Transformational Leadership Builds on Reward System

"Transformational leadership," a popular management style focused on the leader's charisma and extolling of shared values, was not much more effective than the typical system of goals and rewards in a review of all studies on the subject. Instead, the more visionary style appears to build onto the reward system, according to Timothy Judge and Ronald Piccolo of the Univ. of Florida.

The two identified nearly 1,300 relevant journal articles and doctoral dissertations, then cut that down to 68 studies, 18 dissertations, and one set of unpublished data providing enough information to be analyzed. They compared the two leadership styles with three others: merely addressing problems, but when signs first arise; merely addressing problems after the fact; and no leadership, referring to managers who "avoid making decisions, hesitate in taking action, and are absent when needed." Each of these five categories were tested for their relationship to:

• "follower job satisfaction,"
• follower satisfaction with the leader,
• "follower motivation,"
• "leader job performance,"
• "group or organization performance," and
• "ratings of leader effectiveness."

Overall, transformational leadership was only slightly more correlated to the leadership criteria than was the reward system (0.44 vs. 0.39). Both were far better than the alternatives: proactive problem management scored an 0.15, problem fixing a -0.18, and no leadership a -0.37. (Negative numbers mean when use of that style was higher, leadership ratings went lower). In short, the more proactive a manager was, the better, and having charisma and vision was icing on the cake. However, digging into each leadership factor found some differences between the top two, Judge and Piccolo report. Transformational was better than reward leadership for follower satisfaction with the leader and leader effectiveness ratings. The reward style was better for follower job satisfaction and leader job performance, and the two were equal on the remaining two criteria. Transformational style seemed "more satisfying to followers than it is effective in inducing leader and group performance..." especially when hard numbers instead of survey ratings were used for performance, the authors write.

They also point out that transformational leadership is nothing new. The study found little difference between it and so-called "charismatic" leadership that was first discussed in a book in 1921.

Although transformational leadership worked in every study setting (military, college, business, and government), the reward style was slightly better in business studies. This may simply be because business managers have greater resources to use as rewards, the authors say. The relative usefulness of transformational or reward styles did not vary by the level of leader (first-line supervisor to CEO). And there were so many overlaps between the two styles, Judge and Piccolo write, it is hard to separate them. Successful transformational leadership appears to be built upon a base of an effective reward system.

Source: Judge, T., and R. Piccolo (04), "Transformational and Transactional Leadership: A Meta-Analytic Test of Their Relative Validity," Journal of Applied Psychology 89(5):755.