Influence Of Transformational Leadership Styles In Developing Small Businesses - Essay Example

? Influence of transformational leadership styles in developing small businesses Table of Contents Introduction- Transformational Leadership Style 3 Importance of Transformational Leadership Styles and Advantages 4 Transformational leadership styles in change management 5 Transformational Leader Managing employees, customer satisfaction 7 The successes of prosperous businesses- Successful business that developed through TLS 10 Other importance of transformational leadership compared to other styles of leadership 13 Recommendations 16 Conclusion 17 Reference 18   20 Introduction- Transformational Leadership Style Leadership style has been classified into many different ways in the research field. In the recent years two forms of leadership style have been coalesced which are the transformational leadership and transactional leadership. It has been proved that transformational and transactional leadership are not mutually exclusive. Therefore leadership is defined as a process where an individual tends to influences individuals in order to achieve the set common goal (Northouse, 2009, p.3). The transformational leadership style mainly focuses on the future and is developmental. This form of leadership is most valued when task involves breaking deadlocks, creating order mainly out of order, initiating a change in the organisation and on the way of developing future leaders. This form of leadership has also been termed as relationship oriented, inspirational leadership and also charismatic leaders. The main motive of the transformational leader is to inspire the employees to go beyond or above their self interest (Krause, 2005, p.39). The transformational leader is known to be charismatic and their style usually revolves around the empowerment of the subordinates. Thus these leaders are often characterised as people who mainly articulates the realistic vision of the future, understand the difference that exists among the subordinates and stimulates them through intellectual manner. In countries such as Canada, Japan, United States, Austria and Taiwan the transformational leadership is viewed as the most positive form of leadership than any other form of leadership. Thus transformational leadership is often associated with the characteristic of being charisma which is often viewed as a desirable form of attitude and positive (Waite, 2007, p. 5). Like charismatic leadership, an effective transformational leadership also requires the ability to bring about a change and also challenge the status quo, is able to recognise the opportunities for the organisation and also for the employees, risk taker and should also encourage others to take risk. The transformational leadership often requires the ability to inspire a shared vision. They rally others for a common dream and are adept in envisioning the future of the employees and the organisation and also enlisting them to move towards the vision. A transformational leader should be able to set an example of commitment towards shared vision and values (Lussier & Achua, 2009, p.350). Importance of Transformational Leadership Styles and Advantages Transformational leadership style or the transformational leaders has proved to gain a high importance in business particularly when it comes to small business. A transformational leader is strongly related with the unit focused which measures the effectiveness if leadership. In a small business it is necessary that the leader needs to be effective and charismatic so that he is able to lead from the front and initiate the followers to adopt the same technique and take risk. Every business needs to take risk and it’s the leaders who initiate the members of the organisation. Since transformational leadership style is the most accepted and possess unique qualities suitable to run a business or organisation thus this form of leadership is very important. Employees who have the transformational leadership style tend to have a higher level of job performance than other members of the business. They usually have high level of motivation to work better which is needed in any kind of business, mainly small business (Colquitt, 2011, p.495). The importance of the transformational lies on the fact that these leaders pay special attention to each and every individual needs for growth and achievement by guiding them as coach and mentor (Bass & Riggio, 2006, p.7). The advantages of transformational leadership form of style is that it can be reinforced buy the policies of the organisation, the culture, the structure and greatly improving the performance of the organisation and the members of the business. The transformational form of leadership can occur at each and every level of the organisation (Bass & Riggio, 2006, p. 139). Many studies have shown the importance of transformational leadership have relatively increased the performance of the organisation; positively linked with customer satisfaction; it tends to generate higher commitment from the respective employees; increases the trust in management and so on. Thus transformational leadership possess many advantages and is highly regarded important by the management. Transformational leadership styles in change management The organisation and the management are constantly changing and it has been rightly said that change is the only constant thing and because of the constant change in the management and organisation, the supervisors must adopt the change and help the organisation, whether small or large to response with the environmental and also with the internal changes. In the process of change management the management must adapt and create programs to increase the efficiency of the organisations. Thus the supervisors who want to be effective need not only the leadership skills but also change management skills. In the past organisational leadership assumed that leadership was exhibited only by the top management and the staffs need to be following the top management. Recently a study has proved that leaders can emerge at all the levels of the business. The definition of the transformational leader also suggests that it is a process which inspires change and also empowers the followers to accept the accountability and responsibility for the members and for the process for which the members are assigned. Change management desires to bring about a change and so does the transformational leadership style. The transformational leadership is challenging and at the same time it is time consuming but it is one of the most effective form of leadership to bring about the change and to bring about the potential in the members (Austin & Hopkins, 2004, p.55). The theories of transformational leadership are based on the ideas and concept of collaborative to bring about a change. They consist of the qualities that are mostly needed in change management. Thus the effect of the qualities can be summarised as building awareness about the value and task and its importance; focusing the minds of the employees into group objectives rather than personal achievement or interest; appealing to the employees or the members and activating the aspiration needs. Transformational leadership is relevant to the successful change management when it comes to major changes. This form of leadership style is relevant in political and also in military leaders. It mostly requires integrity and personal behaviour. Transformational leaders is said to be about consciousness and is more about practical terms which is about encouraging the people to become aware of what the members feel and values which they can be motivated and are encouraged to take constructive action. Transformational leaders need to take into consideration the impact of change on the people and especially when the change is implemented. According to some authors, the situational change is not as difficult as the psychological transition which is mostly experienced by the people due to change in the business or organisation. The transformational approach of leadership also aims to win the trust of the people which is facilitated by an assumption that when the leader implements change the followers also follows it and they too would change. And most importantly when organisation implements change, the members feel more insecure, de motivated and anxious and this is where the role of transformational leaders come into light. The transformational leader is known for having a charismatic feature and has the capacity to influence all the members of the organisation. According to Yukl (1994) have defined the transformational leadership as a process which influences some of the major changes in the assumption and attitude of the members of the organisation and build commitment towards the mission, strategies and objectives. The followers of the transformational leaders mainly feels an admiration towards the leader, loyalty, trust and most importantly respect the leader are highly motivated to do work and put their hundred percent to bring about a change and most importantly implement the change. Thus the ability to create a new organisational process and forms by way of change and to innovate the culture and to create a stronger culture of the organisation is very crucial to remain competitive in the competitive world and with the help of a transformational leader a business can achieve what is desired for and the future of the organisation. A transformational leader not only have a strong vision but also has the ability to let the employees accept the vision as their own and tends to develop a commitment in bringing the vision into the reality (Yean, 2001). Thus it is through the transformational leadership that change management is brought into practice and can be implemented successfully. Transformational Leader Managing employees, customer satisfaction A transformational leader is mostly people oriented rather than people oriented and this is the factor that is liked by most of the employees and they are the greatest motivators. They believe in the employees, is enthusiasm, optimistic, problem solving, develop employees and treats the employees as individuals. The transformational leader encourages the employees in order to get the goal and focuses more on the people and not on the result. Most of the times, the focus is all that motivates the employees to work harder. According to Del Brocco and Sprague, leaders have the capacity to manage employees and perform a better job in handling the employees. With their charismatic leadership nature the leaders are able to inspire the employees and motivate them to do the work more effectively. A transformational leader is able to achieve the desired behaviour of the subordinate in either one of the several ways. The transformational leader tends to become a source of inspiration for its employees through the commitment for his work, the leaders perseverance to the mission, willingness to take charge of the task and a strong desire to achieve the set goal and objectives. The transformational leaders tends to meet diagnose, and elevate the needs of each of the employee by considering them individually and believe in improvement in the employees. And lastly the transformational leaders view the world from a different and new perspective and try to improve the strategies (Mills, 2007, p.17). Transformational leaders manage to transform the employees by way of creating changes in the values, goals, needs, aspiration and beliefs. They achieve the transformation by appealing to the followers and realising their personal identity and values. The transformational leader is often influenced by the characteristic of individual and the organisation. The researcher have revealed that the transformational leaders carry a personality which are agreeable, proactive and extraverted than the other non transformational leaders and the female leaders most commonly uses the transformational leadership style than the males. The transformational leader transforms the employees through motivation which involves establishing an attractive vision for the future for the employees; and through idealized influence such as sacrificing for the betterment of the group, becoming a role model for the followers and at the same time displaying and practising a high level of ethical standard of business practice. Individualised consideration and intellectual stimulation has helps the leader to manage its employees and they are most accepted form of leaders in the organisation (Kinicki, 2006, p. 355). Transformational leadership does affect the customer satisfaction. One of the strengths of transformational leadership style is that the leadership style has proved to increase the level of performance and is positively correlated with customer satisfaction and market share in the long run. With a change in the organisation customer satisfaction has become the topmost priority for the entire organisation and a leader plays an eminent role in customer satisfaction. It has been said that a transformational leader has all the capacity to make the followers believe in themselves and achieve the goal that is needed and at the same time can induce customer satisfaction. It can be said that a transformational leader with his charismatic style can motivate his employees who would further lead to customer satisfaction. Transformation occurs within the system and also the sub system of the organisation and they are brought into light by the leaders (Hacker & Roberts, 2003, p.1). When the employees work effectively, with the motivation of a transformational leader, they tend to appreciate the work and experience job satisfaction. One of the key fundamental of customer satisfaction is the management from the top. The top management usually influences the employees to work better and produce better quality product for its customers generating customer satisfaction in return. One of the characteristic of transformational leaders is it improves customer satisfaction. According to a research the new model of customer satisfaction is the link between the leader, the employees, the customer and profit. A good leader should be superfluous and should make a difference. Leadership have an impact on commitment of the employee and customer satisfaction which would ultimately translate in the direct impact of leaders for profitability (Zenger & Folkman, 2009, p.32). Thus the new chain which undertakes the cause and effect event is the leaders, then the employees, the customers and finally profits. Therefore it can be said that transformational leaders manages employees effectively and also leads to customer satisfaction. The successes of prosperous businesses- Successful business that developed through TLS Transformational leadership style can bring about many changes in business directions in organizations. For example it is possible for new CEO in an ailing company to revitalize a company and return its profitability. Friedman & Langbert have particularly mentioned characteristics of transformational leaders as having vision, confidence, willingness and immense courage to make big sacrifices for the well being and success of organizations. It is also seen that transformational leadership arises from the organizations. For example, organizations which were at the forefront during the advent of the computer revolution have been able to change the course and direction of business history. They are some of the vivid examples of successful application and effectiveness of transformational leadership styles. The development and application of computing technology by such companies as Microsoft, Apple, IBM, Intel, etc during the early 1980s are some of the organizations which depict some of the biggest transformational events in the world (Johnson, et al, 2009). In the financial sector the world has witnessed major transformational leadership. Examples are Peter Lynch who is the portfolio manager and Edward Johnson in Fidelity which is the leader in mutual funds. John Boggle of Vanguard which is one of pioneers of index funds is also another example of transformational leadership. Mutual funds majorly pool in investors’ money into the stock market, bond market and various other financial products. Index funds are responsible for tracking the major indexes. These funds have been instrumental in transforming the way people make investments in businesses and also offer a wide variety of diversification and professional money management schemes at very low costs. This radical change would not have been possible without the application of true transformational leadership style in the financial market. Another leading example of successful transformational leadership in business is the clothing manufacturer, Berkshire Hathaway which was driven by the true spirit and initiatives of Warren Buffet and transformed into the giant holding company which continues to outperform to that of its competitor companies and market peers. Transformational leadership style was demonstrated by jack Welch of General Electric who was appointed as the Chief Operating Officer of the company in 1980. Under his leadership General Electric saw the dynamic transformation of the bureaucratic organization into the agile and lean powerhouse of the world. His acted as a source of inspiration and motivation for his followers who responded and reacted positively to his initiatives constantly and took the company towards success. One prominent example of transformational leadership has been demonstrated by Colin Marshall who has transformed the British Airways from being an ailing company to one of the most favourite airlines in the world in the 1980s. He applied his leadership skills by listening to the concerns and ideas of people within his organization and also people from outside. This was mainly done with the aim to understand beliefs, values, attitudes and behaviour of the organization which were required to change. He wanted to indentify the gaps which the company needed to overcome in order to become successful and move towards progress. Based on the findings he acted accordingly to remove those existing gaps in the organization and enhance and improve efficiency of the company (Michael, 2007, p.7-10). More than 5000 researches around the world on leadership reveals that over last few decades Transformational leadership is gaining more importance. Transformational leaders are self-styled to empower followers to deliver beyond expectation. Here the leaders provide a strategic and objective goal setting process to the followers with an appropriate support level, deeper involvement, and appreciation and to align with the leader’s vision. Transformational leaders are sensitive to subordinates aspirations and also with their own requirements. Transformational leaders promote the acceptance of the group mission by their followers through intellectual stimulation and individualized consideration. They unite subordinates as they work for a common goal. A radical performance spin was brought about by the transformational leadership by the manager of Life Insurance Corporation of India, Shri BK. An extremely amiable character without good physique due to rheumatoid arthritis he had for well over 10 years, Shri BK was known for his humble upbringing and for being simple and straightforward. He was much known for his quality consciousness about performance issues. During his tenure the organization was confronted with some of the major hurdles and organizational conflicts between unions and management. Organizational productivity had worsened and workers had lost faith in the management completely. When BK took over the charge in May 2003, he wanted to get control of the situation through discussion with his colleagues. BK also had series of meetings with the leaders of various unions, who raised the pending issues and also demanded their early solution. BK agreed to look into their problems and promised to expeditiously solve all their legitimate problems that come under jurisdiction. After Three months into his new role, BK finds that softer options are not going to work, and he would have to enforce discipline. Accordingly, memos were issued individually for disobedience and neglect of duty to all the staff that boycotted work meetings. Individual memos were also issued to the President and General Secretary of the Divisional Union for instigating unlawful activities against the management proposing disciplinary action. Under his leadership the company could first remove all inefficiencies accounting to low productivity which was identified as the main problem by BK. By the end of October 2003, a tangible difference was noted in the new business performance. The Tanjore Division came up to fifth position in terms of premium growth in the twelve divisions in the Zone. There was even further improvement by 2003 and the Division came to the third position in the zone on premium growth. The Division was able to attain fifth ranking in entire India on premium growth and also attained the 2nd position within the Zone. Besides attainment of new business, this Division continued to deliver quality performance on other major key areas attaining premium targets. During the same time, strict disciplinary action continued to prevail. The vision and belief showed by Shri BK was phenomenal in changing the organization from a downfall towards radical change and progress (Balakrishnan, 2007, p.1-7). Other importance of transformational leadership compared to other styles of leadership The most crucial difference between transformational leadership from other styles of leadership lie in the fact it is not based on the awareness of emotions existing in its followers. It is rather more focussed towards instilling the emotions and direction within the minds and hearts of followers. The transformational leader arouses emotions within his follower and motivates them to act beyond their regular framework of activities that they are used to. Unlike other styles of leadership, particularly transactional leadership, the leader remains already aware of the link between the efforts and the expected rewards. It has lesser ability to instil emotions in the minds of followers or to motivate them. Other styles of leadership do not show their ability to foresee that which has not occurred or has not yet happened. A transformational leader mainly looks beyond the established standards and procedures and directs it to a different goal (Epitropaki, 2001, p.1-2). Unlike other leadership styles the transactional leader generally aims at higher goals as compared to other forms of leadership. The transactional leader, for example, tries to achieve goals which are already set and his acts and behaviours abide by the prescribed and assigned procedures and standards. Specific tasks and activities are assigned to the subordinates, which they are required to fulfil in order to meet the prescribed standards. These standards are precisely agreed upon and prescribed. On the other hand the transformational leader tries to motivate followers and raises their concerns from their basic needs too. For example it motivates followers to attain self fulfilment and self achievement by directing them beyond their self interests towards the concerns of the groups at large, or the project and the organization. They instil charisma, intellectual stimulation, inspiration and even individual consideration among followers. They are particularly meant to address the self worth of individuals and also capitalize on the unique capabilities of the individuals. This is particularly important for enhancing and uplifting the self worth of individuals which reflects through their productivity and performance in the organization. Followers are keen to uplift their performance and productivity not only in terms of their own goals and objectives but also in faith of the organization on the whole. This takes them to a higher level of performance which reflects through the uplifted and enhanced performance of the organization. Transformational leadership is always associated with long term benefits and customer satisfaction for the organization unlike other forms of leadership styles which focuses more on existing concerns and seeks to attain term goals and objectives (Epitropaki, 2001, p.1-2). One of the most crucial contributions of transformational leadership styles is that it is able to bring about complete change in the organization. The leader is able to build confidence on him in the followers’ minds which forms the basis on which radical changes are accepted in the organization. Rest of the leadership styles such as autocratic, democratic, bureaucratic or even task oriented leadership styles does not require extensive commitment and faith of workers on his leader as they do not confront with radical change stimulus which can be unacceptable. Such leadership do not necessarily implement radical change decisions which can be confronted with resistance or confrontations. The leader only acts a guide and mentor directing followers through the work processes or even allows followers to take directions based on their own decisions (Simic, 1998, p.3-7). Since a transformational leader seeks to bring about radical changes in the organizations, they confront with numerous conflicts and resistances. Resistance handling accounts for one of the core responsibilities of a transformational leader. The importance that it bears from the context of an organization is that through the process of resistance confrontation and handling it looks into the minute and detailed concerns of workers and the issues they face in the regular activities of the organization. Different issues, hurdles and problems come to the fore in the process and the leader has grounds to address them. The leader provides in-depth solution to these problems and seeks to address all small problems which combined accounts for major organizational issues in the long run. Most importantly employees feel heard and are able to voice their suggestions and views which is crucial for any organization to retain the faith and confidence of workers. The workers’ faith is restored and helps in retaining confidence on the management. Some of the major organizational issues can be resolved in this way, such as employee attritions and organizational conflicts (Marshall 2010, p.16). Recommendations Since transformational leaders act as charismatic personnel to which everyone looks up, it is possible that such leaders get committed to egoistic values and their acts and behaviours reflect such values. At times such egoistic values over powers the purpose of catering to the organization’s purpose. This leads to the failure of transformational leadership. The voice of employees takes a backseat and their issues and concerns are not heard properly. Leadership activities and behaviours are more ruled by altruistic values because of such egoistic values which can have damaging impact on the organization (Price, 2006, p.134). Thus it is recommended that transformational leaders must be such people who has the ability to look at the future and at the same time also identifies small issues and concerns which can be overlooked by most people. The leader must possess a flexible nature and the capability to keep organizational objectives before egoistic values. Many times the transformational leaders set challenging expectations and targets which remain unachievable for followers. This is because of lack of exchanges or transactions that take place between unlike transactional leadership. Transformational leaders motivate followers to commit to a shared vision, providing them with challenging work activities, committing them to be innovative problem solvers which can fail in the long run. Thus it is recommended that the transformational leader takes into account the terms of workers and their abilities to implement and execute the shared vision before setting targets. Followers must be informed regularly about the work expectations and progress. This is crucial for the success of change implementation and progress. Conclusion The project reveals the importance and necessity of transformational leadership in not only retaining sustainability of an organization in the competitive market but also ensuring its transformation and progress towards a brighter future. Numerous historical examples have proved that transformational initiatives shown by leaders have kept organizations from failing and eventually made them flourish in future. Some of the most nations in the world have progressed through major transformational leadership efforts. The same happened with some of the major leading organizations like Microsoft, IBM, General Electric, Life Insurance Corporation of India and even the British Airways. The importance of this leadership lies in its ability to look into the minute details in the organization as well as foreseeing the future where it aims to take the organization to. This belief acts the driving force behind all his efforts and also empowers followers to believe in the belief of the leader. However, it is seen that transformational leadership is not free from drawbacks. It faces tremendous resistance and handling resistance accounts for its major responsibilities. At times the leaders' high charisma results in huge ego which comes before his objectives and goals for the organization. This can be damaging for the organization and must be avoided at all costs. A truly humbled natured leadership has been demonstrated by Shri BK of Life Insurance Corporation of India under who’s heroic and sincere efforts the ailing organization was returned its long lost success and glory. Thus it is seen that the fate and success of Life Insurance Corporation of India could not have been possible without the application of stringent transformational style of leadership demonstrated by Shri BK. Reference Austin, M. J. & Hopkins, K. M. (2004). 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