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This Organizational leadership Assignment is aiming to critically evaluate the statement “Transactional leadership has no place in a contemporary organization”. It appears that this statement is largely true and applicable in the present business environment. This assignment would define and explain the terms like transactional leadership and also provide an academic back up for the statement and its applicability. This assignment would also explore the opportunities where business leadership approaches can be applied in an organizational setting. A comparative evaluation between types of leadership broadly would be done as well to provide context to the assignment.
Leadership refers to the concept of “organizing a group of people for the accomplishment of a task”. Chemers, (1997) describe leadership as “a social influential process in which an individual is able to get the support of other people to complete a task or activity”. Leadership can be broadly classified as a transformational leadership and transactional leaders. According to Gao, Janssen, & Shi, (2011) Transactional leadership can be defined as “Style of leadership that is based on the setting of clear objectives and goals for the followers as well as the use of either punishments or rewards in order to encourage compliance with these goals’’.
A leadership style decides the way all employees are lead makes a lot of difference in the way they perform. It makes an impact on their innovative approach, their ability to think out of the box, their decision making power and their job satisfaction level. Leadership approach can be of a transformational leadership and transactional leadership in an organization by a leader. Other than this there is one more way to classify leadership styles. This leadership classification states that leadership could be classified as autocratic, democratic, Laissez fare, Charismatic leadership, authoritative leadership etc. (Goddard & Melville, 2004). The different type of leadership styles has their own advantages and disadvantages.
A transformational leadership aligns itself with the change needed in an organization. It identifies the change and its importance, then it motivates and encourages employees to share the vision and align their own efforts and activities towards that change. A transformational leader usually provides the association with the positive outcomes and it also ensures that other than reward and punishments there should be motivating factors which can encourage employees to reach out beyond the call of their duty and bring changes. It’s not necessary that a leader will have formal authority in leadership. The leader may or may not have any formal authority. Research has been going on for centuries to find out the true qualities/characteristics of a leader (Wong & Laschinger, 2013).
In modern business environment change is the only constant and the globalized business model ensures that the business environment stays dynamic all the time. There is always a new invention which can obsolete the previous version or there could be a technological breakthrough which can obsolete an existing technology immediately. One good example of such absolution is the usage of film role based camera which was vanished in a small period of time with the arrival of digital cameras. Companies like Cannon, who transformed themselves with changing technology survived and gained competitive advantage while companies like Kodak who did not make a change because their leadership could not envision the needed changed perished into bankruptcy. Any organization which is contemporary in nature is moving so fast ahead in the business world that even if a company stops itself in current position, they start losing or going backwards because no one else is stopping. It is now a snowball effect of the contemporary organizations have a transformational leadership style on the roll. Leadership is aspect of an organization which can facilitate the changes and make the entire organization much more contemporary, open and progressively adapting to the changing times. This right leadership is one of the most important factors in developing better Job roles, work environment and job satisfaction in nursing profession (Wang, et al. 2011).
Miner (2015) has pointed out that a motivated staff is not only likely to offer higher quality and quantity of work, but also have the interest of the organization at heart, hence are willing to undertake any activity that will ensure the highest level of performance is reported. Leadership behaviours have been associated with the motivation of employees, however, there is contradictory findings obtained on the nature of the influence with some scholars stating that effective leadership is likely to motivate the employees while others asserts that the nature of leadership within any organization has minimal effects on the employee motivation (Miner, 2015). It is expected that collaboration, inspiring and motivation of the staff, developing others and having a strategic perspective in work are the major leadership behaviours that are likely to be reported amongst the leaders to the firms with transformational leadership style. In addition a higher extent of employee motivation and performance is likely to be reported in organizations where the above leadership behaviours have been effectively executed.
According to this theory each situation requires an analysis before the leader can decide what should be the amount of guidance and direction required in it. It is broadly divided into two axis of behaviour namely task behaviour and relationship behaviour. Each situation lies in different coordinates of these axis and according to its position on the axis its response can be decided by a leader. There are four common and critical competencies which a situational leader demonstrates namely diagnose, adapt, communicate and advance. There is no single best style of leadership which can be used a sa uniform approach to leadership. According to this theory in different situation different styles of leadership are best suitable. This theory is in contradiction with the statement made above prima facie but on analysis it can be observed that current external environment is dynamic in nature and that is why transactional leadership is not applicable in current situation making it obsolete for modern organization.
The adoption of effective leadership behaviours in the management of the employees is therefore likely to enhance the motivation of the employees as well as increase their performance. From this theoretical perspective, it is hypothesized that effective leadership behaviours enhances the motivation and performance of the employees. Gao, Janssen & Shi (2011) have, however, pointed out that as much as the above identified actions of a leader are likely to contribute towards the motivation of the employees, there are certain behaviours that when enhanced will have a higher significant effect than the others. For instance, increasing the level of collaboration, supporting the employees and motivating them are likely to have a higher level of motivation of the employees. Based on this assertion, there are certain leadership behaviours that have significant effects in the enhancement of the employees’ motivation and performance (Montana and Charnov, 2008).
People set the tone for the culture of the organization which ultimately determines how much successful an organization is. To manage people effectively and to retain them with an organization, an organization needs effective leadership (Bennis, 2007). Thus, it is very much relevant in contemporary business environment that organizations who are on a growth pattern and do not want to lose their focus on improvement should follow the transformational leadership approach only. Leaders can only succeed if they know which leadership style (task, motivated/leadership motivated) to practice in which situation. Hence, effective leaders should practice a mix of task oriented and relationship oriented leadership style depending on which leadership style works best in a particular situation (Spillane, et al. 2004).
Another difference between a transformational leadership and transactional leadership is that a transitional leadership just communicates the vision of an organization to the middle and lower level employees while a transformational leader would keep a two way communication with all, he would not just communicate the vision, but he will live the vision of the company and present himself as an example to all so that they can be brought on board for changes. Transformational leaders find the best people for the task and play a very active role in effective development. They know that value for an organization can only be created if best people are put into a task. Not only do these employees create value for the organization, they also create value for themselves, which help them on the personal and professional front.
The decision making process of a transformational leader is also much better in today’s complex organizational structure and business environment where consideration and choice of employees, consumers are equally important. They understand that value is not in individual success; but rather the value is in the success of the organization and in the success of employees working in the organization (Berdahl & Anderson, 2005).
In conclusion, it can be said that being aware of an organization’s values is one thing and practicing them in day to day work is an entirely different thing. Knowing the organization’s values help to align one’s work with the values and create desirable value for the stakeholders. A transformational leadership is always working towards unlocking more value out of every level of the value chain. A lot of decision making is involved for managers in today’s corporate world. They have to take difficult business decisions like how to align daily work with the company’s strategy, how to create value for the stakeholders, how to play a part in the organization’s growth, etc.
Leadership refers to the concept of “organizing a group of people for the accomplishment of a task”. It’s not necessary that a leader will have formal authority in leadership. Effective leadership is often considered a competitive advantage of an organization and successful organizations focus a lot on effective leadership. This a transformational leadership is needed to properly manage the resources in an optimum manner to enable organizations to achieve success and with this evidence backed reasoning, it would be fair to say that Transactional form of leadership is not applicable in case of contemporary organizations.