Transformational leadership isn’t equally effective in all situations. It has a
greater impact on the bottom line in smaller, privately held firms than in more
complex organizations. 77 The personal nature of transformational leadership
may be most effective when leaders can directly interact with the workforce
and make decisions than when they report to an external board of directors or
deal with a complex bureaucratic structure. Another study showed transforma-
tional leaders were more effective in improving group potency in teams higher
in power distance and collectivism. 78 Other recent research using a sample of
employees both in China and the United States found that transformational
leadership had a more positive relationship with perceived procedural justice
among individuals who were lower in power-distance orientation, which in turn
related to a stronger transformational leadership-citizenship behavior relation-
ship among those higher in power distance. 79 Transformational leaders also
obtain higher levels of trust, which reduces stress for followers. 80 In short, trans-
formational leadership works through a number of different processes.
One study examined how different types of transformational leadership can
be effective depending on whether work is evaluated at the team or the individual
level. 81 Individual-focused transformational leadership is behavior that empow-
ers individual followers to develop, enhance their abilities, and increase self-
efficacy. Team-focused transformational leadership emphasizes group goals,
shared values and beliefs, and unified efforts. Evidence from a sample of 203 team
members and 60 leaders in a business unit found individual transformational
leadership associated with higher individual-level performance, whereas team-
focused transformational leadership drew higher group-level performance.
Transformational leadership theory is not perfect. Contingent reward lead-
ership may not characterize transactional leaders only. And contrary to the full
range of leadership model, the four I’s in transformational leadership are not
always superior in effectiveness to transactional leadership (contingent reward
leadership sometimes works as well as transformational leadership).
In summary, transformational leadership is more strongly correlated than
transactional leadership with lower turnover rates, higher productivity, lower
employee stress and burnout, and higher employee satisfaction. 82 Like charisma,
it can be learned. One study of Canadian bank managers found branches man-
aged by those who underwent transformational leadership training performed
significantly better than branches whose managers did not receive training.
Other studies show similar results. 83
The GLOBE study—of 18,000 leaders from 825 organizations in 62 countries—
links a number of elements of transformational leadership with effective lead-
ership, regardless of country. 84 This conclusion is very important because it
disputes the contingency view that leadership style needs to adapt to cultural
differences.
What elements of transformational leadership appear universal? Vision, fore-
sight, providing encouragement, trustworthiness, dynamism, positiveness, and
proactiveness top the list. The GLOBE team concluded that “effective business
leaders in any country are expected by their subordinates to provide a powerful
and proactive vision to guide the company into the future, strong motivational
skills to stimulate all employees to fulfill the vision, and excellent planning skills
to assist in implementing the vision.” 85
A vision is important in any culture, then, but the way it is formed and com-
municated may need to vary by culture. A GE executive who used his U.S. lead-
ership style in Japan recalls, “Nothing happened. I quickly realized that I had to
adapt my approach, to act more as a consultant to my colleagues and to adopt
a team-based motivational decision-making process rather than the more vocal
style which tends to be common in the West. In Japan the silence of a leader
means far more than a thousand words uttered by somebody else.” 86
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