Change leadership and organizational performance

Abstract

Organizational change has always been an area of discussion because it is directly related to the performance of organizations in the rapidly changing business environment. This research focused on knowing the relationship between an effective leadership, organizational change, and employee performance. The point of discussion was that leadership plays a critical role in making a smooth organizational change, which not only result in the effectiveness of change but also drives organizational performance. The findings of the research validate the statement that leadership is at the core of smooth transition towards any particular change, which results in improving organizational performance and productivity.

Introduction

Organizational change and organizational performance are closely linked with each other. Every organization undergoes different types of structural or strategic changes from time to time because of several internal and external business environment factors. The need for any organizational is to be able to respond to those changes in such a way that not only the basic internal organizational structure remains intact but also the organizational performance goes up as the result.

The need for organizational change emerges when the performance of the organizational operations does not come up to the expectations. The role of leadership in the execution of required changes is vital. An effective organizational leadership predicts the need for change and communicate the importance of change t the employees and make them ready to adopt the change without disrupting their performances. This topic of organizational change and role of leadership is important to study because changes occur in every organization and are an ongoing issue for many organizations because of rapid technological and economic changes in the present era. Thus, it is very important to study the role that leadership can play in making the changes beneficial for the organization by working on the readiness level of the employees. The thesis statement for this paper is that ‘leadership, organizational performance, and organizational change are altogether interrelated and an effective leadership is an important determinant of improved organizational performance’.

Literature Review

Organizational change is an essential procedure related to rebuilding or reshaping of an organization in the light of external business environment changes (Antoni, 2004). Organization change is a change in general behaviors and parts of the representatives of an organization for acquiring change the general profitability of the organization. Self-determination is the key to successful change implementation within organizations (Gagne, Koestner & Zuckerman, 2000). Employee should also be taken on board and their input should be supported in facilitating a change. Three key values that work incredibly in acceptance of a change include “giving a rationale for doing a task, offering some choice about how to do the task, and acknowledging feelings about the task” (Gagne, Koestner & Zuckerman, 2000, p. 1843).

In giving the employees the role to facilitate in change management process, leadership holds an important place because they have the ability to oversee, control, and guide the employees in a manner that everybody works with full responsibility and show readiness to cooperate in the direction provided to them (Judge, Thoresen, Pucik & Welbourne, 1999). Pre-implementation change readiness levels exert a positive effect on the satisfaction level of employees with the accuracy of the system, change outcomes, and post-implementation change function (Jones, Jimmieson & Griffiths, 2005). As Kavanagh and Ashkanasy (2006) state, “Leaders need to be competent and trained in the process of transforming organizations to ensure that individuals within the organization accept the changes” (p. 81). Viable leadership assumes a conclusive part in inspiring individuals towards achievement of a typical mission or desired goals (Young & Dulewicz, 2008). In organizations where there are no leaders to convince and motivate employees about expected and desired changes, difficulties occur for the managers and employees to move effectively and efficiently towards reaping the outcomes of the changes.

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In organizational settings, leadership manages management of individuals in a manner that each representative turns out to be completely committed to work in beneficial prospect of the organization. Leadership is equally important in every sector that needs reforms (Hallinger & Kantamara, 2000). In a study, Michaelis, Stegmaier, and Sonntag (2010) found that commitment to change helps in mediating the relationship between leadership and the employees’ behavior towards implementation of change. Change can never be brought into an organization without support of the workers. “Leadership relates to followers’ innovation implementation behavior, the psychological mechanisms of this relationship, and the role of individual perceptions of climate for initiative” (Michaelis, Stegmaier & Sonntag, 2010, p. 408). To accomplish organizational goals, leaders ought to have the capacity to invigorate representatives’ behaviors in a manner that workers begin perceiving their commitments and duties with respect to accomplishment of goals.

In discussing the connection between leadership and organizational change, it can be said that organizational change has a direct connection with organizational performance (Fedor, Caldwell & Herold, 2006). A need for organizational change emerges when performance of the organizational techniques does not come up to the desires (Gagne, Koestner & Zuckerman, 2000). Organizational change turns out to be in favor of organizations if it is occurs in response of restructuring of organizational processes and environmental conditions and is laid on a particular set of competencies (Haveman, 1992).

In the overall process of change, the role of leadership is of integral importance (Herold, Fedor, Caldwell & Liu, 2008; Higgs & Rowland, 2010). Employees’ affective commitment towards change support the viewpoint that leadership and top management are equally important in controlling change implementation behavior by managing the individual differences between employees and listening to their concern about change (Michaelis, Stegmaier & Sonntag, 2009). A leader likewise needs to persuade the workers to take part during the time spent change. There are some key stages that a leader needs to take after top acquire changes the organizational framework. those stages incorporate distinguishing the need of change, making an arrangement to actualize the change, conveying the vision and mission to the representatives, acquiring changes workers’ conduct, managing conflicts, overseeing change to ensure worker and situational control, and guaranteeing inviting organizations with workers and the management (Gagne, Koestner & Zuckerman, 2000).

The role of leadership is vital in bringing organizational change (Owen & Demb, 2016). A leader predicts the need of change as well as urges the workers to support the change. Leaders offer direction to employees and demand contribution from the supporters. This conduct of leaders makes representatives more responsible and committed towards change (Appelbaum, St-Pierre & Glavas, 1998; Michaelis, Stegmaier & Sonntag, 2009). Leaders need to teach representatives to make them mindful of the significance of the change. It is one of the center obligations of the leaders to stimulate representatives to work for the purpose. Leaders make the representatives mindful of the useful results of the required changes with a specific end goal to build their advantage and duty for change. And all of this happens in collaboration with the top management. “Top management needs to establish a flexible and adaptive infrastructure that should lead contemporary and complex organizations to optimum levels of performance” (Appelbaum, St-Pierre & Glavas, 1998, p. 289). The result of such approach towards change is favorable not only in terms of successful change implementation but also in terms of enhanced organizational performance (Appelbaum, St-Pierre & Glavas, 1998).

Methodology

The main sources of data collection used in the research included 15 peer-reviewed journal articles. The articles helped in finding the information related to the topic. All sources were closely related to the topic and contained a significant amount of information to be retrieved for use in the study. There was no bias in collecting information from the articles as all articles were chosen and used regardless of any difference in regions under study and authors. Moreover, there was no threat to validity as all sources were taken from peer-reviewed scholarly journals.

The research question under study is given below:

1. Research Question:
   • What is the relationship between organizational change, leadership, and organizational performance?Hypotheses Tested:
2. Main Hypothesis:
   • An effective leadership is essential in ensuring smooth organizational change and improved organizational performance.
3. Null Hypothesis:
   • There is no connection between an effective leadership, organizational change, and organizational performance.
4. Alternate Hypothesis:
   • There is some relationship, positive or negative, between an effective leadership, organizational change, and organizational performance.

Research Findings

The organizational change theory demands distinctive methodologies towards the need for change from both business and worker points of view. “Organization change is both critical for managers in terms of effective implementation and for employees in terms of acceptance and engagement” (Avey, Wernsing, & Luthans, 2008, p. 49). From businesses’ point of view, the readiness to adjust to the changes occurring in the internal and external business environment is the biggest challenge. In this regard, the role of leadership becomes essential as leaders are the sources of inspiration and motivation for the employees working for the organization. Leaders need to show eagerness for organizational changes and additionally to assist managers in developing methodologies for actualizing those changes. An effective leadership is one that helps managers in formulating the strategies regarding management of change processes, as well as keeps employees on board and engaged right through the completion of the change process.

A readiness and accommodating approach for organizational changes is necessary to make employees ready for the new business model whether it is technological, structural, or strategic. The reason is that when the level of readiness is high, businesses initiate the procedure of change, and additionally find a profoundly cooperative behavior from the employees and all concerned authorities. Leaders use their creative thinking skills, personal skills, and interactive communication skills to convince employees and organizational authorities for resolving any particular issue.

Another point found through research is that changes mainly occur due to changing trends in competition and certain economic situations. In any case of change needed, the role of an effective leadership becomes essential because leaders not only assist managers in advocating for the need of change but also hold critical value in communicating the need for change to employee unions and organizational higher level authorities. The end goal of leaders is to ensure harmony between the current and future business positions.

Organizational performance largely depends on the employees’ change acceptance level. The more the employees would show readiness to adopt a particular change, easier would be the implementation of change, and enhanced would be the performance of the organization. Here, it is also noteworthy to state that when employees show reluctance in the implementation of a change, results are not in favor of the organization because employees are the main working body for any organization. Leaders can prove effective in raising the readiness level of employees by communicating their needs and concerns to the high level managers regarding any change and resolving their issues in order to make employees committed for change.

The overall procedure of change implementation results in many significant benefits for organizations some of which include improved cost savings, better organizational structure, improved corporate relationships, enhanced leadership to employee relationship, increased growth opportunities, improved position among competitors, improved organizational performance, and increased productivity.

Summary and Future Research

Summing it up, is that leadership, organizational performance, and organizational change are interrelated and an effective leadership is an important determinant of improved organizational performance. The need for organizational change is expected in light of the outcomes of organizational operations, as well as because of rapid technological and economic environment changes of the present world. The role of leadership in making changes worthy for organizations is extremely impacting. Leaders work on the mindset of employees, meet their concerns, and make them read for accepting any new change. As the result of this, not only the organizational changes become successful as they reap the benefits as expected but also the overall organizational performance goes up because of improved processes and technological incorporation for running different business affairs.

The studies explored in the literature review were of extreme importance as they provided a considerable amount of information on the topic under study. Researchers can use the information in facilitating and advocating for the need of an effective leadership within organizations of all sizes. However, there were a couple of issues that can be explored further in future research. First, there should be a research on the role of different types of leadership in making organizational structure related changes successful for organizations. For example, the role of autocratic leadership, facilitative, or strategic leadership in making structural changes successful. Second, there should be research on the role of leadership in making mid-sized organizations ready to cope with the bigger challenges related to external business environment to excel in bigger markets.