Evaluating the relationship between perceived leadership style and telecommuter intent to leave an organization
TABLE OF CONTENTS CHAPTER 1: INTRODUCTION 1 Background 2 Problem Statement 4 Purpose 5 Theoretical Framework 6 Research Questions 10 Hypotheses 11 Nature of the Study 12 Significance of the Study 14 Definitions .15 Summary 16 CHAPTER 2: LITERATURE REVIEW 20 Theoretical Framework 21 Historical Overview 21 Leadership 21 Turnover 24 Turnover Models 24 Current Literature 26 Turnover 26 Employee Turnover Intentions .....26 Telecommuter Intent to Leave 28 Employee-Organization Fit 33 Organizational Support and Turnover Intentions 35 Field and Turnover Intentions 36 Problems with Telework 39 Work-Life Balance 40 Telework and Isolation 46 The Withdrawal from Telework 47 Turnover Intentions in Expatriate Workers 48 Leadership Styles 49 Leaders as Role Models 51 The Augmentation Effect 53 Leadership and Meaning 54 Leadership and Self-Development ....55 Leadership and Culture 57 Enterprise Mobility 58 Leadership Style and Turnover 58 The Learning Organization 62 Participative Management 64 viii
Employee Mobility 64 Organizational Support and Telework 65 Transactional Corporate Culture versus Telework 66 Conclusion 67 Summary 69 CHAPTER 3: RESEARCH METHOD 71 Research Methods and Design(s) 73 Participants ....75 Materials/Instruments 76 Operational Definition of Variables 82 Data Collection, Processing, and Analysis 84 Data Collection 84 Data Analysis 86 Methodological Assumptions, Limitations, and Delimitations 88 Assumptions 88 Limitations 88 Delimitations 89 Ethical Assurances 90 Summary 91 CHAPTER 4: FINDINGS 92 Participant Demographics 93 Descriptive Data 94 Results 96 Evaluation of Findings 99 Summary 104 CHAPTER 5: IMPLICATIONS, RECOMMENDATIONS, AND CONCLUSIONS 106 Implications 108 Recommendations 112 Practical Recommendations 112 Recommendations for Future Research 113 Conclusions 116 REFERENCES 119 APPENDIXES 134 Appendix A: Multifactor Leadership Questionnaire (5x-Short) 134 Appendix B: Staying or Leaving Index 135 Appendix C: Demographic Survey 136 Appendix D: Permission to Use Multifactor Leadership Questionnaire 137 Appendix E: Permission to Use Staying or Leaving Index 138 Appendix F: Permission to Collect Data - MSI Systems Integrators, Inc 139 ix
Appendix G: Permission to Collect Data - Professional Veterinary Products 140 Appendix H: Informed Consent Form 141 Appendix I: Participant Demographics 142 x
LIST OF TABLES Table 1 MLQ 5X Scoring Methodology 78 Table 2 Operational Variables 84 Table 3 Means and Standard Deviations on Intent to Leave, Transformational, Transactional and Laissez-Faire 96 Table 4 Regression with Transactional Leadership Predicting Intent to Leave...97 Table 5 Regression with Transformational Leadership Predicting Intent to Leave 98 Table 6 Regression with Laissez-faire Leadership Predicting Intent to Leave ....99 Table 11 Frequencies and Percents for Gender 142 Table 12 Frequencies and Percents for Age Range 142 Table 13 Frequencies and Percents for Ethnicity 142 Table 14 Frequencies and Percents for Education 143 Table 15 Frequencies and Percents for Time with Organization 143 Table 16 Frequencies and Percents for Time in Career Field 144 XI
1 CHAPTER 1: INTRODUCTION The cost of employee turnover can be high and negatively affect the profitability of an organization (O'Connell & Kung, 2007). For a midsized organization with 1,000 employees and a 10% annual turnover rate, the annual turnover cost is approximately $7.5 million (Bliss, 2007). Losses incurred when employees leave an organization include the costs of recruiting and training new employees, increased sales costs, loss of skills and company knowledge, lost productivity and capacity, and lost customers (Kochanski & Sorensen, 2008). Frequently overlooked costs include damaged external market relations, draining of expert knowledge, and lowered co-worker motivation (Mayfield & Mayfield, 2008). Intent to stay or leave an organization is the strongest predictor of actual voluntary turnover (Lee & Liu, 2006). Employee levels of trust, job satisfaction, and organizational commitment have a direct relationship to turnover rates (Bibby, 2008; Knudsen, Ducharme, & Roman, 2009; Lee & Liu, 2006). A positive relationship exists between the trust employees have for their leaders and the shared values between employees and leaders. Increased use of communication and information technology, and an increasing number of telecommuters, has created new challenges for leaders (Kahai, Fjermestad, Zhang, & Avolio, 2007). Geographic, time, and cultural differences among team members reporting to a single leader present structural, evaluation, developmental, and inspirational challenges (Kahai et al., 2007). The leader-employee relationship is particularly important in a work environment that
2 involves telecommuting. Successful telecommuting programs result in a positive relationship between supervisors, tasks, and the work environment. Organizational leaders who guide successful telecommuting programs place considerable emphasis on planning, management support, and selecting employees involved in telecommuting (Shia & Monroe, 2006). Organizational leaders with telecommuters should provide training to both the telecommuting employee and the organizational leader. Organizations with successful telecommuting programs train both parties to deal with the changes that telecommuting brings to relationships and working conditions (Baker, Gayle, & Crawford, 2006). The current chapter includes the problem examined, why the problem is of interest, and the purpose of the study. The chapter continues with a discussion of the theoretical framework, the research questions, and the hypotheses guiding the study. The chapter concludes with a discussion of study significance and definitions of key terms. Background Employee turnover is "the rate of change in the working staff of an organization during a defined period" (Shahnawaz & Jafri, 2009, p. 159) or "the movement of employees out of an organization" (Lee, Hsu, & Lien, 2006, p. 1951). Turnover is the estimated probability that an individual will stay with an employing organization (Lee & Liu, 2006). Two forms of employee turnover exist: involuntary and voluntary. Involuntary turnover occurs when an employee unwillingly leaves an organization, frequently occurring during layoffs,
3 restructuring, or retirement initiated at an organizational level (Ashworth, 2006). Voluntary turnover occurs when employees choose to leave an organization, and is frequently described "as a deliberate, job dissatisfaction-initiated process that includes job search and subsequent expected utility deliberations" (Weller, Holtom, Matiaske, & Mellewigt, 2009, p. 1146). Organizational leaders employ a wide range of incentives to decrease turnover. Work-life balance initiatives offered by an organization, including flextime, compressed workweeks, and telecommuting can reduce employee turnover and enhance organizational commitment (Smith & Gardner, 2007). The advent of digital technologies enables employees to perform a wider variety of tasks from locations other than that of the employer. As a result, organizational leaders are able to reduce real estate costs and comply with governmental regulations (Gajendran & Harrison, 2007). An estimated 45 million American employees telecommuted in 2006 (Gajendran & Harrison, 2007). Gajendran and Harrison (2007) surveyed senior level executives outside the United States and found two thirds of the firms contacted used telecommuting. Employees are attracted to telecommuting because it offers more flexibility to meet individual and family needs (Martinez-Sanchez, Perez-Perez, de-Luis-Carnicer, & Vela- Jimenez, 2007). Employees who telecommute commonly reciprocate with a higher commitment to the organization (Martinez-Sanchez et al., 2007). Kirk and Belovics (2006) estimated that by the year 2010 there will be 20 million full-time and part-time telecommuters in the United States and over 27 million in Europe. Advances in technology have made telecommuting a practical
4 alternative for an increasingly wide range of jobs. Fewer positions are bound to the traditional workplace (Golden, Veiga, & Dino, 2008). Still, telecommuters do leave their jobs. Baker et al. (2006) suggested that successful implementation of a telecommuting program within an organization requires careful attention to interpersonal issues, technological structure, and organizational structure. Problem Statement The problem addressed in the study was the high cost of telecommuter turnover and the resulting negative effect on the profitability of an organization. The cumulative high cost of replacing employees, whether the employee telecommutes or works in a traditional workplace, has a negative and potentially serious effect on the fiscal stability of an organization (Lee, Gerhart, Weller, & Trevor, 2008). The cost for an employer to replace a single telecommuter ranges from 25% to 200% of the telecommuter's annual salary, with the annual turnover cost to the United States economy estimated at $5 trillion (Alexandrov, Babakus, & Yavas, 2007). The strongest predictor of voluntary turnover is employee intent to stay or leave (Bibby, 2008; Knudsen et al., 2009). A high turnover rate in an organization may result from negative leadership behaviors. The focus of the quantitative, non-experimental study was to determine if a relationship exists between perceived leadership style and telecommuter intent to leave an organization. The findings from the study may prove useful in understanding what, if any, leadership traits will decrease the intent of telecommuters to leave an organization. The three leadership styles included in the study were transactional, transformational, and laissez-faire.
5 Purpose The purpose of the quantitative non-experimental study was to examine the relationship between perceived transactional, transformational, and laissez- faire leadership styles and telecommuter intent to leave an organization. The Multifactor Leadership Questionnaire Form 5X (MLQ 5X) was used to measure the perceived leadership styles of transactional, transformational, and laissez- faire. Using an ordinal level scale, the MLQ 5X provides a measure of the extent to which an individual demonstrates each of the three leadership styles. The styles are not mutually exclusive; they may co-exist, and a leader may be described by any, all, or none of the three leadership styles (Mind Garden, personal communication, February 25, 2009). The Staying or Leaving Index (SLI) was used to measure telecommuter intent to leave an organization. Using an ordinal level scale, the higher the score of the respondent, the greater is the intent to leave an organization. The sample included 200 telecommuters from two medium sized sales- based organizations with headquarters in the Midwestern United States. The first organization is a computer systems integration firm. The second organization is a veterinarian products distributor. The population included male and female employees ranging in age from 19 years to 70 years. Employee tenure at the current organization ranges from less than one year to not more than 15 years. Length of time in current career field ranges from less than one year to more than 15 years. The population educational levels range from high school graduates to
6 doctoral or professional degrees including Doctor of Philosophy (PhD) and Jurist Doctor (JD). All employees within the two organizations who telecommute were included in the sampling frame. Telecommuters from the veterinarian products distributor were sales staff. Telecommuters from the computer systems integration firm included sales staff, technical engineers, administrative support personnel, mid level managers, and executive level management. For the study, the population was readily identifiable and literate, with no known language difficulties. The people chosen in the sample were willing to complete the survey, and there were no geographic restrictions. Participants were readily accessible through email, as all employees of both participating organizations have an email address. Theoretical Framework The study fell under the broad theoretical area of leadership. The purpose of the study was to examine the relationship between the independent variables of transactional, transformational, and laissez-faire leadership and the dependent variable of telecommuter intent to leave an organization. Many theories surround leadership including trait theory, situational leadership, leader member exchange, the contingency/situational model, and path-goal theory. The research study was guided by the full range leadership theory. Using the Multifactor Leadership Questionnaire (MLQ) the full range leadership theory is empirically tested (Avolio & Bass, 2004; Dumdum, 2002; Judge & Piccilo, 2004).
7 The full range leadership theory constructs are comprised of three types of leadership behavior: transformational, transactional, and non-transactional laissez-faire leadership, represented by nine distinct factors (Antonakis, Avolio, & Sivasubramaniam, 2003). Theories of charismatic, transformational, and visionary leadership dominate much of the current literature surrounding leadership. Weber (1974) used the term charismatic to describe a leader endowed with a gift of divine grace. According to Weber (1974) five elements are required: (a) a person with extraordinary gifts, (b) a desperate situation or social crisis, (c) a set of ideas to provide a radical solution to the crises, (d) followers attracted to the exceptional leader and who come to believe the leader has a direct link to transcendent powers, and (e) validation of the leader's uncommon gifts and transcendent powers by repeated success (1974). House (1971) and Burns (1978) further developed charismatic leadership theory. In the 1980s, the concept of transformational and transactional leadership originally proposed by Burns was operationalized and refined by Bass' (1985) multifactor leadership theory encompassing a range of leader behaviors including charismatic and mundane leadership. The full range leadership theory further refines and expands on the multifactor leadership theory. Conceptual frameworks of leadership range from non-leadership (laissez-faire), to transactional leadership based on rewards and punishments, to transformational leadership based on leader behavioral charisma (Bass & Avolio, 1993).
8 Frequently referred to as transactional contingent reinforcement, transactional leaders provide rewards and recognition when followers successfully accomplish assigned tasks (Bass, Avolio, Jung, & Berson, 2003). The transactional leader expects clarifying goals and subsequent reward will result in expected performance levels by individuals and groups. "In its more corrective form, labeled active management by exception, the leader specifies the standards for compliance, as well as what constitutes ineffective performance, and may punish followers for being out of compliance with standards" (Bass et al., 2003, p. 208). A transactional leader rigorously monitors followers for mistakes, errors, and deviation from expected results, quickly taking corrective actions (Yukl, 2006). The passive form of transactional leadership is laissez-faire or passive- avoidant leadership (Bass et al., 2003). The laissez-faire leader refuses to take action or waits for problems to arise before acting, fails to provide goals and standards for followers, and refuses to clarify expectations. "This type of leader shows passive indifference about the task and subordinates...It is best described as the absence of effective leadership rather than as an example of transactional leadership" (Yukl, 2006, p. 281). Transformational leadership refers to the leader moving the follower beyond immediate self-interests through idealized influence (charisma), inspiration, intellectual stimulation, or individualized consideration (Bass, 1999, p. 11). Significant transformational leadership behaviors include respect of other, pride among employees, confidence in others, a lack of self interest, a focus on
9 the common good, enthusiasm, vision, optimism, problem solving, development of employees, promoting creative solutions to stressful conditions, and treating employees as individuals (Harland, Harrison, Jones, & Palmon, 2005). The primary measurement tool utilized in research on the Ml range leadership theory is the MLQ (Tejeda, Scandura, & Pillai, 2001). Avolio and Bass (1991) suggested all leaders display transactional and transformational attributes, but each leader demonstrates more of one and less of the other. "Those leaders who are more satisfying to their followers and who are more effective as leaders are more transformational and less transactional" (Bass, 1991, p. 11). Perceptions of leadership assessed on the MLQ range from ineffective, those behaviors representative of avoidance of responsibility and action, to effective, those behaviors that generate high order developed and performance effects (Avolio & Bass, 2004). The range of behavior assessed through the MLQ is broader than the range assessed by other leadership surveys. Advantages of the MLQ include the emphasis on feedback and leadership development, ease of understanding, and the ability to assess perceptions of leadership effectiveness at all levels of an organization (Avolio & Bass, 2004). Avolio and Gardner (2005) suggested that over the last 100 years most leadership theories originated without focusing on essential core processes. As a result, rigorous testing does not occur, theories are inadequately developed, and conceptualizations occur in a post hoc manner (Avolio and Gardner, 2005). Individual perspectives influence the way researchers define leadership.
10 Researchers define leadership "in terms of traits, behaviors, influence, interaction patterns, role relationships, and occupation of an administrative position" (Yukl, 2006, p. 20). Most definitions reflect an assumption that a process of intentional influence is exerted by one person over others. The definitions have little else in common and differ in the purpose of the influence, which exerts influence, how influence is exerted, and the outcome of influence (Yukl, 2006). The fundamental disagreement among researchers regarding identifying leaders and leadership processes leads some theorists to question whether leadership is a useful scientific construct (Alvesson & Sveningsson, 2003). Researchers with different concepts of leadership use different phenomena to investigate leadership and interpret results in different ways. Defined in a restrictive manner, a narrow perspective on the process under consideration occurs and the researcher is "less likely to discover things unrelated to or inconsistent with their initial assumptions about effective leadership" (Yukl, 2006, p. 21). Research Questions The purpose of the research study was to examine the relationship between perceived leadership style and telecommuter intent to leave an organization. To determine if leadership style has an effect on telecommuter intent to leave an organization, the following three research questions and associated hypotheses guided the study:
11 RQ1: What is the relationship, if any, between the extent to which a leader demonstrates a transactional leadership style and telecommuter intent to leave an organization? RQ2: What is the relationship, if any, between the extent to which a leader demonstrates a transformational leadership style and telecommuter intent to leave an organization? RQ3: What is the relationship, if any, between the extent to which a leader demonstrates a laissez-faire leadership style and telecommuter intent to leave an organization? Hypotheses H10: There is no relationship between the extent to which a leader demonstrates a transactional leadership style and telecommuter intent to leave an organization. H1a: There is a relationship between the extent to which a leader demonstrates a transactional leadership style and telecommuter intent to leave an organization. H20: There is no relationship between the extent to which a leader demonstrates a transformational leadership style and telecommuter intent to leave an organization. H2a: There is a relationship between the extent to which a leader demonstrates a transformational leadership style and telecommuter intent to leave an organization.
12 H30: There is no relationship between the extent to which a leader demonstrates a laissez-faire leadership style and telecommuter intent to leave an organization. H3a: There is a relationship between the extent to which a leader demonstrates a laissez-faire leadership style and telecommuter intent to leave an organization. Nature of the Study A quantitative non-experimental design was used to examine the relationship between perceived leadership styles and telecommuter intent to leave an organization. Three leadership styles were examined: transactional, transformational, and laissez-faire. Telecommuters responded to a single online survey combining two validated survey instruments, the MLQ 5X Rater Form and the SLI. The survey included demographic questions about age, gender, race, level of education, length of time with current organization, and length of time in the career field. Researchers use quantitative methods to test or verify theories or explanations, identify variables to study, and relate variables through questions (Creswell, 2003). The quantitative method uses unbiased approaches and uses standards of validity and reliability. When the problem involves identifying factors influencing an outcome, or understanding the best predictors of a given outcome, a quantitative approach is optimal (Creswell, 2003). Researchers use a non- experimental design to identify possible causes, identify variables requiring
13 additional investigation, and to predict one variable from another (McMillan & Schumacher, 2001). Four constructs were measured: transactional leadership style, transformational leadership style, laissez-faire leadership style, and telecommuter intent to leave an organization. The three leadership styles constituted the independent variables. Telecommuter intent to leave an organization was the dependent variable. Data for the study was collected on the Internet. Participants received an email containing a link and password to the survey. The survey was hosted on SurveyMonkey, an online survey-hosting site. The survey had a start and end date. Selected participants who attempt to respond to the survey after the end date were denied access. After the end date, all data was downloaded for statistical analysis. Telecommuter perception of leadership styles was measured using the MLQ 5X, a self-reporting questionnaire that provides measurements on how participants perceive their managers' leadership style. The MLQ 5X consists of 45 questions displaying a spectrum of leadership behaviors and addressing the frequency of behaviors exhibited by the participant's leader (Avolio & Bass, 2004). Using the MLQ 5X, telecommuters rated the frequency of observed behaviors using a Likert-type scale. The dependent variable, telecommuter intent to leave an organization, was measured using the SLI. The SLI is an eight-item survey instrument in which
14 intent to leave is measured using a 7-point Likert-type scale. Respondents with a higher score have a greater intent to leave the organization (Bluedorn, 1982a). Data was entered into SPSS version 15.0 for Windows. Descriptive statistics were conducted on demographic data (e.g., gender, race, and age). Descriptive statistics include frequencies and percentages for nominal (categorical, dichotomous) data. Composite scores were calculated for transactional, transformational, and laissez-faire leadership styles by summing all items in each subscale and dividing by the total number of items in each subscale. Significance of the Study Telecommuter turnover affects organizations and their stakeholders, including organizational leaders, employees, customers, and suppliers. Relationships suffer if an organization is unable to retain its valuable telecommuters. According to Cascio (2006) the number the number of Americans leaving their jobs between 2004 and 2005 has increased by 13%. Manufacturing and transportation industries have a turnover percentage of approximately 15%, while leisure, hospitality, construction, and retail industries have a turnover rate ranging from 25% to 45%. Cascio (2006) continued: To appreciate what that means for an individual firm, consider the number of people Wal-Mart employed at the end of 2004—1,600,000 people. Its annual employee turnover rate is 44 percent—close to the retail industry average. Each year, therefore, Wal-Mart must recruit, hire, and train more than 700,000 new employees just to replace those who left. (p. 41) The study contributes to the body of knowledge regarding the relationship between leadership style and telecommuter intent to leave an organization. The
15 findings provide organizational leaders with insight helpful for promoting the leadership factors needed to retain telecommuters. The insights gained will also be useful for the process of hiring and promoting employees and for leaders who supervise telecommuters. The results of the study may assist leaders in identifying desirable leadership traits that have been previously unrecognized or underutilized. The traits may then be encouraged by upper management as a way of increasing telecommuter intent to stay with an organization. Leaders may use the information to reinforce favorable practices and develop plans to correct leadership styles that are associated with higher telecommuter intent to leave the organization. Reduction in telecommuter intent to leave an organization may translate into increased client satisfaction, lower recruiting and retraining costs, overall improvement in morale within the organization, an increase in profitability, and fiscal stability. Definitions The study included operational terms. Some of the words and operational terms used in the research are unique or have multiple meanings. This section defines the operational terms. Employee retention. Employee retention is a strategic method used by organizations to retain quality employees (James, 2005). Employee turnover. Employee turnover is the ratio of workers replaced in a given time period to the average number of workers, or "the movement of employees out of an organization" (Lee et al., 2006, p. 1951).
16 Laissez-faire. Laissez-faire refers to a leadership style involving an abstention from responsibility, decision making, providing feedback, and passive indifference toward worker growth (Yukl, 2006). Telecommuting or telework. Telecommuting or telework is work performed at an employee's home or a work location other than a traditional office, averaging at least one day a week, and regularly used (United States Office of Personnel Management, 2009). Transactional leadership. Transactional leadership is a leadership style involving appeals to the self-interests of the worker, and an exchange of benefits, such as pay, in return for work effort (Yukl, 2006). Transformational leadership. Transformational leadership is a leadership style involving appeals to the moral values of the worker, in an attempt to raise worker consciousness and mobilize worker resources and energies to reform an organization (Yukl, 2006). Summary By the year 2010, there will be 20 million full-time and part-time telecommuters in the United States and over 27 million in Europe (Kirk & Belovics, 2006). Telework is beneficial for a range of organizational outcomes, including higher levels of organizational commitment, reduced absenteeism, higher levels of job satisfaction, and reduced rates of turnover (Major, Verive, & Joice, 2008). Employee turnover is costly for an organization and has a negative effect on profitability (O'Connell & Kung, 2007). Intent to stay or leave an organization is the strongest predictor of actual voluntary turnover (Bibby, 2008;
17 Knudsen et al., 2009; Lee & Liu, 2006). Therefore, research into the possible connection between telecommuter perception of leadership style and intent to stay or leave an organization may be valuable for organizations. The problem addressed in the study was the high cost of telecommuter turnover and the resulting negative effect on the profitability of an organization. The cumulative, high cost of replacing employees, whether the employee telecommutes or works in a traditional workplace has a negative and potentially serious effect on the fiscal stability of an organization (Lee et al., 2008). A high turnover rate in an organization may result from negative leadership behaviors. The focus of the quantitative, non-experimental study was to determine if a relationship exists between leadership style and telecommuter intent to leave an organization. The three leadership styles included in the study are transactional, transformational, and laissez-faire. The study fell under the broad theoretical area of leadership. The purpose of the study was to examine the relationship between the independent variables of transactional, transformational, and laissez-faire leadership and the dependent variable of telecommuter intent to leave an organization. The research study was guided by the full range leadership theory developed by Avolio and Bass (1991). Theories of charismatic, transformational, and visionary leadership dominate much of the current literature surrounding leadership. In the 1980s, the concept of transformational and transactional leadership originally proposed by Burns was operationalized and refined by Bass' (1985) multifactor leadership theory encompassing a range of leader behaviors including