Transformational Leadership, Uncertainty and Digital Transformation: the research

What the research says about transformational leadership, uncertainty & digital transformation….

The digital transformation of an organisation’s operating systems, processes and strategies through the integration of digital technologies and IT has become an increasingly common process for many organisations. Advancements in technology and recent environmental pressures, for example climate change and Covid-19, which prompted the expansion of remote work has accelerated this trend. Digital transformation can entail massive amounts of change, from redesigning infrastructure to developing new workflow processes. Change on such a large scale tends to create high levels of uncertainty.

How transformational leadership impacts the way employees respond to the uncertainty generated by digital transformation

In this podcast, we examine recent research looking at how transformational leadership impacts the way employees respond to high levels of uncertainty generated by the digital transformation of their organisations.

Podcast – Transformational leadership, uncertainty and digital transformation

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Uncertainty management

Employees experience uncertainty when they are unable to accurately predict what will happen usually following some form of change.

A lack of information, or inconsistent and ambiguous information, tends also to trigger heightened uncertainty. For instance, large-scale organisational change, like the irreversible conversion of manual work processes to digital ones, is a common cause of uncertainty with employees. This is in part because employees are often unsure how their jobs, skills, knowledge, status, etc. will be impacted. Employees often worry about being replaced by the new technology, which can usually perform tasks more efficiently than humans.

As a result, how uncertainty is managed and perceived tends to determine the effects it creates. Employees tend to evaluate uncertainty through a psychological appraisal, or uncertainty appraisal, process. During the primary appraisal, people assess the situation generally and decide whether the changes will have an impact on their lives. Then, if changes are significantly influential, during the secondary appraisal, people tend to determine how the changes will impact them personally. In this way, employees develop positive or negative perceptions of the changes and associated uncertainty inherent in the situation.

Podcasts in this digital transformation series

1. What is digital transformation? 
2. The trust for transformation model 
3. Success factors for digital transformation
4. The experience of a transformation consultant working with digital transformations in organisations
5. Transformational Leadership, Uncertainty and Digital Transformation – This podcast
6. Design Thinking and Company Resilience Support Organisations During Transformations
7. A Roadmap for Facilitating Successful Digital Transformation

Melanie Marshall

Melanie is a transformation and organisational change consultant and author of the book Trust: The foundation for Healthy Organisations and Teams. Melanie is based in Australia and spent 10 years in the Royal Australian Airforce and has a degree in Psychology from the University of Canberra. She co-hosts this mini series of seven podcasts with David.

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Transcript

DT 5 Transformational Leadership, Uncertainty and Digital Transformation

[00:00:00] David: Welcome back. And with this podcast, we’ve got Melanie Marshall who’s our guest again, we’re looking at digital transformation and what we’re going to do is over the next series of podcasts is just go through some of the research briefings. Now, just to remind you that a research briefing is a briefing usually based on a paper, but we introduce other studies into it as well, just to kind of add a little bit of context and richness to the issue and to bring in other findings as well. Welcome back, Melanie. 

[00:00:28] Melanie: Thanks for having me. It’s good to be back. 

[00:00:29] David: So in this podcast, what we’re going to have a lookout is a research briefing that we’ve entitled, “Transformational leadership, Uncertainty, and Digital transformation.” And I’m just going to very quickly kind of go over the main findings of it and then see what some of these reactions are to the paper. So, this briefing is based on a paper, I’ll put the full reference in the notes, titled testing the theory of communication and uncertainty management in the context of digital transformation with transformational leadership as a moderator, that’s probably a very long [00:01:00] title. This was published in 2021. Basically what the study that was looking at the impact of transformational leadership on the way employees appraise the uncertainty caused by digital transformation. And what they found was that firstly, uncertainty negatively impacts employee appraisal self-efficacy and job performance. What that means is basically is that when there’s uncertainty within the workplace, employees tend to view, they tend to appraise tend to think about things in a more negative way, their self-efficacy so their own self-confidence starts to decline, and so does job performance. The other findings where the transformational leadership has a positive effect on employee appraisal, so it increases particularly increases their sense of confidence and job performance, and also the transformational leadership, well they say moderate, so it’s kind of in the middle, the impact of uncertainty on employee appraisal and self-efficacy, so what that means is that when transformational [00:02:00] leadership is less, uncertainty tends to cause negative appraisals and a negative impact on people and this drop in self-efficacy or self-confidence. And when transformational leadership is higher, uncertainty is perceived more positively, and it prevents employees from experiencing drops in self-efficacy or confidence, and self efficacy is really the confidence in our own ability to be able to solve problems, and do things. So what were your thoughts about this briefing Melanie?

[00:02:27] Melanie: Well, firstly it reminded me of when we spoke a couple of podcasts ago about the number of leadership styles that are now coming out in these briefings. And I kind of think, really like how many labels do we need to put on leadership because it’s getting to a point now where I think it’s becoming a bit overcooked and it’s becoming a bit confusing and I mean, how is transformational leadership different to adaptive leadership? How is it different to contextual leadership? Situational leadership, all of those other sorts of styles. So when I see that it’s [00:03:00]another label, I kind of cringe a little but at the same time, when I looked at it when, okay, well, what do they mean by transformational leadership with respect to this research? So, okay, the aim of transformational leadership is inspiration, stimulation to grow and expand knowledge and skills, communication, demonstration of desired behaviors of success and empathic consideration of people’s individual needs. Now I would argue that if you are a good leader, you’re doing that anyway, and you’re not necessarily going to call you transformational in that regard, but I’m happy to let my stuff sit up in a little box and tied away to get into the nitty gritty of this, and really, I think what was interesting in this study is that absolutely in times of uncertainty you need to be able to moderate those negative effects very quickly, and also to that focus on how do you improve people confidence in themselves that they can actually in fact make the change and not just make the [00:04:00] change, but make the changes work for them. So that notion of one valuing the power of individual experience and then redefining that uncertainty as an opportunity to grow and advance was something that I really liked in the research here is that it is really about trying to help people to reframe what the changes are going to mean, and certainly when it comes to going down the path of increasing the psychological safety around it, getting people to say that there are opportunities in those changing roles and to support the experimentation aspect of it. So I get that it’s important, I’d love to be able to say a little bit more around or how do they really recommend that people do that in this research? 

[00:04:42] David: Okay. Yeah. Interesting. So, transformational leadership itself is the most highly researched form or identified kind of nature of leadership by a huge amount, it’s kind of a power law thing. So one of the things there’s over 120, so we’re tracking at the moment within the Oxford Review, we’re tracking [00:05:00] all the different leadership styles and there’s over 120 odd different styles of leadership that kind of crop up in the research and I’m fairly convinced that we haven’t gotten them all yet. They keep cropping up and when you kind of have a look at that vastness of leadership styles that people are kind of looking at, there’s very few of them that have actually been validated in terms of, so there’s a couple of things you’ve got to do a cluster analysis and a factor analysis to be able to say, okay, this is a thing that’s distinct, factor now, sort of transformational leadership is one of those that has had that and it’s probably one of the most, well, it is the most popular form of leadership. The whole idea as the name says, is to kind of drive change and transformation and adaptability with the new organisation through its people, through creating some form of, well, a whole series of things like a vision, but also getting people to be involved within that chain. And I think what’s interesting about this briefing and the paper is [00:06:00] that tying it in with digital transformation and starting to think about the impact that leadership has within a transformational space, and I would certainly agree with you that these are the kinds of qualities that a good leader should have anyway. One of the interesting things about transformational leadership is the level of complexity or the level of complicatedness, if you want, of being a good transformational leader. It’s a, on a, kind of a scale from a high level of difficulty to a low level of difficulty, from a leadership perspective the kinds of attributes thinking that you need the attitudes that you need, as well as the skills. Actually transformational leadership is pretty high in terms of difficulty from a leadership point of view as opposed other forms of leadership, so things like transactional leadership and obviously laissez faire leadership, and there’s been one or two studies looking at that have shown that the difficult levels, you know, they’re easy to do. So we’re talking about kind of a higher skill level. 

[00:06:59] Melanie: [00:07:00] Yes. So I can see that. I can see that now and I get where you’re coming from, and I think this comes back to other research findings as well, that support that systems thinking and integrated approach and if you’re going to be a transformational leader, it really requires that level of 360 inside out upside down type thinking across multiple domains, not just the domain that you specialise in. So I think it would be interesting to say in other research where that transformational leadership is defined even further, it says, well, what does that mean from a systems point of view beyond just, changing things up in a really transformative way for one of a better term. 

[00:07:43] David: Yeah. And certainly if you look across the range of research to do with transformational leadership, what you find is this concern not only with the organisational transformation, but with the employees transformation. So the people that are doing the work, in terms of their skills, their [00:08:00] abilities, but also their attitudes towards things most likely why this paper had the findings that it had, that, high levels of transformational leadership tends to moderate or abate uncertainty. So it reduces the negative impact of uncertainty on employees, because it’s very people centric as a way, but with a very strong high change and transformation, as I say, both the organisation and the people, and this is less spoken about for transformational leadership, the leader themselves, they’re very aware of their own, a good transformational leadership leader is very aware of their own skills and abilities, their own sense of purpose, and the impact that they’re having, which is probably why these findings to do with uncertainty in situations of digital transformation because it creates huge upheaval and a lot of fear. There’s this public perception that, you know, digital transformation is going to replace my job, so.. 

[00:08:52] Melanie: Yeah, and I think when it comes to preparing people for transformation too, that focus on self [00:09:00] efficacies is really important because they also have to lead, they’ve got to lead at their own level and really adopt good solid self-leadership because they’re the only one that’s really going to, you know, decide whether or not to be on board or to jump off the train on this, and no leader from above is really going to be able to influence them in that space. So I think that level of self-leadership is really important in that how you guide to transform yourself throughout these things by looking at the opportunities that brings, how are you going to grow and adapt differently to the changing environment? If your role is changing, if it had elements that are being automated, how are you going to adapt on your own terms? And one thing that I really did like about this paper was it mentioned that, there’s a significant positive effect on employee appraisal for transformational leadership and self-efficacy, and all the moderates, it doesn’t remove the negative effects when people are unable to [00:10:00] perform their job, so you can moderate it but if people can’t get their job done, it doesn’t matter how transformational you are, the reality is you’re not delivering. 

[00:10:08] David: Yeah. And I think that’s important, what you’ve just said before about the idea, you know, whilst we talk about styles of leadership, you know, as being isolated, things are not, and you know, a good transformational leadership will also involve shared leadership. So you know, well, if there’s somebody better to be kind of moving things on at this moment in time that they’ll capitalise on that as well, and so you get this kind of huge overlap and the other thing that kind of cropped up while you were talking that started making me think was that, you know, with any digital transformation, it is to a certain extent, in fact, quite a lot of extent to kind of a launch into the unknown because you’re not quite sure, A, what impact is going to have on the organisation. In the first podcast, we looked at that difference between digital transformation and IT enabled organisational transformation that they are two different things, you’re not quite sure, [00:11:00] both the reaction and how you know exactly how it’s going to change the organisation and what we’re going to be doing, but also the reaction of the market and how to get that into a good fit with the market, especially in a changing landscape. And we’ve got a lot of kind of thing, a lot of moving parts, particularly COVID. 

[00:11:18] Melanie: Yeah, that’s right. And that’s where the adaptive nature of transformational leadership kicks in. So when I think in terms of transformational leadership, that doesn’t come without adaptive leadership as part of it, because there are so many moving parts and you do have to think a lot on the fly, and prepare for the unknown as best you can. So, yeah, I think the paper was interesting, and certainly one thing that I’m really looking forward to is when we go into our next couple of briefs around, yeah, how does that look from a governance perspective and operating model perspective, a management perspective, because you know, you can’t really be a good leader if you don’t know how to manage.

[00:11:57] David: Yeah, exactly. 

[00:11:57] Melanie: Let’s, I’m looking forward to getting into, you [00:12:00] know, what are the sorts of things that they’re going to have to manage and control and works. 

[00:12:04] David: Yeah. And in the next podcast, we’ll be having a look at those. So this research briefing that we’ve just been having a look at that’s in the members area is titled transformational leadership, un certainty, and digital transformation and it’s based on a ’21 paper, testing the theory of communication, uncertainty management in the context of digital transformation with transformational leadership as a moderator, and that was published in the International journal of business communication in 2021. 

Reference

Matsunaga, M. (2021). Testing the Theory of Communication and Uncertainty
Management in the Context of Digital Transformation with Transformational
Leadership as a Moderator. International Journal of Business Communication,
23294884211023966.