The Impact of Transactional Leadership

Style on Strategic Development of ABC

Company PLC
Esoft Metro Campus - Kandy
MASTER OF BUSINESS ADMINISTRATION
(Academic Year 2022-2023)

MN 7185
Leadership And Strategic Management

Lecturer:

Dr. Niluka Amarasinghe

BY

K.A. Chathurika Jayangani Kasthuriarachchi

LMU ID – 22014824
ESOFT ID - E160759

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 Table of Contents
1.0 Introduction...................................................................................................................................3
1.1 Introduction to Organization....................................................................................................3
1.2 Organizational Leadership.......................................................................................................4
2.0 Justification....................................................................................................................................5
3.0 Literature Review..........................................................................................................................6
4.0 Analysis..........................................................................................................................................9
5.0 Recommendations and Action Plan............................................................................................12
6.0 Self Reflection..............................................................................................................................13
References..........................................................................................................................................14

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1.0 Introduction
1.1 Introduction to Organization

The telecommunication industry is one of the most dynamic industries in Sri Lanka,
contributing significantly both directly and indirectly to economic growth, investment,
employment, and productivity. It also serves as a source of innovation and a driver of overall
productivity. Therefore, five mobile operators service 22 million people in Sri Lanka's
telecommunications industry. Foreign direct investment (FDI) is substantial in Sri Lanka's
telecommunications sector. Increased telecommunications use has led to an increase in total
fixed-line and mobile telephone density to 142 per 100 people, mainly owing to a rise in
mobile clients. Mobile phone service providers dominate this industry. Continuous
infrastructure development has enabled the provision of telecommunications services
throughout the country. Three fixed-line operators, five mobile phone operators, and eleven
Internet service providers face intense competition.

In just over five years, the information technology and business process outsourcing sector in
Sri Lanka tripled exports and more than doubled employment. Between 2015 and 2020, the
industry is predicted to grow by 120 percent, with current exports totaling more than $1
billion. As a result, it is one of the fastest-growing sectors in the economy and the fifth-
largest export segment overall. The state-owned Information and Communication
Technology Agency (ICTA) is in the forefront of driving information technology and
implementing projects to develop information technology in both urban and rural areas. The
e-Sri Lanka initiative has a strategy that includes developing information infrastructure and
an enabling environment, modernizing government and providing citizen services, leveraging
information and communications technology for economic and social development, and
promoting Sri Lanka as a destination for information and communications technology
professionals.

In Sri Lanka, Dialog Axiata (ABC) PLC, a subsidiary of Axiata Group Berhad (Axiata), is
the operator of the country's significant and most rapidly expanding mobile
telecommunications network. In addition, in terms of market capitalization, the Company is
one of the largest publicly traded corporations on the Colombo Stock Exchange.
Additionally, Dialog (ABC) is Sri Lanka's largest Foreign Direct Investor (FDI), having
made investments totaling more than USD 2.8 billion (Annual Report, 2020).

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Dialog (ABC) has the distinction of being named Telecom Service Provider of the Year and
Internet Service Provider of the Year by Sri Lankan consumers at the SLIM-Nielsen People's
Choice Awards for four consecutive years in the country, having received two Global System
for Mobile Communications (GSMA) Mobile World Awards in 2015. Dialog (ABC) is
ranked first in Sri Lanka's Corporate Accountability rankings for the past five years, and the
corporation is ISO 9001 certified. The company has received numerous local and
international awards, including the National Quality Award and the Sri Lanka Business
Excellence Award (Annual Report, 2020).

1.2 Organizational Leadership

Organizational Leadership is surrounding both an art and a science, and it takes both to
succeed. To achieve successful and efficient Leadership, leaders must first define a vision,
establish a mission, communicate the vision and mission to all key stakeholders, but the
vision and mission into action, and ensure that feedback is collected and integrated for the
next generation. Leadership is also situational, which implies that leaders are often chosen
based on the conditions in which they are placed.

Therefore, due to the ongoing pandemic, most organizations face many difficulties providing
better service to customers, such as straight health guidelines and restrictions with minimum
staff members in the organization. This study focuses on how Dialog Axiata leadership
overcame their remote working problems in an organizational setting.

The management method in which leaders assist in setting strategic goals for the business
while motivating employees within the organization to accomplish tasks in support of those
goals is known as organizational leadership (Tokar, 2020). In Dialog Axiata (ABC) PLC,
Human Resources was highly confident in adequately conveying the change to the
employees, ensuring that no injustice would be done to any employees, and ensuring that they
met all of the employees' rights following the law.

The function of supervision, organization, and group performance is the primary focus of
transactional leadership, which is often referred to as managerial leadership. Leaders who use
this model focus on a few critical tasks at a time and use both positive and negative
reinforcement to get their followers to do what they want them to do (Xenikou, 2017). Max
Weber, a sociologist, was the first person to describe this leadership theory, and Bernard M.
Bass, in the early 1980s, was the first person to investigate and expand upon it.

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2.0 Justification

Sustainable development can be seen as a form of progress protection for future generations.
There can be no sustainable development without leadership, particularly in the social,
human, and cultural spheres; hence this link is critical. Therefore, as a leading company in the
telecommunication industry, Dialog Axiata (ABC) always pays attention to achieving
sustainability through their company staff.

Dialog's (ABC) approach to sustainability is based on a three-pillar strategy for long-term

growth. Dialog (ABC) looks beyond short-term profit to contribute to the overall well-being
of the people of Sri Lanka. It aims for Process Excellence while investing in people and
working for the benefit of the planet and society.

Many issues face traditional leaders, including those related to the millennial workforce,
emotional intelligence; security; e-leadership; virtual work settings; globalization, and
women's leadership (Avolio et al., 2009). People who follow traditional leadership theories
have to deal with their views being outdated because they were formed before the current
developments in society, technology, and globalization (Bennis, 2013; Latham, 2014).

Traditional leadership approaches encourage people to accomplish their duties by providing

guidance, direction, and incentive. The Dialog (ABC) Axiata leader uses this method to
motivate people to execute their jobs. In the traditional leadership model, the primary focus is
on improving the companies or organizations competitive position in the marketplace.

A contemporary leader is a leader who uses their power to motivate and inspire others to
achieve corporate goals and make a positive impact on society (Harvard Business Review).
Over time, it has been established that good leadership has a favorable impact on both
individual and organizational growth and performance. It's possible to categorize leaders'
behavior into several distinct styles. There is, however, no one-size-fits-all approach to
leadership. Collaboration is a new approach to leadership in today's world. The Dialog
Leaders are aware of the most excellent teamwork. Strategies are developed through group
consensus, and problem-solving is an iterative process. Must share Information and expertise
to ensure everyone is on the same path: peer-to-peer training and mentoring increase one's
creative and cooperative problem-solving capacity.

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3.0 Literature Review

Dissatisfaction with one's job can directly correlate to one's workplace culture. An important
factor in employee happiness is the level of dedication shown by the firm. Wages have a
significant impact on how happy people are at work. Having transactional leadership has a
direct impact on an employee's performance. Employee performance is unaffected by the
culture of an organization. Workers committed to the company they work for are more likely
to perform well. Salary is an essential factor in influencing an employee's performance. Their
level of job satisfaction significantly impacts employee productivity. Employee performance
is positively influenced by transactional leadership through work satisfaction. Indirectly,
corporate culture has a negative and minor impact on employee performance through
employee job satisfaction. Indirectly, employee performance is positively influenced by
organizational commitment through work satisfaction. When employees are satisfied with
their jobs, they are more likely to perform well (Nurlina, 2022).

Abdelwahed et al. (2022) found that transactional leadership style and the entrepreneur's
passion positively impacted staff performance. Entrepreneurial passion has been identified as
a mediator between transactional leadership and staff performance. Based on the study's
conclusions, there will be substantial consequences for executives, entrepreneurs, and
managers. Employees' leadership style perception has a significant impact on the degree of
performance they produce at work. Thus, the study will provide a s

mooth way to improve employee performance with leadership behavior.

According to Udin et al. (2021), transactional leadership has a considerable and favorable
impact on knowledge sharing. However, transactional leadership has a less direct impact on
innovative work practices. Additionally, knowledge sharing has a considerable impact on
innovative work behavior. This study indicates that knowledge exchange is a critical
mediator between transactional leadership and innovative work behavior in the distribution
market. When it comes to the role of transactional leadership in encouraging innovative work
behavior, this study breaks out of the confines of previous research by looking at it through
social exchange theory. This study also showed that a transactional leader fosters employee
connection and a desire to share their knowledge to create creativity and innovation.

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L. Zhang et al. (2017) say that transactional leadership is a leading style that gets people
interested in their work and makes them want to do it. A leader's behavior focuses on the
task's outcome and the relationship between themselves and their employees in exchange for
the rewards they desire. Transactional leadership enables the leader to modify his or her style
and behavior better to comprehend the expectations of his or her subordinates. Based on
expert consensus, it is possible to conclude that transactional leadership is a leadership style
in which appropriate suitable incentives (contingent rewards) and management are used to
encourage subordinates through the inclusion or emphasis of rewards to motivate employees
(management by exception). Transactional leadership's shaping factors are the actions that
leaders take in their implementation.

According to Fernando et al. (2020), a transactional leader defines what employees must
accomplish to attain company goals and helps them build confidence in performing the tasks.
When a leader provides his subordinates with resources and prizes in exchange for increased
task performance, he practices transactional leadership.

Transactional leadership is defined by the author's San Lam & O'Higgins (2012) as having
three dimensions: a first dimension is contingent rewards, which are used as an incentive to
help leaders better define the job that must be done. As a follow-up to the first approach,
management by exception (management by exception) entails both a passive effort to
influence the leader's behavior and an active effort to influence behavior by actively
monitoring the work performed by employees and enacting corrective measures in response
to substandard performance or deviations from standards. Laissez-faire leadership, on the
other hand, is when a manager avoids attempting to sway his or her employees, neglects his
or her responsibilities as a leadership coach, and instead gets caught up in the tedium of daily
tasks to avoid conflict. When things appear safe, leaders tend to let things flow without
setting explicit goals or assisting group decision-making.

When dealing with employees' performance, transactional leadership is straightforward.

When such activities are covered, and consequences are issued for poor performance, they
will receive a reward. On the other hand, transformational leadership refers to the kind of
leadership that entails setting goals for the company's personnel and then guiding them
toward achieving those goals. Despite this, the foundation of transactional leadership is the
relationship between the leader and the followers. The people who follow the leaders do it on
purpose, and the leaders are the ones who reward them for their efforts. Transactional

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leadership focuses on the exchanges between the leader and follower in which the leader
regulates the rewards and consents to the exchanges between the leader and follower
(Meisam et al., 2013).

The leader and follower exchange ideas about the task. Followers will be rewarded for their
preferred behaviors, while those who engage in contrary or undesirable behaviors will face
the consequences. Promotions, pay raises, and other incentives are among the many benefits
that could be received. In contrast, punishments include demotions, wage reductions, and
terminations of services. The followers of a transactional leadership style are directed toward
achieving predetermined goals through unpredictable rewards, reward strategies, and
supervisory oversight. Managers that adopt TLS use reward techniques to increase business
performance by rewarding people who perform well and punishment strategies to punish
those who do not (Dai et al., 2013).

As a vital precursor to entrepreneurial orientation (EO), entrepreneurial passion influences

strategic entrepreneurship behavior (SEB) in a significant way. In addition, the EO-SEB
relationship is positively and strongly moderated by the linear thinking style of entrepreneurs
but not by the connection between EO and enthusiasm (Zollo et al., 2021). A more recent
study by Bilginolu and Yozgat (2021) suggests that individuals lack a sense of job passion in
today's fiercely competitive workplace. Subordinates' work passion is being influenced
positively by the igniting leaders, leading to an increase in JS. According to Saif (2020),
entrepreneurial creativity has been associated with a higher level of entrepreneurial passion
for starting new businesses.

"Transactional leadership" describes a style of leadership where a leader and a follower work
together to further their own goals by exchanging information (Bass, 1999). A transactional
leader's goal is to establish a connection with their subordinates in which the contributions of
both parties are valued and appreciated (Lewis, 1987). Active management-by-exception or
passive management-by-exception may be used. Rewarding followers based on their
performance is called a contingent reward, specified by the leader. When a follower fails to
meet criteria under active management-by-exception, the leader watches their performance
and takes action to remedy the situation. Passive management-by-exception is characterized
by leaders' waiting for problems before taking corrective action (Bass, 1999). Transactional
leaders are judged by how well they keep meeting the needs of the people who follow them.

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4.0 Analysis

Abdelwahed et al. (2022)

According to the findings of the study, entrepreneur passion and transactional leadership have
a favorable and significant effect on employee performance. Entrepreneurial passion
mediates the association between transactional leadership and employee performance among
Pakistan's employees and entrepreneurs in the small and medium-sized enterprises (SMEs).
Managers, executives, and entrepreneurs can take some severe business away from the
study's conclusions in terms of practical applications. It is, therefore, possible to use it as a
reference for HR operations and practices. Employees need to have a positive impression of
the leadership style to achieve higher productivity levels in the workplace context.

Nurlina, (2022)

According to this study, Apply the principles of transactional leadership into practice to boost
morale among workers. Employee job satisfaction is a direct result of improving and
increasing the actualization of the company culture and improving employee work
satisfaction by implementing an organizational commitment to it. Perceptions of job
satisfaction should be taken into account when determining remuneration levels. Realize
transactional leadership that is focused on enhancing employee performance. Instilling solid
philosophical principles in the workplace to boost employee productivity is a good start.
Keeping the company committed to helping employees improve their performance is good.
They were using transactional leadership to promote employee performance through
achieving work happiness. Employee productivity can be boosted by enhancing its culture
and ensuring that employees are happy in their jobs. Organizational commitment is
maintained by the fulfilment of job satisfaction geared at boosting employee performance.
Improving employee performance by increasing the availability of adequate compensation
and ensuring that employees are content with their work is a top priority.

Udin et al. (2021)

Transformative leadership was found not to affect innovative work practices. Knowledge-
sharing and job passion were positively enhanced by transformative leadership. Innovative
work behavior was also positively and significantly influenced by knowledge sharing and

9
work passion. Transformational leadership and innovative work behavior were linked
through knowledge sharing and a passion for work.

Saif (2020)

Researchers show the link between job satisfaction and entrepreneurial passion in this study.
The current study also indicates the function of career anchors in predicting entrepreneurial
behavior via entrepreneurial passion. They feel it is crucial to understand how passion is born
and developed and how it mediates career anchors and entrepreneurial behavior. This study
gives us a broad understanding of entrepreneurial passion and its mediation effect on career
anchors and entrepreneurial behavior and career anchors' function in motivating
entrepreneurial activity.

Fernando et al. (2020)

Increased female involvement in top management teams has a significant and direct impact
on overall managerial competencies and positively impacts both stability and crises. In
particular, researchers show that the link between gender diversity and performance is
entirely (or partly) mediated by management skills. It suggests that feminine qualities and
transformational leadership styles are more effective in modern leadership environments than
before.

L. Zhang et al. (2017)

Transformational and active-transactional leadership mediate emotional intelligence's

correlations with performance contribution, efficiency, and interest satisfaction and
somewhat mediate its relationship with relationship satisfaction. Passive transactional
leadership partially mediated emotional intelligence's associations with relationship and
interest satisfaction, not performance contribution and efficiency satisfaction. Because
laissez-faire leadership does not significantly affect collaboration satisfaction, it does not
mediate the association between emotional intelligence and the four collaboration satisfaction
categories. By showing cooperation satisfaction criteria and emotional intelligence's in the
integrated project delivery project, this work contributes to research on the new full-range
leadership model's mediating mechanism.

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Meisam et al., (2013)

According to this research, employees who have participated in a wellness program report
higher job satisfaction, reduced stress, and decreased time away from work. Employee well-
being and company well-being benefit from wellness programs, as well. In the contemporary
research literature, more attention is paid to industrialized countries. Moreover, these studies
focus on several different viewpoints rather than a single one. In some ways, the current
study has been pared down to focus on a few primary objectives.

Dai et al., 2013

Transformational/transactional leadership affects procedural and distributive justice

positively. Managers adopting transformational leadership can gain employees' trust.
Transformational leaders affect organizational commitment through distributive justice and
trust, while transactional leaders do so through distributive justice. Trust is enhanced through
distributive fairness. Organizational commitment and distributive fairness are linked.
Interestingly, transactional leadership affects organizational commitment negatively. Trust
leads to organizational commitment, and both positively affect organizational citizenship
behavior.

San Lam & O'Higgins (2012)

The findings reveal that managers' transformational leadership styles mediate the association
between managers' emotional intelligence and job satisfaction. However, managers'
transformational leadership styles had little effect on the association between managers'
emotional intelligence and employee performance, organizational commitment, and
workplace stress. Using a third variable, transformational leadership, this study adds to the
current understanding of the interrelationships between managers' emotional intelligence and
job happiness and their leadership style and employee outcomes.

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5.0 Recommendations and Action Plan
Recommendations Action Plan

Literature Who When How Where

Introduce short Saif (2020) Divisional First day Morning Meeting
term organizational Heads Head of of the meeting Room
goals for HR Marketing month
organizational Managers
members (Daily
targets, Monthly
sales)
Receive employee San Lam & Team Leaders End of the Using their Workplace
feedbacks of new O'Higgins week daily record
process and keepings
evaluate the target (2012)
achievement
Introduce new HR Meisam et al., Head of HR End of the With Monthly
concepts to the (2013) month gathering general
leaders at Dialog meeting
(ABC) (Team
targets, Monthly
budget allocation
and reward
concepts)
Receive regular L. Zhang et al. Head Of HR Monthly Questionaries' Workplace
feedback from (2017) .
employees on
leader
approachability and
willingness to listen
to followers
Educate leaders on Dai et al., 2013 Head Of HR 4 months Workshops Meeting
applying Room
transactional
leadership

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 principles In
dealing with change
dynamics
Conduct Interviews Udin et al. Head of 6 months With Meeting
and record (2021) HR/Learning gathering Room
employee and
feedbacks and Development
communicate to
leaders

6.0 Self Reflection

Through this study;

I have learned the importance of transactional leadership and its influence on organizational
sustainability. It is essential to follow transactional leadership skills to achieve organizational
success in today's world. A role for transactional leadership may be found today in the global
economy and business community. The best place to apply it is in international organizations
with a diverse workforce. Once the structure and requirements are understood, successful
completion of duties becomes second nature to employees. The simplicity and lack of
training necessary to master transactional leadership make it an effective strategy. Because of
its simplicity and broad applicability, it is a good fit for most businesses.

Furthermore, If not handled with attention, this leadership style can be deceptive. In a matter
of seconds, it conveys the sense of authoritative leadership. As a result, it is critical to
establish a healthy balance between directness and indirectness. Motivational mechanisms,
such as rewards and punishments, are necessary to keep things in balance. Transactional
leaders only step in when an employee fails to satisfy the standards set by the organization.
When a person fails to meet expectations, they are penalized for poor performance.
Therefore, Leaders that take a transactional approach focus on the essentials of the problem.
They have no faith in theories or concepts. As a general rule, these leaders are practical and
realistic.

According to this literature review, it is vital to transactional leadership concepts to enhance

employee performance within the organization. Therefore, ABC PLC can focus more on a
transactional leadership style to make its targets and goals achievable and enhance its
profitability within the telecommunication industry.

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