Keywords

Transformational Leadership, Transactional leadership, Romance of Leadership, Employee satisfaction, Employee performance, Telecommunications

Introduction

Charisma and transformational leadership are a focus of researchers worldwide (Xu, Jiang, Hong & Roche, 2021). According to transformational and transactional leadership theory, charisma and the leader’s reputation are contingent on the follower’s perceptions (Ugwu & Okore, 2020). Charisma is the cornerstone of transformational and transactional leadership theory (Brown, 2020). Employees who follow individuals with a transformational leadership styleare often more committed, higher-performing, and more satisfied with their job than employees who work for transactional leaders (Kanat-Maymon, 2020). This is true in both the private and public sectors and across a variety of cultures (Meki?, Had?iahmetovi? & Budur, 2020). Transformational leadership is also strongly associated with motivational consequences, such as high employee satisfaction resulted from continuous leader motivation and stimulation, in the private sector but less so inthe public sector (Almarshoodi, 2021). However, previous studies have not addressed the effects of transformationaland transactional leadership amongemployees at U.S. telecommunications companies (USTCs), despite the importance of USTCs to the U.S. economy and their unique corporate structure relative to many other organizations.

In this study, we examined the effects of transformational and transactional leadership on the satisfaction and self-perceived performance of USTC sales representatives. We additionally accounted for the effects ofself-respect and romance of leadership, which are known to moderate employee satisfaction and performance independently of the transformational leadership style (Abouraia & Othman, 2017).

Literature Review

Charisma

Charisma is an important component of transformational leadership and therefore has an important effect on organizational outcomes. The word charismacomes from a Greek word meaning “grace” or “gift.”Ordinary people do not have charisma; instead, charisma is considered to be a superhuman, supernatural, or otherwise exceptional quality (Fitria & Anik, 2021). According to Tokbaeva (2018), the authority of a charismatic leader derives from the trust that is built by theleader’s exceptional charm. Charismatic leadership substantially shapes and/or modifies company culture and workplace happiness. The success of a charismatic leader ultimately depends on leaders’ ability to charm their followers in the absence of other equally charismatic leaders (Bass, 1985). The extent to which followers show respect, trust, and affectionfor a charismatic leader depends on both theleader’spersonality and the followers’ perceptions of it. Dimopoulos (2020) described a variety of theories about how leaders' behaviors, characteristics, and influence on subordinates can affect their satisfaction and performance. Supratman, Entang & Tukiran (2021) similarly stated that charismatic leadershaveexceptional self-confidence, strong ethical principles, and a high propensity to inspire others. They are also highly motivated, able to overcome challenges, and can articulate a clear and purposeful mission. Most importantly, charismatic leaders learn about and use impression management behaviors to improve their followers’ confidence and trust.

Transformational and Transactional Leadership

In this study, we considered two main leadership styles that could be exhibited by a charismatic leader in a corporate or organizational setting: transformational leadership and transactional leadership. Transactional leadership is a reward and sanction system of management (Berkovich & Eyal, 2021). In this model, preferred behavior is compensated in some way, whereas unpreferred behavior is punished. Possible rewards include promotions, increased pay, commissions, or other bonuses, and potential punishments may include pay cuts, fewer or no bonuses, or termination. This type of leadership is not considered appropriate in many instances such as banks sector (Ma & Jiang, 2018). Also, the behaviors of transactional leaders may not earn these leaders additional titles or accolades.Becausethe transactionalleadershipstyle is based onan exchange system, employeesare generally not motivated to do any more than is necessary to avoid penalties or earn extrinsic gifts (Purwanto, Bernarto, Asbari, Wijayanti & Hyun, 2020). As a result, employers who fully rely on transactional leadership are unlikely to maximizejob satisfaction and performance (Sunarsi, 2021). In contrast, transformational leadership generally produces an extraordinary level of employeesatisfaction and performance. This leadership style, which was first defined and described by Bass (1985), fosters and encourages employeeself-actualization, performance, satisfaction, intelligence, and organizational commitment (Anah, 2020). For example, Luu & Phan (2020) reported that transformational leadership has apositive effect on employee satisfaction.

The two leadership theorists who were responsible for the initial development of transformational and transactional leadership theory, Bass (1985); Burns (1978), agree on most of the foundationalconcepts of transformational and transactional leadership; however, they have conflicting beliefs regardingthe relationship betweenthe two leadership styles. Bass (1985) claimed that both styles have similar end results, whereas Burns (1978) claimed that the two styles produce opposite end results. An influential leader demonstrates characteristics of both transformational and transactional leadership, according to Burns and Bass. However, transformational leadership is more focused on employee development, whereas transactional leadership is more concerned with the external motivation the employee may receive to complete the task. Bass (1985) additionally defined key “dimensions,” or qualities, of the two leadership styles. Transactional leadership includes two basic dimensions: management-by-exception and conditional rewards. Management-by-exception refers to an environment where leaders implement penalties for behaviors that substantially deviate from the norm, and conditional rewards refer to an environment where leaders and employees have a mutual understanding of the performance emerging from reward or punishment systems. The transactional leadership model emphasizes achieving assigned tasks according Burns and Bass agreements of how both styles work.

In contrast, transformational leadership includes four basic dimensions. The first dimension, charisma, helps create a deep emotional relationship between leaders and employees, which generates enthusiasm for accomplishing the organization’s mission (Bass, 1985). Fauzi (2021) noted that an organization’s mission is quickly accomplishedwhen employeestrust and respect their leader. The second dimension of transformational leadership isinspiration; transformational leadersinspire enthusiasm and optimism in theiremployees (Top, Abdullah & Faraj, 2020). The third dimension is individualized consideration, which refers to how leadersare personally attentive to the unique needs of individual employeeswhile still being fair and equitable to all employees (Luu & Phan, 2020). In other words, transformational leaders identify the needs of employees and train them according to their abilities. The final dimension, intellectual stimulation,motivatesemployees by giving them opportunities to use their critical thinking skills to solve practical and important problems. According to Burns (1978), leaders who intellectuallystimulate their employees ultimately help employees increase their creativity, innovation, and wisdom. To measure these various dimensions of transformational and transactional leadership in individual leaders, Bass (1985) developed the Multifactor Leadership Questionnaire (MLQ). The MLQ is commonly used in researchsettings because it has been proven to bereliable in accuracy (Imam, 2017).

Self-respect

Aside from the leadership style at an organization, another key factor influencing employee performance and satisfaction is the employees’ sense of self-respect. Self-respect refers toa set of beliefs and attitudes adopted by people when they confront others (Clucas, 2020). Self-respect has been widely studied in leadership researchandhas been found to as affect employees’ competitive behaviors, social participation, responses to workplace-related threats such as termination, and conformity. Researchers alternatively describe self-respect using terms like self-esteem, self-confidence, self-love, or self-worth.

Romance of Leadership

Another consideration that affects employee satisfaction and performance is the romance of leadership theory. According to Hammond, et al., (2021), the “romance of leadership” refers toemployees’perceptions or beliefsabout the importance of their leader(s) to the organization, which can affect how employees perceive their leader; for example, employees may naturally have more favorable perceptionsof transformational and charismatic leaders. Meindl & Ehrlich (1988) established the Romance of Leadership Scale (RLS) to measure the extent to which employees romanticize the importance of their leaders. Nevertheless, this scale is not supported by anempirical evidence,as it is difficult to validate whether RLS scores are directly related to employee satisfaction.

U.S. Telecommunication Companies

One organizational landscape where the relationship between transactional and transformational leadership is particularly pronounced, and where self-respect and romance of leadership could have important implications for employee satisfaction and performance, is USTCs. USTCswork with cell phones, internet service providers, and other wireless products (de Andrés, Poniszewska-Mara?da & Gómez, 2020). Previous studies of the business environment in the cell phone and internet retail subsectorhave largely focused on retail businesses (U.S. Bureau of Labor Statistics, 2021); however, there are comparatively fewstudies addressing the business environment of USTCs. USTCs, as a retail subsector, are unique because they operate as commission-based systems in whichemployeesearn higher commissions for selling more products and services; in most other retail subsectors, employees receive fixed hourly wages. The business environment of USTCs is also distinct from other retail subsectors because employees and leaders often interact more closely than in other businesses and because the product landscape changes more rapidly. As a result, sales representatives require continuous training to stay up to date with new promotions, offers, and products (Bataineh, 2020). Additionally, this retail subsector is characterized by the large amount of daily updates sales representatives receive and need to learn. This study tested the effects of transformational and transactional leadership styles on the business environment of USTCsand therefore begins to addressthe issues of this subsector as a unique commission-based business. This study tests the effects of transformational and transactional leadership styles on the business environment of USTCs and therefore provides important information on the poorly studied role of leadership in commission-based businesses.

Problem Statement

USTCsare an importantretail subsector of the U.S. economy and provide an essential service toconsumers and to phone and internet service providers. Ensuring that the business environment at USTCs remains healthy, with quality customer service and low employee turnover,is therefore important for both the U.S. economy and the generalpopulation. The leadershipteams at USTCs play a crucial role in sustaining high-quality operations at their companies; the overuse of a less effective leadership style, such as transactional leadership, may negatively affect the sustainability and stability of the businessby leading todissatisfied employees, a high employee turnover rate, and financial loss (Jaman, 2020; Asghar & Oino, 2017).

Purpose Statement

In this study, we quantitatively evaluatedthe effects of transactional and transformational leadership styles on the satisfaction and performance of USTCsalesrepresentatives. Because theoveruse of certain leadership styles may interfere with business operations by affecting employee satisfaction and performance, we aimed to quantify the extent to which transactional and transformational leadership affect job satisfaction and performance, with the goal of determining the balance of management strategies that best promotes effective operations.

Hypotheses

After an initial literature review, we generated the following four hypotheses:

H1 There is a relationship between transactional leadership in USTCs andthe job satisfaction and performance of USTCsalesrepresentatives.

H2 There is a relationship betweentransformational leadership in USTCs andthe job satisfaction and performance of USTC sales representatives.

H3 There is a relationship between the degree of self-respect reported byUSTC salesrepresentativesand their job satisfaction and performance.

H4 The relationship betweenthe leadership styles of USTC supervisors/managers and the job satisfaction and performance of USTC sales representativesis moderated by the romance of leadership and self-respect.

Methods

Population and Sample

We provided a total of 500 questionnaires to four different commission-based USTCs in Florida, Georgia, Texas, and Utah. The number of questionnaires distributed to each USTC was determined based onthe size of the company workforce, with the goal of surveying all USTC sale representatives working in full-time, non-managerial positions. We additionally included only sales representatives between 26-45 years old who had an associate degree or higher and at least four years of experience working in USTCs. The questionnaire consisted of 80 closed-ended questions, with extra details provided following each question. We used a selection of 250 questionnaires for our final analysis the remaining questionnaires were excluded because of incomplete or absent responses.

Measures

The 80 questions on our questionnaire were designed to measure sale representative's perception of transformational and transactional leadership in their company, as well as their self-respect, romance of leadership, job satisfaction, and job performance. All questions consisted of a statement to which employees were asked to respond on a five-point Likert scale ranging from "strongly disagree" to "strongly agree."

We used the Bass & Avolio (1996) Multifactor Leadership Questionnaire/Short Form (MLQ-5x)to quantify participants’perceptions of transactional and transformational leadership styles in their company. The MLQ-5x used four subscales to quantify the four dimensions of transformational leadership: (1) inspiration (e.g., the leader speaks eagerly about tasks to be achieved); (2) charisma (e.g., being associated with the leader instills pride); (3) intellectual stimulation (e.g., the leader searches for different viewpoints to solve a problem); and (4) individualized consideration (e.g., the leader responds to representatives’needs and assists in developing theirabilities). The questionnaire also used two subscales to quantify the two dimensions of transactional leadership: (1) management-by-exception (e.g., the leader waits until a violation occurs before takingaction) and (2) conditional rewards (the leader uses a reward system to motivate representativesto do tasks).

We used additional questionnaires or scales to quantify the other two independent variables in our study: Self-respect and romance of leadership. Self-respect was quantified with Rosenberg’s ten-item scale (1979), which has participants responds to statements like “I have great qualities,” “I feel that I can address most problems I face,” and “I can do things other peoplefind difficult to do.”Romance of leadership was quantified usingan adapted version of the scaleoriginally developed by Meindl & Ehrlich (1988). Many editions of this scale have been developed; the original scale included 32 items, but weused Form C (RLS-C), which contains 11 items. Participants were asked to respond to statements like“at a certain point, the leadership can influence the operations in the company” and“the company is great with its leaders.” Several additional questions were used to quantify our two dependent variables, employee satisfaction and performance. Satisfaction was measured using a 14-item scale that included statements like“I’m generally happy because leaders always consider my opinions.” Performance was measured using a five-item scale that included statements like “I think my performance is above average,” and “I hit my goals all the time.”All statements were quantified by having participants respond on a five-point Likert scale.

Results

Scale Reliability

We first computed Cronbach’salphato determine whether our questionnaire responses werereliable and internally consistent. According to Nunnally (1978), alpha values above 0.80 are good, values fall between 0.80 and under 0.60 are satisfactory, and values under 0.60 are poor. In this study, Cronbach’s alpha values were 0.88 for transformational leadership questions, 0.70 for transactional leadership questions, 0.76 for self-respect questions, 0.78 for romance of leadership questions, 0.71 for job satisfaction questions, and 0.74 for job performance questions.

Correlations

Table 1 shows Person’s correlations among allthe independent and dependent variables measured in this study. Transactional and transformational leadership styles were significantly correlated, with r=0.67 and p<0.001. Job satisfaction and performance, dependent variables, were also significantly correlated, with r=0.30 and p<0.001. It is also worth noting that we did not notice any discernable trends among the four companies surveyed, such as significant higher job satisfaction or performance in one company compared to others.

Table 2 shows the mean (m) and standard deviation (SD) of the Likert-scale responses for all variables.

Hypothesis Testing: Partial Correlation and Multiple Regression

We tested our first three hypotheses using two different multiple regression models, with separate models for each of our dependent variables. Table 3 shows the results from the multiple regression for the first dependent variable, job satisfaction, at m=2.48 and SD=0.68. This model was significant and showed that self-respect and a transformational leadership style had a significant, positive effect on job satisfaction (p<0.001 for both variables). In contrast, romance of leadership and a transactional leadership style were not significantly associated with job performance as shown in table 4.

Table 4 shows the results from the multiple regression for the second dependent variable, job performance, at m=2.4 and SD=0.60. This model was also significant at p<0.001. Self-respect, a transformational leadership style, and romance of leadership were all significant predictors of job performance (p<0.001). However, a transactional leadership style was not significantly associated with performance.Table 5.

Discussion

Our results demonstrated that the job satisfaction and performance of USTC sales representative’s are not significantly affected if their boss or superiors use a transactional leadership style. This result contradicts our first hypothesis. However,job satisfaction and performance were significantly higher when employers useda transformational leadership style,which supports our second hypothesis. We found mixed support for our third hypothesis; self-respect and romance of leadership were both significantly correlated with job performance,but self-respect was the only variable that was significantlycorrelated with job satisfaction. With respect to our fourth hypothesis, we found that self-respect and RLS did not negatively or positively mediate the relationship between the dependent and independent variables in the presence of individual differences.

Impacts of Transformational Leadership

According to our results, transformational leadership styles in USTCs had the largest positive effect on employee performance and job satisfaction relative to all other variables we studied. This implicitly means that the leaders’ use ofcharisma, inspiration, and other dimensions of the transformational leadership style promoted positive behaviors and attitudesamong employees. These leadership qualities also helped motivaterepresentatives by meeting their needs and developing their abilities. For example, we found that a majority (85%) of survey respondents either agreed or strongly agreed with statements that their boss meets their needs and develops their abilities. Our results are also supported by other studies; for example, Azizaha, et al., (2020) found that the employment of transformational leadership manners is strongly correlated with higher job satisfaction and performance. Overall, leaders who are attentive to their employeesreflect a positive energyin theirpsychological state anddramatically increaseemployee satisfaction.

Impacts of Transactional Leadership

Our results additionally showed that a transactional leadership style was not positively correlated withemployee performance or satisfaction. In the transactional leadership model, employees respond positively to a predefined work system that itemizes their roles, performance, and expectations by linking those roles to expected rewards. We expected thetransactional leadership styleto be more influential than the transformational because USTCs traditionally follow a commission-based model; however,we found that a transformational style was more closely relatedto higher employee satisfaction and performance. USTC customer servicerepresentatives therefore must be seekingflexibility overtransactional authority. In other words, they must be seeking flexibility in their role rather than a concrete reward/punishment system.

Combination of Transactional and Transformational Leadership Styles

Our multiple regression models provided additional insight into the role of leadership by showing that the independent variables, transformational leadership, transactional leadership, self-respect, and romance of leadership, significantly increased employee performance and satisfaction. We specifically found that transformational and transactionalleadership styles were complementary and could both be used by the same leader. Bass (1990) similarly described how both leadership styles can be complementary to boost employee satisfaction and performance. However, our results showed that a transformational leadership style, rather than a transactional style, significantly affects employee performance and satisfaction. Our results lead us to three key hypotheses about the relationship between USTC sales representatives, the leadership style of their employers, and the commission-based business model. First, we suspect that the inspiration provided by a transformational leader is more important than financial rewards for maintaining the happiness and performance of USTC representatives, as most USTCs already provide commissions on sales. Second, USTCsales representatives confirmed that it is important for their employer to meet their needs and develop their abilities because this personalized attention boosts self-assessed performance. Third, we determined that the commission itself is less important than an employee’s psychological stability. It is therefore important that the leaders of USTCsadapt their leadership styles to retainemployees, reduce employee dissatisfaction andturnover, and increase employeeproductivity.

It is also important to note that, althoughemployee satisfaction and performance at the USTCs were not negatively affected bytransactional leadership behaviors, employees linked most of theirperformance and job satisfaction to transformational leadership behaviors. This implicitly suggests that the satisfaction and performance obtained in a routine business environment resulted from meeting employees’ needsby breaking their daily businessroutines at workplace (Herzberg, 1959). Rewards also play a crucial role in maintaining employee satisfaction and performance. Finally, our observation thattransactional and transformational leadership styles haddifferent effects on employee performance and satisfaction support the view of Bass (1985) which transformational leadership style is more preferred than the transactional by employees.

The Effects of Romance of Leadership and Self-respect

We additionally found that romance of leadership was significantly correlated with job performance, whereas self-respect was significantly correlated with both job performance and satisfaction. Specifically, high self-perceived performance was generally associated with employees having positive opinions about their company leadership. This follows with the general principles of the romance of leadership theory, which suggest that employees who strongly support the importance of leadership may have higher self-assessed performance. Job satisfaction was more closely tied to self-respect: self-respect was strongly correlated with bothsatisfaction and performance such that the higher the self-respect ofUSTC employees, the higher their satisfaction and self-perceived performance.

Future Research

Additional research is still needed to further examine the connectionsbetweena transactional leadership style and employees’ satisfaction and performance. Although USTCs are commission-based businesses and therefore structured on performance incentives, sales representatives still preferred transformational over transactional leadership. Because we evaluated self-perceived employee performance, further research will be needed to evaluate the relationship between various leadership styles and independently assessed measures of performance, performance measured by specific research tools. Studies of how employees perceive leadership should also be emphasized. We lastly recommend exploring the relationship between other leadership styles and employee satisfaction, for example, how would the structure of tasks at USTCsaffectemployee satisfaction?

Conclusion and Limitations

Bass (1985) initially claimed that both transformational and transactional leadership derive from the same character qualities and are thereforenot exchangeableor competing; however, the results of this studydo not support that statement. Based on our results, leaders must have charisma, provide individualized consideration, and inspire employees using intellectual stimulation to improve employee performance and increase employee satisfaction. Whether leaders must adopt both leadership stylesto be successful remains unclear; however, there are no apparent alternativesto thetransactional and transformational leadership frameworkat USTCs.

Meindl (1995) stated that leadership ascriptions frequently emerge from social spreading processes. In other words, employeeswithout direct access to their leaders can often acquiretheir leadership ascriptions from otherinfluential employees. Most models of transactional and transformational leadership styles generally assume that employees’ ascriptions toward their leadership are based on direct contact betweenemployeesand their leader; however, many studies have evaluated the role of leadership styles in the workplacewithout considering the distance between employees and their leaders. We avoided creating a similar bias in our results by considering the contact distance between representatives and their leaders; all USTC sales representatives that we surveyed were in direct contact with their leaders on a daily basis.

The nature of the leadership team at any organization plays a crucial role in regulating employee performance. In general, employeesbehave positively in the presenceof strong and charismatic leadership, though an employee’s sense of self-respect is another important factor affecting job performance and satisfaction. Based on our results, we suggest that trainingUSTC leaders with the skills for effective transformational leadership would be beneficial for maintaining high-quality operations and exceptional customer service at USTCs.

Because our study relied on a self-assessment of sale representatives performance, one possible limitation of this study was that employees may have overrated their own performance. As a result, our measures for the effect of transformational leadership on job performance might be slightly inflated. We also did not investigatehow employees’ personalities and levels of trainingmay have affected their relationship to the various dimensions of transformational leadership. As a result, sale representatives’ perception toward some variables, such as romance of leadership and job performance, might be slightly different from one representative to another.

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