ORGANIZATIONAL BEHAVIOUR PROJECT

NATIONAL LAW UNIVERSITY ODISHA

ORGANIZATIONAL BEHAVIOUR PROJECT

ON

TRANSFORMATIONAL

LEADERSHIP, EMPLOYEE ENGAGEMENT AND PERFORMANCE:

EFFECT OF PSYCHOLOGICAL OWNERSHIP-

ASLAM KHAN

AZKA GHAFOOR, TAHIR MASOOD

SYED TAHIR HIJAZI.

MEDIATING
QURESHI, M.

AND

PROJECT WORK SEMESTER IV B.A. LL.B.

UNDER THE GUIDANCE OF:

MRS. ARJYALOPA MISHRA
ASSISTANT PROFESSOR OF MANAGEMENT
NATIONAL LAW UNIVERSITY ODISHA

SUBMITTED BY:
NAKUL KUMAR BAJPAI
2013/B.A. LL.B./028

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1.

EXTENDED

ABSTRACT

The transformational leadership style has long been shown to elicit above average performance
in followers; however, the reasoning behind why this process occurs is unclear. The present study
investigates whether follower engagement mediates the relationship between perceived
transformational leadership and performance on a task. Although the relationships between
transformational leadership, employee engagement, and job performance have been studied
before, they have been studied at a macro level that seems to go against the original
conceptualization of engagement as being task-related. Therefore, the present study explores
these relationships at a micro task-related level, in a specific interaction between leader and
follower in which the leader delegates a task to the follower. Results provide evidence that
follower task engagement mediates the relationship between perceived transformational
leadership and task performance. By better understanding how leaders build engagement and
drive performance in regard to a specific task, organizations can take advantage of the influence
that leaders have on everyday interactions with their followers.
Several studies have examined the relationship between leadership and employee engagement,
however, only a few have attempted to study the linkage specifically between the
multidimensional constructs of transformational leadership and employee work engagement.
Avolio, Bass and Jung (1999) define transformational leaders as being charismatic in their ability
to influence employees to go above and beyond what is expected of them, for the greater good of
the organization. Schaufeli, Salanova, GonzalezRoma and Bakker (2002) discuss engagement in
terms of employee vigor, dedication, and absorption at work. The main purpose of is to explore
the relationship between transformational leadership and employee job engagement. Specifically,
it is hypothesized that transformational leadership will have a positive relationship with
engagement, and will also be most predictive of job engagement over and above the control
variables discussed in this study, namely, social support received by employees, and job
resources available to them at work.

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2.

REVIEW

OF LITERATURE

Expressed Humility in Organizations: Implications for Performance, Teams, and

Leadership. Bradley P. Owens, Michael D. Johnson and Terence R. Mitchell, Organization
Science, Vol. 24, No. 5 (September-October 2013), pp. 1517-1538.
We draw on eight different lab and field samples to delineate the effects of expressed humility on
several important organizational outcomes, including performance, satisfaction, learning goal
orientation, engagement, and turnover. We first review several literatures to define the construct
of expressed humility, discuss its implications in social interactions, and distinguish expressed
humility from related constructs. Using five different samples, Study 1 develops and validates an
observer-report measure of expressed humility. Study 2 examines the strength of expressed
humility predictions of individual performance and contextual performance (i.e., quality of team
member contribution) relative to conscientiousness, global self-efficacy, and general mental
ability. This study also reveals that with regard to individual performance, expressed humility
may compensate for lower general mental ability. Study 3 reports insights from a large field
sample that examines the relationship between leader-expressed humility and employee retention
as mediated by job satisfaction and employee engagement as mediated by team learning
orientation. We conclude with recommendations for future research.
Leadership and Organizational Citizenship Behavior: OCB-Specific Meanings as
Mediators. Author(s): Changquan Jiao, David A. Richards and Kai Zhang Source: Journal of
Business and Psychology, Vol. 26, No. 1 (March 2011), pp. 11-25.
This study seeks to examine how perceived organizational instrumentality (the extent to which
employees believe that OCB contributes to the functionality and effectiveness of their work unit
or organization) and perceived individual instrumentality (the extent to which employees believe
that OCB is important to their own interests) relate to employee engagement in OCB and how
these perceptions mediate the effects of leadership on OCB. Results revealed that perceived
organizational instrumentality was related to and explained variance in OCB beyond perceived
individual instrumentality. Moreover, perceived organizational and individual instrumentalities
partially mediated between leadership (transformational leadership and contingent reward) and
OCB. Implications Elevating OCB-specific instrumentality beliefs and educating employees
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about the importance of OCB for the functionality and effectiveness of their work unit or
organization can help promote OCB. Effective leadership can contribute to the development of
stronger perceptions of organizational and individual instrumentalities, and lead to greater OCB.
This study represents the first attempt to empirically examine perceived organizational
instrumentality and consider both organizational and individual instrumentalities in mediating
the association between leadership and OCB.
An Empirical Study of Leader Ethical Values, Transformational and Transactional
Leadership, and Follower Attitudes Toward Corporate Social Responsibility. Author(s):
Kevin S. Groves and Michael A. LaRocca Source: Journal of Business Ethics, Vol. 103, No. 4
(November 2011), pp. 511-528.
Several leadership and ethics scholars suggest that the transformational leadership process is
predicated on a divergent set of ethical values compared to transactional leadership. Theoretical
accounts declare that deontological ethics should be associated with transformational leadership
while transactional leadership is likely related to teleological ethics. However, very little
empirical research supports these claims. Furthermore, despite calls for increasing attention as to
how leaders influence their followers' perceptions of the importance of ethics and corporate
social responsibility (CSR) for organizational effectiveness, no empirical study to date has
assessed the comparative impact of transformational and transactional leadership styles on
follower CSR attitudes. Data from 122 organizational leaders and 458 of their followers
indicated that leader deontological ethical values (altruism, universal rights, Kantian principles,
etc.) were strongly associated with follower ratings of transformational leadership, while leader
teleological ethical values (utilitarianism) were related to follower ratings of transactional
leadership. As predicted, only transformational leadership was associated with follower beliefs in
the stakeholder view of CSR. Implications for the study and practice of ethical leadership, future
research directions, and management education are discussed.
Work Life Balance, Employee Engagement, Emotional Consonance/Dissonance &
Turnover Intention. Author(s): Tara Shankar and Jyotsna Bhatnagar Source: Indian Journal of
Industrial Relations, Vol. 46, No. 1 (July 2010), pp. 74-87.
This paper reviews the literature in the domain of Work-Life Balance. It accentuates the
importance of broadening the current narrow focus which looks at balance, primarily between
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"work" and "family". The paper proposes a conceptual model to be tested empirically. The
construction of a robust scale for measurement of Work-Life Balance is emphasized. The
proposed model focuses on the correlates of Work-Life Balance construct and its relationship
with other variables such as employee engagement, emotional consonance/dissonance and
turnover intention. Theoretical and practical implications of research in this domain are discussed
with a focus on areas for future research.
Transformational leadership, goal difficulty, and job design: Independent and interactive
effects on employee outcomes, J. Lee Whittington, Vicki L. Goodwin, Brian Murray:
A field study of 209 leaderfollower dyads from 12 different organizations was conducted to test
the moderating effects of job enrichment and goal difficulty on the relationship between
transformational leadership and three follower outcomes: performance, affective organizational
commitment, and organizational citizenship behaviour. Moderated regression analyses were
conducted to test for direct and moderated relationships. Transformational leadership and job
enrichment each had significant main effects. In addition, we found that job enrichment
substituted for the effects of transformational leadership on affective commitment, whereas goal
setting enhanced relationships between transformational leadership and both affective
commitment and performance.

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3.

INTRODUCTION

Since the application of transformational leadership to organizational settings over two decades
ago, numerous studies have shown that followers of transformational leaders display above
average performance. Still, the question of how transformational leaders elicit performance
beyond expectations remains a topic with many theories but few clear answers. 1 An answer to
this question may lie in the concept of employee engagement, which refers to a personal
investment of the self into individual work tasks that are performed on a job. Indeed, employee
engagement has been separately linked to both transformational leadership and job performance.
However, despite these findings that engaged employees perform well and that transformational
leaders beget engaged employees, no research has considered the possibility that employee
engagement mediates the relationship between transformational leadership and employee
performance, thus offering an explanation for how transformational leaders elicit performance.2
Employee engagement is a fluid state that arises due to an individuals positive perceptions of his
or her environment, and transformational leaders work to shape their employees work
environment for the better. Hence, employee perceptions of transformational leadership may play
a role in how positively they perceive their environment thereby affecting their personal
investment at work, ultimately influencing how well they perform. It appears that the link
between transformational leadership and employee performance is affected by many factors,
suggesting that engagement will likely partially mediate this relationship. Additionally, no
studies have investigated this relationship at the task level; they have instead focused on broader
measures of overall job performance and job engagement.3
The aim of the current study is to understand the role that engagement plays in the relationship
between transformational leadership and follower performance on a task. The present study will
1 Amabile TM (1988). A model of creativity and innovations in organizations. In B. M. Staw &
L. L. Cummings Ed. Res. Organ. Behav., 10: 123-167.
2 Avey JB, Avolio B, Crossley C, Luthans F (2009). Psychological Ownership: Theoretical
Extensions, Measurement, and Relation to Work Outcomes. J. Org. Behav., 30: 173-191.
3 Frank, FD, Finnegan RP, Taylor CR (2004). The Race for Talent: Retaining and Engaging
Employees of 21st Century. Hum. Resol. Plan., 27.
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add to the literature by examining the relationship between transformational leadership,
engagement, and performance at the task level, thus differentiating it from past research that
investigated each relationship separately, as well as at a broader job level. This concentrated
level of analysis may lead to a greater understanding as to how organizations and leaders can
influence individual employees levels of engagement and performance on specific tasks.4

4 Azeem SM (2010). Job Satisfaction and Organizational Commitment among Employees in the
Sultanate of Oman. Per. Psychol., 1: 295-299.
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4.

TRANSFORMATIONAL LEADERSHIP

Burns created the concept of transformational leadership as a description of political leaders who
transform the values of their followers, but Bass later expanded the scope to include leadership
within organizational settings. Since then, transformational leadership has become one of the
most widely-studied leadership styles due to its emphasis on changing workplace norms and
motivating employees to perform beyond their own expectations. Transformational leaders are
believed to achieve such results through aligning their subordinates goals with those of the
organization and by providing an inspiring vision of the future. Transformational leadership is
typically divided into four major components: (1) inspirational motivation; (2) idealized
influence; (3) individualized consideration; and (4) intellectual stimulation. Inspirational
motivation involves the ability to communicate clearly and effectively while inspiring workers to
achieve important organizational goals.5
Transformational leaders are considered to be enthusiastic and optimistic when speaking about
the future, which arouses and heightens their followers motivation. Idealized influence refers to
behaviors that help to provide a role model for followers. Such behaviors could involve
displaying strong ethical principles and stressing group benefits over individual benefits.
Individualized consideration involves treating each 6 follower as an individual with his or her
own unique needs and attending to these needs appropriately.6
The focus of behaviors falling under the individualized consideration category is on the
development of the follower. Lastly, intellectual stimulation involves encouraging the follower to
be creative and challenging him or her to think of old problems in new ways. Transformational
leaders create a culture of active thinking through intellectual stimulation, and this culture
encourages followers to become more involved in the organization.7
5 Gong Y, Huang JC, Farh JL (2009). Employee Learning Orientation, Tranformational
Leadership, and Employee Creativity: The Mediating role of Creative Self Efficacy. Acad.
Manag. J., 52(4): 765-778.
6 Gumusluoglu L, Ilsev A (2009). Transformational leadership, creativity, and organizational
innovation. J. Bus. Res., 62: 461- 473.
7 Bass BM (1988). The inspirational process of leadership. J. Manage. Dev. , pp. 21-31.
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5.

EMPLOYEE ENGAGEMENT

Employee engagement refers to a personal investment of the self into individual work tasks that
are performed on a job. Though there exist many descriptions of what engagement may be, a
common agreement among researchers is that engaged employees are immersed and involved in
their work (Macey, Schneider, Barbera, & Young, 2009), take pride in their job (Mathews, 2010),
and exert a great deal of effort toward their work (Hay Group, 2010). The general consensus in
both academic and business circles is that employee engagement is easier to recognize than it is
to understand. Therefore, it is important to obtain a firm understanding as to the theory behind
this intriguing concept. Though there are some common themes in the engagement literature,
there are several distinctions to be made across theories. Schaufeli and colleagues (Schaufeli &
Bakker, 2004; Schaufeli, Martinez, Marques Pinto, Salanova, & Bakker, 2002; Schaufeli,
Salanova, GonzalezRoma, & Bakker, 2002) view engagement as the opposite of burnout and
propose that engagement contains three components: vigor (high levels of energy), absorption
(full concentration), and dedication (a sense of significance and pride in ones work).8
In contrast, Kahn (1990) proposes that engagement is the harnessing of ones physical, cognitive,
and emotional energies into ones work roles. Kahn further specifies that engagement is based on
how employees perceive the context in which they work, specifically how their work
environment impacts their feelings of psychological meaningfulness, psychological availability,
and psychological safety. There are disagreements as to whether engagement should be
considered a trait, state, or behavior. Macey and Schneider (2008) propose that engagement can
be conceptualized as a combination of the three, integrating them into a process that moves from
trait (predisposition to view work as engaging) to state (the feeling of absorption at work) to
behavioral (extra-role behavior) engagement.9
In contrast, Schaufeli et al. (2002) posited that Engagement refers to a persistent and pervasive
affective-cognitive state that is not focused on any particular object, event, individual, or
8 Khan MR, Ziauddin JFA, Ramay MI (2010). The Impacts of Organizational Commitment on
Employee Job Performance. Euro. J. Soc. Sci., 15: 292-298.
9 Lashley C (1999). Employee empowerment in services: A framework for analysis. Pers. Rev.,
28(3): 169-191.
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behavior; (p. 295). In other words, engagement can be thought of as a state that is not specific to
any one task. Kahn (1990) highlights the importance of the context of employees work
environments, claiming that engagement is a sort of motivational tool that is elicited through
employees beliefs that their work is valuable (meaningfulness), that they have a necessary
amount of physical, emotional, and psychological resources to do the work well (availability),
and that they can immerse themselves in their work without fear of negative consequences
(safety).
This view suggests that engagement is more state-like, as it changes based on employees
perceptions of the environment in which they work. In the proposed study, I will view
engagement through a lens similar to that of Kahn, in that I consider engagement to be
influenced by the context in which one works. Although other conceptualizations of employee
engagement exist (e.g. Harter et al., 2002; Macey & Schneider, 2008; Schaufeli et al., 2002)
including those reviewed above, Kahns definition most adequately recognizes the importance of
situational factors on the psychological state of engagement, factors over which leaders may
have influence or control. Thus, engagement is defined as a motivational state of mind
influenced by the factors of psychological meaningfulness, availability, and safety, which are
impacted by situational features of the work environment. This state of mind manifests itself as
behaviors such as task performance.
6.

IMPACT

ON

PSYCHOLOGICAL AVAILABILITY

Psychological availability can be thought of as assessing the readiness or confidence of a person

to engage in his or her work. Transformational leaders foster psychological availability by
increasing follower levels of personal resources, which are aspects of the self that are generally
associated with resiliency. A number of studies have illustrated the relationship between
transformational leadership and higher levels of a myriad of personal resources such as
optimism, self-esteem, intrinsic motivation, well-being, positive affect, empowerment, and selfefficacy. Self-efficacy in particular has a strong association with transformational leadership as

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well as engagement and performance, suggesting that it may be an important factor in the
process by which transformational leaders elicit higher levels of engagement and performance.10
The Galatea effect may explain how personal resources such as self-efficacy play a role in
employee engagement and performance (Eden, 1992, 1994; Eden & Kinnar, 1991). The Galatea
effect refers to a process in which an individual translates positive expectations regarding
performance outcomes into tangible performance outcomes. In other words, ones positive
belief and expectation about ones ability and self-expectations about ones performance can
significantly determine ones real performance or success (Zhu et al., 2009, p. 598). As
previously stated, transformational leaders impact the confidence of their followers by raising
their self-efficacy (Kirkpatrick & Locke, 1999), and self-confidence is associated with higher
levels of engagement (Judge et al., 2003) and increased performance (Eden & Kinnar, 1991).
Since self-efficacy is especially salient in short-term performance (McNatt & Judge, 2004),
transformational leaders have the unique ability to influence their followers performance
through cultivating engagement on a specific task.11

10 Ismail A, Halim FA, Munna DN, Abdullah A, Shminan AS, Muda AL, et al (2009). The
Mediating Effect of Empowerment in the Relationship between Transformational Leadership and
Service Quality. J. Bus. Manage., 4(4): 3-12.
11 Hsu MH, Ju TL, Yen CH, Chang CM (2007). Knowledge sharing behavior in virtual
communities: The relationship between trust, self-efficacy, and outcome expectations. Int. J.
Hum-Com. Stud., 65(2): 153-163.
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7.

CRITICAL

ANALYSIS

The following paper by Azka Ghafoor, Tahir Masood Qureshi, M. Aslam Khan and Syed Tahir
Hijazi on analyzing the concepts of transformational leadership, employee engagement and
performance and their mediating effects is being briefed in this section. The authors have sought
to achieve this by the use of the Multifactor Leadership Questionnaire (MLQ). J. M. Burns
introduced the paradigms of transformational and transactional leadership with both of them
occupying two ends of a single continuum.
The authors have started the paper discussing the development of the early leadership theories
and how those early empirical studies showed that both these forms of leadership, i.e.
transformational and transactional could exist independent of each other and were in fact two
separate leadership dimensions. But practically as the authors have concluded most of the top
world leaders displayed both transformational and transactional leadership qualities. After that
they conducted a factor analytic studies which showed that each orientation of leadership had
just more than one component and which in turn lead to multiple range of factors.
After conducting the sample survey, the authors arrived at the conclusion that the best model
which managed to fit in the replication sample as well with minimum shrinkage was the six
factor model. But there was a low discriminant validity among the transformational and
transactional contingent reward leadership scales. B.M. Bass in his works had often discussed
transformational leadership as a higher-order factor and to throw light on this, the current paper
has also analysed several other higher-order factor models.
The tests conducted in this paper have addressed many pre-existing lineage of criticism of the
MLQ survey. Specifically, by including two correlated higher-order factors to represent the
transformational and transactional contingent reward leadership factors, the authors were able to
reduce the latent correlations and enhance the discriminant validity between the transformational
higher-order factor containing charisma, inspirational and intellectual stimulating leadership and
the second higher-order factor containing individualized consideration and contingent reward.9
In the end, the authors concluded that not surprisingly, the transactional contingent reward
leadership correlates with transformational leadership.

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This section describes the various consequences of employee engagement. Job satisfaction is
more reactive concept when we look at it as a consequence in terms of feelings about what has
already been attained and is likely to be attained. As defined by (Locke 1969), it is the
pleasurable emotional state resulting from the appraisal of ones job as achieving or facilitating
the achievement of ones job values. Job satisfaction is an old construct that has long been
recognized as important to any consideration of turnover behaviour and more recently, to an
understanding of turnover intentions as well. Employees who are more satisfied experience
lower rates of absenteeism, have reduced rates of intention to leave. Job attitudes combined with
job alternatives predict whether employees intend to leave an organization, which is the direct
antecedent to turnover.
Theres a common misconception that job engagement, high motivation to work, is a personality
trait and that motivated people will work with a lot of enthusiasm. But research consistently
shows that even the most committed employees will rapidly become de motivated if they cease
to find their work meaningful or they cant succeed at it. Thus, whether its a media frontier or a
product launch, the people in charge need to be vigilant about removing obstacles impeding their
most engaged employees the very people whom they may think need the least help in staying
motivated. For these high performers, factors they cant control, role ambiguity, inadequate
resources, and overwork itself, can hinder their best work and may ultimately drive them to seek
jobs elsewhere.
The ones who stay behind may well be the ones who just dont care. (HBR 2013, Thomas
W.Biit) In addition to its conceptual domain (job satisfaction as an affective state or as an
attitude), the concept of job satisfaction may vary by the target an individual evaluates (Spector,
1997). Job satisfaction is a mix of individual attitudes on various aspects of the job: relations
with coworkers and supervisors, the work itself, and the organizational infrastructure and
processes (Lee, 2000).Using all these conceptualizations, in this study, job satisfaction is the
subjective, individual-level attitude representing an individuals general affective reaction to a
job (Cranny, Smith, & Stone, 1992).
Simply put, job satisfaction is the extent to which people like their jobs (Odom, Boxx, & Dunn,
1990; Spector, 1996). The review of literature revealed that job satisfaction is distinct from two
other attitudinal constructs: job involvement and organizational commitment (Kanungo, 1982;
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Lawler & Hall, 1970; Locke, 1976; Mowday, Steers, & Porter, 1979; Steers, 1977).
Organizational commitment can be defined as "the relative strength of an individual's
identification with, and involvement in, a particular organization (Mowday et al., 1979).
Although both job satisfaction and organizational commitment are closely related in that both are
affective responses, the two constructs are different because of their referent objects; job
satisfaction focuses on the work environment where employees perform their duties while
organizational commitment focuses on employees attachment and allegiance to the organization
they work for (Lee, 2000). Job satisfaction traditionally has been distinct from job involvement.
Job involvement is defined as psychological identification with a job (Kanungo, 1982) although
both constructs refer to a specific job, job satisfaction pertains to the emotional state of liking a
job (Locke, 1976; Kanungo, 1982).
An engaged employee is satisfied with his job, who understands and is aligned with the
organizations goals, is a productive, profitable employee, and one who creates customer loyalty,
remains with the organization, practices safety and is strongly aligned with the organizations
brand values. An employee can be satisfied with a job without being engaged in the job.
Employee engagement is much more than being content with pay and the ability to leave in time.
That contentedness is merely job satisfaction, and though satisfaction is generally enough to
retain employees, its not enough to ensure productivity.
On the other hand, employee engagement does promote increased productivity. An engaged
employee is an employee who is deeply involved and invested in their work. The factors that
drive employee engagement, however, are different than those that drive satisfaction.
Engagement factors include Meaning, Autonomy, Growth, Impact, and Connection. Employee
satisfaction is the foundation upon which employee engagement can grow and thrive.
Organizations with genuinely engaged employees have higher retention, productivity, customer
satisfaction, innovation, and quality. They also require less training time, experience less illness,
and have fewer accidents.

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