Building Effective Leadership

Mostafa Sayyadi, Author, Transformational Leadership: How To Prosper as a Leader In Today's Hypercompetitive Environment

Building Effective Leadership
How Organizational Factors Can Facilitate or Can Inhibit Leadership Effectiveness

The term transformational leadership has described an inspirational role that managers can apply to enhance the organization’s intellectual capital and ultimate performance. The question arises whether organizational factors themselves can be a source of effectiveness for transformational leaders. I pose that an ineffective vision and strategic plan may expose organizations to missed opportunities and lack of using leadership opportunities to their benefit given the existing opportunities in international and domestic markets, and how this lack of judgment may concern stakeholders. This assumption can be further explained by Barney (1991), who argues that an organization’s internal characteristics can be seen as essential sources of achievement. HR professionals, to date, have failed to provide a comprehensive framework which incorporates all of the contextual factors that may impact transformational leadership within companies. Exploring these factors and how they may impact practical implications for top managers to improve outcomes at the organizational level and meet their business objectives. There is a gap toward identifying the catalysts of transformational leadership. The absence of a systematic approach toward this challenge inhibits the development of transformational leadership as a vital driver of corporate performance. It is apparent that a systematic approach toward transformational leadership can provide practical guidelines for management executives.

Transformational leaders inspire followers to generate new solutions and a better environment. A highly centralized structure has a negative impact on transformational leadership, while decentralization positively contributes to transformational leaders in developing a more innovative climate. This can be enhanced by the crucial role of decentralized structures in facilitating the exchange of ideas and the implementation of more innovative solutions based on stipulating the power of decision-making at all levels of the organization. Highly formalized structures are more bureaucratic, and this negatively contributes to the effectiveness of transformational leadership in changing the existing situations and creating a better environment. Thus, transformational leadership is more effective in more informal structures when compared to bureaucratic structures. Hence, a formalized and centralized structure is negatively related to the effectiveness of transformational leadership.

Trust, and important component of a collaborative culture which could positively contribute to develop and maintain organizational communications is emphasized in this section of my article. Both cultural aspects of collaboration and trust can be critical for the effectiveness of transformational leadership, which is strongly based on developing relationships with subordinates. A leader’s ability to build a more innovative environment is also highly dependent on the extent to which their subordinates trust them. Therefore, a culture that instils trust in subordinates enables transformational leadership  through mobilizing their support toward the transformational leadership vision for changing current situations, whereas, distrust will impair the effectiveness of this form of leadership. Therefore, both cultural aspects of collaboration and trust can positively contribute to transformational leadership.

Inter-companies social networks improve leadership effectiveness in developing a more innovative climate. As transformational leaders can facilitate innovation in the organization. Moreover, inter-companies social networks positively impact on leaders’ views, and motivate them in expanding relationships with their subordinates. Inter-companies social networks can enable transformational leaders in developing relationships with subordinates. Inter-companies social networks can also positively contribute to transformational leadership to effectively empower employees. This could be justified by stressing this fact that firms linked together by using inter-companies social networks are more capable in the effectiveness of learning. Hence, inter-companies social networks can have a positive relationship with the effectiveness of transformational leadership.

Finally, stakeholder orientation can improve the effectiveness of transformational leadership through developing a better vision that incorporates stakeholder’s attitudes. Transformational leaders facilitate knowledge sharing and innovation and this could be positively affected by stakeholder orientation, which propels knowledge exchange with stakeholders. A higher degree of innovation is also dependent on exchanging more knowledge with various resources such as stakeholders. The exchange of knowledge can have a strong influence on learning within organizations. Moreover, the amount of knowledge exchanged with various stakeholders may be more likely to facilitate transformational leadership effectiveness by setting highly desired expectations for employees through contributing to identify better opportunities in the business environment. Thus, transformational leadership is more effective in organizations that have a high stakeholder orientation.

This article not only introduces various organizational factors that have a direct and indirect impact on transformational leadership, but also provide an impetus of effective transformational leadership in supporting ultimate performance. This article clearly uncovers how transformational leadership can be affected by substantial internal characteristics of organizations such as the organizational structure, culture, networks, and most importantly, the stakeholders.   


Barney, J.B. 1991. Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), 99-120.