Transformational Leadership

Transformational leadership, relationship quality,

and employee performance during continuous

incremental organizational change

MIN Z. CARTER 1*

, ACHILLES A. ARMENAKIS 2, HUBERT S. FEILD 2AND

KEVIN W. MOSSHOLDER 2

1Department of Management and Marketing, Troy University, Troy, Alabama, U.S.A.2Department of Management, Auburn University, Auburn, Alabama, U.S.A.

SummaryAlthough transformational leadership has been investigated in connection with change at higher levels of organi-

zations, less is known about its“in-the-trenches”impact. We examined relations among transformational

leadership, explicit change reactions (i.e., relationship quality), change frequency, and change consequences

(i.e., task performance and organizational citizenship behavior (OCB)) during continuous incremental organizational

change at lower hierarchical levels. In a sample of 251 employees and their 78 managers, analyses revealed that

the quality of relationships between leaders and employees mediated the inﬂuence of transformational leadership

on employee task performance and OCB. We also found that change frequency moderated the positive association

of relationship quality with task performance and OCB, such that associations were stronger when change

Keywords:organizational change; transformational leadership; relationship quality; change frequency; task

performance; organizational citizenship behavior

Organizational change is a necessity for organizations to survive and prosper. In fact, most organizations compete by

changing continuously (Brown & Eisenhardt, 1997; Burke, 2002). Acontinuous incremental change context

comprises frequent, purposeful adjustments that are small but ongoing and cumulative in effect (Brown & Eisenhardt,

1997; Weick & Quinn, 1999). Scholars have argued that continuous change requires employees to modify not only

work routines but also social practices (e.g., relations with their managers and peers). To cope with the daily challenge

of real-time adaptation, employees selectively retain effective elements of their performance routines and integrate them

with new, more efﬁcient ones (Feldman & Pentland, 2003). As a result, these employees often experience difﬁculties

and tensions in maintaining prior levels of performance while adapting to their new job requirements (Kanfer &

Ackerman, 1989).

To mitigate the tensions and facilitate effective performance, managers must exhibit appropriate leadership

behaviors (Bass & Riggio, 2006; Burke, 2002). Among various leadership perspectives, transformational leadership

is often linked with managerial effectiveness during organizational change (Bass & Riggio, 2006; Pawar & Eastman,

1997). Transformational leaders recognize the need for change, create and share compelling visions with employees,

guide them through adaptations, and inspire them to accomplish the challenging goal of institutionalizing change

(Bass, 1999). Transformational leadership should be effective in both Western and non-Western societies (Bass, 1997)

and correlates with individual- and team-level job performance (Judge & Piccolo, 2004). Surprisingly, however, few

*Correspondence to: Min Z. Carter, Department of Management and Marketing, Troy University, Troy, Alabama, U.S.A. E-mail: [email protected]

An earlier version of this paper was presented at the 2010 annual meeting of the Academy of Management, Montreal, Canada. We thank Jeremy

Bernerth, Alannah Rafferty, and David Waldman for comments on earlier drafts of this paper.

Research Article

Revised 18 July 2012, Accepted 23 July 2012

Journal of Organizational Behavior, J. Organiz. Behav.34, 942–958 (2013)

Published online 30 August 2012 in Wiley Online Library (wileyonlinelibrary.com)DOI: 10.1002/job.1824 studies have considered potential mediating factors (e.g., quality of relationships between managers and employees) that

explain how transformational leadership actually inﬂuences job performance in change contexts (Bass, Avolio, Jung, &

Berson, 2003; Nemanich & Keller, 2007). Although some studies have considered related issues at the strategic

level (cf. Groves, 2005; Waldman, Ramirez, House, & Puranam, 2001), theﬁndings are of limited relevance at

lower hierarchical levels (e.g., work teams) where employees must meet the day-to-day challenges of continuous

change while pursuing their ongoing task objectives (cf. Seo et al., 2012).

One goal in the present research is to investigate how team-focused transformational leadership inﬂuences

employee performance at lower organization levels where change is an integral part of ongoing operations. We used

Oreg, Vakola, and Armenakis’(2011) change model as an overarching framework for our study. On the basis of the

empirical studies of employees’reactions to organizational change over a 60-year period, the model of Oreg et al.

suggests that change antecedents (e.g., support, communication) are associated with explicit employee reactions that

lead to change consequences (e.g., performance outcomes). We propose that transformational leadership acts as a

change antecedent, which facilitates the development of quality relationships between leaders and their employees.

Positing relationship quality as an explicit employee reaction to such leadership, we further suggest that it should

stimulate and support effective employee change behaviors in the form of in-role task performance and extra-role

organizational citizenship behavior (OCB). In essence, we propose that through high-quality relationships, managers

manifest the change processes (e.g., transformational leadership behaviors—creating change vision, involving employees

in problem solving to accomplish change goals) shown to promote positive employee change consequences.

The quality of relationships between managers and employees represents social exchanges in which the two

parties interact on the basis of shared obligations, respect, and trust (Blau, 1964). In higher quality relationships,

interpersonal communication is more frequent, and support and trust between managers and employees are greater

(Dulac, Coyle-Shapiro, Henderson, & Wayne, 2008; Graen & Uhl-Bien, 1995). These features allow both parties to

accommodate the demands of ongoing change. Generally, high relationship quality facilitates the exchange of

resources between managers and employees that are necessary for task accomplishment (Liao, Liu, & Loi, 2010).

Speciﬁcally under conditions of ongoing change, employees need access to adaptive resources such as free-ﬂowing

information and personal support from managers, whereas managers need employees’support inﬁne tuning changes

and attaining high levels of work effort (Caldwell, Herold, & Fedor, 2004; Weick & Quinn, 1999). Additional

characteristics of high relationship quality conducive to change are greater employeeﬂexibility and acceptance of

risks involved with change (Tierney, 1999) and higher change acceptance (Farr-Wharton & Brunetto, 2007).

The underlying goal of organizational change is to improve organizational performance. At lower organiza-

tional levels, progress toward this goal is gauged in terms of employees’job performance behaviors. Oreg

et al. (2011) noted that job performance and OCB have both been studied as change consequences (e.g., Morse

& Reimer, 1956; Shapiro & Kirkman, 1999). Task performance is a logical change consequence because it indi-

cates how well employees have mastered new work routines and processes. Because of its discretionary character,

OCB can serve as a change consequence reﬂecting employee buy-in, the degree that employees invest in a change

effort of their own accord (Shapiro & Kirkman, 1999). Employees with higher OCB should be more willing to

face the inevitable inconveniences and disruptions accompanying change (Podsakoff, MacKenzie, Paine, &

Bachrach, 2000).

A second goal of our study is to examine whether thechange contextaffects the inﬂuence of relationship quality

on change outcomes. In continuous incremental change contexts, the adaptation process is more iterative in nature.

Iterative change consists of a sequence of small-scale changes that allow the work unit (i.e., work team) to move

forward while maintaining coherency in purpose (Weick & Quinn, 1999). It compels employees to constantly adjust

to maintain process effectiveness, as well as positive social interactions among team members. Reﬂecting this

situational feature, change frequency involves how often change events are implemented in the work team, each

of which requires employees to adapt their daily work routines (cf. Rafferty & Grifﬁn, 2006). Where the velocity

of change is high, employees’conﬁdence levels are likely to be greater if close relations with managers exist.

Because this circumstance could positively affect their work behavior (Rafferty & Grifﬁn, 2006; Tierney, 1999),

we examine change frequency as a potential moderating inﬂuence.

LEADERSHIP AND PERFORMANCE943

DOI: 10.1002/job Our study contributes to the transformational leadership and change literatures in four ways. First, we provide a

much needed empirical examination of processes that might explain how transformational leadership inﬂuences

change outcomes (cf. Nemanich & Keller, 2007). We scrutinize a relational form of employee reactions to

change-oriented leadership behavior during times of change. Such an examination provides greater understanding

of relationships among leadership, employee reactions, and change consequences. Second, our study focuses on

transformational leadership and change at lower hierarchical levels. Rather than being above the transformational

fray, managers dealing with continuous incremental change are embedded in it. Studies of transformational

leadership during change have generally featured upper level managers directing change through formal restructuring

and cascading downward inﬂuence. Eliciting participation from lower level employees permits testing whether

transformational leadership facilitates change by not only broadcasting the change message, but also actively enabling

it through supportive relationships. Third, in exploring the contextual inﬂuence of change frequency, we provide a more

nuanced consideration of the impact of relationship quality on performance (cf. Avolio, Walumbwa, & Weber, 2009).

That is, our research provides insightinto the role of relationship quality in stimulating performance within

contexts of varying change frequency. Aﬁnal contribution is we use independently assessed performance criteria

(i.e., evaluated by team leaders) to gauge leadership effectiveness during organizational change. Nearly all of the

change studies included in the review of Oreg et al. (2011) used self-report, same-source performance assessments

(i.e., assessed by employees themselves).

Transformational Leadership and Relationship Quality during Continuous

Incremental Change

Transformational leaders transmit to employees a strong vision of the growth opportunities in their team, en-

courage them to think critically about change initiatives, enhance their conﬁdence in dealing with adaptation,

and emphasize the importance of performance while transcending self-interests for the team’s sake (Bass,

1999). Because of such leadership inﬂuence, employees are more likely to react favorably to change both

attitudinally and behaviorally. For instance, Herold, Fedor, Caldwell, and Liu (2008) reported positive rela-

tionships between transformational leadership and employee change commitment. Similarly, Detert and Bur-

ris (2007) provided evidence that change-oriented (i.e., transformational) leadership predicted job perfor-

mance at the unit level.

At the strategic level, change attempts are broad, and communications relevant for the change tend to be formal,

scripted, and directed at larger audiences. Furthermore, impersonal media (e.g., emails) are used to elaborate the

changes. With continuous incremental change at lower hierarchical levels, smaller changes are implemented, each

of which can involve informal communication and active employee participation (Rafferty & Restubog, 2010).

Managers implementing change are more likely to model the intended changes and engage in unscheduled, face-

to-face employee conversations. In return, employee-initiated questions and comments can stimulate a sizeable

proportion of change-related communication. Participation can involve several employees simultaneously, and

change-related issues might be resolved by bottom-up inputs about work processes. Through such interpersonal

exchanges, employees develop positive reactions and become motivated to make change a reality (Levay, 2010).

As managers strive to operationalize change, employees react to change in both intended and unintended ways.

For example, managers might have varying ideas on how to accomplish change that could be equally instrumental

for invoking supportive change reactions. If employees misinterpret managers’ideas for implementing change

(Sonenshein, 2010), they might experience uncertainty about particular behaviors needed to achieve desired change

objectives. These experiences can emotionally charge change contexts (Fugate, Kinicki, & Prussia, 2008) and

reduce employees’conﬁdence in effectively adjusting to change. Such contexts, coupled with repeated adjustments

in employees’work routines, divert energy from their daily performance. Tensions might mount in employees as

they attempt to learn new work routines while maintaining prior performance levels (Kanfer & Ackerman, 1989).

Under these conditions, transformational leaders cannot champion change impersonally, but must convince

944M. Z. CARTERET AL.

DOI: 10.1002/job employees that they can depend on them for guidance and support. Thus, frequent two-way communication and

interactions between managers and employees are important given the iterative nature of the change program. If

effective, both managers and employees should better understand how each operates and anticipate what is needed.

Howell and Hall-Merenda’s (1999)ﬁndings that transformational leaders positively inﬂuenced the performance of

employees working closer to them underscore the importance of frequent interaction.

We argue that as transformational leaders devote more time to coaching and guidance, relational ties with employees

should grow (cf. Liu & Batt, 2010). Such ties include mutual obligation, respect, trust, and interpersonal support

(Feldman, 2004; Sun, Aryee, & Law, 2007; Tierney, 1999), all of which are social wares and indicative of quality

relationships. Social exchange theory (Blau, 1964) suggests employees will engage in behaviors that reciprocate

tangible (i.e., rewards, resources) and intangible (i.e., trust, respect) beneﬁts provided by managers (Graen & Uhl-Bien,

1995; Wilson, Sin, & Conlon, 2010). As such, employees who are involved in high-quality relationships with their

managers should perform at higher levels and go the extra mile to help their managers and peers (Cropanzano &

Mitchell, 2005). Much prior research supports the idea that high-quality relationships foster task performance (Gerstner

& Day, 1997; Howell & Hall-Merenda, 1999) and OCB (Ilies, Nahrgang, & Morgeson, 2007).

We propose that under conditions of continuous incremental change, transformational leadership acts as a change

antecedent that facilitates the formation of higher quality relationships between managers and their employees.

Because higher relationship quality involves dynamics that promote favorable change outcomes, we expect that it

will inﬂuence employees’performance behaviors. Therefore, we posit:

Hypothesis 1(a-b):Relationship quality will mediate the association of transformational leadership with employee

(a) task performance and (b) OCB.

Relationship quality, change frequency, and job performance

There is general agreement in the literature that contextual factors can determine the magnitude of inﬂuence leader

behaviors will have on employee work outcomes (Pawar & Eastman, 1997; Yukl, 2010). Logically then, characteristics

of the context in which change is attempted could alter leader effectiveness. Organizational change scholars have also

noted that the contextual elements of change can inﬂuence employee behaviors (cf. Armenakis & Bedeian, 1999). In this

study, we focus on change frequency, because it reﬂects the iterative nature of continuous incremental change.

Ideally, when a change initiative is implemented, employees modify their old work routines to retain more efﬁcient

and socially beneﬁcial approaches in the workﬂow. However, continuous change can also disrupt attempted modiﬁca-

tions, resulting in increased employee apprehension about work procedures and social norms (Ashford, 1988). Rafferty

and Grifﬁn (2006) provided evidence that employees experienced higher uncertainty as the number of internal changes

(e.g., ranks of top management, consolidation of human resource functions) increased. Higher change frequency can also

make relationships difﬁcult to maintain, raising doubts about the interpersonal support employees might have previously

experienced (Shaw, Ashcroft, & Petchey, 2006). Such doubts are likely greater in work teams consisting of members

with interdependent work relations. As members’work routines typically involve social interactions, high change

frequency could disrupt their previously shared work responsibilities, as well as negatively affect job performance.

When change is infrequent in a work unit, its operational system remains relatively stable. In such environments,

employees’work routines are not interrupted frequently, and adaptation demands are less imposing. As such,

members are more conﬁdent in performing their tasks, and their need for managers’guidance and support tend to

be less salient. When change is frequent, however, work routines that were a source of comfort to employees no

longer exist (Espedal, 2006). Such a change context places greater demands on members in the form of new

constraints, conﬂicts, and effort expenditures. The result can lead to disparities between employees’performance

and adaptation capabilities, heightening the need for clear guidance and support to cope with continuing change.

When work routines and processes are inﬂux, it is constructive for managers to engage in quality relational

behaviors, such as, increasing personal interactions with employees, providing resources and information support

LEADERSHIP AND PERFORMANCE945

DOI: 10.1002/job for work adjustments, and delivering formal and informal rewards for successful adaptations (Weick & Quinn, 1999).

Such circumstances also magnify employee tendencies to be more receptive to their managers’inﬂuence (Yukl, 2010)

and reciprocate by devoting extra effort to the changes while maintaining high performance. Kim, Hornung, and

Rousseau (2011) suggested that making trust and social support integral to employees’relations with their organization

can facilitate change sustainability. Given that relationship quality helps assuage potentially disruptive elements

accompanying continuous incremental change, it should be more critical to employee performance behaviors when

change occurs at a higher rate. Therefore, we hypothesize:

Hypothesis 2(a-b):Change frequency will moderate the positive association of relationship quality with (a) task

performance and (b) OCB, such that the positive association will be stronger when change frequency is high.

Method

Organizational change context

We collected data from two service organizations in China, labeled here as Company A and Company B. Both

organizations employ work teams in their respectivebusiness operations. A work team consists of a group of

members with interdependent work interactions and mutually shared responsibility to achieve common goals,

such as delivering quality services to its customers (Mathieu, Maynard, Rapp, & Gilson, 2008). Customer

service is inherently interactive and generally requires close regulation by team leaders to facilitate proper

proactive and reactive employee behaviors. The production and delivery of services differ from traditional

manufacturing concerns in that a varying mix of customers requires employees to be interactive andﬂexible

(Schneider, Ehrhart, Mayer, Saltz, & Niles-Jolly, 2005).

When the economic recession started in mid-2008, both companies experienced a decline in revenue and

proﬁtability. Top management teams in both companies recognized the value of their human capital in weathering

the unfavorable business climate. In December 2008, both companies made similar strategic decisions to forestall

signiﬁcant layoffs in 2009 and initiate incremental organizational changes to maintain (and improve) customer

relations and quality services. Both companies implemented training designed to create a customer-oriented culture

while improving the quality of service. Following training, team leaders took responsibility for implementing

changes in team processes. Meetings were held with team members to solicit input on modifying work procedures

and informationﬂow. Team leaders also met with other leaders to discuss various change initiatives in their respective

teams. On the basis of the ideas and information emerging from these meetings, team leaders ultimately decided how to

initiate modiﬁcations to achieve work goals.

During our data collection period, teams in both companies continuously implemented change initiatives to

modify their work procedures as needed. Company A announced a 24/7 customer service call center and promised

customers a 24-hour turnaround on service calls. The change initiative involved delegating authority and assigning

responsibility to members to enable each team to better coordinate call center service contacts. As an example, a new

work form (Form II) was developed to record timelines on service call progress, and team leaders designated

members to develop weekly statistical reports on service calls. Incremental modiﬁcations were made as teams

implemented their change initiatives, with some teams combining Form II and a prior service form (Form I) and others

altering which items appeared in weekly statistical reports. Several teams also reassigned members’responsibilities as

weekly reports were digested.

Company B announced a commitment to customer satisfaction and planned to incorporate customer satisfaction

results in its incentive pay structure. A customer survey website was launched, and paper survey instruments

were developed for those clients who did not have Internet access. A newly created department handled paper

and web-based customer satisfaction surveys along with other service quality control functions. Because of the

sensitive nature of pay structure changes and lack of historical data on customer satisfaction, human resources

946M. Z. CARTERET AL.

DOI: 10.1002/job personnel worked with each team to establish a customer satisfaction database and incentive pay plan that best suited

the team. As the teams incorporated these initiatives into their workﬂow, they redesigned speciﬁc work forms to

record progress on various work activities. For example, team members detailed the times and services performed

at each stage of the service in a revised work form (i.e., times ofﬁrst customer contact, follow-up communications,

and service delivery).

Participants and procedures

We collected data from full-time employees working in teams in two companies in early 2009. We invited all teams

to participate in the survey and distributed two sets of conﬁdential questionnaires to the participants: one for team

members (i.e., employee survey) and the other for team leaders (i.e., manager survey). When completed, participants

returned the surveys in postage-paid envelopes. A coding scheme matched employee–manager responses for the two

questionnaires. We instructed team members to consider the change context (within which their work was affected)

and respond to surveys that assessed their leader’s transformational leadership and the relationship quality between

themselves and the leader during the changes. Team members also self-reported their demographic information. We

told team leaders to consider the change initiatives happening in their teams and answer items that assessed their

perceptions of change frequency. They also rated their employees’task performance and OCBs during the

organizational changes.

For Company A, average team size was 4.6, ranging from three to six team members per team leader. We

obtained usable data from 143 team members (a 60 percent response rate) and 43 team leaders (an 83 percent

response rate). On average, 3.33 team members (SD= 0.52) completed the survey per team. Given that the average

team size was 4.6, we estimated the within-team response rate to be 72 percent. For team members, average age was

26.4 years (ranging from 20 to 46); average organizational tenure was 2.2 years (ranging from 0.10 to 12); 81 percent

were male; 34 percent held an associate’s degree, and 66 percent had a bachelor’s degree. For team leaders, average

age was 31.3 years (ranging from 24 to 41); average organizational tenure was 5.4 years (ranging from 2 to 12); 77

percent were male; 19 percent had an associate’s degree, 77 percent had a bachelor’s degree, and 5 percent had a

master’s degree.

For Company B, the average team size was 3.9, ranging from three toﬁve team members per team leader. We

received usable data from 108 team members (a 64 percent response rate) and 35 team leaders (a 78 percent response

rate). On average, 3.09 team members (SD= 0.28) completed the survey per team. Given that the average team size

was 3.9, we estimated the within-team response rate to be 79 percent. For team members, average age was 26.1 years

(ranging from 22 to 41); average organizational tenure was 3.4 years (ranging from 0.50 to 16); 66 percent were

male; 30 percent had an associate’s degree, 69 percent had a bachelor’s degree, and 1 percent had a master’s degree.

For team leaders, average age was 34.5 years (ranging from 26 to 43); average organizational tenure was 10.9 years

(ranging from 3 to 20); 51 percent were male; 14 percent possessed an associate’s degree, 69 percent had a

bachelor’s degree, and 17 percent held a master’s degree.

To check within-organizational representativeness of the two samples, we compared team leader and member

respondents’demographic data with demographic data of non-respondents in the respective companies. There were

no signiﬁcant differences between the respondents and non-respondents in either company for age, gender,

education, and organizational tenure. Ourﬁnal sample consisted of 251 employees nested in 78 teams.

Measures

Respondents used a seven-cell response format ranging from 1 (strongly disagree)to7(strongly agree) for all

questions, unless otherwise speciﬁed. All scales, with the exception of the change frequency measure, had been used

in other Chinese companies and shown acceptable reliability and validity (cf. Chen & Aryee, 2007; Kirkman, Chen,

LEADERSHIP AND PERFORMANCE947

DOI: 10.1002/job Farh, Chen, & Lowe, 2009; Liao & Chuang, 2007; Wang, Law, Hackett, Wang, & Chen, 2005). We presented items

in both English and Chinese. When a Chinese version of scale items was unavailable, we used back-translation

methods (Brislin, 1980) to translate the items from English to Chinese. To measure the two team-level variables

(i.e., transformational leadership and change frequency), we used a referent-shift consensus composition approach

to modify the original scale items (Chan, 1998).

Transformational leadership

We assessed transformational leadership using a modiﬁed Chinese version of the Multi-Factor Leadership Questionnaire

(MLQ) Form 5X (Avolio & Bass, 2004). Rigorously validated, the MLQ-5X consists of 20 items with a 5-cell response

format ranging from 0 (not at all)to4(frequently, if not always; Bass, Cascio, & O’Connor, 1974) and is a widely used

transformational leadership measure (Tejeda, Scandura, & Pillai, 2001). Sample items are“Our manager emphasizes the

importance of having a collective sense of mission”and“Our manager talks optimistically about the future of our work

team.”The dimensions and coefﬁcient alphas for the measure were idealized attribution (.75), idealized behavior (.74),

inspirational motivation (.78), intellectual stimulation (.76), and individualized consideration (.79).

We conducted a conﬁrmatory factor analysis (CFA) to test whether theﬁve transformational leadership

dimensions conﬁgured in a higher order factor modelﬁt our data (cf. Wang et al., 2005). In this test, we modeled

the 20 items to load on the respectiveﬁve transformational leadership dimensions, which served as latent indicators

of one higher order factor. Resultantﬁt indices fell within an acceptable range (w

2= 223.82,df= 161,CFI= 0.97,

RMSEA= 0.04,SRMR= 0.04), suggesting that the data were consistent with those of the higher order model. As

such, we treated transformational leadership as a global construct (a= .94). Also, because transformational leadership

data were obtained from team members, we assessed the appropriateness of aggregating individual scores to the team

level using intraclass (i.e.,ICC1andICC2) and within-group agreement indices (i.e.,r

wg(j) ). Our results indicated that

there was sufﬁcient statistical justiﬁcation for aggregation (ICC1 = 0.43;ICC2 = 0.71; meanr

wg(j) = 0.98).

Relationship quality

In leadership research, the quality of social exchange relationships between leaders and employees is often framed in

terms of leader–member exchange (LMX; Graen & Uhl-Bien, 1995). We used LMX to operationalize our

relationship quality construct, as has been carried out in several other studies (cf. Dulac et al., 2008; Nahrgang,

Morgeson, & Ilies, 2009; Tierney, 1999). We used the LMX–multidimensional scale (LMX-MDM; Liden &

Maslyn, 1998) to gauge relationship quality. LMX-MDM contains 12 items, examples of which are“My manager

would defend me to others in the organization if I made an honest mistake”and“I do not mind working my hardest

for my manager.”The LMX-MDM dimensions and coefﬁcient alphas were affect (.73), loyalty (.70), contribution

(.75), and professional respect (.80). We conducted a CFA to test whether the four LMX-MDM dimensions plus a

higher order factor modelﬁt our data. Again, resultantﬁt indices fell within an acceptable range (w

2= 99.49,df= 46,

CFI= 0.96,RMSEA= 0.07,SRMR= 0.04), suggesting that the data were consistent with those of the higher order

model. As such, LMX was treated as a global construct (a= .91).

Change frequency

Researchers have used managers to describe the changes implemented during organizational change initiatives

(cf. Lau & Woodman, 1995). When changes are frequent, employees are less likely to perceive change events as

discrete(Rafferty & Grifﬁn, 2006). The mix of rapidity and unpredictability comprising continuous change can

cause employee perceptions of separate events to blend. We felt that team leaders were in a better position to assess

work unit change frequency for several reasons. First, team leaders drove the change initiatives, interacting with

other team leaders in sharing and discussing various changes occurring in work teams. Second, as changes were

undertaken, they obtained employee feedback regarding the speciﬁc changes and information regarding service

quality and customer relations. This feedback inﬂuenced subsequent change modiﬁcations by team leaders. Finally,

using team leaders to assess change frequency avoided the problem of same-source measurement for change

948M. Z. CARTERET AL.

DOI: 10.1002/job frequency and relationship quality. Therefore, we assessed change frequency (a= .88) with a modiﬁed three-item

scale developed by Rafferty and Grifﬁn (2006). A sample item is“In my work team, change frequently occurs.”

Task performance

We used Farh and Cheng’s (1999) four-item, in-role task performance scale, to measure task performance (a= .85).

We conducted a CFA on the task performance measure,ﬁnding the results acceptable (w

2= 6.42,df=2,CFI= 0.99,

RMSEA= 0.09,SRMR= 0.02). A sample item is“This employee can always fulﬁll the jobs assigned by the manager

in time.”

Organizational citizenship behavior

We measured OCB using a 24-item scale developed by Podsakoff, MacKenzie, Moorman, and Fetter (1990). The scale

contains items such as“This employee helps others who have heavy workloads”and“This employee keeps abreast of

changes in the work team.”The OCB dimensions and coefﬁcient alphas were altruism (.78), conscientiousness (.78),

sportsmanship (.75), courtesy (.79), and civic virtue (.78). We conducted a CFA to test whether theﬁve dimensions plus

a higher order factor modelﬁtourdata.Theﬁt indices fell within an acceptable range (w

2= 326.59,df=241,CFI=0.96,

RMSEA= 0.04,SRMR= 0.05), suggesting that the data were consistent with those of the higher order model. We

therefore treated OCB as a global construct (a= .93).

Additionally, because our task performance and OCB measures were highly correlated (r= .77), we conducted a

discriminant validity test for these two variables. We compared a two-factor model in which covariance between the

two variables was freely estimated with a one-factor model in which the covariance between the two variables was

ﬁxed to one. The test yielded a signiﬁcant chi-square difference, indicating that task performance and OCB were

statistically distinct (Δw

2= 34.33,Δdf=1,p<.001).

Control variables

Previous research has shown that the length of time leaders have managed employees is associated with employees’

leadership perceptions, and that employees’organization tenure and team size might be related to their performance

(cf. Kirkman et al., 2009; Wang et al., 2005). We therefore controlled for employee tenure in the work team and the

organization. Team members provided this information in years. Team leaders reported team size, the number of

members supervised. Because we collected data from two organizations, organization membership was also

controlled (cf. Henderson, Wayne, Shore, Bommer, & Tetrick, 2008). We coded organization membership as

0=Company Aand 1 =Company B.

Data analyses

Because of the multilevel nature of our model and data, we tested our study hypotheses using hierarchical linear

modeling (HLM 6.0; Raudenbush & Bryk, 2002). Before the analyses, we grand-mean centered team-level

continuous independent variables and group-mean centered the individual-level continuous independent variables

(Hofmann & Gavin, 1998).

To test multilevel mediation, we used Zhang, Zyphur, and Preacher’s (2009) procedure for a 2-1-1 model

(i.e., centered within context and subtracted means being reintroduced at Level 2—CWC(M)). A 2-1-1 mediated model

is supported if the between-group mediated indirect effect (i.e., average CWC(M) Sobel statistic) is signiﬁcant

(Sobel, 1982; Zhang et al., 2009). To test the moderation hypothesis, we used slopes-as-outcomes models (Gavin &

Hofmann, 2002). To avoid confounding cross-level and between-group interaction effects, the model also included

the group-level interaction between relationship quality and change frequency (Hofmann & Gavin, 1998). We

performed analyses for each outcome variable by entering the controls, main effect variables, and between-group

interaction term in the appropriate equations (Level 1 or Level 2).

LEADERSHIP AND PERFORMANCE949

DOI: 10.1002/job Results

Table 1 presents the means, standard deviations, coefﬁcient alphas, and intercorrelations among the study variables.

Tests of mediation

Hypothesis 1a–b predicted that relationship quality will mediate the association between transformational leadership

with task performance and OCB, respectively. As shown in Table 2, tests of Models 1–3 revealed associations

between transformational leadership and task performance (g= 0.85,p<.001), between transformational leadership

and OCB (g= 0.53,p<.001), and between transformational leadership and relationship quality (g= 0.77,p<.001).

Further, in testing Model 4, the association between relationship quality and task performance was signiﬁcant

(g= 0.60,p<.001), whereas the association between transformational leadership and task performance was signif-

icantly reduced (g=0.43,p<.01) as indicated by the average CWC(M) Sobel test (mediation effect = 0.42,z=3.62,

p<.001). This supports a partial mediation model for Hypothesis 1a. Displayed in Table 2, our tests of Model 5 show

asigniﬁcant association between relationship quality and OCB (g=0.49,p<.001), but not between transformational

leadership and OCB (g= 0.10,ns). The average CWC(M) Sobel test conﬁrmed the mediation test. The indirect effect

of transformational leadership on OCB (via relationship quality) was signiﬁcant (mediation effect = 0.43,z= 3.88,

p<.001). Therefore, Hypothesis 1b received support.

Although conceptualized at different levels of analysis, transformational leadership and relationship quality were both

rated by team members. As a check on common method variance concerns (CMV; Podsakoff, MacKenzie, Lee, &

Podsakoff, 2003), we also had team leaders rate their own transformational leadership behavior. We tested our

hypotheses using leaders’ratings of their own behavior. Model testing results revealed full mediation models for

Hypothesis 1a–b. We found similar results whether the mediation models were examined using same- (i.e., team

member ratings) or different-source (i.e., leader self-ratings) transformational leadership data, suggesting that

CMV was not likely a study concern.

Table 1. Means, standard deviations, and intercorrelations among study variables.

VariableMSD123456789

Individual-level variables

1. Organization 0.43 0.50

2. Dyad tenure (years) 2.12 1.40 .22**

3. Organizational tenure

(years)2.67 2.45 .26** .03

4. Relationship quality 5.85 0.57 .24** .12 .15* (.91)

5. Task performance 5.62 0.68 .16* .06 .06 .56** (.85)

6. Organizational

citizenship behavior5.06 0.55 .17** .07 .01 .52** .77** (.93)

Team-level variables

7. Team size 4.28 0.77 .46** .08 .16* .16* .01 .08

8. Transformational

leadership2.90 0.42 .15* .03 .02 .51** .53** .42** .10 (.96)

9. Change frequency 4.52 1.03 .05 .05 .02 .24** .01 .09 .14* .01 (.88)

Note: Values in parentheses along the diagonal represent coefﬁcient alphas for the individual-level and team-level scales. Scores for team-level

variables were calculated as team-level means, assigned back to individuals.

aN= 251 individuals.bN= 78 teams.

*p<.05; **p<.01. 950M. Z. CARTERET AL.

DOI: 10.1002/job Tests of moderation

Hypothesis 2a–b predicted that change frequency will moderate the association between relationship quality with

task performance and OCB, such that the associations will be stronger when change frequency is high. As shown

in Table 3, the cross-level interaction effects were signiﬁcant for task performance (Model 6:g= 0.22,p<.05)

and OCB (Model 7:g= 0.20,p<.05). Thus, our results supported Hypothesis 2a–b.

For Hypothesis 2, we plotted moderating effects of change frequency on OCB across relationship quality

( 1SD; Aiken & West, 1991). Figure 1 shows that the association between relationship quality and OCB was

stronger when change frequency was high. Because the plot of the moderating effects of change frequency on

the relationship quality–task performance association was very similar to that of Figure 1, we omitted this

interaction plot.

Discussion

Although researchers have generally posited that transformational leadership should inﬂuence organizational

change efforts (Bass & Riggio, 2006; Pawar & Eastman, 1997), few studies have considered the context in which

transformational leaders operate (Bass & Riggio, 2006; Nemanich & Keller, 2007). Our analysis of the relationship

between transformational leadership and employee performance in a continuous incremental change context partly

addresses the dearth of research on the topic. We found that transformational leadership was related to employees’

performance (i.e., task performance and OCB) mainly through the quality of the relationship developed between

managers and employees. We also found the frequency with which changes occurred in the teams moderated the

link between relationship quality and performance. The nature of this moderation effect showed that this link was

stronger when change frequency was high.

Table 2. HLM analyses of mediation.

Dependent variable

Task

performance OCBRelationship

qualityTask

performance OCB

Model 1 2 3 4 5

Level 1 variables

Organization 0.18 (0.09)

a 0.15 (0.09) 0.29 (0.08)*** 0.33 (0.11)** 0.31 (0.10)**

Dyad tenure (years) 0.07 (0.05) 0.02 (0.05) 0.02 (0.04) 0.05 (0.04) 0.03 (0.04)

Organizational tenure

(years) 0.03 (0.02) 0.01 (0.02) 0.03 (0.02) 0.01 (0.01) 0.01 (0.01)

Relationship quality 0.60 (0.15)*** 0.49 (0.11)***

Level 2 variables

Team size 0.11 (0.06) 0.01 (0.05) 0.07 (0.05) 0.07 (0.05) 0.03 (0.05)

Group-mean relationship

quality0.54 (0.14)** 0.55 (0.14)***

Transformational

leadership0.85 (0.11)*** 0.53 (0.11)*** 0.77 (0.06)*** 0.43 (0.13)** 0.10 (0.12)

Note: N= 251 individuals andN=78 teams. Unstandardized regression coefﬁcients are reported. OCB, organizational citizenship behavior.aTheﬁrst value is the parameter estimate, and the value within parenthesis is the standard error.

**p<.01; ***p<.001.

LEADERSHIP AND PERFORMANCE951

DOI: 10.1002/job Our study is one of a few to examine mediating processes that explain transformational leadership’sinﬂuence on

performance at lower levels where change is confronted on a day-to-day basis. In contexts where frequent change

exerts adaptation demands on employees, transformational leaders appear to personalize the change vision and work

closely with employees to make it a reality. The mediating inﬂuence of relational quality underscores the importance

of social support when working under incremental continuous change conditions. Relational quality might prevent

emotionally laden misunderstandings because it encourages frequent communication and information sharing

(Ford, Ford, & D’Amelio, 2008). Essentially, this interpersonal bridge building allows employees to better under-

stand changes required in their work routines and social practices, and it provides assurance that managers are

likely to support changes as they are incorporated. These results are consistent with prior suggestions that

relationship quality is essential for linking transformational leader behavior with employee performance (Howell &

Hall-Merenda, 1999; Wang et al., 2005).

Depending on the frequency of change in work teams, the quality of leader–member relationships can differentially

inﬂuence employee performance. Although relationship quality was associated with employee performance behaviors

regardless of change frequency, this association was more positive in contexts where changes were more frequently

implemented. Thisﬁnding suggests that more frequent change generates greater needs for direction and assistance from

managers. Researchers have noted that for change to diffuse throughout an organization, employees must feel valued

rather than like faceless cogs in the process (Bartunek, Rousseau, Rudolph, & DePalma, 2006). Congruent with this no-

tion, Higgs and Rowland (2011) concluded from their interviews with managers in 33 organizations that change efforts

were more successful when employees worked with managers who were more facilitating and engaging. As employee

demands for leader resources increase, the value of high-quality relationships translates into better performance. In

Table 3. HLM analyses of moderation.

VariableDependent variable

Task performance OCB

Model 6 Model 7

Control variables

Organization (Org) 0.51 (0.09)***

,a 0.41 (0.08)***

Dyad tenure (DT) 0.03 (0.03) 0.02 (0.03)

Organizational tenure (OT) 0.00 (0.02) 0.00 (0.02)

Team size (TS) 0.05 (0.06) 0.02 (0.05)

Independent variables

Relationship quality (RQ) 0.63 (0.11)*** 0.50 (0.09)***

Change frequency (CF) 0.09 (0.04) 0.02 (0.04)

Between-group interaction

RQ CF0.02 (0.01) 0.01 (0.01)

Cross-level interaction

RQ CF0.22 (0.10)* 0.20 (0.09)*

Note: N= 251 individuals andN=78 teams. OCB, organizational citizenship behavior. For example, the following hierarchical linear modeling

(HLM) model was used to test Hypothesis 2 (i.e., OCB):

Level 1:L1 :OCB ðÞ

ij¼B 0jþB 1jOrg ij

þB 2jDT ij

þB 3jOT ij

þB 4jRQ ij

þr ij Level 2:

L2 :B 0j¼

G 00þ

G 01TSj

þG 02RQ j

G 03CF j

G 04RQ j CF j

U 0 B1j¼

G 10 B2j¼

G 20 B3j¼

G 30 B4j¼

G 40þ

G 41CF j

U 4 aTheﬁrst value is the parameter estimate, and the value within parenthesis is the standard error.

*p<.05; ***p<.001. 952M. Z. CARTERET AL.

DOI: 10.1002/job essence, our study suggests that to be more effective in high-frequency change contexts, managers not only need to

exhibit transformational leadership but also to actively engage in high-quality relationships with their employees.

As noted earlier, our study assessed both task performance and OCB because they highlight differing types of

behavioral change consequences. Adjusting to task-related changes requires employees to draw upon relevant cognitive

skills and abilities is readily apparent. However, less obvious is the notion that task-related change can also involve in-

terpersonal demands (Bartunek, Balogun,& Do, 2011) requiring employees to effectively use relational skills. Such skills

(e.g., being aware of others’and their own emotions in dealing with adaptations and inconveniences) are especially impor-

tant in work teams where members perform interdependent tasks and are jointly accountable for team outcomes. Incorpo-

rating both in-role (task performance) and discretionary (OCB) outcome measures allowed us to gauge more broadly the

effects of transformational leadership during continuous incremental organizational change.

Including both team and individual-level variables in our study reﬂects a movement by change researchers to

directly capture the multilevel nature of organizational change (cf. Caldwell et al., 2004; Herold et al., 2008). Our

study design permitted us to examine whether leadership inﬂuences manifested at the team level cascaded

downward through manager–employee relationships to individual performance behaviors. We recognize that an

ultimate objective of organizational change interventions is organizational-level improvement, and that tracking

incremental continuous change at lower organizational levels is not likely considered very glamorous by top-level

managers. However, we argue that it is through an accumulation of“in-the-trenches”adaptations that organizational-

level change programs ultimately succeed (Burke, 2002). Ourﬁndings support a bottom-up view of change, and we

encourage future research to craft designs to further explore this perspective.

Study limitations and future research

Our study includes several noteworthy features, including multi-source, multilevel international data. These features

offer both beneﬁts and limitations. Future studies should endeavor to longitudinally separate the measurement of the

Figure 1. Moderating effects of change frequency on relationship quality–OCB relations

LEADERSHIP AND PERFORMANCE953

DOI: 10.1002/job independent, mediator, and dependent variables (Podsakoff et al., 2003). Incorporating a longitudinal design could

help establish causal direction and address the role of time as organizational change progresses (cf. Kim et al., 2011;

Pettigrew, Woodman, & Cameron, 2001). In addition, to supplement behavioral indicators of employee task

performance, future research should incorporate objective measures of employee productivity. Another limitation

is that we did not measure transactional leadership, assessing instead only transformational leadership because of

its core relevance for processes of change and adaptation (Bass & Riggio, 2006). We acknowledge that including

transactional leadership would have allowed us to better discriminate between transformational and transactional

leadership effects (cf. Bass, 1999; Judge & Piccolo, 2004) and urge researchers to examine both in future organiza-

tional change studies. Finally, future studies should consider other change-related variables, such as employees’

organizational change beliefs (Armenakis, Bernerth, Pitts, & Walker, 2007), and examine their role in the change

process and context.

We used data collected from two companies in China, where social ties and obligations govern individual

behaviors (Gelfand, Bhawuk, Nishii, & Bechtold, 2004). Study participants’behaviors and their interactions could

have been inﬂuenced by the Chinese cultural context, but we contend that it should not have unduly affected the

ﬁndings. First, although Western researchers developed the transformational leadership construct, it has been

described as a universal process (Bass, 1997). Studies conducted in non-Western cultures have consistently found

transformational leadership–outcome relations to parallel those discovered in Western cultures (cf. Kirkman et al.,

2009; Wang et al., 2005). Second, recent cross-cultural research has demonstrated that transformational leadership

effects hold across both Chinese and U.S. contexts (cf. Kirkman et al., 2009; Schaubroeck, Lam, & Cha, 2007).

However, we suggest future examinations of our model be replicated in Western contexts as well. Furthermore,

speciﬁc cultural value dimensions (e.g., power distance, uncertainty avoidance) might be examined in connection

with employee reactions to transformation leadership during organizational change.

Practical implications and conclusion

Our study underscores the importance of relationship quality in the midst of continuous incremental change. To

respond quickly to change, some scholars have recently suggested that organizations should strive to incorporate

behavioralﬂexibility into their human resource systems (Beltrán-Martin, Roca-Puig, Escrig-Tena, & Bou-Llusar,

2008). Suchﬂexibility refers to employees’capacity to exhibit a variety of behavioral repertoires under different

circumstances. One means of developing behavioralﬂexibility at lower organizational levels is to encourage

employees to go beyond prescribed roles in working with team members and other employees. Our results suggest

transformational leadership might shape the change environment so that employees feel well supported and develop

a more expansive view of their work. This would encourage them to help with unforeseen task requirements, such as

backing up other team members who are adapting to changing work demands (Porter et al., 2003). It could also give

employees more conﬁdence in deploying skills and abilities to address a range of change alternatives (Liao et al., 2010).

Because change is necessary in environments characterized by economic instabilities, shifting market demands,

and technological advances (Burke, 2002), organizations must condition managers to expect and prepare for it.

Through training, organizations can encourage managers in turbulent contexts to utilize the energizing aspects

of transformational leadership to facilitate the development of high-quality relationships. When managers are

initiating in-the-trenches change, the more personal aspects of transformational leadership (e.g., individualized

consideration, inspirational motivation, intellectual stimulation) might have a special value. Simons (1999) noted

that transformational leadership theory recognizes the importance of managerswalking their talkwith respect to

change, and maintaining behavioral integrity in the eyes of employees undergoing necessary adaptation. During

continuing change at lower levels, it could well be that therelationship quality associated with transformational

leadership boosts employee perceptions of managers’behavioral integrity which, in turn, translates into employee

performance improvements.

954M. Z. CARTERET AL.

DOI: 10.1002/job In conclusion, our results suggest that lower level managers should be transformational during continuous

incremental organizational change. Perhaps because of the closer contact managers have with employees in such

change contexts, transformational leadership acts to generate beneﬁcial relationships with their employees, which

encourage positive change outcomes such as task performance and OCB. We also found that a frequent change

context generates more demand for quality relationships between leaders and employees, which if met result in

higher performance levels. Theseﬁndings can inform effective management practice and underscore the challenges

organizations must confront in contexts marked by continual change.

Author biographies

Min Z. Carteris an Assistant Professor of Management in the Department of Management and Marketing at Troy

University. She earned her PhD in Management from Auburn University. Her research interests include leadership

and motivation, organizational justice, social exchange, and contextual and multilevel issues.

Achilles A. Armenakisis the James T. Pursell, Sr. Eminent Scholar in Management Ethics in the Department of

Management at Auburn University. He received his doctorate from Mississippi State University. His research

interests include diagnosing, planning and implementing change, and management ethics.

Hubert S. Feildis the Torchmark Professor of Management in the Department of Management at Auburn University.

He received his PhD from the University of Georgia. His research interests include human resource selection and

research methods in human resource management.

Kevin W. Mossholderis the C. G. Mills Professor of Management in the Department of Management at

Auburn University. He received his PhD from the University of Tennessee. His research interests include organiza-

tional behavior, human resource management, interpersonal workplace interactions, and high-quality work

relationships.

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