Doing well and doing good:

The relationship between leadership practices that facilitate a positive emotional climate and
organizational performance

https://sci-hub.ru/10.1108/02683940810850817

 Purpose – The purpose of this study is to investigate whether and how leadership practices that
facilitate a positive emotional climate (the “PEC practices”) are related to organizational outcomes in
terms of performance (increase in revenue), strategic growth, and outcome growth.
 Design/methodology/approach – A panel study was conducted to test the hypotheses. Data were
collected from 229 entrepreneurs and small business owners operating in Greater Vancouver,
British Columbia, Canada. In the first wave of the study, the authors collected data regarding the
PEC practices. The data on outcome variables, i.e. revenue, strategic growth, and outcome growth,
were collected in the second wave, 18 months later.
 Findings – The regression analyses showed that the PEC practices were positively related to
company performance, revenue growth, and outcome growth, providing support for the hypotheses
in the study.
 Originality/value – This study provides valuable insights about the role of emotional factors in
organizational-level outcomes, a relatively unexplored area in emotions research. Analyzing a set of
panel data, the study has shown that leadership practices that facilitate a positive emotional climate
in an organization make a difference in organizational-level outcomes.
 Emotions affect many aspects of employees’ relations in organizations, from perceptions of
authority to feelings about the desirability of making a career within an organization.
 For instance, as Kahn (1998) noted, employees form emotional attachments in the context of their
work relationships and, beneath the layer of formal organizational structures, these relationships
and emotions shape how they engage with their work environment. Within organizations, emotions
serve as the social glue that can potentially “make or break organizational structures” (Fineman,
1993, p. 15).
 Several studies, for instance, have found that that the positive affectivity of employees contributes
significantly to their task perceptions (Isen and Baron, 1991), creativity (Amabile et al., 2005),
performance as managers (Staw and Barsade, 1993) and pro-social behavior (George and Brief,
1992). It has also been found that employees’ performance in service transactions is negatively
affected by discrepancies between their felt and expressed emotions (Grandey, 2003; Ashforth and
Tomiuk, 2000; Hochschild, 1983).
 Given that the leadership style and behaviors of top-level managers can have a substantial effect on
employees and organizational outcomes (Waldman et al., 2001), leadership practices aimed at
mobilizing employees’ emotional resources could be an important factor in determining
organizational-level performance. In addition to more cognitive tasks such as planning, coordinating,
organizing, and decision-making, the management of employees’ emotions is now being considered
as an important component of effective leadership (Pescosolido, 2005; Salovey and Mayer, 1990).
 Huy (1999) offered compelling arguments for why and how company leaders should implement
management practices that increase their capability for attending to their employees’ emotions at
the organizational level. He proposed that organizations could improve their performance if
 managers paid sufficient attention to the emotional needs of their employees and made deliberate
attempts to address these needs in their routines and practices.
 McColl-Kennedy and Anderson (2002), for instance, found that transformational leadership
behaviors, such as inspirational motivation and individual consideration, helped employees cope
with frustrating work events and feel more optimistic at work, which, in turn, led to increased
individual-level sales performance.
 In another study, Pirola-Merlo et al. (2002) found that team leaders who facilitated positive working
relationships among team members created more positive team climates, which, in turn, led to
increased team-level performance.
 Thus, current research provides empirical support for the view that leaders’ emotional management
practices can influence both individual-level and group-level performance. However, the
relationship between managers’ emotional management practices and organizational-level
performance, such as revenue and growth, has yet to be empirically examined.
 To shed light on this important yet relatively unexplored area, this study examines the relationship
between the leadership practices that facilitate a positive emotional climate within organizations
(the “PEC practices”) and organizational outcomes. By positive emotional climate, we mean an
organizational environment where managers take into consideration the emotional needs and
personal growth of employees and encourage the sharing of positive emotions.
 Theory and hypotheses Conceptual framework Our definition of leadership practices that facilitate a
positive emotional climate draw on Kahn’s (1998) relational systems framework, which
conceptualizes organizations as ongoing systems of work relations among employees who have
varying emotional attachments to each other. Kahn (1998, p. 41) proposed that relational systems
can be functional or dysfunctional, depending on the degree to which organizational members are
emotionally bound to others “through experiences of feeling themselves joined, seen and felt,
known, and not alone in the context of their work lives”. He suggested that these relational systems
routinely shape the interactions among organizational members and have a substantial impact on
the way that organizations operate and perform. We argue that, depending on their management
goals and practices, organizational leaders may influence the relational systems in their organization
by establishing and enacting norms for how organizational members should interact with each
other. Thus, drawing on the relational systems framework (Kahn, 1998), we have conceptualized the
PEC practices as reflecting an organizational leader’s deliberate attempts to establish and maintain a
functional relational system in his or her organization. Kahn (1993) has also identified certain
patterns of organizational care giving acts that might induce positive relational systems in
organizations, such as being considerate of employees’ emotional needs and asking for and
appreciating employees’ ideas, efforts, and help. Our conceptualization of the PEC practices
incorporates such care giving acts, including: being sensitive to employees’ emotional needs,
encouraging employees by giving positive feedback, offering opportunities for employees’
advancement, and taking initiatives to create a teamwork environment and a positive emotional
climate between workers.
 Tsui et al. (1997) found that an employer’s approach to the employee-organization relationship
(such as pure economic exchange vs. social exchange relationship) significantly affected how
employees connected with and performed in their organization.
 Important - emotions research has shown that the emotions that leaders express toward
employees, whether positive or negative, influence the emotional states of employees (Sy et al.,
 2005; Lewis, 2000; Georg
e, 1995). Thus, prior research provides evidence that leaders have a strong capacity to influence the
emotional climate of their organizations and the emotions of their employees.
 Before discussing the organizational-level outcomes of organizational leaders’ practices, we will
clarify the nomological network in which the concept of positive emotional climate practices is
embedded. We focus specifically on how “emotional climate” differs from “emotional culture”, and
how leadership practices to create a positive emotional climate differ from transformational and
charismatic leadership.
 De Rivera (1992) specifically distinguished the concepts of emotional climate and emotional culture.
He proposed that, whereas culture is dynamically stable and usually held in place by a network of
socialization practices over generations, emotional climate is more subject to change and dependent
on existing leadership styles and administrative policies. A new leader with a different management
style could change the emotional climate of an organization in a relatively short period of time, even
though the culture of the organization might remain the same. Drawing on these distinctions, we
believe that focusing on leadership practices is more consistent with a climate perspective than a
cultural perspective.
 A major attribute of transformational and charismatic leaders is that they use their power to
influence or change the attitudes and values of their employees in the direction of organizational
goals (Yukl, 1989).
 Engaging in image building or impression management processes, these leaders use emotions to
induce employees towards a strong identification with the leader, heightened motivation, superior
performance, and self-sacrificial behavior (Gardner and Avolio, 1998; Conger and Kanungo, 1987;
Bass, 1985; House, 1977).
 Indeed, with their strong need for power and extraordinary abilities to influence other people, some
charismatic leaders can be even emotionally manipulative and exploitative of others (Klein and
House, 1998; Waldman and Yammarino, 1999).
 Why leadership practices that facilitate a positive emotional climate should matter Because there is
no empirical literature that links emotions to possible outcomes at the organizational level, we drew
from related literatures to examine how the PEC practices might be related to organizational
outcomes.
 Effects on company performance. The major theoretical assumption of our study is that the PEC
practices in an organization will contribute to organizational outcomes by improving the employees’
commitment, engagement, and motivation at work.
 company performance from a strategic human resource management perspective have found
considerable support for the view that leadership practices aimed at increasing individual-level
outcomes, such as commitment, engagement, and motivation, also lead to increases in an
organization’s overall performance (Combs et al. 2006; Becker and Huselid, 1998; Becker and
Gerhart, 1996).
 Organizational commitment reflects the “psychological bond” that ties employees to organizations
(Meyer and Allen, 1991; O’Reilly and Chatman, 1986). This psychological bond may take a variety
forms, such as affective (due to emotional attachments), continuance (due to economic benefits),
and normative commitment (due to obligatory feelings). Employees with a strong affective
commitment continue employment with the organization because they want to do so. Researchers
have found that organizational commitment based on emotional bonds benefits organizations more,
 in terms of attendance and extra-role behaviors, than continuance or normative commitment
(Somers, 1993; Gellatly, 1995; Hackett et al., 1994; O’Reilly and Chatman, 1986). Results of several
recent studies also suggest that employees with a strong affective commitment to their
organizations work harder at their jobs and perform better than do those with weak commitment
(Bycio et al., 1995; Leong et al., 1994; Bashaw and Grant, 1994).
 Important - How can managers promote affective commitment? In their meta-analysis, Meyer and
Allen (1997) found a positive association between affective commitment and work experiences that
communicate an organization’s support for employees and enhance employees’ sense of personal
importance. The PEC practices in an organization are likely to make employees perceive their
company to be both more supportive of their needs and more considerate of their personal
importance. As a result, employees may develop stronger emotional bonds with the organization.
 Very Important - In his ethnographic study, Kahn (1993) demonstrated that organizational leaders’
acts of care giving, such as actively attending to employees’ self-expressions and showing them
empathy and compassion, made employees feel replenished and emotionally more engaged with
others. In another study, Kahn (1990) showed that employees who were emotionally more engaged
in their work environment also became cognitively more engaged in their task performance and
emotionally more connected to other organizational members in their role performance.
 research in strategic human resource management has empirically shown that managerial practices
that promote employees’ engagement with their task activities and connection with other
coworkers increase the overall productivity and financial performance of an organization by
facilitating communication, cooperation, and resource sharing among employees (Evans and Davis,
2005; Huselid, 1995).
 According to the growth literature, the effective utilization of company resources constitutes
a key component of sustainable growth (Barney, 1991; Penrose, 1959). The resource-based
theory of the firm emphasizes that valuable, rare, inimitable, or non-substitutable firm-
specific resources, such as human skills and competencies, are the fundamental determinants
of effective growth (Lado et al., 1992; Barney, 1991).
 When a company leader engages in practices to facilitate a positive emotional climate, employees
will be physically, cognitively, and emotionally more engaged in their task environment (Kahn,
1993), and this heightened level of engagement can help firms grow by mobilizing and directing
employees’ skills and efforts (Comb et al., 2006).
 Isen and Daubman (1984) found that positive affect led to more creativity and cognitive flexibility
(i.e. a greater ability to make associations, to see dimensions, and to see potential relations among
stimuli) compared with individuals in an emotionally neutral state. Similarly, Isen et al. (1987)
demonstrated that individuals experiencing positive affect were better than those in a more neutral
state at performing tasks requiring the generation of novel strategies.
 Important - . In their comprehensive analysis of the linkages between work motivation and
emotions, George and Brief (1996) suggested that employees who experience positive emotions in
their organization tend to interpret work events from a more positive light and be more optimistic
about the possibility of future success. George and Brief (1996), therefore, argued that positive
emotions will increase employees’ motivation to undertake new, challenging tasks and to persist in
tasks that they have already undertaken.
 Drawing on the above discussion, we suggest that leaders who promote a positive emotional climate
in their organizations will be more likely to motivate their employees to exert effort to find more
customers and increase sales. These leaders would also be more likely to encourage and inspire
their employees regarding strategic growth changes (new products, markets, and customers) and
gain their acceptance and support in implementation processes. Increases in employees’ work
motivation and their support for organizational change, in turn, will increase an organization’s ability
to produce the intended outcome growth.
 Our data are taken from a panel study of entrepreneurs and small business owners conducted in
Greater Vancouver, British Columbia. To obtain our businesses, we sampled firms from records
obtained from the Greater Vancouver Contacts Target Marketing database for 1994 and 1995.
 interested in the consequences of various human resources issues, and thus restricted our selection
to firms that reported having more than four employees. We also selected from target industries
based on the gender demographics of ownership, selecting among three different populations of
industries: those that were more male-dominated, more female dominated, or gender-mixed[1].
Our restrictions led us to identify 594 eligible firms. We contacted each of these firms to ask if they
would participate in our study. A total of 229 owners agreed, resulting in a response rate of 39
percent.
 To examine response rate concerns, we compared participants with non-participants in terms of the
gender of the owner, the age of the firm, the nature of the industry, and the size of the firm. Only
the size of the firm showed a significant difference, with larger firms less likely to participate in the
study. In some cases, this reflected the owner’s report that he or she was not responsible for
employee issues and a suggestion that we interview the person in charge of human resources (a
non-owner) instead.
 leadership practices that facilitate a positive emotional climate in an organization have a significant
effect on the organization’s performance, as measured by the rate of increase in the gross revenue
of companies. In addition, our data provide empirical evidence that the emotional climate practices
of a leader are significantly related to his or her organization’s growth, in terms of both strategic
growth (i.e. the number of products/services, geographic markets, and customer niches) and
outcome growth (i.e. the number of customers and volume of sales). These results add to our
knowledge of how emotional factors relate to organizational-level outcomes, by showing that
company leaders’ emotional management practices could be an important factor in determining
organizational outcomes.
 These results suggest that certain factors might limit the capacity of a leader’s emotional
management practices in creating a positive emotional climate. The affective personalities of
employees, for instance, could be one of these limiting factors.
 The data were collected from a single source, i.e. the owners of the companies.
 The relatively small size of companies included in the sample also poses a limitation.
 Finding - Our findings suggest that company leaders can mobilize their employees’ efforts and
resources to achieve higher organizational performance not only by considering the material
rewards provided in the workplace but also by paying attention to what is emotionally shared there.
 Article 4

Complete Citation:

Ozcelik, H., Langton, N. and Aldrich, H. (2008), "Doing well and doing good: The relationship

between leadership practices that facilitate a positive emotional climate and organizational

performance", Journal of Managerial Psychology, Vol. 23 No. 2, pp. 186-203.

https://doi.org/10.1108/02683940810850817

Article Summary

This research study sheds light on the importance of emotional factors in organizational-level

outcomes, an area of emotions research that has not received much attention. The author states

that emotions impact a wide range of employee relations aspects in organizations, from feelings

about the desirability of pursuing a career within the company to perceptions of authority.

Employees that experienced transformational leadership behaviors—like individual

consideration and inspirational motivation—were better equipped to handle difficult work

situations and feel more upbeat at work, which improved sales performance on an individual

basis. This study's hypotheses were supported by the regression analyses, which demonstrated a

positive relationship between the company's performance, revenue growth, and outcome growth,

and positive emotional climate practices. Moreover, the information was gathered for this

research was from 229 small company owners and entrepreneurs in Greater Vancouver, British

Columbia, Canada.

What?
Here is the list of important points that can be considered for developing the employee

engagement strategy for emotional connectedness –

1. Top-level managers' actions and leadership styles can have a significant impact on

workers and organizational results (Waldman et al., 2001). The performance of an

organization gets significantly influenced by leadership strategies that mobilize workers'

emotional resources (Fineman, 1993, p. 15). Hence, it is necessary for the organization to

adopt an employee centric approach or service-based leadership.

2. Workers develop emotional ties within the framework of their professional relationships,

and these relationships are responsible for shaping the way they engage in their

workplace. Moreover, emotions act as the social glue that has the power to "make or

break organizational structures" in organizations. Hence, it is necessary for the leaders to

ensure that they must focus on creating and maintaining a positive work environment.

3. At the organizational level, managers should adopt strategies that improve their capacity

to address workers' feelings (Huy, 1999). He also contended that if managers gave their

staff members' emotional needs enough consideration and made a conscious effort to

meet those needs through routines and practices, the performance of the organizations

would improve. Therefore, paying attention to the employees’ emotional well-being on

routine basis should be included in the employee engagement strategies by leaders.

So What?

This article highlights some strong points that can play a crucial role in maintaining

emotional connectedness with the employees. Throughout the article the author has emphasized

on employee and leader’s relation. Furthermore, it is important for a leader to build healthy and
positive relationship with the employee for establishing emotional connection, inspirational

motivation and individual consideration, as it will make workers feel happier and more capable

at work, which will boost their ability to close deals on an individual basis. In my opinion,

suggestions and points covered under this article can be implemented for designing effective

strategy. Also, the most crucial step that a leader needs to take is to get into the real and genuine

conversation. It will give the employee a sense that he/she is valuable and his contribution

matters for organizational growth.

Now What?

This article can be used to design several strategies by leaders for achieving the

organizational goal of enhancing employee engagement through emotional connectedness. In

this research study author has discussed importance of consistency between leader’s words and

action, leaders/managers responsibility of maintaining positive work environment and paying

close attention to employees’ feelings in routine. Though these points can be considered as

crucial components for designing effective strategy, but author has failed to discuss possible

challenges that the leadership team or organization may encounter while implementing these

strategies. For the next step, I would like to explore difficulties that the leadership team might

experience while putting these tactics into practice.