Bad Leadership Leads to High Turnover
Leadership has a direct relationship with turnover rate and employee satisfaction. In a survey of 7,200 employees who voluntarily separated from their companies, about half decided to leave due to a bad manager (Gandolfi & Stone, 2018). Leaders must tap into the motives of their subordinates to meet their goals (Latham, 2015). Transformational leadership can help motivate employees to exceed production goals and improve job satisfaction and organizational commitment (Bass & Riggio, 2006).
Leadership Styles
There are several leadership styles, each unique from the rest. These include autocratic, democratic, laissez-faire, transactional, and transformational. In the autocratic style, the manager makes decisions themselves without consultation with others from the team. Autocratic managers believe in a strong chain of command. The democratic style centers around the leader seeking input from subordinates when making decisions. Managers who implement laissez-faire style leadership feel the team is competent, allowing them to operate independently with a hands-off approach. Transactional style leaders are very involved in the team’s activities. This approach is also called micromanagement. The transformational style focuses on the team’s desire to follow the leader because they feel the leader has the ability and skill to lead them to their goals (Morgan & Zolnikov, 2021).
Transformational Leadership
Transformational leadership originated in 1978 by James MacGregor Burns (Bass & Riggio, 2006). The benefits of transformational leadership include empowering employees and aligning their goals with the goals of management and the organization (Bass & Riggio, 2006). Transformational leaders can motivate these employees to succeed in a remote working environment. As not every leader is the same, employees are also not the same.
Transformational leadership is the most influential leadership style researched (Lee et al., 2020). Transformational leadership theory suggests that leaders possess the ability to motivate followers by setting a good example, focusing on the goals of the organization, showing care and concern for subordinates, and helping subordinates cultivate a think-outside-the-box mindset (Urick, 2020). These traits are a dramatic shift from previous leadership theories. Four sub-dimensions can describe transformational leadership theory. These dimensions are:
- Idealized influence – the leader is seen as a role model for their subordinates
- Inspirational motivation – the leader effectively communicates to deliver an attractive vision that promotes team spirit and optimism
- Intellectual stimulation – the leader questions assumptions to promote innovation and creative problem solving
- Individualized consideration – the leader identifies the needs of the followers and acts as a mentor or coach for their development (Jensen et al., 2020)
The Impact of Transformation Leadership on KPIS
When the leader has a transformational leadership style, lower levels of management emulate this style, dramatically affecting the organization’s overall productivity. Recent studies have shown a positive relationship between transformational leadership and performance indicators (Jensen et al., 2020). Jensen et al. (2020) described these indicators as employee perception of leadership, the leader’s job performance, sales performance, and profits.
Idealized influence involves the leader providing a clear mission, values, and beliefs to the organization (Jensen et al., 2020). The leaders also act as role models who clearly communicate expectations. Inspirational motivation involves presenting challenging expectations, exhibiting solid organizational commitment, and giving meaning to the employees (Jensen et al., 2020). This motivation helps drive the individuals to achieve high-performance levels, allowing the organization to reach its collective goals.
Leaders must also utilize intellectual stimulation to promote innovation by questioning assumptions and finding creative ways to solve complex problems, ultimately helping improve company performance (Jensen et al., 2020). Individualized consideration involves the leader paying attention to the employees’ needs and encouraging individual growth and development (Jensen et al., 2020).
Based on the study results of Jensen et al. (2020), intellectual stimulation and inspirational motivation had the most substantial positive effect on organizational performance. These dimensions directly correlate to increased production and job satisfaction. They also contribute to reducing turnover rates and improving profits. The study results showed that true transformational leaders had responses indicating their support and motivation of their teams, including pushing them to reach manageable goals (Jensen et al., 2020). Also, providing the company with a mission and values helps employees support the organization and exceed performance expectations.
Post-Pandemic Leadership
The recent pandemic has brought a significant change to the way work is done in most companies. Companies have had to make difficult decisions and implement far-reaching changes that affect most employees. Accepting change does not come naturally to most workers. Transformational leadership is the best leadership style during and after the pandemic (Sukoco et al., 2020).
Sukoco (2020) states that the pandemic has caused additional employee concerns not related to the work or their jobs but to family needs and additional responsibilities. A transformational leader can look beyond the transactional aspect of the employee and view them as a whole person with needs that require attention outside of the company’s work. To avoid turnover and increase loyalty, a transformational leader must be prepared to adjust or accommodate subordinate’s schedules or expectations (Sukoco, 2020). Transformational leaders must ensure they show concern for employee well-being, not just profits. This concern and empathy ultimately results in higher profits.
Plan of Action
The first step is to identify the current leadership styles of your company’s managers. Conduct a management style evaluation. These can be found online, or you can get assistance from a management consultant. Once their styles are identified, you can discuss the results with the managers and begin training on the pros and cons of their style compared to the pros and cons of transformational leadership.
The next step is to train and develop the managers in transformational leadership. This process requires patience. Teach a topic and allow them a chance to execute it. Provide feedback to help them improve to ensure the instruction becomes a lasting change and they do not revert to old ways. Repeat the process until the manager has mastered the transformational leadership style.
Conclusion
There are many leadership styles that managers and leaders use to lead their teams. Some situations are best suited for specific styles, but overall, transformational leadership will deliver the best production and employee satisfaction. It also will help increase profits and reduce turnover. Making this change may not be easy, but the reward is greater than the cost. Leadership development should be a priority for any business.
References
Bass, B. M., & Riggio, R. E. (2006). Transformational Leadership: Vol. 2nd ed. Psychology Press.
Gandolfi, F., & Stone, S. (2018). Leadership, leadership styles, and servant leadership. Journal of Management Research (09725814), 18(4), 261-269.
Jensen, M., Potočnik, K., & Chaudhry, S. (2020). A mixed-methods study of CEO transformational leadership and firm performance. European Management Journal, 38(6), 836–845. https://doi.org/10.1016/j.emj.2020.05.004
Lee, Y., Chen, P., & Su, C. (2020). The evolution of leadership theories and the analysis of new research trends. International Journal of Organizational Innovation, 12(3), 88–104.
Morgan, S. M., & Zolnikov, T. R. (2021). A pilot study on program leadership styles and student perceptions of competency in marriage and family therapy programs. American Journal of Family Therapy, 49(3), 266–281. https://doi.org/10.1080/01926187.2020.1813655
Sukoco, I., Evitha, Y., Hermanto, B., & Herawati. T. (2020). Optimizing human resources empowerment in the era of Covid 19: From transactional to transformational leadership. Technium Social Sciences Journal, 13(1).
Urick, M. (2020). Generational differences and COVID-19: Positive interactions in virtual workplaces. Journal of Intergenerational Relationships, 18(4), 379–398. https://doi.org/10.1080/15350770.2020.1818662
