Prospectus Revision

Prospectus

The Impact of Transformational Leadership on Organizational Performance and Employee Retention

by

Doctor of Business Administration Prospectus- Leadership Specialization

Submitted in Partial Fulfillment of the Requirements for the Degree

of

Doctor of Business Administration

Walden University

Student ID: A00979323

June 2021

Prospectus: The Impact of Transformational Leadership on Organizational Performance and Employee Retention

Problem Statement

Employee retention continues to remain a complex challenge in small and medium-sized enterprises (Park et al., 2019). In 2018, employee turnover was estimated to be 19%, where 77% of the rate is preventable by leaders through a change of their leadership styles (Anitha & Farida, 2016). According to Mcfeely and Wigert (2019), the cost associated with the replacement of an employee can be as low as half and as high as twice the annual salary of the employee. The general business problem is the high rate of turnover in organizations and its subsequent impact on organizational performance, such as through high employee replacement cost and productivity loss (Boamah et al., 2018; Tian et al., 2020). The specific business problem is the need to examine the relationship between idealized influence, inspirational motivation, individualized consideration, organizational performance, and employee retention.

Purpose Statement

The purpose of this quantitative correlational study is to examine the relationship between idealized influence, inspirational motivation, individualized consideration, organizational performance, and employee retention. The targeted population consist of employees at small and medium-sized business organization located in Colorado Springs, Colorado. The predictor variables of the study consist of idealized influence, inspirational motivation, and individualized consideration. The dependent variables consist of organizational performance and employee retention . The implication for social change consists of improved employee performance and job satisfaction as well as decreased employee turnover , which stabilizes the workforce and lowers unemployment and crime within the community.

Nature of the Study

To conduct the current study, qualitative, quantitative, and mixed research approaches were considered. I selected the quantitative method because it helps test hypotheses through a deductive approach. Quantitative method involves measuring constructs through quantitative variables and statistical tools to test hypotheses to address research questions (O'Dwyer & Bernauer, 2016). In contrast, qualitative research is characterized by an inductive approach, where perceptions and subjective experiences of individuals are used to develop themes of a research phenomenon (Östlund et al., 2011). The mixed approach, which involves aspects from both the quantitative and the qualitative approaches, is useful in studies specifically suited for that purpose, as such a combination involves limitations inherent in both approaches (Bryman, 2006). I will not use the qualitative method as the purpose of this study does not require an inductive approach, nor will I use mixed methods approach as the additional requirements for qualitative elements are not necessary in this study.

For research design, I considered descriptive design and correlational design. I selected the correlational design as the purpose of this study involves examining the relationship between variables. Correlational research design entails the measurement of two or more relevant variables, as well as assessing the relationship between variables (Crawford, 2014). In contrast, descriptive research design is used to gather quantifiable data and describe the nature of a demographic segment (Mertens, 2014). I will not use descriptive research design as the purpose in this study is not to describe the nature of employees at the selected business organization but to examine relation between such variables as idealized influence, inspirational motivation, individualized consideration, organizational performance, and employee retention.

Research Questions

What is the relationship between idealized influence, inspirational motivation, individualized consideration, organizational performance, and employee retention?

Hypotheses

Ho: There is no statistically significant relationship between idealized influence, inspirational motivation, individualized consideration, organizational performance, and employee retention.

Ha: There is a statistically significant relationship between idealized influence, inspirational motivation, individualized consideration, organizational performance, and employee retention.

Theoretical Framework

The principle components of transformational leadership are idealized influence (attributed), idealized influence behaviors, inspirational motivation, intellectual stimulation, and individualized consideration (Avolio et al., 1991). Transformational leadership theory is aligned with the components mentioned whereby all independent variables mentioned promote the validity of the theory. First, idealized influence (attributed) focuses on a leader’s ability to trust their subordinates, and influence followers’ imitation as a result of personal confidence, ideals, and consistency. The quality is also called charisma behaviors and informs of how a leader’s moral behavior, selfless acts, beliefs, and values influence the perception of subordinates in terms of admiration, optimism, confidence, and respect (Avolio & Bass, 2002).

Inspirational motivation is the next independent variable that focuses on how leaders can motivate subordinates through clear communication of visions and goals to create a holistic transformation of values to fit organizational requirements (Givens, 2008). Avolio and Bass (2002) stated that intellectual stimulation increases employee retention and productivity. Individualized concentration increases improvement of each employee by incorporating each employee’s strengths to enhance the effectiveness of the application of the transformational leadership theory (Susilo, 2018).

Significance of the Study

Value to Business

By examining the relationship between idealized influence, inspirational motivation, individualized consideration, organizational performance, and employee retention, this study will reveal the effectiveness of leadership in increasing employee performance and retention. Notably, previous research shows that positive experiences with leadership increases employee engagement in the organization while decreasing the intention to leave the organization (Jiang et al., 2017). In this regard, the present study will contribute value to businesses through the provision of indicators for improvements in organizational performance and turnover rate through the adoption of transformational leadership components. Through the adoption of transformational leadership components by senior leaders at small and medium-sized enterprises, business practices could be made more effective. The employees of transformational leaders tend to exhibit a higher rate of job satisfaction and higher commitment to the organization (Anitha & Farida, 2016; Boamah et al., 2018). By addressing the need for leaders to motivate employees to have high-performance standards and be creative when finding solutions for various problems, the findings of the study could help improve business practice through better organizational performance and employee retention and through helping reduce the cost of employee replacement.

Contribution to Positive Social Change

Additionally, the significance of the study may also extend to positive social change. Researchers have noted the negative consequences of unemployment and job insecurity, both social and individual (Cylus & Avendano, 2017; Norström et al., 2019; Voßemer et al., 2017). The results from a study by Norström et al. (2019) indicate that unemployed individuals have 10% decreased health as compared to those in employment. High rate of crime is another social consequence associated with unemployment (Fallesen et al., 2018). Through higher employee retention and better performing small and medium-sized enterprises, the local unemployment rate may be reduced. The findings of the study are significant as they may contribute to the reduction of the negative social and individual consequences of unemployment such as health and lower crime rates.

References

Anitha, J., & Begum, F. N. (2016). Role of organisational culture and employee commitment in employee retention. ASBM Journal of Management, 9(1), 17-28. https://www.semanticscholar.org/paper/Role-of-Organisational-Culture-and-Employee-in-Anitha-Begum/78f5caf30944c582f3c1fe4f8ae82f77d6a9cafd

Avolio, B., & Bass, B. (2002). Developing potential across a full range of leadership cases on transactional and transformational leadership. Lawrence Erlbaum Associates.

Avolio, B., Waldman, D., & Yammarino, F. (1991). Leading in the 1990s: The four I’s of transformational leadership. Journal of European Industrial Training, 15(4), 9-16. https://doi.org/10.1108/03090599110143366

Boamah, S. A., Laschinger, H. K. S., Wong, C., & Clarke, S. (2018). Effect of transformational leadership on job satisfaction and patient safety outcomes. Nursing Outlook, 66(2), 180-189. https://doi.org/10.1016/j.outlook.2017.10.004

Bryman, A. (2006). Integrating quantitative and qualitative research: How is it done? Qualitative Research, 6(1), 97-113. https://doi.org/10.1177/1468794106058877

Cylus, J., & Avendano, M. (2017). Receiving unemployment benefits may have positive effects on the health of the unemployed. Health Affairs, 36(2), 289-296. https://doi.org/10.1377/hlthaff.2016.1040

Fallesen, P., Geerdsen, L., Imai, S., & Tranæs, T. (2018). The effect of active labor market policies on crime: Incapacitation and program effects. Labour Economics, 52 (2018), 263-286. https://doi.org/10.1016/j.labeco.2018.03.002

Jiang, W., Zhao, X., & Ni, J. (2017). The impact of transformational leadership on employee sustainable performance: The mediating role of organizational citizenship behavior. Sustainability, 9(9), 1-17. https://doi.org/10.3390/su9091567

Johnson, B. (2001). Toward a new classification of nonexperimental quantitative research. Educational Researcher, 30(2), 3-13. https://www.researchgate.net/profile/R_Johnson3/publication/250182704_Toward_a_New_Classification_of_Nonexperimental_Quantitative_Research/links/56e1fd7e08ae03f0278ed889.pdf

Mcfeely, S., & Wigert, B. (2019). This fixable problem costs U.S. businesses $1 trillion. Gallup.

Norström, F., Waenerlund, A., Lindholm, L., Nygren, R., Sahlén, K., & Brydsten, A. (2019). Does unemployment contribute to poorer health-related quality of life among Swedish adults?. BioMed Central Public Health, 19(1),1-12. https://doi.org/10.1186/s12889-019-6825-y

O'Dwyer, L., & Bernauer, J. (2016). Quantitative research for the qualitative researcher. SAGE.

Oldham, J. (1994). Experimental and quasi-experimental research designs: The author identifies and explores the characteristics of design in experimental and quasi-experimental research. Nurse Researcher, 1(4), 26-36. https://doi.org/10.7748/nr.1.4.26.s4

Östlund, U., Kidd, L., Wengström, Y., & Rowa-Dewar, N. (2011). Combining qualitative and quantitative research within mixed method research designs: A methodological review. International Journal of Nursing Studies, 48(3), 369-383. https://doi.org/10.1016/j.ijnurstu.2010.10.005

Park, C., McQuaid, R., Lee, J., Kim, S., & Lee, I. (2019). The impact of job retention on continuous growth of engineering and informational technology SMEs in South Korea. Sustainability, 11(18), 1-19. https://doi.org/10.3390/su11185005

Tian, H., Iqbal, S., Akhtar, S., Qalati, S., Anwar, F., & Khan, M. (2020). The impact of transformational leadership on employee retention: Mediation and moderation through organizational citizenship behavior and communication. Frontiers in Psychology, 11(314), 1-11. https://doi.org/10.3389/fpsyg.2020.00314

Voßemer, J., Gebel, M., Täht, K., Unt, M., Högberg, B., & Strandh, M. (2017). The effects of unemployment and insecure jobs on well-being and health: The moderating role of labor market policies. Social Indicators Research, 138(3), 1229-1257. https://doi.org/10.1007/s11205-017-1697-y

Crawford, M. (2014). Strengths and limitations of correlational design, 1-11. https://doi.org/10.13140/RG.2.1.4195.7920

Givens, R. J. (2008). Transformational leadership: The impact on organizational and personal outcomes. Emerging Leadership Journeys, 1(1), 4-24. https://www.regent.edu/acad/global/publications/elj/issue1/ELJ_V1Is1_Givens.pdf

Susilo, D. (2018). Transformational leadership: a style of motivating employees.  Management and Economics Journal (MEC-J), 2(2), 109-116. https://www.researchgate.net/publication/328167090_TRANSFORMATIONAL_LEADERSHIP_A_STYLE_OF_MOTIVATING_EMPLOYEES

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