Recommendations to prevent employment disputes

Leadership style of supervisor: Transactional or transformational

Disputes that emerge at the workplace can result from vague top-down guidelines from managers, uncooperative  colleagues, diverging interests of team members, lack of clarity on roles and responsibilities, misunderstanding or communication gaps among colleagues and so on as persons responsible for leading teams and meeting goals of the organization, supervisors or line managers are responsible for preventing and resolving such disputes. To do that, supervisors or leaders have to understand the emotions, needs and interests of both disputing parties. Therefore, in this recommendation, we will discuss two leadership styles, transactional leadership and transformational leadership, that are most helpful in understanding the needs, emotions and interests of disputing parties in an employment dispute. Leaders can deploy these leadership styles proactively i.e before the occurrence of the dispute as well as while resolving the dispute.

Interventions and evidence

Explanation of most plausible interventions

Transformational leadership

“Bass and Avolio (1997) defined transformational leadership as a leadership style that motivates followers by appealing to their higher order needs and inducing them to transcend self-interest for the sake of the group or the organization. This form of leadership involves creating an emotional attachment between leaders and followers. Jin (2010) noted that transformational leadership integrates “empathy, compassion, sensitivity, relationship building, and innovation” (p. 174)” (Men 2014, p. 267). 

“Transformational leaders take a genuine interest in the well-being of employees, foster a climate of trust, nurture confidence in their followers, and encourage individual development. To this end, transformational leaders often engage in close interactions with their followers to understand and address their needs better. In terms of decision-making, transformational leaders seek to empower followers. They are willing to share power and delegate significant authority to followers to make them less dependent on the leader (Aldoory & Toth, 2004; Men & Stacks, 2013). Therefore, transformational leaders are characterized by interactive, visionary, passionate, caring, and empowering communication behaviours” (Hackman & Johnson, 2004)” (as cited in Men 2014, p.267).

Transactional Leadership

“Transactional leadership focuses on the exchanges that occur between leaders and followers [or in this context, employees] (Bass 1985; 1990; 2000; 2008; Burns, 1978). These exchanges allow leaders to accomplish their performance objectives, complete required tasks, maintain the current organizational situation, motivate followers through contractual agreement, direct behavior of followers toward achievement of established goals, emphasize extrinsic rewards, avoid unnecessary risks, and focus on improve organizational efficiency” (McClesky 2014, p.122).

“Transactional leaders award rewards and punishments to subordinates based on their performance. They identify goals, assign roles and responsibilities and delegate tasks. They monitor the performance of employees, check for mistakes or errors and conduct two-way discussions on tasks at hand. “They focus on operational efficiency and time management” (Afsar et al. 2017, p.312). “This leadership style aims to maximise operational and individual gains” (McClesky 2014, p.122).

PICO Question

For parties looking to prevent or resolve an employment dispute, where the employer and employee want to recognise emotions, needs and interests (understanding), is transactional leadership or transformational leadership more effective for well-being?

Assessment and grading of evidence

The main sources of evidence used for this particular subject are:

    • Men, L. R. (2014). Strategic internal communication: Transformational leadership, communication channels, and employee satisfaction. Management communication quarterly, 28(2), 264-284.
    • McCleskey, J. A. (2014). Situational, transformational, and transactional leadership and leadership development. Journal of business studies quarterly, 5(4), 117.
    • Lee, M. (2014). Transformational leadership: is it time for a recall?. International journal of management and applied research, 1(1), 17-29.
    • Clarke, S. (2013). Safety leadership: A meta‐analytic review of transformational and transactional leadership styles as antecedents of safety behaviours. Journal of occupational and organizational psychology, 86(1), 22-49.
    • Odumeru, J. A., & Ogbonna, I. G. (2013). Transformational vs. transactional leadership theories: Evidence in literature. International review of management and business research, 2(2), 355.
    • Hay, I. (2006). Transformational leadership: Characteristics and criticisms. E-journal of Organizational Learning and Leadership, 5(2).
    • Sandilands, T. (n.d). What type of organisations employ transactional leadership? Chron.                                                                             

‘Safety leadership: A meta‐analytic review of transformational and transactional leadership styles as antecedents of safety behaviours’ is an academic article by Sharon Clarke who is a professor of organisational psychology at the University of Manchester. She has co-authored several articles on leadership and organisation safety. This paper is a meta-analytic review that tests whether transformational or transactional leadership is instrumental in creating a safe working climate at the workplace. The authors included 103 studies in the meta analysis. According to the GRADE methodology, we assess the quality of this paper to be high given that the study is a meta-analysis. 

‘Strategic internal communication: Transformational leadership, communication channels, and employee satisfaction’ is a paper by Men, who is an associate professor at University of Florida. She has authored several articles on leadership at the workplace. In this paper, she investigates how leadership influences relationships with employees by building the linkage between transformational leadership, the use of communication channels, symmetrical communication, and employee satisfaction. An online survey was conducted with 400 employees who worked in medium and large-sized corporations in the USA. The authors used a stratified and quota random sample to make sure that the sample was representative and comparable across, age, gender, income and education levels. According to the Grade methodology, we assess the quality of the study to be moderate. 

The study by McCleskey (2014) describes 3 leadership theories: situational leadership, transactional leadership and transformational leadership. McClesky is associated with the Western Governors University in Utah. He has written several papers on the topic of leadership at the workplace. The paper is solely based on literature review, so the quality of the paper is assessed to be very low. But because the paper has received a high number of citations (952), we upgrade the quality of the paper to low, according to the GRADE methodology.

‘Transformational leadership: Characteristics and criticisms describes transformational leadership and its criticism’ is a paper by Iain Hay who is an emeritus professor at Flinders University, Australia. The paper is based on literature review. At 162, the paper has a moderate number of citations. All in all, according to the GRADE methodology we assess the quality of this paper to be very low.

The paper by Lee (2014), who is a PhD student at University of Salford UK, examines transformational leadership and inspirational leadership using literature review that is based on observational studies and expert opinions. According to the GRADE approach, we assess the quality of the study to be very low. 

The paper by Odumeru and Ogbonna (2013) compares transactional and transformational leadership drawing evidence from literature review that is mostly based on expert opinions. But because the paper has been widely cited (535 times), we upgrade the quality of the evidence to low, according to the GRADE methodology. 

‘What type of organisations employ transactional leadership?’ is blog article.Although blog articles are not recommended in the GRADE methodology, we use them for this recommendation due to lack of more substantive literature that points to the aptness of each leadership style in different contexts. We grade the quality of this article as very low. 

Quality of evidence and research gap

According to our research method, we grade the evidence comparing transactional leadership style and transformational leadership style as very low. There exists a lot of empirical as well as theoretical literature on the topic of transformational and transactional leadership. However, most of the empirical research has been conducted in Western countries. So knowledge on how leadership styles affect employees in different cultural contexts is lacking. Literature on how transformational and transactional leadership styles affects the well-being of employees and the employer is abundant. But the literature does not directly address how the two leadership styles are useful in preventing and resolving disputes at the workplace. 

Desirable Outcomes

Transactional leadership
Transformational leadership
Transactional leaders facilitate adherence to rules and regulations in the workplace. Rules and regulations are essential in establishing behaviour standards, achieving goals, minimising risks to health, safety as well as project and in managing tasks. Non-adherence to rules and regulations can cause conflicts in the team and can cause projects to go off-track. So adherence to rules and regulations prevents disputes from arising. “Active transactional leadership is important in ensuring compliance with rules and regulations” (Clarke 2013, p.22).
“Transformational leaders employ intellectual stimulation (i.e., leader challenges assumptions, takes risks and encourages subordinates to be creative). This final aspect of transformational leadership is enacted through cognitive, rather than affective processes, whereby subordinates develop new ways of solving problems and are encouraged to question the status quo” (Clarke 2012, p.23).Because subordinates are given the opportunity to be creative, they can grow into their roles better, which is likely to bring them satisfaction at the workplace.
“Transactional leaders monitor subordinates’ behaviour, anticipate problems and take proactive steps to implement corrective actions” (Clarke 2013, p.25). Because the leader is proactively monitoring tasks, employees are less likely to make mistakes and are aware of actions to take in case if plans don’t work out. In other words, by being closely involved in day-to-day management of operations, transactional leaders prevent problems and the disputes that arise out of problems.
‘…[T]ransformational leadership leadership evokes changes in subordinates’ value systems to align them with organizational goals (Clarke 2013, p.23). If the goals of the organisation and individual are aligned, then employees will work according to the expectations of the leader. Similarly, the organisation will also cooperate better with the employee, all of which together will prevent disputes from arising.
“Active transactional leadership provides the opportunity for error recovery and learning from mistakes, which are key elements of a learning culture” (Reason, 1997) (as cited in Clarke 2013, p. 25). By giving employees room for error as well for improvement in performance, transactional leaders promote growth of employees, which is likely to increase their job satisfaction.
“[A] transformational leadership style develops trust and enhances interpersonal relationships between managers and their subordinates” (Clarke 2013, p.26). Because interpersonal relationships between managers and employees are strong, in case a dispute arises, both are likely to co-operate with each other, understand each other’s needs and put more effort into resolving a dispute.
“Active transactional leaders are involved with proactive monitoring of employees’ behaviour and correcting errors before they lead to problems. Such leaders pay attention to safety rules and regulations by employees, leading to greater safety compliance. Furthermore, the emphasis on individual learning and proactive error management demonstrated by active transactional leaders should encourage employees themselves to engage in safety-related activities” (Clarke 2013, p.26). Since transactional leaders prevent problems from occurring and encourage safe behaviour among employees, they prevent disputes that arise out of problems or risky behaviour.
“Transformational leadership has been shown to lead to a better understanding of safety issues at the workplace and improved communication” (Conchie, Taylor, & Donald, 2012) (as cited in Clarke 2013, p.26). Improved communication will facilitate resolution and prevention of disputes among employees as well as with the manager.
“Transactional leadership allows followers to fulfill their own self-interest, minimize workplace anxiety, and concentrate on clear organizational objectives such as increased quality, customer service, reduced costs, and increased production (Sadeghi & Pihie, 2012)” (as cited in McCleskey 2014, p.122). Since transactional leaders give subordinates space to fulfill their own interests and work on minimising workplace anxiety, subordinates are likely to feel satisfied and comfortable at work, which helps in preventing disputes.
“… [I]t would be expected that transformational leadership would lead to compliance, but more particularly would encourage safety participation, as a form of safety citizenship behaviour” (Clarke 2013, p. 27). Because transformational leaders encourage safe behaviour, employees even during a heated dispute, are unlikely to engage in risky behaviour.
“Transactional leadership allows followers to fulfill their own self-interest, minimize workplace anxiety, and concentrate on clear organizational objectives such as increased quality, customer service, reduced costs, and increased production (Sadeghi & Pihie, 2012)” (as cited in McCleskey 2014, p.122). Since transactional leaders give subordinates space to fulfill their own interests and work on minimising workplace anxiety, subordinates are likely to feel satisfied and comfortable at work, which helps in preventing disputes.
“Transformational leaders adopt face to face communication methods with subordinates which is positively associated with employee satisfaction” (Men 2014, p.264).
“Transactional leadership was also [found to be] negatively related to work-related bullying, perceived person-related bullying, and perceived physically intimidating bullying” (Dussault and Frenette 2015, p.724).
“…[T]ransformational leadership strongly emphasizes listening, openness, feedback, participation, and relationship, which are key attributes of symmetrical communication” (Men 2014, p. 268). Symmetrical communication allows employees to air their grievances and provide feedback to managers which in turn improves the functioning of the organisation and helps employees in meeting their own needs.
“Transformation leaders engage in discussions with their subordinates, they communicate well and address their higher order needs. By communicating a desirable, inspirational, and attainable vision, transformational leaders give followers a sense of meaning within the organization (Yukl, 2006) and thus improve their relational satisfaction (Men 2014, p. 268). Given that employees have relational satisfaction, they are less likely to engage in behaviour that can lead to a conflict. Similarly, they will try to resolve a dispute in a less adversarial way, which will reduce the negative emotions around the dispute.
“Transformational leadership, charisma, intellectual stimulation, and individualized consideration were negatively correlated with work-related bullying, person-related bullying, and physically intimidating bullying (ranging from –.21 to –.60, p < .01)” (Dussault and Frenette 2015, p. 728) .

Undesirable Outcomes

Transactional leadership
Transformational leadership
“Transactional leaders form short-term relationships with employees. These relationships tend toward shallow, temporary exchanges of gratification and often create resentments between the participants” (McCleskey 2014, p.122).
By encouraging employees to take risks, transformational leaders can decrease the safety quotient at the workplace. “…[S]ome aspects of transformational leadership could have deleterious effects on safety, such as the association of intellectual stimulation with risk-taking, given that this aspect of leadership encourages novel and creative ways of thinking” (Clarke 2013, p.26).
“…[H]ighly empowered employees may view transactional leadership style as restrictive, less flexible, controlling, and risk aversive which demotivates them to display entrepreneurial behavior” (Afsar et al. 2016, p. 324). Employees who are driven and creative can feel restricted under a transactional leader who does not permit subordinates to be innovative. They may voice their discontent with the manager, which itself can lead to a dispute or pursue a direction that is different from what is suggested by the manager, which can also give rise to a dispute with the manager.
Under transformational leadership, where followers are emotionally attached to the leader, there is a risk where the leader manipulates the employees without giving due consideration to their well-being. Employees can also become dependent upon the leader. “Transformational leaders motivate followers by appealing to strong emotions regardless of the ultimate effects on followers and do not necessarily attend to positive moral values. As Stone, Russell and Patterson (2003, p. 4) observe, transformational leaders can exert a very powerful influence over followers, who offer them trust and respect. Some leaders may have narcissistic tendencies, thriving on power and manipulation. Moreover, some followers may have dependent characters and form strong and unfortunate bonds with their leaders (Stone, Russell and Patterson, 2003, p. 4)” (as cited in Hay 2006, p. 13).
Under transactional leadership, employees don’t push the envelope nor do they work over and above what is required of them. This limits the growth of the organisation. “…transactional leadership, in contrast, is found to have a negative effect on employees’ entrepreneurial behavior. Under transactional leadership, employees are extrinsically motivated (i.e. contingency rewards and active management-by-exception) and thus they are less willing to go beyond their job responsibilities to try out innovative ideas for the benefit of the organization” (Afsar et al. 2016, p. 322).
Because transformational leaders emphasise on the common good, it can lead to neglecting the needs of employees.. “…transformational leaders aim to get people’s thoughts off distributional questions and refocus them on common goals or communal interests” (Keeley, 2004: 167, emphasis in original). This implies that the leaders are putting themselves above followers’ needs, which is “antidemocratic” (Northouse, 2013: 203)” (Lee 2014, p. 20).
Under transformational leadership, employees are emotionally invested in work, which benefits the company but at the risk of employees feeling exhausted. “Stevens et al (1995) believes that transformational leadership is biased in favour of top management, owners and managers. Followers can be transformed to such a high level of emotional involvement in the work over time that they become stressed and burned out” (Odumeru and Ogbonna 2013, p. 357).

Balance of outcomes

Taken together, the available research suggests that both transactional and transformational leadership are necessary in uncovering emotions, needs and interests of employees and preventing or resolving disputes. 

Transactional leadership is most effective in taking care of day-to-day operations of the organisation. The leaders are aware of everyday challenges that subordinates face. Because such leaders are interested in attaining operational efficiency, they are likely to address emotions that employees attach to each task. They help employees to complete tasks efficiently and give them the opportunity to learn from their mistakes. They ensure that employees adhere to rules and regulations which make the workplace a safe place to work. A few pitfalls of transactional leadership are that it doesn’t demand creativity from employees and that motivated and enterprising employees might find it a stifling environment to work in. 

All in all, transactional leadership is instrumental in preventing and resolving disputes at the workplace. For example, if two subordinates are assigned a task with a deadline. But one of them has not been able to make much contribution to it because he or she is inundated with more pressing activities, there might be delay in achieving the previous deadline. Because a transactional leader monitors subordinates, he or she will quickly grasp the problem and can reprioritise certain activities which will free up the time of the employee. Similarly, if the other teammate feels that the coworker is not pulling his weight and it leads to a quarrel among the two, because the transactional leader is involved in everyday operations and is interested in efficiency, he or she will try to resolve the dispute so that the subordinates continue to have a good working relationship and produce good results for the organisation. 

Transformational leadership stimulates employees intellectually, helps them align with the goals and objectives of the organisation, and emphasises employee well-being by keeping conversation channels between seniors and subordinates open. There is a risk that transformational leaders manipulate employees or misuse their trust. The bond between the senior and subordinate can cause the latter to work until they burn themselves out.

Altogether, transformational leadership is also instrumental in preventing and resolving disputes at the workplace. Because transformational leaders nurture a good interpersonal relationship with subordinates, if an employee feels that certain tasks are not going well or if there is misalignment of interests with coworkers, he or she is likely to bring it up with the leader, who can then take action to resolve the issue. Similarly, in an ongoing dispute, transactional leaders make an effort to understand the stand of disputing parties, communicate well and try to resolve the underlying needs of the disputing parties. 

Taking into account the balance of outcomes, and the quality and consistency of the evidence, we make the following recommendation: A combination of the two leadership styles, transactional and transformational, is most conducive to the well-being of employees and the organisation. As explained in the technical remarks, the type of work environment can justify the usage of one style to a greater extent than the other, but one should not be used to the complete exclusion of the other.  Choose a style depending upon the type of organisation they work for and the roles employees they are they work with.

Technical remarks

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