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Effect of Different Leadership Styles on Organisation

Management summary

In this thesis the relationship between the predominant leadership styles in the academic literature, transformational and transactional leadership, and organization citizenship behaviour will be discussed and analyzed. In the transformational leadership  style the leader motivates and inspires followers by gaining their trust and respect. The leader communicates the goals, visions and missions in a clear way and stimulates his followers to go beyond the call of duty. Transactional leadership is based on an exchange relationship between the leader and followers. Followers receive rewards when they perform according to the standards and requirements set by their leader.

Organizational citizenship behaviour concerns those voluntary acts performed by  individual employees that are of a discretionary and voluntary nature and contribute to the effectiveness of the organization. However, when organizations exert citizenship pressures on their employees this might have some serious consequences on their workforce. These high levels of pressure to be a good citizen can result in job stress, work-family conflicts, work-leisure conflicts and might even result in quitting intensions among employees. This thesis will also focus on the desirability of OCBs within the organization and the dangers of citizenship pressures.

Chapter 1.Introduction to the thesis

1.1 Problem Indication

Organizational Citizenship Behaviour (OCB) has been a popular subject among several fields of study for the past couple of decades. OCBs are positive, individual and voluntary acts performed by employees which go beyond their job descriptions and are not directly rewarded or monitored (Organ, 1988). According to Katz & Kahn (1966) these kinds of behaviour are important to organizations because organizations depend on behaviour of their employees that go further than their job description even though these behaviours are not actively monitored and enforced.

Because of the voluntary nature of the positive acts the theory of OCBs seems to be very positive for both the individuals within an organization and the effectiveness of the organization as whole. OCB has been linked with loyalty, obedience, voluntarism, helping behaviours, altruism and other positive traits in many previous studies throughout the years (Bolino, Turnley, & Niehoff, 2004; Organ, Podsakoff, & MacKenzie, 2006). But recent studies have also investigated the “darker side” of OCB. The problem lies with the discretionary and voluntary nature of OCB. There are situations in which employees feel like OCB is expected of them, this citizenship pressure can lead to job stress, work conflicts and even quitting intensions (Bolino,Turnley, Gilstrap, & Suazo, 2010). The first part of this thesis will go further into the dynamics of OCB and will look at both the positive and negative side of OCB. The second part of this thesis will address the relation between leadership styles and OCB. Leadership styles are of great influence on the OCBs of employees (Bass, 1985; Burns, 1978). In the studies of Bass (1985) and Burns (1978)  a distinction has been made between transformational and transactional leadership. These different styles of leadership have different implications on the degree of OCB among the employees (Bass, 1985; Burns, 1978).

1.2 Problem statement

The problem statement of this thesis is formulated in one single question:

How do the different styles of leadership influence organizational citizenship behaviour ?

1.3 Research Questions

The research questions that are derived from the problem indication are:

  1. To what degree is OCB desired within an organization?
  2. What is the influence of transactional leadership on OCB?
  3. What is the influence of transformational leadership on OCB?

1.4 Methodology

The type of research that will be conducted for this thesis is a descriptive research. The thesis will be a literature study which means secondary sources will be gathered and researched (Sekaran, 2008). An analysis of the different variables will be made in order to find the answers to the formulated research questions. The links between the different variables researched in this thesis can be the basis for further empirical research. The main concepts of the research are organizational citizenship behaviour and the transformational (or charismatic) (Yukl, 1999) and transactional leadership types.

1.5 Structure

In this thesis the relationship between the two predominant leadership styles and OCB within an organization will be analyzed. The first chapter will get into the dynamics of OCB in order to determine whether or not and to what degree OCB is desirable.

This means that both the positive and negative sides of OCB within an organization will be balanced in this chapter. At the end of chapter one the first research question of this thesis will be answered. Chapter two and three will link transformational and transactional leadership with OCB. In these chapters it will become clear how the different styles of leadership stimulate OCB and which leadership style results in the largest amount of OCBs. After these chapters the answer to the problem statement is given in the conclusion. Furthermore, limitations of this research and managerial and academic implications will be discussed.

Chapter 2. Organizational Citizenship Behaviour

2.1 Introduction

Organizational citizenship behaviour is a topic that has fascinated many researchers and managers for the last couple of decades since Bateman and Organ (1983) were the first to address this topic in 1983. Nowadays in times of economical crises OCB remains an interesting subject, because in a race of the survival of the fittest organizations rely on good citizens to survive. However, recent studies of the past couple of years have reported some negative implications of OCB and have questioned the desirability of OCB (Bolino, Gilstrap, Turnley & Suazo, 2010; Korgaard, Meglino, Lester & Jeong, 2010; Van Dyne & Ellis, 2004). Vardi and Weitz (2003) have reported on the concept of organizational misbehaviour (OMB) as a counterpart to OCB in their studies.

In this chapter both the positive and negative implications of OCB and citizenship pressures exerted by the organizations will be discussed.

In order to answer the question whether or not OCB is desirable within an organization the concept of organizational citizenship behaviour has to be explained.. OCB can be defined as “individual behaviour that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the effective functioning of an organization”, according to the study of Organ (1988, p. 4). OCB is behaviour of a constructive nature by the employee, which is not a part of the formal job description (Organ, 1988). According to Moorman, Blakely and Niehoff (1988) employees will engage in OCBs when they feel that that behaviour is justified by the positive actions of the organization and are consistent with the treatment and commitment of the organization. Employees feel the need to repay the organization for the positive treatment and commitment they receive throughout the relationship (Moorman et al., 1988). Research of Kidder (1998) and Stamper and Van Dyne (2001) argues that employees that have a long-term relationship with a firm perform more OCBs than temporary or part-time workers.

2.2 The sunny side of OCB

Podsakoff, MacKenzie, Paine and Bachrach (2000) distinguished thirty forms of citizenship behaviours from the literature on OCB and grouped them in seven dimensions; helping behaviour, sportsmanship, organizational compliance, organizational loyalty, self development, civic virtue and individual initiative.

Helping behaviours are voluntary behaviours that help fellow colleagues prevent or solve work related problems. This kind of behaviour includes supporting and cheering for fellow employees and also peacemaking activities when there are times of conflict and struggles between employees (Organ, 1988).

Organizational compliance is a form of OCB which regards the following and obeying of organizational procedures and rules by the employees (Borman & Motowidlo, 1993). Organizational compliance argues that good citizens follow the rules and procedures of the organization instinctively and precisely, even when they know that they are not being supervised or monitored (Podsakoff et al., 2000).   Podsakoff et al. (2000) state that organizational compliance is a form of OCB even though it is expected from subordinates to act according the rules and regulations of the company, because in many cases employees do not act according these rules and regulations when they know that they are not being observed or monitored. Thus, according to Podsakoff et al. (2000) employees that follow up the rules and regulations very precisely even when they know that they are not being supervised can be viewed as very good organizational citizens.

Sportmanship is a type of OCB which describes the process of coping with all the inevitable problems and inconveniences that are bound to happen at work without complaining (Organ, 1990). According to Podsakoff, et al., (2000) good sportsmanship occurs when employees refrain from complaining when other colleagues cause inconveniences for them. ‘Good sports’ are willing to make personal sacrifices in the interest of the group and do not showcase a negative attitude when things are not going their way. Furthermore, ‘good sports’ do not get offended when their suggestions and ideas are not followed up by the rest of the employees in their working environment.

Individual initiative is regarded as OCB when a person goes that far beyond the expected level of task-related behaviours that these behaviours can be viewed as voluntary (Podsakoff et al., 2000).  When employees engage in individual initiative they showcase extra effort and enthusiasm in order to increase their task performance or the performance of the organization as a whole. They voluntarily come up with new ideas and innovations in order to increase organizational effectiveness and encourage fellow colleagues to act in the same way (Podsakoff, et al., 2000).

Organizational loyalty refers to the strong commitment of employees to the organization throughout the good and the bad times (Graham, 1991), defending the organization against threats from the outside and promoting the organization to people outside the organization (Borman & Motowidlo, 1997; George & Jones 1997).

According to the research of Podsakoff et al. (2000) civic virtue(Organ, 1988)means that employees recognize that they are part of a larger whole and they acknowledge and accept the responsibilities for the effective functioning of their organization. The employees actively look out for opportunities and threats in the environment of their organization. They participate actively in the decision making process of the organization and are constantly acting out of the interest of the company while putting their personal interests aside (Podsakoff et al., 2000).

Self development is citizenship behaviour that occurs when employees voluntarily undertake actions in order to learn and improve their skills, knowledge and capabilities (Podsakoff et al., 2000). The study of George and Brief (1992) states that self development might consist of employees participating in advanced training course, employees undertaking actions in order to keep up with the latest developments in their field; or employees might even learn an entirely new set of skills. Self development behaviour is good citizenship behaviour because employees try to improve and increase their personal contributions to the performance and effectiveness of the organization (George & Brief, 1992).

These seven dimensions of OCB all describe positive acts and contributions from the employees which benefit the organization. According to Organ & Konovsky (1989) these combined contributions of individual employees increase organization effectiveness significantly over time. Because of the positive nature of these citizenship behaviours organizations try to stimulate OCBs among their employees. These citizenship pressures lead to higher levels of OCB within the organization, which is essentially favourable for the company (Bolino,Turnley, Gilstrap & Suazo, 2010). However, the stimulation of citizenship behaviours can have a negative effect on the employees because the citizenship pressure to please the organization can result in job stress, quitting intensions and work-family and work-leisure conflicts (Bolino et al., 2010; Greenhaus & Beutell, 1985; Reich, 2001; Sauter & Murphy, 1995).

2.3 The dark side of OCB

One could argue that OCB has a lot of positive implications for an organization based on the dimensions described by Podsakoff et al.(2000). Recent studies however have also shed light on the darker side of OCB (Bolino et al.,2010; Korsgaard Meglino, Lester, & Jeong,2010; Van Dyne & Ellis, 2004; Vigoda-Gadot, 2006). Organ (1988) implies that OCB is solely a positive phenomenon within an organization, because of the discretionary and voluntary nature of OCB. Furthermore, Organ (1988, p. 4) argues that “OCB promotes the effective functioning of an organization”.

Vigoda-Gadot (2006, p. 79) concludes from the definition of OCB by Organ (1988) that it implies that “OCB consists of informal contributions that a participant can choose to make or withhold, without the regard to considerations of sanctions or formal incentives”. However, recent studies have countered the discretionary nature of OCB. Korsgaard et al. (2010, p. 277), argue that OCB is “based on the norm of reciprocity: the obligation to reciprocate the benefits already received from another (“paying you back”) and the expected reciprocity that one’s actions will stimulate future benefits from another (“paying me forward”).”

Vardi and Weitz (2003) have mentioned the concept of organizational misbehaviour (OMB) in their studies as a counterpart to OCB. Organizational misbehaviour is behaviour of a social nature  that harms the interest of the organization.  According to Vardi and Weitz (2003) there are five types of organizational misbehaviour; intra-personal misbehaviour, inter-personal misbehaviour, property misbehaviour, production misbehaviour and political misbehaviour.  OMB can be viewed as the real dark side of employee behaviours.

2.3.1 Citizenship pressure

Citizenship pressure occurs when employees feel the pressure to engage in OCBs because their employer tries to stimulate that behaviour by informal compensation (Bolino,Turnley, Girlstrap & Suazo, 2010).Citizenship pressure is a phenomenon that differs from individual to individual and it is of a subjective nature (Bolino, et al.,2010). Employees that are regarded as high-self monitors are more likely to give in to citizenship pressures and engage more in citizenship behaviours, because those employees value their image and the way they are perceived by their co-workers and supervisors (Blakely, Andrews, & Fuller, 2003).

The study of Bolino et al. (2010) has shown that citizenship pressure leads to higher levels of OCB of employees within an organization. Hence, the studies of Korsgaard, et al.(2010) and Bolino, et al.(2010) question both the discretionary and voluntary nature of OCB. Research has shown that managers do take OCBs into account when evaluating their employees and making other decisions (Podsakoff, et al.,2000)

Van Dyne and Ellis (2004) state that with citizenship pressure, behaviour that was once voluntary and discretionary can become an obligation. Van Dyne and Ellis (2004) mention the phenomenon of job creep, this situation occurs when employees constantly feel the pressure to do more than their job actually requires of them. The duties of the employees are slowly increased without official recognition of the organization and in time are expected of the employees (Van Dyne & Ellis, 2004).

Although citizenship pressure may be a positive phenomenon from an organization’s point of view because it leads to more OCB, it also is associated with negative consequences for the employees and their organization (Bolino, et al.,2010).

The amounts of job stress experienced by the employees are likely to increase in the case of high levels of citizenship pressures (Bolinio, et al.,2010).  Job stress occurs when employees do not have the capabilities and resources that are needed to fulfil their job requirements. The incapability to fulfil these job demands will lead to negative consequences for the emotional and physical state of the employees who experience high levels of job stress (Sauter & Murphy, 1995).

According to Bolino, Turnley, Gilstrap, & Suazo (2010) employees who experience citizenship pressures to behave as a good citizen of the organization may also feel the pressures at home to be a good partner and parent. This work-family conflict is a role conflict that occurs when the work role demands that are required from an employee are not compatible with the demands of the family (Greenhaus & Beutell, 1985).  Work-family conflicts may arise when the partners of the employees have difficulties in understanding why their partner chooses to engage in OCBs that are technically not required of them and are not formally rewarded rather than to spend time with their family (Edwards & Rothbard, 2000). Research of Flynn (1996) shows that in a situation of high citizenship pressures employees with less demanding family situations engage in more citizenship behaviours than married employees with more responsibilities towards their families.

Another conflict related to citizenship pressure is the work-leisure conflict. This conflict arises when employees experience difficulties in balancing their work demands with their personal life and leisure time (Bolino, et al.,2010). The study of Reich (2001) states that employees who are physically away from their working environment, may still be mentally connected to their job. According to Bolino, et al.(2010) these employees experience a conflict between their desires for free time in their personal lives and the desire to be a good organizational citizen in order to receive the benefits that come with that kind of status. The employees who feel citizenship pressures may not enjoy their free time because they are worrying about the situation and problems at work. Furthermore, they may be troubled by the fact that their co-workers might surpass them in terms of productivity and value for the organization when they enjoy their personal time or they may be experiencing feelings of guilt because they are not working (Reich, 2001). This may lead to an increasing tendency among employees to keep in contact with their work office, by means of mobile phones, pagers or email, in order to remain available for their colleagues and superiors (Reich, 2001).

These types of conflict caused by citizenship pressure, like the work-leisure conflict and the work-family conflict and the phenomenon of job stress, contribute to the job quitting intensions among the employees (Bolino et al.,2010).

The dark side of OCB can be accounted to the citizenship pressures exerted by the organization. When an organization pressures  employees to perform citizenship behaviours this can result in negative consequences for the state of mind of the employees (Bolino et al., 2010; Edwards & Rothbard, 2000; Greenhaus & Beutell, 1985; Reich, 2001). This in turn can lead to decreases in productivity and effectiveness for the organization, because employees in a bad state of mind are more likely to leave the organization or work inefficiently (Bolino et al., 2010).

2.4 Desirability of OCB within the organization

OCB in its core essence is desirable for organizations because those citizenship behaviours are linked with helping behaviours, loyalty and commitment to the organization, the following of rules and regulations, creativity and innovation and going the extra mile (Podsakoff, et al.,2000) .  These citizenship behaviours are characterized as positive contributions to an organization and its productivity, effectiveness and social climate (Moorman et al., 1988; Organ, 1988; Podsakoff, et al.,2000). This makes it difficult for one to argue that citizenship behaviours are not desirable within an organization. However, there is also a darker side to OCB. These negative side effects of OCB occur when the voluntary and discretionary nature of citizenship behaviours is removed because of citizenship pressures exerted by the organization on their employees (Bolino et al.,2010; Korsgaard et al.2010) .

Citizenship pressures can result in job stress, work-family conflicts, work-leisure conflicts and eventually in quitting intensions among employees (Bolino et al., 2010; Edwards & Rothbard, 2000; Greenhaus & Beutell, 1985; Reich, 2001).  Effectiveness and productivity of employees decrease when they experience job stress or work-family or work leisure conflicts, which in turn also has a negative influence on the company as a whole (Bolino, et al.,2010).

In conclusion, one could argue that citizenship behaviours are a positive and desired phenomenon for an organization when the negative consequences of citizenship pressures exerted by the organization are not taken into account. However, citizenship pressures result in more OCBs among employees and thus organizations are inclined to exert those pressures on their employees (Bolino et al.,2010). Thus, organizations have to balance the positive and negative consequences of citizenship pressures and OCBs in order to maximize  the value of the employees for the company. Because citizenship pressures has different outcomes for each individual employee, the organization and group leaders could benefit from a thorough analysis of their workforce (Bolino et al., 2010). For instance, employees who are considered to be high self-monitors are more likely to engage in citizenship behaviours when they feel citizenship pressure, because they care about how they are being perceived by their co-workers and leaders (Blakely et al., 2003)

Chapter 3.The transformational and transactional leadership styles

3.1 Introduction

Leadership has always been an interesting topic for researchers from different fields.

According to Tannenbaum, Weschler and Masarik (1961, p. 24) leadership is: “interpersonal influence exercised in situations and directed, through the communication process, toward the attainment of a specified goal or goals”. According to Wayne, Shore & Liden (1997) leadership is important because the exchange between a manager and his follower  is the most important factor in determining employee behaviour. In the literature a distinction has been made by Burns (1978) and Bass (1985) between transactional leadership and transformational leadership. Burns (1978) reports that transactional and transformation leadership are complete opposites. Bass (1985), however, argues that transformational leaders may also use transactional leadership behaviours in certain situations. The concepts of transactional and transformational leadership will be explained in this chapter.

3.2 Transactional leadership

The study of Bass (1985) shows that transactional leaders make the tasks and responsibilities of the followers clear and also promise the followers compensation for when their tasks are performed according to the standards. According to Deluga (1990) transactional leadership is an exchange process in which rewards and punishments are administered. Transactional leaders exchange financial rewards for productivity or deny rewards when the productivity of the followers is lacking (Bass & Riggio, 2006). The relationship between the leader and his followers in a system of transactional leadership is focused on self interest and based on mutual dependency (Lagamarsino & Cardona, 2003).

Bass (1990) concludes in his research that there are four different types of transactional leadership. Contingent reward: The leader sets up a contract based on performance and rewards, solid performance is compensated with rewards. When goals are met the employees will get recognition for their accomplishments. Contingent reward leader behaviours have shown to have a positive relation with performance and follower attitudes (Avolio, Waldman & Einstein, 1988; Waldman, Bass & Yammarino, 1990).

Laissez-Faire: In this particular form of transactional leadership the leader avoids making decisions and steps away from any responsibilities. The subordinates have to fulfil their tasks on their own. According to Dubinsky, Yammarino, Jolson, & Spangler (1995) this type of leader is indifferent, frequently absent,  inattentive and does not influence the workforce. Management by exception (active): The leader actively looks for errors and mistakes in the work process. When the tasks performance of the employees is not on the required level the leader will intervene and he will try to put the employees back on the right track. Management by exception (passive): The leader only undertakes actions when the level of output and requirements and standards are not met by his subordinates.

All these types of transactional leadership lack leadership behaviours that motivate employees to be the best they can be for the organization and to go the extra mile for colleagues and superiors.

3.3 Transformational leadership

The transformational leadership theory of Bass (1985) states that transformational leadership creates a bond of trust between the leader and followers, motivating employees to achieve beyond expectations. According to Bass (1985) transformational leadership activates employees higher-order needs and lets them act out of the interest of the company. Transformational leaders are able to motivate their followers to the degree that they not only increase their task performance but also engage in OCBs that help the organization to function in an effective way (Smith, Organ, & Near, 1983). Transformational leaders motivate their subordinates to come up with creative and innovative for difficult issues within the organization (Bass, 1985). Furthermore, in the transformational leadership style the leaders encourage their followers to go the extra mile for the organization and they reach out to their employees with constructive feedback (Bass, 1985).  Transformational leaders make their missions and goals clear to their followers and they convince the followers to act out of interest of the company (Piccolo & Colquitt, 2006). Employees who are able to link their own success with that of the company and can identify with the values and goals of the organization are more likely to add value to the organization (Podsakoff, MacKenzie, Moorman, & Fetter, 1990). Bass (1985) states in his research that when a manager acts like a transformational leader he will be perceived as a more satisfying and effective leader than a transactional leader. Furthermore, according to the studies of Bass (1985), employees report that they are more willing to put in extra effort and time for managers who behave as transformational leaders. Bass & Avolio (1993) and Pillai (1995) have reported in their studies that there is a positive relationship between transformational leadership and employee satisfaction, and between transformational leadership and in-role behaviours that lead to job performance. According to Yukl (1999) transformational leadership can be viewed as the equivalent of charismatic leadership.
In their research, Avolio & Bass (2002) distinguished four different components of transformational leadership.

Idealized influence: The leaders are admired, respected and trusted by their followers. The leaders are seen as examples/ role-models by the followers and the followers are inspired to emulate their actions. The leaders also put their followers interests above their own interest which earns them trust and respect. Idealized influence, or the charismatic dimension of transformational leadership (Bass, 1985), is often described as the most important component of transformational leadership (Waldman, Bass, Yammarino, 1990). Charismatic leaders receive respect and trust from their followers, because they create a sense of pride among their followers and communicate clear visions and missions (Bass, 1985).

Inspirational motivation: The leaders motivate their followers by attaching meaning and challenge to their work. The leader shows optimism and enthusiasm which stimulates individual and team spirit among the followers.

Individualized consideration: The leaders take the needs and desires of the individual followers into account. The followers receive individual support from their leader in order to grow and develop and achieve higher goals.

Intellectual stimulation: The followers are encouraged to be creative and innovative by their leaders. New approaches and new ideas are stimulated in order to get creative solutions to existing problems. Out of the box thinking is rewarded and it is not a shame to make errors.

Chapter 4. The influence of transactional and transformational leadership on OCB

4.1 Introduction

The predominant style of leadership in an organization has a great influence on the amount and types of OCBs performed by the employees within the organization. Bass (1990) described an experiment in a working area for convicted inmates. In this workplace the inmates had to produce several different types of products for in and outside the prison walls. One group of their supervisors received training in order to become transformational leaders, and the other group received a transactional leadership training. The inmates that were supervised by groups of transformational leaders performed better than those that were supervised by the transactional leaders. Not only did they perform better in the areas of productivity, absence and behaviour,

the inmates also engaged in more citizenship behaviours. Furthermore, Bass (1990) states in his research that managers who are viewed as the high performers by their supervisors, also were viewed to be of a more transformational than transactional nature by their followers in a separate survey.

In this chapter the relationship between transactional leadership, transformational leadership and organizational citizenship behaviour will be discussed.

4.2 Transactional leadership and OCB

The transactional leadership style is based on an exchange relation between leaders and their followers. Employees are rewarded or punished based on whether or not their performance is according to the standards that were set by their transactional supervisors (Bass, 1985; Bass & Riggio, 2006; Deluga, 1990). Because transactional leadership is a system of mutual dependency between leaders and followers that is based on self interest (Lagamarsino & Cordona, 2003) and primarily an exchange process, transactional leadership leads to a low amount of citizenship behaviours performed by employees.

The four different types of transactional leadership (Bass, 1990) do not convince employees to perform the seven dimensions of citizenship behaviour (Podsakoff et al.,2000). In the laissez-faire leadership style the leader avoids making decisions and steps away from his responsibilities. The followers have to do their tasks on their own and there is hardly any communication with the leaders. The leader is frequently absent, inattentive and indifferent and does not influence the workforce (Dubinsky et al.,1995). It is obvious that this type of leader will not stimulate citizenship behaviours among his followers.

The leaders who act according to the management by exception style (both passive and active) only intervene when their followers do not meet up with the requirements and standards that are set for them. The employees do no

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