Leadership Style, Motivation, and Organizational Culture on the

Performance of Employees

LEADERSHIP STYLE AND ORGANIZATIONAL

CULTURE - KEY FACTORS IN EMPLOYEE
COMMITMENT IN PROFESSIONAL SERVICE
COMPANIES IN BULGARIA
Bela Mihneva

Abstract

This study aims at investigating whether leadership style and organizational culture are
key factors for employee commitment in the professional service companies in Bulgaria. To
reach the objective a number of research questions had to answered – what are the different
leadership styles and is there a most appropriate one for the companies for professional
service, what are the different types of organizational culture and is there a most appropriate
one for the professional service companies, and are leadership style and organizational
culture key factors for employee commitment.

Introduction

Employee commitment is of great importance, especially in a time of economic and

financial crisis. When a firm has employees who are committed this leads to higher
performance. This is because a person who is committed is more motivated to work and
adapts more easily to any new idea or change that the organization is going through (Cooper
& Cooper, 2003; Gennard & Judge, 2005). Employee commitment builds shareholder value.
It increases the commitment of clients and this leads to a better brand image and reputation.
This makes the company more attractive for investors (Ulrich & Smallwood, 2003; Sims,
2003). When the organization has committed employees this also leads to lower personnel
turnover. This is because the people feel a sense of belonging to the company and do not
want to leave (Ulrih & Smallwood, 2003; Sims, 2003).

There is no doubt that employee commitment is important, but the main question that
the management of each company asks its-self is how to create, develop and maintain high-
level of commitment among the employees. Many studies have been carried out in order to
find out the factors that influence the commitment of employees in a company.

The main objective of this study is to investigate whether leadership style and
organizational culture are key factors in employee commitment in Bulgarian professional
service companies. Another objective is to find the most appropriate leadership style and type
of organizational culture that can create, develop and maintain high employee commitment.

Leadership Styles

The role of leadership is to establish direction, align people and motivate and inspire
(Northouse, 2009). One of the main perspectives on leadership style is trait theory. It states
that for a person to be a leader he must possess certain types of characteristics. These traits
include intelligence, motivational skills, social skills, administrative skills, emotional control,
dealing with people, and communication (French, Rayner, Rees, & Rumbles, 2011; Goyal,
2010; Williams, 2011).

There are a number of versions of trait theory, such as : great man theory and
charismatic leadership theory. Great man theory, sometimes called heroic, proposes that a
leader is born and not made. According to this theory a leader cannot be trained. If he does
not possess certain traits and characteristics, he will never become a leader

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(Fairholm, 2011; Fairholm & Fairholm, 2008). Charismatic leadership theory states that
charismatic leaders appear in a time of crisis. They are also born with certain characteristics
and due to their charisma are able to make people emotionally involved in their cause.

Another concept of leadership is proposed by behavior theory. According to it, it is not

enough for a leader just to have certain types of characteristics; actions are important as well.
Three main type of leadership behavior have been identified: autocratic, democratic and
laissez-faire. The autocratic leader takes the decisions alone (Robbins & DeCenzo, 2005).
The democratic leader plays the role of a coach, training and improving the skills of the
group by providing feedback (Manning & Curtis, 2002). In the laissez-faire leadership style
the leader plays very little part. The group is left to function on its own and the leader only
intervenes when, for example, asked for help or additional information. Otherwise, the
employees have the freedom to be creative and make decisions on their own (Manning &
Curtis, 2002).

Some studies propose another distinction: transactional and transformational leadership.

Transactional leaders are job-oriented, whereas transformational leadership are people-
oriented (Martin, 2006).

In the words of Buchanan and Huczynski (2010) "leaders must adjust their style in a
manner consistent with aspects of the context" (p.160). This idea gave rise to Fiedler's
contingency theory, defining leadership as contingent on the style of the leader and the way
that the employees would respond (Mullins, 2007; Martin & Fellenz, 2010; Betrocci &
Bertocci, 2009).

Organizational Culture

Schein (2010, p.18) defines organizational culture as: ‘a pattern of shared basic
assumptions that the group learned as it solved its problems of external adaptation and
internal integration, that has worked well enough to be consider valid, and, therefore, to be
taught to new members as the correct way to perceive, think and feel in relation to those
problems’. Another definition of organizational culture is provided by French (2010, p.39),
who states that it "represents the collective values, beliefs and principles of organizational
members and is a product of such factors as history, product market, technology, strategy,
type of employees, management style, national cultures, and so on". As can be seen from
these definitions, organizational culture is complex and is composed of many elements. Also,
it depends on a number of factors.

Different models of types of organizational culture have been created over the years.
Well-known models have been proposed Charles Handy (see Senior & Swailes, 2010),
Cameron and Quinn (see O’Connor & Netting, 2009; Hellriegel & Slocum, 2007); Hofstede,
Hofstede, & Minkov (2010), Deal and Kennedy (see Redman & Wilkinson, 2009) and other
authors.

The companies for professional service have a very complex structure. They have a
hierarchy, which is well defined - managing partners, followed by directors, senior managers,
managers, advisors, and so on. A lot of rules and regulations exist. Also, the companies are
very diverse. With globalization and the fact that usually the professional service companies
(the Big Four) are divided in clusters, the nationalities of the employees are many. This
means that every employee brings with him part of the national culture. That is why the
appropriate organizational culture for the professional service companies is a mixture. From
one side it is hierarchical because there is a structure which is clear and the management is
outlined. There are rules and procedures that need to be followed. Major decisions are taken
by the leaders and if the employees

---------------------------------------------------------------------------------------------------- p. 24

need to make a decision, it first has to be approved. These companies also show traits from
adhocracy culture. Innovation and entrepreneurship are tolerated and risk taking is part of the
everyday work, since the financial market is a risky field. The professional service companies
are also people-oriented as they constantly develop the skills and knowledge of their
employees. Teamwork, tolerance, collaboration, and communication style are also part of the
culture (Kennedy, 2010).

Leadership Style and Organizational Culture as Key Factors for Employee

Commitment

There have been many definitions that appeared over the years of employee
commitment. Following are some of the most commonly used.

Employee commitment, or organizational commitment, as it is sometimes called, is

defined as the degree to which an employee identifies and gets involved with a certain
organization. Also, it is believed that this is an ongoing process, in which the employees
demonstrate their concern and willingness for the long-term success of the company (Stroh &
Neale, 2002). Commitment is sometimes defined as a psychological bond of the employee
with the organization because of shared beliefs and values. As that psychological bond
happens, then the goals of the individual become the same as the ones of the company.

Commitment is characterized by a strong belief in and acceptance of the organization’s goals

and values, a willingness to exert considerable effort on behalf of the organization, and a
strong desire to maintain membership in the organization(Connors, 2011). Some studies have
shown that employee commitment is composed of two factors: cognitive identity and
discretionary energy. The first factor means that the employees feel connected and part of the
organization. They understand and share the values and beliefs of the company and accept its
practices. They want to be part of it and are proud of that fact. The second factor means that
the people working in the company give their maximum effort to reach the goals of the
company. They are even ready to work extra time for the sake and long-term success of the
organization (Ulrih & Smallwood, 2003).

Theoretical Analyses of Employee Commitment and Its Correlates

There are many theoretical reasons for which employee commitment can be viewed as
important for an organization.

First of all, employee commitment can be expected to boost performance. This is because
when the employees are committed they are more satisfied, produce more than is asked from
them and are ready to adapt to any change made in the company. With job satisfaction comes
the will to put more effort in what you do. That is why for the human resource departments a
top priority is to develop employee commitment (Cooper & Cooper, 2003; Gennard & Judge,
2005). Another reason for which it is important to have committed employees is the fact that
this has a social outcome. The company becomes a better and more preferred place to work
as the people are more friendly, helpful, cooperative and collaborative. The third reason is the
fact that employee commitment leads to customer commitment. This is due to the fact that
when an employee believes in the company and is loyal to it, he can transfer that feeling to
the customer. If a customer communicates with a committed employee, then the client will be
satisfied of the service and be convinced that this is the right company. In such a way, the
customer commitment is increased. Another motive for the company to develop employee
commitment is the fact that it builds shareholder value. This is because it reduces costs as
people are more motivated and produce higher volume with the same number of workers.
The fifth reason

---------------------------------------------------------------------------------------------------- p. 25

is the fact that commitment leads to employee retention and less turnover in the organization.
When employees become committed to the company they work for they feel a kind of
belonging and do not want to leave. For the management of the firm this is good for a number
of reasons. The company is going to have highly trained and professional employees who are
already aware with the processes and procedures, as well as all the customers and contractors.
Also, little turnover in a company saves costs, especially for training and development as
there will be no need of constant training of newcomers who have to be introduced to the way
things are done in the organization. This not only saves money, but also time, as there will be
no need to spend time on searching for new employees, making interviews and selecting the
right candidates (Ulrih & Smallwood, 2003; Sims, 2003).

A number of analysts claim that one of the main reasons for loosing talents in a
company is the employee/manager relationship. No matter how well paid a person is, if the
leadership style of the manager is not appropriate and the relationship between the two is bad,
the employee will leave the company. Also, if the management and leadership are poor, this
will also encourage employees to seek other opportunities as the leader would have failed to
develop commitment (Kreisman, 2002).
An effective leadership style can create employee commitment. The leader is a person who
inspires and motivates the people to give their maximum. So, if the leadership style is
appropriate, if the manager communicates with honesty and sets the right direction, then the
employees will feel engaged and part of the organization (Johnson, 2004; Verma, 2011).

When an organization has a strong and identifiable culture this leads to employee
commitment. When an employee understands the culture of the organization and has clearly
set values to follow, this makes him have the feeling of belonging (Fayolle, Kyro, & Ulijn,
2005; Gill, 2006). The values of the employees start to shape as the values of the company
and they become more devoted and inspired to work and contribute to the long-term
profitability and success of the firm. The organizational culture of a company creates the
feeling of unity and being part of a group as the values and beliefs are the same for everyone.
This is why when the organizational culture is strong, employees become so attached to the
group and company that they do not consider leaving. This is how organizational culture
develops employee commitment (Sosik, 2004).

In conclusion, both leadership style and organizational culture are factors in the development
and preservation of employee commitment. The leader is the person who inspires the
employees and makes them attracted and captivated by the mission of the company. On the
other hand, a strong organizational culture is what makes the employee feel part of a group
and share the same values and beliefs with the rest of the group. Without these two factors,
employee commitment will not be possible. And without employee commitment a company
cannot be successful in the long-term as it will have high turnover and employees who are not
motivated to reveal their full potential.

Empirical Studies on Employee Commitment and Its Correlates

Taylor, Levy, Boyacigiller and Beechler (2008) studied employee commitment in

multinational corporations and the impact of organizational culture and management. The
study involved 1,664 employees working in 39 companies around the globe from different
industries such as financial and other services, telecommunication, it sector, pharmaceuticals
and others. The data was gathered through a questionnaire. The study found that culture and
human resource management are the main factors that influence employee commitment.
This was because organizational culture gave a sense

---------------------------------------------------------------------------------------------------- p. 26

of belonging and made the employees feel part of something big. Human resource
management practices made it easier for employees to understand the company's culture.
After a more careful analysis of the data it was discovered that the role of the management
was even more powerful when it came to employee commitment. The management
orientation was what gave the employees a direction to look at. If the management had a
global orientation, it gave the employees an understanding of the mission. It was discovered
that the employees understood and accepted the culture and HRM practices through the
management orientation (Taylor, Levy, Boyacigiller, & Beechler, 2008).

Lok (2003) studied the effect of organizational culture and leadership style on job satisfaction
and organizational commitment. This study was a cross-national comparison, attempting to
show whether there was a difference between leadership style and organizational culture in
different countries. The sample consisted of 337 employees: 219 from Hong Kong and 118
from Australia. The industries from which the managers came were telecommunications,
banking sector, professional service companies and retail. The data were gathered through a
questionnaire. They revealed a number of findings:

 Both leadership style and organizational culture affect employee commitment;

 In Australia, employee commitment is higher when there is a consideration leadership
style and innovative and supportive culture;
 Surprisingly, the research found no correlation between bureaucratic leadership style,
organizational culture and employee commitment in Hong Kong.

Another cross-cultural study of leadership style and employee commitment was carried
out in by Huang, Chiu and Liu (2011). The sample consisted of 137 employees from the
professional service companies in the United States and 247 employees from such companies
in Taiwan. The data were gathered through a questionnaire.

The results showed that the American employees from the Big-Four companies prefer to have
a supportive leadership style. This type of style produced a high correlation with the
commitment dimensions of sense of belonging, promising future, and loyalty. On the other
hand, the Taiwanese employees from the Big-Four prefer to have supportive and participative
leadership style. This leadership style yielded a high correlation with the commitment
dimensions of dedication, policy recognition and loyalty (Huang, Chiu, & Liu, 2011).

Broderick (2012) studied 100 companies for professional services and found that
organizational culture is essential for employees to be committed. It was discovered that there
are a number of values that all firms for professional service share. These are: integrity/ethics,
collaboration/teamwork, dedication to clients, professionalism/excellence, respect,
innovation/creativity, social responsibility, accountability, entrepreneurship and diversity.If
the cultures of the organizations have these values, then the employees will be motivated to
give their best and be committed to the firm (Broderick, 2012).

The Boston College Centre for Work and Family (2003) found another characteristic of
organizational culture that contributes for employee commitment: flexibility. The Chartered
Institute for Personnel and Development (2006) produced found that companies that have a
more friendly leadership style and organizational culture have more committed employees
opposed to organizations where the culture and style are more tense. A friendly culture is one
where positive emotions are used in order to deliver information and the leader acts more like
a mentor and friend rather than a boss. In a tense culture, everyone works under a lot of stress
and pressure and the leader uses negative emotions in order to motivate the employees.

---------------------------------------------------------------------------------------------------- p. 27

Method

A questionnaire was designed for the purpose of this study. It contained questions with
multiple-choice answers. It was distributed to 114 company employees from the audit, tax
and advisory departments of one of the biggest professional service companies in Bulgaria.

The questionnaire was divided in three parts: Leadership style, Organizational culture
and Commitment. Each part consisted of seven questions, which were meant to distinguish
the style and organizational culture of the company and whether there is correlation between
these two and employee commitment. All questions included five-point Likert scales,
ranging from "strongly agree" to "strongly disagree".

The questions about leadership style ask the respondents if they agree with the
following statements:

1. Your manager allows you to participate in the decision making process.

2: Your manager wants you to follow a strict set of procedures.

3: Your manager is part of the team.

4: Your manager is reachable (you can freely go to him/her and discuss an idea or a problem
that you have).

5: Your manager is concerned with your personal problems and well-being.

6: Your manager encourages you to be creative in your work.

7: Your manager encourages you to constantly develop your skills.

The questions about organizational culture ask the respondents if they agree with the
following statements:

1: There are strict rules and regulations in your organization that you have to follow.

2: Your company sets clear goals for you.

3: You are allowed to express your opinion on an idea.

4: You are given the chance to develop in the company.

5: You are encouraged to work in teams.

6: Your organization recognizes the success of teams.

7: Your organization has a strict hierarchy.

The questions about commitment ask the respondents if they agree with the following
statements:

1: You understand the vision and mission of the company.

2: You feel as a part of the company.

3: You are satisfied with the management of the company.

4: Your company and the manager motivate you to show your full potential.

5: You enjoy starting a new day at work.

6: You feel encouraged to make a difference in your organization.

7: You are considering leaving the company in the next 3-5 years.

Results

All questions from the leadership section of the questionnaire, except question 2 (Your
manager wants you to follow a strict set of procedures), correlate with each other. They form
a single dimension that can be called "leadership style". Question two - about strict rules and
procedures - does not correlate highly with any other question from that part of the
questionnaire.

Questions 1 (There are strict rules and regulations in your organization that you have to
follow) one and 7 (Your organization has a strict hierarchy) in the organizational culture
section correlate highly with one another but not with the other five. They form a single
dimension: "organizational strictness-hierarchy". The other five questions are also highly
correlated and form another dimension: "organizational attitude toward individuals".

---------------------------------------------------------------------------------------------------- p. 28

All of the seven questions on commitment are highly correlated with each other and
form a fourth dimension: "commitment".

Table 1 provides correlations between the four dimensions. As we see, commitment

correlates very strongly with leadership style (0.896) and organizational attitude toward
individuals (0.909). Also, there is a strong correlation between leadership style and
organizational attitude toward individual (0.937). There is no correlation between
commitment and organizational strictness-hierarchy (-0.023).

Table 1: Correlations Between the Four Dimensions

Organizational Organizational
Leadership attitude toward strictness-
Commitment Style individual hierarchy
Commitment Pearson 1 ,896** ,909** -,023
Correlation
Sig. (2-tailed) ,000 ,000 ,810
N 114 114 114 114
Leadership Pearson ,896** 1 ,937** ,134
Style Correlation
Sig. (2-tailed) ,000 ,000 ,156
N 114 114 114 114
Organizational Pearson ,909** ,937** 1 ,000
attitude toward Correlation
individual Sig. (2-tailed) ,000 ,000 1,000
N 114 114 114 114
Organizational Pearson -,023 ,134 ,000 1
strictness- Correlation
hierarchy Sig. (2-tailed) ,810 ,156 1,000
N 114 114 114 114
**. Correlation is significant at the 0.01 level (2-tailed).

Discussion

The very high correlation between leadership style, organizational culture, and
commitment, means that the first two factors are essential for having committed employees.
These results are not surprising as they have analogs in the literature. Taylor, Levy,
Boycigiller and Beechler (2008) indicated that leadership style and culture were two of the
three factors that influence commitment, HR practices being the third. Lok (2004) also found
no correlation between bureaucratic and hierarchical leadership style, and culture and
commitment, at professional service companies. Because the leader is a person who inspires
and motivates people to show their full potential, an effective leadership style can create
commitment (Verma, 2011; Johnson, 2004). Further, if the employees understand the
culture of the company, and its vision and the mission, they will be committed (Fayolle,
Kyro, & Ulijn, 2005; Gill, 2006).

Based on this study, the following recommendations can be made to companies in the
professional service sector who wish to have committed employees:

 The leadership style in such a company should be democratic, supportive and

participative;
 The management of the company should be part of the team, easily reachable and
concerned with the personal problems and well-being of the employees;
 The leader should encourage the employees to constantly develop their skills;

---------------------------------------------------------------------------------------------------- p. 29

 The type of organizational culture of the company should be hierarchical, people

oriented, democratic, innovative, supportive, flexible, coaching, and friendly;
 Even if there is a hierarchy and strict rules and regulations, the culture of the firm
should encourage the employees to express their opinion and ideas;
 The organizational culture should support training and development;
 The organizational culture should motivate employees through recognition and
rewards, not through punishment and stress;
 In order to be committed, the employees should fully understand the culture of the
organization, its vision, mission and values. Management should make sure that
everybody is well informed about these issues.

The present study has its limitations. Only one large company for professional service
in Bulgaria took part in it. Still, although there are no data from other companies, it is likely
that the associations found in the present study are valid also in other contexts.

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Authentic leadership and organizational culture as drivers of employees’ job satisfaction

Liderazgo auténtico y cultura organizacional como impulsores de la satisfacción laboral de
los trabajadores
Garazi Azanzaa, Juan Antonio Morianob, Fernando Molerob
a Universidad de Deusto, Spain
b UNED, Spain
Abstract

The promotion of a flexibility-oriented organizational culture, based on support and

innovation, may provide a great value in today's competitive economy. This type of
organizational culture may be a breeding ground for authentic leadership, which, in turn, has
positive effects on employees' attitudes. This study examines how flexibility-oriented
organizational cultures facilitate positive outcomes at the employee level through its impact
on authentic leadership. Multiple regression analysis was used to analyze the data from 571
employees belonging to several Spanish private organizations. The results show that
authentic leadership partially mediates the positive relationship between flexibility-oriented
organizational cultures and employees' job satisfaction. These findings advance theory on the
integration of organizational culture in authentic leadership research and provide guidelines
for improving employees' job satisfaction.

Palabras clave
Liderazgo auténtico, Cultura organizacional, Satisfacción laboral
Keywords
Authentic leadership, Organizational culture, Job satisfaction

Nowadays companies operate in a very competitive global environment, punctuated by the

financial crisis. Given the rapid and substantial changes occurring in the economic
environment, organizations have to adapt to the market and work to become and remain
competitive. While market forces, competitive positioning, strategy, and technology are
evidently important, highly successful companies have capitalized on the value that resides in
developing and managing a unique organizational culture. This culture can be created by the
founder, can emerge over time as an organization faces challenges and obstacles, or be
developed by the management to improve their company's performance (Cameron & Quinn,
2006).

In this context, people are more and more interested in working in companies with a flexible
organizational culture, in which it has been found that employees show higher levels of job
satisfaction (e.g., Lund, 2003; McKinnon, Harrison, Chow, & Wu, 2003; Silverthorne, 2004).
Furthermore, flexibility-oriented organizational cultures, by focusing on the support and
development of employees and the promotion of innovation, may provide a competitive
advantage to face the economic crisis. However, this flexible perspective is a challenge for
companies that hold a traditional culture, commonly based on control, rigid structures, and
hierarchy. Therefore, analyzing the leadership style that could grow in flexibility-oriented
cultures and have a positive impact on employees will provide some guidelines for the
companies to improve their efforts towards innovation and employee development. Thus, in
this study, flexibility-oriented culture is presented as a breeding ground for authentic
leadership (Avolio & Gardner, 2005; Avolio, Gardner, Walumbwa, Luthans, & May, 2004;
Gardner, Avolio, Luthans, May, & Walumbwa, 2005; Luthans & Avolio, 2003), a positive
form of leadership that has been found to be related to follower positive outcomes (e.g.,
Moriano, Molero, & Lévy-Mangin, 2011; Peterson, Walumbwa, Avolio, & Hannah, 2012;
Wong & Laschinger, 2012).

The aim of this article is twofold. First, we examine the relationship between organizational
culture and authentic leadership, which has not been previously examined in the authentic
leadership literature. Second, we analyze the mediating role of authentic leadership in the
relationship between organizational culture and job satisfaction.

Organizational culture

Organizational culture is defined as "the set of key values, assumptions, understandings, and
norms that is shared by members of an organization and taught to new members as correct"
(Daft, 2005, p. 422). Organizational culture has been associated with job satisfaction and
employee retention (Macintosh & Doherty, 2010; Park & Kim, 2009), leadership behavior
(Tsai, 2011), and organizational effectiveness (Gregory, Harris, Armenakis, & Shook, 2009).
Given these relationships, organizational culture appears to permeate every facet of the
organization.

In this study, organizational culture is considered on the basis of Quinn and Rohrbaugh's
(1983) competing values model. This model consists of two dimensions with contrasting
poles: internal vs. external orientation and flexibility vs. control. The first dimension reflects
the organization's point of view. The focus can be internally directed, when the central issue
of the organization is the organization itself, its processes or its people, or, on the other hand,
externally directed, when the central issue is the relation of the organization with the market.
The second dimension measures the flexibility, the tendency towards decentralization and
differentiation, and on the opposite pole the control, i.e., stability and order as the central
issues. The combination of both dimensions creates four organizational culture orientations:
support, innovation, rules and goal orientation (Van Muijen et al., 1999).

The flexibility dimension is particularly relevant to the discussion of culture and its effects on
employees' well-being and leadership processes. In fact, organizational development
interventions are designed to create flexible organizations, empower line employees, and
increase the quality of work life (Bennis, 1969; Burke, 1994). Thus, this study focuses on the
flexibility dimension of organizational culture described by Quinn and Rohrbaugh (1983).

Following this model, flexibility-oriented cultures encompass innovation orientation,

characterized by openness to new ideas, and support orientation, characterized by personal
confidence and support for development (Van Muijen et al., 1999). These cultures are
characterized by spontaneity, change, openness, and responsiveness and are based on
adaptability and readiness to achieve growth, innovation, and creativity (Henri, 2006).

Authentic leadership

As Schein (1985) pointed out, organizational culture provides a system of expectancies that
sets norms and a standard of behavior for employees, providing a reason for leadership
behavior. Thus, a relationship between authentic leadership and organizational cultures that
are in line with authentic leadership may be expected.

Authentic leadership is defined as "a process that draws from both positive psychological
capacities and a highly developed organizational context, which results in both greater self-
awareness and self-regulated positive behaviors on the part of leaders and associates,
fostering positive self-development" (Luthans & Avolio, 2003, p. 243). Thus, an authentic
leader shows hope, trust, positive emotions, optimism, relational transparency, and a moral
and ethical orientation towards the future (Avolio et al., 2004). Walumbwa, Avolio, Gardner,
Wernsing, and Peterson (2008) identified and validated four components to describe
authentic leadership: self-awareness, which refers to understanding not only their own
strengths and limitations, but how they affect others; balanced processing, which involves
analyzing all relevant information objectively before coming to a decision; relational
transparency, which refers to openly sharing the authentic self, their true thoughts and
feelings to followers; and internalized moral perspective, which refers to self-regulation
guided by internal moral standards and values.
Previous studies have examined the relationship between authentic leadership and various
organizational outcomes, finding that authentic leadership was positively related to
employees' job performance (Peterson et al., 2012) and job satisfaction (Bamford, Wong, &
Laschinger, 2012), followers' commitment (Leroy, Palanski, & Simons, 2012), work
engagement (Walumbwa, Wang, Wang, Schaubroeck, & Avolio, 2010), employees'
organizational citizenship behavior (Edú, Moriano, Molero, & Topa, 2012), and employees'
extra effort, (Moriano et al., 2011), among others.

The authentic leadership model by Luthans and Avolio (2003) included the positive
psychological capacities and a positive organizational context as antecedents of the authentic
leadership. Regarding the context in which authentic leadership is developed, the authors
highlighted the importance of organizational context, including organizational vision,
strategy, and culture as antecedents of authentic leadership development and characterizing
this organizational culture as an authentic, mature, and highly developed culture which would
motivate and support optimal leadership development (Luthans & Avolio, 2003). As far as
we know, however, the influence of organizational culture on authentic leadership remains
unexplored.

Regarding the relationship between flexibility-oriented cultures and authentic leadership,

through honest and transparent relations with employees, the internal characteristics of
authentic leaders that are supposed to stimulate employees' creativity and innovativeness may
be perceived by others. Thus, we suggest that in a highly innovative organizational culture we
are likely to see authentic leaders who foster innovative behavior on followers. Moreover,
support-oriented cultures value and respect participation, collaboration, egalitarianism, and
interpersonal relationships (Maier, 1999). Those values may be shared among employees
through authentic leadership and the relational transparency of the authentic leader may serve
as a catalyst to foster the support and positive development of employees.

Therefore, analyzing organizational cultures focused on innovation and support and their
relationship with authentic leadership and their positive effects on employees can provide the
key for today's human resources management. Hence, the following hypothesis is proposed:

H1: Flexibility-oriented cultures will be positively related to authentic leadership.

Job satisfaction

For organizations and managers, the interest in satisfaction comes from its relationship with
work-related behaviors and job performance (Judge, Thoresen, Bono, & Patton, 2001;
Riketta, 2008). Job satisfaction is defined as "the pleasurable emotional state resulting from
the perception of one's job as fulfilling or allowing the fulfillment of one's important job
values" (Locke, 1976, p. 1342).

Regarding organizational culture, the effect that different types of organizational culture or
cultural dimensions have on job satisfaction has been previously examined. For instance,
Lund (2003), based on Cameron and Quinn's (1999) typology of cultures, identified a
positive relationship between flexibility and internally oriented cultures and job satisfaction
and a negative relationship between control and externally oriented cultures. Similarly,
Silverthorne (2004) found that job satisfaction is more likely when culture is supportive, then
when it is innovative and finally when it is bureaucratic. In the same way, McKinnon et al.
(2003) suggested that respect for people, innovation, and stability had a positive effect on job
satisfaction.

Despite these studies, the relationship between organizational culture and job satisfaction is
still unclear and there is a lack of empirical evidence to suggest a strong link between these
variables. Nevertheless, we suggest that, in line with previous research, certain cultural
orientations, such as flexibility orientation, which includes innovation and support, may
predict job satisfaction through its impact on authentic leadership. Thus, the following
hypothesis is proposed:

H2: Flexibility-oriented cultures will be positively related to job satisfaction.

Among the diverse outcome variables of leadership, job satisfaction has been widely related
to authentic leadership in scientific literature. For example, in a study conducted in 11
multinationals Walumbwa et al. (2008) found that followers' perception of authentic
leadership of their supervisors was positively related to followers' job satisfaction. More
recently, Giallonardo, Wong, and Iwasiw (2010) examined this relationship in a sample of
170 graduate nurses finding that nurses paired with leaders perceived as authentic, feel more
engaged and are more satisfied. Similarly, a positive relationship between authentic
leadership and job satisfaction was found by Wong and Laschinger (2012) in a sample of 280
nurses. Consequently, the following hypothesis is proposed:

H3: Authentic leadership will be positively related to employees' satisfaction.

The ability to understand and work within an organizational culture has been considered a
condition for leadership effectiveness (Hennessey, 1998). Leaders must deeply understand
the organizational culture to communicate and implement new visions and inspire follower
commitment to the vision (Schein, 1990). Leaders facilitate the accomplishment of goals that
otherwise may not have been attempted and encourage the need for change (Rousseau, 1996;
Schein, 1985; Trice & Beyer, 1993) and, therefore, they may be the key to foster the
development of certain types of culture through their impact on followers' positive attitudes.

A flexibility-oriented culture may be found in the positive organizational context defined by

Luthans and Avolio (2003) as the framework in which authentic leadership development
occurs. In this context, authentic leaders may have the ability to understand and share the
values of a flexibility-oriented culture, specifically those aspects related to follower
development and the promotion of new ideas through balanced processing. Thus, an authentic
leader may emerge in flexibility-oriented cultures due to the shared values of the organization
and the leader and an authentic leader would, in turn, facilitate the accomplishment of the
cultural values through his/her impact on employees' job satisfaction. Therefore, we suggest
that flexibility-oriented culture has a positive, indirect effect on job satisfaction through
authentic leadership.

H4: Authentic leadership will mediate the relationship between flexibility-oriented

organizational culture and employees' job satisfaction.

Method

Sample
The sample consisted of 571 employees from 114 Spanish private companies belonging to
different sectors: industry (20%), trade (17.9%), IT (9.5%), scientific, and technical activities
(8.8%), health (7.9%) and administration (6.2%), among others. The companies were small
(60.8%), medium (26.1%), and large (13.1%). In this sample, 53.8% of the participants were
female, the average age was 35.62 years (SD = 8.61), and the average seniority was 7.85
years (SD = 7.32); 41.7% of participants had a college degree and 21.9% were graduated
from vocational school.

Measures

Organizational culture. We used the Spanish version (González-Romá, Tomás, & Ferreres,
1995) of the FOCUS 93 questionnaire (Van Muijen et al., 1999), which assesses how
frequent certain situations in your workplace are. Flexibility-oriented culture was measured
with 4 items from the support scale (e.g., "How often do management practices allow
freedom in work?", α = .80) and 9 items from the innovation scale (e.g., "How often does
your organization search for new markets for existing products?", α = .82). A six-point Likert
scale from 1 (never/nobody) to 6 (always/everyone) was employed. The alpha coefficient for
this study was .85.

Authentic leadership. This variable was measured using the 13-item Spanish adaptation
(Moriano et al., 2011) of the Authentic Leadership Questionnaire (ALQ) developed by
Walumbwa et al. (2008), assessing relational transparency, internalized moral perspective,
balanced processing, and self-awareness. A sample item is "My leader says exactly what he
or she means". A seven-point Likert scale from 1 (never) to 7 (always) was employed. The
alpha coefficient for the ALQ in this study was .91.

Job satisfaction. A seven-item scale dealing with several aspects of employees' job
satisfaction (e.g., co-workers, work conditions, and salary) was used. A version of this scale
was used previously in other studies showing a good reliability (Molero, Cuadrado, Navas, &
Morales, 2007). A sample item is "I am satisfied with my salary". A seven-point Likert scale
from 1 (strongly dissatisfied) to 7 (strongly satisfied) was employed. The alpha coefficient for
this scale in the current study was .87.

Socio-demographic data. The following socio-demographic data were collected: age, gender
(coded as 1 = male and 2 = female), educational level (coded as 1 = primary education, 2 =
secondary education, 3 = vocational training, 4 = graduate degree), organizational size (coded
from 1 = micro to 4 = large, depending on the number of employees), seniority, and years
working with the same leader.

Procedure

Employees belonging to working groups with the same leader were asked to complete a
questionnaire. The number of participants per work team ranged between 3 and 6 (not
including the manager or supervisor) and the mean was 4.97 employees per work team (SD =
0.36). Subjects participated on a voluntary basis and were assured confidentiality. IBM
Statistics SPSS (version 21) was used to analyze our data.

Results
Since we collected all data in a cross-sectional survey, Harman's single factor test (Harman,
1967) was carried out to address the issue of common method variance (Podsakoff,
MacKenzie, Lee, & Podsakoff, 2003). While one factor contributing to more than 50% of
total variance is considered an indication of common method bias, the first factor in our
analysis accounts for only 35% of the total variance. This suggests that common method bias
is not likely to be a serious problem with this data.

The descriptive results (Table 1) revealed medium levels of authentic leadership perceived by
the employees in their leaders (M = 4.25, SD = 1.20). The correlations between the variables
of the study were calculated, obtaining significant and positive relationships between
flexibility-oriented culture and authentic leadership (r = .59, p < .01) and job satisfaction (r =
.53, p < .01), and between authentic leadership and job satisfaction (r = .55, p < .01). Few
relationships were found between the demographics and the study variables. Business size
was found to be related to authentic leadership (r = .10, p < .05) and job satisfaction (r = .15,
p < .01). Although the variables in our study were highly correlated, statistical checks suggest
multicollinearity is not a significant concern (VIF < 2.5, tolerance > .40; cf., Allison, 1999).

In the first hypothesis, flexibility-oriented culture was suggested to be positively related to

employees' perceptions of their leader's authentic leadership. Hierarchical multiple regression
revealed that 37% of the variance in authentic leadership was explained by flexibility-
oriented culture (R2 = .37, F = 56.20, p < .01).

Regarding job satisfaction, authentic leadership and flexibility-oriented culture were posited
to positively predict employees' job satisfaction. As shown in Table 2, 32% of the variance in
job satisfaction was explained by flexibility-oriented culture (R2 = .32, F = 45.87, p < .01).
When authentic leadership was entered into the regression, flexibility-oriented culture and
authentic leadership accounted for 39% of the variance in job satisfaction (R2 = .39, F =
53.11, p < .01). Furthermore, flexibility-oriented culture and authentic leadership were both
significant predictors of job satisfaction (β = 0.35, t = 8.49, p < .01 and β = 0.33, t = 8.97, p <
.01), supporting Hypotheses 2 and 3.

In the fourth hypothesis, it was proposed that authentic leadership mediates the relationship
between flexibility-oriented cultures and job satisfaction. According to Baron and Kenny
(1986), four conditions are required to establish mediation: (1) the independent and mediating
variables must be significantly related, (2) the independent and dependent variables must be
significantly related, (3) the mediator and dependent variable must be significantly related,
and (4) the relationship between the independent variable and dependent variable should be
non-significant or weaker when the mediator is added.
In the present study, flexibility-oriented culture was positively related to authentic leadership
(β = 0.60, p < .01); thus, condition (1) and Hypothesis 1 were supported. Flexibility-oriented
culture was positively and significantly related to job satisfaction (β = 0.55, p < .01) and thus,
supported condition (2) for mediation and Hypothesis 2. Authentic leadership was positively
related to job satisfaction (ß = .33, p < .01) and thus, supported condition (3) and Hypothesis
3. Furthermore, results show that after authentic leadership was taken into account the effects
of flexibility-oriented culture (ß = .35, p < .01) became weaker, albeit still significant, which
suggests partial mediation (Table 2). To further assess the significance of the mediation, a
Sobel test (1982) was applied (Sobel test: z = 8.99, p < .001, MacKinnon et al., 2002).
Results show that the mediating effect of authentic leadership for flexibility-oriented culture
and job satisfaction was significant. Thus, Hypothesis 4 was partially supported.

Discussion

The aim of this study was to examine how flexibility orientation in organizational cultures
facilitates positive outcomes at the employee level through its impact on authentic leadership.
The findings confirm that flexibility-oriented cultures exert their positive effects on
employees' job satisfaction through partially authentic leadership.

Organizational culture literature has underlined the role of leaders in maintaining particular
types of culture (Schein, 1985) and fostering organizational change through the knowledge of
organizational culture (Brooks, 1996). In addition, the literature on leadership points out that
understanding and working within a culture fosters leadership effectiveness (Block, 2003).
Specifically, authentic leadership flows through to the followers and finally becomes part of
the fabric of the organizational culture (May, Chan, Hodges, & Avolio, 2003), and it may be
the key to foster job satisfaction in flexibility-oriented cultures.

Our first hypothesis examined the relationship between organizational culture and authentic
leadership by finding that employees' reported levels of flexibility-oriented culture were
related to the perception of their leader's authentic leadership. Furthermore, flexibility-
oriented culture was related to job satisfaction, supporting our second hypothesis. Regarding
authentic leadership, those employees who perceived their leaders to be more authentic also
reported higher levels of job satisfaction, supporting our third hypothesis. These findings
suggest that the promotion of a flexibility-oriented culture in which leaders provide a context
for cooperation and support could provide a great value due to its relationship with authentic
leadership, which, in turn, produces positive effects on followers and organizations, such as
job satisfaction.

Supporting our fourth hypothesis, a mediating effect of authentic leadership on the

relationship between flexibility-oriented organizational culture and satisfaction was found.
These findings could mean that the effects of certain types of cultures are expressed through
the leadership that embodies the values of a culture. An authentic leader fosters the effects of
flexibility-oriented culture on employees due to the shared values of the organization and the
leader. This proposition has implications for organizational culture and authentic leadership
development: hiring or training authentic leaders would enhance employees' job satisfaction
in flexibility-oriented organizations.

Regarding the control variables, employees from large organizations reported higher levels of
job satisfaction. These results are in line with the statements made by Goldschmidt and
Chung (2001), who proposed that employees in large organizations tend to be more satisfied
with the facets of pay and promotion.

The results support the mediating role of authentic leadership in the relationship between
flexibility-oriented culture and job satisfaction, which has been largely related to job
performance (Judge et al., 2001; Riketta, 2008). Thus, this study contributes to a theoretical
extension of the research on leadership through the integration of organizational culture in the
research on authentic leadership, which has not been sufficiently explored in the past, and
serves as a stimulus for future research.

As a limitation of this study, the exclusive use of self-report measures to analyze the variables
should be noted. Self-reported data contain several potential sources of bias that should be
noted as limitations, such as social desirability, and inflation of the observed relationship
between the measured constructs (Podsakoff et al., 2003). It is essential for the development
of research in this area to include objective measures that affect organizations. Therefore,
future research should analyze how these relationships have an impact on business objectives
and indicators of job performance, absenteeism and sales, among others. Another limitation
of the present study is that job satisfaction was the only outcome variable examined. It would
be interesting to analyze other outcomes. Performance and unit effectiveness would be
particularly interesting to investigate in future studies in order to assess the effects of
flexibility-oriented culture and authentic leadership on employees and organizations.

Given our results and the highly competitive nature of today's economy, which highlights the
increasing value of human capital as a key element in organizational growth, this study
provides a framework for understanding the context in which authentic leadership occurs and
its effects on followers by offering guidelines for promoting employees' job satisfaction.

Conflicts of interest

The authors of this article declare no conflicts of interest.

Manuscript received: 11/03/2013

Revision received: 01/08/2013

Accepted: 01/08/2013

DOI: http://dx.doi.org/10.5093/tr2013a7

*Correspondence concerning this article should be sent to Garazi Azanza Martínez de Luco.

Avda. de las Universidades 24. Universidad de Deusto. 48007 Bilbao.

E-mail: Garazi.azanza@deusto.es

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Understanding the link between leadership style, employee

satisfaction, and absenteeism: a mixed methods design study in a
mental health care institution
Rachelle Elshout,1 Evelien Scherp,2 and Christina M van der Feltz-Cornelis3

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Abstract
Background

In service oriented industries, such as the health care sector, leadership styles have been
suggested to influence employee satisfaction as well as outcomes in terms of service delivery.
However, how this influence comes into effect has not been widely explored. Absenteeism
may be a factor in this association; however, no studies are available on this subject in the
mental health care setting, although this setting has been under a lot of strain lately to provide
their services at lower costs. This may have an impact on employers, employees, and the
delivery of services, and absenteeism due to illness of employees tends to already be rather
high in this particular industry. This study explores the association between leadership style,
absenteeism, and employee satisfaction in a stressful work environment, namely a post-
merger specialty mental health care institution (MHCI) in a country where MHCIs are under
governmental pressure to lower their costs (The Netherlands).

Methods

We used a mixed methods design with quantitative as well as qualitative research to explore
the association between leadership style, sickness absence rates, and employee satisfaction
levels in a specialty MHCI. In depth, semi-structured interviews were conducted with ten key
informants and triangulated with documented research and a contrast between four
departments provided by a factor analysis of the data from the employee satisfaction surveys
and sickness rates. Data was analyzed thematically by means of coding and subsequent
exploration of patterns. Data analysis was facilitated by qualitative analysis software.

Results

Quantitative analysis revealed sickness rates of 5.7% in 2010, which is slightly higher than
the 5.2% average national sickness rate in The Netherlands in 2010. A general pattern of
association between low employee satisfaction, high sickness rates, and transactional
leadership style in contrast to transformational leadership style was established. The
association could be described best by: (1) communication between the manager and
employees; (2) the application of sickness protocols by the managers; and (3) leadership style
of the manager.

Conclusion

We conclude that the transformational leadership style is best suited for attaining employee
satisfaction, for adequate handling of sickness protocols, and for lower absenteeism, in a
post-merger specialty mental health setting.

Keywords: leadership style, transformational leadership, sickness rates, absenteeism, employee

satisfaction, qualitative research, specialty mental health care institution

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Background
Significance and aim of the study

A large part of the research that has been done concerning employee satisfaction considers
job factors such as colleagues, supervisors, training opportunities, and overall satisfaction
with the job. Another factor that is often not taken into account is organizational change.1
The study by Howard and Frink1 that addresses the relationship between organizational
restructuring and employee satisfaction shows that work turbulence has a negative influence
on employee satisfaction. While the satisfaction with growth opportunities and coworkers is
important for the motivation of the employees, the satisfaction with the supervisor influences
overall job satisfaction. This underscores the importance of the role of supervisors during
organizational change and turbulent situations at the workplace.

In recent years, the Dutch health care industry underwent major reform. The main drivers of
these changes had been the altering of government policies, reimbursement schemes, and
developments in public opinion.2–7 Moreover, the content of the work, ie, the delivery of
mental health care, has changed substantially.7 These changes are characterized by the
imposition of more administrative duties on the professionals. The reasons for these changes
include more healthcare provisions, a more active role of the client, and a shift in quality
demands. The latter involves more systematic visitation, registration, and continuing medical
education. The new reimbursement system, which is a result of transparency requirements,
also places additional bureaucratic weight on the shoulders of the professionals.8

In response to these developments, a large number of mental healthcare institutions (MHCI)

merged. In their merged form, the organization has easier access to capital.9 Additionally,
MHCIs had to start providing their health care as products, and the managerial influence of
people with backgrounds other than health care increased. As a result of the latter,
professionals felt a loss of control of their profession.10 Additionally, time management and
responsibility became central themes at these mental health institutions.11 Research by Van
Sambeek et al10 suggests that these developments require the professional to focus on
economical and bureaucratic values, both of which often conflict with their professional
values. Furthermore, GGz Nederland, the Dutch association of MHCIs, agreed with the
government on extensive cost reductions in the coming years,12 thus putting leaders as well
as employees of MHCIs under strain to be as productive as possible.

Therefore, we can presume that the Dutch MHCIs are indeed likely to be an example of
turbulent work environments at this time. This makes these institutions a conforming study
environment for investigating the influence of leadership on employee satisfaction and
absenteeism in a turbulent work place. In general, the aim of the regulatory and
organizational changes that occurred in the mental health care sector is the improvement of
the quality of the healthcare products offered. However, to what extent this goal is reached in
any specific MHCI is at the mercy of the performance of its employees. In turn, employee
performance is influenced by their commitment and satisfaction. These are the very same
factors that are under pressure due to the transitions of goals, roles, and knowledge. Finally,
leadership plays an important role in turbulent situations.13,14 Lane and Down14 suggest
that although the role of a leader was perceived to be driving the company’s performance,
this has changed to creating a process for sharing the wisdom of many different and
contrasting perspectives. This new leadership role can help employees deal with uncertainty
and a turbulent working environment.
The individual relationships between leadership style and the three factors (employee
satisfaction, absenteeism, and work turbulence) are already described by many researchers
and there are clear relationships between the three factors themselves. However, most studies
that investigated a combined relationship of these factors assumed a stable work
environment. Therefore, the present study will investigate the influence of leadership style on
employee satisfaction and absenteeism in a turbulent work environment, namely in a post-
merger Dutch MHCI that is under governmental strain for cost reduction. The aim of the
study is to explore employee satisfaction and sickness rates in association with the influence
of managerial leadership style in the MHCI.

Theoretical background

Absenteeism and employee satisfaction

Several studies show that downsizing or organizational restructuring can lead to decreased
job satisfaction, lowered organizational commitment, a higher turnover rate, or increased
absenteeism.15 One result of the study by Sagie16 is that organizational commitment and job
satisfaction are strongly related to the aggregated duration of voluntary absence of
employees. There was, however, no relationship with the duration of involuntary absence.
This means that employees who are strongly committed to the organization or highly satisfied
with their job show up more often at work than those with low commitment or low
satisfaction. Therefore, the relationship between work turbulence and job satisfaction and the
relationship between job satisfaction and employee absenteeism can be presumed.

Transactional and transformational leadership style

A person’s leadership style depends largely on their personality.17–25 However, other

factors have also been identified. When leadership is examined in an organizational setting,
these factors include the organizational structure of the company, its culture, the relevant
organizational layer, the means available to the leader, the product that is delivered, and the
profile of the employees. Additionally, economical and other external circumstances may
have an impact.26–28

It has been stated that the organizational performance and effectiveness of employees may
rest from the following three basic pillars: (1) organizational commitment, (2) job
satisfaction, and (3) leadership style.25,29–33 Therefore, leadership is both of pivotal
importance to organizational success as well as entwined in many internal and external
factors. However, the concept of leadership may be simplified using existing categorizations.
One of these is the distinction between transactional and transformational leaders.

According to Bass,34 the transactional leadership style is characterized by contingent reward.

Employing such a style, the leader gives rewards in exchange for effort and good
performance. The transformational leadership style is a more personal style involving
charisma, inspiration, intellectual stimulation, individualized consideration, and extensive
delegation.34–38 Therefore, the transformational leader motivates people to participate in the
process of change and encourages the foundation of a collective identity and efficacy. This
eventually leads to stronger feelings of self-worth and self-efficacy among employees. The
method through which these feelings are fostered is called empowerment; giving employees
authority, responsibility, and accountability for their tasks has a positive effect on their
commitment and work satisfaction.37,39–46 Hutchinson and Jackson note in their study that
while traditional characteristics of leaders, such as charisma, have always been viewed as
important, a new view has emerged that stresses the importance of transparency, humility,
and proximity of leaders.47 This new view is in line with the transformational leadership
style that emphasizes the importance of the employees. A recent study that focuses
specifically on nurses, discussed that relational leadership styles, such as the transformational
style, were associated with higher nurse job satisfaction, higher organizational commitment,
more staff satisfaction with work, role, work environment, and pay, and higher productivity
and effectiveness. In addition, nurses had a greater intention to stay in the organization when
the relational leadership style was employed. This is in contrast to the task-focused
leadership, such as the transactional style, which scored lower on all the mentioned effects.48
Laschinger et al show similar effects between leadership style and nurses’ satisfaction in their
empirical study in Canada.49 Note how the specific leadership style may in this case nurture
the other two pillars of organizational performance.

Considering the recent changes in the Dutch mental health care industry, it is worthwhile
noting that tensions may exist between the two types of leadership styles discussed earlier.
On the one hand, economic and bureaucratic values may pull leaders towards a more
industrial model or transactional style. On the other hand, working with employees who are
professional experts may invite a transformational style. More specifically, most studies
examining transformational and transactional leadership in a health care setting emphasize
the need for transformational leadership. Some studies explain that health care today is under
a lot of pressure, and that transformational leadership is better suited for such situations.50,51
Others identify positive effects of transformational leadership on the job satisfaction of
nurses,52 on an organizational level by a drop in personnel turnover,53,54 and by a decrease
in feelings of depersonalization experienced by nursing staff.55 Congruently, Cummings et
al56 performed an enquiry into leadership in the general health care sector, more precisely in
the nursing workforce and work environment, and concluded that “leadership focused on task
completion alone is not sufficient to achieve optimum outcomes. Efforts by organizations and
individuals to encourage and develop transformational and relational leadership are needed to
enhance nurse satisfaction, recruitment, retention, and healthy work environment.”

Leadership style as a direct influence on absenteeism

Since there is a close relationship between employee satisfaction and absenteeism, it can be
assumed there might be a relationship between leadership and absenteeism as well. This
relationship has been confirmed by Walumbwa,33 who found that certain leaders
demonstrate higher levels of job satisfaction and commitment, and thereby less withdrawal
intentions of employees. According to Zhu, Chew, and Spangler,44 specific human resource
management practices can have a positive effect on employee performance, motivation,
skills, abilities, and knowledge, thus reducing absenteeism. One of the key factors in creating
this effect is leadership style.

The study by Tharenou57 showed that leadership style can reduce absenteeism. If an
employee receives support from the supervisor, this can provide an environment in which the
employee is more likely to attend work.58 Receiving support from a supervisor can be linked
to both transactional and transformational leadership styles, depending on the nature of the
support. It would fit in the transactional leadership style because these managers control the
employees more and will tell them more specifically what to do. It would fit better in the
transformational leadership style, however, since these types of managers stimulate the
employees to find things out themselves, by still supporting them and guiding them towards
the right track. The results of Van Dierendonck58 highly recommend a transformational
leadership style; the study suggests that giving employees responsibilities reduces
absenteeism.

The direct way in which leadership style affects absenteeism that will be focused on in
particular in this study, is the way in which a leader handles the sickness protocols. Boudreau
et al59 showed in their study that employees who are less satisfied with their supervisor tend
to be absent more. The study showed that sick leave is often simply viewed as additional days
off and that it might be the only way for employees to ensure a day off to go to a special
event on short notice. Only 15% of the employees participating in their study believed that
there was another opportunity for them to get a day off for such purposes. The study tested
whether an opportunity for employees to report unscheduled short term absence would reduce
the overall sickness rates of the organization and this was confirmed.59 This attitude towards
employees, in which they are given the responsibility to report their unscheduled absence
instead of calling in sick, is a part of the transformational leadership style. The employees are
responsible and have the possibility to report absence on the short term if necessary. This
approach resulted in a decrease in absenteeism.

Leadership style as an indirect influence on absenteeism

Besides a direct influence of leadership style on absenteeism through support, a feeling of

being over benefited and the handling of sickness protocols, there is clear evidence that
employee satisfaction plays an important role in this relationship too. Employees who are
more satisfied with their job and their supervisor will be more committed to the organization
and call in sick less often. This relationship has been shown by many
researchers.25,29,33,39,44,45,56,58

As shown by Howard and Frink,1 satisfaction with the supervisor influences the overall job
satisfaction of the employees. Benkhoff60 and Laschinger, Finegan, and Shamian39 show
that if employees perceive their supervisor as competent and like their leadership style, they
will be more satisfied and committed to the organization. In particular, employee
empowerment improves the trust in management and has a positive influence on satisfaction
and commitment. Ross and Offermann25 showed a relationship between leadership and
employee satisfaction, but found that employee satisfaction does not automatically lead to
higher performance. De Veer et al found in their study that nurses with high moral distress
levels were less satisfied with their jobs; they report that moral distress could be caused by
time pressure, low satisfaction with consultation possibilities within the team, and an
instrumental leadership style.61

Zhu et al44 showed that human-capital-enhancing human resource management fully

mediates the relationship between transformational leadership and absenteeism and partially
mediates the relationship between transformational leadership and organizational outcome.

As described earlier, the transformational leader motivates and encourages people, which
leads to stronger feelings of self-worth and self-efficacy among employees, The
empowerment of the employees has a positive effect on their commitment and work
satisfaction.37,39–45
Visual conceptual framework

The proposed relationships are shown in Figure 1. The figure shows that leadership style may
have a positive association with employee satisfaction and a negative relationship with
sickness absence (which means that if a manager has a “better” leadership style, the
employee absenteeism decreases), as described above; this is especially the case if the
leadership has a transformational style. Based on the above research we formulated the
following hypotheses for this study (see below).

Figure 1

Theoretical model of relationships between leadership style and absenteeism.

Leadership and employee satisfaction

Within a merging organization different work cultures inevitably come together. The
ambiguity that discrepancies cause raises the stress that employees experience. Employees
feel the need for leadership to steer them through such a changing environment, whilst at the
same time involving them in decisions regarding their department and work. If they do not
experience such leadership from their management, satisfaction drops. The leadership style of
the manager thus influences employee satisfaction, this has to do with the communication
between management and employees and the attention that is paid to the needs of the
employees.

Therefore, our first hypothesis is that a transformational leadership style is associated with an
increase in employee satisfaction because of provided guidance and structure as well as
enhancing autonomy of the employees in uncertain situations.

Leadership and employee absenteeism

Employees who feel content and secure will be motivated to provide good quality health
services to clients, and consequently show lower absence rates. Conversely, employees that
experience changing job descriptions, interventions in the organization, and much
uncertainty, will feel less motivation to go to work. Employees who are less satisfied may
have a tendency to call in sick more often; thus, this might be an effect of leadership style.
Moreover, the way a leader handles sickness protocols may be a direct way by which he
influences absenteeism. The sickness protocols influence absenteeism levels and therefore the
leadership style can be a direct moderating influence as well as an indirect moderating
influence on absenteeism.

Therefore, our second hypothesis is that transformational leadership has a negative

relationship with employee absenteeism by handling of sickness protocols.

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Methods
Design

We used a mixed methods design with quantitative as well as qualitative research to explore
the association between leadership style, sickness absence rates, and employee satisfaction
levels in a specialty MHCI.62 In depth semi-structured interviews were conducted with ten
key informants and triangulated with documented research and a contrast between four
departments provided by a factor analysis of the data from the employee satisfaction survey
and sickness rates available from the human resources department. Data was analyzed
thematically by means of coding and subsequent exploration of patterns. Data analysis was
facilitated by qualitative analysis software.

Setting

For this study, a MHCI was chosen that recently merged from two smaller institutions in
2009. In 2006, the merger process started by merging two regions (region B and region T) of
the MHCI into one. The full legal merger was completed on January 1, 2009.

Sampling

Sickness rates data

Quantitative data on sickness rates of employees in 2010 were obtained from the human
resources department in the MHCI by independent researchers (ES, RE, MvB, NB, DS, YZ),
between February 9th, 2011 and May 23rd, 2011. Then, sickness rates per department were
established. There were seven departments in total.

Employee satisfaction survey

As the merger was believed to have had a severe impact on the employee’s satisfaction, due
to the combination of external circumstances and internal organizational change resulting
from the merger, the Board wanted to address the resulting burden to the employees. To this
end, the Board of the MHCI ordered a qualitative employee satisfaction survey that was
performed in 2010 by an independent agency. The outcome of the survey was used to attach
values to the measured variables and from this two main variables were deduced: satisfaction
with the work and satisfaction with the managers of the departments. These outcomes were
used to identify which departments were high and which were low in both forms of employee
satisfaction. Determination of comparatively low and high satisfaction rates per department
was performed by factor analysis as described below.

Sampling for semi-structured interviews

During the period between February 2011 and May 2011, semi-structured interviews were
conducted regarding leadership style in 2010 in the four departments with contrasting
sickness rates and satisfaction in order to explore our hypotheses, until saturation of
information had occurred, at the level of the Board, directors, managers, and employees. For
this purpose, one of two Board members was interviewed, the director of the selected
departments was interviewed, and all five managers of the four contrasting departments were
interviewed as well. These departments had contrasting sickness rates and levels of
satisfaction; managers from departments with low sickness rates and high satisfaction levels
were interviewed, as well as managers from departments with high sickness rates and low
satisfaction levels. Moreover, the human resources department randomly selected three
employees from the contrasting departments. In total, ten persons were interviewed; their
interviews were recorded. Also, to validate the contrast between high and low satisfaction on
an individual level, during the interviews, we asked several questions regarding the
satisfaction of the employees with their managers, from which we could conclude their level
of satisfaction, as can be seen in the supplementary materials.

Analysis

The sickness rate data were compared to national sickness rates in the health care setting.62
Departments with high and low sickness rates compared to this national sickness rate were
identified. The data of CBS Statline (The Hague, Netherlands) showed that the national
sickness rate of the health care sector was 5.2% in 2010. This rate has been compared to the
sickness rates data received from the human resources department of GGz Breburg, which
means that the total sickness rate of GGz Breburg (5.7%) was directly concluded to be higher
than the national rate of 5.2%.

A factor analysis was performed to identify relevant factors in the employee satisfaction
survey outcomes. Then, a dimensionality reduction was performed to make a clear overview
of the performance of the different departments in terms of high and low satisfaction. The
reduction method used is a rotated principle component factor analysis. These results were
plotted on a scatter plot with standardized scales in Statistical Package for the Social Sciences
(SPSS; IBM Corporation, Armonk, NY, USA), from which the high and low satisfaction
departments could be identified.

The interviews were analyzed following a method for qualitative research.63,64 In brief, data
were analyzed thematically by means of coding and subsequent exploration of patterns. All
interviews were analyzed using MAXQDA (VERBI GmbH, Germany).65 We focused on
identifying different leadership styles in the contrasting departments. The interview topics
can be seen in the supplementary material. The leadership styles of the managers were
identified based on the characteristics found in the literature. The leadership styles of the
managers were identified by recognizing and asking (implicitly) for leadership style
characteristics according to the following criteria:

 Top-down communication (transactional) versus bottom-up communication

(transformational);
 involving the employees in the organization by face to face meetings (transformational)
versus by email (transactional);
 planning regular face to face meetings with personnel (transformational) versus having an
open door policy without active engagement of the employee by the manager
(transactional);
 engaging employees in the development of new treatments or organisation
(transformational) versus updating them on news from the Board (transactional);
 providing the opportunity for alternative tasks for sick listed employees (transformational)
versus calling the employee to check availability to return to work (transactional).
All interview results were compared and discussed during a group meeting, which lead to
clear insights into the leadership styles of the interviewed managers.

Ethical considerations

The employee satisfaction survey was ordered by the Board of the MHCI and performed by
an independent research company that provided the outcomes clustered per department to the
human resource department on an anonymous basis. Those outcomes were used for the
analysis of the satisfaction data. Anonymous sickness rates data clustered by department were
provided by the human resource department of the MHCI. The semi-structured interviews
were announced by the human resource department and were performed by six independent
researchers (ES, RE, MvB, NB, DS, YZ) and without presence of the human resources
department. The outcomes were reported anonymously. This approach was approved by the
scientific board of the MHCI.

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Results
Sickness absence rates in The Netherlands

According to CBS Statline,62 the average sickness rate percentage in The Netherlands in
2010 was 4.2%. Divided in multiple sectors, we find the lowest sickness rates in catering,
mineral extraction, and financial institutions and the highest sickness rates in public
administration, health care, and education. The sickness rate of the health care sector was
5.2% in 2010. Twenty-five percent of the absenteeism periods that take longer than 7 days
have causes of a mental nature and it takes 53 days on average to return to work, but much
longer in cases of depressive disorders. According to research by ArboNed the main causes
are work pressure and a bad balance between working and private life.66

Sickness absence rates in the MHCI

The average sickness rate of the employees in the MHCI in 2010 was 5.7%, which is higher
than average. This was to a great extent due to people who were ill for a long time (43 to 364
days), which accounted for 2.6% of the employees. The seasons of the year seemed to
influence the number of employees who are ill for a short time. For an average time period,
there is no connection between the number of ill employees and the time of the year.
However, the number of employees who were ill for a very long time was low in the
beginning of the year and quite constant during the rest of the year.

There are seven care groups in the MHCI. Their names and the sickness rates are shown in
Table 1.

Table 1
Sickness absence rates in the care groups of the MHCI split by duration

The total percentages of the different care groups vary from 4.0% to 7.5%. The care group
with the lowest sickness rate is CG6, the prevention and consultation team. Another care
group with a low total sickness rate is CG4: the psychosis and autism care group in T. The
care group with the highest sickness rate percentage is CG2 (7.5%), the adults care group;
this is remarkably high in comparison to the other care groups.

Factor analysis of the employee satisfaction survey

The many variables that our survey was based on were used as a basis for quantitative
analysis of the different departments. The number of variables related to satisfaction was
rather large (15) and our dataset is rather small (n = 51; [sub] departments). Furthermore, the
correlations between the different variables turned out to be very high. Many of these
variables measured more or less the same concept. Using principle component factor
analysis, only two relevant dimensions remained; namely, work satisfaction and management
satisfaction. The former represents employees’ satisfaction with their work, while the latter is
a judgment by the employees of the performance of their management. Figure 2 plots the
different departments (indicated by numbers) on work and management satisfaction of the
employees.

Figure 2

Scatter plot of different departments, indicated by the numbers, on work and management
satisfaction, resulting from the satisfaction survey analysis.

Selection of contrasting departments for interviews

Based on Figure 2, we selected departments with the highest possible contrast between
employee satisfaction regarding management
Made of instinctive, repetitive habits and emotional responses, culture can’t be copied or
easily pinned down. Corporate cultures are constantly self-renewing and slowly evolving:
What people feel, think, and believe is reflected and shaped by the way they go about their
business. Formal efforts to change a culture (to replace it with something entirely new and
different) seldom manage to get to the heart of what motivates people, what makes them tick.
Strongly worded memos from on high are deleted within hours. You can plaster the walls
with large banners proclaiming new values, but people will go about their days, right beneath
those signs, continuing with the habits that are familiar and comfortable.

But this inherent complexity shouldn’t deter leaders from trying to use culture as a lever. If
you cannot simply replace the entire machine, work on realigning some of the more useful
cogs. The name of the game is making use of what you cannot change by using some of the
emotional forces within your current culture differently.
Source: The Katzenbach Center
For further insights: See strategy-business.com/10PrinciplesCulture
Infographic: Opto Design/Peter Stemmler

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Three dimensions of corporate culture affect its alignment: symbolic reminders (artifacts that
are entirely visible), keystone behaviors (recurring acts that trigger other behaviors and that
are both visible and invisible), and mind-sets (attitudes and beliefs that are widely shared but
exclusively invisible). Of these, behaviors are the most powerful determinant of real change.
What people actually do matters more than what they say or believe. And so to obtain more
positive influences from your cultural situation, you should start working on changing the
most critical behaviors — the mind-sets will follow. Over time, altered behavior patterns and
habits can produce better results.

You may be asking: If it is so hard to change culture, why should we even bother to try?
Because an organization’s current culture contains several reservoirs of emotional energy and
influence. Executives who work with them can greatly accelerate strategic and operating
imperatives. When positive culture forces and strategic priorities are in sync, companies can
draw energy from the way people feel. This accelerates a company’s movement to gain
competitive advantage, or regain advantages that have been lost.

Research shows that companies that use a few specific cultural catalysts — that is to say,
those that use informal emotional approaches to influencing behavior — are significantly
more likely to experience change that lasts. Of the companies that reported consciously using
elements of their culture in Strategy&’s 2013 Global Culture & Change Management Survey,
70 percent said their firms achieved sustainable improvement in organizational pride and
emotional commitment. That compares with 35 percent for firms that didn’t use culture as a
lever. Although there is no magic formula, no brilliant algorithm, no numerical equation that
will guarantee results, we have gleaned some valuable insights through decades of research
and observation at dozens of enterprises, including some of the most successful companies in
the world. By adopting the following principles, your organization can learn to deploy and
improve its culture in a manner that will increase the odds of financial and operational
success.

1. Work with and within your current cultural situations. Deeply embedded cultures
cannot be replaced with simple upgrades, or even with major overhaul efforts. Nor can your
culture be swapped out for a new one as though it were an operating system or a CPU. To a
degree, your current cultural situation just is what it is — and it contains components that
provide natural advantages to companies as well as components that may act as brakes.
We’ve never seen a culture that is all bad, or one that is all good. To work with your culture
effectively, therefore, you must understand it, recognize which traits are preeminent and
consistent, and discern under what types of conditions these traits are likely to be a help or a
hindrance. Put another way, there’s both a yin and a yang to cultural traits.

For example, a European pharmaceutical company with a solid product development pipeline
had a tendency to be inward-looking. It had great execution capabilities and an excellent
record of compliance with regulators around the world. However, when new products were
ready to be launched, the company had a hard time marketing them to physicians and
healthcare providers. Rather than bemoaning the company’s ingrained insularity — for
example, its collective tendency to value the opinions of internal colleagues more than those
of outside experts — the leaders decided to use this feature of its culture to its advantage.
They set up a program through which employees were acknowledged and rewarded by
colleagues for “going the extra mile” to support customers. By recognizing a new kind of
internal authoritativeness, the company tapped a powerful emotional trigger already in place,
and engendered a new (and strategically important) behavior in its sales force.

2. Change behaviors, and mind-sets will follow. It is a commonly held view that
behavioral change follows mental shifts, as surely as night follows day. This is why
organizations often try to change mind-sets (and ultimately behavior) by communicating
values and putting them in glossy brochures. This technique didn’t work well for Enron,
where accounting fraud and scandal were part of everyday practice, even as the company’s
espoused values of excellence, respect, integrity, and communication were carved into the
marble floor of the atrium of its global headquarters in Houston. In reality, culture is much
more a matter of doing than of saying. Trying to change a culture purely through top-down
messaging, training and development programs, and identifiable cues seldom changes
people’s beliefs or behaviors. In fact, neuroscience research suggests that people act their
way into believing rather than thinking their way into acting. Changes to key behaviors —
changes that are tangible, actionable, repeatable, observable, and measurable — are thus a
good place to start. Some good examples of behavior change, which we’ve observed at a
number of companies, relate to empowerment (reducing the number of approvals needed for
decisions), collaboration (setting up easy ways to convene joint projects), and interpersonal
relations (devising mutually respectful practices for raising contentious issues or grievances).

Neuroscience research suggests that people act their way into believing rather than thinking
their way into acting.

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A telecommunications company was seeking to improve its customer service. Rather than
trying to influence mind-sets by, for example, posting signs urging employees to be polite to
disgruntled customers, or having employees undergo empathy training, the company focused
on what psychologists call a “precursor behavior” — a seemingly innocuous behavior that
reliably precedes the occurrence of problem behavior. Leaders had noticed that poor teaming
led to poor customer service, so the company rolled out a plan to encourage better and more
effective teaming within call centers. To accomplish this, they set up regular design sessions
for improving practices. When employees felt they were part of a happy team, and sensed a
greater level of support from colleagues, they began treating their customers better.

In another example, a resources company in the Middle East was seeking to make its
workplace safer. Rather than erect placards threatening workers with consequences, the
company focused on a relatively basic precursor behavior: housekeeping. It organized a litter
drive. Picking up trash as a team helped employees take greater pride in the workplace, which
engendered a greater sense of care for fellow employees and made them more likely to speak
up when they noticed an unsafe situation. Changed behavior, changed mind-set.

3. Focus on a critical few behaviors. Conventional wisdom advocates a comprehensive

approach — everybody should change everything that’s not perfect! But companies must be
rigorously selective when it comes to picking behaviors. The key is to focus on what we call
“the critical few,” a small number of important behaviors that would have great impact if put
into practice by a significant number of people. Discern a few things people do throughout
the company that positively affect business performance — for example, ways of starting
meetings or talking with customers. Make sure those are aligned with the company’s overall
strategy. Also check that people feel good about doing these things, so that you tap into
emotional commitment. Then codify them: Translate those critical behaviors into simple,
practical steps that people can take every day. Next, select groups of employees who are
primed for these few behaviors, those who will respond strongly to the new behaviors and
who are likely to implement and spread them.

At an Asian banking company, rapid inorganic growth had led to diverse ways of working
across different units and geographies. To focus on improving teaming, customer outcomes,
and the ability to realize synergies, the CEO and leadership embarked on a culture-led
evolution program. They targeted just three critical behaviors: taking extra steps to delight
customers, valuing performance over seniority, and backing up and supporting one another.
They then converted these three general behaviors into specifics for each part of the
company. Delighting customers, for instance, was translated into frontline staff collaborating
with other colleagues to solve client problems and prioritizing the implementation of process
improvements that affected customer outcomes. For all three behaviors, leadership
recognized and celebrated examples in which people made an extraordinary effort. Senior
leaders acted as role models, explicitly modeling these three new behaviors. The company
also identified influential frontline, client-facing employees who could demonstrate these
new behaviors in action.

4. Deploy your authentic informal leaders. Authority, which is conferred by a formal

position, should not be confused with leadership. Leadership is a natural attribute, exercised
and displayed informally without regard to title or position in the organizational chart.
Because authentic informal leaders, who are found in every organization, are often not
recognized as such, they are frequently overlooked and underused when it comes to driving
culture. It is possible to identify such leaders through interviews, surveys, and tools such as
organizational network analysis, which allow companies to construct maps of complex
internal social relations by analyzing email statistics and meeting records. Once identified,
these leaders can become powerful allies who can influence behavior through “showing by
doing.” In fact, when companies map out their organizations, they can identify leaders who
exhibit different core leadership strengths (see “Four Types of Authentic Informal Leaders”).

Four Types of Authentic Informal Leaders

Every organization has people who influence and energize others without relying on their
title or formal position in the hierarchy to do so. We call them “authentic informal leaders.”
They are a powerful resource in spreading a critical few behaviors from the bottom up.
Among the many types of informal leaders present in organizations, the following are seen
most frequently.

Pride builders are master motivators of other people, and catalysts for improvement around
them. Often found in the role of line manager, they understand the motivations of those with
whom they work. They know how to foster a sense of excellence among others. They can be
found at every level of a hierarchy; some of the most effective pride builders are close to the
front line, where they can interact directly with customers as well as employees. Pride
builders often have powerful insights about the culture and about what behaviors are likely to
lead to improvement.

Exemplars are role models. They bring vital behaviors or skills to life, and others pay
attention to them. They are well respected and are effective peer influencers in the middle and
senior management cohorts.

Networkers are hubs of personal communication within the organization. They know many
people, and communicate freely and openly with them. They serve as links among people
who might not otherwise share information or ideas. If you want to see an idea travel virally
through an enterprise, enlist your networkers.

Early adopters enthusiastically latch onto and experiment with new technologies, processes,
and ways of working. Involve them in your performance pilots, or whenever you are trying to
demonstrate impact quickly.