MM2021

Management & Organization

Individual Essay

Topic:

Whether transformational leadership contributes more job

satisfaction than transactional leadership does.

Name: Lee Yat Hei

Student ID: 14090421D

Tutorial Group: TUT002 (Wednesday 17:30 p.m.)

Tutor: SI Wei
Word count: 1999 words

This essay adopts APA referencing style

“I hereby declare that this essay is my own work and that, to the best of my knowledge and belief, it
reproduces no material previously published or written nor material which has been accepted for the
award of any other degree or diploma, except where due acknowledgement has been made in the text.”

Signature: ________________________
Topic:

Whether transformational leadership contributes more job satisfaction than transactional

leadership does.

Leadership is important for the operation of different companies, and it helps the companies

to motivate their employees and activate resources in order to complete companies’ mission

(Antonakis & House, 2014). Leadership is also one of the ways to increase employees’ job

satisfaction. As employees are one of the most valuable assets in a company, it is important to

study which kind of the leadership will lead to better employees’ performance under different

extents of job satisfaction. Bass (as cited in Lowe, Kroeck, and Sivasubramaniam, 1996)

believes that the transformational and transactional leadership are complementary of each

other. Bass (as cited in Bass, Avolio, Jung, and Berson, 2003) argued that transformational

leadership can reflect social values and usually be applied in times of facing difficulties and

changes while transactional leadership is usually applied to a well-disciplined society. They

can be applied into different situation and it implies that these two kinds of leadership can

affect employees’ job satisfaction to different extent. This paper seeks to compare

transformational and transactional leadership, and conclude which one contributes more job

satisfaction to employees.

To start with, job satisfaction has been defined with different meanings in different ways and

perspectives. Generally, job satisfaction can be defined as whether employees like their jobs

and it can be separated into intrinsic and extrinsic dimensions. Intrinsic job satisfaction

evaluates the nature of the job they do, the tasks that make up the job, while extrinsic job

satisfaction evaluates the condition of work (Ge, Fu, Chang, & Wang, 2011). For instance, if

employees are satisfied with their current job, there are two possibilities. Employees can be
satisfied due to the work that they are doing or the conditions of the work. If the answer is

based on the nature of the work such as high achievement, this is intrinsic job satisfaction. If

employees are satisfied with their wages, this satisfaction is based on the condition of work

and it should be extrinsic job satisfaction.

Under transformational leadership, employees are inspired as the transformational leaders

want employees to be aware and accept the group purposes and mission. Also,

transformational leaders encourage their employees to subordinate personal interests to the

interests of the group (Bass, 1990). Avolio and Bass (1995) suggest that there are four

components of transformational leadership and they may lead to a continuous effect from

leaders to employees. They are idealized as influence, inspirational motivation, intellectual

stimulation and individualized consideration. They all contribute to employees’ personal

identification. Personal identification with the leader refers to employees identifying

themselves with their leader rather than a social group (Zhu et al., 2013). Hobman et al.(as

cited in Zhu et al., 2013) defined personal identification as “A self-categorization process that

involves an individual defining him or herself in terms of the attributes of the leader, shifting

his or her focus on individual gains for the leader, and experiencing a high level of

connection with the leader”.

Idealized influence and inspirational motivation from leaders may lead to the formation of

personal identification of the employees with the leader. They also create the charisma of

leaders which is similar as what Bass charisma scale described. For instance, the employer is

a model for his or her employees to follow (Conger and Kanungo, 1998). According to

Conger and Kanungo’s behavioral model from Conger (1999), charismatic leaders have some

idealized goal that they want to achieve. With this strategic vision, employees will try to
imitate their leaders because of their admiration to the charismatic leaders. As a result,

idealized influence and inspirational motivation from transformational leadership may affect

employees’ behaviors through affecting their personal identification by being stimulated to

share similar values of leaders and giving inspiration to change employees’ belief.

Intellectual stimulation refers that employees are stimulated to challenge the existing

assumption and employees may have a better performance with the development of

innovation and creativity. The last component is individualized consideration which

employers perform as a genuinely caring leader to concern the needs and feelings of the

employees (Zhu et al., 2013).

Leaders who perform transformational leadership can increase employees’ intrinsic job

satisfaction. As mentioned above, intrinsic job means the nature of the work or the

achievement in the work. The four components of transformational leadership are playing

different roles on gaining intrinsic job satisfaction. For Idealized influence and inspirational

motivation, they will affect employees’ personal identification because they will highly

identify themselves with their leader. During this process, employees are willing to change

their self-concept and there will be a tendency of sharing the similar values and beliefs

between leaders and their followers. Employees believe that the vision of transformational

leaders may lead them to success and the goal set by their leader is achievable. With the

existence of individualized consideration, the personal identification will be formed easily

through gaining trust by the contribution of employees’ emotional attachment. As a result,

from these three components, employees believe that the tasks given by their leaders will be

feasible as they share similar values, beliefs and with the emotional attachment of leader.

Personal identification will be formed and the expectation of future achievement will be

higher, then the employees’ intrinsic job satisfaction increases. For intellectual stimulation, it
helps to increase employees’ intrinsic job satisfaction by building employees’ confidence.

Transformational leader encourages their employees to solve problem creatively under the

existence of intellectual stimulation. Employees will have the willingness to take risk as they

can try to realize their creative ideas without any worrying consequences. If employees are

encouraged to challenge the existing assumption and solve problems with their creativity,

employees will be able to fulfill themselves through experiment. They will also find their

weaknesses on their own abilities and with the support of emotional attachment, the nature of

the job will be changed. Transformational leaders give full play to employees’ talent and

make improvements from their creative ideas rather than just following traditional method.

Employees may understand more about themselves and make improvement and their

confidence will increase through this process. As the nature of the job bring positive effect on

their confidence, innovation and creativity, they will be satisfied based on the work they are

doing and it will increase their intrinsic job satisfaction.

When compared to transformational leadership, transactional leaders seem to be responsive

rather than being proactive as transformational leaders. Zagorsek, Dimovski and Skerlavaj

(2009) mention that under transactional leadership, the relationship between employers and

employees is built by exchange. Transactional leader offers reward and punishment when

employees achieve the required tasks. Employees are not encouraged to subordinate personal

interests to the interests of the group. However, the employers will motivate the employees

by appealing to their own self-interest. According to Bass (as cited in MacKenzie, Podsakoff

and Rich, 2001), there are two forms of behavior in transactional leadership. They are

contingent reward and contingent penalization. Contingent reward will be given if employees

perform at or above expectation while contingent penalization contains correction, criticism

and other forms of punishment and it will be given if employees perform under the
expectations. For example, if leaders set a time limit for the task and employees can complete

the task on-time or ahead of time, contingent reward will be given. Otherwise, contingent

penalization will be given.

Leaders who perform transactional leadership can increase employees’ extrinsic job

satisfaction. According to Gerstner and Day (1997), the value of reward is directly

proportional to the quality and quantity of work. For example, if employees always perform

in high quality and they have high levels of royalty, they will receive highly valued reward,

such as promotion. Employers will motivate the employees by appealing to their own self-

interest rather than changing their self-concept or belief. As a result, employees are working

within the organizational culture under transactional leadership while they will change the

organizational culture by the experiment of creative idea under transformational leadership.

When compared to transformational leadership, transactional leadership will not change the

nature of the job. Also, employees will not achieve objectives through changing

organizational culture, higher ideals and adjusting their moral behavior. They achieve

objectives only through rewards and punishments which are the conditions of the job set by

the leaders. As employees exchange good performance for reward and like their job, they

actually like the reward from the job rather than the job itself. As a result, with the reward of

good performance, employees are satisfied with the condition of the job and it will increase

employees’ extrinsic job satisfaction.

As both of the leadership styles will contribute to job satisfaction, we need to compare which

of them contribute more. According to the Initial Theoretical Model (Fig. 1) from Pillai,

Schriesheim and Williams (1999), under transformational leadership, the relationship

between leaders and employees is defined as social exchange which is being outside the
economic contract. Employees will gain job satisfaction through the existence of procedural

justice and trust. Greenberg (as cited in Pillai, Schriesheim and Williams, 1999) believes that

procedural justice includes advancing the group solidarity for the long run. Employees are

encouraged to subordinate personal interests to the interests of the group and they share

similar values and belief. Also, employees are encouraged to share their creative ideas and

they are treated equitably under the existence of individualized consideration. As a result,

under transformational leadership, procedural justice will first be occur and leaders will then

gain employees’ trust which will contribute to the job satisfaction of employees.

In contrast, under transactional leadership, the relationship between leaders and employees is

defined as an economic exchange. Employees will gain job satisfaction through distributive

justice and trust. Konovsky and Pugh(as cited in Pillai, Schriesheim and Williams, 1999)

mention that distributive justice equals to the fairness of outcomes. Employees focus on the

outcomes rather than the procedures because their rewards will depend on their performance.

In this process, distributive justice will be important. If employees receive a clear expectation

from transactional leaders and understand what outcomes they may expect to receive for the

work they do, they will build trust with their leader. With the satisfaction of the reward,

extrinsic job satisfaction will be increased. However, Pillai et al. (1999) find that procedural

justice had higher correlation with trust than distributive justice did. It suggested that

procedural justice take a more important role on building trust. As Tyler and Degoegy (as

cited in Pillai, Schriesheim and Williams, 1999) linked trust with the sense of identity from

employees and their leaders. As transformational leader will share similar values and belief

with their employees, their sense of identity will be higher and a greater trust will be formed

between leaders and their employees. As a result, transformational will cause procedural

justice which have a relatively high contribution on trust and job satisfaction.
 Figure 1. Initial Theoretical Model

In addition, the contingent penalization of transactional leadership may be a factor of

weakening job satisfaction. Although employees may make effort to the tasks which offered

by transactional leader, there is a possibility that the performance does not reach the

expectation. The contingent penalization will occur in this case. When compared to

transformational leadership that employees can realize their creative idea without any

worrying consequences, although employees under transactional leadership may be satisfied

with the contingent reward, they need to bear the risk of contingent penalization when they

cannot reach the expectation. As a result, the conditions of the job are not only involved the

reward, but also the risk of having punishment. This risk may weaken the degree of extrinsic

job satisfaction.

In conclusion, transformational leadership contributes more job satisfaction than transactional

leadership does. Both transactional and transformational leaders may be able build trust with

their employees and form job satisfaction of the employees. However, as their styles are

different, the contribution may also differ. For procedural justice from transformational
leadership, research has support its relative importance over the distributive justice from

transactional leadership. Also, the components of transformational leadership will all

contribute to the intrinsic job satisfaction of employees while the contingent penalization of

transactional leadership may weaken the degree of extrinsic job satisfaction. (1999 words)
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