Relational Theory

The ability for a leader to relate to the needs of his or her followers is a cornerstone step in building trust (Burke, 2007).  According to Uhl-Bien (2006), the term relational is used to describe a person who likes people and thrives on relationships. Knippenberg (2004) describes strong relational bonds between leaders and followers equates to mutual benefit and mutual interest for all individuals involved in the organization.  This motivates the employee and leader to consider what is best for others rather than just for one’s self.  This paper will discuss the relational theory’s attribution to select leadership models, transactional and transformational leadership relationships, in the United States corporate culture, and the psychometrics of instruments that measure leadership.

Relational Theory and Leadership Models

How can a leader relate to so many different personalities in an organization?  There is not a particular leadership model that will allow an individual to accurately assess each person’s need.  Each leader will develop into their own (Uhl-Bien, 2006) model and be able to build relationships with individuals in their organization that will allow them to address situations with individuals, which will then allow them to expect and receive improved performance from their team members.  The following leadership models are the select few that will be discussed:

  • Transactional leadership
  • Transformational leadership
  • Charismatic leadership
  • Level 5 leadership

            Leadership models.

In this section the aforementioned leadership models will be overviewed and a correlation will be made to how these models and the relational theory affect the profit and non-profit sectors of leaders.

            Transactional Leadership

Knippenberg (2004), refers to transactional leadership as exchange-based leadership that has contingent rewards and monitors to intervene when necessary. Transactional leadership model is structured with a clear vision for defined rewards and altercation for missing or not complying with objectives set forth.  Bonuses and promotions are handed out for excellent performance and punishment for lack of performance, not meeting expectations or company or organizational violations.  According to Burke (2007), the consistent behavior exuded by a transactional leader would be commitment and predictability.  This leadership model is based on an exchange relationship.  For example, an employee works very hard and is rewarded with a bonus.  This leadership model affirms the statement, “If I do this, you will give me that.”  Transactional leadership assumes that salient issues like rewards for accuracy and correction of errors motivate people.  This make the subordinate more reliant on the superior, which in turn requires a clear organizational structure or mechanism in which employees can be led. The goal for the employees is that they best assist their employer for the largest bonus.  The follows need their leader, as they trust him or her and they value the bonus or compensation that could occur.

Cole (2007) characterizes transactional leadership as an individual that leads by reward and punishment.  This transactional leader enjoys when rules of conduct are strictly defined.  Lastly, the rules determine the staff.  A person who cannot meet or exceed expectations would resign especially without any support from their superiors.  The transformation leadership model is a considerable contrast to this leadership style.

Transformational Leadership

Positive outcomes are associated with transformational leadership (Bedeian, 2007). Leaders are able to energize groups and compliment properly in order for an increase in team performance.  The vision is cast and followed due to mutual respect and coherence for the same shared vision.  A transformational leader has a personality that makes people feel like they can do anything. They inspire through words and actions not through rewards and punishment.  This leader is nurturing, affirms identity, and reminds assurance to his or her subordinates.  A transformational leader will be able to give individual care based on the subordinates need.

The staff and employees of an organization will follow a person who casts a vision that can easily be visualized and shared. The leader inspires others by injecting enthusiasm and energy into his or her team or staff.  Typically a transformational leader will have high-energy and genuinely like people. Fry (2005) makes an interesting comparison on how transformational leaders and charismatic leaders are similar.

            Charismatic Leadership

A charismatic leadership is able to bring strategic change to increase firm performance (Waldman, 2004). In Fig. 1 there is a clear correlation to the leader of the company having an influence on strategic change and that altering firm performance.

Finkelstein (1992) states that leaders have power that emanates from their personality. Individuals in an organization are moved to perform by the charismatic leaders ability to persuade through this power. Charismatic leaders believe in themselves and their self-confidence is transferred to their subordinates.  These leaders are admired and looked to for guidance and direction.  They are individuals that enjoy the fame and enjoy controlling the scenario of the team.  In some ways, they share some similarities with a level 5 leader.

            Level 5 Leadership

According to Collins (2005) a Level 5 leader is a study in duality: modest and willful, shy and fearless. They are known as a quiet leader.  A level 5 leader takes the blame when the team is at fault and share the credit when the team receives accolades.  Colman Mokler, the CEO of Gillette, stared down three takeovers from 1975 to 1991.  He was a quiet man who was known as gentle.  Perhaps others mistook his shyness for weakness.  Calmness inner peace allow for a level 5 leader to remain centered in the worst of circumstances. Mokler viewed himself as nothing more than a facilitator of the corporate vision.  He was humble.  His focus was in the success and stature of the Gillette and not in receiving any personal claim.  Mokler had an inner intensity that allowed him to be overly passionate and dedicated to his direction while still maintaining his demeanor. According to Collins, Level 5 leaders hire people that are more talented than they are.  They do not fear those that have more talent, as they carry the vision and the ability to connect the abilities of their team.

These leadership models reveal the significance of relational theory to the individual leaders.  Whether the leader is a charismatic leader or a transactional leader they have responsibilities to their followers.  This has great significance in either the profit or non-profit sector.

Significance to both the profit and the non-profit sector.

Gandossy (2004) asserts that leaders have changed from being values neutral to values driven.  Is this specific to just one particular sector over another, profit or non-profit? Fry (2005) compares the difficulty that the military has with enabling US troops in 21st century Iraq, with the ability to make quick, tactical, and accurate decisions without having to wait for leadership direction and approval.  This is significant to modern leaders.  Leaders must be able to instill a sense of purpose and passion that will allow for forces to quickly and precisely respond to threat and engage the enemy.

The profit sector needs the ability to be agile in the marketplace in order to maintain a sustained competitive advantage (Waldman, 2004).  Through the measurement of growth and increase in profitability, Waldman is able to assume that charismatic leaders increase sustained competitive advantage overtime.  This yields higher profit margins and continued growth of the company.  Not only do the top-level executives that were examined show successful results in the surveys and regression test, but they also led to the firms’ outcomes.  The significance that could carry over to the non-profit sector based on what was just revealed from the profit sector is that charismatic leaders in a non-profit company will be able to secure grants and lead the organization in meeting its objectives.

Transactional and Transformation Relationships in the US Corporate Culture

China, Kenya, and Thailand employees were examined on how transformational leaderhip behaviors alter reactions in their family-friendly policies. Walumbwa (2010) discovers that the transformational leadership positively altered perceptions and trust that is not prevalent in the United States. Walumbwa’s, cultures in which the studies occurred, had a higher organizational commitment and less work withdrawal.  How could this alter the demeanor and attitude of corporations in the United States?  Transactional relationships that could use more of a transformational leadership model are those in the service industry. The hospitality industry has an interesting dichotomy of cultures that collide and leave those working in that industry without adequate compensation (Borchgrevink, 2004).  In the United States minimum wage is continually in flux and has risen over time.  In foreign countries, working unrealistic hours and for less than minimum wage on cruise ships is worth it due to the exchange rate.  As a United States citizen an individual would not find working long hours worth the work.  However, someone from Thailand could support his entire extended family by doing the work that an American trained person would not consider.

In order to stay competitive, leaders must enable through effective and inclusive leader-employee relationships, employee commitment, loyalty, trust, customer service, and improved performance (Mouriño-Ruiz, 2010).  No longer can the United States be a transactional corporate culture.  This is no longer effective and employees do not have the loyalty that their employers need.

Psychometrics of Instruments that Measure Leadership

According to Mouriño-Ruiz (2010), the Leader-Member Exchange (LMX) is a tool that can address leader-employee relationships.  The premise is that leaders differentiate how they interact and manage their subordinates.  The LMX is based on supporting the theory that the relationship between the leader and the employee will have an effect on the employee’s performance, communications, and happiness.  This was then used in a co-location environment to show whether or not distance attributed to varying results.  The strengths of this tool are that it seems to take every case individually. The interaction with one employee and the interaction with another employee would yield varying results.  However, this will then lead to the weakness of this tool.  How could one determine the variables and correlation from the LMX and leadership models?  This leaves some questions about the psychometric properties and validation of the instrument. “We cannot lose sight of the fact that employee satisfaction, how you treat and deal with people, is the biggest lever in retaining and motivating a workforce (Mouriño-Ruiz, 2010).”  The instrument is just a tool used for measurement of subjects at a time in space.


Relationships as a leader will vary based on the individual needs and scenarios a person finds themselves (Knippenberg, 2004).  Finding the correct balance assurance, identity, and nurturing for each relationship that is built will translate to a leader that is transformational in the way he or she deals with his or her constituents.  The level 5 could be compared to a hybrid of both transformational and servant leader model (Collins, 2005) based on the similarities and overlap of styles. The humility involved with the level 5 leader is astonishing and the ability to put ones self last behind the mission and vision of a company is respectable.  The relational theory is caring, individually, for your team and employees.



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