relationships between transformational leadership and both affective

commitment and performance.

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3. INTRODUCTION

Since the application of transformational leadership to organizational settings over two decades

ago, numerous studies have shown that followers of transformational leaders display above

average performance. Still, the question of how transformational leaders elicit performance

beyond expectations remains a topic with many theories but few clear answers.1 An answer to

this question may lie in the concept of employee engagement, which refers to a personal

investment of the self into individual work tasks that are performed on a job. Indeed, employee

engagement has been separately linked to both transformational leadership and job performance.

However, despite these findings that engaged employees perform well and that transformational

leaders beget engaged employees, no research has considered the possibility that employee

engagement mediates the relationship between transformational leadership and employee

performance, thus offering an explanation for how transformational leaders elicit performance.2

Employee engagement is a fluid state that arises due to an individual’s positive perceptions of his

or her environment, and transformational leaders work to shape their employee’s work

environment for the better. Hence, employee perceptions of transformational leadership may

play a role in how positively they perceive their environment thereby affecting their personal

investment at work, ultimately influencing how well they perform. It appears that the link

between transformational leadership and employee performance is affected by many factors,

suggesting that engagement will likely partially mediate this relationship. Additionally, no

studies have investigated this relationship at the task level; they have instead focused on broader

measures of overall job performance and job engagement.3

The aim of the current study is to understand the role that engagement plays in the relationship

between transformational leadership and follower performance on a task. The present study will

add to the literature by examining the relationship between transformational leadership,

engagement, and performance at the task level, thus differentiating it from past research that

investigated each relationship separately, as well as at a broader job level. This concentrated 1 Amabile TM (1988). A model of creativity and innovations in organizations. In B. M. Staw & L. L. Cummings Ed. Res. Organ. Behav., 10: 123-167.2 Avey JB, Avolio B, Crossley C, Luthans F (2009). Psychological Ownership: Theoretical Extensions, Measurement, and Relation to Work Outcomes. J. Org. Behav., 30: 173-191.3 Frank, FD, Finnegan RP, Taylor CR (2004). The Race for Talent: Retaining and Engaging Employees of 21st Century. Hum. Resol. Plan., 27.

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level of analysis may lead to a greater understanding as to how organizations and leaders can

influence individual employees’ levels of engagement and performance on specific tasks.4

4 Azeem SM (2010). Job Satisfaction and Organizational Commitment among Employees in the Sultanate of Oman. Per. Psychol., 1: 295-299.

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4. TRANSFORMATIONAL LEADERSHIP

Burns created the concept of transformational leadership as a description of political leaders who

transform the values of their followers, but Bass later expanded the scope to include leadership

within organizational settings. Since then, transformational leadership has become one of the

most widely-studied leadership styles due to its emphasis on changing workplace norms and

motivating employees to perform beyond their own expectations. Transformational leaders are

believed to achieve such results through aligning their subordinates’ goals with those of the

organization and by providing an inspiring vision of the future. Transformational leadership is

typically divided into four major components: (1) inspirational motivation; (2) idealized

influence; (3) individualized consideration; and (4) intellectual stimulation. Inspirational

motivation involves the ability to communicate clearly and effectively while inspiring workers to

achieve important organizational goals.5

Transformational leaders are considered to be enthusiastic and optimistic when speaking about

the future, which arouses and heightens their followers’ motivation. Idealized influence refers to

behaviors that help to provide a role model for followers. Such behaviors could involve

displaying strong ethical principles and stressing group benefits over individual benefits.

Individualized consideration involves treating each 6 follower as an individual with his or her

own unique needs and attending to these needs appropriately.6

The focus of behaviors falling under the individualized consideration category is on the

development of the follower. Lastly, intellectual stimulation involves encouraging the follower

to be creative and challenging him or her to think of old problems in new ways.

Transformational leaders create a culture of active thinking through intellectual stimulation, and

this culture encourages followers to become more involved in the organization.7

5 Gong Y, Huang JC, Farh JL (2009). Employee Learning Orientation, Tranformational Leadership, and Employee Creativity: The Mediating role of Creative Self Efficacy. Acad. Manag. J., 52(4): 765-778.6 Gumusluoglu L, Ilsev A (2009). Transformational leadership, creativity, and organizational innovation. J. Bus. Res., 62: 461- 473.7 Bass BM (1988). The inspirational process of leadership. J. Manage. Dev. , pp. 21-31.

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5. EMPLOYEE ENGAGEMENT

Employee engagement refers to a personal investment of the self into individual work tasks that

are performed on a job. Though there exist many descriptions of what engagement may be, a

common agreement among researchers is that engaged employees are immersed and involved in

their work (Macey, Schneider, Barbera, & Young, 2009), take pride in their job (Mathews,

2010), and exert a great deal of effort toward their work (Hay Group, 2010). The general

consensus in both academic and business circles is that employee engagement is easier to

recognize than it is to understand. Therefore, it is important to obtain a firm understanding as to

the theory behind this intriguing concept. Though there are some common themes in the

engagement literature, there are several distinctions to be made across theories. Schaufeli and

colleagues (Schaufeli & Bakker, 2004; Schaufeli, Martinez, Marques Pinto, Salanova, & Bakker,

2002; Schaufeli, Salanova, GonzalezRoma, & Bakker, 2002) view engagement as the opposite of

burnout and propose that engagement contains three components: vigor (high levels of energy),

absorption (full concentration), and dedication (a sense of significance and pride in one’s work).8

In contrast, Kahn (1990) proposes that engagement is the harnessing of one’s physical, cognitive,

and emotional energies into one’s work roles. Kahn further specifies that engagement is based on

how employees perceive the context in which they work, specifically how their work

environment impacts their feelings of psychological meaningfulness, psychological availability,

and psychological safety. There are disagreements as to whether engagement should be

considered a trait, state, or behavior. Macey and Schneider (2008) propose that engagement can

be conceptualized as a combination of the three, integrating them into a process that moves from

trait (predisposition to view work as engaging) to state (the feeling of absorption at work) to

behavioral (extra-role behavior) engagement.9

In contrast, Schaufeli et al. (2002) posited that “Engagement refers to a persistent and pervasive

affective-cognitive state that is not focused on any particular object, event, individual, or

behavior;” (p. 295). In other words, engagement can be thought of as a state that is not specific to

any one task. Kahn (1990) highlights the importance of the context of employees’ work

8 Khan MR, Ziauddin JFA, Ramay MI (2010). The Impacts of Organizational Commitment on Employee Job Performance. Euro. J. Soc. Sci., 15: 292-298.9 Lashley C (1999). Employee empowerment in services: A framework for analysis. Pers. Rev., 28(3): 169-191.

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environments, claiming that engagement is a sort of motivational tool that is elicited through

employees’ beliefs that their work is valuable (meaningfulness), that they have a necessary

amount of physical, emotional, and psychological resources to do the work well (availability),

and that they can immerse themselves in their work without fear of negative consequences

(safety).

This view suggests that engagement is more state-like, as it changes based on employees’

perceptions of the environment in which they work. In the proposed study, I will view

engagement through a lens similar to that of Kahn, in that I consider engagement to be

influenced by the context in which one works. Although other conceptualizations of employee

engagement exist (e.g. Harter et al., 2002; Macey & Schneider, 2008; Schaufeli et al., 2002)

including those reviewed above, Kahn’s definition most adequately recognizes the importance of

situational factors on the psychological state of engagement, factors over which leaders may

have influence or control. Thus, engagement is defined as a motivational state of mind

influenced by the factors of psychological meaningfulness, availability, and safety, which are

impacted by situational features of the work environment. This state of mind manifests itself as

behaviors such as task performance.

6. IMPACT ON PSYCHOLOGICAL AVAILABILITY

Psychological availability can be thought of as assessing the readiness or confidence of a person

to engage in his or her work. Transformational leaders foster psychological availability by

increasing follower levels of personal resources, which are aspects of the self that are generally

associated with resiliency. A number of studies have illustrated the relationship between

transformational leadership and higher levels of a myriad of personal resources such as

optimism, self-esteem, intrinsic motivation, well-being, positive affect, empowerment, and self-

efficacy. Self-efficacy in particular has a strong association with transformational leadership as

well as engagement and performance, suggesting that it may be an important factor in the

process by which transformational leaders elicit higher levels of engagement and performance.10

10 Ismail A, Halim FA, Munna DN, Abdullah A, Shminan AS, Muda AL, et al (2009). The Mediating Effect of Empowerment in the Relationship between Transformational Leadership and Service Quality. J. Bus. Manage., 4(4): 3-12.

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The Galatea effect may explain how personal resources such as self-efficacy play a role in

employee engagement and performance (Eden, 1992, 1994; Eden & Kinnar, 1991). The Galatea

effect refers to a process in which an individual translates positive expectations regarding

performance outcomes into tangible performance outcomes. In other words, “one’s positive

belief and expectation about one’s ability and self-expectations about one’s performance can

significantly determine one’s real performance or success” (Zhu et al., 2009, p. 598). As

previously stated, transformational leaders impact the confidence of their followers by raising

their self-efficacy (Kirkpatrick & Locke, 1999), and self-confidence is associated with higher

levels of engagement (Judge et al., 2003) and increased performance (Eden & Kinnar, 1991).

Since self-efficacy is especially salient in short-term performance (McNatt & Judge, 2004),

transformational leaders have the unique ability to influence their followers’ performance

through cultivating engagement on a specific task.11

11 Hsu MH, Ju TL, Yen CH, Chang CM (2007). Knowledge sharing behavior in virtual communities: The relationship between trust, self-efficacy, and outcome expectations. Int. J. Hum-Com. Stud., 65(2): 153-163.

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7. CRITICAL ANALYSIS

The following paper by Azka Ghafoor, Tahir Masood Qureshi, M. Aslam Khan and Syed Tahir

Hijazi on analyzing the concepts of transformational leadership, employee engagement and

performance and their mediating effects is being briefed in this section. The authors have sought

to achieve this by the use of the Multifactor Leadership Questionnaire (MLQ). J. M. Burns

introduced the paradigms of transformational and transactional leadership with both of them

occupying two ends of a single continuum.

The authors have started the paper discussing the development of the early leadership theories

and how those early empirical studies showed that both these forms of leadership, i.e.

transformational and transactional could exist independent of each other and were in fact two

separate leadership dimensions. But practically as the authors have concluded most of the top

world leaders displayed both transformational and transactional leadership qualities. After that

they conducted a factor analytic studies which showed that each orientation of leadership had

just more than one component and which in turn lead to multiple range of factors.

After conducting the sample survey, the authors arrived at the conclusion that the best model

which managed to fit in the replication sample as well with minimum shrinkage was the six

factor model. But there was a low discriminant validity among the transformational and

transactional contingent reward leadership scales. B.M. Bass in his works had often discussed

transformational leadership as a higher-order factor and to throw light on this, the current paper

has also analysed several other higher-order factor models.

The tests conducted in this paper have addressed many pre-existing lineage of criticism of the

MLQ survey. Specifically, by including two correlated higher-order factors to represent the

transformational and transactional contingent reward leadership factors, the authors were able to

reduce the latent correlations and enhance the discriminant validity between the transformational

higher-order factor containing charisma, inspirational and intellectual stimulating leadership and

the second higher-order factor containing individualized consideration and contingent reward.9

In the end, the authors concluded that not surprisingly, the transactional contingent reward

leadership correlates with transformational leadership.

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This section describes the various consequences of employee engagement. Job satisfaction is

more reactive concept when we look at it as a consequence in terms of feelings about what has

already been attained and is likely to be attained. As defined by (Locke 1969), it is “the

pleasurable emotional state resulting from the appraisal of one’s job as achieving or facilitating

the achievement of one’s job values”. Job satisfaction is an old construct that has long been

recognized as important to any consideration of turnover behaviour and more recently, to an

understanding of turnover intentions as well. Employees who are more satisfied experience

lower rates of absenteeism, have reduced rates of intention to leave. Job attitudes combined with

job alternatives predict whether employees intend to leave an organization, which is the direct

antecedent to turnover.

There’s a common misconception that job engagement, high motivation to work, is a personality

trait and that motivated people will work with a lot of enthusiasm. But research consistently

shows that even the most committed employees will rapidly become de motivated if they cease

to find their work meaningful or they can’t succeed at it. Thus, whether it’s a media frontier or a

product launch, the people in charge need to be vigilant about removing obstacles impeding their

most engaged employees the very people whom they may think need the least help in staying

motivated. For these high performers, factors they can’t control, role ambiguity, inadequate

resources, and overwork itself, can hinder their best work and may ultimately drive them to seek

jobs elsewhere.

The ones who stay behind may well be the ones who just don’t care. (HBR 2013, Thomas

W.Biit) In addition to its conceptual domain (job satisfaction as an affective state or as an

attitude), the concept of job satisfaction may vary by the target an individual evaluates (Spector,

1997). Job satisfaction is a mix of individual attitudes on various aspects of the job: relations

with coworkers and supervisors, the work itself, and the organizational infrastructure and

processes (Lee, 2000).Using all these conceptualizations, in this study, job satisfaction is the

subjective, individual-level attitude representing an individual’s general affective reaction to a

job (Cranny, Smith, & Stone, 1992).

Simply put, job satisfaction is the extent to which people like their jobs (Odom, Boxx, & Dunn,

1990; Spector, 1996). The review of literature revealed that job satisfaction is distinct from two

other attitudinal constructs: job involvement and organizational commitment (Kanungo, 1982;

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Lawler & Hall, 1970; Locke, 1976; Mowday, Steers, & Porter, 1979; Steers, 1977).

Organizational commitment can be defined as "the relative strength of an individual's

identification with, and involvement in, a particular organization” (Mowday et al., 1979).

Although both job satisfaction and organizational commitment are closely related in that both are

affective responses, the two constructs are different because of their referent objects; job

satisfaction focuses on the work environment where employees perform their duties while

organizational commitment focuses on employees attachment and allegiance to the organization

they work for (Lee, 2000). Job satisfaction traditionally has been distinct from job involvement.

Job involvement is defined as psychological identification with a job (Kanungo, 1982) although

both constructs refer to a specific job, job satisfaction pertains to the emotional state of liking a

job (Locke, 1976; Kanungo, 1982).

An engaged employee is satisfied with his job, who understands and is aligned with the

organization’s goals, is a productive, profitable employee, and one who creates customer loyalty,

remains with the organization, practices safety and is strongly aligned with the organization’s

brand values. An employee can be satisfied with a job without being engaged in the job.

Employee engagement is much more than being content with pay and the ability to leave in time.

That contentedness is merely job satisfaction, and though satisfaction is generally enough to

retain employees, it’s not enough to ensure productivity.

On the other hand, employee engagement does promote increased productivity. An engaged

employee is an employee who is deeply involved and invested in their work. The factors that

drive employee engagement, however, are different than those that drive satisfaction.

Engagement factors include Meaning, Autonomy, Growth, Impact, and Connection. Employee

satisfaction is the foundation upon which employee engagement can grow and thrive.

Organizations with genuinely engaged employees have higher retention, productivity, customer

satisfaction, innovation, and quality. They also require less training time, experience less illness,

and have fewer accidents.

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Documents

Original OB Project