A charismatic leader is a person who is energetic, visionary, unconventional and exemplary. He can inspire, influence and motivate his followers. Charisma is considered to be the most important factor in transformational leadership model (Humphreys, 2002). The attributes of leadership are vision, communication skills, integrity, drive and motivation which are possessed by charismatic leaders and the charismatic dimension of transformational leadership forms the effective leadership. Charisma or inspirational motivation is demonstrated by communication of high expectation expressed in simple way.
Disscussion
As management evolved, the organisation's success (Humphreys, 2002) continued to reside within the ability of individual leaders to enhance the performance of their subordinate followers. The importance of this relationship became significant in organisation's success.
Leadership styles are classified into two types namely transactional leadership and transformational leadership.
The key to transactional leadership is the exchange between leader and follower. They influence each other in a way that they both receive something of value and there is a mutual dependence from both sides. Rewards are used by the leader in this style of leadership like bonuses and promotions. Transactional leadership promotes compliance by appealing to the needs and wants of individuals. This style of leadership is common in large organisations today. In this perspective, contingent rewards is a positive reciprocal relationship between leaders and followers who exchange ideas and skills in the pursuit of company goals and individual needs.
Transformational leadership does not constitute of exchange of commodities between leader and follower but operates from deeply held personal value system. Transformational leaders unite their followers and change their goals and beliefs and gain acceptance of organisational mission by developing the ability in followers to look beyond their self interests. Charisma, inspirational motivation, intellectual simulation and individual consideration (Gill, 2003) are the factors associated with this leadership. Individualised consideration is the fundamental transformational leadership behaviour (Sarros, Santora, 2001) where individuals are treated as important contributors to workplace and leaders who use this style show consideration to workers needs and encourage and coach them about work place behaviour. Inspirational motivation is raising consciousness of workers about organisation's mission and vision and encouraging them to understand and commit to the vision. Intellectual simulation is to stimulate workers to encourage creativity and accept challenges as part of their job. Leaders help the workers in their difficulty in a calm and calculated fashion and guide them use problem solving techniques for making decisions which reflects mutual consensus between leaders and employees. Idealised influence is the behaviour which encourages followers use their leaders as their role model. Idealised influence is developed in followers when leaders inspire, provide meaning for, and instil a sense of purpose in people.
Now let us turn our focus towards charismatic dimension of transformational leadership. It is very interesting to know how charismatic leadership creates its influence. This was explained by Shamir (1991), he reorganised and compared theories and found four alternatives which might explain how charismatic leadership happens and these are psychoanalytic explanation, the sociological-symbolic explanation, the attribution-based explanation, and the self-concept based explanation. Each one of them has its own factors to influence the followers. The psychoanalytic explanation suggest that the followers imagine the leaders as powerful figures which is stimulated because of the leaders extraordinary personal traits and this can result in feeling of relief from internal conflict and a strong identification with leaders (Huang, 2005). The sociological-symbolic explanation suggests that the followers' needs for symbolic order and the meaning of life are fulfilled by charismatic leaders. The attribution-based explanation suggests that charismatic leadership is simply the combined attribution of the leader's motivation, behaviour, and the situation from subordinates which can help followers to clarify ambiguous situations. The self-concept-based explanation suggests that charismatic leaders can stimulate subordinates' intrinsic motivation and enhance their self-concepts, self-esteem, and self-worth.
However, each of the explanations regarding the influence process of charismatic leadership seems to be too ambiguous to be tested empirically. Thus most of them remain at the stage of conceptual discussion. The only exception is the self-concept-based explanation. Based on the model of Shamir et al. (1993), the theory suggests that a charismatic leader can increase the intrinsic valence of efforts and goals by linking a follower's self-concept to the leader, to the mission, and to the group, such that the follower's behaviour for the sake of the leader and the group becomes self-expressive. In other words, we can say the self-concept-based theory sees charismatic leadership as a motivational process.
Let us look into the behavioural dimensions of charismatic leadership; Huang (2005) argues that charismatic leadership behaviour can be categorized into two groups: one includes the behaviour relating to subordinate shaping; second one includes the behaviour relating to culture shaping.
Subordinate shaping means that the charismatic leader usually interacts with subordinates directly by providing support to subordinates, which builds confidence in them, and displaying exemplary behaviour. By this charismatic leader can encourage followers to identify with the leader and internalize the leader's values. Thus, subordinates not only show great respect and trust for the charismatic leader but also make commitment to the leader and task directed by the leader.
On the other hand, culture shaping means the charismatic leader can transfer the ideological values to organizational members by presenting a vision or values. By showing this type of behaviour, the charismatic leader helps followers internalize organizational values and identify themselves with the whole group. Thus, subordinates have more positive affect toward their own group and show a higher willingness to commit to benefits.
According to Schein (1992), the most important function of top leaders is to bring in their own values into the organization through culture embedding mechanisms, and thus establish a strong organizational culture. One of the main elements is though charisma. Other researchers also suggested that since a charismatic/transformational leader is expected to present group values and identity in personal behaviour, verbal and nonverbal behaviour which actively increases shared values and norms. Thus, such a leader contributes to create a distinctive and strong organizational culture. Therefore, we can expect charismatic CEOs to have greater power to bring their own values into organizational values than non-charismatic CEOs.
As a whole by subordinate shaping behaviour Charismatic CEO influences employees to internalize the values proclaimed him and also can promote subordinates identification with the leader. Through culture shaping, the charismatic CEO helps the employees to go through a socialization process to internalize the organizational values.
Charismatic strategic leaders influence organizational performance because they are able to overcome the three major inertial forces (cognitive, motivation and obligation) that allow the organizations to adapt to new environments; they are able to inspire and motivate employees and other corporate stakeholders, they are able to create cohesion among the members of organizations with their vision and power; they have an effect on their followers and they are willing to implement strategic change. Hence, when employees perceive their CEO as charismatic (Bacha, 2009), we can expect higher organizational performance.
Bacha (2009) noted that uncertainty of environment could influence the leadership and organizational performance. When environment is unstable and uncertain, the employees are more influenced by charismatic CEO as they require guidance. So the charisma of CEO is very important for an organization whose environment is uncertain.
To investigate the relationship between CEO charismatic leadership, employee outcomes and his organizational values, let us consider a study by Huang (2005).
The study found an average correlation between charisma and subordinates' self-rated outcomes of 0.81, and a correlation between charisma and objectively rated outcomes of 0.35.
Moreover, the effect size of charismatic leadership has been found to be between 0.40 and 0.80 for individual outcome variables, and between 0.35 and 0.50 for organizational outcomes. Basically, these outcome variables for studying charismatic leadership can be grouped into three categories. The first category includes variables describing the relationship between subordinates and leaders, such as identification to leaders and supervisory satisfaction. The second includes variables describing subordinates' perception on their own tasks and roles, such as extra job involvement and intrinsic motivation. The third includes variables describing the relationship between subordinates and their groups, such as organizational commitment and identification to the unit. Hence CEO Charismatic leadership will have a positive effect on the following employee outcomes: Extra effort to work, satisfaction with the CEO, and organizational commitment.
To see what type of leadership is best, let us explore (Sarros, Santora, 2001) few elements like visionary, role modelling and team building through transformational-transactional leadership model. Times are changing rapidly and the knowledge and practice of leadership should accommodate these changes. With changes like these, there is a need for more strategic form of leadership. An analysis of this nature must involve a study with current CEO's and managers. The study involves executives (Sarros, Santora, 2001) in Top 500 companies in Australia. To assess the leadership profiles of executives, four factors of transformational and two factors of transactional leadership and one non leadership factor was used.
It is of interest to see how leaders strive to obtain transformational results but often find hindrances on their way with some unpredictable external factors or internal problems among staff. The four types of transformational leadership used by the executives in this study in order of most often and least often used of mean scores where 0 = not at all and 4 = frequently, were
Individualised consideration (mean = 3.07)
Inspirational motivation (mean = 3.02)
Intellectual simulation (mean = 3.00)
Idealised influence (mean = 2.89).
The ratings for transactional leadership were contingent rewards (mean = 2.5) and management by exception (mean = 1.89).
So the conclusion from these anecdotes is leaders are driven into unfamiliar territory where change remains the only constant. The ability of the leader to handle the change has the massive impact on the business and morale of their workers. The ability of an executive to identify their leadership styles in a problematic organisational and social context makes them effective leaders.
To summarise the key findings of this study (Sarros, Santora, 2001), the following leadership approaches provides guidelines for leadership development, theory and practice.
Leadership deals with people, ideas and their beliefs while management deals with strategies, systems and structures.
People prefer good leadership over management.
Today's business needs executives to strive harder and work longer hours to achieve results and to keep the business competent.
Leadership works best when leaders and workers agree the mechanism and strategies to reach the goal.
Leaders need ethical and consistent work behaviour to inspire trust and commitment in the followers.
Leadership is about motivating and directing people by including the values such as trust, respect, honesty and integrity.
Contingency leadership is driven by bottom line rather than the needs and values of workers.
Transactional leadership is a transaction between the leader and the follower purely driven by the wants of the follower and does not involve emotions, trust and integrity between leader and follower.
Transformational leadership motivates workers to perform beyond expectation which is driven by inspiration.
Apart from being interpersonal and strategic, successful leader needs to be cognitive and intuitive.
Successful leadership is giving more responsibilities to workers and making them more accountable for their success and failures and guiding them for this.
Leaders should consider few environmental factors such as organisation's culture and business climate.
Leaders inspire others by their hard work, commitment to people and commitment to organisation.
Leaders who have high idealised influence have high emotional stability and control by which they overcome their inner conflicts and believe strongly in themselves to achieve the target. They also believe that transforming their followers through communication, role modelling and encouragement are appropriate strategies for achieving the mission and goals of the company.
Inspirational leaders work actively with the workers to get the best out of them and encourage and guide them continuously.
Leaders who practice management by exception trust their employees to achieve their targets to a satisfactory standard.
Leaders need to understand the systems they operate apart from interpersonal and technical expertise.
Conclusion
To conclude this analysis, we have seen transformational and transactional leadership theories in detail and we have tried to explain the qualities and abilities of a Charismatic leader. CEO charismatic leadership can influence employee outcomes such as extra effort to work, satisfaction with the CEO and organizational commitment through person-organization values fit. We can say charismatic CEO's play an important role when environment is unstable and uncertain. In today's constantly changing world, leaders need to adapt to the changes to thrive ahead in the business and Charismatic CEO's can inspire, motivate and guide the employees and lead by example. Whereas in transactional leadership the exchange of rewards does not involve emotions, trust and integrity but this transactional leadership can be used with transformational leadership to satisfy the employees needs. We can conclude that transformational leadership plays a significant role and leads to effective leadership.
