Abstract
This report aims at reviewing the current body of knowledge concerning the effect of transformational leadership on organisational change management. Organisations are in a constant search to improve the current practices of organisational change. Leadership strategies were found to have a significant effect on the effectiveness of change management. While some leadership styles are situationally effective, the transformational leadership style was found to be effective for all types of changes. The effect of transformational leadership was found to be both direct and indirect. On the one hand, the results demonstrated that transformational leadership positively affected the attitudes to change, trust in the leaders, and increased self-efficacy of employees. On the other hand, transformational leadership affected commitment to change, which decreased resistance to change during change projects. Two gaps in the current body of literature were identified. Therefore, the results of the present literature review suggest that future research should focus on exploring the relationship between transformational management and change management in the public sector and in GCC and African countries.
Background
Organisations are always in the process of constant change regardless of the will of the managers. In modern days’ hectic environment, organisations need to change to adapt to the influence of economic, political, social, and technological factors. Organisational change can be defined as an alteration in “in organisational structure, its system/sub-systems, employees and relation of between them in a planned or non-planned way” (Bejinariu et al., 2017, p. 322). According to Burnes (2005), change can be managed, which is planned and implemented by the management team, and spontaneous or self-organised change. The results of spontaneous change are difficult to predict; therefore, companies are interested in managing change in the most efficient way to ensure that the change is implemented effectively and beneficial for the company.
Change managers are in the constant search of strategies for minimising resistance to change. Transformational leadership is known to have a positive influence on managing change (Putri, Mirzania, and Hartanto, 2020). Transformational leadership is based upon four components, including intellectual stimulation, individualised consideration, inspirational motivation, and idealised influence (Henricks, Young, and Kehoe, 2020). Intellectual stimulation is associated with encouraging creativity and exploring new ways to address problems (Henricks, Young, and Kehoe, 2020). Individualised consideration is fostering support to individual team members taking into consideration their needs and feelings (Henricks, Young, and Kehoe, 2020). Inspirational motivation is promoting a clear vision of a better future (Henricks, Young, and Kehoe, 2020). Finally, idealised influence is associated with the leader being a role model that employees want to imitate (Henricks, Young, and Kehoe, 2020). Transformational leadership improves the team’s effectiveness and loyalty (Putri, Mirzania, and Hartanto, 2020).
This report provides a review of current literature concerning the relationship between transformational leadership and organisational change management. The purpose of the report is to identify a gap in knowledge concerning the relationship between these two variables to provide recommendations for future research.
Critical Review
Importance of Leadership Strategy for Change Management
Leadership strategies are known to have a significant impact on the change management process and success. A literature review conducted by Mansaray (2019) revealed that different leadership models have varying effects on change management. All leadership styles, starting from authoritarian leadership, transformational leadership, laissez-faire leadership, and transactional leadership to bureaucratic leadership, have a varying effect on the success of change, resistance, and behaviour of employees Mansaray (2019). The utilisation of an appropriate leadership style is crucial for achieving the goals of change and staying competitive in the quickly changing external environment (Akinbode and Al Shuhumi, 2018). The selection of an inappropriate leadership style is often one of the central reasons for the failure of change projects (Akinbode and Al Shuhumi, 2018). Appelbaum et al. (2018) state that leadership styles help to address resistance to change during organisational change projects.
Some leadership styles are more universal, while others are situational. Hechanova, Caringal-Go, and Magsaysay (2018) stated that some leadership styles, such as laissez-faire leadership and inclusive leadership may be effective during periods of relative stability. When speaking of change management, such leadership styles are effective when the change is slow at pace and insignificant in influence (Hechanova, Caringal-Go, and Magsaysay, 2018). However, when speaking of fast-pacing emergency changes, authoritarian and strategic leadership become more effective (Mansaray, 2019).
Research demonstrates that there are two leadership styles that are universal for any type of change, regardless of the circumstances. Akinbode and Al Shuhumi (2018) recommend a transformational leadership style for an effective change management process based on the results of five case studies from different industries. Holten and Brenner (2015) also recommended transformational leadership for the long term success of the change. At the same time, transactional leadership is negatively associated with the long-term success of change (Holten and Brenner, 2015). Thus, this leadership style is not recommended for change management.
Transformational Leadership and Change Management
Transformational leadership affects the effectiveness of organisational change in different ways. First, research demonstrated that transformational leadership affects the employees’ trust in managers. A quantitative study by Jena, Pradhan, and Panigrahy (2018) revealed that transformational leadership is positively associated with organisational trust. Increased trust in the leaders can decrease resistance to change, which is beneficial to change management (Jena, Pradhan, and Panigrahy, 2018). Islam, Furuoka, and Idris (2021) stated that trust moderated the relationship between transformational leadership and employee championing behaviour. In other words, transformational leadership improves the trust of the employees, which also increases their ability to address complex problems and make difficult decisions.
Transformational leadership is known to affect employee behaviour in numerous different ways. Apart from championing behaviour described by Islam, Furuoka, and Idris (2021), transformational leadership positively influences employee engagement and innovation (Bednall et al., 2018; Faupel and Süß, 2019). Bednall et al. (2018) conducted a cross-sectional and longitudinal study on the effect of transformational leadership on innovation. The results revealed that two variables were positively correlated; however, the relationship was non-linear. Moreover, both studies confirmed that knowledge sharing mediated the relationship between innovative behaviour and transformational leadership in during change implementation (Bednall et al., 2018). Faupel and Süß (2019) examined the relationship between transformational leadership and work engagement. The results revealed that transformational leadership increased engagement in the change process (Faupel and Süß, 2019). Moreover, Faupel and Süß (2019) stated that transformational leadership positively affected perceptions of attractive change consequences. Anticipation of positive change encourages supportive behaviour to change (Faupel and Süß., 2019). As a result, the resistance to change decreases, and the employees become change facilitators.
Research demonstrates that transformational leadership affects change by improving the self-efficacy of employees. Djourova et al. (2020) suggested that transformational leadership positively affects the well-being of the employees during organisational change. Increased self-efficacy of employees served as a mediator of the relationship between these two variables (Djourova et al., 2020). In other words, transformational leadership positively affected employee self-efficacy, which, in turn, affected their psychological and emotional health. Similarly, a study by Bayraktar and Jiménez (2020) revealed that transformational leadership improved the employee’s self-efficacy, which in turn positively affected the extent of change and the reaction to change.
Transformational Leadership and Commitment to Change
The effectiveness of change is closely correlated with workplace culture (Rosenbaum, More, and Steane, 2018). If commitment to change is embedded in the workplace culture, resistance to any change project reduces significantly (Rosenbaum, More, and Steane, 2018). Thus, it is crucial for companies to maintain the spirit of constant change to improve the success rates of the change projects. The results of the literature review revealed that transformational leadership is positively associated with commitment to change among employees.
The effect of transformational leadership on employees’ commitment to change is well established in the education industry. In particular, Yu, Leithwood, and Jantzi (2002) stated studied the effect of transformational leadership of the principal on the teachers’ commitment to change the result revealed a weak direct correlation between the variables and a strong indirect relationship between the variables. The correlation between transformational leadership and commitment to change was mediated by school culture, strategies for change, school structure, and the school environment (Yu, Leithwood, and Jantzi, 2002).
Lo, Ramayah, and De Run (2010) examined the effect of different dimensions of transformational leadership on the commitment to change. The results revealed that idolised influence and inspirational motivation had a positive impact on the teachers’ commitment to change (Lo, Ramayah, and De Run, 2010). However, intellectual stimulation and individualised consideration had no such effect on employees’ commitment to change (Lo, Ramayah, and De Run, 2010). However, it should be noted that the results of the research by Yu, Leithwood, and Jantzi (2002) and by Lo, Ramayah, and De Run (2010) are applicable only to academe organisations. Transformational leadership may have a different effect on business organisations, as their workplace culture are different.
A study by Hechanova and Cementina-Olpoc (2013) examined the differences in the effect of transformational leadership on the commitment to change in academic and business organisations. The results revealed that transformational leadership had a greater impact on academic organisations because their vision is long-term and does not require constant revision (Hechanova and Cementina-Olpoc, 2013). Academic organisations do not need to change rapidly to stay competitive as business organisations. Change management practices had a greater impact on the commitment to change in comparison with transformational leadership (Hechanova and Cementina-Olpoc, 2013). It should be noted, meanwhile, that transformational leadership continues to have a major impact on corporate organizations’ dedication to change.
Dung and Hai (2020) studied the influence of transformational leadership on the commitment to organisational change based on a sample of 474 employees from different organisations. The results of the study demonstrated that transformational leadership had a positive impact on job satisfaction and organisational commitment (Dung and Hai, 2020). At the same time, workplace satisfaction was positively correlated with affective and normative commitments to constant change. Transformational leadership affects commitment to change indirectly.
Hill et al. (2012) discussed the effects of normative and affective commitments to change on change management success. The results revealed that normative and affective commitments to change are affected by the hierarchical distance of the employees. If the immediate manager of the employees utilises the transformational leadership approach, both normative and affective commitments to change are increased (Hill et al., 2012). When transformational leadership is practised by higher managers, the effect is blurred (Hill et al., 2012). In summary, all the researchers agree that transformational leadership positively affects commitment to change. However, the magnitude of the effect may differ depending on different factors, such as the type of the organisation and hierarchical distance.
Problem Statement
The results of the review demonstrated that transformational leadership had a positive effect on organisational change management both directly and indirectly (Hechanova, Caringal-Go, and Magsaysay; Holten and Brenner, 2015; Mansaray, 2019). On the one hand, the findings showed that transformational leadership enhanced employees’ self-efficacy, trust in the leaders, and attitudes toward change (Bednall et al., 2018; Djourova et al., 2020; Jena, Pradhan, and Panigrahy, 2018). However, throughout change projects, transformational leadership reduced opposition to change by influencing commitment to change. The research findings were consistent among different populations and during different chronological periods.
Nevertheless, all of the studies on how transformational leadership affects organizational change management were conducted in Western and Asian nations. No studies were conducted in the GCC region or Africa, which is a significant limitation of the applicability of research results. Resistance to change is deeply rooted in organisational culture, which is affected by the national cultures (Rosenbaum, More, and Steane, 2018). According to Hofstede’s model of cultural dimensions, GCC countries have high power distance and uncertainty avoidance, which may affect the preferred leadership style (Hofstede, 2011). Thus, it would be beneficial to assess the effect of transformational leadership on organisational change management in African and Arabic countries.
Another significant gap in the current literature concerning the matter discussed in this paper is the lack of studies on the relationship between transformational leadership and organisational change in the public sector. Since the public sector does not operate in a hectic competitive environment, it may be assumed that the influence of transformational leadership on organisational change would be different. However, no studies were found that focused specifically on the public sector.
Considering the problems identified by this literature review, two recommendations for future research can be given. First, future research should focus on examining the relationship between transformational leadership and organisational change in African and GCC countries. Second, future studies are recommended to explore the correlation between transformational leadership and organisational change in the public sector of different countries to close the gap in the current body of knowledge.
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