Does Leadership Affect Employee Commitment Management Essay

Does Leadership Affect Employee Commitment Management Essay In this thesis, the influence of different leadership styles, on the commitment of employees will be researched. According to the literature, commercial performances of companies depend on the commitment of employees. (Bovenlander en Timmer, 2007). However there are different interpretations of commitment. According to Sheldon (1971, p.143) commitment appears when the identity of the person (is linked to organization. Hall et al., (1970 p. 176) commitment appears when the goals of the organization and those of the individual become increasingly integrated or congruent In general one can argue that when commitment of the employees towards the company is high, this will have a positive influence on the organization. In fact, managers or leaders have an influence on the commitment and motivation among their employees. Managers have a great influence on their staff. They have an influence on the commitment of employees to achieve the business objectives. Earlier research points out that HRM investments provide a good job experience and thus commitment of the employees (Steijn, 2003). Not only HRM managers, but also other managers must ensure the commitment of the employees. Avolio et al. (2004) argued that leaders can have a positive influence on work motivation. They also argued that this study is not completed yet. Future research also needs to collect ratings of leadership, empowerment, and outcomes from multiple sources over time to adequately test the mediating effects of psychological empowerment on the relationship between transformational leadership and organizational commitment. (Avolio et al., 2004 p. 964) A lot of research is done about commitment and leadership, but which way of leadership is the best way to create commitment among employees? This reason makes this field a very interesting field of research. This literature review focalizes on different leadership styles and their influence on commitment. This will be examined in this paper, by means of a literature review. This will result in a clear and proper insight in commitment, leadership and the connection between these two variables. Problem statement How does leadership influence the commitment of employees? Research Questions An answer on the problem statement will be given by the following sub questions: What are the different leaderships styles and what are the characteristics of these styles? What is commitment and how can commitment be measured? How can leaders improve the commitment of their employees? Methodology This literature review will be a exploratory research. This is done on a descriptive basis. The typical approach for this thesis will be to rely on available literature: existing theses and studies from well-known scientists. (Sekaran and Bougie, 2009) For this research it is necessary to investigate the following variables: commitment and the different leadership styles and his characteristics. The results of this research will be the basis for further empirical research. Further empirical research will consist about the link between the variables commitment and leadership. The scientific papers that will be discussed are located on websites or the Tilburg Universitys library. Structure To give an answer to the main question of this thesis, how does leadership influence the organization with respect to work motivation, you first need to find an answer on the two sub questions. To give an answer on the sub questions, it is necessary to investigate the variables leadership and motivation. Regarding motivation it is important to know all the factors that may have an influence on the work motivation of employees. Leadership will be examined using two different styles. Namely transactional and transformational leadership. After that it is possible to connect leadership with work motivation. This will be the last chapter of the this thesis and will give you a clear and proper answer on the main question. Chapter 1: Leadership In the following chapter different leadership styles will be analyzed. What are the different leaderships styles and what are the characteristics of these styles? This question is the main question that will be answered in this chapter. Although several approaches to leadership, the distinction made between transformational and transactional leadership is the most prominent in the literature (Keegan and Den Hartog, 2004). Firstly, the different leadership styles will be described. After that transformational and transactional leaders will be further explained. Finally, a short conclusion will be made. 1.1 Leadership styles In this paragraph will be analyzed which leadership styles are mainly used by prominent researchers. In the second part of this paragraph these leadership styles will be further analyzed. A distinction between transformational and transactional leadership will be made. In the past, there have been several studies on leadership. So did Alice H. Eagly, Mary C. Johannesen-Schmidt (2001) research about the difference between the leadership styles of men and women. Eagly and Johannesen-Schmidt (2001) argued that women face more barriers to become leaders than men do. They try to make a distinction between female and male managers using transactional, transformational and Laissez-Faires leadership. Researcher Weber (1947) described four different leadership styles. He was one of the first who made a distinction between transformational and transactional leadership. Also prominent researchers did further research with respect to transformational and transactional leadership. Bass (1985) and Burns (1978) developed new thoughts on transformational and transactional leadership. Therefore is chosen only to discuss transformational and transactional leadership in this literature review. In the next paragraph these two styles will be further analyzed. 1.1.1 Transactional leadership Transactional leadership occurs when the initiative of one person towards others to make contact for an exchange of something valuable. (Burns,1978) (Bass, 1985) (Kuhnert and Lewis, 1987) Bass (1990) made a distinction between four types of transactional leaders. Contingent reward: The manager gives rewards if employees perform well by giving pay increases and advancement. But he also gives penalties if they do not perform well. Management by exception (active): A transactional leader only takes action when things went wrong. He is constantly looking for deviant behavior and then he takes corrective action. (Bass,1990) Management by exception (passive): In this typology the manager intervenes only if the standards are not met. Laissez-Faire: Some researches argued that this is a separate leadership style (Eagly and Johannesen-Schmidt, 2001), but Bass (1990) argued that this is a part of transactional leadership. A Laissez-Faire manager constantly avoids decision making, he takes no responsibility. Bass (1990) find this kind of leadership ineffective and, in the long run, counterproductive. Also he found out that the effectiveness of this style depends on the control that the leader has on the rewards or penalties. 1.1.2 Transformational leadership Transformational leaders are charismatic leaders, that is why they inspire their employees. Employees wants to identify with this leaders. They give each employee personal attention and treat them individually. He intellectually stimulates his followers and gives advice and coaches them individually. He gains respect and trust. He tries to solve each problem carefully (Bass, 1990). This is a general description of a transformational leader. In a more recent attempt to define a transformational leader, Avolio, B.J., Bass, B.M., Jung, D.I. and Berson, Y. (2003) made a distinction between four different types of transformational leaders: Idealized influence: These leaders are admired, respected and trusted. Followers identify with and want to emulate their leaders. Among the things the leader does to earn credit with followers is to consider followers needs over his or her own needs. The leader shares risks with followers and is consistent in conduct with underlying ethics, principles and values. (Avolio et al., 2003) Inspirational motivation: Leaders behave in ways that motivate those around them by providing meaning and challenge to their followers work. Individual and team spirit is aroused. Enthusiasm and optimism are displayed. The leader encourages followers to envision attractive future states, which they can ultimately envision for themselves. (Avolio et al., 2003) Intellectual stimulation: Leaders stimulate their followers effort to be innovative and creative by questioning assumptions, reframing problems and approaching old situations in new ways. There is no ridicule or public criticism of individual members mistakes. New ideas and creative solutions to problems are solicited from followers, who are included in the process of addressing problems and finding solutions. (Avolio et al., 2003) Individualized consideration: Leaders pay attention to each individuals need for achievement and growth by acting as a coach or mentor. Followers are developed to successively higher levers of potential. New learning opportunities are created along with a supportive climate in which to grow. Individual differences in terms of needs and desires are recognized. (Avolio et al., 2003) 1.1.3 LMX Leadership In the available literature there is done a lot of research with regard to the relationship between LMX and commitment. Howell en Hall-Merenda (1999) argued that LMX and transformational leadership can be seen as complementary. The effects of transformational leadership and LMX on the commitment of employees are equal. Consequently, when the term transformational leadership is used in this review it is also applicable to LMX. For this reason, in this thesis only the term transformational leadership will be used. Furthermore in this paragraph, LMX leadership will be shortly explained. The theory of a LMX is based on the fact that not every employee receives the same treatment from his leader. Every leader develops his own unique relationship with every individual employee. (Liden Maslyn, 1998). Every relationship of leaders and subordinates has his own characteristics with respect to the interaction between the leader and the subordinate. There are four different components who describe the relationship between a leader and his subordinate. Affection, loyalty, task-related behavior and respect. Affection is related to the like-factor. Loyalty means that the employee and leader publicly support each others behavior and character. Task-related behavior is related to the performance in the organization. Finally, respect is related to respect for each others professional knowledge and skills. (Liden Maslyn, 1998). Every relationship can have each of the different components. But it is also possible that all of the components are applicable on the relation. Close rel ationships can be characterized with confidence, respect, mutual influence and likeability. These relationships, with a high LMX, are called in-group. Opposite relations, thus not a close relationship, is just a work relationship because of the contract that is signed. These relations, with a low LMX, are called out-group. (Dansereau, Graen, Haga, 1975). Thus, the theory of Leader-Member Exchange argued that every relationship between a leader and a subordinate is unique and develops in course of time. 1.4 Conclusion This paragraph is a short conclusion about leadership. In the foregoing paragraphs there is an overview of what types are mainly used and most successful. In this paragraph a comparison between transformational and transactional leadership will be made. There is much literature available about leadership. As mentioned above Howell en Hall-Merenda (1999) argued that LMX and transformational leadership can be seen as complementary. For this reason, only transformational leadership will be discussed in this thesis. However, there is no clear agreement with reference to transactional and transformational leadership. Bass (1985) suggested that the best way of leadership is a combination between these two styles. But actually all researchers agree with the fact that only transactional leadership is outdated. Managers who behave like transformational leaders are more likely to be seen by their colleagues and employees as satisfaction and effective leaders than are those who behave like transactional leaders (Bass,1990). As mentioned above transactional leaders can be effective in clarifying the expectations and organizational objectives, but in the long run its ineffective and counterproductive. Bass (1990) also argued that you need to operate as a transformational leader to improve the performance of employees. Several researchers pointed out that there is a positive relationship between transformational leadership and performance, reported in the literature. (Avolio et al., 2003). As mentioned above, in the introduction, commitment is one of the factors that has an influence on the performance. Chapter 2: Commitment This chapter will cover the concept of commitment. Mowday, Porter, and Dubin (1974) suggested that highly committed employees may perform better than less committed ones This further demonstrates that commitment needs to be investigated. In the first paragraph will be explained what commitment actually is according to several researchers. In the second paragraph, the question that will be answered is how commitment can be measured. Finally, a short conclusion about commitment will be given. 2.1 What is commitment? There is a great amount of research done about commitment. It is impossible to give one definition about commitment. Every researcher has his own approach towards commitment, they all have their own interpretation. In this research commitment will be described using uni-dimensional commitment and multi-dimensional commitment. 2.1.1 Uni-dimensional commitment One of the first researches from Mowday, R.T. , Steers, R.M. and Porter, L.W. (1979) argued that many of these definitions focus on commitment-related behaviors. For example when we talk about someone becoming bound by his actions or behaviors that exceed formal and/or normative expectations, we are in effect focusing on overt manifestations of commitment (Mowday et al., 1979). Several researchers described affective commitment in terms of an attitude, as mentioned in the introduction. The identity of the person (is linked) to the organization (Sheldon, 1971, p. 143) or when the goals of the organization and those of the individual become increasingly integrated or congruent ( Hall et al., 1970 p. 176) Cohen (2007) argued that affective commitment is highest and deepest form of the organizational commitment. Further on in this paper commitment will be measured, so only the definition of Porter will be discussed. According to Porter an employee is committed to an organization when he or she identifies themselves with the organization and he or she is involved in the organization. Mowday et al. ( 1979) defined three characteristics related to commitment: a strong belief in and acceptance of the organizations goals and values. a willingness to exert considerable effort on behalf of the organization. a strong desire to maintain membership in the organization. 2.1.2 Multi-dimensional commitment The description of uni-dimensional commitment is the classical approach of commitment and made years ago. More recent attempts to give a clear insight commitment points out that uni-dimensional commitment, as earlier described not covers the whole part of commitment. It only covers the part of affective commitment. (Hackett, Bycio Hausdorf, 1994) There are three distinct types of commitment (Meyer Allen, 1991) : Affective commitment Continuance commitment Normative commitment Affective commitment refers to the employees emotional attachment to, identification with, and involvement in the organization. If an employee has a strong affective commitment, he wants to continue his employment because he want it to do. (Meyer Allen, 1991). This is the part as mentioned above in affective commitment. Continuance commitment and normative commitment complete the multi-dimensional commitment. Continuance commitment refers to an awareness of the costs associated with leaving the organization. Employees who primary link to the organization is based on continuance commitment remain because they need to so. (Meyer Allen, 1991). Normative commitment reflects a feeling of obligation to continue employment. Employees with a high level of normative commitment feel that they ought to remain with the organization. (Meyer Allen, 1991) Thus, employees with a strong affective commitment remains with the organization because they want it. Employees with a strong continuance commitment wants to remain with the organization because they need it. And employees with a strong normative commitment remains with the organization because they ought it. Meyer Allen (1991) argued that affective, continuance and normative commitment will be seen as components and not as different types of commitment. Each component is influenced by his own antecedents. The rate of affective commitment is related with your personal characteristics and work experience. Continuance commitment is determined by personal characteristics, alternatives and investments. Thus, when a employee has no other alternatives for what he is doing now he will continue with the organization. Investments, also known as side bets, means everything that an individual invests in a relationship, such as efforts, time and money, that would be lost or decreased when the individual would end the relationship. The rate of normative commitment is related with the antecedents personal characteristics, socialization experience and organizational investments. Normative commitment develops as a result of socialization experience that gives morale pressure to remain with the organization. Organizational investments comes from the receiving of much advantage by the employee. The employee wants to pay it back (Bovenlander, 2007). In the appendix is shown a figure the relationships between the expected antecedents, forms of commitment and the expected results according to Meyer Allen. 2.2 How can commitment be measured? The main question of this paragraph is how commitment can be measured. Researchers did several approaches to measure commitment. There is a large amount of approaches to measure commitment, but in the foregoing paragraph commitment is defined as uni-dimensional commitment and multi-dimensional commitment. These two explanations will be used to measure commitment. To measure commitment, Mowday, Steers and Porter (1979) developed the Organizational Commitment Questionnarie (OCQ). This questionnaire consists of fifteen different statements, which try to measure the three commitment related characteristics as mentioned in the foregoing paragraph. In the appendix are the fifteen statements according to Mowday et al., (1979). More Meyer Allen argued that this approach to measure commitment only measures the part of affective commitment. To measure the three parts of commitment, affective commitment, continuance commitment and normative commitment, they developed the Three-Component Organizational Commitment Scale. This scale consists of several statements, each component of commitment can be measured by his own statements. Listed below are some examples of the Three-Component Organizational Commitment scale according to Meyer Allen in several studies. Affective Commitment I would be very happy to spend the rest of my career with this organization I really feel as if this organizations problems are my own Continuance Commitment Right now, staying with my organization is a matter of necessity as much as desire It would be very hard for me to leave my organization right now, even if I wanted to Normative Commitment I do not feel any obligation to remain with my current employer Even if it were to my advantage, I do not feel it would be right to leave my organization now The Three-Component Organizational Commitment Scale appears to be a reliable scale to measure affective, calculative and normative commitment. The model and the measurement instrument focus especially on the commitment of a whole organization. In a later stage this model is also translated towards other objects of commitment, such as the appeal to test the generalization of the model. How an employee behave on his work depends on the organizational commitment and the occupational level. The occupational level is the level of commitment with reference to the profession itself. The three components of commitment with the profession are associated with variables who measure the antecedents of commitment as mentioned above. Meanwhile it point out to be that a high organizational and occupational commitment lead to performance improvements and low staff turnover. (Meyer Allen, 1993) 2.3 Conclusion In this paragraph a short conclusion about commitment will be given. The most complete form to describe commitment is the Multi-Dimensional way. According to this description of Meyer Allen commitment consists of three components. The affective component, the continuance component and the normative component. In fact, employees with a strong affective commitment remains with the organization because they want it. Employees with a strong continuance commitment wants to remain with the organization because they need it. And employees with a strong normative commitment remains with the organization because they ought it. These components where influenced by the different antecedents as shown in the figure of paragraph 2.1. In an approach to measure affective commitment Mowday et al., (1979) developed a Organizational Commitment Questionnarie (OCQ). To measure affective, continuance and normative commitment, Meyer Allen developed the Three-Component Organizational Commitment Scale. It measures the three different components of the Multi-dimensional commitment. This model appears to be a reliable scale to measure commitment. A positive organizational and occupational commitment lead to performance improvements and low staff turnover. This could be a very interesting outcome for organizations and managers. Chapter 3: Commitment and leadership As mentioned in the introduction transformational leadership has a positive connection with organizational commitment. (Avolio et al., 2004). In the two foregoing chapters of this research leadership and commitment is discussed. In the first paragraph the connection between leadership and commitment will be described. Additionally will be explained what exactly this connection is and an answer on the main question of this research will be given: What is the influence of leadership on the commitment of employees? 3.1 Connection between leadership and commitment The following chapter will provide information about the link between commitment and leadership. First, shortly will be explained which connection there is between leadership and commitment according to the two foregoing chapters. Commitment is one of the factors that have an influence on the performance. And as mentioned in a foregoing chapter, several researches pointed out that there is a positive relationship between transformational leadership and performance, reported in the literature (Avolio et al., 2003, 2004). Bass (1990) also argued that you need to operate as a transformational leader to improve the performance of employees. Thus, the conclusion that transformational leadership has an influence on the organizational commitment can be made. Transactional leadership will not be discussed in this chapter, because researches cannot find a positive connection between transactional leadership and organizational commitment. As mentioned above transactional leadership is ineffective en counterproductive on the long run. 3.2 Transformational leadership and affective commitment Earlier research points out that it is mainly the part of affective commitment of an employee who is related to various organizational issues as leadership. (Purcell Hutchingson, 2007). As mentioned in the foregoing paragraph there is only a positive connection between transformational leadership and commitment. Thus, this review will only cover the part of transformational leadership and his connection with affective commitment. According to Truckenbrodt (2000) appears that a high quality of exchange between leader and employee lead to a high organizational commitment. And a low quality of exchange lead to a low organizational commitment. In practice, a high quality of exchange means that a leader gives an employee responsibility. A leader involves the employee in the decision making and gives him autonomy. Several researchers pointed out that a high quality relationship between a leader and an employee creates more commitment among the employees. (Gernster and Day, 1997) (Basu en Green, 1997) As mentioned earlier in this paragraph, there is a positive connection between affective commitment and transformational leadership. Which means that when a leader operate as a transformational leader and the quality of exchange is high, it creates high affective commitment among employees. The rate of affective commitment is related with personal and organizational factors and characteristics and work experience of an employee. So, now it is clear that there is a relation, and what that relation is. However, it is interesting to know how leaders can have an influence on this and so create a high quality of exchange. According to Shamir, House, Arthur (1993) transformational leaders are capable to have an influence on the organizational commitment of employees by promoting higher levels of intrinsic value associated with goal accomplishment, emphasizing the linkages between follower effort and goal achievement, and by creating a higher level of personal commitment on the part of the leader and followers to a common vision, mission, and organizational goals. But how can transformational achieve these goals. Avolio (1999) argued that transformational leaders influence followers organizational commitment by encouraging followers to think critically by using novel approaches, involving followers in decision-making processes, inspiring loyalty, while recognizing and appreciating the different needs of each follower to develop his or her personal potential. In summary, transformational leaders can have an influence on the affective part of commitment. They need to get their employees involved by the organization. There are different components that has an influence on the commitment. For example, the involvement of an employee in the decision-making is an important issue to create commitment among employees. 3.3 Psychological influence on commitment of employees Another issue that cannot be underestimate is the psychological influence that transformational leaders can have on organizational commitment. In this paragraph will be explained what several researches suggested about this subject. Transformational leaders can have an influence on several aspects such that employees are capable to get everything out of themselves (Lowe et al., 1996). Aspirations, identities, needs and preferences are some of these aspects that Lowe et al. (1996) argued about in his literature review. Transformational leaders are able to ensure that employees wants to identify with them. Transformational leaders have the potential to make clear towards their employees how essential a wealthy career and future is. That is how they can create committed and motivated employees, because their employees want to meet this expectations (Avolio et al., 2004). As mentioned earlier commitment is one of the factors that has an great influence on performance. Several researches pointed out that these leaders try to create a working climate which results in good performances. They try to do it with their enthusiasm, high moral standards, integrity, and optimism and provide meaning and challenge to their followers work, enhancing followers level of self-efficacy, confidence, meaning, and self-determination (Avolio et al., 2004). Leaders are constant seeking for different ways to let employees perform well. Transformational leaders wants give their subordinates new insight of getting things done. They try to intellectual stimulate them. (Bass Avolio, 1997). As mentioned earlier it is from great importance to give employees responsibility and getting them involved in the decision-making. The more committed an employee is, the better the performance. Hughes, Ginnett, Curphy (1999) argued that an intensive supervision by means of coaching, giving feedback and encouragement, ensure that the self-confidence of an employee in his performance increases. This occurs through a transformational leader, who try to have close ties with every employee, so that he or she knows exactly what is in the employees mind. Shamir (1995) suggested that physically close leaders have a greater opportunity to show individualized consideration, sensitivity to followers needs, and support for the development of employees. Transformational leaders, as mentioned above, who knows exactly what is in the mind of an employee, give intense supervision, give feedback and so on, are called close leaders. Leaders with a less close relationship, which are on distant of their employees are named, as the term suggest, distant leaders. Close leaders have a very positive effect on organizational issues as performance and commitment. Thus, when an employee believes that their leader involves them in the organization, due to the foregoing ways, they feel a high commitment towards the organization. 3.4 Conclusion In this paragraph a conclusion about the connection between commitment will be summarized. In fact, an answer on the main question of this research will be given. How does leadership influence the commitment of employees? Avolio et al. (2004), suggested that transformational leadership has a positive connection with organizational commitment. Commitment is one of the factors that have an influence on the performance. So commitment could be a very interesting organizational issue for transformational leaders. Earlier research points out that it is mainly the part of affective commitment of an employee who is related to various organizational issues as leadership. (Purcell Hutchingson, 2007). Thus, transformational leaders can have an influence on the affective commitment of employees. Several researchers pointed out that a high quality relationship between a leader and an employee creates more commitment among the employees. (Truckenbrodt, 2000) (Gernster and Day, 1997) (Basu and Green, 1997) An interesting question that now arises is, how transformational leaders can ens