Organisational Leadership and Generation Z

Table of contents

1 Introduction
1.1 Objectives and research questions
1.2 Approach and limitations
1.3 Theoretical framework

2 Leadership
2.1 Definition
2.2 The purpose of leadership
2.3 The impact of leadership in organisations
2.4 Leadership across cultures
2.5 The history of leadership
2.5.1 The trait era
2.5.2 The behaviour era
2.5.3 The contingency era
2.5.4 The current era
2.6 Transformational Leadership
2.6.1 Background and Definition
2.6.2 The Full Range Leadership Model
2.6.3 The Multifactor Leadership Questionnaire
2.6.4 Research on Transformational Leadership

3 Generation Z
3.1 Environment
3.2 Generation Z’s values
3.3 Generation Z’s key characteristics
3.4 Generation Z’s working expectations
3.5 Current state of research

4 Empirical quantitative research
4.1 The survey
4.1.1 Choice of study design
4.1.2 Construction of survey
4.1.3 Execution of survey
4.2 Presentation of the survey’s results
4.3 Survey analysis
4.3.1 What does Generation Z expect from effective leadership?
4.3.2 Does Generation Z think that different dimensions of Transformational Leadership have more importance than others for effective leadership?

5 Empirical qualitative research
5.1 The interviews
5.1.1 Choice of study design
5.1.2 Construction of interviews
5.1.3 Execution of interviews
5.2 Presentation of the interview’s results
5.3 Interview analysis

6 Discussion

7 Future consideration and conclusion
7.1 Future consideration
7.2 Conclusion

Sources

Abstract

Generation Z are individuals born between 1995 and 2010 who are growing up in a digital work. However, Transformational Leadership is a relatively recent theory of leadership, shown to be effective across various industries. Leaders who cultivate a Transformational Leadership style are able to work together with their followers towards higher goals and shift expectations and perceptions. Thus, this thesis was initiated to test the hypothesis that Transformational Leadership theory is effective for Generation Z.

A web-based survey based on Transformational Leadership was designed to assess Generation Z’s expectations of effective leadership. Therefore, 15 statements were individually assessed and then grouped together into the 5 dimensions of Transformational Leadership to determine if Generation Z expressed more importance for any specific dimension. Finally, a depth interview was designed based on the Transformational Leadership theory to see how leaders incorporate Generation Z’s expectations effectively into their organisation.

A total of 147 respondents from Generation Z answered the survey with 15 statements. Statements with the most important expectations were ‘’a leader should promote his followers’ further development’’ and ‘’a leader should have confidence in their followers’’. When all 15 components were put together to form the five dimensions of Transformational Leadership, the following dimensions were most important to Generation Z: Inspirational Motivation and Idealized Influence Attributes. Further analysis showed that Idealized Influence Behaviour becomes increasingly important with more working experience. Furthermore, three managers were selected for depth interviews from the aviation industry, automotive industry, and an educational foundation for disadvantaged children. The depth interviews provided feedback showing that managers acknowledge Generation Z’s values and that there are different approaches for leading Generation Z. Generation Z offers their workforce a number of opportunities such as their flexibility, readiness for change and openness to digitalisation. On the other hand, Generation Z need more attention and leadership support.

Language: English

Key words: leadership, Generation Z, Transformational Leadership, effective leadership

Table of appendixes

Appendix 1: Umfrage zur Generation Z und Führungskräften

Appendix 2: Survey on Generation Z and leadership

Appendix 3: Results of survey

Appendix 4: Results of interview

Table of figures

Figure 1: Summary of methodology

Figure 2: Leader's functions in shaping organizational culture

Figure 3: County clusters based on GLOBE

Figure 4: Full range leadership model

Figure 5: Generation Z's core values

Figure 6: Distribution of year of birth

Figure 7: Distribution of gender

Figure 8: Distribution of highest educational qualification

Figure 9: Distribution of work experience

Figure 10: Distribution of question

Figure 11: Distribution of question

Figure 12: Distribution of question

Figure 13: Distribution of question

Figure 14: Distribution of question

Figure 15: Distribution of question

Figure 16: Distribution of question

Figure 17: Distribution of question

Figure 18: Distribution of question

Figure 19: Distribution of question

Figure 20: Distribution of question

Figure 21: Distribution of question

Figure 23: Distribution of question

Figure 24: Distribution of question

Figure 25: Development of mean scores with work experience

Figure 26: Mean scores of each dimension

Figure 27: The four steps of evaluating interviews

Abbreviations

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1 Introduction

‘’Leadership is not about the next election, it’s about the next generation.’’

- SIMON SINEK -

Currently, five generations are engaged in today’s working environment. These include the Greatest Generation, Baby Boomers, Generation X, Millennials and last not least, the next generation - Generation Z. In the near future, Generation Z will dominate the workforce and set new expectations for employers. Compared to earlier generations, Generation Z will be the first generation whose workforce consists of employees that have been brought up using technology which is both transparent and personalized. It is expected that these employees will exercise a life style enabling unlimited options and access. Moreover, they will be recognised for their independence, autonomy and self-awareness. Our initial experience with individuals from Generation Z shows they are renowned for encountering and assimilating huge amounts of data daily. They seek information rapidly and have an aptitude to perceive messages visually. At the same time and from an early age, this group is alleged to be able to distinguish data with a relatively low attention span of under eight seconds. Despite the numerous opportunities that might be derived from these newly acquired skills in an increasingly digitalized world, Generation Z is encountering serious environmental concerns. Global warming and air pollution are threatening our planet and the sheer existence of Generation Z. If society is to incorporate Generation Z into the workforce and into every organisation, then society must be better placed to appreciate individual values, needs and principles. Simply speaking, Generation Z must be heard and understood. Only if this approach will be followed will it be possible to develop an appropriate and effective leadership style. The world is longing to have a style of leadership which does not focus purely on the leader, but rather on the next generation - Generation Z.

1.1 Objectives and research questions

The objective of this thesis is to explore the potential leadership role of Generation Z. Specifically to determine whether Generation Z can be effectively led with the Transformational Leadership style within an organisation.

After reviewing different leadership theories within the theoretical part of this thesis, the work focuses on the most relevant one - Transformational Leadership. Generation Z’s key characteristics are then analysed. Thereafter, the empirical part identifies what kind of expectations members of Generation Z have for effective leadership in their work place regarding Transformational Leadership. Ultimately, an analysis is completed to determine how these expectations might be integrated successfully in to a leadership function within an organisation.

Based on these objectives, the thesis deals with the following hypothesis:

H: The Transformational Leadership theory is effective for Generation Z. Furthermore, the thesis aims to answer the specific research questions:

- What does Generation Z expect from effective leadership?
- Does Generation Z think that different dimensions of Transformational Leadership have more importance than others for effective leadership?
- How can today’s leaders incorporate Generation Z’s expectations and values effectively within an organisation?

1.2 Approach and limitations

The approach of this thesis is to identify relevant leadership theories and consider their respective traits and their respective benefits and limitations from a theoretical perspective. Because there is such a high number of different theories, this thesis is limited to and focuses on the Transformational Leadership theory as this has been one of the most heavily researched theories to-date. Furthermore, research has proven the effectiveness of this style of leadership for employees and for other relevant factors.¹

The empirical part of the thesis is divided in to two sections and premised on the Transformational Leadership theory. Firstly, a survey was conducted to see what Generation Z expects from successful leadership and if one dimension of Transformational Leadership has more importance than another. Secondly, depth interviews were prepared which were conducted with some of today’s leaders to see how the expectations of Generation Z could be successfully incorporated into organisational leadership. Further and more detailed information about the research’s methodology is explained in the empirical part.

The following figure visualizes and summaries the theoretical methodology:

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Figure 1: Summary of methodology

The selected approach has some important characteristics considered from the survey and the expert interviews. These characteristics embrace some weaknesses but also strengths inherent in the research design.

The survey: The survey focuses on a target group which includes individuals from Generation Z. Accordingly, participants need to been born between 1995 and 2010². In order to obtain homogenous data and ensure that values and beliefs are similar, the survey is limited to one specific geographical area. According to the Global Leadership and Organizational Behaviour Effectiveness Research (GLOBE) there are ten country clusters which each share similar values of leadership.³ The country selected for the survey was Germany. With 82.2 million inhabitants⁴ Germany has the largest population in Europe and could be considered to represent the Germanic cluster which includes Austria, Germany, Lichtenstein, Luxemburg, the Netherlands and Switzerland.

Depth interviews: In addition, to the survey, a questionnaire was designed for the depth interviews. Each interview was directed to explore similarities across different types of leaders and how these leaders would incorporate Generation Z’s into a successful leadership style. Since the research time for this research activity was restricted, interviews were confined to three managers in leading positions. It is acknowledged that drawing any conclusions from just three interviews may be misleading. Therefore, more emphasis is placed on the survey within the empirical part. Nevertheless, the data gained from the interviews might provide hints and suggestions for further research. Not least, it is hoped that the interviews give some valuable insight as to how Generation Z could be led effectively.

1.3 Theoretical framework

The purpose of this thesis is to identify leadership expectations displayed by individuals from Generation Z and how these expectations could be integrated effectively in today’s leadership. In order to understand this in context with leadership theory, initially the various styles of leadership are considered for their respective traits and their respective benefits and limitations.

The theory mainly focuses on two areas - leadership and Generation Z. Most emphasis is placed on leadership. Firstly, the term ‘leadership’ is defined. As there are many definitions the term is analysed from different perspectives. After introducing the term, it is explained why leadership has such a big impact on organizations and how it influences whole businesses positively or negatively. Additionally, it is explained how leadership can be positioned in a global context using the GLOBE research. Leadership is a wide applicable term; therefore, many leadership theories and styles have been developed over the last century. To give a broad overview, the thesis examines the three eras of leadership including the trait era, the behaviour era, and the contingency era. Whereas each approach has its strengths and limitations, the Transformational Leadership theory has turned out to be the most relevant one according to the current state of research. ^{5 6}

The second part of the theory deals with Generation Z. Once again, the term is defined and explained. Furthermore, this thesis looks into Generation Z’s characteristics including values and characteristics which have an impact on today’s and the future working environment.

After having assessed these two main parts of the thesis, the current status of research is stated to show how closely these two areas are linked to each other and what kind of research has been carried out up until this point in time. To aid in completing these topics various information resources are selected including books, scientific journals and studies.

2 Leadership

Over time, many definitions of the term leadership have been introduced. This may be due to the topic’s high relevance and effective management. This chapter not only looks at different definitions, but also at the purpose and impact of leadership. Leadership is also considered across different cultures. Finally, leadership is briefly discussed from the historical perspective leading up to Transformational Leadership.

2.1 Definition

Ralph M. Stogdill, an international renowned researcher for leadership and organisations, remarked ‘’there are almost as many different definitions of leadership as there are persons who have attempted to define the concept’’.⁷ For this precise reason, it is hard to find one definite description for the term leadership as so many definitions have been developed over time. Indeed, researchers are still trying to provide a clear and integrative working definition for the term leadership by comparing various sources.s Although many of these definitions examine different elements of leadership, four commonalities can be identified:^{8 9}

- A leader cannot exist without followers. Therefore, leadership requires a group.
- Leadership demands interpersonal influence in order to guide followers to objectives.
- Leaders use their influence to direct others along a certain approach or to accomplish objectives.
- Leadership involves some type of hierarchy. It does not matter whether this is horizontal or vertical.

Taking these key elements into account leadership could be defined ‘’as a process of social influence, which maximizes the efforts of others, toward the achievement of a goal.’’¹⁰ Furthermore, a leader can be characterised ‘’as any person who influences individuals and groups, within an organization, helps them establish goals, and guides them toward achievement of those goals, thereby allowing them to be effective.’’¹¹

In a business context, leadership is connected to achievement, meaning that employees are guided with a strategy in order to execute a company’s objectives successfully. ¹² In this respect, it is not unusual that the terms leader and manager are used as synonyms, even though they have distinctive features. Managing refers to setting an organisation’s objectives by planning and budgeting, compared to leading which concerns steering a company in a direction by creating a vision and mission. In other words, management imposes a certain order and prevents chaos ensuring factors such as a company’s profitability. However, leadership needs to cope with change in times of intensified international competition and fast-changing markets. In order to keep pace with these market trends, organisations need to accommodate change to remain competitive and innovative. Generally speaking, management deals with mastering complexity, whereas leadership is about managing change.¹³

2.2 The purpose of leadership

In 1945, after World War II ended, Germany was left shattered in economic collapse. While Adolf Hitler had led the country to ruin, the German nation had been abandoned to their hopelessness. After years of dictatorial leadership, the country experienced separation and a period of absence of leadership. Although Great Britain, France, the United States and the Soviet Union had taken on the task to guide Germany, they were mainly preoccupied with their own reconstruction.¹⁴ This is when Konrad Adenauer shouldered the challenge to reunite the neglected nation and managed to guide society towards a unified direction.¹⁵ With this new leadership, Germans finally started developing new hope and optimism.

This is only one of many examples that shows the importance of leaders for whole groups of people. All individuals tend to form groups and groups need a leader to make the right decisions and be responsible for certain functions so that the group remains stable and is sustainable and continues to prosper. The fact that some individuals have the characteristics and right skill set might make them a suitable leader for a specific group at a time when specific circumstances dictate that a group needs strong leadership to save the organization. At a fundamental level, according to Nahavandi groups need leadership for the following reasons:¹⁶

- Order and focus: Humans have always been social animals and tried to master challenges within groups. Although the group may be pursuing one goal, individuals will show different needs and desires. This demand requires a leader who is able to find a strategy which includes individual needs and simultaneously, follows the execution of the group’s objective.
- Accomplishment: Sometimes tasks are carried out more effectively by groups than by individuals. Nevertheless, it needs a leader who guides the group and sets objectives.
- Purpose: Leaders help to provide a path, and give life a sensible structure. Also, greater importance may be attached to situations which are vague and uncertain.
- Being a romantic ideal: Frequently, individuals admire a leader as they embody a desired character who reflect the individual’s own ideals and values.

Broadly speaking, humans are born with the desire for leadership. Although leaders are not unconditionally necessary for survival, humans long for someone to follow and be motivated by somebody. Therefore, leadership is striven for at all levels.¹⁷

2.3 The impact of leadership in organisations

Groups need leaders, as do organisations. In 1981, a study by Weiner and Mahoney examined 193 manufacturing companies for over 19 years to find how leadership and other factors affect a firm’s profit, profitability and its stock price. The results showed that leadership is strongly connected to a firm’s profitability, having up to a 44% impact.¹⁸ Also more recent studies have shown correlation between effective leadership and business performance in different dimensions. For example, according to the global leadership forecast 2018 which analysed over 25,812 leaders in 2,488 organisations worldwide, an effective leadership strategy can enhance Human Resource’s strategic impact and increase the competence to acquire internal employees for demanding open positions.¹⁹ Similarly, Yildiz et al. found that leadership, besides innovativeness, has positive effects on the overall business performance.²⁰ Also research from Ibrahim and Daniel has displayed that ‘’the style a leadership adopt[s] has a direct effect on the organizational performance of the employee.’’²¹

Whilst research has demonstrated that leadership is only one factor besides many others influencing business performance, there is still disagreement about the extent to which leadership affects organisations. However, it can definitely be said that effective leadership influences other performance factors and is a key element in the vision creating process.²² It is difficult to determine which particular leadership style has a positive effect on companies, because a well-executed style always involves several factors such as a company’s size and strategy. However, there is common ground that good leadership generally has a positive effect on the company.

Although good leadership results in a better company performance this expectation is unlikely to be achieved without a happy workforce. The leader of an organisation takes the responsibility to fulfil a number of personnel functions which shape and sustain the organisational culture as shown in the figure below.²³

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Figure 2: Leader’s functions in shaping organizational culture (Nahavandi, 2015 p.34)

Vision & Mission: It is one of the leader’s key tasks to create a positive climate and atmosphere for the overall organisation as a company’s culture is very often impacted by a leader’s personality. The way an organisation is guided, is often reflected in its vison and mission.

Role Modelling: A leader who satisfies employee’s and an organisation’s needs will be respected by his followers and serve as a role model function. Role models do not only inspire, but also encourage and motivate their followers in the long-term.

Reward-System: The right motivation of employees is another key factor for ensuring a successful organisational culture. Therefore, a leader should make thorough decisions based on the reward systems and use incentives in the right way to encourage his followers.

Hiring Decisions: Controlling decisions influence a company’s current culture in the shortterm, as well as the long-term. By wisely choosing and announcing subsequent leaders who suit the existing climate, a firm’s culture can remain effective and stable.

Strategy & Structure: Designing an optimal organisation’s structure will shape its culture, dynamics, entrepreneurship and furthermore, support interactions. Simultaneously, a firm’s strategy will support the structure in the long-term and help to consistently align resources.

2.4 Leadership across cultures

Whereas leadership shares many common key elements in a global context, there are significant differences within cultures when it comes to selecting a successful and effective style of leadership. Different cultures prefer distinct values, traditions and perceptions, and therefore, demand different types of leaders.²⁴

The Global Leadership and Organisational Behaviour Effectiveness (GLOBE) 2014 project builds on GLOBE 2004 and 2007 which analyzed cross-cultural leadership in over 62 countries over 20 years. Accordingly, ‘’the relationship between observed leadership behaviours of CEOs, societal leadership expectations [...], as well as between leadership and organisation effectiveness’’²⁵ was tested. Within this area of study, GLOBE is one of the most extensive research initiatives having examined information from 1,000 CEOs and 5,000 senior executives in 2014 alone. These data are being collected in order to find out how leadership should be executed appropriately in different cultures.²⁶ To find similarities and differences concerning leadership across cultures, the GLOBE project also selected nine sets of parameters referred to as ‘’shared modal values of collectives’’²⁷ as listed below. These data were used to measure similar leadership values within 62 countries examined in 2002.²⁸

- Uncertainty Avoidance: The degree to which a society tolerates unpredictability by relying on rules and social norms.
- Power Distance: The degree to which individuals’ cultures encourage and practice that power should be distributed equally in an organisation or society.
- Societal Collectivism: The degree to which individuals are encouraged to practice collective actions by an organisation or culture.
- In-group Collectivism: The degree to which pride is communicated by individuals.
- Gender Egalitarianism: The degree to which genders are differentiated.
- Assertiveness: The degree to which individuals are confrontational, aggressive and assertive.
- Future Orientation: The degree to which a culture values long-term planning over short-term planning.
- Performance Orientation: The degree to which excellent performance is rewarded.
- Humane Orientation: The degree to which a society values fairness, friendliness and generosity.

Additionally, GLOBE created a questionnaire which included 112 leadership traits and abilities. This questionnaire was filled out by 17,000 managers. Subsequently with the evaluation, ‘’21 primary dimensions of leadership’’²⁹ were designed. Based on these findings six global leadership dimensions were created, which in turn supported the production of the culturally endorsed leadership theory, also known as CLTs. These CLTs includes:³⁰

- Charismatic Leadership: Followers are encouraged and motivated by a leader who is able to inspire them.
- Team-orientated Leadership: Besides focusing on team building, high emphasis is put on having the same objective within a team.
- Participative Leadership: This leadership reflects the involvement of subordinates within the decision-making process.
- Human-Orientated Leadership: This leadership supports followers by including consideration for generosity and compassion.
- Autonomous Leadership: This leadership focuses on independency and individualism.
- Self-Protective Leadership: This leadership is based on securing individuals and the group through self-enhancement.

Based on these seven values and six CLTs, the GLOBE research identified ten regional clusters shown in the figure above. Furthermore, the study examined which cultural leadership profile suits each cluster best. ³¹

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Figure 3: County clusters based on GLOBE (Nahavandi, 2015, p.59)

For example, the geographic area Germanic Europe which this thesis focuses on considers an ideal leader as ‘’autonomous, charismatic, participative [and| human oriented’’ ³². In conclusion, this research may support leaders in understanding values of different nations and their basic expectations towards successful leadership.

2.5 The history of leadership

Leadership had become an important topic to study during the Industrial Revolution towards the end of the 19th century. The study can be split into three eras which show increasing emphasis on measuring and predicting the effectiveness of leadership. The initial era termed the Trait Era took place from the late 1800’s to just after the Second World War.

2.5.1 The trait era

The assumption ‘’that leaders are born rather than made dominated’’³³ initial work on leadership. Leaders were supposedly born with native qualities which directed researchers to look at personality and intelligence. However, despite 40 years of dedicated work by theorists such as Thomas Carlyle and William James, little was found to prove this belief. It was noticeable that some leadership traits were important such as being social, aggressive, and popular but the situation itself played a bigger role in determining leadership. Towards the end of the era, workers such as Ackerson and Bird began to study leadership in context with groups in specific situations. Although personal traits remain a key area for leadership research today, studies after the Second World War turned to behavioural aspects which formed the Behaviour Era and continued in to the early 1970’s.³⁴

2.5.2 The behaviour era

Workers in the UK and US were influenced by the need to identify and train leaders during the war. Rather than trying to find traits that might make somebody an effective leader, focus turned to what an effective leader does. It was easier to observe behaviour, measure behaviour, and teach behaviour towards establishing effective leadership. Research initially was based on the work of Lewin who identified leaders as exhibiting democratic, autocratic or laissez-faire behaviour. One study group from Ohio State Leadership Studies developed hundreds of behaviours which were later simplified by others to far fewer styles including task- and relationship-related styles. As research continued it was still unclear how to define which behavioural styles led to effective leadership. Although a people-oriented (team) behaviour resulted in satisfaction for followers and a structured behaviour is linked to job performance, these findings were largely relevant to the US. By and large, behavioural research still excluded the situational aspect and gradually developed into the Contingency Era from the early 1960’s to the present time. The Behavioural Era did, however, establish task and relationship as primary leadership behaviours.³⁵

2.5.3 The contingency era

Being able to identify and predict effective leadership continued for years and years of leadership research. Researchers such as Stogdill in 1948 were seeking an approach that also involved situational factors. This was finally achieved in the early 1960’s when Fred Fiedler’s work developed complex leadership models which considered not just the leader but situational factors such as task and type of work. Fiedler’s Contingency Model was followed by other complex models such as the Path-Goal Theory and the Normative Decision Model. In these models, it is assumed that the leadership situation directs the personality and behaviour of the leader. Other findings showed that there is no single best way to lead, people can indeed learn leadership, leadership influences the effectiveness of working groups, and personal traits may influence the effectiveness of the leadership. Contingency is still studied today but is moving towards the interactions between leaders and followers.³⁶

2.5.4 The current era

There is another aspect of effective leadership which catches the interest of many researchers today. This aspect is the capacity of some leaders to generate devotion and belief from their followers in the sense that the personal interactions between leader and group members becomes so strong leading to change and success.

New leadership models have been developed from earlier concepts. Max Weber initially introduced charisma in the 1920s. James McGregor Burns used charisma in his Transformational Leadership style in 1978. Then Bernard Bass introduced a business-oriented Transformational Leadership in 1985. Charisma has been taken further by placing it in context with vision and change in large companies and organisations. Some models look at leadership values resulting in the authentic leadership model. Positive psychology and positive behaviour have also shaped recent models. These models consider the inspirational role of leaders and the ability of leaders to develop group culture. These newer models go even further by allowing application of emotional reactions. Furthermore, they look at both affective and cognitive leadership. They also include the application of transformational and charismatic leadership across top management.

All these models share inspiration, vision, and the relationship between leaders and followers as strengths in their common approach. Unlike contingency, these models can be applied across a wide range of situations.³⁷

2.6 Transformational Leadership

Transformational Leadership is a relatively recent theory of leadership, shown to be effective across various industries. Leaders who cultivate a Transformational Leadership style are able to work together with their followers towards higher goals and shift expectations and perceptions. In this subchapter the style of leadership is further discussed.

2.6.1 Background and Definition

Unlike transactional leadership, Transformational Leadership is not only about an ‘’exchange between leaders and followers’’³⁸, which takes place when leaders reward their subordinates for tasks and good performance. Transformational Leadership is also about the leader’s competence to create change in followers.³⁹

In 1978, Burns introduced the fundamental idea of transactional and transforming leadership for political leaders. Bass and Riggio furthermore claim that transforming leadership builds on transactional leadership and that it ‘’raises leadership to the next level’’ ⁴⁰. According to Burns transforming leadership ‘’occurs when one or more persons engage in such a way that leaders and followers raise one another to higher levels of motivation and morality.’’⁴¹ In other words, this theory includes inspiring a team to share the same vision, challenging a team to think outside the box, and supporting individuals by having the leader acting as a mentor. Hence, transforming leadership increases follower’s motivation, their morale and job performance. Generally speaking, this approach tries to encourage a group to work most effectively by motivating and supporting individuals with a clear vision.^{42 43}

Eight years later, Bass extended and developed Burn’s concept of transforming leadership to Transformational Leadership. In addition to Burn’s idea Bass introduced a way how Transformational Leadership could be measured and, ‘’how it impacts follower motivation and performance’’⁴⁴. The ideal transformational leader enhances their follower’s interest and motivates them to work harder than expected. A transformational leader also involves subordinates in the working process by appreciating their personality.⁴⁵ In contrast to Burns, who said that transactional and Transformational Leadership cannot take place at the same time, Bass said that these two leadership styles can go hand in hand. ⁴⁶

However, the theory has been an active topic of leadership research especially in recent years. Leaders who adopt a Transformational Leadership style are able to work together with followers towards higher goals. These leaders are able to lead by example motivating their followers and themselves to change expectations and perceptions. Today, it is considered by researchers such as Bernard Bass that Transformational Leadership can be observed in terms of its influence and impact on followers. Transformational leaders provide their team members with a mission and vision and inspire their followers to challenge the ‘norm’ by developing initiatives. Research has identified the following four key components, also rereferred to as the four I’s, by which transformational leaders operate to motivate members of their team.⁴⁷

1. Idealised Influence: When leaders are admired, respected and trusted, they are considered to exercise idealised influence. In their interaction with their followers, leaders exhibit a particular behavioural style and are recognised by their followers as possessing specific attributes. Their idealised influence is characterised by an aptitude to take measured risk and provide reassurance that goals can be reached.
2. Inspirational Motivation: To attain goals, transformational leaders share their vision with their team members and clarify joint commitment to meet these goals. The enthusiasm and optimism that leaders show creates team spirit within an environment of inspirational motivation. Combined with the qualities of idealised influence, inspirational motivation can lead to a single leadership style also known as charismatic- inspirational leadership.
3. Intellectual Stimulation: The innovation and challenges that followers address under Transformational Leadership result from the capacity of their leader to question and to be able to encourage creativity and accept mistakes. The leadership actions that play such an important role in such scenarios are termed intellectual stimulation. Problems can be solved by identifying solutions by having different ways of analysing the various challenges.
4. Individualised Consideration: The final key component that makes transformational leaders successful is the glue for effective team cohesion. The leader considers every member of the team and takes time to develop their potential. In this role, the leader is both mentor and coach. Every member is different with individual development needs known as individualised consideration. There is a two-way exchange of information where leaders have an individualised approach to listen to individual circumstances and set individual goals to develop that individual. Progress is monitored by coaching continuously rather than performing checks on achievement. ⁴⁸

2.6.2 The Full Range Leadership Model

In the early 1990s, Avolio and Bass introduced the Full Range Leadership Model (FRLM) to demonstrate the effectiveness of Transformational Leadership. Transformational and Transactional Leadership are two leadership styles which have been shown to form a continuum which include many other styles.⁴⁹

The model which is illustrated below⁵⁰ includes three dimensions illustrating the degree of the leader’s activity , the leadership’s effectiveness which was tested in studies, and the amount of how frequently these different leadership theories are executed. The model represents the behaviour of managers towards employees in different work situations. In addition to Transformational Leadership, the model also distinguishes between transactional and nontransactional, also referred to as laissez-fair leadership.

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Figure 4: Full range leadership model (Avolio, Full Range Leadership Development, 2011, p.66)

Figure 4 illustrates an optimal leader profile and assumes that each of these leadership theories are executed to some extent. In an optimal leader profile, the laissez-faire (LF) style is not executed very frequently as it tends to be the most ineffective style where a leader executes leadership by being mostly absent and letting his employee take over responsibility. In contrast, in an ideal leadership profile, transactional leadership is executed more frequently involving the elements: passive and active management-by exception, and contingent reward. Even within this style these different components show a different degree of effectiveness. Passive management-by expectation (MBE-P) and active management-by expectation (MBE-A) describe the active or passive controlling of the team’s mistakes and activities and are illustrated to be less effective than contingent rewards. The most effective transactional component is displayed by contingent reward (CT) which is about an exchange of fulfilling tasks and being rewarded by the leader. However, a successful leader executes transformational components most of all. Avolio and Bass also found different degrees of effectiveness in the different transformational components according to the following order: individualized consideration, intellectual stimulation, inspirational motivation and idealized influence. However, even though Transformational Leadership has proven to be most effective within these studies, transactional leadership may be favoured in certain situations. Under circumstances where a leader is unable to influence reward for appropriate performance the transactional leadership might be desirable. ^{51 52}

2.6.3 The Multifactor Leadership Questionnaire

The individual components of transformational and transactional, as well as the laissez-faire style described briefly above can be measured using a Multifactor Leadership Questionnaire (MLQ). The MLQ is a useful tool for assessing leadership properties in research.⁵³ Initially in 1995, Bass and Avolio created a long version including a total of 78 items. In order to make it shorter, a new version referred to as the Multifactor Leadership Questionnaire 5X (MLQ 5X) was created. A sample version can be found on Mindgarden’s website.^{54 55} The MLQ has been developed to facilitate measuring success via a retesting programme. In this manner, changes in leadership style can be tracked.⁵⁶

In contrast to the basic concept of Transformational Leadership which is split up in to the four dimensions (Idealized Influence, Inspirational Motivation, Intellectual Stimulation and Individualized Consideration) the MLQ includes five dimensions. This is achieved by creating two dimensions (Attributes and Behaviours) from Idealized Influence.

Over the years, the MLQ has proven itself to be a reliable tool for measuring Transformational Leadership for different reasons. Firstly, Bass who developed the idea of Transformational Leadership has also developed the MLQ. Secondly, it is not limited to a country or an organisation. The MLQ is also known to have the best correlation of the survey results and organisational performance.⁵⁷ Furthermore, extensive recent research has proven the reliability and validity of the MLQ. ‘’Thousands of research programs, doctoral dissertations, and master’s theses’’⁵⁸ have successfully applied the MLQ. Finally, a thorough study by Antonakis et al. who is a well-known researcher on leadership, confirms the MLQ’s stability when applied in a homogenous environment. ⁵⁹

2.6.4 Research on Transformational Leadership

Although Transformational Leadership has been one of the most extensive and most intensively researched leadership theories, the theory includes some weaknesses. Even though this style of leadership is suggested by many studies to be effective, it cannot be used as a ‘’panacea’’. Currently, there are shortcomings in some studies. Teaching Transformational Leadership can be very complex as the theory is based on several personal traits such as being empathetic and inspirational. These characteristics are known to evolve in an early stage of life, some people have them and others do not. Finally, research has been lacking in terms of addressing adverse effects of Transformational Leadership. Further research could investigate situations where there is too much reliance of followers on leaders who exhibit undesirable and unethical practices.⁶⁰

Nevertheless, research on Transformational Leadership has evolved a lot in recent decades. Since the style of leadership was initially introduced with basic concepts, it has been extended to include modifying parameters. This has provided favourable conditions for research to suggest further applications of the model suitable for other environments such as the military or educational institutions. Research has also proven that Transformational Leadership has a positive impact on employee’s engagement and their performance. Transformational Leadership may even have a positive influence on climate, innovation, employee emotions, employee commitment and job satisfaction.⁶¹ Last, but not least, researchers have proposed that Transformational Leadership is valid across genders and cultures. In terms of a cross-cultural context, many countries have been shown to share ideal leadership characteristics reflected by common Transformational Leadership elements.⁶²

Both organisational effectiveness and leadership training benefit from Transformational Leadership concepts. Reaching out to followers and influencing followers using this valuable approach could benefit many leaders and organisations to become more effective.⁶³

3 Generation Z

Older individuals in Generation Z have already started to enter daily work life. Rather sooner than later, the dominant workforce will move from Generation X and Millennials to Generation Z. Although there are a number of definitions of when Generation Z starts and ends, many researchers define Generation Z as individuals born between the mid- to late-1990s and the early 2010s. Forbes states that Gen Zers are born between 1995 and 2010, meaning that the youngest are just 10 years old and the oldest are 25 years of age.⁶⁴

3.1 Environment

Individuals of Generation Z are largely shaped by the environment in which they grew up. Generation Z has been referred to as, ‘’a tumultuous world, demonstrated to them in all its VUCA (Volatility, Uncertainty, Complexity and Ambiguity) glory’’⁶⁵. VUCA refers to a faster developing world which is becoming increasingly more complex. In this world, people are faced with planning uncertainty. A one-size-fits-all approach has been replaced by a wider choice. Digitalization flows everywhere in daily life and infiltrates every possible business niche.⁶⁶ Most individuals of Generation Z are exposed to this 24/7 connected community. Social networks, online platforms and mobile devices are integral parts of their daily life which is why the boundaries between virtual and real life are rapidly merging. Thus, Generation Z has learned to process digital data quickly and use digital data from an early age. Simultaneously, individuals from Gen Z were more praised and encouraged by their parents and involved in the family’s decision-making process than previous generations. This may be just one reason for Gen Z’s desire to be independent. Furthermore, Generation Z is also known for being curious and open-minded.⁶⁷

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¹ (Nahavandi, 2015, pp. 213-214)

² (Patel, 2017)

³ (House, Dorfman, Javidan, Hanges, & Sully de Luque, 2014, p. 8)

⁴ (World Population Review, 2020)

⁵ (Nahavandi, 2015, pp. 213-214)

⁶ (Malik, Javed, & Hassan, 2017)

⁷ (Stogdill, 1974, p. 7)

⁸ (Winston & Patterson, 2006, p. 6)

⁹ (Nahavandi, 2015, p. 25)

¹⁰ (Kruse, 2013)

¹¹ (Nahavandi, 2015, p. 25)

¹² (Ward, 2020)

¹³ (Kotter, 1999, pp. 52-54)

¹⁴ (Center for European Studies, n.d.)

¹⁵ (Küsters, n.d.)

¹⁶ (Nahavandi, 2015, p. 28)

¹⁷ (Sandling, 2014)

¹⁸ (Weiner & Mahoney, 1981)

¹⁹ (Development Dimensions International (DDI), The Conference Board, & EY, 2018)

²⁰ (Yildiz, Bastürk, & Boz, 2014)

²¹ (Ibrahim & Daniel, 2019)

²² (Nahavandi, 2015, pp. 28-31)

²³ (Nahavandi, 2015, pp. 34-36)

²⁴ (Chamorro-Premuzic & Sanger, 2016)

²⁵ (House, Dorfman, Javidan, Hanges, & Sully de Luque, 2014, p. xvi)

²⁶ (GLOBE 2020, n.d.)

²⁷ (House, Javidan, Hanges, & Dorfman, 2002, p. 5)

²⁸ (House, Javidan, Hanges, & Dorfman, 2002, pp. 5-6)

²⁹ (GLOBE 2020, n.d.)

³⁰ (GLOBE 2020, n.d.)

³¹ (Dorfman, 2002, pp. 5-6)

³² (GLOBE 2020, n.d.)

³³ (Nahavandi, 2015, p. 87)

³⁴ (Nahavandi, 2015, pp. 87-88)

³⁵ (Nahavandi, 2015, pp. 88-89)

³⁶ (Nahavandi, 2015, p. 89)

³⁷ (Nahavandi, 2015, pp. 200-201)

³⁸ (Nahavandi, 2015, p. 210)

³⁹ (Mampra, 2017)

⁴⁰ (Bass & Riggio, 2006, p. 4)

⁴¹ (Burns, 1978, p. 20)

⁴² (Mampra, 2017)

⁴³ (Bass & Riggio, 2006, pp. 3-5)

⁴⁴ (Roberts, 1985)

⁴⁵ (Avolio & Bass, Developing Potential Across a Full Range of Leadership, 2002, p. 1)

⁴⁶ (Mampra, 2017)

⁴⁷ (Bass & Riggio, 2006, pp. 5-8)

⁴⁸ (Bass & Riggio, 2006, pp. 3-5)

⁴⁹ (Nahavandi, 2015, p. 214)

⁵⁰ (Bass & Riggio, 2006, pp. 5-8)

⁵¹ (Avolio, Full Range Leadership Development, 2011, pp. 63-67)

⁵² (Jackenkroll, 2016)

⁵³ (Bass & Riggio, 2006, pp. 5-8)

⁵⁴ (Bass & Avolio, Multifactor Leadership Questionnaire™, 2015, pp. 5-6)

⁵⁵ (Harazd & Ophuysen, 2011, pp. 146-147)

⁵⁶ (Bass & Avolio, Multifactor Leadership Questionnaire™, n.d.)

⁵⁷ (Bass & Avolio, Multifactor Leadership Questionnaire™, n.d.)

⁵⁸ (StatisticsSolutions, n.d.)

⁵⁹ (Antonakis, Avolio, & Sivasubramaniam, 2003)

⁶⁰ (Nahavandi, 2015, p. 213)

⁶¹ (Malik, Javed, & Hassan, 2017)

⁶² (Nahavandi, 2015, pp. 213-214)

⁶³ (Nahavandi, 2015, p. 214)

⁶⁴ (Patel, 2017)

⁶⁵ (INSEAD, Emergin Markets Institute, The HEAD Foundation, Leadership Center, & Universum, 2017)

⁶⁶ (Âhman, 2012, pp. 36-38)

⁶⁷ (Agentur Junges Herz, 2019)