Across small and medium sized firms (SMEs) deemed to be failing or simply not performing to stakeholder expectations, there is a tendency for boards to parachute leaders into the CEO post and expect transformational leadership. Leaders in this case are selected for their heroism, charisma and drive. They are put to task and given objectives, often demanding instant results. But is it right to seek transformational leadership? And does transformational leadership always deliver? This post discusses these points and looks at the alternatives: if not transformational, what leadership approach might be more appropriate to turn round failure?
Leadership: an introduction
First a definition: leadership is the process of influencing the activities of an organised group in its efforts toward goal setting and goal achievement. This definition suggests that the role of the leader is in influencing. The leader will deliberately adopt an approach to influencing; he or she will strive to find an appropriate method by which his or her influence will be brought to bear on the organised group.
Leaders achieve influence though having power over their followers. Power is a socially constructed concept. It takes a leader to project power and followers to be amenable to accept instructions. Leaders, and in this context CEOs or MDs, are appointed. That appointment confers legitimacy on the leader’s position and hence give the leader power over the group. But those who follow grant the leader respect, often as a result of the leader’s expert knowledge or charisma. Respect and legitimacy give power. Power allows leaders to have influence and allows them to cause change in the firm’s fortunes.
There are a number of approaches that a leader might adopt to cause change, create performance and achieve goals. In the rest of this post we discuss each approach and look to recent research to find evaluation of the popular ‘transformational leadership’, so often sought by boards.
Definitions: transformational leadership and others
There are in all seven recognised leadership approaches. These are listed and described below.
- Professional leadership: a professional leader sets the mission and the programme of work for the organisation. He or she is a role model for all staff, determining professional standards of work.
- Transactional leadership: a transactional leader treats all interaction with staff as a social activity, ensuring that in order to get his or her way, the leader gives staff what they want and need in a kind of trading arrangement.
- Moral leadership: a moral leader focusses on selecting and transmitting the values and ethics desired to meet the organisational goals.
- Participative leadership: a participative leader is a leader in with the troops, working alongside staff to dictate the work style and pace to achieve the goal.
- Contingent leadership: a contingent leader avoids pinning his or her colours to any single approach, preferring to make decisions about what approach to take to match the context they find the organisation in from time to time.
- Managerial leadership: a managerial leader treats the organisation as a series of operational tasks, and then leads by managing their completion.
- Transformational leadership: a transformational leader has charisma, gives inspiration, considers the efforts of individuals, stimulates intellectually and develops vision for staff to follow.
On the face of it, we might expect any one approach to be taken up by our new CEO or MD. What then does research in organisations tell us about the success of a universal adoption of transformational leadership in failing or under-performing organisations? Are boards right to expect such an approach or are other approaches worthy of consideration too?
Developing argument: research results on transformational leadership
Currie and Lockett, cited in the footnote, investigated the demand (by Government) for transformation placed on new organisation principals. They investigated a population of schools, using the performance metric of ‘added value’, the change in achievement of students between two evaluation points (key stage 1 and key stage 2 exams). In a firm, this might be the change in shareholders’ funds or net worth year on year. And they correlated this performance increase against the leadership approach adopted by the principal. Initially they found that there was a direct link between performance and the adoption of a professional approach. Schools where the principals adopted a professional approach achieved greatest added value. The professional approach appeared to succeed over other approaches.
In an effort to investigate the context in which a school existed, Currie and Lockett studied the effect of social deprivation in the catchment area and found that context mattered. In these cases a professional approach was less useful. In cases of social deprivation, a contingency approach succeeded best. Here, success came from adapting the approach to fit the environment as the school evolved.
These results show that, whilst the Government expected a transformational leadership approach to turn round failing schools, in fact both a professional approach or a contingency approach worked better.
Discussion on transformational leadership
So how does this research apply to the small to medium sized firm? What does this tell us generally about the appointment of a transformational leader to take an organisation from poor to great performance? Is it charisma, inspiration and vision alone, or do other leadership approaches work better?
Whilst we have to take care in inferring general conclusions from one specific case, it does seem that a single approach to all firms would be incorrect. The evidence from the research suggests a simple concept: that each case needs to be analysed and the leadership approach determined by considering the needs of the staff in the organisation. If they would likely follow a professional leader, and the context supports this, then seek a professional leader. If on the other hand, the firm would do better under a participative approach, find a participator and adopt that. In fact, adopt a contingency approach at the macro level.
Transformational Leadership: not the best show in town
In parachuting a new CEO or MD into a failing or under-performing firm, boards tend to dictate the leadership approach. They expect ‘transformation’ and the CEO or MD recruit seldom objects. This brief argument suggests that boards would be wise to avoid such direction and select the leader and leadership approach from analysis of the firm and its context.
If this post has interested you, why not call TimelessTime today (on 01825 724179) to discuss how we can help you transform your organisation.
 Buchanan D A and Huczynski A A (2010) Organisational Behaviour, p.596, Pearson Education, Harlow, UK.
 Currie G and Lockett A (2007), A critique of transformational leadership: moral, professional and contingent dimensions of leadership within public services organisations, in Human Resources Volume 60(2), pp.341-370, The Tavistock Institute.