Leadership has a strategic importance within organizations. Many theories have been developed by the researchers to explain it and many leadership styles have been also developed. The effective leader is the one who can contribute to the organizational progress. He has to be visionary, experimental, can initiate changes and imaginative.
1.1 Theories of leadership
Many different theories introduce the characteristic that distinguishes between leaders and non-leaders. Most of the researchers today have switched from the personality-based theories to the modern situation theory. The modern theory argues that the leadership skills and characteristics determine the situation in which leadership is exercised. The contemporary theories of leadership fall under certain perspectives, represented in leadership as a process, leadership as certain behaviors and leadership as a combination of traits (Amanchukwu, Stanley & Ololube 2015).
1.1.1 The transactional theory
The model of transactional leadership was developed by Burns (1978), as cited in Yahaya & Ebrahim (2016). Then Bass (1985), as cited in Yahaya & Ebrahim (2016), has extended the work of Burns and developed the theory of transactional leadership. He assumes that leaders and followers exchange things of value which result in advance for both parties. The transactional leaders are concerned with goals accomplishment rather than the employees’ personal development. The leaders specify how work should be done and expect that the employees achieve the required objectives, then employees are rewarded according to their performance.
The transactional leadership theory describes the leader-follower relationship. The association between the leaders and follower is based upon a series of agreements between the leader and his followers. This theory is based on reciprocity as the leader and his followers influence each other. Bass and Avolio (1994) as cited in Khan, Nawaz & Khan (2016), argue that the transactional leadership is a type of contingent-reward that requires a positive and active exchange between the leader and his followers, where followers achieve the agreed-upon objectives and are rewarded. The leader shows his gratitude to the followers in the form of bonuses and promotions. Good work is exchanged with positive support, but the transactional leader might focuse on errors and avoids delayed decisions.
1.1.2 Transactional leadership style
The transactional leadership style consists of three components; contingent reward, active management-by-exception and passive management-by-exception. The Contingent rewards explain the performance expected from the followers who in return are being appreciated for their good performance. This relationship is called a contractual agreement that acts as a principal motivator. It depends on the intrinsic rewards to enhance the followers’ motivation which leads to increased job satisfaction for the followers and increases the level of confidence of the team. The second component is the active management by exception, it describes the leaders’ behavior toward the deviations of the followers’ expected performance. It is called active, as the leader does not expect that the employees can achieve more than the expected outcomes, as the business goes as usual. The leader trusts in his followers but communication with the team is poor. There are some factors that control the leaders’ behavior in the two cases, represented in the technical expertise, the high degree of precision and the time constraints. The third type is the passive management by exception. This style of transactional leadership does not make agreements with the followers and just waits for something wrong to happen then he can take an action (Khan, Nawaz & Khan 2016; Sorensen, Hasle & Pejtersen 2011).
The RETSA’s Chief Executive Officer is considered as a transactional leader, he depends on the contingent reward to influence the employees to achieve the organizational goals. The High-Performance Work Teams has a compensation agreement to be rewarded for their contribution rather than the length of service or seniority. The CEO of RETSA has created a bonus system based on 5% of salary and 30% of the profit above the performance objectives of the accountancy market sector.
RETSA has adopted a new “low cost” internet channel for the private health insurance. This system has been put into operation to complement the existing offerings for professional services organizations and trade unions. The new internet channel system maximizes the benefits of the leading-edge information systems that was developed by the high-performance teams in the accounting sector. The managerial staff at RETSA has assured the importance of engaging the junior staff, the senior management, and the stakeholders.
2.1 Employee engagement
The leaders have a vital role in the success of the organization, as the quality of the relationship between the leader and his followers is positively related to the employees’ satisfaction and motivates them to improve their performance. Successful leaders can improve the employee engagement (Ruck, Welch & Menara 2017). One action could be taken to employees is providing them training. According to Murphy and DeNisi (2008), as cited in Ruck, Welch & Menara (2017), most of the performance management actions are designed to motivate the followers to perform better. Accordingly, training could be a good action that the CEO of RETSA could use. Training keeps the employees engaged in the continuous development throughout their careers. Also, training can make the employees feel more secure about performing their job which increases their feeling of availability and lowers their anxiety. Training programs are likely to enable the employees at RETSA to cope and engage with the demand of the new “low cost” internet channel system (Gruman & Saks 2011). The appropriate training enables the employees to increase their knowledge and enhance their skills. They can know more about their job requirements. It enhances the employees’ freedom of the close supervision from their direct managers and enables creating self-efficacy and commitment (Markos 2010). Accordingly, contracting with a business school to provide the supervisors and managers with the necessary skills is not enough, as the employees at all levels need training.
2.2 Senior management engagement
Communication increases the organizational effectiveness. It could take a formal style or could be informal. The internal communication encourages the upward critical communication. Johansson, Miller, and Hamrin (2014), as cited in Ruck, Welch & Menara (2017), identify the communicative leadership as being willing to listen, receive complaints and share appropriate information. Engagement requires a strong leadership commitment through the establishment of a clear vision, mission statement and values, which the senior managers have to believe in them, own them and pass them to their subordinates. It is important that senior managers lead by example. In order to allow the senior managers to believe in the new “low cost” internet channel, one action could be taken by the CEO is conducting a two-way communication. Clear communication of what is required from them is likely to influence them. Senior managers’ involvement requires sharing of thoughts and empowering them through participative decision making (Markos 2010).
2.3 Stakeholders engagement
Engagement is important for managers, it creates a positive feeling to stakeholders. It promotes connection to work and to others as it maintains a high level of energy (Ruck, Welch & Menara 2017).The CEO of RETSA have to build a distinctive corporate culture that allows the goals and values to be aligned across all sections. Building a culture of mutual respect can keep its stakeholders engaged with the spirit of organizational culture (Markos 2010). The internal and external communication is the communication process between the organization’s strategic managers and the stakeholders. It aims to promote commitment to the organization and create a sense of belonging to it, it allows information about the changes in the environment and its evolving aims. The internal communication enables the stakeholders to understand the organizational goals and identify its values (Welch 2011).
3.1 Motivational theories
Motivation involves a collection of issues that affect the behavior of individuals (Dias et al. 2017). Different theories have emerged to describe the nature of motivation and its impact.
3.1.1 Maslow’s hierarchy of needs
One of the most famous motivation theories is Maslow’s hierarchy of needs. It assumes that people needs are function of the benefits they got. It proposes five levels of needs, the first level represents the lowest physiological needs. Basic needs include food, shelter and water. The second level is the security needs, as people need to feel secure and protected against violence. The third level of Maslow’s hierarchy is the love and belonging needs, followed by the fourth level of the self-esteem where the individual needs to be unique and self-respected. The highest level is the self-actualization, it is based on the individual satisfaction in the first four levels. Accordingly, fulfilling one needs enables the individual to move to the next level.
3.1.2 Expectancy theory
Vroom has formulated the concept of expectancy, it assumes that the action will lead to an outcome. The individual choice between alternatives involves uncertain consequences, and his choices involve expectations of possible outcomes. The maximum certainty involves a subjective certainty that an outcome will occur, but the minimal certainty indicates that an outcome will not occur. This theory has important implications, as the employees are motivated when they are offered what they need and believe it will be satisfying. This leads to performance, which leads to outcomes and satisfaction of the employee (Haque, Haque & Islam 2014).
One important factor that motivates employees is their trust in others and their workplace. The emotional linkages between individuals perform as a basis of the trustworthiness (Zeffane 2010). Moreover the position and title of the employee describe their role in achieving the organizational objectives. It could be linked to the fourth level in the Maslow hierarchy of needs of self-esteem. People leave their workplace to join another organization that offers them a higher scale which is more satisfying to them (Omar, Jusoff & Hussin 2010). This reflects the situation of RETSA when its CEO decided to implement the new “low cost” internet channel. It caused 20 times higher staff turnover amongst the temporary staff compared to the permanent staff and resulted in higher levels of absenteeism for both groups. The CEO of RETSA has to consider key factors for motivating the staff, which are considered necessary to motivate them, enhance their performance, increase their outcomes and enhance their satisfaction level and influence them to stay at RESTA, they could be stated according to Omar, Jusoff & Hussin (2010), Brown & Hewitt (2014) and Ajmal et al. (2015), as follows:
4.1 Change management methodology
Change management is necessary for organizations to enable them from adapting to the environment and achieve healthy growth. The APMG change management methodology introduces a clear model of change management. It consists of a set of concepts regarding the way organizational change is implemented. Change management takes place on three levels including the level of the individuals, groups and organization. The leadership plays important role in each level of change (Bukłaha 2012).
4.1.1 Strengths and potential weaknesses
The APMG change management methodology strengths are represented in its ability to reduce the level of bureaucracy in the decision-making process with regard to the change inputs. Also, it could be used as a communication channel between the staff that favors changes and committed to implementing changes to the organization. The weaknesses are represented in the organizational structure as it might need to be modified to enable the implementation of changes and the employees’ resistance to change due to their fear of changing the way they do their job or to lose their positions (BukÅ‚aha 2012).
4.1.2 Arguments of RESTA change management according to the APMG change management methodology:
My leadership style is transformational, this leadership style is effective in managing change at the organizational level, as it could bring new ideas and lead the innovation process in the organization. It facilitates the organizational learning, especially technological learning and the change process towards the new technology utilization. At the group level, it introduces a behavior pattern directed to the workgroup as a whole. At the individual level, it enhances the innovation on the individual level and focuses on the employees’ individual needs (Feng, Huang & Zhang 2016). If I were the CEO of RESTA, I would have changed the organizational culture towards the innovative culture, enhanced the organizational learning to prepare the staff, including the managers, permanent and temporary employees to accept the implementation of the new “low cost” internet channel system.
As a leader in RESTA, I have to find a way to fix problems, engage the employees and other stakeholders (Fraher & Grint 2016). Leadership is multi-faceted, sometimes it is required to lead from the front and sometimes it is better to lead from the behind (Soon, Yan & Bolden 2016). Acting as the RESTA CEO requires management of the complex demands, a great flexibility is required in managing the change process. Knowing as much details about the business and the organizational culture provides appropriate input to influence the actions taken when implementing organizational change. Moreover, it is important to consider the culture fit through the selection of people with values similar to the organizational values to avoid resistance to change and ensure that the employees perform to achieve the organizational goals.
References
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