Indiana University SPEA Edward J. Bloustein School of Planning and Public Policy University of Pennsylvania AIR American University

Panel Paper: An Experimental Study on How Transformational Leadership Creates Value Alignment in Public Service Organizations

Thursday, November 12, 2015 : 2:05 PM
Pearson II (Hyatt Regency Miami)

*Names in bold indicate Presenter

Ulrich Thy Jensen, Aarhus University
A key concern for managers is to make employees work towards the goals of the organization (Rainey 2014). Scholars have pointed to the importance of aligning the values of employees with those of the organization because values entail conceptions of what is deemed desirable to work towards (Paarlberg and Lavigna 2010). Accordingly, studies on person-organization fit have found public sector employees to perform better when their personal values match those of the organization (e.g., Bright 2008) indicating that value alignment may be a crucial feature of successful organizations.

While managers may pull a number of levers to make employees pursue organizational goals (e.g., introduce contingent rewards or sanctions for specific actions) scholars have suggested that employee values can be managed beyond the scope of self-interested concerns (Perry and Paarlberg 2007). Transformational leadership is considered particularly effective in this quest because transformational leaders target employees’ higher-order needs and seek to raise performance to higher levels by transforming the values of employees (Jung and Avolio 2000; Wright, Moynihan, and Pandey 2012). Despite this widespread assertion, however, very little theoretical or empirical work has investigated if and how transformational leadership indeed aligns the values of individual employees with those of the organization.

Combining insights from the literatures on person-organization fit (Kristof-Brown, Zimmerman, and Johnson 2005) and relational job design (Grant 2007; Bellé 2014) with transformational leadership theory, the first contribution of the paper is to further develop the theoretical argument behind the link between transformational leadership and alignment of employee and organizational values. Specifically, the paper argues that transformational leaders draw on society oriented aspects of the organizational vision to increase employees’ perception of societal impact of their day-to-day work tasks and the broader organizational objectives to which employees contribute. In turn, employees are expected to ascribe importance to work tasks that positively benefit society and therefore to perceive their values to be more congruent with those espoused by the transformational leader.

The second main contribution of the paper is to test whether transformational leadership positively affects employee perceived societal impact and ultimately value alignment. The study combines experimental data and survey data for 110 Danish day care center leaders and their 1,100 employees to assess whether pedagogues in day care centers – where the leader received one year of transformational leadership training – indeed perceive their values to be more similar with those of their organization (compared to pedagogues in day care centers where the leader received no training). To examine whether transformational leaders foster value alignment by increasing employees’ perception of societal impact of their job, random assignment to treatment is used as an instrument for estimating the mediating effect of perceived societal impact. Implications for researchers and managers are discussed.