Leadership in Times of Uncertainty
Wasim Subhan Choudhury Dion Collins
Business Administration, master's level (120 credits) 2021
Luleå University of Technology
Department of Social Sciences, Technology and Arts
Abstract
The purpose of the study was to research leadership during uncertainty to identify managerial implications on organizational performance and enhance the limited body of academic literature available on the topic currently. The implications regarding leadership are not limited to the COVID-19 pandemic but instead widely applicable to leadership during uncertainty overall. The pandemic simply provided an example of uncertainty, which was the context. Additionally, as mining is a global industry with widespread follow-on effects on global economies - authors believe that the results from this research are not limited to the mining industry itself and instead widely applicable to senior-level managers in multinational organizations worldwide. The methodology implemented ensures that leaders at any level can extract practical guidance from this research to determine how they may act during times of uncertainty and potential flow-on effects of their chosen leadership style.
Organizations can remain relevant, achieve long-term success and maintain the expected level of performance through uncertainty by adopting a transformational model of leadership that addresses the needs of a fluctuating environment. Uncertainty is the shortage of knowledge and information about probabilities of the future state of events. Organizational leaders need to provide the necessary guidance, inspiration, and motivation to the members because their approach influences the organizational performance. Essentially, people look up to their leaders during uncertain times.
The research results showed that transformational managers could offer idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration to team members during uncertainty. These outcomes were achieved through encouraging two-way communication, providing necessary guidance and inspiration to bring out and encourage new idea generation and critical thinking.
Results of the research further showed that transformational leadership has positive effects on organizational performance. Teams functioned properly without much supervision, members remained motivated, the workforce interacted more efficiently, and creative ideas came out when leaders and managers practiced a transformational leadership style. Organizational performance increased through meeting deadlines, maintaining the flow of work, KPIs, production, and non-financial metrics such as culture and safety considerations.
Keywords: Leadership during uncertainty, transformational leadership, organizational performance, uncertainties, roles of leaders, COVID-19
Acknowledgments
Researchers conducted this thesis during the spring term of 2021.
As researchers, we would like to acknowledge that research does not occur in a vacuum or controlled environment. Therefore, our findings were dependent on many other people along the way. Words cannot describe the gratitude we have for those who have assisted us throughout the process, as without their help - none of this would have been possible.
Firstly, we would like to express our gratitude to our thesis supervisors Kerry Chipp and Manoj Chiba, for their guidance and support. Their knowledge and experience helped us see the big picture regarding the research we have conducted, as well as helping us to refine and tailor our decisions, which played a massive part in the quality of our finished thesis.
We want to express our gratitude to our professors at LTU, who have passed on their wisdom throughout the master’s program. The learning experience has been invaluable. Their teaching during the courses shaped our vision and allowed us to look into the international business sector with a new perspective. This thesis is an output of those learnings.
Additionally, we would like to thank the five respondents who gave their time, shared their knowledge and experience in detail with us. Although the research is anonymous, we would like to emphasize that their valuable input helped us to better understand the research area and topic by providing a clear comparison/contrast between existing theories on leadership during uncertainty and current managerial perspectives.
Last but not least, we would like to thank our family members for their continuous encouragement and for being supportive in the previous five months. The sacrifices endeavored and countless hours spent collecting and analyzing data do come at a cost. Our work would not have been possible without the support.
Luleå, June 2021
Dion Collins Wasim Subhan Choudhury
Table of Contents
Chapter 1: Introduction 1
1.1. Background 1
1.2. Problem discussion 3
1.3. Research Purpose 4
1.4. Research Questions 4
1.5. Delimitation 5
Chapter 2: Literature Review 6
2.1. Leadership 6
2.2. Transformational Leadership 8
2.3. Leader-follower Relationship 10
2.4. Uncertainty 11
2.5. COVID-19 12
2.6. Organizational Performance 13
2.6.1. Measuring Organizational Performance 14
2.6.2. The Balanced Scorecard 14
2.6.3. Stakeholder Theory 14
2.6.4. Triple bottom line 14
2.6.5. Sustainability 14
2.7. Organizational and leadership performance in uncertainty 15
2.8. Theoretical Framework 15
2.8.1 Framework 15
Idealized influence 16
Inspirational motivation 16
Intellectual stimulation 17
Individualized consideration 17
Empowerment 17
Chapter 3: Research Methodology 18
3.1. Research Purpose 18
3.2. Research Approach 18
3.2.1. Inductive and deductive research 18
3.2.2. Quantitative and Qualitative Research 19
3.3. Research Strategy 19
3.4. Data Collection 19
3.4.1. Primary data collection 20
3.4.2. Secondary data collection 20
3.5. Sample Selection 21
3.5.1. Why the mining sector? 21
3.5.2. Country Context 22
3.6. Data Analysis 22
3.7. Credibility 22
3.8. Validity and Dependability 23
3.9. Transferability 23
Chapter 4: Empirical Data 24
4.1. Approach 24
4.2. Data collected from the interviews 24
4.2.1. Transformational leadership style 24
4.2.2. Leadership during uncertainty 27
4.2.3. Benefits of transformational leadership style 30
4.2.4. Measuring organizational performance 31
4.2.5. Important aspects in time of uncertainty 34
4.2.6. Motivation of the workforce in times of uncertainty 35
4.2.7. Ensuring guidance, inspiration, and motivation through the leadership style 36
4.2.8. Impact of external factors in the leadership style 37
Chapter 5: Data Analysis 38
5.1. Data Analysis 38
5.1.1. Analysis of the first respondent 38
5.1.1.1. Role of transformational leadership during uncertainty 38 5.1.1.2. Effect of transformational leadership on organizational performance during uncertainty
39
5.1.2. Analysis of the second respondent 40
5.1.2.1. Role of transformational leadership during uncertainty 40 5.1.2.2. Effect of transformational leadership on organizational performance during uncertainty
41
5.1.3. Analysis of the third respondent 42
5.1.3.1. Role of transformational leadership during uncertainty 42 5.1.3.2. Effect of transformational leadership on organizational performance during uncertainty
42
5.1.4. Analysis of the fourth respondent 43
5.1.4.1. Role of transformational leadership during uncertainty 43 5.1.4.2. Effect of transformational leadership on organizational performance during uncertainty
44
5.1.5. Analysis of the fifth respondent 44
5.1.5.1. Role of transformational leadership during uncertainty 44 5.1.5.2. Effect of transformational leadership on organizational performance during
uncertainty 45
5.1.6 Cross-case Analysis 46
5.1.7. Contrast in respondents’ feedback 49
5.1.8. Notable Findings 50
5.1.9. Summary of analysis/themes 50
Chapter 6: Discussions and Implications 52
6.1. Discussions 52
6.1.1. Role and benefits of transformational leadership 52
6.1.2. Research question 1: What is the role of transformational leadership during uncertainty? 53 6.1.3. Research question 2: What is the effect of transformational leadership on organizational
performance during uncertainty? 54
6.2. Implications 55
6.2.1 Managerial implications 55
6.2.2. Theoretical implications 56
6.2.2.1 Link between theory and reality 56
6.2.2.2.Future Research 57
Chapter 7: Limitations 58
7.1. Limitations of the research 58
Appendix i: Interview guide
1
Chapter 1: Introduction
This chapter provides a background of the research, problem discussion, and an outline of the importance of leadership. The research purpose and research questions conclude the chapter.
1.1. Background
The global health crisis caused by COVID-19 was unprecedented and created uncertainty in many sectors (Al Saidi et al., 2020). It is posing one of the greatest threats in recent human history as the virus has spread rapidly worldwide, affecting the lives and livelihoods of billions of people (Al Saidi et al., 2020). COVID-19 is one of the turning points in history, shuffling social and economic norms, creating uncertainties, and triggering a new human era (Al Saidi et al., 2020). For organizational leaders, this situation aggravates the challenges associated with decision-making and requires an adaptive response to deal with it (Ahern Loh, 2020).
Subsequently, just like their communities, organizations are in crisis mode (Dirani et al., 2020). Governments, communities, and organizations face the same unprecedented levels of uncertainty and seek guidance from their leaders (Dirani et al., 2020). Leaders’ability to predict, prevent, manage, and overcome crises and uncertainty is critical for organizational success inthe private and public sectors (McCarthy, 2014). One of the vital challenges leaders face is that what they thought they knew about the order of systems is changing and could lead to a breakdown or breakthrough. Essentially, the COVID-19 pandemic is an ultimate test for leadership worldwide (Ahern Loh, 2020). While some will rise to the occasion, others will struggle to manage this crisis of unprecedented proportions.
In times of uncertainty, people look up to their leaders (Bartsch et al., 2020). Thereforeleaders need to provide the necessary guidance, inspiration, and motivation for their followers and members during the time of uncertainty (Shadraconis, 2013). Throughout history, crises that present uncertainty due to unpredictable nature, such as bushfires, floods, and COVID‐19,have presented numerous challenges for leaders. Leaders must detect incoming issues in a rapidly changing situation and make effective decisions based on limited information (Bartsch et al., 2020). Subsequently, crises and major disruptions bring leadership values into focus (Bartsch et al., 2020). Therefore, leaders need clarity about their personal and organizational values to inspire, motivate and guide the followers, team members, and subordinates, as suggested by Shadraconis (2013). The COVID‐19 pandemic has provided many opportunities to observe and reflect on leadership at the international, national, and local levels (Bartsch et al., 2020). However, there is limited literature on leadership in times of uncertainty (Bartsch et al., 2020).
2 Now more than ever, a leader should always seek to ‘say what they do and do what they say’
(Dirani et al., 2020). The current crisis, caused by COVID-19, is having and will continue to significantly impact the individual, institutional, societal, and global levels (Dirani et al., 2020). At the institutional level, the pandemic highlights the role of leaders and leadership in reshaping their organizations to survive the uncertainty. Furthermore, times of uncertainty represent an opportunity for goal-driven, strategic leaders to turn challenges into wins and eventually give their organizations a competitive advantage (Dirani et al., 2020).
The COVID‐19 pandemic has illustrated just how good leadership can be and vice versa (Roberts, 2020). Firstly, COVID-19 has shown that effective crisis response is a living (co- evolving) system (Dirani et al., 2020). Moreover, suppose a leader has a history of placing significant decisions and actions in the context of core values. In that case, it paves the way for crisis response decisions within this same discourse (Dirani et al., 2020).
In times of crisis, silence is not golden; crisis communication should integrate policy, operations, and communications, and a leader communicates most powerfully by what they do (Al Saidi et al., 2020). Leadership lessons in a crisis also apply to leadership generally;
good governance, personal integrity, developing capacity, equipping staff, effective mobilization, good communication, being present, and responding to need are the core curriculum of ‘Leadership 101 (Al Saidi et al., 2020). Influential leaders ensure good coordination, given the socioeconomic and health dimensions of the pandemic. Also, decisive leadership appreciates the need for trusted public communication (Al Saidi et al., 2020).
Leadership is a process of social influence, which maximizes the efforts of others towards the achievement of a goal (Kruse, 2013, p.3). Leadership is of paramount importance as leaders set the tone for the organization they lead; research shows that transformational leadership positively influences the organization’s symmetrical communication system and employee–
organization relationships, positively affecting organizational performance (Men, 2014).
However, though commonly assumed to be incredibly significant, leadership influenceusually is not studied in terms of the variance accounted for in organizational performance (Lieberson& O’Connor, 1972).
Severe uncertainty means that survival now requires that humankind transition its way of thinking. More specifically, “a new type of thinking is essential if mankind is to survive and move toward higher levels” (Einstein, 1946 as cited in King & Badham, 2018). While this is an old quote, it most certainly remains pertinent in the face of uncertainty leaders faced because of the COVID-19 pandemic.
In a rapidly changing world, organizations must adapt quickly to meet the needs of their changing environment (Shadraconis, 2013). According to Shadraconis (2013), organizations can only remain relevant and achieve long-term success and sustainability by adopting a transformative model of leadership that addresses the needs of their fluctuating environment.
What governments, corporations, hospitals, schools, and other organizations need now, more than ever, are what “real leaders’' who “help us overcome our limitations” (Harvard Business
3 Review, 2020). Leaders today need to manage uncertainty and complexity, navigate the unrelenting pace of change, meet an insatiable need for innovation, stay grounded with constantly shifting goals and expectations, and lead people through the discomfort. What is needed now is courageous leadership, leaders who are willing to make tough decisions and have difficult conversations (Leadership Forum, 2020). Moreover, it appears that influential leaders believe in a partnership-driven solidarity response to the pandemic and implement a decisive, open, and compassionate leadership style (Al Saidi et al., 2020).
More specifically, leaders need to provide the necessary guidance, inspiration, and motivation for followers/members of an organization during uncertainty. According to Mumford et al.
(2007), leadership can make a crucial difference to people, groups, and organizations under crisis conditions. Simply because a leader is intelligent and has performed well during stable operating periods does not mean that the leader will respond appropriately during a crisis (Mumford et al., 2007 as cited in Shadraconis, 2013). Moreover, leaders must understand when a poor decision has occurred and when it is necessary to change course. Through conducting informal meetings, transformational leaders can discover problems, address issues, and provide attention to the individual needs of followers (Bass and Riggio, 2006 as cited in Shadraconis, 2013). Leaders need to shine and lead during uncertain times, relying on a well-developed perception, effective decision-making, and make-it-happen skills. Leaders guide their organizations through unpredictable and undesirable situations through learning to manage uncertainty (Alpers, 2019). Organizational leaders and managers can implement a more unified transformational leadership approach to deal with such uncertainty (Shadraconis, 2013).
Overall, an effective leader must have vision, direction, and purpose (Bromley & Kirschner- Bromely, 2007). Vision is a necessary tool for achieving organizational results that add value to the organization, society, and the environment. It is the leader’s responsibility to develop, transform, sustain and communicate that vision (Bromley & Kirschner-Bromely, 2007, p.1).
1.2. Problem discussion
Ultimately, there is limited information available on leadership in times of uncertainty, which fortunately results from the limited occurrence of crises of this magnitude (Gardneret al., 2010). Subsequently, there is a lack of knowledge on the impact of uncertainty in the international business environment; and there is no comprehensive framework on different types of uncertainty and coping strategies used by leaders and managers during times of uncertainty (Sharma et al., 2020). This void makes it difficult for organizational leaders and managers to develop appropriate strategies (Sharma et al., 2020).
It would be naive to assume that a crisis on the scale of COVID-19 will never happen again.
Therefore, it is essential for the researchers of this thesisto explore this research gap and
4 attempt to outline what makes leaders stand out in a positive light in times of uncertainty, and vice versa.
There are several reasons why research on this topic is necessary. Firstly, to fill the research gap concerning leadership during uncertainty. Additionally, this will create a foundation for future research. The results of the studyare generalizable and relevant to many industries.
Moreover, findings have practical implications for business managers in leadership roles during times of uncertainty.
Therefore, research on leadership during the uncertainty can identify its managerial implications on organizational performance and enhance the limited body of academic literature available on the topic currently. COVID-19 provides the context for the uncertainty studied. However, researchers explicitly address that this is simply the context for the uncertainty and not a focal point of this research. Subsequently, the results and implications regarding leadership are not limited to the COVID-19 pandemic but instead widely applicable to leadership during uncertainty in general. Therefore, the implications of this research not only enhance lacking academic literature on the topic but also provide much-needed managerial and practical implications for leaders facing uncertainty.
1.3. Research Purpose
This research investigates the relationship between transformational leadership style and uncertainty and the subsequent impact on organizational performance. The studyaims to increase knowledge surrounding corporate leaders' approaches towards tackling uncertainty.
1.4. Research Questions
Research question 1: What is the role of transformational leadership during uncertainty?
Research question 2: What is the effect of transformational leadership on organizational performance during uncertainty?
5
1.5. Delimitation
This research concentrates on the effectiveness of transformational leadership in times of uncertainty. Data collection took place on five mining sector managers in Western Australia.
The interviews were anonymous to encourage active participation and honest responses, which aids in the validity and reliability of the research findings.
6
Chapter 2: Literature Review
This chapter overviews existing studies and literature that involve leadership, uncertainty, transformational leadership, leader-follower relationship, organizational performances, and COVID-19. Then the theoretical framework is presented and later used in the data collection and analysis sections.
2.1. Leadership
The leader of an organization is the person who is allegedly the most qualified, most knowledgeable, strongest—and sometimes the loudest (Al Kahjeh, 2018). People perceive an organization as the person in charge (Bromley & Kirschner-Bromely, 2007). Leadership is the way people are motivated by a leader to achieve organizational goals and is one of the critical determinants associated with the success and failure of any organization (Al Kahjeh, 2018).
Leadership styles include six categories: transformational, charismatic, transactional, democratic, autocratic, and bureaucratic (Al Kahjeh, 2018).
The transformational leadership style focuses on developing followers through considering their needs (Al Kahjeh, 2018). Managers that focus on transformational leadership develop the overall value system of the employees, development of moralities, skills, and motivation level (Bass and Avolio, 1994, as cited in Al Kahjeh, 2018).
Charismatic leadership is one of the most successful leadership styles. It involves developing a vision and inspiring followers to execute accordingly; it invites innovation, creativity and is motivational for employees (Germano, 2010, as cited in Al Kahjeh, 2018).
A leader is known as a transactional leader if he/she is always willing to give something in return to the followers (Uchenwamgbe, 2013). Examples of this can include a promotion, pay raise, performance reviews, new responsibilities, etc.; hence, transactional leadership is exchanging targets and rewards between the management and the employees (Ojokuku et al., 2012 cited in Al Kahjeh, 2018).
Tannenbaum and Schmidt (2012) have defined democratic leadership as decentralized decision-making made by all subordinates. In the democratic leadership style, the potential for weak execution and poor decision-making is high. However, democratic leadership is also known to motivate employees to perform better, as employees feel that their views and opinions are more valued. Another big problem associated with democratic leadership is the assumption that everyone has a shared level of expertise as they are all actively involved in decision-making processes (Rukmani et al., 2010, as cited in Al Kahjeh, 2018).
Autocratic leaders want their subordinates to work according to their preferred methods, which often appear bossy (Obiwuru et al., 2011, as cited in Al Kahjeh, 2018). Typically,
7 autocratic leaders retain decision-making rights (Obiwuru et al., 2011, as cited in Al Kahjeh, 2018).
Bureaucratic leaders influence subordinates to follow the policies and procedures (Germano, 2010, as cited in Al Kahjeh, 2018). The leaders are strongly committed to their processes and procedures. A downfall of bureaucratic leadership is that it does not lead to the development and motivation of the employees. These leaders focus on their tasks systematically (Germano, 2010, as cited in Al Kahjeh, 2018).
Over the last decade, contextual leadership has been a trending topic in leadership research (Oc, 2018). This particular style roots back to Fiedler’s (1978) contingency model. It examines how situational or contextual factors lessen or enhance the impact of leadership practices. It also explores how leadership takes place in specific contextual settings (Day and Antonakis, 2012). Contextual leadership focuses on both capability and adaptability (Liden and Antonakis, 2009). It focuses on leaders' ability to determine trends amid complexity, uncertainty, and adaptability to shape the events (Liden and Antonakis, 2009). Through this leadership style, leaders adjust their approach to the situation and according to the followers’
needs (Oc, 2018).
Essentially, when organizations face uncertainty, the leader’s impact on a group or team performance is more significant (Mumford, Friedrich, Caughron, and Byrne, 2007). In those times, leadership can make a crucial difference to people, groups, and organizations (Mumford et al., 2007). Moreover, during uncertainty, new idea generation and critical thinking are required by leaders (Mumford et al., 2007).
According to Ahern and Loh (2020), trust is necessary for transformative and collective action during uncertain times. They stated that subsequently, to bring about confidence among followers and employees, leaders need to take appropriate action via preparation and planning, seek information and intelligence, adapt, and carry out a coordinated response.
Ahern and Loh (2020) suggested that organizational leaders need to take responsibility and accountability; offer hope; create a credible vision; develop guidance, and remain closely connected to people on which their decisions are impacting. On the other hand, according to Anderson (2018), leaders need to realize that the information and data available to them early in a crisis might not be complete or entirely accurate. Therefore, leaders can apply their experience to tackle these situations, leveraging the traditional and indirect experience and then adapting lessons from their past to the current conditions (Anderson, 2018).
Uncertainty and crisis can change the way people respond to their leaders; in times of uncertainty, followers look up to their leaders to provide a clear vision and direction for the future and pay close attention to how the leaders react to the uncertainty (Storey, Hartley, Denis, Hart, Ulrich, 2017). For instance, leaders are more likely to emerge as transformational in crisis and uncertain situations (Trice & Beyer, 1991 stated by Storey, Hartley, Denis, Hart,
& Ulrich, 2017). Leaders are not immune to evaluating how they respond to uncertainty and crises (Bligh, Kohles, & Pillai, 2011). Leading an organization successfully during a crisis
8 period can cause leaders to appear confident, charismatic, and effective. George W. Bush is a prime example of this; he was considered an extremely uncharismatic leader before 9/11.
However, following his response, President Bush was regardedas a highly charismatic leader (Bligh, Kohles, & Pillai, 2011).
2.2. Transformational Leadership
Transformational leadership is a change-focused perspective of leadership that reflects a leader’s commitment to achieving the goals of an organization while simultaneously meeting the needs of the individuals who make up that organization (Burns, 2010, as cited in Caldwell
& Anderson, 2020).
According to Stephenson (2009), transformational leaders are adaptable; they can be leaders and followers. They can embrace the notion of emergence and hierarchy with shifting leadership roles based on competence and contextual appropriateness. Most of all, transformational leadership is about participation and collaborative creation for mutual benefit (Montuori & Donnelly, 2017).
Transformational leadership theoryrefers to the concept provided by Burns (1978) and Bass (1985). Political historian and leadership scholar James MacGregor Burns provided the initial framework for transformational leadership theory and identified two opposites: transactional leadership and transformational leadership (Burns, 2010). According to Burns, leaders maintain a relationship with their followers as a series of exchanges or bargains to satisfy current needs in transactional leadership. Transformational leadership leaves the traditional model's core and achieves desired performance by developing, intellectually stimulating, and inspiring followers to transcend their self-interests for a higher collective purpose” (Howard and Avolio, 1993). American scholar of leadership studies and organizational behavior fields Bernard Morris Bass also contributed to transformational leadership. According to Bass (1985), transformational leaders raise physiological underlings to make perceptions of leadership. Leaders following transformational leadership style can make perceptions as the individuals who can support and give care to the underlings with individualized consideration through inspirational motivation and charisma (Bass, 1985).
Transformational leaders empower followers and help them grow by aligning individual and group goals with the leader's priorities and the organization's objectives (Bass & Riggio, 2005, as cited in Caldwell & Anderson, 2020). Moreover, transformational leaders are committed to values and outcomes that serve the long-term interests of society (Caldwell, Dixon, Floyd, Chaudoin, Post, & Cheokas, 2012 as cited in Bruce et al., 2019).
Transformational leadership enhances the followers' motivation, morale, and performance through several mechanisms (Montuori & Donnelly, 2017). Transformational leaders
9 motivate and inspire others and get respect, trust, followers, and people around them (Yukl, 2010).
Evidence demonstrates transformational leadership's benefits over autocratic or unilateral forms of leadership (Wang, Oh, Courtright, and Colbert, 2011). Moreover, for organizations to be successful, they need leaders who can cope with change, maintain daily operations, and provide a competitive advantage. Transformational leaders can do this and stimulate and inspire their followers, resulting in improved output, performance, and job meaningfulness (Wang et al., 2011).
Transformational leaders use their visions to clarify organizational objectives and refocus direction (Shadraconis, 2013). They can demonstrate dedication while building follower trust through self-sacrificial behaviors and behavioral integrity, fairness, and follower empowerment (Bass and Riggio, 2006). Transformational leaders help followers build commitment to the already set organizational goals through role modeling and idealized influence; thus, inducing them to personally identify with the leader's goals, interests, and values (Bass and Riggio, 2006). When leaders of an organization start to sacrifice, it can signal that a combined effort is taking place and that combined effort can increase idealized influence (Bass and Riggio, 2006).
Transformational leaders seek feedback and new ideas from people around them and do not publicly criticize the team members' mistakes (Bass and Riggio, 2006). This style of leadership, in many ways, encourages overall organizational learning.
Transformational leaders empower followers by encouraging independent thought, delegating responsibility, bringing in self-awareness, and challenging the status quo, resulting in employees being more effective, innovative, and committed to the organization. Furthermore, transformational leaders can guide followers through the sensemaking process during uncertain times by providing an enthralling vision, which emphasizes transcending self- interest for the overall benefit of the collective (Shadraconis, 2013).
According to Shadraconis (2013), transformational leadership is not a list of items required, things to be done, or points to be considered. Instead is a formulaic manner to engage with followers. Transformational leaders act with courage, integrity and challenge assumptions (Shadraconis, 2013). In such times, transformational leaders clarify roles effectively and provide the right set of guidance to their followers (Shadraconis, 2013).
Previous studies suggest a significant relationship between employees’ work performance and a transformational leadership style (Al-Amin, 2017). Advani and Abbas (2015) and Sundi (2015) also stated that transformational leadership influences motivating employees’ work performance effectively. Additionally, according to Mangkunegara and Huddin (2016), transformational leadership affects the work performance of employees positively and significantly.
10 Authentic transformational leadership is a clear and encompassing view of the future (Bromley & Kirschner-Bromely, 2007, p.1). The leader hopes to establish morale, integrity, a sense of justice, and a clear vision (Bromley & Kirschner-Bromely, 2007, p.1).
Transformational leaders are more concerned with the individual and their intellectual stimulation while possessing charisma and inspiration. They inspire subordinates to go beyond their self-interest and act for the organization's good (Bromley & Kirschner-Bromely, 2007, p.1). Additionally, transformational leaders are people who can create significant change in both followers and the organization with which they are associated (Griffin, 2003 as cited in Hay, 2006). They lead changes in mission, strategy, structure, and culture, focusing on intangible qualities like vision, shared values and ideas, and relationship building. They can give significance to diverse activities, illustrating, for example, how different people and groups might be working towards larger organizational objectives. Transformational leaders also find common ground that allows them to enlist followers in change processes (Hay, 2006).
Bromley & Kirschner-Bromle (2007) suggested that six competencies are necessary to lead an organization’s transformation. These include; having, holding, conveying, and fulfilling the vision of the transformed organization, learning systems thinking and creativity, effective communication, and interaction building capability in self and others (empowerment), passion, charisma, and energy, as well as protecting the organization and its employees through proper ethics and morals.
Hay (2006) suggested that a transformative leader's critical characteristics include having a clear sense of purpose, being value-driven, acting as a robust role model, having high expectations, persistent, self-knowing, and sharing a perpetual desire for learning.
Additionally, transformative leaders love work, are life-long learners, and identify themselves as change agents.
2.3. Leader-follower Relationship
Leadership is an influencing process, which takes place between leaders and followers to achieve a common or shared goal (Achua & Lussier, 2007). Leadership exists in a context where leaders function (Liden and Antonakis, 2009). In an organizational context, leaders lead teams, members, organizations. Leadership styles impact members, groups, and organizations (Graen&Uhl-Bien, 1995). Work-related attitudes and behaviors of team members depend on how they respond to their leader (Rockstuhl, Dulebohn, Ang, & Shore, 2012).
The relation between the leader and team members affects the performance of individuals and teams (Le Blanc and González-Romá, 2012). According to Lord & Maher (1991), the impact of leadership depends on both leaders and followers. They mentioned leaders could influence subordinates’ and followers' self-concepts and behavior. Graen and Scandura (1987) noted
11 that subordinates and followers are concerned about defining the organizational role and about learning to perform acceptably. They further said that leaders are essential components of defining managerial roles and the individual.
The Leader-Member Exchange Theory, which first emerged in the 1970s, indicates the relationship between organizational leaders and members of their teams. It is a two-way interactive relationship between leaders and followers (Graen&Uhl-Bien, 1995). Leader- member exchange theory explains how relationships with leaders affect team attitude, cognition, emotions, and behavior of team members (Erdogan and Bauer, 2010). Studies showed that the relationship between Leader-Member Exchange Theory differentiation and outcome variables such as employees’ attitude, cognition, and behavior is mixed, and relationships are dependent upon other factors. Other factors affect this relationship. For example, scholars found that Chinese-owned organizations have greater power distance between the leader and team members than Western countries, impacting job performance and individual creativity (Richards, 2014). Overall, the leader-member exchange theory emphasizes the relationship between the leader and their followers, team members, or colleagues (Erdogan and Bauer, 2010).
2.4. Uncertainty
Uncertainty is the shortage of knowledge and information about probabilities of the future state of events influencing the organization (Knight, 1921). Uncertainty and its role in decision-making are essential phenomena in this era of globalization (Sniazhko, 2019).
Uncertainty affects the speed of international expansion, internationalization paths, entry mode choices, and level of commitment (Aharoni, Tihanyi, & Connelly, 2011).
There is confusion between risk and uncertainty (Alpers, 2019). Many use these two terms interchangeably. However, risk and uncertainty are different (Alpers, 2019). Most risks can be anticipated and measured with varying degrees of probability. On the other hand, uncertainty is a subjective, multidimensional concept, which can vary based on its source and degree.
Essentially, risk can be measured, whereas uncertainty is challenging to measure (Alpers, 2019). The COVID-19 pandemic is a good example. Organizational leaders and managers could estimate the perceived financial and operational risk but may struggle to deal with the uncertainty about COVID-19's broader impact on the economy and society. It is a discontinuous risk where uncertainty itself and severity are measured by the number of people killed and the duration of the disaster (Sniazhko, 2019).
There are many contributing forces of uncertainty, including leadership upheavals, wild market fluctuations, market shifts, competitor upheavals. Additionally, lack of solid planning, ineffective communication, a culture that discourages thinking also contributes to uncertainty (Mathur & Pater, 2019). Moreover, research indicates several dimensions of uncertainty, including environmental uncertainty, industry uncertainty, and firm uncertainty.
12 Environmental uncertainty includes political, economic, government, cultural, discontinuous uncertainty and represents both formal and informal parts of a country’s environment.
Industry uncertainty relates to competition, demand, input, and technological doubt, whereas firm uncertainty includes behavioral and operating uncertainty (Sniazhko, 2019).
Managing uncertainty involves reducing the probability of undesirable outcomes (Figueira- de-Lemos & Hadjikhani, 2014). Organizational leaders and managers tackle uncertainty with strategies that help them either mitigate or cope with uncertainty (Sniazhko, 2019). Reducing uncertainty guides an organization's behavior whileadapting itsapproach (Sniazhko, 2019).
Moreover, dealing in some cases requires the leaders to change strategy (Miller, 1992).
Coping with uncertainty does not attempt to influence uncertainty; instead, it tries to find ways to adapt and minimize the impact of uncertainty, whereas reducing uncertainty strategies enables organizations to tackle uncertainty at its source (Simangunsong, Hendry, &
Stevenson, 2012).
Organizational leaders and managers reduce uncertainty through information gathering, proactive collaboration, and networking; and cope with uncertainty through flexibility, control, imitation of competitors, reactive cooperation, and avoidance (Simangunsong, Hendry, & Stevenson, 2012). The characteristics of an individual decision-maker during uncertainty include the leader's level of hierarchy within the organization, their ability to make decisions and tolerate ambiguity (Sniazhko, 2019).
During a pandemic like COVID-19, managers commonly implement reactive collaboration to deal with environmental or industry uncertainty (Figueira-de-Lemos & Hadjikhani, 2014).
During periods of uncertainty, organizations must adapt quickly to meet the needs of the changing environment. Organizations can achieve long-term success only when they adopt a model of leadership that addresses their fluctuating environment (Shadraconis, 2013).
2.5. COVID-19
COVID-19 is a 'disaster of uncertainty' with obscurity about nature and the course;the uncertainty prevailed due to a lack of knowledge about its lethality, duration, and ambiguity in messaging from world leaders (Everly, Wu, Cumpsty-Fowler, Dang, & Potash, 2020). The outbreak has disrupted the world's political, social, economic, religious, and financial structures (Verma et al., 2021).
The pandemic started in December 2019 in Wuhan of Hubei province in China and spread worldwide in the following months. The World Health Organization (WHO) declared COVID-19 a public health emergency of international concern on March 11, 2020. As a result, over 80 countries worldwide closed their borders from transitioning countries, ordered businesses to close operations, and instructed respective populations to self-quarantine (Verma et al., 2021). Subsequently, challenges arose as border closures and restrictive
13 measures were taken by countries to contain and better prepare to deal with the pandemic's fallout (Dube, Nhamo, & Chikodzi, 2021). Organizations across the world, irrespective of their size, started experiencing contractions in production, and transport became restricted or impossible. Concern among consumers and organizations hampered usual consumption patterns and created market irregularity (McKibbin & Fernando 2020).
2.6. Organizational Performance
Performance is a contextual concept associated with the phenomenon studied (Hofer, 1983 as cited in Carton & Hofer, 2006). Performance is a measure of change regarding the organization's financial state that results from management decisions and the execution of those decisions by members of the organization. Since the perception of these outcomes is contextual, the measures used to represent performance are selected based upon the circumstances of the organization(s) being observed (Carton, 2004). Moreover, each organization has a unique set of circumstances, making performance measurement inherently situational (Cameron &Whetton, 1983 cited in Carton, 2004).
Therefore, one of the core purposes of both entrepreneurship and strategic management theory and research isorganizational performance improvement (Cameron & Whetten, 1983;
Eisenhardt & Zbaracki, 1992; Schendel & Hofer, 1979; Venkatraman &Ramanujam, 1986 as cited in Carton, 2004). However, organizational performance is one of the most important constructs in management research (Richard et al., 2009). As concluded in a study by (McGivern &Tvorik), organizational factors explain almost twice as much variance in profit rates as do economic factors (McGivern &Tvorik, 1997). Nevertheless, the most exciting questions in this area are not technical; they are conceptual; not how to measure effectiveness or productivity, but what to measure, how definitions relate to other aspects of an organization's structure, functioning, and environmental relations. Problems plaguing this field are not mere annoyances to be brushed aside (Kanter, 1981).
Performance measurement is an active field of research in management science, attracting interest from academic and practitioner circles. Measuring and analyzing organizational performance plays a vital role in turning organizational goals into reality. Nowadays, many managers recognize this and put conscious effort into defining company-specific goals, performance indicators and evaluate them. The first step towards improving this area is to make explicit the available knowledge on performance indicators and how they are related (Popova &Sharpanskykh, 2010).
In general, the concept of organizational performance refers to the idea that an organization is the voluntary association of productive assets, including human, physical, and capital resources, to achieve a shared purpose (Alchian&Demsetz, 1972; Barney, 2001; Jensen
&Meckling, 1976; Simon, 1976). Those providing the assets will only commit them to the organization so long as they are satisfied with their value in exchange, relative to alternative
14 uses of the assets. As a consequence, the essence of performance is the creation of value (Carton, 2004).
2.6.1. Measuring Organizational Performance
Measuring organizational performance is complex, especially when what has to be measured keeps changing (Hubbard, 2009). However, in general, organizational performance is evaluated by determining the satisfaction (degree of satisfaction) of vital organizational goals (Popova &Sharpanskykh, 2010).
2.6.2. The Balanced Scorecard
The “Balanced Scorecard” approach developed by Kaplan (1984) combines both historical accounting perspectives as well as operational measures that capture information about expected future organizational performance (Kaplan, 1984 as cited in Carton, 2004).
2.6.3. Stakeholder Theory
Stakeholder theory assesses organization performance against the expectations of various stakeholder groups withparticular interests in the effects of the organization’s activities. Its perspective of organizational performance incorporates shareholder value but recognizes that shareholders are just one group of stakeholders and only relevant to those organizations that issue shares (Hubbard, 2009).
2.6.4. Triple bottom line
The triple bottom line stems from the stakeholder theory, but it takes a much broader perspective of the stakeholders affected by the organization than does the BSC (Hubbard, 2009). It relates to the idea that a firm should measure its performance concerning stakeholders, including local communities and governments, not just those stakeholders with direct, transactional relationships (such as employees, suppliers, and customers). The TBL is an unsettling concept for many organizations because it implies that the firm’s responsibilities are much broader than simply those related to the economic aspects of producing products and services that customers want, to regulatory standards, at a profit. The TBL adds social and environmental performance measures to the financial measures typically used in most organizations (Hubbard, 2009).
2.6.5. Sustainability
The emergence of the concepts of ‘sustainable development’ and ‘sustainability’ reflect a seminal change in global thinking, forcing firms to re-evaluate their approach to measuring organizational performance. At the macro level, the World Commission on Environment and Development defined sustainable development as development that ‘meets the needs and aspirations of the present without compromising the ability of future generations to meet their own needs (Hubbard, 2009).
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2.7. Organizational and leadership performance in uncertainty
The performance of an organization covers broader areas, including the connection between performance and organizational goals (effectiveness), organizational resources (efficiency);
and,the satisfaction of the stakeholders (relevancy) (Jenatabadi, 2015). Moreover, organizations perform various activities to accomplish their organizational objectives.
Quantifying these activities ascertains the level of performance so that management can make informed decisions on where, if needed, within the processes to initiate actions to improve performance.
Standard assessment practices use subjective measures which link the concept of success to expectations (King & Badham, 2018). Popular organizational performance measures include achievement of sales targets, turnover, profit, customer satisfaction, and employee engagement. In the face of this endemic uncertainty, there is an imperative to help leaders develop the capabilities they need to navigate it. The level of resources committed to development programs shows that companies are trying, as such development is crucial in generating the forms of intelligence and resilience needed to sustain performance (King &
Badham, 2018).
2.8. Theoretical Framework
This section consolidates the link and relationship between existing literature, theoretical frameworks, and the proposed research purpose. Since the authors studied several theoretical concepts, they have narrowed this down to the one that aligns more with the research purpose and research questions.
2.8.1 Framework
Transformational leaders can motivate others, inspire their followers to admire, respect, trust, and be loyal to them (Yukl 2010 as cited in Shadraconis, 2013). Organizations need leaders who can cope with change, maintain daily operations, and provide a competitive advantage.
Transformational leaders can stimulate and inspire their followers, rallying them behind a collective cause, resulting in improved output, performance, and job meaningfulness (Purvanova, Bono, and Dzieweczynski 2006; Wang et al. 2011 as cited in Shadraconis, 2013).
Transformational leadership consists of four behavioral components or dimensions. These include idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration (Bass and Bass 2009 cited in Shadraconis, 2013).
Levine et al. (2010) argue that the most common verbs to describe the four components of transformational leadership are: influence, inspire, motivate, and communicate, respectively.
16 Furthermore, Levine et al. (2010) argue that effective articulation, motivation, and inspiration are all components of effective communication. Thus, practical communication skills are a requirement for a transformational leader. Without these skills, a leader would find it difficult or impossible to accomplish any of the three principles of transformational leadership (Levine et al., 2010 as cited in Shadraconis, 2013).
Idealized influence
Idealized influence is the level of social identification that leaders, following transformational leadership style, create among their followers, resulting in the desire to identify with him or her closely. Increases in idealized influence can result from leaders sharing risk, cultivating trust and respect, and engaging in self-sacrificing behavior (Oke et al., 2008 cited in Shadraconis, 2013).
Transformational leaders help build follower commitment to organizational goals.
Transformational leaders can induce followers to personally identify with the leader's plans, interests, and values (Bass and Roggio 2006 as cited in Shadraconis, 2013). When leaders share in the sacrifice of an organization, it can signal that there is a combined effort, increasing idealized influence. However, when a leader’s actions are not congruent with the framing of a message, there may be a reduction in follower commitment and motivation (Shadraconis, 2013).
Inspirational motivation
The inspirational dimension refers to how leaders following a transformational leadership style can motivate and inspire followers by setting realistic expectations and demonstrating a commitment to shared visions (Oke et al. 2008 cited in Shadraconis, 2013).
A vision can be a collaborative effort that addresses disparate issues that an organization may be facing. A compelling vision serves as a meaningful, forward-looking goal to followers, acting as a roadmap for the organization's future direction (Bass and Bass 2009 as cited in Shadraconis, 2013). Transformational leaders can create resonance by articulating a shared vision. Influential leaders can monitor the effects of actions undertaken to achieve a dream and adjust as necessary. Vision can be likened to mythmaking as a means of inspiring followers and compelling them into action. Myths can have a lasting effect and work to shape an organization or a group (Schien 2004). As individuals assist in achieving group goals, the more integrated they become as a part of the group (Schien 2004 cited in Shadraconis, 2013). Ultimately, this can act as a psychological contract increasing commitment to the organization and transformational leader (Shadraconis, 2013).
17 Intellectual stimulation
Intellectual stimulation refers to a transformational leader’s ability to motivate subordinates to discover new ways of accomplishing tasks (Levine, Muenchen, and Brooks 2010 cited in Shadraconis, 2013).
According to Bass and Bass (2009), “Intellectually stimulating leaders help make their followers more innovative and creative. They question assumptions, reframe problems, and look at old problems in new ways'' (Bass and Bass, 2009 as cited in Shadraconis, 2013).
Leaders must be adaptive to face the problems of a rapidly changing operating environment.
To be adaptive, leaders should encourage feedback and novel approaches to current issues or new issues as they arise. Transformational leaders solicit feedback and new ideas and do not publicly criticize the mistakes of individual members (Bass and Riggio 2006 as cited in Shadraconis, 2013).
Individualized consideration
Individualized consideration is a transformational leader’s ability to identify and develop the higher-order needs of subordinates while providing the necessary feedback to achieve organizational goals (Levine et al. 2010 as cited in Shadraconis, 2013). Developing this is accomplished by setting examples, assigning subordinates specific and relevant tasks, and creating new learning opportunities in a supportive environment (Yammarino et al. 1991;
Bass and Bass 2009 cited in Shadraconis, 2013). Transformational leaders serve as mentors and coaches to followers, provide individualized consideration of follower needs, and encourage two-way communication (Bass and Bass 2009 cited in Shadraconis, 2013).
Individualized consideration allows leaders to make interactions with followers more meaningful. Leaders who personalize communication and encourage two-way communication can find it an asset for their organization (Shadraconis, 2013).
Empowerment
Quinn and Spreitzer (1997) identified four shared characteristics of empowered individuals:
self-determination, competence, impact, and meaning. When employees have a sense of self- determination, they are free to determine many aspects of how they do their work and are not micromanaged (Quinn and Spreitzer 1997 as cited in Shadraconis, 2013). Competence refers to the confidence that employees possess regarding their ability to perform tasks and produce high-quality work (Quinn and Spreitzer 1997 cited in Shadraconis, 2013). Impact refers to the belief that employees hold about their ability to exert influence over their work and others within their workgroup, both leaders and co-workers (Quinn and Spreitzer 1997 as cited in Shadraconis, 2013). Employees who have a sense of meaning care about the work they do and feel that their work is essential (Quinn and Spreitzer 1997 as cited in Shadraconis, 2013).
The framework is inthe data analysis chapter of this research to facilitate the research questions and analyze the empirical data.
