Leadership in a Changing Context

Leadership In a Changing Context

Differentiate Transformational and Transactional leadership and lay out how the two concepts translate into the practical work environment of Schlumberger

Transformational and Transactional Leadership; Practical Applications for the Work Environment of Schlumberger in Saudi Arabia

Abstract: The presentation discusses the theories of transformational and transactional leadership in the first seven slides, application to Schlumberger in the next six slides, and the usefulness of either of the leadership approaches for the organisation in the next five slides. The presentation contains recommendations and a conclusion. Harvard referencing is used throughout the presentation.

Elements of Transactional Leadership

Definition: Burns (1978, p. 19) originated the concept of transactional leadership and defined it as leadership that occurs when ‘one person takes the initiative in making contact with other for the purpose of an exchange of valued things. The exchange could be economic or political or psychological in nature.’

Best Used in situations where followers or employees are motivated by external rewards such as compensation or status. The followers, however, must value the rewards, must believe that reaching a goal will indeed result in obtaining the reward, and must believe that it is possible to achieve the goal with existing resources (Barbuto, 2005, p. 27).

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Variable Effectiveness Across Cultures: The rewards must be perceived as valuable in the context of the culture. For example, compensation may be a desirable reward in one culture and status or prestige may be a desirable reward in another culture. The manager must identify the appropriate reward to lead effectively across cultures (Muenjohn & Armstrong, 2007, p. 274).

Transactional Leadership Implementation

Rewards: The leader provides rewards to followers according to followers׳ needs (Hargis, Watt & Piotrowski, 2011, p. 54). If the follower values the reward , the Follower w!ll engage ¡n the desired behaviour

Sanctions: The leader provides punishments for deviation form rules (Chaudhry ه Javed, 2012, p 259). Sanctions are presumed to provide negative reinforcement resulting in the follower avoiding the undesirable behaviour

Management by Exception (Riaz & Haider, 2010, p. 30).

Active Management: The leader continuously monitors followers and takes corrective action to prevents mistakes before they happen

Passive Management: Leader Intervenes with corrective action only after a mistake has happened

Transactional Leadership for Motivation

Transactional leadership has a consistent and positive relationship with motivation of employees(Chaudhry & Javed, 2012)

Factors that Motivate Employees

- Clear guidance that reduces ambiguity and uncertainty and defines a path to the goal (Bass & stogdill, 1990)
- Rewards that the employee values and is willing to expend effort to obtain
- Employees can be reasonably certain of obtaining the rewards if they follow the directions or commands
ofthe leader
- Routine monitoring helps to ensure the employee is focused on tasks
- Useful for managers responsible for leading large groups because the leader does not have to form separate relationships with each employee (Bass & Avolio, 1990).

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Elements of Transformational Leadership

Definition: Burns (1978) initially used the term transforming leadership to identify a form of leadership that involves interactions between leaders and followers that enabled them to advance to a higher level of motivation and morale. Bass (1985) extended the concept to define a transformational leader as one that causes changes in followers and organisational systems

The American entrepreneur Steve Jobs who founded Apple Inc. is an example of a transformational leader. The use of transformational leadership techniques empowered employees to pursue his vision of making Apple the global leader in consumer electronics. As a result, the employees were Innovative, highly committed to the company, and willing to take on the responsibilities of leadership in their specific areas of responsibility. Because of Jobs' leadership, Apple has enjoyed competitive advantages that enabled the company to achieve Its goals.

Relationships, Learning and Growth

Relationship Orientation: The transformational leader focuses on developing relationships with followers as the foundation for motivating others. The approach Is based on the premise that the relationship provides the means to Influence others Leader Learning: The transformational leader is involve in a continuous process of learning and self development (Garcia-Morales et al, 2012). The leader must be able to learn from followers to effectively influence others Developing Followers: The objective ofthe transformational leader is to develop followers so that they have the skills to become leaders and to influence others to pursue the common organisational objective Organisational Learning: Transformational leadership is associated with organisational learning because the leadership approach allows followers to exercise initiative and to communicate with peers

Elements of Transformational Leadership

Idealized Influence

Idealized influence is sometimes referred to as charisma. The transformational leader provides a role model for followers by behaving a manner consistent with the values, norms and expectations of followers (Den Hårtog et al. 1999

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Individualised Consideration

The transformational leader considers each follower unique and treats them in an individualised manner (Bass & Rlgglo, 2006). The leader assesses the current skills of the follower and assigns tasks that can lead to learning and growth

Intellectual stimulation

With intellectual stimulation, the transformational; leader creates challenges for followers. The leader encourages innovation and risk taking, which to organisational learning.

Inspirational Motivation

The transformational leader influences followers to adopt the leader's vision as their own. Techniques include raising followers' expectations, and communicating confidence (Antonakls & House, 2013) /

The Transformational Leadership Process

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Comparison of Transformational and Transactional Leadership

The table shows some of the conceptual differences between transactional and transformation leadership that managers in ' an organisation should consider when selecting a leadership approach.

Source of Power: The source of the ability to influence employees comes from the position of the manager in the organisation, which is generally considered less effective than a source of power based on perceive character or competencies of the manager.

Follower Reaction: The transactional leader is satisfied with employee compliance while the transformational leader wants the employee to be committed to the organisational goals, with commitment generally leading to improved organisational performance.

Time Frame: Transactional leaders focus on shortterm results because of the difficulty of followers pursuing external rewards overthe long term. Transformational leaders cultivate long-term relationships with followers to increase commitment.

Rewards: The rewards provided by transactional leaders are extrinsic an( generally address Maslow's lower order needs while transactional leaders provide higher order rewards.

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Supervision: The transactional leader closely monitors work of employees while the transformational leader develops employees so that they require less supervision.

Counselling Focus: Transactional leaders evaluate employees while transactional leaders encourage employee development.

Locus of Change: Transactional leaders focus on influencing employee behaviour, which is an external manifestation of leader influence, whilst transactional leaders focus on transforming employee attitudes, which is an internal manifestation of leadership influence.

Transformational and Transactional Leadership:
Complementary Approaches

Compatible Approaches: Transformational and transactional leadership are not mutually exclusive approaches to leadership. As shown in the diagram, the four components of transformational leadership and the two components of transactional leadership are different in nature. The ' transactional leadership techniques add to the transformational leadership techniques (Ismail et al., 2010). In practice, it is possible to use both the transformational and transactional leadership techniques at the same time or with different followers. An effective leader is familiar with both the transformational and transactional and transformational leadership techniques, when used together, the two approaches to leadership can result in performance beyond expectations.

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Situational Selection: Each situation that a leader encounters is different. As a result, an effective leader has to analyse the situation and determine the leadership approach and specific techniques that are best suited to inspire and to motivate employees underthe circumstances.

Transactional Leadership in the Workplace: The transactional approach to leadership is useful when an employee is motivated by extrinsic rewards such as higher compensation or bonus from achieving a goal. The transactional techniques may also be helpful if an employee makes frequent mistakes because of a factorthat is underthe employee's control such as inattention

Transformational Leadership in the Workplace: The transformational approach to leadership should be used in the majority of situations because most employees are willing to respond to the relationship formation techniques associated with transformational leadership.

Transactional Leadership: Where it Can be Implemented at Schlumberger, Saudi Arabia

Field Service Teams Operating from CRE Facility in Dammam Saudi Arabia

Schlumberger provides services to companies in the business of oil extraction. Transactional leadership can be implemented among the teams responsible for providing services in the field working out of the Dammam facility, which is Schlumberger's Centre for Reliability and Efficiency (CRE) in the Middle East. The facility employs approximately 450 workers that form teams to perform various tasks necessary to ensure that drilling and other oil extraction operations take place efficiently. While many of the members of the teams are composed of Saudi nationals, the teams often include international workers with specialised skill in oil field operations and quality control.

- Potential Benefits of Using Transactional Leadership at the Damman CRE Facility ν' Provides team with structure

- Transactional leader gives clear directions to followers on how to perform tasks to achieve goals

- Clear vision of project goals provided by manager

^ Transactional leader explains the outcomes that client wants, which are the project goals

- Focus on completion of projects on time and within budget

- Transactional leader uses variance from the schedule and the budget as the basis for monitoring followers. If variance occurs, the transactional leader can manage by exception, taking corrective action.

(Bass & stogdill, 1990)

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Potential Effects of Transactional Leadership Implementation on Teams Operating from Schlumberger's CRE Facility

- Clarity with role and task expectations

- The transactional leader gives clear instructions to each member of the team about their role on the team and how to perforrn tasks. As a result, each member of the team has better understanding of tasks that lead to less confusion and error when performing tasks (Bass & stogdill, 1990).

- Unambiguous one-way communications from team leader

- The transactional leader uses top-down communications with the team that involves giving directions and asking questions to ensure that the members of the team have enough information to perform the tasks in the manner desired by the leader (Barbuto, 2005).

- Supervision to ensure that tasks are performed properly

- The transactional leader ensures monitors performance to ensure that tasks are completed on time, within budget, and in accordance with client's quality specification.

- Rapid intervention of the team leader if an error occurs or problem develops

- The transactional leader can use schedules and budgets as the criteria for determining if an intervention is necessary through management by exception (Bass & stodgill, 1990). In field operations, the project manager acting as team leader can rapidly determine if an error has occurred to correct the error or problem, which minimises schedule and budget variance on a project.

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Expected Performance Benefits of Using Transactional Leadership at Schlumberger's CRE Facility

- Better coordination of team activities to perform tasks

Transactional leadership methods can result in better coordination of the team activities to perform project tasks (Bass & stodgill, 1990). The team leader assigns the tasks to each member of the team that are necessary to achieve the goal of successful project completion. The coordination approach can be directive or participative depending on the characteristics or needs of the team members.

- Contingent rewards useful incentives in crisis situation

The contingent rewards used by a transactional leader can be beneficial in an emergency or crisis situation in which the team has to complete a project more rapidly than usual (Chaudhry & Javed, 2012). The leader of a project team in the field can offer additional rewards as motivational incentives for the team members to engage in an extra effort that results in superior performance.

- Improvement in completing projects on time and within budget

With the use of transactional leadership techniques, the team leader more closely supervises the activities of the project team (Bass & stodgill, 1990). As a result, the team leaders can make early interventions to correct errors and to ensure that the project remains on schedule and within budget.

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Transformational Leadership: Where it Can be Applied at Schlumberger's CRE Facility.

- VP Technology Lifestyle Maintenance (TLM)

- Responsible for establishing vision of the type of services that the company will provide for ' to clients

- Director CRE Dammam

- Establishes leadership culture for company in Saudi Arabia (Bass & stogdill, 1990)

- COO CRE Dammam

- Develops leadership abilities in managers

- Project Managers

- Inspire employees to perform beyond expectations

Transformational leadership can be particularly useful for the senior managers in Schlumberger's technology lifestyle division of which the Damman CRE facility Is a part. Senior managers are responsible for establishing the vision for the future of the organisation, which generally requires some change from the current state to the desired future state for the organisation. Transformational leadership can particularly beneficial for senior managers attempting to inspire junior managers and employees to adopt the vision for the future as their own and to take the steps necessary to Implement the vision (Bass & Stogdill, 1990). In addition, the senior managers establish the leadership culture In the organisation (Bass & Avollo, 1990).

The use of transformational leadership by senior managers cascades through the organisation with project managers using transformational methods. As a result, the project managers can inspire employees leading to performance beyond expecta itons.

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