THE INFLUENCES OF TRANSFORMATIONAL LEADERSHIP IN LIGHT OF HET NIEUWE WERKEN. ROBERT SPIJKER Universiteit van Amsterdam Student number :

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1 Academic year: Date of completion: 08/08/2010 Supervisor: Corine Boon THE INFLUENCES OF TRANSFORMATIONAL LEADERSHIP IN LIGHT OF HET NIEUWE WERKEN ROBERT SPIJKER Universiteit van Amsterdam Student number : This research develops a model in which transformational leadership moderated the relationship between several variables of The new way of working and Leader-Member exchange. The sample comprised of 72 professionals interested in The new way of working which were approached using LinkedIn.com. The findings emphasize the importance of transformational leadership within organizations for the development of high quality relationship. Furthermore the study suggests that transformational leaders are able to overcome the limitations of digital communication inherent to The new way of working. Implications for the theory and practice are addressed, and future research opportunities are offered. Introduction During the last few years in the Netherlands a relatively new work dynamic has appeared. Both large and small companies are investigating whether to adopt Het nieuwe werken. Directly translated this concept means The new way of working. This trend is largely stimulated by new technology from Microsoft further substantiated by Microsoft successfully implementing and promoting the concept. Microsoft explains that The new way of working allows organizations to treat the working time and environment in a more flexible manner (Microsoft, 2010). This flexibility gives employees the freedom to decide how, where and when they work, resulting in increased job-satisfaction and ultimately a more productive organization (Microsoft, 2010). This new form of working is further stimulated by demand from the labor market. An article in Het Parool (a Dutch daily newspaper) on explains that a common factor among the three most highly ranked employers in The Netherlands is their large commitment to these types of flexible working arrangements. While IT infrastructures rapidly improve and companies aim to 1

2 become increasingly efficient supported by an active labor market it is likely that these working environments will become more common throughout the coming years. When considering The new way of working it should be noted that the concept of flexible working arrangements is not new at all. In 1975 Nilles was the first to coin the word telecommuting, since then more than two decades of research has been devoted to understanding the effects of these flexible forms of working. Telework has previously surprised researchers for its lower than expected rate of diffusion, Cooper and Kurland (2002) identified management reluctance as the main inhibitor. However, reviewing popular media suggests that this reluctance is diminishing, Het Intermediair, a Dutch magazine for professionals states that 47% of the Dutch workforce works from home regularly and that Microsoft Nederland hosts visitors daily interested in The new way of working ( , p ). In essence The new way of working allows employees to decide how where and when they will complete their work resulting in enormous amounts of flexibility and freedom. However for employers and managers there are substantial implications especially in relation to the change in social dynamics. Where employees primarily developed relationships based on personal contacts within the organization now communication is increasingly becoming digitalized to facilitate working at a distance from other employees. A lack of physical presence within an office is likely to limit the number of interactions with colleagues. Professional isolation is a common phenomenon within teleworking research. Cooper and Kurland (2002) explains that this is often caused by a lack of both formal and informal social activities. Considering these changes on individual level it is important for management to be aware of such effects. Furthermore management needs to consider how these individuals are managed in such a working arrangement. The management of individuals takes place through the relationship between the leader and subordinate. The Leader-Member exchange construct developed throughout the 1980 s explains how dyadic relationships between the leader and subordinate develop (Jones, 2009). High quality relationships provide an advantageous position when considering issues such as resources, premier assignments, emotional support and cooperative interactions (Liden & Graen, 1980). Organizations need to be careful allowing to many low quality leader-member relationship as it could have an effect on the bottom line (Jones, 2009). Wang et al. (2005) explains that in order for these dyadic relationships to develop sufficient interaction is needed. Considering the changed working conditions of The new way of working there is likely to be a strain on these dyadic relationships. In a dyadic relationship measured by the leader-member exchange the style of leadership has considerable influence. Literature has identified two distinguishable leadership styles namely transaction and transformational. Burns (1978) was the first to develop the concept of transaction and 2

3 transformational leadership. Transactional leadership is based on the social exchange theory where all exchanges are based on a cost-benefit analysis from both parties. This style of leadership attaches very little value to relationship. Transformational leadership on the other hand aims to inspire, challenge and foster the capabilities of individuals by creating a shared vision. Throughout literature transformational leadership has consistently proven to increase personal, team and organizational performance (Howell & Avolio,1993; Dvir et al, 2002). Integrating the implications of The new way of working with regard to the leader-member exchange theory and the importance of transformational leadership on an individual the following implications are apparent. The new way of working is changing the way in which individuals interact within an organization. Traditionally leaders could develop their relationships and influence through personal interactions within the workplace. Now, however, due to the freedom given to employees to complete their work where they wish personal interactions may be limited and/or take another digital form such as , telephone or videoconference calls. This research aims to investigate whether the negative effects of the reduced interaction caused by The new way of working is moderated by transformational leadership. This study will contribute to theory in several ways. Firstly, there is a lack of research covering The new way of working, although teleworking can be considered similar in terms of social dimensions these topics have largely divergent implications. Secondly, the research will contribute to theory by studying the effects of The new way of working on transformational leadership, which as far as I am aware has not been done previously. Lastly this research will contribute to theory by studying how The new way of working and transformational leadership together influence the levels of the leader-member exchange. In addition, this research contributes to the more recent stream of literature investigating virtual leadership. Furthermore, this study has important implications for practitioners. The introduction briefly addressed the large extent to which The new way of working is being diffused within the Dutch market in both private and public organizations. Taking into account this large extent it is important for companies to understand the influences their managers and leaders have upon subordinates and to design measures to overcome any possible negative effects. In essence employees require direction and leadership, understanding the effects of leadership is therefore critical for organizations. In order to contribute to the answer if negative effects of the reduced interaction caused by The new way of working is moderated by transformational leadership previous literature regarding flexible working arrangements, the influence of transformational leadership and the dynamics of the leadermember exchange theory will be outlined. On the basis of previous findings from the literature a theoretical framework will be constructed. Next, the methodology will be presented in order to address 3

4 the specifics of the empirical research. Subsequently the results will be presented. Finally, a discussion including theoretical and managerial implications will be presented. Theory and hypotheses The new way of working is not a new concept within the literature. In essence The new way of working shares a large overlap with concepts such as telework, flexible working arrangements and the virtual office. Firstly this theoretical framework will consider the social consequences of The new way of working. Following this section the Leader-member exchange theory will be explained and related back to The new way of working. Finally the relationship between the leader-member exchange theory and transformational leadership will be addressed. The new way of working The new way of working has not been defined academically in the Dutch literature as yet, however there is an increasing amount of information available from corporate websites, professional magazines, newspapers and blogs. Due to the lack of academic literature this review will briefly discuss the dynamics of The new way of working based on non-academic writing and subsequently use teleworking literature to further argue the social implications. Since 2007 the Dutch government has implemented The new way of working motivated by the new vision from then prime minister. In the document Het nieuwe werken bij het rijk the government provides a good description of the essence of this working arrangement (Ministerie van Buitenlandse Zaken en Koningsrelaties, 2009). The aim of The new way of working is to make work more efficient, effective and enjoyable and as such benefiting both society and organizations (Ministerie van Buitenlandse Zaken en Koningsrelaties, 2009). In order to achieve this goal employees are given the freedom to determine how, where and when they complete their work (Microsoft, 2010). In light of this study, which focuses on interaction, the where and when are of particular importance. If employees spend a majority of their working hours outside of the office, leaders will be unable to communicate face-to-face and are forced to use other mediums. Furthermore employees might opt to work outside of regular office hours forcing interactions to take place through asynchronous mediums such as (Hambley et al., 2007). Looking beyond the scope of individuals there are several other implications on an organizational level. Organization will have to change their culture and mentality while new technology facilitates the interaction between individuals (Over het nieuwe werken, 2009). Moving from a more industrial era where the focus was on the process to an information era where the focus is on the people. Ultimately this new flexible arrangement is meant to better the balance between autonomy and responsibility with less 4

5 rules and procedures (Over het nieuwe werken, 2009). Trust and transparency are two critical concepts when attempting to implement The new way of working. With such a large amount of freedom within an organization trust and transparency are particularly important for the abilities of management (Bijl, 2009). In practice each company will adapt this program to reflect their company culture and ambitions. Results will vary and are influenced by the extent The new way of working is adopted. Where some large companies such as Microsoft may provide employees with nearly complete freedom to chose how, where and when they complete their tasks other companies may restrict this to only two days. Particularly the freedom of where an employee can do their work has been around for several years. J.M. Nilles was the first to coin the term telecommuting in In later years Nilles (1998) defined telework as follows: Any form of substitution of information technologies (such as telecommunications and computers) for work-related travel; moving the work to the workers instead of moving the workers to work (Nilles, 1998, p.unknown). This concept is in line with the previously mentioned explanation by Microsoft regarding their program The new way of working which states that employees are given the freedom to decide how, where and when they will work (Microsoft, 2010). Microsoft further explains that this has been made possible by the developments in information technology, which is further in line with the definition from Nilles. Since The new way of working has not been academically defined by Dutch scholars teleworking research will be used to argue the social consequences. Even though The new way of working takes on a more intense form; teleworking is built on the same premise especially when considering the social element of these working arrangements. The social consequences form one of the main disadvantages for teleworking employees, namely professional isolation. Cooper and Kurland (2002) argue that employee isolation may be one of the main obstacles limiting the diffusion of teleworking. The authors explain that professional isolation is closely related to personal development which consists of both formal and informal activities. The authors identify three informal components of development activities: interpersonal networking, informal learning and mentoring (Cooper & Kurland, 2002). Interpersonal networking relates to gossip and spontaneous workrelated discussions within the working environment which results in the establishing and building of relationships. These relationships allow people to gain information that could further advance their career. Secondly, informal learning is an important part of an employee s development. These moments are spontaneous and cannot be planned (Cooper & Kurland, 2002). Brown and Duguid (1991) take this 5

6 further by arguing that informal learning stems from communities where individuals need to learn how to speak the appropriate language. In such a learning environment access to these communities is essential; individuals need to be positioned on the border of these communities and have legitimate access (Brown and Duguid, 1991). In summary this implies that learning is critical for an individual s development but takes shape as an informal social networking activity. Thirdly, Cooper and Kurland (2002) explain that mentoring is another important component of career development. A mentor is an experienced manager who aids the development of the individual for the benefit of both the organization and the employee. Altmeyer, Prather and Thombs (1994) find that a mentor s support consists of three components: emotional support, access and feedback. Emotional support comes in the form of a friendly relationship in which the individual is guided. The access component refers to the introduction to both internal and external networks, as discussed earlier this is an important social component of the working environment. Finally, the mentor provides feedback on the performance of the individuals to further improve and guide them. Relating these findings back to the context of teleworking it can be argued that this alternative form of working has particular social consequences. Due to the fact that teleworkers are not physically present they will miss out on spontaneous work-related discussions which carry value. Furthermore their social networking and relational strength is likely to be lower due to the lack of interaction. Taylor and Kavanaugh (2005) explain that teleworking has a negative effect on communications and interactions with colleagues and managers. Rather communication between the individual and organization will take a digital form such as or phone conversation, this however is not a perfect substitute for face to face interaction (Norman et al., 2005). Daft and Lengel (1986) show that mediums of communication differ in richness. According to the authors a rich medium allows the transmission of multiple verbal and nonverbal cues, the use of natural language, provision of immediate feedback and finally the senders to convey personal emotions. Based on these factors different mediums can be ranked, face-to-face is considered the richest medium followed by telephone, chat, and printed materials (Hambley et al., 2007). Furthermore Norman et al. (1995) explains that due to the nature of the mediums through which teleworkers communicate the quality of feedback is likely to be lower because of the reduced non-verbal cues. Furthermore the amount of feedback from supervisors, coworkers and clients is also likely to be reduced (Taylor & Kavanaugh, 2005). In summary The new way of working aims to increase operational efficiency and effectiveness by giving employees the freedom to work how, where and when they wish. This organizational choice has significant consequences for the personal development of employees. Since employees will be increasingly physically separated from each other their communication frequency and mediums will change. As a result employees will be less involved with spontaneous social interaction, less likely to 6

7 learn informally and less likely to gain from a mentoring relationship with his/her leader. Table 1 below provides a conceptualization of The new way of working used in this study. The manner and frequency in which individuals communicate with each other is important when considering the establishment and development of relationships. The following section will address this issue in more detail by investigating the leader-member exchange theory developed by Graen and Uhl- Bien (1995). Table 1: Conceptualization of "The new way of working" Goal: To make work more efficient, effective and enjoyable and as such benefiting both society and organizations Operationalization: Organizational context Social impact on employees: Give employees the freedom to determine how, where and when they complete their work A organizational culture and mentality that better balances autonomy and responsibility with less rules and procedures Professional Isolation - Closely related to personal development which consists of: interpersonal networking, informal learning and mentoring Interpersonal networking: Spontaneous interaction with colleagues Informal learning: Involvement in internal communities Mentoring: Consists of emotional support access and feedback Consequences: Less interactions with colleagues and leader due to physical location Less rich communication due to use of digital mediums Less quality of interactions due to frequency and communication style Leader-member exchange theory When considering the effect of leadership on subordinates it is important to consider more than the unilateral effects of a particular leadership style (Wang et al. 2005). The Leader-Member exchange (LMX) theory explains that the quality of the relationship between the leader and the follower will be predictive of outcomes at both individual and group level (Gerstner & Day, 1997). Gerstner and Day (1997) find in their meta-analysis of LMX research that the quality of the relationship between the leader 7

8 and member is consistently positively related to the outcomes: member job performance, satisfaction, commitment, and turnover intentions. Low quality relationships on the other hand are characterized by limited access to the supervisor, fewer available resources, restricted information and overall lower job satisfaction Graen and Uhl-Bien (1995) in the initial development of the theory explain that there are three stages that categorize the state of the relationship: stranger, acquaintance and partner. The authors argue that as the relationship develops positively the relationship moves from a contractual based relationship to a relationship based on trust, respect and loyalty. The roots of the low quality contractual relationship can be found in the social exchange theory by Blau (1964), where every exchange is based on a cost benefit analysis. Regarding the development of the relationship between the leader and member the LMX theory explains that it begins with an initial interaction. This initial interaction is followed by a series of exchanges in which both parties test one and another in order to discover whether a quality relationship consisting of trust, respect and obligation is possible (Maslyn & Uhl-Bien, 2001). If the reception of an exchange is positive the relationship will continue to develop however if the response is negative the relationship may fail to develop. The absence of exchanges will also limit the development of high quality relationships (Maslyn & Uhl-Bien, 2001). In their study Liden and Maslyn (1998) find empirical evidence that the leader-member exchange consists of four dimensions: affect, loyalty, contribution and professional respect. Affect explains the interpersonal attraction between the two members; this affection becomes apparent by the desire of a relationship which is personally rewarding. Loyalty concerns the public support for the personal values and vision of the other member of the exchange. This expression is generally consistent throughout different situations. Contribution relates to the level of work put forth by both members. For a subordinate it is important to handle responsibility well and put in extra effort outside of general task requirements. For a leader it is important to provide the subordinate with opportunities to show their capabilities and provide them with the necessary resources to complete their tasks. Finally professional respect addresses the degree to which an individual has built a reputation for him/herself through past experiences. This may take the form of rewards or comments made regarding members of the exchange. Professional respect is not necessary before working with someone however it may aid the relationship if this perception is present (Liden & Maslyn, 1998). As outlined previously each company will develop their own interpretation of The new way of working. It is therefore important to account for the extent to which an employee makes use of The new way of working. The extent to which an employee is physically present within an organization will have an effect on their sense of professional isolation. Being physically present will decrease the use of digital 8

9 communication outside of its normal use. Furthermore digital communication is not a perfect substitute for face to face communication (Norman et al, 2005). Maslyn and Uhl-Bien (2001) explain that the absence of interactions will limit the development of high quality relationship. While Taylor and Kavanaugh (2005) show that it is likely that an employee which is not physically present will interact less with colleagues. Together these arguments imply that employees making use of The new way of working will communicate less and with a lower quality than face to face interaction and therefore develop relationship of a lower quality. Based on this relationship the following hypothesis is constructed. Hypothesis 1: The extent to which an employee makes use of The new way of working is negatively related to the quality of the relationship between himself/herself and his/her leader. Transformational leadership Transformational leadership was first described by Burns (1978) as the opposite style of transactional leadership which is based on contractual arrangements and the social exchange theory. Bass and Reggio (1998) explain that transformational leaders aim to empower employees providing them enough space to develop. Transformational leaders provide followers with a vision and develop a consistent working environment (Wang et al., 2005). Shamir et al. (1993) furthers this notion explaining that transformational leaders provide followers with meaning and purpose as opposed to transactional leaders which use material incentives and threat of punishment. This rather intrinsic leadership style has consistently found to be positively related to individual, group and organizational performance (Wang et al., 2005). Avolio et al. (1999) further defines transformational leadership, explaining the four components of which it consists: idealized influence, inspirational motivation, intellectual stimulation and individual consideration. Bass and Reggio (2005) provide the following explanations for each dimension. Idealized influence is characterized by a consistent high moral conduct which becomes apparent through the role modeling of the leader. The role models are admired, respected and trusted by their followers. The second dimension, inspirational motivation, provides meaning and challenges their followers work. This is expressed by creating a clear vision and motivating team spirit among followers. The third dimension, intellectual stimulation, challenges employees to express creativity when solving problems and question old routines consequently. New ideas are encouraged by the leader and not criticized to ensure continuance of creativity. Finally individual consideration refers to the leader paying special attention to each follower, acting as a mentor and stimulating growth. Leaders create a supportive climate that encourages a two way communication in finding solutions and opportunities. 9

10 Wang et al. (2005) responded to a call from scholars to integrate the transformational leadership and leader-member exchange literature. The authors found the leader-member exchange theory to fully mediate the relationship between transformational leadership and task performance organizational citizen behavior. Wang et al. (2005) argued that as leader-member exchange relationship increases in quality the relationship moves from transactional to transformational where the focus moves from self interest to the broader interest of the unit. As a result Wang et al. (2005) finds that transformational leadership behavior is a form of social currency, received mostly under the presence of a high quality leader-member relationship. Hoyt and Blascovich (2003) find that trust is a critical element when considering transformational leadership. In their study the authors found that the relationship between leadership style and both leadership satisfaction and group cohesiveness are fully mediated by trust. Especially when considering dyadic relationship trust is an important element. Transformational leaders exhibit trust through some of the four components previously outlined. Idealized influence allows subordinates to trust in and identify with the leader (Hoyt & Blascovich, 2003). Additionally, among others, transformational leaders can increase trust through expressing concern for the need of their subordinates. This trait can be identified with the individual consideration component. Furthermore trust has been identified as prerequisite for a mature leader-member exchange (Hoyt and Blascovich, 2003). Hoyt and Blascovich (2003) further find that there is a strong relationship between trust and satisfaction with the leader. This satisfaction and trust, is likely necessary in order for an honest relationship between a leader and member to develop and be of high quality. In their study the authors also found that group members are more satisfied with transformational leaders than transactional leaders. Furthermore Hambley et al. (2007) argues that transformational leadership in comparison to transactional leadership become more effective in anonymous situations. As previously explained The new way of working uses communication mediums that are more anonymous than face-to-face interaction. From this finding it can be derived that transformational leaders likely excel in anonymous communication mediums. Additionally, Potter et al. (2000) finds that a passive interaction style between members in a virtual team results in a lower performance than a team managed by face-to-face communication. Considering again the two leadership styles, transformational and transactional, it is likely that transformational leadership will have a more constructive manner of interaction. Transformational leaders are known to increase enthusiasm and promote understanding (Hambley et al. 2007). On the other hand transactional leaders are characterized by the use of management-by-exception which is a very passive manner of interacting (Bass, 1985). 10

11 These findings regarding trust, leader satisfaction, anonymous situations and manner of interaction are of particular relevance when considering that low quality leader-member relationships are characterized by transactional leadership. In contrast to low quality relationships, high quality leadermember relationships are characterized by transformational leaders (Wang et al, 2005). It is therefore likely that high levels of transformational leadership will be able to overcome the interaction strains due to the The new of working Finally, transformational leadership includes both inspirational motivation and individual consideration. Both these components require extensive communication to members in order to be successful. As a result individuals are more likely to interact with their leader when he or she is considered to be highly transformational. Additionally taking the communicative skills of highly transformational leaders into account these interactions are likely to be of high quality. In line with the previous arguments the following hypothesis can be formulated: Hypothesis 2: The relationship between The new way of working and Leader-Member exchange will be weaker where there is a higher level of perceived transformational leadership than when there is a lower level of perceived transformational leadership. The theoretical framework that this research proposes can be graphically represented as follows: Transformational leadership H2 - The new way of working H1 - Leader-member exchange This theoretical framework will attempt to find whether the relationship between The new way of working and the Leader-member exchange is weaker when there are high levels of perceived transformational leadership and vice versa. The first relationship between The new way of working and the Leader-member exchange theory is based on the theory that employees who make use of teleworking will communicate less (Taylor, Kavanaugh, 2005) and with a lower quality in comparison to face to face communication (Norman et al. 2005). This lack of communication and quality of communication will 11

12 result in fewer interactions with their leader. However to develop a high quality relationship these interactions are needed (Maslyn & Uhl-Bien, 2001). As a result, employees making use of The new way of working will have a lower quality relationship with their leader. This is important when considering that Wang et al (2005) found a positive relationship between the perceived transformational leadership behaviors by the employee and the quality of the leader-member exchange relationship. With this in mind it can be proposed that transformational leadership plays a moderating role in the relationship between The new way of working and the leader-member exchange relationship. Considering the whole framework this would mean that transformational leaders are able to overcome the negative social dimensions of The new way of working. Research design and Methodology Design In order to find whether the negative affects of the reduced interaction caused by The new way of working are moderated by transformational leadership this study will make use of an empirical research design. The research will take place on an individual level by assessing the extent to which employees make use of The new way of working, the quality of their leader-member exchange relationship and the perceived transformational leadership behaviors. The collection of data will take place through an electronic survey distributed through the professional networking website LinkedIn.com. The advantage of this approach is the broad spectrum of participant that can be gathered through this website. Due to the diversity within the sample this study will be applicable to larger group within the Dutch market. The data will be collected from individuals using an electronic survey. Considering that both the leadership-member exchange and perceived transformational leadership behaviors are known it is wise to make use of a quantitative research design. When measuring the relationship between the leadershipmember exchange and transformational leadership Wang et al. (2005) also successfully made use of a questionnaire. The research will have little control over which employees are targeted. The electronic surveys will be placed with several groups focused on The new way of working within these groups the discussion board will be used to ask readers to participate in the research. Participants will be able access the survey online anonymously. The survey will include a clear explanation regarding the purpose of the study and subsequently instructions concerning the completion.. In terms of sample size this research aims to retrieve a minimum of 80 surveys. From a statistical analysis perspective 30 is the absolute minimum, however to increase the reliability of the study additional surveys should be retrieved. The minimum acceptable level of response rate for the study to be 12

13 considered reliable is 20%, as a result in order to obtain 80 surveys, 400 surveys would need to be distributed. However since the survey will be placed on a website rather than sent to individuals the percentage of participants who successfully completed the whole questionnaire will be measured. A percentage below 60% will indicate that the survey needs to be adjusted. Additionally there is a time constraint regarding the completion of this research that further limits the quantity of information that can be gathered. Measures As previously mentioned the survey will focus on three defined constructs. Firstly the perceived transformational leadership behavior will be measured using the CLIO scale developed by De Hoogh, Den Hartog and Koopman (2004). This scale includes 11 items measured on a 7 point Likert scale. An example of one of the questions is: My manager allows employees to make important decisions. There are several scales that measure transformational leadership, each with their own criticism. The CLIO scale consists of only 11 questions which makes it rather accessible. Especially because this research is aimed at large organizations the questionnaire will need to be concise. The leader-member exchange variable will be measured using the LMX scales developed by Liden and Maslyn (1998). The 11 item multi-dimensional scale measures four dimensions of the leadermember exchange namely: affect, loyalty, contribution and professional respect. The extent to which an employee makes use of The new way of working will be measured by the amount of hours per week spent working outside of the office. This is in line with Golden and Veiga (2005) who investigated to which extent telecommuting had an impact on job satisfaction. Also questions regarding their tendency to communicate with their manager over s/telephone or face to face will be included in the questionnaire to gain further insights into the dynamics. These additional measures of communication will be important in this study in order to gain enough variation on the extent of use of The new way of working because without enough variance this study will be unable to reach conclusive results. Regarding communication the frequency of will be measured using a scale developed by Kacmar et al. (2003). In their study Kacmar et al. (2005) use this scale in order to determine whether communication frequency moderates the relationship between leader-member exchange and job performance ratings. The communication frequency is measured by 8 items on a 5 point Likert scale. This scale is also particularly appropriate as it distinguishes between 4 mediums of communication namely: memos, , face-to-face and telephone conversation. This is important when considering that some mediums of communication are richer than others. Webster and Hackley (1997) find that the richest medium is face-to-face, followed by telephone, chat, and print communications. Hambley et al. 13

14 (2007) find that videoconferencing, a newer technology, could be a possible alternative to face-to-face communication if meeting in one place is not possible. Since The new way of working actively includes technologies such as videoconferencing this medium is added to the communication frequency scales. Videoconferencing was included using the same style and formulation as the other items of the construct. Secondly, the questionnaire will address several control variables including gender, age, tenure with current manager, length of time using The new way of working and the extent to which employees can work independently. Gender and age could influence the frequency and manner in which individuals communicate. For example it could be expected that elder individuals are less comfortable communicating digitally, this is in line with the study done by Kacmar et al. (2003). Tenure with current manager is important as this variable has an influence on the level of the leader-member relationship. Especially individuals only recently working for their supervisor are unlikely to have high quality relationship due to inexperience rather than lack of interaction. This is in line with the study from Kacmar et al. (2003) which focused on the leader-member exchange theory and communication. Additionally the length of time using The new way of working will be used as a control variable. This variable is important when taking into account learning curves and change processes. The new way of working has a large impact on the manner in which employees operate. Individuals need time to settle and select the manner which is best suited to them. Finally the extent to which employees can complete their tasks independently is accounted for as a control variable. Certain tasks may require frequent contact with the leader, as a result the contact may be caused by the nature of the task rather than the employee. Results Demographics The sample was distributed online within the professional networking site LinkedIn. The survey was started 116 times and 85 surveys were finished resulting in a completion rate of 73%. However of the 85, 13 surveys could not be included in the analysis due to the large number of missing answers leaving 72 responses for the analysis. From the 72 responses 47 (65.3%) were male, a relatively uneven distributed sample in terms of gender. A majority of the sample, 76.4%, was aged between 30 and 50, this was expected due to the nature of the study and therefore will not result in large biases. More than 85% of the sample completed either University or other professional training resulting in a highly educated sample. The tenure between the leader and subordinate reflects how well the two parties know each other. This is important when investigating the strength of their relationship. Nearly 80% of the sample has known their leader for more than a year which is sufficient to validate the relational measures, while 68.1% of the sample has been using The new way of working for over a year. This experience is important for their communication 14

15 behavior and knowledge of The new way of working. Finally the sample has a relatively uneven distribution regarding the hours worked outside of the office. On Average, 69% of the sample, works less than 2 days per week outside of the office. Ideally this percentage would have been lower, showing a larger variance. The descriptive statistics of the demographics can be found in Table 2 below. Table 2: Descriptive statistics of demographics Variable Range Frequency Percentage Gender Male Female 25 34,7 Age Education University Profesional school MBO Other Tenure < 3 months months months > Experience with The new < 6 months way of working 6-12 months years > 2 years Work outside of office Dont < 1 day p.w days p.w days p.w days p.w > 4 days p.w The reliability of the measures used in the sample is important in order to validate the testing of hypotheses. The scales used within this research are transformational leadership, leader-member exchange and contact frequency. The cornbach s alpha for these scales were 0.958,0.936 and respectively. The items Work outside the office and Independent task are single items and therefore a 15

16 reliability test is not possible. Each of the reliability measures is well above the generally accepted norm of 0.7 and it is thus statiscally justified to aggregate these variables into scales for hyptheses testing. For an overview of the reliability and correlations refer to Table 3. Considering the correlations between the items of interest there are several results which should be noted. Firstly, there is a very strong significant correlation between Transformational leadership and Leader-Member Exchange (r =.815, p <.01). Secondly, there is a smaller positive correlation between Contact frequency and Transformational Leadership (r =.287, p <.01). Likewise there is a smaller postive correlation between Contact frequency and Leader-Member Exchange (r =.223, p <.05) The Independent tasks variable included in the table shows significant positive correlation to both Transformational Leadership and Leader-Member Exchange. This variable was measured by asking whether the participants required frequent contact with their supervisor to complete there tasks. Finally it should be noted that Contact Frequency had no correlation with Work outside of office (r =.017, p =.444). This is an important finding since the first hypotheses was based on the assumption that employees working outside the office would interact less with their leader while using digital meduims which are not a substitute for face to face interaction. In order to draw legitimate conclusions from the results it is important to further investigate the lack of correlation between Contact Frequency and Work outside of office. Table 4 below shows the correlations between Work outside of office and the different communication mediums including; memo,face to face, telefoon, and videoconferencing. In line with the arguments supporting the hypotheses it is expected that Work outside of office and Face-to-face communication would be negatively related (r = -.203, p <.05). Likewise , Telefoon and Videoconferencing is expected to be postively related to Work outside of office. This reasoning does not hold for the medium, Video conferencing however is significantly more positively related to Work outside of office (r =.257, p <.05). Tefeloon communication is partially positively correlated to Work outside of office at a significance level of p <.055. These results are in line with supporting arguments of the hypotheses 1. However, considering the ambigious results between Contact and Work outside of office and their theoretical importance to the study the hypotheses testing has been conducted using two models, one including Work outside of office and the other Contact frequency as a variable representing the average contact across all communication meduims. 16

17 Table 3: Means, standard deviations, and correlations among variables Variables M SD Leader-Member Exchange Transformational Leadership ** Contact Frequency * 0.287** Work outside of office n.a. 5.Independant Tasks * 0.233* n.a. 6. Age * * n.a. 7. Tenure * n.a. 8. Time using The new way of working ** n.a. 9. Education * * * ** ** n.a. 10. Gender * ** ** Correlation is significant at the 0.01 level (1- tailed tests) * Correlation is significant at the 0.05 level (1-tailed tests) Cronbach Alpha's are in bold Table 4: Correlations between Work outside of office and Communication mediums Variables Work outside of office - 2. Contact Memo Contact Face to Face * Contact ** 0.401** - 5. Contact Telefoon ** 0.242* 0.653** - 6. Contact Videoconferencing 0.257* * 0,263* ** Correlation is significant at the 0.01 level (1- tailed tests) * Correlation is significant at the 0.05 level (1-tailed tests) 17

18 Hypothesis testing As previously explained the hypotheses will be tested using 2 models. Model 1 will include the variable Work outside of office as stated in the hypotheses. Model 2 will be constructed using Contact frequency as the test variable. In order to test hypothesis 1 and 2 a regression model was contructed. In step 1 the regression model contains all the control variables including: age, gender, tenure, experience with The new way of working and the extent to which their tasks are independent. In step 2, depending on the model, either Work outside of Office or Contact Frequency is added. Following this Transformational leadership is included in step 3. Finally the interaction variable is added to the model in step 4. The variables Work outside of Office, Contact Frequency and Transformational leadership were standardized for inclusion in both models. Table 5 and 6 below show the results from the regression analysis of Work outside of office and Contact frequency. Table 5: Regression model 1: Work outside of Office R² Δ R² ϐ 1: Control variables Age *** Gender Tenure Experience Independant Tasks 0.317*** 2: Work outside of Office Age -0,286** Gender Tenure Experience Independant Tasks 0.327*** Work outside of Office (Z) 0.232** 3: Transformational Leadership Age ** Gender Tenure Experience Independant Tasks 0.109* Work outside of Office (Z) 0.136** Transformational Leadership (Z) 0.755*** 4: Interaction Variable Age -0,139** Gender Tenure -0,025 Experience -0,083 Independant Tasks 0.124* Work outside of Office (Z) 0.123* Transformational Leadership (Z) 0,764*** Interaction Variable ** 18

19 Table 6: Regression Model 2: Contact Frequency R² Δ R² ϐ 1: Control variables Age ** Gender Tenure Experience 0.83 Independant Tasks 0.317*** 2: Contact Frequency Age ** Gender Tenure * Experience Independant Tasks 0.299*** Contact Frequency (Z) 0.226** 3: Transformational Leadership Age ** Gender Tenure Experience Independant Tasks Contact Frequency (Z) Transformational Leadership (Z) 0.774*** 4: Interaction Variable Age ** Gender Tenure Experience Independant Tasks 0.135** Contact Frequency (Z) Transformational Leadership (Z) 0.867*** Interaction Variable 0.228*** * Regression is significant at 0.1 level ** Regression is significant at 0.05 level *** Regression is significant at 0.01 level Hypotheses testing Model 1: Work outside of office Hypothesis 1 investigates whether the extent to which an employee makes use of The new way of working is negatively related to the quality of the relationship between himself/herself and his/her leader The results for this hypothesis can be observed in step 2 from both models. Table 5 shows that Work outside of Office significantly influences the Leader-member exchange (ϐ = 0.232). This positive ϐ indicates that the more employees work outside the office the stronger the relationship with their leader will be, this result is not in line with hypothesis 1 which is therefore rejected. 19

20 Hypothesis 2 aims to determine whether the relationship between The new way of working and Leadership-member exchange will be weaker when there is a higher level of perceived transformational leadership than when there is a lower level of perceived transformational leadership. As can be observed from Table 5 the interaction variable is significant. In order to interpret the model the output has been plotted in a graph, see Figure 2 below. Analyzing Figure 2 shows that for highly transformational leadership the strength of the relationship between the leader and subordinate does not change when the employee increases their working hours out of the office. For a relationship with low transformational leadership the LMX is strengthened when the employee increases his/her hours outside the office. From this it can be concluded that high levels of transformational leadership weaken the relationship between the Leader-Member exchange and Work outside of Office from a positive to neutral influence. This finding is in line with hypothesis 2 which is therefore supported. Additionally, it should be noted that the positive relationship between Leader-Member Exchange and Work outside of Office under low transformational leadership is not in line with the expectations of this study. As argued in the theoretical framework it was expected that Leader-Member Exchange and Work outside of Office would have a negative rather than positive relationship. Figure 2: Model 1 Work outside the office Leader-member Exchange 5 4,5 4 3,5 3 2,5 2 1,5 1 Low Work outside of Office High Work outside of Office Low Transformational High Transformational 20