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Assessing the Effectiveness of Authentic Leadership

Author: Biplab Datta  
Issue: 1  
Volume: 9  
Year: 2015

The effectiveness of authentic leadership (AL) has been empirically evaluated in this paper. It has been found that authentic leadership has been understood as a three dimensional, second order construct by Indian respondents. The study indicates that AL, as measured by the 16 items of the Authentic Leadership Questionnaire (ALQ), leads to seven different dimensions of effective management and five different dimensions of effective leadership as measured by 42 variables. The paper concludes that AL leads to effective management and leadership performance.


Leadership is the process of influencing a group of individuals to achieve shared objectives (Northouse, 2013; Yukl, 2011). The primary function of leadership is to produce change and movement, while the primary function of management is to provide order and consistency to organisations (Northouse, 2013). As both leadership and management are processes, anybody can execute leadership or managerial functions at different times. Leaders cannot be called as leaders simply by virtue of the position they hold in organizations (Kellerman, 2012). The execution of management and leadership functions by leaders situated in organizations has been examined in this paper.

Driven by concerns of ethical conduct of today’s leaders, several authors have studied one form of ethical leadership, called authentic leadership (AL) (Gardner et al., 2011) with diverse results. In their study, Clapp-Smith, Vogelgesang & Avey (2009) found that AL leads to trust in management and positively affects group performance measured by unit sales growth.

Hassan & Ahmed (2011) found that AL promotes subordinates’ trust in the leader and contributed to work engagement. Jensen & Luthans (2006) found that employee’s perception of leaders’ authentic behaviour served as the strongest single predictor of employee job satisfaction, organizational commitment and work happiness. Laschinger, Wong & Grau (2012) found that AL has negative direct effect on workplace bullying and emotional exhaustion and a positive effect on job satisfaction. Peterson et al. (2012) find that authentic leadership behaviour exhibited by leaders is positively related to follower job performance. Peus et al. (2012) found that followers’ satisfaction with supervisor, organisational commitment and extra effort, and perceived team effectiveness were outcomes of AL. Hmieleski, Cole, & Baron (2012) found that shared AL has a positive indirect effect on firm performance. Leroy, Palanski & Simons (2012) found that AL is related to follower affective commitment and work role performance. Rego et al. (2012b) find that AL predicts employees’ creativity. Rego et al. (2012c) found that AL predicts team affective commitment and team potency. Walumbwa et al. (2008) found a positive relationship between AL and supervisor-rated performance. Walumbwa et al. (2010) found that AL was positively related to supervisor rated organizational citizenship behaviour and work engagement. Woolley, Casa, & Levy (2011) reported a positive relationship between AL and followers’ psychological capital, partially mediated by positive work climate and a significant moderating effect from gender. Walumbwa et al. (2011) found AL to positively affect desired group outcomes like group level performance and citizenship behaviour.

According to Gardner et al. (2011), limited amount of empirical research makes it difficult to assess the validity of assertions regarding the positive effects of AL that are commonly advanced by its proponents. Gardner et al. (2011) further state that having recognised the documented relationships between authenticity, engagement and well being (Deci & Ryan, 1995; Kernis, 2003, Kernis & Goldman, 2006), five recent studies (Gardner et al., 2009; Giallonardo, Wong, & Iwasiw, 2010; Macik-Frey, Quick, & Cooper, 2009; Walumbwa et al., 2010; Wong & Cummins, 2009) have explored the relationship between AL and leader/follower engagement, empowerment and well being. Gardner et al. (2009) have encouraged research on the positive effects of AL on these and related outcomes (e.g., job satisfaction, organizational commitment, and employee and organizational performance). This study has been undertaken to find whether AL can lead to effective management and leadership performance in the Indian context.

Authentic Leadership

According to Harter (2002), authenticity can be defined as “owning one’s personal experiences, be they thoughts, emotions, needs, preferences, or beliefs, processes captured by the injunction to know oneself” and behaving in accordance with the true self. Based on the initial definition of AL by Luthans and Avolio (2003), and the underlying dimension of the construct posited by Gardner et al. (2005) and Illies, Morgenson, & Nahrgang (2005), Walumbwa et al. (2008) have defined AL as a pattern of leader behaviour that draws upon and promotes both positive psychological capacities and a positive ethical climate, to foster greater self-awareness, an internalized moral perspective, balanced processing of information, and relational transparency on the part of leaders working with followers, fostering positive self-development. In this definition, self awareness refers to demonstrating an understanding of how one derives and makes meaning of the world and how that meaning making process impacts the way one views himself or herself over time. It also refers to showing an understanding of one’s strengths and weaknesses and the multifaceted nature of the self, which includes gaining insight into the self through exposure to others, and being cognisant of one’s impact on other people (Kernis 2003). Relational transparency refers to presenting one’s authentic self (as opposed to a fake or distorted self) to others. Such behaviour promotes trust through disclosures that involve openly sharing information and expressions of one’s true thoughts and feelings while trying to minimize displays of inappropriate emotions (Kernis, 2003). Balanced processing refers to leaders who show that they objectively analyze all relevant data before coming to a decision. Such leaders also solicit views that challenge their deeply held positions (Gardner et al., 2005). Internalized moral perspective refers to an internalized and integrated form of self-regulation (Ryan & Deci, 2003). This sort of self-regulation is guided by internal moral standards and values versus group, organizational, and societal pressures, and it results in expressed decision making and behaviour that is consistent with these internalized values (Avolio & Gardner, 2005; Gardner et al., 2005; Walumbwa et al., 2008).

Measurement of AL

Based on the above conception of AL, a 16-item Authentic Leadership Questionnaire (ALQ) by Avolio, Gardner, & Walumbwa (2007) is available from www.mindgarden.com. The ALQ consist of four components: Relational Transparency (5 items), Internalized Moral Perspective (4 items), Balanced Processing (3 items) and Self Awareness (4 items). The ALQ, operationalized and validated by Walumbwa, et al. (2008)and derived from Kernis and Goldman’s (2006) multi-component conception of authenticity, was found to be the most frequently used measure of AL by Gardner et al. (2011) in their review of AL literature from 1980 till 2010. Neider & Schriesheim (2011) developed an 8-item Authentic Leadership Inventory (ALI) and inferred that it is devoid of some concerns with the ALQ, while urging future researchers to test the ALI further. However, the ALQ has been used by many other researchers as a measure of AL after 2010 including Hassan & Ahmed (2011); Peterson et al. (2012); Walumbwa et al. (2011); Wooley, Caza & Levy (2011); Hmieleski, Cole & Baron (2012); Laschinger, Wong & Grau (2012); Leroy, Palanski & Simons (2012); Peus et al. (2012); Rego et al. (2012 a, b & c). The ALQ has been used in this study to measure AL after testing the psychometric properties of the scale (whose construct validity requires further assessment according to Gardner et al., 2011).

Although Walumbwa et al., (2008) have confirmed a 4-factor second order structure of the ALQ, Neider & Schriesheim (2011) have raised some concerns with the same. While the ALQ has been used and tested in USA, China, Kenya (Walumbwa, Avolio, Gardner, et al., 2008), Portugal (Rego et al., 2012 a & b), Belgium (Leroy, Palanski, & Simons, 2012), Canada (Laschinger, Wong, & Grau, 2012), New Zealand (Caza, Bagozzi, & Caza, 2010) and Germany (Peus et al., 2012), the survey of literature revealed that no study involving the ALQ has been carried out in India so far.

Managerial Effectiveness

According to Yukl (2011), conceptions of leader effectiveness differ from one writer to another like the definitions of leadership. The criteria selected to evaluate leadership effectiveness reflect a researcher’s explicit or implicit conception of leadership. Most researchers evaluate leadership effectiveness in terms of the consequences of influence on a single individual, a team or group, or an organisation.

According to Yukl (2011), the most commonly used measure of leader effectiveness is the extent to which the performance of the team or organizational unit is enhanced and the attainment of goals is facilitated. Examples of objective measures of performance include sales, net profits, profit margin, market share, return on investment, return on assets, productivity, cost per unit of output, costs in relation to budgeted expenditures, and change in the value of corporate stock. Subjective measures of effectiveness include ratings obtained from leader’s superiors, peers and subordinates. As mentioned earlier, the primary function of leadership would be to produce change and movement, while the primary function of management would to provide order and consistency to organisations (Northouse, 2013). Accordingly, the above would be measures of managerial effectiveness rather than leadership effectiveness.

Followers’ attitude and behaviour provide an indirect indicator of dissatisfaction and hostility toward the manager. Examples of such indicators include absenteeism, voluntary vacancies, grievances, complaints to higher management, requests for transfer, work slowdowns, and deliberate sabotage of equipment and facilities.

A final type of criterion for managerial effectiveness is the extent to which a person has a successful career as a manager. Is the person promoted rapidly to positions of higher authority? Does the person serve a full term in a managerial position, or is he or she removed or forced to resign? For elected positions in organizations, is a manager who seeks re-election successful?

Leadership Effectiveness

Follower attitudes and perceptions of the leader are common indicator of leader effectiveness (Yukl, 2011). How well does the leader satisfy their needs and expectations? Do followers like, respect, and admire the leader? Do followers trust the leader and perceive him or her to have high integrity? Are followers strongly committed to carrying out the leader’s requests, or will they resist, ignore and subvert them? Does the leader improve the quality of work life, build the self-confidence of followers, increase their skills, and contribute to their psychological growth and development?

Leader effectiveness is occasionally measured in terms of the leader’s contribution to the quality of group processes, as perceived by followers or by outside observers. Does the leader enhance group cohesiveness, member cooperation, member commitment, and member confidence that the group can achieve its objectives? Does the leader enhance problem solving and decision making by the group, and help to resolve disagreements and conflicts in a constructive way? Does the leader contribute to the efficiency of role specialization, the organization of activities, the accumulation of resources, and the readiness of the group to deal with change and crises?

Measurement of Managerial and Leadership Effectiveness

In this study 42 items were used to measure 7 dimensions of managerial effectiveness including A. Organisational performance, B. Satisfaction of followers’ needs and expectations, C. Improvement of the quality of work life and development of the followers, D. Manager’s contribution to absenteeism of followers, E. Manager’s contribution to dissatisfaction and hostility of the followers, F. Manager’s contribution to quality of group processes of his/her unit or organisation, and G. The extent to which the manager had a successful career, and 5 dimensions of leadership effectiveness including H. Respect for the leader, I. Commitment to carry our leader’s requests, J. Leader’s contribution to enhancement of problem solving, decision making and conflict resolution skills of his/her unit, K. Leader’s contribution to group ability to deal with change, and, L. Leader’s contribution to group ability to deal with crises. The detailed questionnaire for measuring managerial and leadership effectiveness is given in the Appendix.

Method

In this study, 324 working executives, mainly from Eastern India, were requested to fill in the ALQ along with 42 questions related to 12 dimensions of managerial and leadership effectiveness of the person whom they considered as their leader in their organisations.

Respondents were required to rate each item on a Likert scale anchored at Not at all = 0, Once in a while = 1, Sometimes = 2, Fairly often = 3 and Frequently, if not always = 4. A total of 280 valid responses were used for empirical analysis after eliminating obvious cases of ‘ya saying’ and removing outliers with the help of SPSS 16 boxplots.

Results

Sixteen items of the ALQ were subjected to Principal Axis Factoring suitable for exploring the underlying factors (Hair et al. 2006) and also subjected to rotation by direct oblimin method with Kaiser normalisation using SPSS 16. The pattern matrix is laid out as Table 1.

Table 1: Rotated Factor Solution – Pattern Matrix

 Factor
Variable1234
1. says_means0.529   
2. admits_mistakes0.581   
3. speak_mind0.575   
4. tell_truth0.439   
5. emotions_feelings0.399   
6. beliefs_actions0.741   
7. decisions_values0.476   
8. positions_values0.325   
9. ethical_decisions   -0.874
10. challenge_position   -0.466
11. analyses_data  -0.469 
12. listens_viewpoints  -0.659 
13. feedback_improve 0.405-0.462 
14. others_capabilities 0.668  
15. reevaluate_positions 0.499  
16. actions_impact 0.353  

It was evident from the pattern matrix that the first 5 variables supposed to measure the Relational Transparency construct got merged with the first 3 variables that are supposed to measure the Internalised Moral Perspective construct. It was concluded that respondents could not differentiate the above two constructs as separate ones. The merged factors were renamed as Transparent and Moral Perspective (TMP). The ALQ was then subjected to confirmatory factor analysis using AMOS 18. Although variable no. 9 and variable no. 10 loaded on a fourth factor, variable no. 9 was clubbed with TMP and variable no. 10 was clubbed with the Balanced Processing (BP) construct as per the loading of the original ALQ. Similarly, although variable no. 13 cross loaded on 2 factors, it was clubbed with BP as per the original ALQ. Following Walumbwa et al. (2008) the second order conceptual model was tested with the first 9 variables loading onto the first factor, i.e. Transparent and Moral Perspective (TMP), the next three variables loading onto the second factor i.e. Balanced Processing (BP) and the remaining four variables loading onto the third factor i.e. Self Awareness (SA). The result of the confirmatory factor analysis of the second order 3-factor model using Maximum Likelihood method indicated reasonable fit of the data with the conceptual model with CMIN/DF = 2.183, CFI = .889 and RMSEA = .065, laid out as Table 2. Acceptable model fit values are CMIN/DF <= 2 (Byrne, 1989), CFI close to 1 (Bentler, 1990) and RMSEA <= .05 (Browne and Cudeck, 1993). In contrast, the second order, 4-factor model of the original ALQ indicated worse fit with CMIN/DF = 2.256, CFI = .883 and RMSEA = .067. The difference between the chi square values of the three and four factor models was 5.146 and the difference in degrees of freedom was 1, thereby indicating that the difference between the 3-factor and 4-factor models was significant at P = .05. The results confirmed the construct validity of the three dimensions of the ALQ scale in the Indian context. The Cronbach’s Alpha values for the three dimensions ranged from .634 to .807. According to Hair et al. (2006), reliability between .6 and .7 may be acceptable provided that other indicators of a model’s construct validity are good. Since the standardised regression weights of the three dimensions of the ALQ were high and significant and these have been reported to be internally consistent by Walumbwa et al. (2008), all the items making up the 3 dimensions were retained for further analysis.

Table 2: Confirmatory factor analysis of the ALQ

PathSRWPathSRW
AL -> Transparent and Moral Perspective (TMP).839TMP -> says_means.610
Cronbach’s Alpha = .807 TMP -> admits_mistakes.588
  TMP -> speak_mind.592
  TMP -> tells_truth.589
  TMP -> emotions_feelings.316
  TMP -> beliefs_actions.590
  TMP -> decisions_values.572
  TMP -> positions_values.595
  TMP -> ethical_decisions.629
AL -> Balanced Processing (BP).959BP -> challenge_position.491
Cronbach’s Alpha = .653 BP -> analyses_data.711
  BP -> listens_viewpoints.727
AL -> Self Awareness (SA).777SA -> feedback_improve.630
Cronbach’s Alpha = .634 SA -> others_capabilities.503
  SA -> reevaluate_positions.469
  SA -> actions_impact.550
SRW = Standardized Regression Weights, P = .001.

managerial effectiveness and the three-factor, second order ALQ. Similarly, four structural equation models (H through L) were tested for relationship between leadership effectiveness and the ALQ. The model fit measures and the standardized regression weights of the paths are laid out as Tables 3 and 4. All the models indicated reasonable fit with the data as indicated by the CMIN/DF, CFI and RMSEA values. The results indicated the construct validity of the 12 dimensions of effective management and leadership performance tested in this study. The Cronbach’s Alpha values of the 12 dimensions of effective management and leadership ranged from .641 to .895. These were within the acceptable range as suggested by Hair et al. (2006) and were indicative of the internal consistency of the 12 latent constructs.

Table 3: Fit of 8 structural equation models indicating relationship between AL and managerial effectiveness

ModelCMIN/DFCFIRMSEAPathSRWPathSRW
A.1.928.904.058AL -> Organizational Performance (OP) Cronbach’s Alpha = .864.565OP -> Sales OP -> Profit OP -> Market Share OP -> ROI OP -> Stock Value.793 .846 .813 .547 .487
B.2.007.905.060AL -> Satisfaction of Follower Needs (SFN) Cronbach’s Alpha = .807.738SFN -> Follower Needs SFN -> Follower Expectations.815 .861
C.1.965.916.059AL -> Improved Quality of Work Life (IQWL) Cronbach’s Alpha = .859.773IQWL -> Improved QWL IQWL -> Builds Self-Confidence IQWL -> Enhances Skills IQWL -> Helps Psychological Growth.779 .890 .766 .690
D2.039.902.061AL -> Contribution to Absenteeism (CA) Cronbach’s Alpha = .895-.666CA -> Absenteeism of Self CA -> Absenteeism of Others.878 .924
E.2.171.897.065AL -> Contribution to Follower Dissatisfaction & Hostility (CFDH) Cronbach’s Alpha = .889-.445CFDH -> Complained against the Manager CFDH -> Requested Transfer CFDH -> Slowed Work CFDH -> Sabotaged.797 .833 .811 .803
F.2.060.887.062AL -> Contribution to Quality of Group Attitudes and Behavior (CQGAB) Cronbach’s Alpha = .811.647
CQGAB -> Increased Cohesiveness CQGAB -> Increased Cooperation CQGAB -> Increased Commitment CQGAB -> Increased Confidence.544 .713 .861 .727
G.1.993.884.060AL -> Successful Career of Manager (SCM) Cronbach’s Alpha = .641.679SCM -> Successful Career SCM -> Promoted Higher SCM -> Reelected.721 .640 .439
SRW = Standardized Regression Weights, P = .001.

Table 4: Fit of 4 structural equation models indicating relationship between AL and leadership effectiveness

ModelCMIN/DFCFIRMSEAPathSRWPathSRW
H.2.096.914.063AL -> Respect for
the Leader (RM)
Cronbach’s Alpha =
.826
.841RM -> Like
Leader
RM -> Respect
Leader
RM -> Admire
Leader
RM -> Trust
Leader
RM -> Leader
Integrity
.796
.837
.857
.857
.725
I.1.967.896.059AL -> Uncommitted
to Leader’s Requests
(ULR)
Cronbach’s Alpha =
.741
-.156*ULR -> Resist
requests
ULR -> Ignore
requests
ULR -> Subvert
requests
.390
.866
.853
J.2.001.890.060AL -> Problem
Solving Skill
Enhancement
(PSSE)
Cronbach’s Alpha = .726
.512PSSE -> Problem
Solving Skills
PSSE -> Decision
Making skills
PSSE -> Resolving Disagreements
.734
.844
.538
K.1.867.905.56AL -> Helps Deal
with Change
(HDCH) Cronbach’s
Alpha = .820
.583HDCH ->
Enhancing Role
Specialization
HDCH ->
Enhancing
Organization of
Activities
HDCH ->
Accumulation of
Resources
HDCH -> Group
Readiness
.677
.789
.719
.739
L.1.935.903.058AL -> Helps Deal
with Crises (HDC)
Cronbach’s Alpha =
.832
.636HDC -> Enhancing
Role
Specialization
HDC -> Enhancing
Organization of
Activities
HDC ->
Accumulation of
Resources
HDC -> Group
Readiness
.735
.789
.806
.689
SRW = Standardized Regression Weights, P = .001. *P = .047

Conclusion

The results indicate that AL leads to various dimensions of managerial effectiveness including organisational performance, satisfaction of follower needs, and improvement in the quality of work life. AL leads to decrease in negative attitudes and behaviour of followers like absenteeism, dissatisfaction and hostility. AL leads to enhancement in positive group attitudes and behaviour. Finally, managers practising AL achieve personal success as perceived by their followers.

AL leads to various dimensions of leadership effectiveness including respect for the leader, commitment to leader’s requests, enhancement of problem solving skills and group ability to deal with change and crises.

Discussion

This study indicates that AL is a three-factor second order construct according to Indian respondents. The Relational Transparency and Internalized Moral Perspective factors of the original ALQ get merged into a new factor which may be called Transparent and Moral Perspective. The results of the study indicate that AL improves both managerial and leadership performance.

An important limitation of this paper is that the study might be suffering from common method bias as data has been collected from a single source of respondents. Common method bias includes factors such as item ambiguity, the measurement context, transient mood states, social desirability, consistency motif, implicit theories, demand effects, scale anchors and formats, leniency bias and demand characteristics (Williams, Hartman, & Cavazotte, 2010). Future research studies should consider collecting data about followers from the leader and vice versa as one of the ex ante measures of avoiding common method bias (Chang, van Witteloostuijn, & Eden, 2010). Alternatively, ex post methods (Williams, Hartman, & Cavazotte, 2010) may be used as remedy for common method bias.

It might appear that, it has been assumed that a person in a position is a leader. It must be reiterated that the AL behaviour of leaders situated in organisations have been examined in this paper. Such leaders can execute managerial functions at certain times and leadership functions at other and could be perceived as either leaders or managers by their followers.


About the Author

Biplab Datta is associate professor at Vinod Gupta School of Management, Indian Institute of Technology, Kharagpur, India. He received his Ph.D. degree in Service Quality Management from Indian Institute of Technology Delhi in 2004. His current teaching and research interests include organizational leadership, service quality management and customer relationship management. He has published several papers in Indian and international journals. He has organized and taught a number of management development programmes on leadership and teamwork for executives and faculty members of other management institutes.

Email: bd@vgsom.iitkgp.ernet.in


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