Transactional Leadership

Abstract

Background

The implementation of transformation policies in state-owned enterprises (SOEs) in South Africa has catalysed the emergence of Black top-managers. From an organizational perspective, though, it is unclear how specific behaviours linked to the transactional leadership style (TLS), of this cohort of topmanagers, affect employee commitment.

Purpose of The Study

The study seeks to explore the nature of the relationship, between transactional leadership behaviours of Black top-managers and employee commitment in SOEs in South Africa.

Approach

A quantitative approach was utilized and the data was collected through a self-administered questionnaire that was distributed to a purposive sample of employees in identified SOEs. The study's constructs were measured with previously validated instruments, specifically the multifactor leadership scale and the three-component employee commitment model. Subsequently, descriptive and inferential statistical tools were employed to analyse the data.

Findings

Statistically significant relationships exist between the Contingent-Reward (CR) facet of the TLS of Black top-managers and the affective, continuance and normative commitment of their employees. Conversely, the Management-by-Exception (Passive) facet of the TLS demonstrated a negative correlation with the affective and normative commitment of employees. Interestingly, no statistically significant relationship was found between the Management-by-Exception (Active) facet of the TLS and any of the three types of employee commitment.

Recommendations/ Value

Black top-managers should consider deploying the CR facet of the TLS to enhance employee commitment in their work groups in order to reap possible collateral benefits.

Managerial Implications

The study's results illuminate the importance of reward systems in promoting the commitment levels of employees in South African SOEs. Mindful of the current challenges that encumber the performance of SOEs in South Africa, it is imperative for Black top-managers to continuously explore novel ways to reward the positive contributions of their employees in the quest to increase all forms of employee commitment.

Keywords: 

Black managers; Contingent-reward; Employee commitment; Transactional leadership.

Source: Tabea Maasa and Chukuakadibia Eresia-eke, https://scielo.org.za/scielo.php?script=sci_arttext&pid=S1815-74402022000100017
This work is licensed under a Creative Commons Attribution 4.0 License.

Introduction

In South Africa's pre-democratic era, when apartheid policies were applied, members of certain racial groups (Black, Coloured and Indian) were barred from playing many roles, including occupying important managerial positions. This discriminatory practice is the reason why these racial groups are labelled as 'previously-disadvantaged' groups. Notably, the South African Employment Equity Act (EEA) (No. 55 of 1998), in its quest to redress apartheid-induced racial skewness and to transform South African workplaces, classifies all previously disadvantaged racial groups as Black people. Partly due to the EEA, more Black people now occupy top leadership positions in various South African organisations.

Indeed, Luthans et al. acknowledge the entrance of more Black South Africans into all levels of organisations but warn that the resulting cultural diversity needs proactive management. Consequently, it became imperative to establish special interventions such as the South African Management Programmes to bridge gaps in the managerial acumen of targeted Black employees. The whole point of such initiatives was to ensure that Black people who become managers will be able to provide requisite leadership to employees. Buoyed by this understanding, this study seeks to examine the relationship between facets of the transactional leadership style (TLS) of Black top-managers and employee commitment in South African state-owned enterprises (SOEs). It is worth highlighting that in the context of the South African SOEs, this cohort of top-managers, includes C-suite executives and division heads, who are typically responsible for providing strategic leadership (Department of Labour, 2020) and driving work performance.

The study draws impetus from extant literature which suggests that a manager's leadership style influences employee commitment; though studies have not specifically examined the nexus of specific behaviours associated with a single leadership style and employee commitment. Interestingly, however, Oztekin et al. argue that employee commitment mirrors the quality of leadership within an organisation. Similarly, Katsaros et al. also opine that employees' commitment depends on how they view the leader and the extent to which their expectations continue to be met within the context of organisational operations.

Literature Review

Since employee commitment is associated with leadership behaviour in organisations, a rational projection could be that organisations need managers who exhibit leadership behaviour that lends itself to employee commitment. It is unknown whether this situation applies in South African SOEs, which is why this study sought to determine if recognized TLS behaviours demonstrate any relationship with employee commitment in Black-manager-led work units in South African SOEs. The literature review of the study therefore covers the concepts of leadership and employee commitment. Subsequently, the possible connections between facets of the TLS and employee commitment are discussed as part of the process of a deductive approach for hypotheses formulation.

Leadership

In the context of an organization, leadership refers to the power relationship between managers and their employees, while also encapsulating the process of using power to affect the behaviour of others (Northouse, 2016) with the aim of achieving organizational goals. A leadership style is typically a habitual pattern of displayed behaviours that may be moulded by factors such as philosophy, culture or values, character, education, preparation and experience. Given that leadership is based on a social exchange relationship between the organization and employees and the managers are drivers in these relationships, their behaviours are inevitably important. This rationale is in line with the concept of the leader-member exchange (LMX) theory which emphasises the employees' dependence on leadership. According to Harb et al., the LMX theory explicates the reciprocal influence processes within vertical manager-employee dyads in which the managers, who should provide leadership, have direct authority over their employees.

Transactional leadership

Daft and Marcic contend that the transactional leadership theory is founded on a traditional management process of planning, organising, leading and controlling. In essence, transactional leaders are responsible for creating proper structures, providing rewards and incentives, and considering the needs of employees in decision-making. According to Mufti et al. (2020), this style of leadership is particularly suited to managers who work in organizations in which assignments are simple and routine. It would seem, however, that the TLS involves a process of conditional exchange between a leader and subordinate, given that Pastor and Mayo argue that both parties perceive the other as being useful for the fulfilment of each other's needs. This belief signals the existence of a psychological contract between the manager and the employees that is characterised by 'give-and-take' dependencies. In harmony with this position, Daft  posits that the use of the TLS requires managers to provide the guidance that their subordinates value. The fundamental course of transactional leadership is linked to managers' accurate judgement of situational factors which are inclusive of subordinates' expectations.

Liu et al. note that managers with a TLS usually operate within the strict confines of an established system. Indeed, managers who exhibit behaviours linked to the TLS typically rely on legitimate power, which gives them the formal authority to ensure that tasks are executed as directed. According to Bass and Avolio, there are three different behavioural facets that characterise the TLS and these are the contingent-reward (CR) behaviour, management-by-exception (Active) (MbE_A) behaviour and the management-by-exception (Passive) (MbE_P) behaviour. The Contingent-Reward (CR) behaviour is expressed when the manager aligns objectives with a reward, clarifies expectations through a discussion with the employees and makes resources available for task-execution.

Studies by Burroughs et al. as well as Eisenberger and Aselage affirm that the use of the CR facet of the TLS enhances innovation, especially when employees find the promised rewards attractive. However, Faraz, et al. warn that with time the controlling effect of rewards diminishes. This is consistent with the view of Folakemi et al., who opine that the potency of the CR facet of the TLS may be enhanced if it is complemented by other leadership behaviours.

The MbE_A behaviour manifests when a manager exercises control by closely tracking and monitoring the performance of subordinates. Emerging deviations from the set standards are corrected to ensure good performance. When the performance falls below the expected standards, the manager often feeds back the information to the subordinates, sometimes with consequences as may be deemed fit. Kark, et al. aver that this type of leadership behaviour may discourage additional effort on the part of the employees because they are usually interested in fulfilling only basic obligations.

The MbE_P behaviour is evident when the manager does not act, except when there are escalations or when objectives have not been met. This approach means the manager does not intervene in employees' work, except in the face of a problem that cannot be ignored. Jones and Jones posit that given that leadership behaviours are transmissible, passive managers send organisationally damaging signals to employees, who might then become passive as well.

Employee commitment

Allen and Meyer's study presents employee commitment as the psychological state that differentiates employees' desire to remain within an organization and their likelihood to quit. There are three types of employee commitment: affective commitment, continuous commitment and normative commitment. Affective commitment refers to the employees' emotional attachment to, identification with, and involvement in the organization. Continuous commitment stems from considerations of costs associated with leaving the organization, while normative commitment reflects the employees' feeling of obligation to remain within the organization. In effect, according to Bergman, employees may choose to remain within an organization because they want to (affective), they have to (normative) or they need to (continuance).

and Meyer's study presents employee commitment as the psychological state that differentiates employees' desire to remain within an organization and their likelihood to quit. There are three types of employee commitment: affective commitment, continuous commitment and normative commitment. Affective commitment refers to the employees' emotional attachment to, identification with, and involvement in the organization. Continuous commitment refers to commitment based on costs associated with leaving the organization, while normative commitment refers to the employees' feeling of obligation to remain within the organization. In effect, according to Bergman, employees may choose to remain within an organization because they want to (affective), they have to (normative) or they need to (continuance).

The employee commitment construct can be considered from a multidimensional perspective because as subordinates become involved in different aspects of their work, their depth of involvement varies over time. This practice suggests that the application of specific TLS facets by Black top-managers in SOEs may be associated with different employee commitment types. It would be rational to project that the manifestation of a particular commitment type, as observed by Georges, might depend upon the way that employees perceive the specific transactional leadership behaviour of managers. This position is reinforced by the assertion of Landis et al. that in recognition of the variances in employees' preferences, and in line with the proposition of behavioural and situational leadership theories, effective leadership is contextual. The implication of this submission is that results from previous studies conducted in other settings, particularly in developed countries, cannot provide a veritable premise to determine the nature of the relationships that might exist between different behaviours linked to the TLS and employee commitment in South African SOEs.

Facets of TLS and employee commitment

Several studies have revealed that a positive relationship exists between TLS and employee commitment. Conversely, studies by Cho et al. as well as Wulani et al. reveal that managers' TLS demonstrates a negative association with employee commitment. Despite the lack of harmony in research findings pertaining to the direction of the relationship between a TLS and employee commitment, Baloch et al. insist that TLS, considered as a mono-construct, remains a strong predictor of employee commitment.

More specifically, some studies have shown that TLS demonstrates a significant relationship with affective commitment. In particular, Yahaya and Ebrahim assert that managers who adopt the CR facet of the TLS provide followers with material and psychological rewards based on the fulfilment of contractual obligations. In light of theories such as the LMX theory, social exchange theory and organizational justice theory, it is clear that these rewards are personal, and the determination of whether the rewards are equitable or not is dependent upon the employees. In essence, the existence of the employee-organization exchange relationship, facilitated by the manager, does not necessarily ensure employee commitment. As it pertains to the MbE_A facet of the TLS, Emery and Barker argue that MbE_A may be ineffectual when employees view it as tantamount to micromanagement or disempowerment practices by the manager.

Regarding the MbE_P facet of the TLS, which Sayadi refers to as a non-leadership approach, Lee et al. argue that managers who use it are unlikely to invest any effort in-building relationships with employees. The feature of infrequent exchanges characteristic of the use of MbE_P could erode any implications this approach might have for the affective commitment of employees. Cognizant of the different positions in the extant literature with respect to the possible associations between facets of TLS and affective commitment of employees, within the context of South African SOEs, the following null hypotheses are formulated for this study:

H1: There is no relationship between Black top-managers' use of the CR facet of the TLS and the affective commitment of their employees.

H2: There is no relationship between Black top-managers' use of the MbE_A facet of the TLS and the affective commitment of their employees.

H3: There is no relationship between Black top-managers' use of the MbE_P facet of the TLS and the affective commitment of their employees.

With respect to continuance commitment, studies by Mash and Cohen as well as Silva and Mendis established that a significant positive relationship exists between the TLS and continuance commitment. Conversely, research undertaken by Devi and Zaraket and Sawma's found that there is a negative relationship between a manager's use of the TLS and employees' continuance commitment.

More specifically, Bycio et al. claim that the use of the CR facet of the TLS does not correlate with employees' continuance commitment. This fact may be because CR behaviour of the TLS is displayed by managers who are dependent upon favourable transactions with employees to satisfy both employee and organizational expectations. In the specific context of public organizations, Ko and Hur established that while the use of various tactics, such as performance-contingent rewards, may be prevalent, such organizations are continually grappling with the challenge of increasing financial difficulties, and these problems make it more arduous to continue with the rewards practice.

While the MbE_A behaviour requires managers to monitor deviations and errors in order to maintain workplace stability, the MbE_P facet of the TLS is generally considered as a passive-avoidance approach. Given that employee continuance commitment is contingent upon the availability of external opportunities, managers' display of behaviours that are concomitant with the facets of a TLS, therefore, may not influence this type of employee commitment. The different positions advanced by scholars highlight the importance of context in the examination of the relationship between managers' use of facets of TLS and employees' continuance commitment. Consequently, with respect to the situation in South African SOEs, this study hypothesises that:

H4: There is no relationship between Black top-managers' use of the CR facet of the TLS and the continuance commitment of their employees.

H5: There is no relationship between Black top-managers' use of the MbE_A facet of the TLS and the continuance commitment of their employees.

H6: There is no relationship between Black top-managers' use of the MbE_P facet of the TLS and the continuance commitment of their employees.

Focusing on normative commitment, the findings of Donkor and Zhou's study show that a positive relationship exists between the TLS of a manager and the normative commitment of employees, though Biza and Irbo contend that the identified relationship is weak. In contrast, however, Khan et al. found no correlation between the manager's TLS and employees' normative commitment.

According to Jabeen et al., the TLS entails an economic exchange between the organization and its employees. Stemming from this observation, Valaei and Rezaei found that the CR behaviour of a manager correlates positively with the normative commitment of employees. Notably, the financial strain experienced by organizations compels them to change their focus from a patriarchal employer-employee relationship in which the employer takes care of the employees by providing them with upward mobility and job security to a strict transactional employer-employee relationship. This latter relationship implies that it becomes more challenging for managers to display behaviours linked to the TLS with the hope of nurturing normative commitment of employees because doing so may not necessarily encourage employees to remain within the organization. It is against this backdrop that this study proposes that within South African SOEs:

H7: There is no relationship between Black top-managers' use of the CR facet of the TLS and the normative commitment of their employees.

H8: There is no relationship between Black top-managers' use of the MbE_A facet of the TLS and the normative commitment of their employees.

H9: There is no relationship between Black top-managers' use of the MbE_P facet of the TLS and the normative commitment of their employees.

Methodology

This study adopted a positivistic philosophical approach, which is based on the observable social reality acquired independently. The research framework utilized in this study is compatible with comparable studies in the leadership behavioural domain.

In line with research practices based upon the positivism paradigm, this is a quantitative study, and primary data was collected using a survey. A cross-sectional time-horizon was applied to the study because the data was collected at a single point in time through self-administered questionnaires that were distributed electronically.

Purposive sampling was employed to create a respondent pool because the sampling technique allowed the researchers to identify direct reports of Black top-managers who fit Jupp's description of the group of people who can provide relevant data. The details of 130 listed SOEs in South Africa across its nine provinces (Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North-West and Western Cape) were obtained from the Government Communication and Information System published records. All the SOEs were approached through their human resource departments. A total of 26 SOEs consented to their employees' participation in the study. Reliant on a mix of purposive sampling and the snowball technique, a total of 596 questionnaires were distributed. The study achieved a response rate of 39 percent which equates to 232 returned and usable questionnaires.

The survey instrument comprised an adapted version of the Multifactor Leadership Questionnaire (MLQ), developed by Avolio and Bass for the measurement of the facets of TLS, as well as Meyer and Allen's Three Component Model (TCM) questionnaire for measuring types of employee commitment. Items in the MLQ and TCM questionnaires were accompanied by five-point Likert answer options. The results of the reliability test for the MLQ and TCM scales for the current study are comparable to those obtained in previous studies. The Cronbach alpha values resulting from the reliability tests conducted in this study and previous studies are shown in Table 1.

As shown in Table 1, the Cronbach alpha values obtained for the current study are above the 0.7 threshold prescribed by Louangrath as well as Taber. Further, confirmatory factor analysis was used to assess the model fit in the study. The values of RMSEA (0.06), GFI (0.94), AGFI (0.90), GFI (0.94) and CMIN/DF (1.95) meet the minimum threshold as recommended by Hair et al. (2010). Consequent upon the results obtained for the reliability analysis and the confirmatory factor analysis, the scales for measuring the facets of the TLS and types of employee commitment were, therefore, considered to be fit for use in this study.

Table 1 Results of reliability analysis of measurement scales

Findings and Discussion

Figures 1 and 2 show the race and level of education of respondents who partook in this study. The race distribution of participants is 62.1 percent Black, 21.6 percent White, 7.3 percent Coloured and 9.1 percent Indian. This range is not remarkably different from the composition of the overall population at the top-management level in SOEs, which according to the Department of Labour (2020) is 60 percent Black, 22.8 percent White, 6.4 percent Coloured and 9.2 percent Indian, while the rest are foreign nationals. In essence, in the studied population, as well as in the SOEs generally, Black people predominate other racial groups.

Figure 1 Respondents racial distribution

Figure 2 indicates that 8.6 percent of the n=232 participants have a Grade 12 (National Senior) certificate, 19.4 percent have a diploma and 72 percent have a bachelor's degree. According to Statistics South Africa (2016), the number of persons who have attained a bachelor's degree across all ages in South Africa has increased. This progress is evident in the respondent population of this study because more than 70 percent of them hold a bachelor's degree. More instructively, 53 percent of all the respondents have a postgraduate qualification.

Figure 2 Respondents' level of education (n=232)

Bivariate analysis was used to test the possible existence of relationships between the facets of TLS and the three types of employee commitment. The results are presented in Table 2.

Table 2 Results of the tests of relationships between facets of the TLS and employee commitment types

In the context of South African SOEs, specifically within the studied population, results indicate that there is a statistically significant positive relationship between Black top-managers' use of the CR facet of the TLS and affective commitment (r = 0.34, p = 0.000); continuance commitment (r = 0.16, p = 0.018); and normative commitment (r = 0.35, p = 0.000). The null hypotheses of the study, H₁o H40 and H70, therefore, are not statistically supported. Interestingly, these results align with those of Alkahtani (2016) and Korir and Kipkebut (2016), who found a relationship between CR and all types of employee commitment.

As it relates to the MbE_A facet of the TLS, the study's results as shown in Table 2 revealed no statistically significant relationships between Black top-managers' use of MbE_A and affective commitment (r = -0.04, p = 0.504), continuance commitment (r = 0.10, p = 0.125), and normative commitment (r = 0.04, p = 0.530) in the studied population of employees in South African SOEs. The null hypotheses of the study, H20, H50 and H₅o, therefore, are statistically supported. This position is congruent with McLaggan et al.'s (2013) finding that there is no statistically significant association between MbE_A and all types of employee commitment. The result, however, contradicts Gardner's (2018) findings that a correlation exists between MbE_A and the affective, normative and continuous commitment of employees.

With respect to the MbE_P facet of the TLS of Black top-managers and its association with employee commitment, this study's results signal that a statistically significant negative relationship exists between MbE_P and affective commitment (r = -0.25, p = 0.000) as well as normative commitment (r = -0.19, p = 0.005). This result resonates with the findings of Al-Yami, et al. (2019) that a negative correlation exists between MbE_P and the affective and normative commitment of employees. As shown in Table 2, there is no statistically significant relationship between MbE_P and continuance commitment (r = -0.08, p = 0.202), which is consistent with the findings of earlier studies conducted by Lee (2005) and Delegach et al. (2017). Based on this study's results, the hypothesised relationships as expressed in H30 and H90 are not statistically supported, while the converse is the case for H₆0.

Discussion

The study's results point to the existence of a significant relationship between the CR facet of the TLS and employees' affective, normative and continuance commitment. This result means that the use of incentives by Black top-managers' is associated with employees' choice to continue working for the SOE. It may, therefore, be that employees' interest in the rewards offered by Black top-managers in SOEs relates to their continued stay within the SOEs. Lending credence to this position, Arnold et al., contend that CR is the most favourable and effective behavioural facet of a TLS, owing to the connection of reciprocal exchanges between employees and their managers.

In the context of this study, it would appear that the respondents acknowledge and appreciate the rewards offered by Black top-managers, which may be related to personal development and career progression, among others. It would seem, therefore, that Black top-managers have the opportunity to use rewards as leverage to keep employees committed and to retain talent within SOEs. However, it is imperative to recognise that the effects of using the TLS's CR facet are largely temporary, because such effects crystallise only insofar as the rewards are appealing and continue to be offered to employees.

The findings of this study further showed that a negative statistically significant relationship exists between MbE_P and the affective and normative commitment of employees. Indeed, Skogstad et al. as well as Aasland et al. conclude that MbE_P has a negative effect on employees' attitudes and performance. This finding can be appreciated against the backdrop of the fact that the use of the MbE_P facet of TLS equates to the absence of interference by a manager in the work of employees and this behaviour inevitably means that hardly any guidance is provided by the manager to support employee efforts. This practice may be feasible because the distinctive context of the South African SOEs is such that the hierarchical structure and function is heavily characterised by strict rules and regulations, which are often documented as part of the SOEs' policies and standard operating procedures.

The implication of working in a setting of this nature is that employees confront automatic restrictions that foist an air of autonomous operations. This results in fewer interactions between Black top-managers and their employees, while the usual recourse to documented procedures reduces the likelihood of employee commitment being associated with a manager's display of MbE_P behaviour. In the context of this study, it may be that although employees have a preference for autonomy, they still expect some interaction with Black topmanagers who should provide structure and direction. The study's revelation that no significant relationship exists between MbE_P and continuance commitment is understandable given that continuance commitment depends on the accessibility of external opportunities.

In addition, when the MbE_A facet of the TLS was considered, no statistically significant relationship could be found with affective, normative and continuance commitment. A plausible explanation, in the context of this study, could be that given the study respondents' levels of qualification and comparatively senior positions, it would not be necessary for the Black topmanagers to constantly be involved in their employees' work. These employees, therefore, may prefer autonomy over close monitoring or micromanagement.

Conclusion

The study sought to determine if there were any relationships between facets of the TLS displayed by Black top-managers and particular types of employee commitment in South African SOEs. The findings revealed that the CR facet of the TLS is statistically associated with the three types of employee commitment. These results illuminate the significance of reward systems in promoting the commitment levels of employees in South African SOEs. With the current challenges faced by SOEs in South Africa and the evolving needs of employees, it is even more imperative for leadership to continually seek ways to reward employees, since CR correlates with different types of employee commitment.

This study, therefore, contributes to the body of knowledge within the scope of leadership because it provides insight about specific leadership behaviours among Black top-managers in South African SOEs that could lend themselves to different types of employee commitment. This is critical as it may result in benefits such as talent retention and increased employee performance at SOEs. Further, the study contributes to African leadership and management literature because it expounds various relationships between facets of the TLS and employee commitment in a peculiar African context.

Future Research

In this study, the facets of TLS were uniquely treated as sub-constructs relative to previous leadership studies that have tended to bind these sub-constructs into the mono-construct of transactional leadership. Arguably, the prevalent treatment of the TLS as a mono-construct clearly limits the explanatory powers of such studies. It is recommended, therefore, that future studies should test the different facets of the TLS as sub-constructs in order to establish how each facet relates to employee commitment in different work contexts and cultural environments within the African continent. Furthermore, while the study showed that the CR facet of the TLS has a relationship with all types of employee commitment, exploring how specific forms of rewards influence the different strands of employee commitment could prove insightful.