Employee Engagement
Employee Engagement
Employee Engagement
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SOCIAL RESEARCH REPORTS – VOLUME 25 - DECEMBER 2013
IMPACT OF TRANSFORMATIONAL
LEADERSHIP DEVELOPMENT THROUGH
ORGANIZATION DEVELOPMENT
INTERVENTION ON EMPLOYEE
ENGAGEMENT AND FIRM PERFORMANCE:
A CASE STUDY
Sumontha TONVONGVAL1
Abstract
1
Sumontha Tonvongval is a graduate of the Ph.D. OD program at Assumption University. She is
also a member of the Board of Director, The Human Capacity Building Institute, The Federal
of Thai Industries (FTI), THAILAND.
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Introduction
Literature Review
Leadership
Definitions of leadership are varied. Cook (2000) referred leadership as the
ability to learn and adapt to change, a risk taker and using personal power to win
the hearts and minds of people to achieve a common purpose. While Burns (1978)
defined it as a mobilization process by individuals with certain motives, values,
and access to resources in a context of competition and conflict in pursuit of
goals. Northouse (2010) cited different functions of management and leadership
was that leaders produce changes and movement while management provides
order and consistency in organization. Gill (2006) argued that vision is the key
differences between managers and leaders. Bennis and Nanus (1985) defined
difference between management and leadership that managers are people who do
things right while leaders are people who do the right things. To manage is to
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accomplish activities and master routines while to lead is to influence others and
create vision for change.
Importance of Leadership
The DDI’s 2011 Global Leadership Forecast Research (Boatman & Wellins,
2011) revealed that organizations with the highest quality of leaders were thirteen
times more likely to outperform their competitors in key bottom-line results while
many corporations are facing leadership shortage (Bersin & Associates, 2011). A
survey carried out by Accenture in 2007 with more than 900 top executives in the
world’s largest organizations in the U.S, Europe and Asia revealed that only fifty
five percent of the organizations were able to develop their executives’ ability and
talent to cope with the rapid changes (Moe, 2007). Trust in managers and having
good relations with managers who provide training, coaching, giving challenging
work and providing more opportunities to do what subordinates want and having
clear work preferences as well as career goals lead the organizations with more
engaged and satisfied employees (White, 2008).
Leadership Development
Overall leadership interventions had a sixty six percent probability of achieving
positive results (Rice, 2011). Leadership development has become increasingly
important and an emerging trend to organizations in response to the increase in
organization’s competitiveness (Leskiw & Singh, 2007). DDI’s 2011 Global
Leadership Forecast Survey reported that leaders in organizations with more
effective leadership development programs were eight times more likely to rate
leadership quality as excellent (Boatman & Wellins, 2011) and training more than
four hours in a month resulted in fourteen percent increase in productivity (Fox,
2011). Many leadership development programs are offered and they are very
expensive since it is a time-based process and cannot be accomplished in one
single point of time (Bruce, 2011). The training cost was estimated to range from
$100,000 to $250,000 to develop and $50,000 to $150,000 to deliver per session
(Fulmer, 1997). Gill (2006) cited that self-awareness of a leader is considered a
basic necessity for effective leadership development as it starts first with learning
to know and control oneself. White (2000) argued that leadership development
program can be effective depending on leadership that transform and raise both
the leaders’ and followers’ motivation, sense of higher purpose and higher-order
needs for achievement (Gill, 2006; Burns, 1978).
Leadership styles
This study employed transformational leadership (TL) model proposed by
Bass & Avolio (Avolio, 1999 & 2011) integrated with various learning methods,
which included whole brain appreciative coaching approach (Soponkij, 2010) to
generate more effective and creative development program for the ABC Lending
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Employee engagement
Employee engagement has different definitions. It is defined as employees’
willingness and ability to help their company succeed (Towers Perrin Talent
Report (2003); employees’ positive emotional attachment and commitment to
employer (Dernovsek, 2008); and willingness to invest oneself and expand one’s
discretionary effort to help employer succeed beyond simple satisfaction (Blessing
White, 2008; Erikson, 2005; Macey & Schneider, 2008); the extent to which
employees commit to someone or something in their organization and how hard
they work and how long they stay as a result of that commitment (Lockwood,
2007).
Numerous researchers found that engaged employees will contribute their best
and exceed typical performance levels beyond their employment contract (Macey
& Schneider, 2008; Wellins & Concelman, 2005; Robinson et al.,2004) and that
engaged employees increase competitive advantage of organizations (Corporate
Leadership Council, 2006); Harter, Schmidt & Hayes, 2002); Schaufeli & Bakker,
2004) and a positive relationship of a highly engaged employee and the company’s
revenue growth. High engagement firms experienced an earnings per share (EPS)
growth rate of twenty eight percent compared to an 11.20% for low engagement
firm; and seventy eight percent were more productive and forty percent were
more profitable (Towers Perrin, 2003 & Hewitt’s Best Employers in Asia Report,
2007). This study adopted two employee engagement elements, which include
employees’ job satisfaction and extra effort. Stemming from this relationship of
transformational leadership behavior and employee engagement, the following
two hypotheses were developed:
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Research Methodology
Action research was employed for this study based on WBL and AC appro-
aches. There are three phases of action:
- Phase one (pre-ODI): this is the assessment stage which objectives were
determined and information collected from interview with management,
company documents and questionnaires to determine the current situation
and leadership of middle management mangers comprising of 42 branch
and district managers.
- Phase two (ODI stage): this includes the implementation of the ODI
activities during a four-month period to address issues and identify a plan
of action to improve leadership behavior of managers. The transformational
leadership development program intervention consisted of two workshops
in the following sequence: (1) WBL and AC and (2) Leadership deve-
lopment workshop. To foster the transfer of learned content from the leader-
ship program intervention to the workplace, the two workshops combined
classroom-based training which include lectures, discussions and prac-
ticing, and the use of learning feedback from subordinates, direct manager
and the management. After the training workshops, individual managers
were required to practice newly learnt behavior in day-to-day work settings.
Supportive activities to enhance the newly learned leadership included: (1)
monthly self leadership practice report; (2) monthly reflection, and (3)
group project work.
- Phase three (assessment and evaluation stage): it includes a formative
evaluation during the ODI and a post-ODI summative evaluation.
Data was collected using two sets of questionnaires. Transformational lea-
dership factors were measured using 20 standard questions of the MLQ Form 5X-
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short. Employee engagement factors were measured using two sets of ques-
tionnaire based on (i) the Employee Job Satisfaction Survey of the focal company
and (ii) Extra Effort of the MLQ Form 5X-short questions. The employee enga-
gement questionnaire comprises 10 questionnaires and three questions on extra
effort. The job satisfaction questionnaire is a valid instrument since it was de-
veloped by the company’s learning and development expert and has been used
more than 100 countries over 10 years consecutively. The sample of this study
consisted of forty two managers (8 District and 34 Branch Managers). Majority of
them (45%) have been working with the company more than five years in the
position and supervised (74%) 5-8 subordinates or customer services represen-
tatives. Majority of them (52%) had a bachelors’ degree. Each manager was
requested to identify three subordinates from each branch to provide feedback on
their leadership perspective during pre-and post-ODI. A total of 179 subordinates
were participated to provide their perspectives, of whom 88% graduated with a
bachelor’s degree and sixty-eight (38%) of them had more than 5 years of working
experience with the company.
A control group comprised of 8 Team Leaders and 25 subordinates was em-
ployed in this study as the experimental conditions were complex and difficult to
isolate so the independent variables being tested in the experimental group cannot
influence the results.
Semi-structured interviews were conducted with two groups of participants (9
individual managers and 18 subordinates). Four reflective sessions were con-
ducted to reflect how managers learned and provide a meaningful way for them to
gain genuine understanding (Densten & Gray, 2001). A group of 6-7 managers
developed a team project since learning from real-life experience on project at
work helped learners to achieve tangible improvement on their specific business
issues as well as advance in their learning (William, 2003; Carter, 2001). There
were total 6 projects proposed which each team presented their results 120 days
later.
Data from the respondents were analyzed using descriptive statistics options
of SPSS. To assess the improvement of leadership behaviors and determine
whether they were significantly different, a Paired Sample t-Test (2-tailed) was
employed. The Pearson’s Correlation was used to examine the relationship bet-
ween the two elements of the staff employee engagement (the dependent va-
riables) and the managers’ leadership effectiveness (the independent variables) at
the significant level of 95% or alpha = 0.05.
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Table 1 below presents the pre- and post-ODI descriptive statistics for all the
variables between the experimental and Control groups.
* * . C o r r e la t io n is s ig n if ic a n t a t t h e 0 .0 1 le v e l (2 - ta ile d ) .
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Total aggregated
improvement (Jan-Dec 2011
Organization Performance vs 2012)
Experimental
Control Group
Group
Sales revenue 34% -14%
Staff attrition reduction -13% 3%
Customer Complaints -138% NA
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Conclusions
First, the findings of this study are consistent with prior empirical researches
that transformational leadership development inspired and motivated followers
(Yammarino & Bass, 1990; Yukl, 2002) to put extra effort (Harter, Schmidt, &
Hayes, 2002) and impacted on employee engagement element especially extra
effort and company’s performance (Avolio 1999 & 2010; Bass, 1985 & 1990;
Gill, 2006; Howell, 1993; Northouse, 2010; Soponkij,2010).
Second, the important findings was on the action or experiential learning
through project work was found to be a powerful component of leadership de-
velopment as managers had the opportunities to deal with different types of
subordinates in workplace situations as the lessons learned by practices was found
to stay with managers for many years (Cacioppe, 1998).
Third, the results of this study also suggested that a period of four months for
a leadership development program intervention was sufficient and effective to
enhance the leadership behaviors of the managers. The combination of OD tools,
comprising the formal learning of the structured and planned leadership de-
velopment workshops coupled with the monthly boosters and self-enhanced acti-
vities such as self leadership practice report, monthly reflective sessions, and
group project works enhancing the effective leadership behavior of managers.
Fourth, the study indicated that the impact of the appreciative coaching (AC)
under the whole brain literacy concept was so powerful since learning new
leadership behavior required a paradigm shift in the managers’ thinking concept
specifically the change of thinking concept depended on the individual self who
sought to see the world as “it was” or “as they perceived it to be” Tayko (2010).
Lastly, the positive change of the managers’ transformational leadership started
first from individual managers who shifted their thinking mind set or perspective.
The findings implied that Thai managers’ leadership style influenced by national
cultural dimensions could compliment and strengthen the transformational leader-
ship style of the Thai managers since Thai leadership styles tended to be more
paternalistic, team-oriented, participative and non-confrontational style.
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