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Abstract

Developing Leaders:
Examining the Role of
Transactional and
Transformational
Leadership Across Business
Contexts
Michael B. Hargis
John D.Watt
Chris Piotrowski
Michael B. Hargis, Ph.D., is an
Assistant Professor of Management
and Innovation at the University of
Central Arkansas. His research inter-
ests focus on understanding how
person- and situation-based factors
influence both functional (e.g., task
persistence, innovation, goal setting)
and dysfunctional (e.g., unethical
decision-making, workplace deviance) behavior in
organizations. His research appears in journals such as
Personnel Psychology, Journal of Vocational Behavior, and
Humar) Relations. Dr. Hargis serves as a member of the
Arkansas Governor's Council of Economic Advisors.
Contact Information
Department of Marketing and Management
University of Central Arkansas
201 Donaghey Avenue
Conway,AR 72035
Over the past 20 years, the Multifactor Leadership
Theory (MLT) has become one of the most
dominant theories of leadership. This popularity
is due, in part, to the broad range of leadership
behaviors included in the theory. Bass (1985) and
colleagues conceptualized leadership as consist-
ing of three primary factors (i.e., transformational,
transacfional, and passive/laissez-faire leadership)
and prior research has clearly linked transforma-
tional and transactional leadership to important
outcomes, such as employee commitment and
organizational performance. Furthermore, prior
research has established that these behaviors can
be developed through training. However, it is
less well understood how the importance of these
behaviors changes across organizational settings.
The purpose of this study, therefore, is to examine
(across two data sets) the relative importance of
these leadership factors across various outcomes
(i.e., team potency/efficacy, team cohesion, and job
performance) and organizational contexts (i.e.,
military and healthcare). Results indicate that
transformafional leadership behaviors are
critically important for team cohesion and team
potency/efficacy (Data Set 1) and leader
effectiveness (Data Set 2), and that transactional
leadership becomes particularly salient with
regard to actual task performance and extra effort
(Data Set 1 and 2). Implications of these results
for practitioners are discussed, and a useful tax-
onomy to guide leadership development is pro-
vided.
Volume 29 Number 3 Fall 2011
51
Introduction
John D. Watt, Ph.D., is an Associate
Professor of Organizational Behavior
and Human Resources (OBHR) in the
Department of Management at the
University of Central Arkansas. His
research interests center around the
influence of cognitive and personality
variables on organizational behavior.
He is particularly interested in the areas
of boredom proneness, individual attitude strength (e.g.,
affective-cognitive consistency), employee engagement,
perceived organizational support, and underemployment.
His research appears in journals such as Journal of Applied
Psychology, Journal of Business and Psychology, and
Journal of Research in Personality. Dr. Watt currently serves
as Executive Editor of The Journal of Psychology:
Interdisciplinary and Applied.
Contact Information
Department of Marketing and Management
University of Central Arkansas
201 Donaghey Avenue
Conway, AR 72035
Chris Piotrowski has served as a
research consultant at the University of
West Florida since 1982. He has
authored over 200 peer-reviewed pub-
lications, including book chapters over
the past 30 years. He has a research
focus on database searching, assess-
ment issues, and the study of disasters.
His work has appeared in the
Encydopedia of Stress. Chris also serves as a reviewer for
journals in psychology, medicine, and business.
Contact Information
Chris Piotrowski
504 Concordia Blvd.
Pensacola FL 32505
piotrowskichris@hotmail.com
52
Effective leadership has been recognized as a cen-
tral determinant of growth and success within
organizational settings ranging from profit seek-
ing enterprises to amateur and professional ath-
letics, religious organizations, and military units
(Judge & Piccolo, 2004; Lowe, Kroeck, &
Sivasubramaniam, 1996; Northouse, 2007). Such
recognition has resulted in increasing interest in
leadership development, with organizations
investing greater and greater resources into lead-
ership development and succession planning
(Bolt, 2007; Carter, Ulrich, & Goldsmith, 2005;
Hernez-Broome & Hughes, 2004; Riggio, 2008).
Across settings, transformational leadership
behaviors have become one of the most dominant
approaches to understanding leadership effective-
ness (Lowe & Gardner, 2001) and certain transfor-
mational leadership behaviors are included in
leadership development programs from compa-
nies operating in industries ranging from on-line
retail (e.g., Zappos.com) to finance (e.g., GE capi-
tal; Hsieh, 2010). Furthermore, there is substan-
tial evidence that transformational leadership
behaviors lead to important individual-level out-
comes such as employee commitment, motivation
and task performance and organization-level out-
comes such as firm performance (Barling, Weber,
& Kelloway 1996; Bono & Judge, 2004; Bycio,
Hackett, & Allen, 1995). Finally as described in
the Multifactor Leadership Theory (MLT), evi-
dence suggests that transformational leadership
behaviors augment, or build upon, transactional
leadership behaviors such as utilizing contingent
rewards (Judge & Piccolo, 2004).
Thus, the extant research provides reasonably
strong support for the theoretical predications
Organization Development Journal
derived from the MLT (cf.. House & Shamir, 1993;
Howell & Avolio, 1993; Judge & Piccolo, 2004;
Lowe et al., 1996). Namely, transactional leader-
ship behaviors and transformational leadership
behaviors are necessary to effectively perform as a
leader and that transformational leadership adds
incremental value to more traditional transaction-
al leadership behaviors. While prior research has
largely supported the theoretical tenets outlined
in the MLT, leadership scholars have begun to rec-
ognize that aspects of the situation, or organiza-
tional context, impact w^hat leader behaviors are
ultimately effective (Lord, Brown, Harvey, & Hall,
2001; Shamir & Howell, 1999). That is, the trans-
formational or transactional leader behaviors that
are effective in one situation (e.g., the Peace
Corps) may not translate to effective performance
in a different context (e.g.. New York Yankees
Front Office). The same is true across different
performance criteria (Judge & Piccolo, 2004). In
fact, evidence (cf. Antonokis et al., 2003; Den
Hartog et al., 1999) clearly indicates that the
leader behaviors that relate to some criteria (e.g.,
extra effort, team efficacy) are not equally predic-
tive of other criteria (e.g., creativity, commitment,
etc.) across diverse organizational settings.
Given the role of leadership in creating and sus-
taining a competitive advantage, and the role
leadership development training programs play
in shaping leader behaviors (Parry & Sinha, 2005),
it is important to understand the specific factors
that impact organizational success. Furthermore,
it is important to examine how the importance of
these factors changes across characteristics of the
organization. Thus, the purpose of this study is
to extend prior research by exploring the relative
importance of a wide range of leader behaviors
and subsequent performance across a variety of
organizationally valued criteria (e.g., team poten-
cy/efficacy, job performance, team cohesion) and
organizational contexts (e.g., private healthcare
and military). This is particularly important
because prior research has relied on faulty meas-
ures to assess predictor importance, and there is
some data suggesting that leadership behaviors
change in importance across contexts (Den Hartog
et al., 1999; Johnson & LeBreton, 2004; LeBreton,
Hargis, Griepenti-og, Oswald, & Ployhart, 2007).
Additionally, these data will help practitioners
create leadership development approaches that
are more cost and time-effective, and context sen-
sitive, due to the increased awareness of which
behaviors are most related to desired outcomes
across different organizational settings.
In the text that follows, we: 1) outline the leader-
ship behaviors included in the multifactor leader-
ship theory, 2) present the results of a study
designed to examine how the relative importance
of these leadership behaviors change across dif-
ferent organizational settings (military and med-
ical) and across outcomes such as team
potency/efficacy, team cohesion, and job perform-
ance, and 3) present a leadership development
taxonomy (based on the results of the current
study and a review of best practices) designed to
aide practitioners in the development and change
process.
Multifactor Leadership Theory
The multifactor leadership theory developed by
Bass (1985) has received a great deal of theoretical
and empirical attention over the past nearly three
decades (Bass & Avolio, 2000; Judge & Piccolo,
2004; Lowe, Kroeck, & Sivasubramaniam, 1996).
This popularity is due, in part, to three primary
factors. First, the model of leadership introduced
by Bass encompasses a broad range of leader
Volume 29 Number 3 Fall 2011
53
behaviors including transformational, transaction-
al, and non-leadership (or laissez-faire). Second,
the scientific literature has generated substantial
support for the major tenets of the theory (cf..
House & Shamir, 1993, Howell & Avolio, 1993;
Kirkbride, 2006; Lowe et al., 1996). Third, this
approach to leadership clearly focuses on behav-
iors that can be developed through training and
learning (Parry & Sinha, 2005) and these behav-
iors have been linked to important individual,
group, and organization level outcomes (Hater &
Bass, 1988; Howell & Avolio, 1993; Lowe et al.,
1996; Waldman, Bass, & Yammarino, 1990). For
example, Lowe et al. (1996) presented meta-ana-
lytic evidence demonstrating that transformafion-
al leadership was related to subjective and objec-
five rafings of leadership effectiveness with cor-
rected correlations of .73 and .30, respecfively.
Additionally, prior research has demonstrated
that transformational leadership impacts creativi-
ty and innovation (Avolio et al., 1999) and com-
mitment (Bass & Riggio, 2006). Finally, Dvir,
Eden, Avolio, and Shamir (2002) presented evi-
dence suggesting that transformational leadership
resulted in better unit performance relafive to
groups that did not receive transformational lead-
ership training. In the following text, each of the
factors included in the MLT will be discussed.
Transformational leadership. Transformational
leaders are described as being capable of motivat-
ing followers to transcend their self-interests to
accomplish collective goals (Bass, 1985).
Transformational leadership includes four distinct
factors: idealized influence, inspirational motivation,
intellectual stimulation, and individualized considera-
tion (Bass & Avolio, 2000). The idealized influence
factor represents transformational behaviors
directed at influencing followers' perceptions of
fhe leader as powerful, confident, and capable of
accomplishing stated goals, as well as leadership
behaviors that are directed towards goal attain-
ment and developing a sense of mission among
followers. Key behaviors include demonstrafing
high levels of competence and the effecfive use of
power to enhance group performance (Kirkbride,
2006). The inspirational motivation factor focuses
on behaviors directed towards energizing and
motivafing followers, such as communicafing a
vision and making emotional appeals that help
followers strive towards future goals.
Inspirational behaviors include presenting opti-
mistic (yet attainable) visions for the future and
creafing a unified sense of mission and purpose
(Kirkbride, 2006). The intellectual stimulation fac-
tor focuses on encouraging followers to crifically
examine their assumpfions, values, and beliefs. In
effect, the intellectual sfimulafion factor is viewed
as the degree to which leaders favor new ways of
doing things and encourage followers to develop
the skills necessary to think through and solve
problems for themselves. Finally, the individual-
ized consideration factor focuses on leadership
behaviors that are aimed at understanding the
needs of individual followers and encouraging
them to develop to their full potential in the pur-
suit of challenging goals (Avolio, Bass, & Jung,
1999; Bass & Avolio, 2000).
Transactional leadership. The notion of transac-
tional leadership grew^ out of the exchange-based
theories of leadership that dominated the leader-
ship literature until the 198O's. Bass (1985)
defined fransactional leaders as leaders who iden-
tify the needs of their followers and engage in
exchange relationships with them based on objec-
tives to be met. The higher order factor of trans-
actional leadership includes: contingent reward,
active management by exception, and passive manage-
ment by exception. Contingent reward leadership is
54 Organization Development Journal
characterized by the exchange of rewards from
leaders to followers for accomplishing objectives
(Bass & Avolio, 1993). With this style of leader-
ship, the leader sets clear goals and objectives and
clearly specifies what rewards (financial or non-
financial) can be expected for achieving goals.
Both active and passive management by exception are
characterized by the use of discipline to correct
undesired behavior from followers. The differ-
ence between the two approaches becomes appar-
ent when one considers the monitoring pattern of
the leader. Active management by exception is
characterized by the leader's continued observa-
tion of followers to ensure that agreed upon stan-
dards of performance are met (Antonakis et al.,
2003). In contiast, passive management by excep-
tion leaders only intervene w^hen mistakes have
already occurred (Antonakis et al., 2003).
Non-Leadership. The last leadership factor
included in the MLT is actually a non-leadership
factor, which is labeled laissez-faire leadership.
This style of leadership is characterized by the
absence of transformational or transactional lead-
ership and a lack of interaction betw^een leader
and follower. In essence, this type of leadership
would be characterized by leaders who avoid
making decisions and who fail to take interest
and responsibility in the growth of their unit,
department, or organization (Kirkbride, 2006).
In summary, there are eight factors represented in
the current form of the multifactor leadership the-
ory. Bass (1985; Bass & Avolio, 1993) suggests that
both transformational and transactional leader
behaviors are necessary to effectively perform as a
leader. Furthermore, Bass (1985) argued that
transformational leadership behaviors augment
the transactional leader behaviors in predicting
organizational outcomes. Several studies support
this proposition. For instance, there is evidence
that transactional leadership behaviors lead to
effective leadership (Hater & Bass, 1988; Waldman
et al., 1990). Prior research also demonstiates that
after controlling for the effects of transactional
leadership, transformational leadership behaviors
account for incremental variance in ratings of
leader effectiveness (Hater & Bass, 1988) and sat-
isfaction with the leader (Podsakof, MacKenzie,
Moorman, & Fetter, 1990). Additionally, the
results of a meta-analytic investigation of the
MLT, conducted by Lowe et al. (1996), suggested
that the same leader might exhibit behaviors asso-
ciated with transactional and transformational
leadership, which is consistent with the theory
postulated by Bass (1985). This meta-analysis also
demonstrates that both types of leadership are
associated with leader effectiveness.
JVIethod
To examine how leader behaviors change in
importance across different criteria and organiza-
tional contexts, we reanalyzed the correlation
matrices from two published studies using two
relative importance indices that are increasingly
being used in the organizational science literature:
Dominance Analysis and Relative Weights
Analysis - both of which are intioduced in more
detail in the data analysis section below. The use
of these relative importance statistics is becoming
more common in the organizational sciences (cf..
Baltes, Parker, Young, Huff, & Altinann, 2004;
LeBreton, Ployhart, & Ladd, 2001). These data
sets were chosen because: (1) these two datasets
allow us to examine the relative importance of the
factors and sub-factors included in the MLT
across diverse samples (military vs. registered
nurses) and performance criteria, and (2) the vari-
ables, as a group, explained a significant and
Volume 29 Number 3 Fall 2011
55
practical amount of variance in meaningful
dependent variables. These selection criteria are
consistent with the selecfion criteria utilized in
other recent studies examining the relative impor-
tance of variables in the organizational sciences
(cf.. Baltes et al., 2004; LeBreton et al., 2007).
Data Set 1: The first data set came from a study
conducted by Bass, Avolio, Jung, and Berson
(2003) who examined the impact of transforma-
tional and transacfional leader behaviors on two
team outcomes: team potency/efficacy (represent-
ing the general belief that the team can successful-
ly perform its mission) and team cohesion (repre-
senting whether team members pulled together to
accomplish tasks). The authors addressed their
quesfion using a sample of 78 platoon leaders and
their direct reports.
Data Set 2: The second data set came from a
study conducted by Bycio, Hackett, and Allen
(1995). These authors utilized a sample of nurses
(N = 1,376) to examine the impact of transforma-
tional and transacfional leadership behaviors on
leader effectiveness and extra effort from employ-
ees.
Data Analysis: Relative Importance Indices
Johnson (2000, p. 2) defines relative importance as
"the contribufion each variable makes to the pre-
diction of a dependent variable considering both
its unique contribution and its contribution when
combined with other variables." Traditionally, a
number of stafisfics (e.g., squared correlafions and
beta weights) have been used to evaluate predic-
tor importance. While each of these methods has
strengths, they fail to consider the joint effects on
the criterion shared by two or more correlated
predictors (Johnson & LeBreton, 2004).
Darlington (1968) notes that most measures of
predictor importance are often misleading when
variables are correlated, which is often the case in
the organizational sciences (LeBreton et al., 2004).
This is very useful when considering the MLT
because transactional leadership and transforma-
tional leadership behaviors are often highly corre-
lated. For instance, Bycio, Hackett, and Allen
(1995) presented evidence demonstrafing that
contingent reward behaviors usually correlated
strongly with transformational behaviors with
intercorrelations ranging from .63 to .70.
Furthermore, Lowe et al. (1996) reported uncor-
rected correlations between the transformational
factors that ranged in magnitude from .68 to .89.
To overcome these limitations, two stafistical
approaches have been introduced: dominance
analysis (Budescu, 1993) and relative weights
analysis (Johnson, 2000). These stafisfics have
recently been used in the organizafional science
literature in areas ranging from employee selec-
fion (Van Iddekinge & Ployhart, 2008) to under-
standing percepfions of fairness (Schleicher et al.,
2006). For example, LeBreton et al. (2007) and
Van Iddekinge and Ployhart (2008) both utilized
relative importance indices to examine which
employee selecfion tests best predicted job per-
formance. Addifionally, Schleicher et al. (2006)
utilized relative importance indices to examine
how selection procedures that provided the
opportunity to perform job related tasks positive-
ly influenced subsequent applicant reactions to
the organizafion. Finally, Behson (2005) demon-
strated, via dominance analysis, that certain man-
agement practices (e.g., supervisory support,
autonomy, etc.) predicted a number of importance
outcomes such as job safisfaction, work stress,
and intenfions to quit. While relative importance
indices have been used to examine a number of
56
Organization Development Journal
organizationally valuable activities, litfle (if any)
research has used these statistics within a leader-
ship context.
Dominance Analysis. Dominance analysis was
designed to furnish estimates of predictor impor-
tance in the presence of correlated predictors.
Dominance analysis provides a measure of the
relative importance of multiple predictors by
computing the mean squared semi-partial correla-
tion across all possible subset regressions
(Budescu, 1993). That is, for each variable, the
dominance weight represents the average useful-
ness of a predictor across all subset regression
models. These dominance weights are then used
to rank-order the predictors in terms of their rela-
tive importance. Statistically, for each variable (j),
the general dominance weight is calculated (Cj)
and this weight represents the average "useful-
ness" of a variable across all subset regressions
(Azen & Budescu, 2003). Thus, dominance analy-
sis furnishes an index of relative importance
based on "a variable's direct effect (i.e., when con-
sidered by itself), total effect (i.e., conditional on
all other predictors), and partial effect (i.e., condi-
tional on all subsets of predictors)" (Budescu,
1993, p. 544). Furthermore, general dominance
analysis examines patterns of a predictor's domi-
nance, which can be used to determine the specif-
ic pattern of a variable's relative importance
across regression models. Full dominance occurs
when a variable is consistently more important
than any other variable across all subset regres-
sions.
Relative Weights Analysis. The second method.
Relative Weights Analysis (Johnson, 2000), pro-
vides a measure of the relative importance of
multiple predictors by using a principal compo-
nents approach to create a new set of uncorrelated
predictors that are maximally correlated with the
original set of predictors yet are orthogonal
(uncorrelated) to one another. The criterion vari-
ables are then regressed on the transformed pre-
dictors yielding standardized regression coeffi-
cients. These coefficients are then squared and
combined with the squared standardized regres-
sion coefficients to calculate importance estimates.
Both methods provide estimates of predictor
importance based on the proportion of the model
R-^ that can be attributed to each independent pre-
dictor. Furthermore, all of these independent
components add up to the model R^. Because
these methods provide estimates of importance
that sum to the model R^, it is possible to evaluate
predictors using the metric of their proportionate
contribution to the model R^. Additionally, it is
possible to calculate rescaled relative importance
estimates for both dominance and relative
weights by dividing each raw estimate by the
model R^. These rescaled importance estimates indi-
cate the percentage of total explained variance
contributed by each independent predictor, which
is a helpful method to communicate results.
Results
Bass et al. (2003) examined the predictive validity
of transformational and transactional leadership
behaviors of platoon leaders for ratings of unit
potency (i.e., group efficacy), unit cohesion, and
task performance by examining data collected
from 72 platoon leaders. When considering
unit/team potency (see Table 1), which represents
the belief that the team can carry out the mission
successfully, our data indicate that transforma-
tional leadership behaviors are most important
(ranked #1) and account for approximately 42% of
the predicted variance and transactional leader-
Volume 29 Number 3 Fall 2011
57
Table 1
Dependent Variable = Platoon Potency (R^ = .18)
r j Y
0.41
0.37
-0.37
j
0.28
0.04
-0.13
RS- CJ
0.42
0.28
0.30
"T
1
2
2
'2 j2
1
3
2
Cj
1
3
2
Importance Estimates Relative Rankings
Variables
Transformational Leadership
Transactional Leadership
MBE/Passive Leadership
Totals 1.00
Dominance Results: Platoon Leader TF >D> Platoon Leader PA, Platoon Leader TA
Note: Data are from the Platoon Leader Sample described in Bass et al. (2003). rry = zero order correlation; j = stan-
dardized regression coefficient; RS-Cj = rescaled (RS) importance estimate, whicr\ is calculated by dividing the domi-
nance weight (Cj) by model R^. RS-Cj can be interpreted as the percentage of total explained variance contributed by
each predictor.
Table 2
Dependent Variable = Platoon Cohesion (R^ = .25)
Importance Estimates Relative Rankings
Variables TTX, j RS-Cj rjy^ j2 Cj
Transformational Leadership 0.48 0.26 0.39 1 1 1
Transactional Leadership 0.46 0.15 0.33 2 2 2
MBE/Passive Leadership -0.43 -0.11 0.28 3 3 3
Totals 1.00
Dominance Results: Platoon Leader TF >D> Platoon Leader TA >D> Platoon Leader PA
Note: Data are from the Platoon Leader Sample described in Bass et al. (2003). rjy = zero order correlation; i = stan-
dardized regression coefficient; RS-Cj = rescaled (RS) importance estmate, which is calculated by dividing the domi-
nance weight (Cj) by model R^. RS-Cj can be interpreted as the percentage of total explained variance contributed by
each predictor.
58 Organization Development Joumal
ship behaviors and management by exception
account for 28% and 30% of the variance, respec-
tively. With regard to team potency, transforma-
tional leadership fully dominates transactional
leadership behaviors and management by excep-
tion. However, if we were just looking at the
standardized regression weights as our indicator
of importance (which is a common practice in the
organizational sciences and development litera-
ture), we would likely make the attribution that a
relationship with a .04 magnitude is practically
insignificant. However, when considered with
more appropriate importance indices, this vari-
able actually accounts for a significant and mean-
ingful amount of variance.
When considering team cohesion (see Table 2),
transformafional leadership fully dominates
management by excepfion/passive leadership
behaviors. More specifically, transformational
leadership accounts for 39% of predicted vari-
ance followed by 33% for transactional and 28%
for managemenf by excepfion. Finally, in ferms
of performance during a full-scale training exer-
cise (see Table 3), transformational leadership
behaviors became relatively less important.
More specifically, transactional behaviors account
for 36% of predicted variance and passive leader-
ship/management by exception accounted for
33% of predicted variance. Both variables fully
dominated transformafional leadership, which
accounts for 31% of predicted variance.
However, by examining the re-scaled importance
estimates (which reflect percentages) we see that
each variable accounts for roughly equal portions
of predicted variance.
The Bycio et al. (1995) study allows us to look at
the relative effectiveness of the sub-factors of fhe
MLT across different criteria (i.e., leader effec-
tiveness and extra effort fiom employees). As
presented in Table 4, idealized influence (or
charisma) was the most important predictor with
regard to leader effectiveness accounting for 41%
Table 3
Dependent Variable = Platoon Performance (R^ = .11)
Importance Estimates
Variables
Transformational Leadership
Transactional Leadership
MBE/Passive Leadership
RS-C
j
0.30 0.06 0.31
0.31 0.16 0.36
-0.30 -0.14 0.33
Relative Rankings
2 3 3
1 1 1
2 2 2
Totals 1.00
Dominance Results: Platoon Leader TA, Platoon Leader PA >D> Platoon Leader TF
Note: Data are from the Platoon Leader Sample described in Bass et al. (2003). rw = zero order correlation; j = stan-
dardized regression coefficient; RS-CT = rescaled (RS) importance estimate, whicli is calculated by dividing the domi-
nance weight (Cj) by model R^. RS-Cj can be interpreted as the percentage of total explained variance contributed by
each predictor.
Volume 29 Number 3 Fall 2011
59
Table 4
Dependent Variable = Leader Effectiveness (R^ = .41)
Importance Estimates Relative Rankings
Variables
Transformational Factors
Idealized Influence
Individualized Consideration
Intellectual Stimulation
Transactional Leadership
Contingent Reward
Management-by-Exception
RS-C
J
0.63 0.57 0.41
0.56 0.15 0.25
0.51 -0.03 0.18
0.42 -0.07 0.11
-0.26 -0.04 0.05
1
2
3
4
5
1
2
4
5
3
1
2
3
4
5
Totals
1.00
Dominance Results: Idealized Influence >D> Individualized Consideration >D> Management-by-Exception
Contingent Reward, Intellectual Stimulation
Note: Data are from Bycio et al. (1995). rjy = zero order correlation; j = standardized regression coefficient; RS-Cj =
rescaled (RS) importance estimate, which is calculated by dividing the dominance weight (G) by model R^. RS-Cj can
be interpreted as the percentage of total explained variance contributed by each predictor.
of the predicted variance. Individualized consid-
eration was the second most important variable in
predicting leader effectiveness accounting for 25%
of the predicted variance. Taken together, these
two variables accounted for a combined 66% of
predicted variance in the criterion (41% and 25%,
respecfively). Contingent reward, management-
by-exception, and intellectual stimulation were
much less important, accounting for 18% or less
of predicted variance.
In terms of extra effort (see Table 5), again, ideal-
ized influence was the most important predictor
variable (ranked #1 and accounting for 32% of
predicted variance). Intellectual stimulation was
the second most important variable accounting
for 27% of the predicted variance in extra effort.
Contingent reward and individualized considera-
tion both accounted for 18% of predicted vari-
ance, but contingent reward dominated individu-
alized consideration. One of the most interesting
findings here relates to individualized considera-
tion. Examining the regression weight (or stan-
dardized beta weight) it appears that individual-
ized consideration is not important (see Table 5).
However, relative weights analysis suggests that
it actually accounts for 18% of the predicted vari-
ance and is tied with contingent reward leader-
ship in terms of predictor importance.
Discussion
Taken as a whole, the results from the current
study clearly indicate that transformational lead-
ership behaviors are critically important when
considering team cohesion and team potency/effi-
cacy (Data Set 1) and leader effectiveness (Data
Set 2). While transformational leadership is still
60
Organization Development Journal
important with regard to actual task performance
and extra effort, transactional leadership behav-
iors (parficularly confingent reward styles)
become more salient. This finding is consistent
across both data sets with confingent reward
styles of leadership accounting for 36% of the
variance in Data Set 1 (see Table 3) and 18% of the
variance in Data Set 2 (see Table 5).
Thus, across samples and criteria, our results fur-
ther buttress the major assertions of the MLT and
clearly indicate that effective leaders need to have
a full range of leader behaviors to draw from. For
instance, in building team cohesion and team effi-
cacy, transformational behaviors appear most
important. However, during training activifies
directed at improving specific task performance.
Table 5
Dependent Variable = Extra Effort (R^ = .72)
transacfional behaviors take the forefront. We
observed this pattern of relafionships across both
samples used in this study.
From a practical standpoint, the results of the cur-
rent study have implications for leadership train-
ing and development programs. The results of
this study provide more information regarding
the impact that contextual factors have on shap-
ing leadership processes. Addifionally, through
the use of dominance analysis, the results inform
us which factors are most important for predict-
ing outcomes in a particular context. Given that
training time is expensive, this last piece of infor-
mation could really facilitate the development of
training protocols geared towards developing
leaders for specific contexts.
Variables
Transformational Factors
Idealized Influence
Individualized Consideration
Intellectual Stimulation
Transactional Leadership
Confirigent Reward
Management-by-Exception
Totals
Dominance Results: Idealized Influence
Importance
0.82
0.70
0.78
0.68
-0.33
%
0.46
0.00
0.27
0.16
-0.06
>D> Intellectual
Estimates
RS-Cj
0.32
0.18
0.27
0.18
0.04
1.00
Stimulation
Relative
1
3
2
4
5
%
1
5
2
3
4
Rankings
1
4
2
3
5
>D> Contingent Reward >D>
Individualized Consideration, Management-by-Exception
a Bycio et al. (1995). rjy = zero order correlation; j = standardized regression coefficient; RS-Cj = rescal
timate, which is calculated by dividing the dominance weight (Cj) by model R^. RS-Cj can be interprett
Note: Data are from '
(RS) importance estimate,
as the percentage of total explained variance contributed by each predictor.
Volume 29 Number 3 Fall 2011
61
Leadership Development Best Practices
Partly due to the recognition of the value that
effective leadership has on organizational per-
formance and partly due to a shrinking talent
pool as a result of baby-boom generation retire-
ments and falling birthrates, organizations are
directing greater resources into leadership devel-
opment (Avolio, Avey & Quisenberry, 2010;
Fulmer, 1997; Riggio, 2008). Indeed, in the 2009
BusinessWeek.com and Hay Group's Best
Companies for Leadership Survey, the 20 most
successful companies placed a premium on select-
ing, developing, and retaining effective leaders at
every organizational level. As a consequence,
leadership development is viewed as a growth
area for organizational consultants.
While there are clearly many different means to
developing leadership, effective leadership devel-
opment has more to do with the quality of the
overall design, integration, and consistent imple-
mentation than with the actual choice of the rele-
vant components (Day, 2001; Day & Halpin, 2001;
McCauley, Velsor, & Ruderman, 2010). One
recent approach that reflects the increasingly criti-
cal and strategic imperative for optimal organiza-
tional effectiveness is the emergence of "best prac-
tices" with regard to leader and leadership devel-
opment. Yet, a review of the literature shows that
there is little consensus in the field on what con-
stitutes best practices and how such aspirational
benchmarks are applied in business organizations
(Haskins & Shaffer, 2009). Nonetheless, a number
of key components of effective leadership devel-
opment are noted below:
Aligning leadership competencies with
business strategy
Fostering innovation, creativity, and
continuous improvement
Recruiting, identifying and developing
future talent and succession
Executing and promoting organizational
strategy and change
Building customer and employee loyalty
Engaging in a supportive organizational
culture
Evaluating the efficacy of leadership
development initiatives and programs
Although this study represents a useful extension
of previous research, there are research questions
that remain unaddressed. For example, the cur-
rent study, as well as the previous investigations
examining the impact of context on the leadership
process, has only considered one variable at a
time. Given that human behavior is determined
by multiple elements, a useful area for future
research would be to examine the impact of mul-
tiple contextual variables concurrently.
Additionally, most of the research examining the
transformational leadership process has focused
on the positive outcomes associated with transfor-
mational leader behaviors. While this work is
incredibly useful, it does not consider the causes
of this behavior. Thus, another area of future
research could explore the various intraindividual
causes (e.g., personality, motivation, values) of
transforming behaviors.
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