How Does Transformational Leadership Affect Customer Satisfaction.Doc

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How does transformational leadership affect customer satisfaction?

In recent years, the concept of leadership focuses more on transformational leadership, which is a contemporary view of leadership (Bass, 1985). Also, Employee empowerment becomes one of the leadership issues in the 21 century. From the previous studies, it is found that transformational leadership is associated with employee empowerment, whereas the association between employee empowerment and customer satisfaction is significant. However, few researches have been done to analyze the relationship between transformational leadership and customer satisfaction. In this paper, a mediation model is used to analyze how transformational leadership influences customer satisfaction conceptually. In the mediation model, employee empowerment mediates the connection of transformational leadership and customer satisfaction. First, the relationship of transformational leadership and employee empowerment; employee empowerment and customer satisfaction are identified and discussed one by one. The association of transformational leadership and customer satisfaction is then examined. A conclusion summarizing the whole paper with implications is also provided at the end.


Figure 1. The proposed mediation model of relationships between transformational leadership, employee empowerment and customer satisfaction


Transformational leadership and employee empowerment

According to Bass (1990), transformational leadership is the ability of leaders to intellectually stimulate and inspire followers to go beyond their own self-interest for the good of the organization to achieve a higher collective purpose and mission. Transformational leaders achieve their goal through four dimensions, which are charisma, individual consideration, intellectual stimulation and inspiration (Bass, 1995). Referring to the definition of transformational leadership, transformational leaders with dynamic organizational vision often “necessitates a metamorphosis in cultural values to reflect greater innovation” (Özaralli, 2003: 336). It is suggested that transformational leaders promote empowering cultural norms (Özaralli, 2003).

Conceptually, empowerment is defined as granting employee power to control and authority to make decision in order to bring desired organizational outcomes (Ugboro and Obeng, 2000). It is proposed that organizational environment has great impact on cognitions of empowerment (Özaralli, 2003). Özaralli suggested that transformational leadership has close relationship with employee empowerment.

There is positive relationship between transformational leadership and employee empowerment. Referring to the four dimensions of transformational leadership (Özaralli, 2003), leaders with transformational behaviors focus more on inspiring employees. Transformational leaders not only create mission within the organization and they are charistmic to their subordinates to influence their goal. Leaders with transformational behaviors tend to create a participative environment and a more empowered condition so as to transfer the mission of the organization to reality. The staff is treated as individual. Followers are stimulated intellectually to think in a new ways with autonomy of problem solving and decision-making. They are also inspired and motivated by having challenging objectives. Transformational leaders try to ensure the effectiveness of the practice by providing training and collecting feedback continuously.

Employee empowerment and customer satisfaction

There is a close association between customer contact employees and customer satisfaction. Customer satisfaction is “a summary cognitive and affective reaction to a service incident”. It is a result of “experiencing a service quality encounter and comparing that encounter with what was expected” (Taylor and Baker, 1994). Customer satisfaction is actually the fulfillment...
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