An Analysis of Transformational Leadership in Business

Leadership in Business

“Many of the leadership styles you have come across in the module tend to be more successful in the short term, but the emerging research and literature seems to demonstrate that a transformational style is much more effective for the longer term in terms of its impact on business success and employee motivation/engagement.”

Leadership is a critical aspect for any organisation to achieve business success. Leader’s play a key role in this as they aim to bring together employees to accomplish the overall company’s vision (Meyer & Meijers, 2017). Every leader has their own leadership styles; however, there are discrepancies as to which style is most effective in achieving business success and employee motivation. This essay will analyse whether the transformational leadership style is more effective in the long term and critically evaluate two other leadership styles and see if this impacts business success and employee motivation in the long-run.

Transformational Leadership

The new paradigm that will be explored is transformational leadership. A business leader who has adopted this style is Mark Zuckerberg, CEO of Facebook. Transformational leadership consists of four components, these have been relayed into Mark’s leadership style.

Idealised Influence

Idealised influence is conveyed by him as he ignites passion and pride in what his vision is for Facebook, he overlooks his self-interest and focuses on the bigger picture, and he reassures his employees that they will collectively overcome any barriers (Wasson, 2016). This is a factor that makes employees admire and respect his views and help accomplish the vision for the company. Mark excels in this area as he persuades employees to execute notions that he might disagree with, as he believes that this primarily helps the company succeed as a unit (Mejia, 2018). Every Friday he encourages his employees to involve themselves in a question and answer session where he responds to any questions they may have. He provides access to confidential information regarding any new products or plans that are being worked on (Zetlin, 2018). Ultimately, this corresponds with Yammarino and Bass’s (1990) ideology because transformational “leaders…are able to inspire followers to raise their criteria for success” (Barbuto, 2005, p. 28).

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Inspirational Motivation

The second component is inspirational motivation. He illustrates this by celebrating work anniversaries, known as ‘Faceversaries’. The co-workers personally decorate the individual’s desk with personalised balloons. Mark sometimes encourages them to stand up and share their memories associated with working for Facebook (Cain, 2017). This behaviour is beneficial for the employees as they feel valued, it enhances team spirit, which can be a contributing factor to business success and employee retention in the long term.

Intellectual Stimulation

Mark demonstrates intellectual stimulation through “hiring smart, ambitious people and then giving them the freedom to run their own experiments” (Clifford , 2017, p. 1). As a result, this inspires employees to experiment, conduct testing and see whether it works or not. It creates an atmosphere where they are persuaded to take risks and think independently. It gives employees a sense of belonging as the leader shows that they trust the employees are capable enough to make good decisions. The environment is comfortable as mistakes are not highlighted in front of everyone and creativity is not stifled.

Individualised Consideration

Finally, Mark embraces individualised consideration by focusing on his employee’s needs. One of the ways he does this is by offering a variety of perks, some of these include, paid time off for new parents, fitness allowance, complimentary meals throughout the day and much more (Cain, 2017). Based on this, money is not always a motivator and there are other factors that contribute to employee motivation.

Alderfer's ERG Theory

All the above factors correlate with Alderfer’s (1972) ERG theory. This theory covers all of Maslow’s hierarchy into three sections; existence, relatedness, and growth needs. Mark satisfies existence needs by providing employees with their mandatory psychological and safety needs, through salary and food. Relatedness needs, are accomplished through building relationships with those he works with. Mark has continuously demonstrated this by empowering them to present ideas and be innovative, in a safe space where mistakes are not frowned upon. Lastly, growth is an important factor in any business as employees may have personal achievements they want from their job. According to Gillett (2015) Facebook surpass boundaries in this area as they have smaller teams which means employees have the flexibility to move up the ladder and progress with their career. This ideology is better suited than Maslow’s theory because isolating one need at a time could lead to frustration in the workplace (Quigley, 2015).

Limitations of Transformational Leadership

Despite the positive attributes that arise from transformational leadership, there are some distinct limitations with this approach. The leader may have a vision in mind that they want to achieve, however, if everyone is not aligned with this vision then they will not be motivated to achieve this. Every leader should persuade employees to balance their work and personal life. Mark Zuckerberg works late evenings and sometimes over the weekends, and he believes that Facebook’s top staff should follow suit (Zetlin, 2018). The problem with this is that employees may feel obliged to do the same, despite not wanting to do it. In the long-run, this could hinder employee motivation, which ultimately affects business success. According to Northouse (2016), it can be a challenge to understand the intricacies of this style as the characteristics are varied and broad.

Alternative Leadership Styles vs Transformational Leadership

Visionary leadership can differ from transformational leadership in many ways. Jeffrey Bezos (Jeff), CEO of Amazon adopts this style, as he is focused on his vision for Amazon; to “use this platform to build Earth’s most customer-centric company…and discover anything and everything they might want to buy online” (Metz, 2017). From the vision he set, his characteristics from his style are displayed as he had a clear vision in mind and he was willing to take risks by building an environment where employees strive to achieve this. Employees have contributed to the success as Jeff has taken the right steps to retain the talented employees by offering them stock options instead of a cash salary. This has been used an incentive to motivate employees to work hard and help the company succeed financially (Byers, 2007). This varies from Mark’s style as he was very employee oriented and made sure everyone was on the same page, however, Jeff is more focused on achieving his vision and getting his employees to follow suit. In relation to this, the goal setting theory by Locke and Latham (1990), is evident as Jeff sets out goals for his employees that he expects to be met so that the vision can be achieved. The leadership style adopted by Jeff may contribute to the overall success of Amazon and employee motivation.

Conversely, democratic leadership varies from the other styles as here the leader persuades employees to be actively engaged in the decision-making process (Khan, et al., 2015). Indra Nooyi, CEO of PepsiCo has embraced this leadership style to manage her workforce. According to the article published in the World Finance (2016), “PepsiCo is the second-largest food and beverage company in the world…boasting approximately $63bn in revenues.” This indicates that her style is effective as it has lead the business to succeed financially which could not have been achieved without her employees’ hard work. As well as this, she is a sole believer in uniting the team together when it comes to decision making, as she encourages employees to listen to one another and empower them to succeed and accomplish the vision set out for the business (The Economic Times, 2018). Motivating the team is a crucial part to achieve business success and employee retention in the longer term. There are multiple strategies that Indra uses to achieve this, her Education Assistance Program enables her staff to enhance their skills and get a degree that strengthens their careers and adds a valuable contribution to society (PepsiCo, 2017). Ultimately, this can boost an employee’s motivation to do work as they are being provided with an opportunity to grow and develop professionally. As a result, they may be inclined to work harder and be more productive. Another way she builds a one to one relation with her colleagues is by writing over 400 letters to her senior executive’s parents. The letter expresses her appreciation for all the work that they are doing for the business (Ward, 2017). Appreciation that can lead to employees feeling satisfied and respected, this can lift their self-esteem. This varies from Mark’s approach as even though he is focused on his employees he keeps his vision in mind and instils passion that makes his employees believe in him. Equally, Jeff’s approach is channelled towards achieving the vision as his primary focus and his employees’ needs are not set as a priority, like Indra does.

Despite the positives that can arise from democratic leadership, this style can hinder business success; especially when quick decisions need to be made. This style may not be as effective as transformational or visionary as the process of decision making can be slower. Also, individuals may not have the right business acumen to make valuable contributions to the decision-making process (Jakhar, 2017). This can slow down productivity and it can have an adverse effect on the performance and profits.

Conclusion

To conclude, after thorough analysis into the various leadership styles, transformational leadership seems to be most appropriate in achieving business success and employee motivation in the long-run adopted by Mark Zuckerberg. The leader has been successful in achieving these aims as they have managed to build an atmosphere that enables employees to flourish and one where the leader is actively engaged with them. In relation to the pitfalls of this style, in the short-run this may be difficult to achieve, however, changes in the organisation can spark new ideas which augment business success. Other styles such as visionary may not be effective in the long term because if the employee needs are not considered a priority then they may not be aligned with helping the business achieve their vision. Similarly, democratic leadership is not deemed to be appropriate for this situation because involving employees in decision making processes can slow down productivity.

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