Transformational & Transactional Leadership

1          Introduction:-

The demand for business organizations to react to constantly changing and usually conflicting needs from customers and to grow within the current severe competitive economic climate has resulted in a continuous search for modern approaches aimed at improving project performance.  Managers and Project leaders from across the world that have strong leadership skills are more confident, more productive and more efficiently driving their organizations onward. Managing a leader’s style and spirit will affect in dimensioning and winning goals (Pasmore, 2000). Projects are initiated in order to change (Turner and Müller, 2003), and to undergo a way round to organizational outcome (Sydow et al., 2004). The organization’s needs considerably proven practices to help in the success cycle of projects. Various leadership styles have previously been explored in the context of organizational management. Projects are a temporary endeavour undertaken to create a unique product or service and the person responsible for the project, who will be held accountable for its success or failure is the Project Manager (PMP, 5th edition).

In this era, innovation and competence in organizations is increasing as organizations deal with growing uncertainties in ever-changing environments (Hitt et al., 2007). Owing to these unknown situations, business firms frequently choose a flexible project organizational style. Influential leadership and effective skills play a crucial role in ensuring those uncertainties are met in projects (Waldman et al., 2001). The important role of leadership and the key features of projects account for an increase in studies focusing on leadership in a project context. In real Leadership is “getting project tasks done well from others” (PMP). Six schools of thought have developed in past decades. Transformational & Transactional leadership styles were determined by the charismatic and visionary school of thought. In leadership theory, Transformational & Transactional leadership represent two linear points of view. Transactional leadership concentrates on the task-related exchange of activities and rewards between follower and leader. Contrary to transactional, transformational leadership places stress on a person-orientation by understanding followers' needs with the organization's roles and tasks (Bass, 1990).

1          Literature Review

Modern leadership theories describe leadership as a process of complex exchanges between leaders and followers, more focused on relationships, interactions, and subjective insight (Yukl, 2001). The 21st century projects: previously limited, behavioural related research on project leaders has been undertaken. Today project-based industries such as construction, electronics, and software engineering can be observed as project-based organizations almost everywhere (Bakker, 2010; Sydow et al., 2004). Building on the behavioural, competency and contingency schools of leadership, the visionary and charismatic schools have shown, in general management context, that leadership style of a manager influences the performance of the business organization. The project manager’s energetic and influential style can help in communicating a vision, creating a motivational climate, building high-performance employees and coaching to enrich people (Heller, 2010). Researchers have questioned the success of traditional leadership styles and approaches in time-limited and authority-limited situations (Thamhain, 2004). However, less research has been carried out in order to shed light on the underlying issues at play in such environment. Due to a project's limited duration, the unspecified exchange processes more often cannot take place. Moreover, a project's short-term course and the focus on instantaneous delivery to the customer, shortens the team members' time-horizon (Marks et al., 2001). Contrary to this, the organization’s overall goals commonly slowdown in decisions and actions that need a longer time-spam, such as spending in knowledge management systems or management control systems (Lindner and Wald, 2011; Love et al., 2005).

Leaders must discover ways of including longer term aims in a short-termed project. According to previous researchers, it is a difficult, yet vital leadership task that includes creating a long-term vision (Christenson and Walker, 2004) and engendering teammates' commitment (Herold et al., 2008) to the organizations' goals. Alternatively, other researchers say that leadership in a given time frame simply calls for a spotlight on the actual tasks to be completed effectively and efficiently as time is too scarce to build relationships (Müller and Turner, 2007). The result of a temporary projects’ undertaking are unique; therefore, the way that leads to this outcome is often marked by uncertainty (Atkinson et al., 2006). Although a projects degree of uniqueness varies and cannot generally be specified in individuality or scope (Brockhoff, 2006), they often need novel practices. Therefore, leaders in the project industry have to allow team members to display creativity. This illustrates that it is insufficient for leaders to merely give instructions (Goodman and Goodman, 1976). In contrast to a permanent organization, a project undertaking is to some extent autonomous from its host industrial unit structures and strategy (Grant, 2010). Owing to the reality that a range of experts with vastly different backgrounds work in collaboration (Chiocchio and Essiembre, 2009), project undertakings normally operate with complex tasks. Hierarchical parts outside the project institute (Jensen and Scacchi, 2007) also split boundaries of organizations (Engwall, 2003) as well as add to uncertainty and complexity. Moreover, people might co-operate coming from diverse educational backgrounds and various industrial units and cultures (Bell and Kozlowski, 2002). Therefore, a great potential for conflict arises (Roberto, 2013). Most teammates working within permanent organizational structures depend on their supervisor in the permanent part of the organization, who is accountable for encouragement, training, and incentive. The leader of a project organization has, therefore, little de facto power. Certain situations of influencing, such as pleasing and punishing, are difficult to practice in the absence of hierarchical lines. (Hodgetts, 1968) Of vital significance, especially as team workers from different industrial units have to collaborate, is dedication towards the common task (Hoegl et al., 2004). In summary, owing to the absence of a history of relationship building, leaders must base their ability to motivate project members, as well as to influence their perceptions, values and commitment, on behaviours other than rewarding and punishing. The challenges that are specific to temporary organizations pose limitations on leadership actions; at the same time, leadership in temporary organizations has to influence and facilitate a range of subordinates' behaviours.

1.1       Extension of leadership theory to incorporate project:

Transformational & Transactional leadership behaviours reflect the extent of goals to achieve and team orientation and include earlier leadership approaches. Thoroughly analyse leadership in project organizations’; in research we use the characteristic of leadership approaches as being task-oriented or people-oriented. Compare to Bass (2003), who says that Transformational & Transactional leadership behaviours signify a novel paradigm, (Den Hartog et al., 1997) state that these theories integrate many ideas from previous leadership research, sociology, and political science. While conventional task-oriented theories are predicated on coherent processes, people-orientation theories spotlight on emotions and the ethics that are affected (Brown, 2003). Respective leadership models can integrate people, tasks, or a combination of both, situations, and environmental characteristics, and the range of outcomes is based on a scale (Zaccaro, Kemp and Bader, 2004). Elaborate models reflect on situational effects, and offer accentuated suggestions with combinations of task and people-orientation (Fuller, Marler and Hester, 2006). Bass and Riggio (2006) therefore defined this approach as “full-range leadership theory”. This explanation has become a generally accepted leadership conduct distinction in research (Bass, et al., 2003). We go behind this line of argumentation, and examine the factors that constitute Transformational & Transactional leadership behaviours in order to comprehensively pinpoint possible antecedents to project organizations' uniqueness.

1.2       Transformational & Transactional leadership in projects:

Transformational & Transactional leadership both consist of numerous factors, which are related to fundamental leadership and social research. For example, the transactional dimension focuses on tasks (Winkler, 2009), with factors that relate to path-goal theory and vertical dyad theory (Hall, 2013). These theories are a series of leader– follower bargains and interactions that provide the necessary inspiration for the followers to track the path set. Against this, the transformational leadership dimension incorporates numerous person-oriented reasons, just as neo-charismatic leadership, charismatic leadership, inspirational leadership and visionary leadership (Waldman, Balthazard and Peterson, 2011; Winkler, 2009). The theory of transformational leadership assumes that a leader is capable of bringing about positive changes in followers' morals, attitudes, perceptions, and outlooks in a permanent organization (Bass, et al., 2003; Brown, 2003). Furthermore, a transformational leader focuses on people and their motivations, beliefs, and behaviours and provides them with visions that pleased and met their needs and desires (Lussier and Achua, 2009). While the transactional–transformational concept can be seen on one continuum (Washington, 2007), several authors regard this concept on two separate dimensions. These authors state that a leader can display behaviours from both dimensions (Emery and Barker, 2007). Since the characteristics of project organizations result in a broad range of task complexity, we follow Bass (1999) arguing that transformational leadership is part of transactional leadership, as it expands the array of leadership behaviours that have to be displayed. Existing empirical studies give a mixed picture of the effectiveness of Transformational & Transactional leadership attributes in project organizations. Characteristics of transactional leadership behaviours have been found to be useful in certain project types (Müller and Turner, 2010).

Effective and influential leadership attitudes in times of revolution and uncertainty (Bass and Bass, 2009); therefore, this form of leadership seems of particular interest to project organizations that are the bearers of change for the permanent organization (Sydow et al., 2004). Transformational leaders have also been identified to have a strong, positive influence on teammates' commitment, which is based on the successful outcome of projects (Christenson and Walker, 2004). In order to fully analyse the applicability of Transformational & Transactional leadership theories to the characteristics of project organizations, we will consider the respective factors that constitute Transformational & Transactional leadership in the following section. We will include an investigation of Transformational & Transactional leadership effectiveness in projects.

1.3       Transactional leadership and Project Success:-

Transactional leader’s reward when followers do what is expected of them, and punish when they do not behave as expected (Bass and Bass, 2009). Several researchers state that the factors constitute transactional leadership, as in studies proposed by Bass (1985), are not reflected in empirical studies (Antonakis et al., 2003; Hartog et al., 1997). Taking these considerations of leadership and the characteristics of project industrial organizations into consideration, an active manager is a leader who supervises and elevates followers' work deviations and irregularity.

Transactional leadership provides traditional opinions on leadership, which concentrates on the contractual agreement between the leader and the subordinate on expected achievement in return for sure rewards (Thite, 2001). Previous studies cited to transactional style are task-oriented and possible support as the important element of leading leadership behaviours in organizations. Within transactional leadership, followers agreed with praise, rewards, and resources or the disciplinary action, accepted by the manager in exchange for work. Recognition and rewards were given to followers on extraordinary work or effectively carrying out assignments and roles (Podsakoff, Todor, & Skov, 1982). Transactional leadership elucidates progress and provides recognition when objectives are achieved. The elucidation and clarification of defined roles and tasks, and providing of honour once goals are completed should result in individuals and groups achieving project anticipation levels of work (Bass, 1985).

Although different leadership behaviours can generally be classified as either transactional or transformational, there are few that concentrate on the decision of whether to concentrate on the projects to be engaged with the squad to recognize these tasks (Lousier and Achua, 2009). Lee-Kelley and Leong Loong (2003) recommended that there is an important relationship between the project managers’ approaching for project achievement and his or her own personality. Confidence and self-assurance are likely to play a noteworthy element in the project manager’s ability to deliver a project successfully. In research, Cooke-Davies (2001) did not talk about the people part of project management or state clearly the project manager’s ability and leadership skill when defining the accomplishment factors. The distinctiveness of transactional leadership has been identified through different ways, by using factor analysis, interviews, observations, and key characteristics of an ideal leader.

1.4       Transactional Leadership key characteristics:

The key distinctiveness of transactional leadership acknowledged by the researcher in previous research is defined below:

1.4.1        Active Management by Exception:

The manager defines standard procedures and processes for successful completion, as well as what constitute ineffective work or performance, and may penalize the teammates for performing outside of that procedure.  This is known as active management by exception. This style of management leadership is applicable, where close monitoring for deviances, mistakes, and errors is necessary and then taking appropriate corrective action as soon as possible when they occur.

1.4.2        Transactional Contingent Reward:

Previous research has explored transactional contingent reward style leadership to be constructive to a team’s dedication, satisfaction, and execution (Bycio, Hackett, & Allen, 1995; Hunt & Schuler, 1976). Goodwin, Wofford, and Whittington (2001) investigated a constructive relationship between transactional contingent appraisal leadership and organizational citizenship behaviours; differentiating transactional leadership which is more recognition based from that based on setting basic necessities and tasks.

1.4.3        Implicit Contracting:

Transactional leadership is recognition-based, which is also known as implicit contracting, was more positively related to followers displaying organizational citizenship attitude (Goodwin et al.).

1.5       Transformational leadership and Project Success:-

Bass (1990) showed that today’s environment demands subordinates perform at an extraordinary level which is deliverable by transformational leadership. This style yields inspiration and intellectual stimulation, motivates followers by having strong motivation and modelling suitable actions, and invites followers with new ideas and approaches (Bass, 1990). It is a way into leading that changes followers, affecting them to look beyond self-interest, in favour of the team's goals by modifying their team spirit, ethics, and trust, (Pieterse et al., 2010).

With the introduction of Transformational & Transactional leadership theory into the literature, focus has now been placed on how certain leaders are well equipped to elevate a team’s motivation and performance to the significant levels of skills (Bass, 1985). The project leader builds personal and social identification in followers with the mission and goal of the project in transformational style. The followers’ feelings of involvement, cohesiveness, commitment, strength, and performance are enhanced. Other authors have suggested that transformational leadership is an important antecedent to building the collective confidence or potency needed for groups to be successful when executing difficult tasks. As said by Guzzo and his fellows (Guzzo, Yost, Campbell, & Shea, 1993), group effectiveness is a group design function (task interdependence), steps, and context (operating conditions). When a group’s task is planned to facilitate highly mutually beneficial work and the leadership of the team provides excitement for members to work in co-operation; team members’ collective courage and motivation is higher. Researchers concluded that leadership actions that influence and develop teams’ ability may be as critical and decisive of collective effectiveness as the team’s previous work experiences (Zaccaro, Blair, Peterson and Zazanis (1995). Effective leadership styles have major effects in the completion of projects. According to Elenkov, (2002) leadership can straightforwardly influence organizational performance in a constructive way. Our research study extends preceding studies in and invaluable manner.

The distinctiveness of transformational leadership has been recognized in different ways, by utilize of factor analysis, interviews, observations, and key characteristics of a follower’s perfect leader.

1.6       Transformational Leadership key characteristics:

The key characteristics of transformational leadership was identified by utilizing the Multifactor Leadership Questionnaire (MLQ–Form 5X; Avolio & Bass, 2002). The four major characteristics that Avolio et al. investigated with respect to transformational leadership are described below:

1.6.1        Idealized influence

These managers’ leadership styles are respected, admired and trusted. Supporters and Followers recognize with and wish to emulate the leaders. The project leader earns credit among followers in essence to consider teams’ requirements over own requirements. The leader tells merits and risk with followers and is steady in conduct with definite ethics, standards, and virtues.

1.6.2        Inspirational motivation

The project leader behaved in a way, which attracted them by giving significant resources and opportunities. Individual as well as team spirit levels are enriching. Optimism and determination are present. The Project leader motivates them to envision brighter future states that they ultimately envision.

1.6.3        Intellectual stimulation

Here, , the project leaders express their teams’ work to be creative and innovative by making assumptions, avoiding anomalies, and covering old conditions using new methods. There’s no criticism of the mistakes of individual members in the team. Creative solutions and new ideas to anomalies are requested from followers, which are comprised in the course of addressing anomalies and presenting various solutions.

1.6.4        Individualized consideration

In this transformational leadership behaviours, the leader mainly focuses on every member’s requirements for completion and progress by performing as a mentor or coach. Teams are established to incredible levels of skills. A creative and supportive environment is created in which teams prosper positively to achieve goals.

The Transformational & Transactional leadership styles as described above; can be used in projects either individually or collectively. Project leaders’ adopt one or other style or both styles to influence followers to believe in themselves and success.

1.7       Critical Success Factor:-

It is conceived in the general management text, that the leadership style of functional manager is efficient in the achievement of the production or organizational unit; the project manager’s leadership approach in projects is not generally discussed when identifying project success factors. Critical success factors (CSFs) are generally used today as a way of evaluating project accomplishment. In the past two decades, there has been innovation in the measurement from simply time, cost (on budget), and functionality perfection capacity in the 1970s to a supplementary quality based centre of attention in the 1980s and 1990s. Project accomplishment at present takes stakeholder satisfaction, product success, business and organization assistance, and team development as measures of project success (Atkinson, 1999; Baccarini, 1999). Cooke- Davies (2001) declared that even though well-known research results and decades of individual and combined experience of project execution, project results persist in dissatisfying stakeholders. He was paying more attention to cost, time, and quality when studying project success and identified related success factors.

We discuss the literature review that includes the extension of leadership theory to incorporate project. It also discusses that the Transformational & Transactional leadership behaviours reflect the extent of goals to achieve and team orientation and include earlier leadership approaches. Respective leadership models can integrate people, tasks, or a combination of both, situations, and environmental characteristics, and the range of outcomes is based on a scale. It also includes that the Transformational & Transactional leadership both consist of numerous factors, which are related to fundamental leadership and social research. For example, the transactional dimension focuses on tasks, with factors that relate to path-goal theory and vertical dyad theory. This chapter also includes the transactional leadership behaviour along with the transactional leadership key characteristics. On the other hand, Transformational leadership style earns motivation as well as logical stimulation, inspires followers by offering inspiration and exhibiting appropriate actions. This leadership style invites followers through novel approaches and ideas. In the last it focuses on the critical success factor and how the leadership style of functional manager is efficient in the achievement of the production or organizational unit; the project manager’s leadership approach in projects is not generally discussed when identifying project success factors. Critical success factors (CSFs) are generally used today as a way of evaluating project accomplishment.