Currently the organizations are in the phase of transition economy characterized by liberalization, macroeconomic stabilization, restructuring & privatization, legal & institutional reforms and resultant privatization, price liberalization, trade & foreign exchange, competition policy, infrastructure reform and many more. Essentials to survive this change include better technology, better infrastructure and better people with effective communication. Leadership plays a major role in developing people with effective communication (Yukl, 2010).
This paper focuses on important leadership function of “giving feedback” utilized by leader to build psychological connect with the employees. The way a leader interacts with the employees draws upon and promotes psychological connect and sets a culture (Walumbwa, Avolio, Gardner, Wernsing, & Peterson, 2008) especially during formal and informal feedback session and can serve as a responsible and effective leadership model able to build credibility and improve productivity (Avolio et al, 2004). The structure of the paper is as follows: introduction to the topic succeeded by a brief literature review that deals with the main constructs. Next the research methodology used is explained followed by the research results and findings, limitation and scope of future research. The paper contributes to the leadership literature by considering how effective leadership behavior focused on feedback given to employees may impact employee contractual status with regard to relational psychological connect, and ultimately competitiveness of the organization, in a dynamic, turbulent and challenging environment. The focus is on organized service sector organizations.
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The way a particular leader has the potential to influence the behavior of his/her members, is a relatively invisible and often neglected feature of a firm’s HR system. Leaders can directly communicate what efforts are needed on the part of employees and what they can expect in return. Leadership is known to influence business strategy implementation, long – term firm performance, and financial success through their mere ability of motivating and engaging the behaviors of their team in the right direction (Conway et.al, 2009). By virtue of what leaders pay consideration to, measure, and control, they exert huge command over how employees set clear goals, direct their efforts and how well they perform at work.
Currently the organizations are in the phase of transition economy characterized by liberalization, macroeconomic stabilization, restructuring & privatization, legal & institutional reforms and resultant privatization, price liberalization, trade & foreign exchange, competition policy, infrastructure reform and many more. Essentials to survive this change include better technology, better infrastructure and better people with effective communication. Leadership plays a major role in developing people with effective communication (Yukl, 2010).
This paper focuses on important leadership function of “giving feedback” utilized by leader to build psychological connect with the employees. The way a leader interacts with the employees draws upon and promotes psychological connect and sets a culture (Walumbwa, Avolio, Gardner, Wernsing, & Peterson, 2008) especially during formal and informal feedback session and can serve as a responsible and effective leadership model able to build credibility and improve productivity (Avolio et al, 2004). The structure of the paper is as follows: introduction to the topic succeeded by a brief literature review that deals with the main constructs. Next the research methodology used is explained followed by the research results and findings, limitation and scope of future research. The paper contributes to the leadership literature by considering how effective leadership behavior focused on feedback given to employees may impact employee contractual status with regard to relational psychological connect, and ultimately competitiveness of the organization, in a dynamic, turbulent and challenging environment.
The purpose of this section is to present an overview of the research streams under investigation in this research paper. The areas of leadership, goal setting, performance and psychological connect are discussed in the context of service sector.
Individuals produce valuable results, when they feel good about themselves, the organization and the other people with whom they work. Individuals who work under a leader initially look at leadership style as a source of wisdom and then decide their pattern of working style in the organization.
Leadership styles refer to patterns of actions that influential people use to shape others behavior. The transactional style is a set of leader behaviors that give structure to the work and job requirements employees need to accomplish (Battisti et.al, 2007). The role is to advance, clarify, and support suitable work methods and results. As a result, transactional leaders set specific, measurable goals; use mechanisms such as direction and task organizing to clarify appropriate employee behavior and make it easier to demonstrate consistently; coordinate the work individuals do; and monitor their accomplishments and deliverables. This style derives from each efficacy from using the leader’s power to reward employees. This leadership style is also known as task oriented leadership style.
On the other hand, transformational leadership style also sometimes referred as people oriented leadership style takes into consideration employee growth also along with the organizational profitability.
Transactional leadership style or tough leaders may result the organizations to win in short term but will lose talented individuals in the long run. Transformational leadership style or nice leaders may win individuals sometimes at the cost of organizational profit. Thus both styles are partially effective.
Effective leaders or leadership style can include use of clear, concise goal setting and feedback on the achievement of goals to communicate overall vision and instill work with meaning and to provide coordination, direction, and structure for individuals or groups of employees. Effective leaders are the ones who “manage themselves and the people they work with so that both the organization and the people profit from their presence.
The psychological contract refers to an individual’s (e.g. employee’s) beliefs regarding mutual commitments between that person and in this context, the leader. These commitments take many forms, from loyalty and job security to no obligations whatsoever (Battisti et.al, 2007; Adelman, 1989). Two core types of obligations are prevalent economic or monetary psychological contract terms and relational or socio emotional ones (Morris et.al, 1997). This paper deals with relational or socio emotional ones.
These monetary obligations involve compensation for specific forms of labor, as expressed by “a fair day’s work for a fair day’s pay.” Where money is the dominant concern, psychological contracts tend to be explicit in their terms.
The relational psychological contract is a fascinating subject because it offers so many different perspectives. It's not just a tool or a process. It helps to understand more about the 'give and take' at a basic level between leader and followers of an organization that describes working for an organization, and more specifically leading an organization.
This research paper makes an attempt to contribute to the leadership literature by considering how effective leadership behavior focused on feedback given to employees may impact employee contractual status with regard to relational psychological connect, and ultimately competitiveness of the organization, in a dynamic, turbulent and challenging environment.
The research method used is qualitative (Kohari, 1990). The primary data is collected by means of observations and discussions with various HR and owners of organized service sector organizations. Secondary data is collected by means of published and unpublished paper and electronic sources.
Understanding why employees are 'difficult to motivate', or 'difficult to manage' is the challenge of the relational psychological contract. The relational psychological contract helps leaders understand better how to align their people's needs with those of the organization, which at best is a very abstract idea. Following practices with regards to goal setting and feedback interaction between leader and follower in the organization can initiate the building of constructive relational psychological contract:
It is essential for the leader to clear the responsibilities and accountabilities of the staff. Generally, a leader must understand that 80% of really important results will come from 20% of the goals. Focusing on these 20% of goals can enable follower to be clear of their key areas of responsibility, maybe three to six goals in all. Of course, in the event a special project comes up, separate goal setting session can be held by the leader with the followers. This philosophy will lead to ‘no surprises’ culture as everyone knows what is expected from the beginning itself.
Leaders can enable the individuals to solve their own problems by guiding them how to follow the process. If the followers are taught to put the problem in behavioral terms and bridge gap what is actually happening and what they desire to be happening, check for solutions and implement the right one as per availability of resources, empowerment of followers can result.
Crystal clear consistent feedback has to be given to the followers immediately. Clarity in exactly what the individual did right or wrong reflects sincerity and familiarity with what the individual’s work. Immediate feedback on behaviors leads to immediate corrective actions on the part of the followers instead of piling up of all the feedback for performance appraisal session.
Leaders should tell people up front that they are going to let them know how they are doing. Praise people immediately. Tell people what they did right—be specific. Tell people how good you feel about what they did right, and how it helps the organization and the other people who work there. Stop for a moment of silence to let them “feel” how good you feel. Encourage them to do more of the same. Shake hands or touch people in a way that makes it clear that you support their success in the organization.
Warning should be given as soon as the subordinate have done something wrong. Leader can specify exactly what went wrong. Tell people how they felt about what they did wrong—and in no uncertain terms. Stop for a few seconds of uncomfortable silence to let them feel how a leader feels. Shake hands, or touch them in a way that they know the leader is honestly on their side. The leader must make it clear that he is upset of the performance and not about the individual and realize that when the reprimand is over, it’s over.
Effective leaders are the ones who “manage themselves and the people they work with so that both the organization and the people profit from their presence.”
To develop leaders who are effective leaders following recommendations are given by research with support from the literature available on leadership:
Most companies spend 50% to 70% of their money on employees’ salaries. And yet they spend less than 1% of their budget to train their employees to become leaders. Promotions are generally based to higher positions on basis of individual performances. Most companies, in fact, spend more time and money on maintaining their buildings and equipment than they do on maintaining and developing leaders.
In order to look good as a leader in most organizations, focus of leaders is to catch some of their team mates doing things wrong. It is normal mentality of most of the leaders that in an organization there should be a few winners, a few losers, and everyone else somewhere in the middle. This mentality is known as normal-distribution-curve mentality. Organizations must generate leaders with a thought process that
“Everyone Is a Potential Winner Some People Being Disguised as Losers, Don’t Let Their Appearances Fool You”
Most leaders know what they want their team mates to do. They just don’t bother to tell their team mates in a way they would understand (Coyle et.al, 2000). They assume they should know. Leaders’ communication should be clear and concise with focus on praising in front of all and reprimand in isolation for mutual benefit of followers and organization.
The findings of this research paper should be viewed with carefulness due to the following limitations. The current study is limited by lack of quantitative data and confidentiality with respect to names of HR and owners of the firms. Also generalization to other sectors has to be done with caution as this study at present is restricted to organized service sector.
Leadership development has become a topic of interest for researchers across a range of disciplines, and the diversity of theories and research emerging on leadership development is stimulating leading to new and exciting ideas on the topic especially in the field of relational and collective leadership, self-identity of leader, effect of intrinsic motivation on leadership development and many more (DeRue, 2011; Mostovicz et.al, 2009; Daft, 2008). This research focuses on developing effective leadership to play a significant role in generating relational psychological contract with the employees and further research can be conducted to see the impact of the same on the profitability index of the organization.
The nature of Human resource management in India is known to be ‘context specific’ (Brewster, 1999). Khatri et al. (2001) argue that the Human resource management system varies from country to county and can either be universal or context specific, like in India’s case where there is a strong relationship between the social contacts and human resource management practices like stress management, work life balance, leadership etc. which presents the context-specific nature of such a practice .Most of the research on leadership has emphasized the effects of leadership rather than the development of leadership. Leadership development also emphasizes on developing people’s motivation to lead, their identity as leaders, as well as their mental mode about what it means to contribute in a leadership process. Developing effective leadership plays a significant role in generating relational psychological contract with the employees and further research can be conducted to see the impact of the same on the profitability index of the organization.
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