How Transformational Leadership Impacts Business Performance

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 How Transformational Leadership Impacts Business Performance

Transformational leadership is an inclusive kind of leadership in which a leader inspires and

motivates employees to work toward an organization’s vision. Transformative leaders encourage

bottom-up communications and openness in handling employees. Frequent interactions with the

employees allow the leaders to understand and identify employees' strengths and weaknesses

leading to improved performance by assigning employees tasks that match their strengths (Yang

et al., 2020). Transformational leadership employs different leadership styles and techniques

such as motivation of employees, and retention of workers among others resulting in increased

productivity of the business.

A transformational leader motivates employees resulting in increased productivity. One trait of a

transformational leader is turning followers into leaders by being critical of their behavior, which

is in line with behavioral leadership theory which says that leaders can be made or acquired.

According to Supratman, Entang, and Tukiran (2021), the leader's charisma and leadership

approach inspire employees to achieve more. Transformational leaders clearly define the visions

of the company by breaking the visions into smaller achievable goals that are easily understood.

Transformative leaders encourage and inspire independent thinking among employees allowing

them to contribute to the decision-making process. The motivating environment enables

employees to realize their full potential and achieve organization goals and visions. Motivation

to be part of the success leads to increased productivity resulting to a positive growth of the

business (Ali and Anwar, 2021). Therefore leadership approach influences significantly

employee morale and in turn, affects business performance.

Retention of employees is critical in business productivity. Transformational leaders encourage

bottom-up communications and take into consideration employee needs (Peretomode, 2021). The

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leader's ability to set clear goals and objectives enables employees to understand the

organization's goals and objectives. Understanding the goals and objectives the employees can

exercise their independence in coming up with solutions and better ways of achieving the

objectives. Employees therefore build trust with their leader making them more committed and

loyal to the organization. As a result, the company can retain its employees reducing the cost

recruitment agency cost and training costs among others, associated with the recruitment of new

employees (Rodríguez-Sánchez et al., 2020). The company also retains skilled employees who

are an asset to the company thus helping in maintaining and increasing productivity. According

to Great Man Theory, some people are naturally born leaders and they influence their followers

through their charisma, wisdom, confidence, and social skills. Therefore we can say that

transformative leaders help in retaining employees by their charisma and social skills.

Transformative leaders improve and maintain productivity by retaining qualified workers.

In conclusion, leadership style influences the employee's behaviours which can affect the overall

performance of the business. An effective leadership style leads to a positive performance of

business and the opposite is true. Transformative leadership style combines different approaches

such as inspirational motivation which makes it an effective leadership style that therefore leads

to increased performance of the business.

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 References

Ali, B.J. and Anwar, G., 2021. An empirical study of employees’ motivation and its influence

job satisfaction. Ali, BJ, & Anwar, G.(2021). An Empirical Study of Employees’ Motivation and

its Influence Job Satisfaction. International Journal of Engineering, Business and Management,

5(2), pp.21-30.

Peretomode, V.F., 2021. Demystifying the Ivory Tower Syndrome in Universities through the

Use of Transformational Leadership. International Journal of Educational Administration and

Policy Studies, 13(1), pp.1-9.

Rodríguez-Sánchez, J.L., González-Torres, T., Montero-Navarro, A. and Gallego-Losada, R.,

2020. Investing time and resources for work–life balance: The effect on talent retention.

International journal of environmental research and public health, 17(6), p.1920

Supratman, O.V., Entang, M. and Tukiran, M., 2021. The relationship of charismatic leadership,

employee personality, and employee performance: Evidence from PT. Karya Abadi Luhur.

International Journal of Social and Management Studies, 2(2), pp.17-41.

Yang, C., Chen, Y., Zhao, X. and Hua, N., 2020. Transformational leadership, proactive

personality and service performance: The mediating role of organizational embeddedness.

International Journal of Contemporary Hospitality Management, 32(1), pp.267-287.