The contemporary business world is highly competitive and rapidly transforming, which implies much change in both the external and internal environments of a company. Throughout the different stages of organizational development, multiple shifts and alterations take place, thus impacting the individuals, groups, and organizations at large. Indeed, change is an inevitable and natural aspect of any type of growth and advancement, which is why businesses that strive to grow are inherently exposed to change and must be prepared to handle it effectively. The failure to lead and implement the change successfully is associated with significant risks for companies, including breach of individual and organizational goals and interests, workplace culture deterioration, employee burnout and turnover, chaos, productivity losses, and ultimate monetary and competitive damage to the organization. Therefore, it is essential for any development-directed business entity to design and implement an effective change management strategy capable of foreseeing and mitigating risks and enhancing the benefits of change.
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However, change management as a process involves not only the strategy but also a step-by-step implementation approach that particularly depends on the leadership of an organization. Indeed, the style of leadership predetermines the overall working environment in the company, the type of interpersonal relationships between employees, their work ethics, and the overall corporate culture. As it has been stated, change management and change awareness is a vast aspect of corporate culture that cultivates advancement and competitive advantage in the market alongside employee work satisfaction and accomplishment. In such a manner, the approach that a leader chooses for managing the company is decisive in the way change is handled.
The contemporary management research contains much evidence on the performance-related outcomes of leadership styles, as well as the relationship between leadership styles and change management outcomes. The findings indicate that despite the inevitability and omnipresence of change in the business environment, the rates of success in change handling are very low (Appelbaum et al., 2017). These insights indicate that the quality of change management practices applied by leadership is insufficient and requires improvement and practice-related clarifications. Moreover, current academic research lacks “consensus regarding basic change processes,” which even complicates the change management implementation (Stouten et al., 2018, p. 752). The identification of leaders’ role in change management is one of the ways to resolve the problem. Therefore, it is essential to explore the practical side of the issue by determining which leadership styles best fit successful change management strategies. Thus, this paper will explore the importance of change management for organizations, different leadership styles, and change management processes to identify the leadership styles that allow for the most effective change management outcomes.
The Importance of Change Management for Organizational Performance and Competitive Advantage Building
When one contemplates the modern global business environment, one might notice that the pace of development in various fields is increasing, causing continuous shifts in conventional practices and mindsets. In particular, the development of technologies and their rapid integration into the organizations, globalization trends that incorporate multiple international stakeholders, and new insights of academic research yield the necessity for change. According to Stouten et al. (2018), planned organizational change might be defined as “deliberate activities that move an organization from its present state to a desired future state” (p. 752). To achieve the desired goal, a company must function as a complete integrative unit with clearly defined functions of each stakeholder.
Naturally, any alteration in the conventional way of existence or performance is perceived negatively due to the anticipated additional effort, uncertainty, and stress associated with change. Indeed, the underlying challenges of change complicate the process of its successful implementation and induce stress for both individual employees and the whole organization, as well as deteriorate the successful path toward sustained growth (Appelbaum et al., 2017; Cameron & Green, 2019). The reasons for ineffective change management practices and resistance to change are inherent in poor communication quality, lack of transparency, chaotic and non-systematic change implementation, and the insufficient corporate culture. Resistance might be manifested through a multitude of attitudes and actions on the employee’s side. Studies provide evidence on such instances as “absent from duty, failure to complete assignments on time because employees do not want to do, or damaging new machines deliberately so that new things will not work properly” (Amjad & Rehman, 2018, p. 57). As a result, the organizational performance suffers, monetary and non-monetary losses follow, and the company loses its opportunity to achieve a competitive advantage in its market.
Moreover, change in the organizational context is a multifaceted and complicated issue that integrates the participation of multiple stakeholders at multiple levels. Indeed, according to Rosenbaum et al. (2018), change implementation is particularly connected with the intellectual capital of the company that is comprised of employees and their talent. Therefore, successful change must occur at three levels, namely individual, group, and organizational. The individual level is essential since individual employees are considered the drivers of change. Indeed, according to research, “the success of any change depends on the employees of the organization mainly because organizations only announce the change whereas the implementation is carried out by the employees” (Appelbaum et al., 2017, p. 214). Consequently, the group level of change is possible to be pursued on the basis of individual employees’ readiness to overcome change-related difficulties for the benefit of their organization. Ultimately, a complete organizational level change might successfully occur with the integrated efforts of leaders and employees.
The ability to face difficulties and acknowledge flaws and failures is essential in change management. These qualities of employees and leaders contribute to the continuous competitive advantage building and improved organizational performance. Moreover, the element of planning plays a decisive role in this context since a clear vision of the steps of the process ensures the correctness of direction and timely mistake identification (Crosby, 2020).
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Thus, a well-functioning company is highly dependent on the implementation of effective change management capable of reducing the tension and resistance to change and increasing the growth potential of the workforce.
The Role of Leadership in Change Management
Without a doubt, leadership plays a pivotal role in successful change management. Given the complexity of the modern business environment, contemporary leaders must demonstrate specific qualities and skills associated with infinite mindset, clear strategic vision, communication skills, and mentorship abilities. In an environment where continuous change is the synonym of development, leaders must “balance a track record of success with the ability to admit mistakes and meet failure well” (Cameron & Green, 2019, p. 4). Thus, not only the ability to identify and correct one’s own mistakes but manage the staff on the way to the common goal is the leaders’ primary task. Moreover, leaders also must “balance short term and long term goals, be both visionary and pragmatic, pay attention to global and local issues and encourage individual accountability at the same time as enabling teamwork” (Cameron & Green, 2019, p. 4). Therefore, companies with successful change management practices and strategies must have competent and change-oriented skillful leaders.
Within the context of skills and qualities of an effective change-leading manager, the issue of proper mindset arises. Agility, flexibility, creativity, ability to learn quickly, and reflection on mistakes are some of the qualities that Hoe (2017) emphasizes in change-friendly leaders. In leadership and the workforce, “among the personal attributes, proactive personality has been often connected to engagement” (Caniëls et al., 2018, p. 49). Ultimately, engagement is viewed as an attribute of a growth-driven mindset which is vital for proper change management. Similar to engagement, the concept of commitment also plays a decisive role. On the contrary to Caniëls et al. (2018), Applebaum et al. (2017) emphasize the pivotal dependence of change outcomes on change attitude that is manifested through leaders’ commitment style.
In particular, the scholars differentiate between three main types of commitment to change as informed by empirical evidence (Applebaum et al., 2017). They include affective, normative, and continuance commitment types, each implying a different approach of a leader to handling crises. Affective commitment to change means that the leader is driven by “beliefs in the inherent benefits of the change” (Applebaum et al., 2017, p. 215). Normative commitment to change is manifested in the “sense of obligation to provide support for the change” (Applebaum et al., 2017, p. 215). Finally, continuance commitment is associated with the leader’s “recognition of the costs associated with failure to support the change” (Applebaum et al., 2017, p. 215). Thus, the very mindset of a leader predetermines the outcomes of planned change management and the capability of such a manager to engage employees in the implementation process.
Overview of Leadership Styles and Their Application to Organizational Change Context
The defined pivotal role of leadership as a whole in the process of change management demonstrates that effective leaders with proper skills and qualities must utilize a specific leadership style. According to Gandolfi and Stone (2018), the reason that validates leadership importance is in the disruption of operations when leadership fails. Indeed, “when leadership is ineffective, absent, or toxic, the result is that people, organizations, communities, and even entire societies are impacted, sometimes in the most devastating ways” (Gandolfi & Stone, 2018, p. 262). Thus, the choice of a relevant leadership approach in times of crisis or change plays a decisive role for organizational future. However, before determining which leadership style best fits change management requirements, one should identify the main styles of leadership.
An abundance of literature covers different classifications of leadership styles. However, when differentiating between the main ones, one should identify transactional, transformational, authoritarian (or directive), and laissez-faire. A transactional leader “focuses on a small set of individual details, is intelligent, follows the rules, and gets the job done” (Bowers et al., 2017, p. 554). A transformational leader is change-driven and growth-oriented; this individual is adaptive and logical, agile and flexible, as well as prone to leading the employees by example and inspiration (Alqatawenh, 2018; Bowers et al., 2017). An authoritarian or directive leader is inflexible and strict, follows the rules and principles, and “typically expects people to follow the dictum without questioning it too deeply” (Bowers et al., 2017, p. 554). Finally, a laissez-faire leader is prone to delegate responsibilities to others, which might not be effective in systematic change management.
Change Management Theory and Models
The change management theory holds that any change is inevitable, and a well-planned implementation approach is key in successful change implementation. Some of the most effective change management models have emerged throughout the years of management research. The essential one is Lewin’s Three-Phase Process, which is simple in planning and implementation when approached correctly. The three phases of this model include unfreezing, moving, and refreezing (Rosenbaum et al., 2018). When unfreezing, the organization opens itself to the opportunities of change to ultimately move toward the desired transformation and refreeze or stabilizer the operations (Rosenbaum et al., 2018; Stouten et al., 2018). On the contrary, a more detailed model entitles Beer’s Six-Step Change Management Model includes the identification of the need to change, finding change vision, enhancing the support of change, implementing, institutionalizing, and monitoring and adjusting (Stouten et al., 2018). These steps demonstrate that the inclusion of the leader in managing change and maintaining employee’s commitment throughout the process. Among other effective and evidence-based approaches to change management, one might name Kotter’s Eight-Step Model, Judson’s Five Steps, and others. In essence, all of the models necessitate a clear vision of the anticipated results and the active inclusion of a leader into the guiding practices that allow for employee commitment.
Leadership Styles Compatible with Most Effective Change Management Approaches
The review of the scholarly literature unfolded that the majority of scholars agree that the transformational leadership style is the best choice for a company that strives for successful change management. Indeed, Alqatawenh (2018) claims that such aspects of transformational leadership as “idealized influence, inspirational motivation, intellectual stimulation, and empowerment” provide the most favorable context for a successful change to occur (p. 17). Similar findings have been presented by Caniëls et al. (2018), who claim that transformational leadership allows for enhancing work engagement and commitment, which are particularly important in times of crisis. Additionally, in terms of learning from mistakes, which is necessary for change management, Bligh et al. (2018) found that consistent with the previously mentioned studies, transformational leadership helps in enhancing employees’ mistake learning and successful error correction. However, such a leadership style as laissez-faire hinders employee error learning and fails to serve the purposes of effective change management (Bligh et al., 2018). Therefore, transformational leadership is most capable of successfully completing the steps of change management models since its implied mindset and commitment approach are inherently growth-driven.
In summation, the analysis of the interplay between leadership styles and change management has demonstrated that although there is no solid unanimous opinion, transformational leadership best fits the requirements of change management models. A set of leaders’ qualities and skills includes agility, flexibility, fast learning, commitment to change, and growth mindset. All these aspects complemented by inspirational and empowering relations with employees make transformational leadership the style that is capable of driving change effectively. Ultimately, a company that is managed by a transformational leader is capable of enhancing organizational performance and building competitive advantage by means of loyal intellectual capital.
Alqatawenh, A. S. (2018). Transformational leadership style and its relationship with change management. Verslas: Teorija ir Praktika, 19(1), 17-24.
Amjad, A., & Rehman, M. (2018). Resistance to change in public organization: Reasons and how to overcome it. European Journal of Business Science and Technology, 4(1), 56-68.
Appelbaum, S. H., Cameron, A., Ensink, F., Hazarika, J., Attir, R., Ezzedine, R., & Shekhar, V. (2017). Factors that impact the success of an organizational change: a case study analysis. Industrial and Commercial Training, 49(5), 213-230.
Bligh, M. C., Kohles, J. C., & Yan, Q. (2018). Leading and learning to change: The role of leadership style and mindset in error learning and organizational change. Journal of Change Management, 18(2), 116-141.
Bowers, M. R., Hall, J. R., & Srinivasan, M. M. (2017). Organizational culture and leadership style: The missing combination for selecting the right leader for effective crisis management. Business Horizons, 60(4), 551-563.
Cameron, E., & Green, M. (2019). Making sense of change management: A complete guide to the models, tools and techniques of organizational change. Kogan Page Publishers.
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Caniëls, M. C., Semeijn, J. H., & Renders, I. H. (2018). Mind the mindset! The interaction of proactive personality, transformational leadership and growth mindset for engagement at work. Career Development International, 23(1), 48-66.
Crosby, G. (2020). Planned change: Why Kurt Lewin’s social science is still best practice for business results, change management, and human progress. Productivity Press.
Gandolfi, F., & Stone, S. (2018). Leadership, leadership styles, and servant leadership. Journal of Management Research, 18(4), 261-269.
Hoe, S. L. (2017). What makes a competent change manager? The importance of developing the “right” attitudes. Development and Learning in Organizations: An International Journal.
Rosenbaum, D., More, E., & Steane, P. (2018). Planned organisational change management: Forward to the past? An exploratory literature review. Journal of Organizational Change Management, 31(2), 286-303.
Stouten, J., Rousseau, D. M., & De Cremer, D. (2018). Successful organizational change: Integrating the management practice and scholarly literatures. Academy of Management Annals, 12(2), 752-788.