Your reflection notes should be organized to present:

1. Key learning points from the three readings of your choice (a summary)
2. Your reflections
3. References

Reflections is underlined as this is considered one of the most important parts of the learning process. Based on the readings, you must consider your unique experiences and perspectives. And also Cite

Bass, B. M., Avolio, B. J., Jung, D. I., & Berson, Y. (2003). Predicting unit performance by assessing transformational and transactional leadership.Journal of applied psychology,88(2), 207-

How do leadership ratings collected from units operating under stable conditions predict subsequent performance of those units operating under high stress and uncertainty? To examine this question, the authors calculated the predictive relationships for the transformational and transactional leadership of 72 light infantry rifle platoon leaders for ratings of unit potency, cohesion, and performance for U.S. Army platoons participating in combat simulation exercises. Both transformational and transactional contingent reward leadership ratings of platoon leaders and sergeants positively predicted unit performance. The relationship of platoon leadership to performance was partially mediated through the unit's level of potency and cohesion. Implications, limitations, and future directions for leadership research are discussed.

The pace of change confronting organizations today has resulted in calls for more adaptive, flexible leadership. Adaptive leaders work more effectively in rapidly changing environments by help- ing to make sense of the challenges confronted by both leaders and followers and then appropriately responding to those challenges. Adaptive leaders work with their followers to generate creative solutions to complex problems, while also developing them to handle a broader range of leadership responsibilities (Bennis, 2001).

Bass (1985) labeled the type of adaptive leadership described above transformational. The literature accumulated on testing transformational leadership theory has provided general support for the hypothesized relationships between transformational lead- ership, transactional leadership, and performance (Avolio, 1999; Bass, 1998). For example, ratings of transformational leadership

Bernard M. Bass, Center for Leadership Studies and School of Man- agement, Binghamton University; Bruce J. Avolio, Department of Man- agement and College of Business Administration, University of Nebras- kaLincoln; Dong I. Jung, Department of Management, San Diego State University; Yair Berson, Institute for Technology and Enterprise, Poly- technic University.

Bernard M. Bass and Bruce J. Avolio served as co-principal investiga- tors in a project (Contract DASW01-008) sponsored by the U.S. Army Research Institute for the Behavioral and Social Sciences that supported the collection of data used in this study. We thank retired Lieutenant General W. F. Ulmer and Colonels M. Shaler and W. M. Snodgrass for their active consultation in all phases of the project, as well as Wendy Clark. We also express our appreciation to the generals in command of the 10th Mountain and the 82nd and 101st Airborne divisions for their coop- eration, and to the officers and enlisted men. Finally, we thank Mike Drillings, who was our contract monitor at the Army Research Institute.

Correspondence concerning this article should be addressed to Bruce J. Avolio, Department of Management, 209 College of Business Adminis- tration, University of Nebraska, Lincoln, Nebraska 68588-0491. E-mail: b..2@unl.edu

were positively correlated with supervisory evaluations of mana- gerial performance (Hater & Bass, 1988; Waldman, Bass, & Ein- stein, 1987), recommendations for promotion (Waldman, Bass, & Yammarino, 1990), research and development project team inno- vations (Keller, 1992), and percentage of financial goals achieved in strategic business units (Howell & Avolio, 1993).

Meta-analyses conducted by Lowe, Kroeck, and Sivasubrama- niam (1996) and Patterson, Fuller, Kester, and Stringer (1995) have confirmed the positive relationship between transformational leadership and performance reported in the literature. Yet most of the studies included in these two meta-analyses were based on leadership and performance data collected at the same point in time, and typically from the same source. Lowe et al. reported that the effects of common source bias inflated the relationship be- tween transformational leadership and performance reported by many previous authors. Although the estimated true score corre- lation was still positive, Lowe et al. indicated that it was consid- erably lower when ratings of leadership and performance were collected from different sources.

DeGroot, Kiker, and Cross (2000) completed a third meta- analysis of the transformational and transactional leadership liter- ature, reconfirming the positive relationship between ratings of charismatic-transformational leadership and performance reported earlier. They also reported that the relationship between charis- matic leadership and performance varied when leadership and performance were examined at an individual versus group level, concluding that "results show an effect size at the group level of analysis that is double in magnitude relative to the effect size at the individual level" (DeGroot et al., 2000, p. 363).

Although the literature on transformational and transactional leadership has grown rapidly over the past 15 years, only a handful of studies have examined how transformational and transactional leadership predict performance. For example, Howell and Avolio (1993) reported that transformational, but not transactional, lead- ership of financial managers positively predicted unit performance

207

208

BASS, AVOLIO, JUNG, AND BERSON

over a 1-year period. Geyer and Steyrer (1998) evaluated the leadership of managers heading Austrian branch banks, reporting a stronger positive relationship between transformational leader- ship and long- versus short-term performance. Geyer and Steyrer speculated the stronger relationship between transformational leadership and long-term performance may have been due to transformational leaders creating a more inspired, committed, and cohesive culture in their banks.

Emergence of transformational leadership depends in part on the context in which the leader and followers interact. For example, Bass (1985) argued that "transformational leadership is more likely to reflect social values and to emerge in times of distress and change while transactional leadership is more likely to be observed in a well-ordered society" (p. 154). Most prior research has exam- ined transformational and transactional leadership in units that operated within relatively stable conditions. Consequently, one major focus of this study was to examine how transactional and transformational leadership predicted performance in units oper- ating under conditions of high levels of uncertainty, challenge, and stress. Leadership ratings were collected in U.S. Army platoons during normal operational assignments. These leadership ratings were then used to predict the performance of the platoon units operating in a 2-week complex simulation that was designed to test the unit's performance effectiveness under high levels of stress and uncertainty.

In addition, some researchers have argued that research on transformational and transactional leadership has not fully exam- ined important mediating variables that link leadership style to performance (Yukl, 1999). Therefore, we also evaluated how ratings of transformational and transactional leadership were me- diated by levels of unit cohesion and potency in predicting platoon performance in near-combat conditions.

Theoretical Background and Research Model

Distinguishing Transactional and Transformational Leadership

Prior to the introduction of charismatic-transformational lead- ership theory into the literature (Bass, 1985; Burns, 1978; House, 1977), most researchers referred to transactional contingent rein- forcement as the core component of effective leadership behavior in organizations. Exhibiting transactional leadership meant that followers agreed with, accepted, or complied with the leader in exchange for praise, rewards, and resources or the avoidance of disciplinary action. Rewards and recognition were provided con- tingent on followers successfully carrying out their roles and assignments (Podsakoff, Todor, & Skov, 1982). Transactional contingent reward leadership clarifies expectations and offers rec- ognition when goals are achieved. The clarification of goals and objectives and providing of recognition once goals are achieved should result in individuals and groups achieving expected levels of performance (Bass, 1985). In its more corrective form, labeled active management by exception, the leader specifies the standards for compliance, as well as what constitutes ineffective perfor- mance, and may punish followers for being out of compliance with those standards. This style of leadership implies closely monitor- ing for deviances, mistakes, and errors and then taking corrective action as quickly as possible when they occur. In its more passive form, the leader either waits for problems to arise before taking

action or takes no action at all and would be labeled passive- avoidant or laissez-faire. Such passive leaders avoid specifying agreements, clarifying expectations, and providing goals and stan- dards to be achieved by followers.

Previous research has shown transactional contingent reward style leadership to be positively related to followers' commitment, satisfaction, and performance (Bycio, Hackett, & Allen, 1995; Hunt & Schuler, 1976; Podsakoff, Todor, Grover, & Huber, 1984). Goodwin, Wofford, and Whittington (2001) reported a positive relationship between transactional contingent reward leadership and organizational citizenship behavior, distinguishing transac- tional leadership that was more recognition based from that based on setting basic expectations and goals. Goodwin et al. showed that the recognition-based transactional leadership, which they labeled implicit contracting, was more positively related to fol- lowers displaying organizational citizenship behaviors than was a transactional leadership based on explicit contracts or a quid pro quo exchange between the leader and follower.

The components of transformational and transactional leader- ship have been identified in a variety of ways, including through the use of factor analyses, observations, interviews, and descrip- tions of a follower's ideal leader. Using the Multifactor Leadership Questionnaire (MLQ-Form 5X; Avolio & Bass, 2002), Avolio, Bass, and Jung (1999) and Antonakis (2001) identified the distinct components of transformational leadership. The four components of what Avolio et al. referred to as a higher order construct of transformational leadership include the following:

Idealized influence. These leaders are admired, respected, and trusted. Followers identify with and want to emulate their leaders. Among the things the leader does to earn credit with followers is to consider followers' needs over his or her own needs. The leader shares risks with followers and is consistent in conduct with underlying ethics, principles, and values.

Inspirational motivation. Leaders behave in ways that moti- vate those around them by providing meaning and challenge to their followers' work. Individual and team spirit is aroused. En- thusiasm and optimism are displayed. The leader encourages fol- lowers to envision attractive future states, which they can ulti- mately envision for themselves.

Intellectual stimulation. Leaders stimulate their followers' ef- fort to be innovative and creative by questioning assumptions, reframing problems, and approaching old situations in new ways. There is no ridicule or public criticism of individual members' mistakes. New ideas and creative solutions to problems are solic- ited from followers, who are included in the process of addressing problems and finding solutions.

Individualized consideration. Leaders pay attention to each individual's need for achievement and growth by acting as a coach or mentor. Followers are developed to successively higher levels of potential. New learning opportunities are created along with a supportive climate in which to grow. Individual differences in terms of needs and desires are recognized.

Transformational Leadership, Commitment, Cohesion, and Potency

With the introduction of transformational leadership theory into the literature, greater attention has now been paid to understanding how certain leaders are better equipped to elevate a follower's motivation and performance to the higher levels of accomplish-

ment (Bass, 1985). Shamir, House, and Arthur (1993) suggested that charismatic-transformational leaders transform the self- concepts of their followers. They build personal and social iden- tification among followers with the mission and goals of the leader and organization. The followers' feelings of involvement, cohe- siveness, commitment, potency, and performance are enhanced. Other authors have suggested that transformational leadership is an important antecedent to building the collective confidence or po- tency required of groups to be successful when dealing with difficult challenges. According to Guzzo and his colleagues (Guzzo, Yost, Campbell, & Shea, 1993), group potency is a function of group design (e.g., task interdependence), process (e.g., leadership), and context (e.g., operating conditions). When a group's task is designed to facilitate highly interdependent work among group members and the leadership of the group provides encouragement for members to work together, group members' collective confidence is expected to be higher. Zaccaro, Blair, Peterson, and Zazanis (1995) suggested that "leadership actions that persuade and develop subordinate competency beliefs may be as critical a determinant of collective efficacy as the group's prior performance experiences, if not more so" (p. 317). Transforma- tional leadership as defined above develops followers to believe in themselves and their mission.

Carless, Mann, and Wearing (1995) reported that follower rat- ings of transformational and transactional leadership predicted the financial performance of Australian banks, and that leadership style was mediated in terms of its relationship to performance through the level of group cohesion associated with each bank unit. Sosik, Avolio, and Kahai (1997) examined the impact of transfor- mational leadership on the level of creative output generated by teams interacting through computer networks, reporting that rat- ings of transformational leadership had both direct and indirect relationships with performance. Level of group potency mediated the relationship between ratings of transformational leadership and performance. Prior evidence supports positive links between trans- formational leadership, cohesion, potency, and performance. Yet relatively few studies have examined how leadership is mediated by potency and cohesion in predicting performance.

Why Study Transactional and Transformational Leadership in a Military Context?

Transformational leadership is at the core of what constitutes adaptive leadership, according to U.S. Army doctrine Field Man- ual 22-100. Adaptive leaders are trained to exemplify the highest levels of ethical and moral conduct. They are required to gain the confidence of their followers so that the followers will make appropriate sacrifices for their unit. They are asked by senior leaders to continuously focus on their own leadership development and the development of their followers, to address the range of challenges confronting U.S. military forces.

In military engagements, leadership, morale, cohesion, and commitment have long been identified as critical ingredients to unit performance (Bass, 1998; Gal, 1985). Military units demon- strating a high level of esprit de corps and morale have frequently produced the best results (Shamir, Zakay, Breinin, & Popper, 1998). Shamir et al. (1998) reported that among Israeli Defense Force companies, unit morale, cohesiveness, and potency were each positively correlated with the level of trust that followers had in their unit's leadership and their willingness to make sacrifices

on the leader's behalf. Curphy (1992) reported the transforma- tional and transactional leadership of U.S. Air Force squadron leaders positively predicted the motivation, cohesion, and perfor- mance levels of their squadrons. In a true field experiment setting where participants were randomly assigned to transformational leadership training, Dvir, Eden, Avolio, and Shamir (2002) dem- onstrated that Israeli platoon commanders with enhanced transfor- mational leadership led platoons that received significantly higher performance scores 6 months later.

In sum, transformational leaders are expected to enhance the performance capacity of their followers by setting higher expec- tations and generating a greater willingness to address more dif- ficult challenges (Avolio, 1999; Bass, 1998). Transactional con- tingent reward leadership should also relate positively to performance in that such leaders clarify expectations and recog- nize achievements that positively contribute to higher levels of effort and performance. On the basis of prior research, there is sufficient justification to propose and test the direct and indirect linkages between transactional contingent reward leadership, transformational leadership, unit potency (cohesion), and perfor- mance, as presented in Figure 1. Figure 1 shows which path coefficients were expected to positively or negatively predict unit cohesion, potency, and performance. Thus, the specific hypotheses tested in this study include the following:

Hypothesis 1a: Ratings of transformational leadership for platoon leaders (ordinarily lieutenants) and platoon sergeants will positively predict unit performance.

Hypothesis 1b: Ratings of transactional contingent reward leadership for platoon leaders and platoon sergeants will positively predict performance but to a lesser degree than transformational leadership.

Hypothesis 2: Ratings of transformational leadership for pla- toon leaders and platoon sergeants will be positively related to ratings of unit cohesion and potency.

Hypothesis 3: Unit cohesion and potency will mediate the relationship of transformational and transactional contingent reward leadership with unit performance.

Method

The core leadership in a platoon rests with the platoon sergeant (a noncommissioned officer) and the platoon leader (usually a commissioned second lieutenant). We measured the leadership of the platoon sergeant and platoon leader and the platoon's potency and cohesiveness on post approx- imately 4 to 6 weeks before each platoon participated in a 2-week combat simulation at Fort Polk's Joint Readiness Training Center ( joint readiness refers to operating in concert with other forces to achieve success in the simulation).

Samples and Procedures

A total of 72 platoons, each made up of three rifle squads and a heavy weapons squad, participated in the joint readiness training exercise. Be- cause the average number of light infantry combat soldiers in a platoon (all men) is typically around 30, the total number of participants rating the platoon leaders and platoon sergeants was 1,340 and 1,335, respectively. Most of the nonparticipating soldiers were on special assignments or on

PREDICTING UNIT PERFORMANCE

209

210

BASS, AVOLIO, JUNG, AND BERSON

Figure 1. Direct and indirect effects of leadership styles among platoon leaders (PL) and sergeants (SGT) on platoon performance. Plus signs indicate a positive relationship; minus signs indicate an expected negative relationship.

leave when the surveys were collected. The total number of raters for unit cohesion and potency was 1,594.

The procedures and design for this study followed prior work on the determinants of platoon performance (Siebold & Lindsay, 1991). Similar to Siebold and Lindsay (1991), we examined how individual leadership, unit potency, and cohesion each predicted performance scores generated by expert observers, who judged platoon mission performance in the joint- readiness training exercises.

Measures

All surveys were collected in large classroom settings on four different Army posts. Participants were scheduled to attend a data collection session during a 3- to 4-day period on the basis of their individual schedules. After explaining the purpose of the study and the protections for anonymity, we gave all participants the option of sitting quietly and not participating in the study. Only 10 respondents chose this option.

All survey scale items used in the current study were first examined and suitably modified in discussion with expert Army consultants. However, relatively few changes were required to the original survey instruments, including the MLQForm 5X; in which only two items were changed on the Management by Exception Scale (i.e., "Concentrates full attention on dealing with mistakes, complaints and failures" and "Directs attention toward failures to meet standards"). There were 36 leadership items mea-

1 sured in each MLQForm 5X survey. Participants rated one of their

respective leaders, who was either a platoon leader or a sergeant, on a 5-point frequency scale ranging from 0 (not at all) to 4 (frequently, if not always).

There were four general components of transformational leadership. These components and a sample item from the MLQForm 5X were as follows: Idealized Influence (e.g., "Talks about the importance of the Army ethics and values"), Inspirational Motivation (e.g., "Emphasizes the im- portance of having a collective sense of mission"); Intellectual Stimulation (e.g., "Seeks different points of view when solving problems"), and Indi- vidualized Consideration (e.g., "Helps platoon members to develop their strengths").

Transactional leadership occurs when the leader sets expectations, stan- dards, or goals to reward or discipline a follower depending on the adequacy of a follower's performance: Contingent Reward (e.g., "Rewards us when we do what we are supposed to do") and Management by Exception (active and passive forms, represented in the items "Directs attention toward failures to meet standards" and "Delays responding to urgent problems," respectively).

The six-factor model that was reported by Avolio et al. (1999) was confirmed in this study with an initial sample of 18 platoons using con- firmatory factor analysis. The resulting fit indices were as follows: goodness-of-fit index (GFI) .90, adjusted goodness-of-fit index (AGFI) .87, root-mean-square residual (RMSR) .04, and normed fit index (NFI) .90. The six-factor model was retested using data collected from the target sample of 72 platoons. Results were as follows: GFI .93, AGFI .91, RMSR .004, and NFI .94. Although producing an adequate model fit, the reliability for the Active Management by Exception scale was below acceptable standards, at .56. Hence, this scale was elim- inated from subsequent analyses, owing to problems with the new items.

Potency. The unit of analysis for this survey was the platoon. The Guzzo et al. (1993) operational definition and scale were used to assess the degree of potency exhibited by 72 platoons, prior to their participation in the 2-week Joint Readiness Training Center exercises. Their measure of potency provided an assessment of how platoon members felt about taking on difficult and unexpected problems and being successful in addressing those challenges. The potency measure contained eight items (e.g., "Our platoon has confidence in itself" ).

Cohesion. Three items were used to measure the level of cohesion among platoon members. The measure of unit cohesion was developed for the current study (e.g., "Members of the platoon pull together to get the job done").

Controlling for Same-Source Ratings and Order Effects

MLQForm 5X survey data were gathered for the platoon leaders and sergeants from separate personnel randomly chosen in each of the 72 light infantry rifle platoons. Ratings of unit potency and cohesion were collected in a separate survey. To control for order effects, we gave half of the respondents who reported to the platoon leaders and sergeants two ques- tionnaires in a folder and directed them to complete the questionnaires in the order presented. These surveys were placed in alternating order in the folders, with either the questionnaire for the platoon leader or for the platoon sergeant first. A second, randomly selected group received in a folder the potency and cohesion survey first. Half of each platoon's subordinates rated either the platoon leader or the platoon sergeant using the MLQForm 5X. The remaining members of the platoon rated the level

1

Information on using the MLQ-Form 5X for research purposes can be obtained by contacting i..o@mindgarden.com or by calling Robb Most at (650) 261-3500.

of potency and cohesion before completing the MLQForm 5X survey for either the sergeant or the platoon leader. For the final data set used in this study, the survey data used to assess leadership, potency, and cohesion were all completed by separate sources.

Field Performance Data Collection From Expert Observers

Approximately 4 to 6 weeks after the survey data were collected, four brigades containing 18 platoons each engaged in 11 tactical mission exercises at Fort Polk. For the four data sets of 18 platoons each, ratings were obtained for each platoon from two highly trained observers. A retired colonel on our research team met with the observers several days prior to their moving into the field with their platoons to brief the observers. He explained the type of performance data we wanted to collect from the observers after the 2-week simulation was completed. He assured the observers that no one's data would be identified or used for anything other than research purposes. At the end of three respective phases, totaling 11 missions (after the first, middle, and last missions), the observers com- pleted ratings of platoon performance on scorecards created for this study. Generally, the 11 missions included defense, movement to contact, and attack.

The 126 observers for all 72 platoons were experienced tactical instruc- tors with the ranks of captain, master sergeant, or sergeant first class. All observers received training on how to complete their evaluations. Each instructor observed a particular platoon for the first time, but all instructors had performed observational duties in the past. Their prior experience was recorded on the field data scorecards. Their experience ranged from 3 to 30 prior rotations, where one rotation meant they followed an individual platoon for 11 missions. The average number of prior platoon rotations was 11.9 for the group of observers participating in this study. Observers remained with these 72 platoons day and night. The overall interrater agreement for the pairs of observers was .75. We averaged their perfor- mance scores to obtain a total performance score for each platoon. Two overall scales of each platoon's performance were used in this study. The first assessed the platoon's performance. Raters evaluated how well the platoon had accomplished its missions on a 5-point scale ranging from 0 (much less well than could have been expected) to 4 (much more than could have been expected). In the second scale, the rater was asked to compare the platoon's performance with the performance of all other platoons the rater had observed in this field setting. A 5-point scale was used here to measure the platoon's performance. These performance rat- ings were highly correlated (r .68) and therefore were combined in subsequent analyses. The total number of ratings across the 11 missions for all 72 platoons was 415 (1-2 raters 3 overall ratings 72 platoons).

Table 1

Data Aggregation and Analysis

For the measures of leadership, potency, and cohesion, the sample size was 72. Tests for aggregating survey ratings to the platoon level were

PREDICTING UNIT PERFORMANCE

211

Means, Standard Deviations, Alpha Coefficients, and Intercorrelations Among Constructs

Intercorrelations

Construct M SD 1 2 3 4 5 6 7 8 9

conducted using James, Demaree, and Wolf's (1984) r

procedure. Spe-

cifically, an r

value was calculated for each scale within each of the 72

wg

platoons. Between 70% and 80% of the r values for all survey scales fell

wg

above the .70 cutoff suggested by James et al. for aggregating ratings from

an individual to a group level of analysis. Results of the r analyses were wg

as follows: The mean r value for ratings of the platoon leader's trans- wg

formational leadership was .80; for the platoon leader's contingent reward ratings, .87; for the platoon leader's passive-avoidant ratings, .84; for the platoon sergeant's transformational ratings, .78; for the platoon sergeant's contingent reward ratings, .82; for the platoon sergeant's passive-avoidant ratings, .88; for unit potency, .90; and for unit cohesion, .88.

We examined how three constructs of leadership related to potency, cohesion, and platoon performance. The first higher order construct rep- resented the transformational leadership factors reported by Avolio et al. (1999). We chose to combine the transformational factors on the basis of prior evidence that they represented a higher order construct, and to reduce the number of parameters being estimated given the small sample size of 72 platoons. The second construct represented transactional contingent reward leadership, and the third was passive-avoidant leadership.