The Impact of Contingent Reward, Charismatic Leadership and Individualized Support On Commitment To Change

The Impact of Contingent Reward, Charismatic Leadership and Individualized Support
on Commitment to Change

Contents
CHAPTER 1: INTRODUCTION....................................................................................................
1.1
Introduction.......................................................................................................................
1.2 Problem Statement.................................................................................................................

1.3 Research Objectives:............................................................................................................
1.4 Operational Definitions:.....................................................................................................
CHAPTER 2: LITERATURE REVIEW.......................................................................................
CHAPTER 3: RESEARCH METHOD.........................................................................................
3.2
Hypotheses......................................................................................................................
3.3
Research Design..............................................................................................................
3.3.1
Type and Nature of Study........................................................................................
3.3.4
Procedure of Data Collection...................................................................................
3.3.5
Statistical Techniques..............................................................................................

CHAPTER 1: INTRODUCTION
1.1 Introduction
The purpose of this study is to examine different factors that affect a company,
organization or even an individuals commitment to change. These variables, when
carefully controlled can be the determining factors for success. First we will analyze the
effects of Charismatic Leadership on an organizations level of commitment.
The effect of good leadership on initiatives taken for change have since long been
ignored by the Academia. At the same time, studies done on organizational behavior
during times of change within an organization have failed to link with more extensive
theories about leadership (Psychology Today, 2015) In order to understand the impact of
change and how successful employees can cope to said change initiative, we will look at
the employees behavior from two different angles; one is rooted in Leadership literature
and the other has its basis in Organizational literature. For now we shall only discuss the
former; what leadership style is best suited in a changing environment? How does it make
an organization better understand the change, imposed on it? According to Bass and
Regio (2006), Transformational leadership is heavily linked with an individuals
charisma, his ability to sell an idea, his effectiveness in convincing his followers that
change is inevitable and is in fact necessary. In order to better understand the effect of
Charismatic leadership on individuals to fully commit to change, we must look at
leadership from a broader prospective. We must move on from organizations and larger
companies to a pool of followers which are even more diverse, we must examine the
effects of leadership at nation-wide level. Take the example of Martin Luther King Jr.

Through his intense rhetoric and charismatic personality, he was able to hold great
influence over the population of the USA, black and white. Take the example of Gandhi
and Mr. Jinnah from the sub-continent. Through their charismatic personalities; Gandhi
with his calm personality and Jinnah with his sharp and cunning tactics were able to end
almost a century of colonialism in India and more importantly, they were able to
influence and reason with an impulsive nation like the Indians. They were able to defeat
the British Empire through their very own constitution. History is filled with examples of
such leaders. Now, we take these examples, and shrink the pool of followers to an
organizational level. If these great leaders could change the mind of nations and make
them accept change, then there is no reason a certain boss/leader can make his employees
believe that yes, change is beneficial for them (Conger & Kanungo, 1988). A form of
leadership which is today considered synonymous with charismatic leadership is
transformational leadership. The reason for this is quite simple, both type of leaders
inspire their followers while performing a task, both the types bring excitement and
enthusiasm into the group which creates an overall positive environment to work in,
hence producing better results. So now, in order to understand charismatic leadership we
must delve into the depths of transformational leadership too. The characteristics of a
transformational leader are ones which truly inspire the employee to do better, a
transformational leader is a model of integrity and fairness, the one who is just and fair.
Such a leader sets clear goals and has very high expectations; he has a clear head and
expects the employees to have one too. He expects them to give a topnotch performance
because he too has fully invested himself to the task at hand. At the same time, a
transformational leader encourages his employees to do better, to excel at their work and

add real value to the task at hand, in order to further encourage his followers to excel by
providing them with recognition, this has the added benefit of encouraging the rest of the
employees, who do not have the will to excel. Another important quality of a
transformational leader is his ability to stir the emotions of his followers, to truly ignite
their emotions and motivate them to do the task at hand with great passion and
enthusiasm. While doing this he compels his followers to look beyond their self-interest
and look at the broader picture, to think of the benefit of people other than his own.
Lastly, but most importantly, it is imperative for a transformational leader to set unreal
goals for his followers, this may sound weird but this is as a matter of fact the only way
for ones employees to actually improve and build his/her skills.
From this we conclude that in order to commit ones employees to change, one
must become a charismatic leader and in order to become a charismatic leader one must
hone the skills of a transformational leader. However like all theories there are certain
downsides; if we an organization is dependent on a leaders ability to lead then so will the
employees ability to work be dependent on said leader. If for some unforeseen reason the
leader decides to leave the organization or is absent from work for a few days then the
organization and the workers will become handicapped and their productivity will
drastically decrease, the workers will get demotivated and the organization in turn will
suffer.
Another factor which determines an individuals commitment to change is the
reward he will get from it. It is natural for human beings to be selfish, whenever an
employee does something for the organization he does so expecting some reward in some

form, it can either be material or something as simple as a pat on the back but a reward
must be there for the taking (Wilson, 2003)
Now, each company strives to develop a culture and it is in the companys best
interest to develop such a culture which will increase the output of said company, if such
a culture is to be developed then a proper rewards and recognition system is a
compulsion. Why is it important to tailor a companys culture as such? The answer to that
lies in the fact that in todays extremely competitive environment it is becoming
increasingly necessary to have employees who can asses and manage risk, they
organizations need their workers to be proactive and work-centric and be able to produce
results that show. Or if we consider a broader example, like that of a political party then
in this case a party needs its employees to be motivated and dedicated to the cause, then
they must give their worker some reward in any form, something he/she can cherish and
value. Thus it is imperative for any organization, not matter how big or small to reward
its employees, to show them that their work is valued and they as a dedicated member of
the organization add value to the company and help in enhancing the output. If a certain
company wants its employees to embrace change and welcome it with open arms then
they must offer some incentives, these offerings on behalf of the company can help the
can help said company enforce its changes at a more faster pace.
However, with this too there are certain pitfalls and drawbacks. For example, if
we offer cash bonuses to hard-working employees then this is the only a temporary short
term solution, this will not buy his long term loyalty and will only make his work
dependent on that reward. Furthermore, if an organization rewards a selected few and not
the rest then this can create enmity or hatred amongst colleagues. Also one must take into

account the fact that in large organization this practice can become very tedious as
looking for say a dozen individuals in a thousand can prove to be a very tedious task
(McMahon, 2010).
The last factor or variable that shall be discussed is the effect of an individuals
attention on the performance of an employee and his willingness to accept and commit to
change. As mentioned above, a charismatic/transformational leader is he who gives
individual attention to his follower, which in turn motivates him to strive for excellence
which indefinitely will help him to commit to a change. Furthermore, when an
organization is going through changes then it is imperative to engage the employees with
individual support. What this does basically is solve the issues of an organization from
the grass root level, which in turns strengthens the organization altogether providing a
more concrete platform for the employee to commit to change. This strategy helps us
implement the change from a bottom up approach. You change the individual, his
mindset, his thinking in order to change the organization and make it grow. To this too
there are certain drawbacks, individual support is not a very practical idea for large
organizations which employee thousands, one would have to establish a proper portfolio
for the cause which can prove to be a very costly venture.
We have discussed 3 key independent variables which determine a dependent
variable, namely Commitment change. What weve concluded is that in order for a
worker to fully embrace the idea of change, all three factors i.e. Charismatic Leadership,
Rewards and Individual support are very important. What weve concluded is that a
change can never be fully implemented in an organization if one of these key factors is
missing. Rewards will not be appreciated if the person who rewards you is not

charismatic, individual support is of no use if there are no rewards to boost morale and
the chain goes on and on (Steinhardt.nyu.edu, 2015).
Industry:
Now the question arises, how do these variables affect the automobile industry?
And when we talk about change in the automobile industry, what is it exactly that were
talking about? In the past 30 years the automobile industry has transformed rapidly, with
the demand rising one must rethink the entire business modal on which the industry
operates, although the old tried and tested methods have their significance but it is those
companies who think out of the box, who persist and stand the test of times. Here is
where true leaders come in, charismatic leaders who believe in transformation and who
can make their workers believe, so are the ones who can truly commit to the success of a
company. For example, in the 20th century, cars were built as high performance machines
with high torque and acceleration, the demand for such vehicles was high. But now in the
modern age, the 21st century people want fuel efficient cars which are also environment
friendly. Now if some manager of some big manufacturer wouldve caved in to the
demands of his employees and not changed the way the company worked, if the company
did not provide individual support to each employee and rewards to those who did change
then that company would not have made it to the 21st century. And this has happened,
there were hundreds of car manufacturers and now there are merely a few left (Plunkett,
2003)

1.2 Problem Statement
Organizational changes are planned and organized to ensure the growth and
development of organizations. Changes are meant to happen, which will help in bringing
positivity in the organizations (Klein & Knight, 2005). Commitment to change refers to
the desire to provide support to the organizational changes, which can promote growth,
development, and success of the organization. Innovation and creativity are the two key
factors that influence changes in an organization (Teare & Rayner, 2002). It is not
necessary that changes always lead to success, at times, the implementation of plans
result in failure, but that does not mean that changes are avoided at different stages.
Changes are important part of the organization, which play an important role in preparing
the organization to achieve the strategic goals and targets (Choi & Price, 2005).
According to commitment theory which was developed by Richard Walton; employees
perform best when they are given broader responsibilities, encourage contributing and
helped to take satisfaction in their work. Guest (1997) in support of commitment theory
describe the significance of binding of employees to the organization and obtain their
behavior outcome of increased efforts and cooperation.
Organizational undergo different processes to bring changes in their functions,
operations, systems, hierarchy, culture, and policies (Meyer & Allen, 1991). The process
of change includes the steps that help in converting an organization from the current state
to the desired state (Sinclair et al., 2005). There are some prominent organizational
change models that are used by the managers and leaders to achieve the desirable changes
and developments in the organization. Commitment towards change can help in bringing

relevant changes, and it is the responsibility of the leaders and managers to bring
effective changes in the organization (Garvin, 2000). (Herscovitch and Meyer 2002);
present a practical solution that affective commitment to change refers to a desire to
support a change, continuance commitment to change is based on a recognition that there
are costs associated with resisting change, and normative commitment to change reflects
a sense of obligation to be supportive. Contingent reward offer tangible and intangible
support to their followers, set directions, and determine the reward for goal achievement
(Walumbwa et al., 2008) and it impact will directly influence employees to perform his
best effort to achieve organizational goals and organizational commitment level. Most of
employee are not commitment to their job and the reason behind is lack of Leadership
and reward whereas there are various studies which consider that the leaders emphasize
on providing employees with a satisfactory and challenging environment, which helps
motivating employees and motivated employees will perform better as compared to
others, which results in better performance and organizational commitment
The individuals perspective towards change might differ from the organizations
point of view. Employees are important part of the organization, and it is essential that
they accept the changes and show their commitment towards it (Henning-Thurauet.al,
2002). The leaders use different leadership styles to motivate individuals to focus towards
bringing changes. The process of change is highly affected and influenced by the
leadership style and planning process, which depends on the goals and objectives of the
organization. Charismatic leadership is one of the commonly used leadership style, which
helps the leaders in influencing their own beliefs, ideas, values, thoughts, and perceptions
on others (Paton & McCalman, 2000). Today, leaders are trying new models and

innovative styles to lead their organizations, unlike implementing the traditional
leadership styles and models. The charismatic leaders transform the needs and desires of
their team members and employees, and make them understand the importance of
change, innovation, creativity, and development (Lehesvirta, 2004).
Effects of commitment to change vary across career stages. The importance of
attention for commitment towards change is represented by its relation to contingent
reward and Leadership (Becker, 1996). Contingent reward offer intrinsic and extrinsic
support to their followers, set direction and describe the reward for goal achievement
whereas individualized support plays a vital role in coop up the people from the stressful
situation by individual. By adopting individualized support, leaders respect their
supporters while offering support and guidance, show honesty and take personal needs
into account (Base & Riggo, 2006).
In context of Pakistan, researcher have conducted many surveys and studies to
identify the impact of leadership on commitment to change but there is a need of more indepth research to find the significance of Charismatic Leadership, Reward and
individualized support and its impact on commitment to change. Hence the study
identifies the gap that failure of commitment to change creates a factor of employee
demotivation which results in less productive and unable in achievement of goal. This
study would help the organization to understand the impact of Leadership, Reward and
Support on commitment to change and to be design it in such a way that organization
achieves its goal effectively and efficiently.
1.2 Research Objectives:

Thus the objectives are established as:
1.
To examine the relationship among Charismatic leadership, Reward,
Individualized support and Commitment to Change

2.
To analyze the impact of Charismatic leadership, Reward, Individualized
support on Commitment to Change
Research Questions:
So as to accomplish previous research objectives, this study will answer the
question stated below:
1.
Is there any relationship among Charismatic leadership, Reward, Individualized
support and Commitment to Change?

2.
Does Charismatic leadership, Reward, Individualized support have a significant
impact on Commitment to Change?
1.4 Operational Definitions:

Now we will try to define the above stated variable in terms of Pakistan and how
they affect the local demographic.
A charismatic leader in the Pakistani society is one who truly believes in his
workers / followers / employees, who will look onto him without biasness, irrespective of
his caste, color, creed and religion. Adding to that our society accepts one to be a man of
charisma if he possesses high morals and has excellent work ethic. A manager at an

automobile factory should be highly motivated, positive and down to earth, in order to
connect to his employees, most of which are from decent backgrounds (Hairston, 1965)
When we talk about rewards, Pakistan as a nation is not as materialistic as the
West, yet, as mentioned earlier, most of the local labor belongs to the poor backgrounds.
For them, money is motivation. Thus, the most effective way to reward an employee,
especially in the automobile factory is to give him a cash bonus, this may include an extra
Eid bonus or anything appropriate.
Now about individual support, this I believe is the key factor when considering
the Pakistani demographic. It is an intrinsic property of human nature to yearn for
personal attention, to be felt special. If an employer in Pakistan can do that, say an
automobile factory really wants his employees to commit to a change then this is the only
way to go about it.
Lets conclude with the last most important variable, commitment to change.
People in Pakistan are not very receptive to anything out of the norm; they like to stick to
their conservative traditions and lifestyles. Same is the case with an employee. For
example if an automobile upgrades, an employee might feel his skills have become
irrelevant. In order to overcome this reluctance of the employee, the factors above are of
critical importance.

CHAPTER 2: LITERATURE REVIEW

CHAPTER 3: RESEARCH METHOD

3.1
Proposed Theoretical Framework
Richard Walton (1985) Theory of commitment is considered as a

relevant tool to model the commitment towards change by providing
workers broader responsibilities, encourage contributing and helped to
take satisfaction in their work. The theory contends with high evidence
that employee attitude and behavior towards organizational change
shows a most important factor for success (Armenakis, 1993).
Transformational leadership behavior (Herold, 2008&Seo, 2012; Yu
et.al, 2002) and Individualized Support (Armenakis and Harris, 2009,
Fedor, 2006; Smollan et,al, 2006) has been found to positively affect
employees commitment to change moreover the leader sets rewards
in result for best performance for which contingent reward plays a
main role in offering tangible and intangible support to their followers,
set rules, and determine the reward for goal achievement (Bass, 1998
& Walumbwa, 2008). Commitment to change has attracted many
researchers in the past, giving rise to various definitions and models of
change. Coetsee (1999) describes commitment to change as the final
phase of acceptance of change. He believes it to be a product of

knowledge about change, information about change, empowerment,
rewards and recognition for changing and shared visions.
The theory of commitment to change (CTC) proposes three
conceptually
independent
variables,
these
variables
includes
charismatic leadership, contingent reward & individualized support. As

a general rule, the more transformational leadership style and support,
the more perceived outcomes of an individual in a shape of reward
which as a result directs an individual intention to understand the
importance of change (Lehesvirta, 2004). See Fig 3.1
Figure 3.1
Proposed Theoretical Framework
Contingent Reward
Charismatic
Leadership
Commitment to
Change
Individualized
Support
3.2
Hypotheses
Ha1: Contingent Reward has a significance relationship with
commitment to change.

Ha2: Charismatic Leadership has a significance relationship with
Ha3: Individualized Support has significance relationship with
Ha4: Contingent Reward, Charismatic Leadership & Individualized
Support have a significant impact on commitment to change.
3.3
Research Design
The research is explanatory research. Researchers focus on
identifying and examining factors that affect employee commitment

towards change by providing charismatic leadership, contingent
reward and support.
3.3.1
Type and Nature of Study

In this study quantitative method has been used to quantify the
relationship and to examine the impact of contingent reward,

individualized support and charismatic leadership on Commitment to
change.
3.3.2 Sampling and Design
For this study we will collect data through a field survey method
whereas all questionnaires will be self-administrated. The respondent
of this study will be the employees working in an automobile industry

in Karachi like previous researcher (Aslam et al., 2010; Ismail et al.,
2010). Since the nature of study is quantitative, so the large sample
size of employees to conclude findings. The reason for selecting
employees of automobile industry as a research population are as
follows:
Firstly, an automobile industry sector is one of the booming
industrial sector other than other sector (Economic Survey of Pakistan,
2006). In Pakistan, presently 32 assemblers including multinationals
with their equity participation engaged in progressive manufacturing /
assembling of different automobiles under the approved deletion
program of the Ministry of Industries and Production, Government of
Pakistan.(Maslehat, 2006).
Secondly, in the latest survey conducted in 2010 (Federal Bureau of
Statistics
Pakistan,
2010),
an
automobile
industry
is
presently
contributing 18.5 percent to GDP in the economy of Pakistan.

Finally, the most important factor for choosing this industry is
that usually the population of workers in such industries are high which
can help the organization in resistance to change. Therefore, it is
considered the most important population for this study.
3.3.3 Instrumentation
Self-administered survey questionnaire is used as an instrument
in this research. This is a sufficient data collection tool to ensure the

accuracy and relevancy of information gathered as the responses are
objective, standardized and comparable (Zikmund, Babin, Carr, &
Griffin, 2010; Sekaran & Bougie, 2010). This framework is an
appropriate tool to model the commitment towards changes through
leadership, reward and individualized support. Therefore Walton,
(1985) theory has been used in this study.
An adaption of commitment to change Questionnaire (CCQ) has
been utilized for the study taken by different sources as mentioned in
Fig 3.2. The questionnaire is divided into two sections A & B. Section A
consist of questions of three independent variables i.e. Charismatic
leadership, Individualized support & Contingent Rewards whereas
Section B consist of one dependent variable i.e. Commitment to
change. All scales in this study were measured by using five points
Likert scale ranging from 1 with strongly Agree to 7 strongly disagree
(Allen & Meyer, 1990).
The construct, sections, number of items and sources are listed in Fig
3.2
Figure 3.2
Sectio
n
Scale
Items
Leadership
16
Walumbwa , 2008
Reward
05
Sims and Szilagyis, 1975
Variables
Source

Individualized
A
08
Walumbwa , 2008
10
Allen & Meyer, 1990
Support
Commitment to
change
3.3.4
Procedure of Data Collection

Initially, the questionnaire will distribute to 400 employees of
automobile industries in Karachi. During the data collection process,

self-administered questionnaire, including a covering letter will deliver
to respondent. Furthermore the instrument must be converting in a
soft copy by using Google Docs and then will be circulated to all
concern respondents. In addition to data collection hard copy of
questionnaires will be circulated to related organizations in Karachi
after getting permission by the respective manager in organizations.
The questionnaires includes questions about four factors; Charismatic
Leadership,
Contingent
Reward,
Individualized
Support
and
Commitment to Change).
3.3.5
Statistical Techniques
All statistical analysis were performed by using SPSS 19.0.
Descriptive analysis of Mean & Standard deviation, Correlation analysis

& Multiple Regression analysis will be applied on data, overall 400 data
will be analyzed. Hypothesis 1, 2 and 3 will be analyze by using
correlation analysis and hypothesis 4 will be analyze by using

regression analysis, hence all data will be analyze on significance level
of 95%.

REFERENCES

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