Organizations are facing increasingly rapid and profound changes. Some examples of these changes are disruptions in demand caused by COVID, the appearance of new types of consumers, changes in the behavior pattern and habits of consumers, more sophisticated consumers with more information, the arrival of new technologies in supply and demand, an accelerated flow of new products and services from competitors, and legislation to drive the sustainability of ecosystems.
On top of these changes, among other considerations, there is the political and economic situation, with high and uncertain rates of inflation challenging expectations, interest hikes by central banks in an attempt to curb inflation, rising transport and energy costs, possible energy restrictions, and armed conflicts with a wide range of geopolitical positions depending on the country. It is likely that this situation will lead to a slowdown in demand and an economic recession which many governments and economists are already announcing.
With accelerating changes in demand and supply, and the possibility of a general economic slowdown, companies and their directors face uncertainties that they will have to manage swiftly, in order to adapt as quickly as possible and survive. In this environment, transformational leadership becomes more necessary than ever in organizations.
According to the literature, transformational leadership is a type of leadership in which the leader moves the follower beyond immediate self-interests through idealized influence (charisma), inspirational motivation, intellectual stimulation, or individualized consideration. In contrast to transactional leadership, which seeks to achieve the interests of both parties, the transformational leader elevates the follower’s level of maturity and ideals, as well as concerns for achievement, self-actualization and the well-being of others, the organization and society. If, in addition to this, a moral compass is provided which guides the organization by means of ethical decisions and responsibilities, humanist transformational leadership emerges. These characteristics can be applied to teams as well as organizations.
Transformational leaders are capable of envisioning a desirable future, while taking the collective perception into account; they explain the way in which this may be achieved, leading by example; they establish high levels of performance to help people grow; they show determination and confidence; they help followers to be more innovative and creative, attending to their needs for development; they support and coach them, offering encouragement and motivation; and they delegate tasks, thereby providing opportunities for growth.
They are concerned about their moral and personal development, as well as their training and education. Moral maturity born of the moral values of their family, the pursuit of difficult challenges with paternal support, independently of their success, and leadership experiences at school and in extra-curricular activities are aspects which help to shape this leadership. Leadership training in higher education programs promotes and helps to develop this type of leadership.
Today, transformational leadership is needed when tackling current and future uncertainties, since this leadership is capable of modifying the organizational system and aligning it with the vision of the company; it can change people's values and provide a new perspective on the future; this must be communicated effectively, aligned with new objectives, and it must involve all the stakeholders in the organization.
Transformational leadership has a direct positive effect on both incremental and disruptive organizational innovation; it promotes top-down and bottom-up communication; it increases the company's commitment to innovation, considering and taking advantage of urgent environmental sustainability changes; and it increases the capacity for ongoing sustainable innovation, developing the ability to swiftly perform new tasks and actions in response to emergencies and to unexpected and unwanted changes, be these as a result of market needs or customer demands. On the one hand, it has a positive effect on generating change, to which it is open and prepared. On the other hand, it counteracts resistance to change and cynicism towards it.
With respect to people, this style of leadership promotes the adoption of people-centered policies, a vocation for service, mentoring and altruism; it focuses a vision of organizational efficiency, taking account of the needs of both face-to-face and virtual teams, as well as individuals, increasing their commitment and performance; it has a virtuous effect on teams, which develop a greater capacity for innovation; at the same time, it increases the capacity for individual learning, creating the conditions in which the individual may experiment, accompanying them as they and their teams grow, and it fosters positive attitudes towards change, thereby increasing the chances of change being implemented successfully. This has the effect of reducing exhaustion and burnout, as well as social loafing, while increasing individual motivation.
This type of leadership is not exclusive to senior executives in organizations; on the contrary, all corporate leaders and management staff who need to transform themselves and their organizations so that they are prepared for future challenges will surely need to develop their transformational leadership capacities, if they are to successfully respond to changes in the environment or among consumers more quickly and efficiently than their competitors. Fortunately for all of them, these capacities can be taught and learnt. Who, then, will not want to set off on this path?
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