Transactional Leadership in relation to Culturally-Linked Concepts

Introduction

In this elaboration, my objective is to provide short analysis and brief discuss about leadership
concepts of Transactional Leadership. These models are particularly relevant to my interest, as had
impact on my personal experience and career. Also, as supportive idea, I would like to evaluate them
in reference to cultural aspect, underlining that leadership styles, as well as “leader behaviours and
actions are interpreted and evaluated differently depending on their cultural environment” (Jogulu,
2010).
It was not easy to select these exact concepts from wide variety of models, research and theorems.
I found them useful to explain my understanding and practise with leadership, and believe, that this
approach gives interesting perspective on management. It can be even said, for me personally, that
this document is kind of self-explanation study, trying to address questions that were unanswered till
this MBA course: what exactly happened in my professional life? Why did it happen? Why I am,
where I am?

Brief Description of Leadership Theories

Transactional Leadership

Transactional leadership concentrates on performance, endorse success with rewards and penalties,
and preserve compliance with company norms and standards. This approach is considered as dealing
with daily operations and keep system running. Bass define transactional leadership as task that
“Followers are motivated by the leaders’ promises, praise, and rewards, or they are corrected by
negative feedback, reproof, threats, or disciplinary actions. The leaders react to whether the
followers carry out what the leaders and followers have ‘transacted’ to do” (Bass, 1999:184).
Burns, as well as reiterated by Jogulu “defined transactional leaders as people who emphasise work
standards, and have task-oriented aims” (Jogulu, 2010:706).

Bass defines the transactional leadership, as consisting of following components (Bass, 1999):
contingent reward
In this behaviour managers assign tasks or they consult with subordinates about what needs to be
completed in exchange for reward (payment, bonus, etc), they also discuss the required provision of
resources.

active management by-exception

This model is characterized by leaders those monitor employees performance and correct their
mistakes.

passive management-by-exception
In this case, they wait passively for subordinates’ faults to be risen to their attention, prior taking
corrective action, with intention of negative reaction and/or reprimand.

Laissez-faire
This behaviour is considered when manager evade leading at all.

During this course I have noticed, that transactional leadership is quite often contrasted with
transformational type, and usually researchers, and following students tend to underestimate
transactional model in favour of transformational one.
I would like to underline values of transactional model, even this may be considered as obsolete for
modern led organizations. Also, there are disputable bases for such extensive support that drives
transformational leadership in the literature. I find it, majorly, as the theorem that not always can be
applied, and it is strictly related with the cultural background of organizations.
Many colleagues from my study given quite enthusiastic approach on transformational idea of
leadership. However my personal contest and reservations come from direct experience on various
international projects, that gives some bitter facts to elsewhere positive transformational leadership
idea, giving favourable arguments to apply transactional model instead.

Hofstede’s proposed model, that has been used by Jogulu (2010) has examined relationship of styles
of leadership with cultural links. In this case, transactional type is highly observed in Eastern Europe
countries, not excluding my Homeland – Poland, where high power distance may be observed
(Hofstede, 1980). That was the reason that laid basis for selection of transactional model in this
elaboration.

Culturally-linked Concepts
Researchers noticed, that cultural context frequently appears with different leadership styles (Jogulu,
2010). The studies found important variances between leadership styles and cultural groups types
(Jogulu, 2010). This implies the argument, that “culture and leadership interact in different ways in
diverse contexts” (Jogulu, 2010:705). As we can refine above, variations in leadership styles are
effect of cultural impacts, while people have various beliefs and assumptions about attributes that
are considered effective for leadership. Also it is noticeable, that the same leadership types are
perceived, enacted in different ways across the cultures, mainly because their meaning and
understanding of the leadership types vary.

As it was stated by Hofstede, among various cultures, we can distinguish significant divergences,
especially in terms of attitude, individual behaviour, or values, and these differences have effects on
leadership styles in organisations (Hofstede and Hofstede, 2005; Alves et al., 2006).
This approach brings attention how important for companies and managers is to analyse different
cultures, their perceiving of doing business, understanding of communication, workforce diversity
and hierarchy.
Hofstede defines cultural variables such as: low power distance, when roles and responsibilities can
be changed basing on individual work and achievement, and that someone who today is my
subordinate, tomorrow could be my superior (Hofstede and Hofstede, 2005). Managers and
subordinates are considered in egalitarian way, as underlining equal preference, emphasising
individual approach, and freedom of relationship between manager and subordinate.
Another variable is high power distance in the culture. This determines situations, where public
status, social position, are considered with high esteem, since they imply the way others approach
and perform towards you. Managers and employees are considered in unequal positions each other,
thus it is expected common respect for the age, paternalistic approach to the followers, compromise
and agreement with the rules, broad acceptance for working together.

“With globalisation and the expansion of organisations across borders, numerous challenges and
opportunities exist for leadership. With differing cultural beliefs and values, there is a greater
necessity for understanding and acknowledging culturally-linked leadership styles. Being receptive
towards cultural sensitivities which may be radically different from one’s own values and beliefs, is
crucial for leadership effectiveness” (Jogulu, 2010:708).
All of these measures are set forth, to prepare company to cooperation in multinational
environment, when business is affected by international circumstances.
It is crucial to understand, that for the management point of view, differences in preferred leadership
models occur difficult challenges for companies, particularly when they enact and provide services
globally. These organizations need to struggle with diversity of cultural values, behaviours and
performance that seem much different from the country where headquarter is located.
My personal experience confirms above phenomenon, especially considering my engagement in
international EPC contracting company, delivering key-turn projects of thermal power plants across
the world. I was leading electrical engineering department, having strong involvement with co-
partners and subcontractors from other countries, and other cultures (former Soviet Union
Countries, Middle East, USA). All of my industrial projects were spread between international teams.
In two cases, the leadership style of US-led consortium was so different from Middle East partner
approach, that exposed the project into serious threat of complete financial failure.
Corporation top management was forced to undertake drastic measures, and handed over the entire
project from USA to Poland, where lesser costs of educated workforce allowed to save some
stretched already budget, but first of all cultural aspects of doing business in Eastern Europe are
more close to the Middle East ones.
My intention was to examine and discuss cultural influence on leadership models, basing on above
examples.

My personal perspectives on transactional leadership and cultural circumstances

Firstly I would like to express my perspectives to the cultural aspects on my experience.

„The nature of the interdependent relationship between leadership styles and cultural underpinnings
cannot be ignored or underestimated” (Jogulu, 2010:706).
Referring to my own experience I need to admit that there is huge correlation between type of
organization, business that is made with the cultural basis and type of leadership.

Five socio-cultural dimensions have been identified (Hofstede, 1994, 1997) and refined in other
research (such as Ardichvili and Kuchinke 2002) that comparison between cultures is not always
obvious and straightforward. These measurements can be explained as:

“Power distance (PDI), and is defined as the degree of inequality among the people which a
group of people considers as normal.

Individualism (IND), is the degree to which people prefer to act as individuals rather than as
members of groups.

Masculinity (MAS), is the degree to which such ‘masculine’ values as assertiveness,

competition, and success are emphasized as opposed to such values as quality of life, warm
personal relationships, and service.

Uncertainty avoidance (UAI) is the degree to which people in a country prefer structured
over unstructured situations.

Long-term orientation (LTO), was intended to account for specific traits of many Asian
cultures, which were not covered by the first four dimensions (Hofstede 1993).
Long-term orientation is defined as the degree to which people’s actions are driven by long-
term goals and results, rather than the short-term results and the need for immediate
gratification.”

(Ardichvili, 2002:100)
Ardichvili study, however precisely defines various measurement categories, is more related to the
former Soviet Union Countries, that not necessarily adapt all the nuances and realities in Poland.
I exercised typical polish manager path, that developed from strictly post communism principles,
among them we can differentiate expectations for respect to the leader (especially aged one), and
difficulties with individualism expression in the company, linked with trouble to enforce own ideas
and improvements, for sake of day-to-day working, less risk, ”just survival till retirement“ attitude of
managers.
Such old-schooled enactment had huge impact on my leadership development. Back in time, in 2008
I was matured engineer with international experience already, that was engaged in German and
Finnish leadership styles. As it is expected, mutual relationships were attributed with smaller power
distance and relatively high individual indexes. As successful construction site manager, and fresh
entrepreneur I offered my consulting services to the biggest EPC contracting companies in power and
oil & gas sector worldwide. I was chosen to lead electrical department in Warsaw Poland branch
design office.
There were significant circumstances that I mentioned before, company headquarter located in the
USA, already struggled with critical power plant project for Iraq government. It seemed that US type
of cultural leadership and management completely mismatched to the middle east, that was
moreover spoiled by after Iraq war circumstances. It affected all communication between our
consortium partners on site (Jordanian company), difficulties in dealing with Ministry of Electricity of
Iraq, finally schedule and budget issues came into concern.
The only possible option was to transfer entire program to other entity, like polish, Eastern Europe
style, that could be buffer between extremums –US western approach and mid-east.
I was more than happy to cooperate with US located project directors and high management coming
from there.
It is observed by Eisenberg, employees in Poland, generally, have quite high gratitude of the expat
managers they worked with. It is interesting that my history exactly fits this research, that such
attitude depends on whether the Polish employee used to work internationally or not (Eisenberg et
al., 2015)
However, It was completely surprising struggle that I faced with my own polish manager (all
engineering disciplines). This peculiar clash between generation, young manager and old director,
might find his roots in different experience and contradict exposure in western style leadership
(Eisenberg et al., 2015). My supervisor was few years before retirement, he wanted just to spend
this time, avoiding engagement of too many resources for demanding and failure threatened
projects. Especially considering fact that company needed to expand a lot with resources, software,
hardware, employees, in order to provide professional design. For my boss new international project
was overwhelming task (Yukl, 2001). As Hersey and Blanchard explain, my director indirectly
influenced intervening variables, by taking actions to reduce constraints, expand choices and try to
control situation, but the problem was in the substance of task, his goal was different than company.
It is difficult to believe, but I was ordered to state not truth about resources in my disposal,
and alter real progress to hide deficiencies in the official reports, which I obviously refused to do,
arguing that difficult projects need more resources, irrespective of what headquarter will say.
This was really deviation from ethical leadership (Brown and Mitchell 2010), that caused negative
Pygmalion effect (Livingstone 2003), and mine frustration.

Over the time my conflict with director came to the point that I realized that there is no chance of
promotion, even though both Iraq projects have been successfully completed. I left the company and
got offer in Middle East in the biggest oil producing organization worldwide.

Summarizing my experience from polish organization point of view, I was eager to transform weak
managed office into flexible institute, that can compete on difficult market. These negative facts and
difficult projects I treated as occasion and opportunity to develop (Bennis and Thomas 2002), and
kind of crucible on the path to emerge good leader in the crisis situations (Bennis and Thomas, 2002).
Treating as reference above cultural analysis, also, I would like to discuss the transactional
leadership model and contest common researcher excitement about transformational concept.
It is worth to be said that, according to Bass, “The best of leadership is both transformational and
transactional. Transformational leadership augments the effectiveness of transactional leadership; it
does not replace transactional leadership” (Bass, 1999:191).
Basing on my experience of site supervisor, further, as electrical discipline manager, on worldwide
projects, such as ship building for Brazilian oil company, or construction of goldmine in the polar
circle of Chukotka/ Russia, through Middle East power plants, always, the best way of dealing with all
process participants was transactional leadership.
In harsh competition environment, specific of the job character, weaknesses of subcontracting
workforce, compacted schedule, there is no time for waiting for effects of transformational
theorems. In contracting industry it never worked. Projects are structured in such a way, that action
must impose effects immediately. Also relationship with the other team members, engineering
disciplines, subcontractors, customers, authorities are strongly based on transactional type of
interference.
Concluding, I would agree with hypothesis, that is stated by Yukl article, as it is not obvious, whether
transformational leadership is reflected in the literature mainly as dealing with the daily managing of
companies, or whether they are exceptional form of leadership applicable only in extraordinary
circumstances like deep economic crises (Yukl, 1989).

Conclusions

It is worth to underline, that since Poland entered European Community in 2004, gradually,
leadership styles rooted in old communism culture approach, are passing away. Also it is a matter of
time that old schooled leaders, those rated mostly on manager’s authority, contented with the
autocratic managerial style (Maczynski et al., 2010) and (Eisenberg et al., 2015) will relay lead to
younger generation, that brought up in completely different international culture of leadership.
Here we can conclude with an significant observed finding, that international exposure significantly
revises Eastern Block countries’ leadership attitudes. It directs toward foreign, implicitly, western
leadership model and relations.

Also, I would formulate hypothesis, that in certain conditions transformational leadership is

uneconomical. Some examples came from construction sites where there is no time to spend for
education and transforming efforts on subcontractors, because the will disappear as soon as their
scope of works is accomplished.
Also, during my discuss with cousin, who is one of the top manager in biggest European Bank IT
department, he expressed doubts, if spending significant effort on transformation of employees is
optimal from company point of view, considering that as soon as they learn new things and acquire
some knowledge, they leave company, seeking for other job. This can be topic for further researches,
considering situational leadership theory (Hersey, Blanchard 1988).

I again disagree with the Jogulu (2010), that transformational managers are taking care and they
are able to develop the employees towards realizing their “fullest potential” (p.706).
They might, but not always, and not in all situations, as confirmed by Bass, as “transformational
and transactional leadership viewed as distinct but not mutually exclusive processes, and he
recognizes that the same leader may use both types of process at different times in different
situations” (Bass, 1999:191).

Prepared by Wojciech Mirski

REFERENCES:

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Ardichvili, A. and Kuchinke, K. (2002) “Leadership styles and cultural values among managers and
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