leadership research paper

SYSTEMATIC REVIEW article

The role of leadership in a digitalized world: a review.

• 1 Department of Management, Ca' Foscari University, Venice, Italy
• 2 Department of Business and Management, LUISS Guido Carli University, Rome, Italy

Digital technology has changed organizations in an irreversible way. Like the movable type printing accelerated the evolution of our history, digitalization is shaping organizations, work environment and processes, creating new challenges leaders have to face. Social science scholars have been trying to understand this multifaceted phenomenon, however, findings have accumulated in a fragmented and dispersed fashion across different disciplines, and do not seem to converge within a clear picture. To overcome this shortcoming in the literature and foster clarity and alignment in the academic debate, this paper provides a comprehensive analysis of the contribution of studies on leadership and digitalization, identifying patterns of thought and findings across various social science disciplines, such as management and psychology. It clarifies key definitions and ideas, highlighting the main theories and findings drawn by scholars. Further, it identifies categories that group papers according to the macro level of analysis (e-leadership and organization, digital tools, ethical issues, and social movements), and micro level of analysis (the role of C-level managers, leader's skills in the digital age, practices for leading virtual teams). Main findings show leaders are key actors in the development of a digital culture: they need to create relationships with multiple and scattered stakeholders, and focus on enabling collaborative processes in complex settings, while attending to pressing ethical concerns. With this research, we contribute to advance theoretically the debate about digital transformation and leadership, offering an extensive and systematic review, and identifying key future research opportunities to advance knowledge in this field.

Introduction

The findings of the latest Eurobarometer survey show the majority of respondents think digitalization has a positive impact on the economy (75 percent), quality of life (67 percent), and society (64 percent) ( European Commission, 2017 ). Indeed, people's daily lives and businesses have been highly transformed by digital technologies in the last years. Digitalization allowed to connect more than 8 billion devices worldwide ( World Economic Forum, 2018 ), modified information value and management, and started to change the nature of organizations, their boundaries, work processes, and relationships ( Davenport and Harris, 2007 ; Lorenz et al., 2015 ; Vidgen et al., 2017 ).

Digital transformation refers to the adoption of a portfolio of technologies that, at varying degrees, have been employed by the majority of firms: Internet (IoT), digital platforms, social media, Artificial Intelligence (AI), Machine Learning (ML), and Big Data ( Harvard Business Review Analytic Services, 2017 ). These tools and instruments are “rapidly becoming as infrastructural as electricity” ( Cascio and Montealegre, 2016 , p. 350). At macro levels, the shift toward different technologies is setting the agenda for new mechanisms of competition, industry structures, work systems, and relations to emerge. At the micro level, the digitalization has impacted on business dynamics, processes, routines, and skills ( Cascio and Montealegre, 2016 ).

Across different sectors and regardless of organization size, companies are converting their workplaces into digital workplaces. As observed by Haddud and McAllen (2018) , many jobs now involve extensive use of technology, and require the ability to exploit it at a fast pace. Yet, digitalization is being perceived both as a global job destroyer and creator, driving a profound transformation of job requirements. In result, leaders need to invest in upskilling employees, in an effort to support and motivate them in the face of steep learning curves and highly cognitively demanding challenges. Moreover, increased connectivity and information sharing is contributing to breaking hierarchies, functions and organizational boundaries, ultimately leading to the morphing of task-based into more project-based activities, wherein employees are required to directly participate in the creation of new added value. As such, the leadership role has become vital to capture the real value of digitalization, notably by managing and retaining talent via better reaching for, connecting and engaging with employees ( Harvard Business Review Analytic Services, 2017 ; World Economic Forum, 2018 ). However, leaders need to be held accountable for addressing new ethical concerns arising from the dark side of digital transformation. For instance, regarding the exploitation of digitalization processes to inflict information overload onto employees, or to further blur the lines between one's work and personal life.

In the last few decades, leadership scholars have been trying to monitor the effects of digitalization processes. Part of the academic debate has been focused on the role of leaders' ability to integrate the digital transformation into their companies and, at the same time, inspire employees to embrace the change, which is often perceived as a threat to the current status quo ( Gardner et al., 2010 ; Kirkland, 2014 ). To bring clarity to this debate, the construct of e-leader has been introduced to describe a new profile of leaders who constantly interact with technology ( Avolio et al., 2000 ; see also Avolio et al., 2014 for a review). Accordingly, e-leadership is defined as a “social influence process mediated by Advanced Information Technology (AIT) to produce a change in attitudes, feelings, thinking, behavior, and/or performance with individuals, groups, and/or organizations” ( Avolio et al., 2000 , p. 617).

Despite the increasing interest in discussing the relationship between digital technology and leadership, contributions have accumulated in a fragmented fashion across various disciplines. This fragmentation has made scholars struggle “to detect larger patterns of change resulting from the digital transformation” ( Schwarzmüller et al., 2018 , p. 114). It also suggests that scholars have relied on multiple theoretical models to explain the phenomenon. Indeed, if, on one hand, it is clear that organizations are changing due to technological improvements, on the other hand, the way in which the transformation is occurring remains under debate. Furthermore, due to the fast-changing development and implementation of digital technology, there is a need to continuously update and consider the latest contributions to the topic.

This article addresses the aforementioned issues by offering a systematization of the literature on digitalization and leadership that has been accumulating across different disciplines, while adopting an interdisciplinary approach and providing a systematization of articles from different fields that analyze digitalization and leadership. Specifically, the present article reviews the literature on how the advent of digital technologies has changed leaders and leadership roles. Moreover, it structures and summarizes the literature, considering both theoretical frameworks and empirical findings, and fostering the understanding of both the content of the debate and its practical underpinnings. Lastly, reflecting on the findings of this review, we offer suggestions for future directions of research.

The present review draws on the following boundary conditions. First, we relied on a broad definition of leadership, in which the leader is understood as a person who guides a group of people, an organization, or empowers their transformational processes. Second, we excluded studies referring to market or industry leaders, in which the leader is represented by an organization. Third, we considered studies that clearly referred to a digital or technological transformation. Fourth, we did not include studies in which there was not a clear link between information technology and leadership (e.g., city leaders protecting the physical and digital infrastructures of urban economies regarding climate change). Therefore, our review was guided by the following research questions: (i) What are the main theoretical frameworks guiding the academic discussion on digital transformation and leadership? (ii) What are the main categories emerging from the contributions that address the relationship between digital transformation and leadership? And (iii) Which are the main future directions of research that scholars should consider?

This paper is structured as follows: First, it describes the methodology used; Second, it proposes a classification of findings based on theoretical frameworks and content. Finally, it describes implications of our findings for both research and practice, and proposes directions for future research.

Research Design

The aim of this paper is to investigate how the debate on digital transformation and leadership has evolved in recent years, to identify key theories and findings, and to propose potential future directions of research. To answer our research questions, we use a mixed method approach, that involves both quantitative research through standard databases and qualitative coding ( Crossan and Apaydin, 2010 ; Peteraf et al., 2013 ; Zupic and Čater, 2015 ).

Data Collection

We collected papers from the Scopus database, one of the most widely used sources of scientific literature ( Zupic and Čater, 2015 ). We also checked Web of Science and Ebsco databases in order to avoid missing articles. Because we did not find any relevant distinction between these databases regarding this topic, we chose to use Scopus only. We firstly accessed the database on September 1st, 2018.

Since our research questions concerned the academic discussion on digital transformation and leadership, the scope of our search was limited to academic articles (not only from peer-reviewed journals but also from unpublished sources, such as unpublished manuscripts). Non-academic books and other publications were outside the scope of our study and were therefore excluded from our search. Our initial search was undertaken using the basic keywords: leader * AND digital * OR e-leader * . The keywords were used as a selection criterion for the topic (title, keywords, or abstract). We searched peer-reviewed papers published in English, in journals focusing on the following subject areas: Business, Management, and Accounting; Psychology; and Social Science, without any additional selection restrictions. We decided to scan articles published in other areas than Business and Management since the topic is covered by several disciplines. These criteria resulted in an initial sample of 790 articles. The following figure ( Figure 1 ) shows how the debate grew since 2000, and significantly expanded since 2015.

Figure 1 . Growth of articles on leadership and digitalization.

In order to avoid a potential publication bias ( O'Boyle et al., 2017 ), and to scan recent studies that might not have had the time to go through the entire publication process, we performed a search within conference proceedings since 2015, using the same aforementioned criteria. The initial sample comprised 113 articles.

The second step within our data collection process involved a qualitative selection of articles. We first considered publications with at least one citation among those published before 2013, seen that the number of citations is a common criterion of scientific rigor and impact in academia ( Garfield, 1979 , 2004 ; Peteraf et al., 2013 ). As citation-based methods may discriminate against recent publications ( Crossan and Apaydin, 2010 ), we kept all papers published after 2013. Based on the assumption that top journals publish high quality papers, we discarded studies that were not included within the first 200 journals appearing in the Scimago list within the Management and Business, Social Science, and Psychology areas. Then, both peer-reviewed articles and conference proceedings were filtered based on the assessment of whether the abstracts were in alignment with the topic and the boundary conditions. Articles were selected based on the following criteria: (i) the leader was a person who guides a group, organization, or empowers their transformational processes; (ii) there was a clear reference to digital or technological transformation; (iii) there was a clear link between information technology and leadership. Articles that focused on either digital transformation or leadership only were excluded, as well as papers that were outside our boundary conditions, such as studies on industry leaders using digital platforms. Figure 2 summarizes the selection criteria and the boundary conditions used to scan the articles. The search criteria resulted in a final dataset of 54 studies.

Figure 2 . Search strategy and selection criteria.

Data Analysis and Qualitative Coding

To attain a “systematic, transparent and reproducible review process” ( Zupic and Čater, 2015 , p. 429), and identify research streams and seminal works, we first performed a bibliometric analysis of the initial dataset of 790 articles. In order to map the origin and evolution of the academic debate on digital transformation and leadership, a systematic coding analysis was conducted on the entire set of articles. Then, the iterative reading and discussion of the final dataset of articles highlighted the following emerging categories that guided our analysis ( Strauss and Corbin, 1998 ): (i) theoretical or empirical papers; (ii) research methodology; (iii) level of analysis (micro and macro); (iv) definition of leadership and digitalization; (v) main themes or objectives of the article; (v) main underlying theories; (vi) field of study (e.g., Management and Planning, Economics and Business, Psychology and so forth). Based on this coding scheme, the three authors independently read and coded all articles. Subsequently, they discussed their coding attribution until an agreement on the final coding of each article was reached.

Dataset Description

The final database comprises 54 articles, of which 42 are peer-reviewed papers published by 33 journals, while the remaining 12 papers are conference proceedings (see Table 1 ).

Table 1 . Dataset citations, source, level of analysis and empirical/theoretical approach.

Regarding the peer reviewed articles in our dataset, most of them stem from Economic, Business and Management (22 articles), and Information and Communication Sciences (10 articles). Only three studies come from the Psychology discipline. As for the sources wherein these articles are published, we count two journals that specifically address the leadership field, such as “The Leadership Quarterly” and “Strategy and Leadership”, whereas the remaining 31 other journals are spread across areas such as Economics, Business and Management, Information and Communication Sciences, Psychology, Educational, Heath and Political Sciences. The novelty of the topic and the breadth of journals in which it is published confirms that the field of digital transformation and leadership has garnered interest from several difference disciplines. Such fragmentation of the literature and the different perspectives it has enabled, justifies the need for systematization and alignment of future research.

As for the conference proceedings, half of the articles come from international and peer-reviewed conferences advancing the debate of digital transformation in business, such as the International Conference on Electronic Business, the Scandinavian Conference on Information Systems, the IEEE Conference on e-Learning, e-Management and e-Services.

Among the top five most cited articles in our sample, three come from journals that specifically relate to Human Resources: “Leadership Quarterly” and “Organizational Behavior and Human Decision Processes.” In these articles the authors focus on the characteristics of digital leaders in terms of roles and behaviors, stressing the idea that technology is deeply changing the way in which leaders conceive communication and cope with their followers ( Avolio et al., 2000 , 2014 ; Horner-Long and Schoenberg, 2002 ; Hambley et al., 2007 ).

As shown in Figure 1 , the early 2000s witnessed an initial interest in the topic, when pioneering work began to consider the changes that digitalization brings in the area of leadership and how the concept and practice of leadership are affected by new technologies ( Avolio et al., 2000 ; Coutu, 2000 ). However, it has been mostly over the last decade that the topic garnered seesawing attention. It is plausible to assert that the much stronger impact that technological development has had within organizations recently, and the expectation that technological evolution will be even more disruptive in the near future, has accelerated the interest on the topic. Indeed, while all peer-reviewed articles in our sample are from 2000 on, 60 percent were published after 2014. As for conference proceedings, we only considered the contributions presented after 2015 in order to understand how the debate has been developing in recent years.

Regarding the level of analysis (micro vs. macro), the majority of contributions within our sample are at the micro-level (30 articles), while 24 adopt a macro perspective. Within the latter, it is interesting to notice that a considerable number of articles do not pertain to the management field. As to the type of contribution, the majority of articles in our sample (37) are empirical studies, while only a few articles are conceptual. This imbalance reveals there is still a lack of theorization about the impact of technology on leadership. Nevertheless, in the next session we systematize the main theoretical frameworks that have been used to address this topic.

Main Theoretical Frameworks

The analysis of the theoretical content of our dataset highlighted that only a small set of studies explicitly refers to the extant theoretical frameworks describing the impact of digital transformation on leadership. Advanced information technologies theory ( Huber, 1990 ), according to which the adoption of information technologies influences changes in organization structure, information use, and decision-making processes, is used as common ground. Scholars agree on the high impact of technology in leadership behavior and identify Information Technologies (IT) developments as a driver for creating disruptive changes in businesses and in leadership roles across different organizational functions ( Bartol and Liu, 2002 ; Geoffrion, 2002 ; Weiner et al., 2015 ; Sousa and Rocha, 2018 ). These changes are so dramatic that scholars started to adopt a new terminology to characterize the e-world, e-business and e-organizations ( Horner-Long and Schoenberg, 2002 ). Recent studies have been discussing the notion of digital ubiquity ( Gerth and Peppard, 2016 ; Schwarzmüller et al., 2018 ), describing the pervasive proliferation of technology ( Roman et al., 2018 ). With this term, scholars refer to a context in which technological equipment is prevalent and constantly interacts with humans. It describes a scenario in which “computer sensors (such as radio frequency identification tags, wearable technology, smart watches) and other equipment (tablets, mobile devices) are unified with various objects, people, information, and computers as well as the physical environment” ( Cascio and Montealegre, 2016 , p. 350).

In terms of leadership theoretical frameworks, scholars seem to turn to a plethora of different theories and definitions. Horner-Long and Schoenberg (2002) contrapose two main theoretical approaches: universal theories and contingency theories. The former supports the view that leaders differ from other individuals due to a generic set of leadership traits and behaviors which can be applied to all organizations and business environments (see for example Lord et al., 1986 ; Kirkpatrick and Locke, 1991 ). The latter argues that, in order to be effective, leadership should adopt a style and behaviors that match the context (e.g., Tannenbaum and Schmidt, 1973 ; Goleman, 2000 ). The authors empirically explore leadership profile characteristics, comparing e-business leaders and leaders from traditional bricks and mortar organizations. Results do not clearly support any of the two approaches. They suggest that in both contexts most of leadership characteristics are equally valued. However, certain characteristics distinguish e-world leaders from leaders in traditional industries. While Horner-Long and Schoenberg (2002) analyze leader profile differences across industries, Richardson and Sterrett (2018) adopt a longitudinal design, exploring how digital innovations influenced the role of technology-savvy K-12 district leaders across time. They base their work on a unified model of effective leadership practices that influence learning ( Hitt and Tucker, 2016 ). Although the leadership practice model is maintained across time, the authors recognize some shifts in the way those practices are implemented.

Only Obschonka et al. (2017) specifically adopt a universal perspective, drawing from trait approach theory ( Stogdill, 1974 ). By analyzing the language used to communicate via Twitter, the authors identify the personality characteristics that distinguish the most successful managers and entrepreneurs.

Heinz et al. (2006) follow a contingency approach, emphasizing the need to take into account the context and consider situational aspects that can influence leadership and cooperation practices.

Most studies in our sample assume that the change in context due to technological advancement may influence leadership. According to Lu et al. (2014 , p. 55), it cannot be assumed that “leadership skills identified in offline context should be transferred to virtual leadership without any adjustment.”

However, some authors make this assumption tacitly (e.g., Schwarzmüller et al., 2018 ), without explicitly addressing any related theoretical framework. Bolden and O'Regan (2016 , p. 439) report that “there is no one approach to leadership,” since leadership is context specific and must to be adapted to the needs of the day. Similarly, Lu et al. (2014) maintain that effective leadership behaviors are determined by the situation in which leadership is developed.

To address the diversity of situations and contexts, Jawadi et al. (2013) overcome the limits of a pure contingency approach and embrace complexity, adopting the framework of leadership behavioral complexity theory ( Denison et al., 1995 ). In a context characterized by complex and unanticipated demands, a leader needs to develop a behavioral repertoire that allows dealing with contradictory and paradoxical situations ( Denison et al., 1995 ). As contingencies are evolving so rapidly as to be considered in a state of flux, an effective leader needs to be able to conceive and perform multiple behaviors and roles.

Avolio et al. (2000 , 2014 ), make a step forward in defining the role of context.

Similarly to Bartol and Liu (2002) , the authors adopt a structurational perspective (Adaptive Structure Theory) (AST; DeSanctis and Poole, 1994 ) as the main theoretical framework. According to their point of view, digital technologies and leadership reciprocally influence and change each other in a recursive relationship. In their perspective, not only technology influences leadership, but also leaders appropriate technology, and it is through the interaction between information technology and organizational structures that the effect of technology on individuals, groups, and organizations emerges. In this view, the context is not only shaping and shaped by leaders; it is part and parcel of the construct of e-leadership itself. Avolio et al. (2000 , 2014 ) remarkably paved the way for the conceptualization of e-leadership, which has since been adopted by many other authors to inform their studies ( Avolio et al., 2000 ; Lynn Pulley and Sessa, 2001 ; Roman et al., 2018 ).

Similarly, Orlikowski (1992) develop a Structurational Model of Technology, whereby technology influences the context in which actors perform but is also designed and socially constructed by its users ( Van Outvorst et al., 2017 ).

Looking at leaders' relationships with their teams, scholars refer to the following main theories: transactional leadership theory, transformational leadership theory ( Burns, 1978 ; Bass, 1981 , 1985 ), and leader-member exchange theory (LMX; Graen and Scandura, 1987 ). Transactional and transformational leadership are among the most influential and discussed behavioral leadership theories of the last decade ( Diaz-Saenz, 2011 ). They distinguish transformational leaders, who focus on motivating and inspiring followers to perform above expectations, from transactional leaders, who perceive the relationship with followers as an exchange process, in which follower compliance is gained through contingent reinforcement and rewards ( Bass, 1985 ). Previous studies reveal that leadership styles may influence virtual team interactions and performance (e.g., Sosik et al., 1997 ; Sosik et al., 1998 ; Kahai and Avolio, 2006 ). As such, Hambley et al. (2007) explore the effects of transactional and transformational leadership on team interactions and outcomes, comparing teams interactions across different communication media: face-to-face, desktop videoconference, or text-based chat. Likewise, Lu et al. (2014) compare virtual and offline interactions, drawing on transactional and transformational leadership theories to understand whether leadership styles of individuals playing in Massive Multiplayer Online Games (MMOGs) can be associated to their leadership status in offline contexts. However, this association is found to be significant only with offline leadership roles in voluntary organizations, not in companies. Results in Hambley et al. (2007) also show that the association between leadership style and team interaction and performance does not depend on the communication medium being used.

While transactional and transformational leadership theories adopt a behavioral perspective in which the focal point is the leader behavior with regards to the follower, leader-member exchange theory (LMX) introduces a dyadic point of view. Leader-member exchange theory focuses on the nature and quality of the relationship between leaders and their team members. The quality of this relationship, which is characterized by trust, respect, and mutual obligation, is thought to predict individual, group and organizational outcomes ( Gerstner and Day, 1997 ). Jawadi et al. (2013) use the concept of leader-member exchange as a dependent variable, exploring how multiple leadership roles influence cooperative and collaborative relationships in virtual teams. Bartol and Liu (2002) build on leader-member exchange theory to suggest policies and practices HRM professionals can use to implement IT-information sharing and positively influence employee perceptions.

The democratization of informational power gave momentum to distributed power dynamics. Moving beyond the centrality of the sole vertical leader, the shared leadership approach emphasizes the role of teams as potential source of leadership ( Pearce, 2004 ; Ensley et al., 2006 ; Pearce et al., 2009 ). Shared leadership is “a manifestation of fully developed empowerment in teams” ( Pearce, 2004 , p. 48) in which leadership behaviors that “guide, structure, or facilitate the group may be performed by more than one individual, and different individuals may perform the same leadership behaviors at different times” ( Carte et al., 2006 : p. 325).

Acknowledging the relevance of increased connectivity in the digital era, some studies underscore the importance to take into account a network perspective. Lynn Pulley and Sessa (2001) contrapose the industrial economy to the current networked economy. Bartol and Liu (2002) define networked organizations as those organizations characterized by three major types of connectivity: inter-organizational (also known as boundaryless; Nohria and Berkley, 1994 ), intra-organizational, and extra-organizational. Kodama (2007) views the organization as the integration of different types of networked strategic communities, wherein knowledge is shared and assessed. Sullivan et al. (2015) use a network representation to depict shared leadership. Gordon (2007) explores how the network is embedded in the concept of web that is currently accepted.

The Macro Perspective of Analysis: Main Categories

The studies on digitalization and leadership that adopt a macro-perspective of analysis can be classified in four different categories, according to whether they focus on: (1) The relationship between e-leaders and organizations; (2) How leaders adopt technology to solve complex organizational problems; (3) The impact of digital technologies on ethical leadership; or (4) The leader's use of digital technologies to influence social movements.

The Relationship Between E-Leaders and Organizations

The studies within our sample that take a macro or organizational-level approach are considerably less than those which investigate the micro dynamics occurring within organizations. A summary is shown in Table 2 . This imbalance is probably due to the relatively greater urgency and challenge to understand the role of leaders and leadership in guiding and implementing the digitalization process within organizations, rather than what new forms of organizations are emerging as a result of the digital transformation. As observed by a recent Harvard Business Review Analytic Services report (2017 ), leaders have increasingly become the key players in driving positive results from the investments on digital tools and technologies.

Table 2 . Main categories summary.

In the last few years, scholars have begun to adopt the construct of e-leader in order to specifically refer to those leaders who have initiated a massive process of digitalization in their organizations. Despite the call to understand how organizations and e-leaders are intertwined, few studies provide an empirical explanation of the new organizational configurations emerging from the interaction between technology and the human/social system. Berman and Korsten (2014) is one among the few. By surveying a large sample of CEOs, running companies of different sizes and across 64 countries and 18 industries, the authors showed that outperforming organizations had leaders that created open, connected and highly collaborative organizational cultures. The authors suggest future leaders should base their organizations on three pillars: (1) Assuring a highly connected and open working environment at any hierarchical levels and units in organizations; (2) Engaging customers by gathering knowledge about the whole person; and (3) Establishing more integrated and networked relationships with partners and competitors ( Berman and Korsten, 2014 ). They posit these three pillars transform the organizations at all levels. This implies organizations are becoming boundaryless, at both the internal and external levels. Further, the organizational structure is no longer a static feature, but an ongoing process ( Van Outvorst et al., 2017 ). While a shift toward an ecological perspective— one where organizations' boundaries are loose and permeable—requires higher coordination, collaboration and individual responsibility, it also enhances innovative capabilities ( Lynn Pulley and Sessa, 2001 ). According to Kodama (2007) , managers at any level can foster innovation if they go beyond the formal organization, to create real or virtual networks among internal and/or external communities of practice. These communities of practice enable a more agile response to change, promoting the free-flow of information and breaking down information silos ( Petrucci and Rivera, 2018 ), thereby empowering both managers and employees to integrate, transform and stimulate knowledge that fosters innovation. This way, information and communication technology enables the creation of shared information pools wherein diverse staff across the organization contribute to a collaborative and dynamic process of idea generation. Moreover, such co-generation of ideas and knowledge cultivates stronger relationships between disparate organizational units, further facilitating open innovation processes ( Henttonen et al., 2012 ).

In sum, by breaking the organizational boundaries within and between internal and external stakeholders, the traditional leader-centered information and decision-making process is giving way to novel processes that democratize access to information and share decision power among all parties involved.

Digital Tools and Organizations: How Technology Enhances the Optimization of Complex Organizational Environments

Although most papers adopting a macro perspective reflect on the novel structures of organizations, they tend to underestimate the effect of digital transformation on organizational processes. That is, however, not the case with Weiner et al. (2015) , who discuss how the effective achievement of operational goals relies on the fit between strategic planning and information technology, particularly in operationally complex organizations, such as hospitals. Their empirical study shows that digital tools could highly contribute in the planning and monitoring of internal processes, increasing the transparency and accountability across all levels of management, and engaging customers' trust. For instance, the intelligent use of data through sophisticated digital tools, allowed hospitals administrators to lead improvements in decision-making processes and service quality by enhancing the usage of traditional management tools, such as key performance indicators (KPIs), and storage of critical data, namely on infections and diseases. Notably, this study offers empirical evidence on the need to adopt digital technology to develop efficient internal organizational processes and guarantee high quality service to customers. In another empirical study conducted in a hospital, the authors confirmed that the use of digital tools helped leaders solve complex issues related to personnel and operational costs. Similarly to the previous study aforementioned, data were used to re-design the entire organization with the aim of optimizing the efficiency in the use of both facilities and processes ( Morgareidge et al., 2014 ).

Leaders are responsible for verifying the suitability of technological tools being adopted or implemented in relation to the organizational needs and objectives. Moreover, while we acknowledge that digital technologies hold the potential for improving the efficiency of organizational processes, we contend that they need to be internalized and integrated within employees' routine tasks in order for organizations to minimize attritions from their adoption and fully capture its benefits.

Organizations and Ethics

Ethics in leadership roles has been an issue of concern to scholars especially since the emergence of the transformational leadership paradigm ( Burns, 1978 ; Bass and Avolio, 1993 ). In general, ethical leadership is defined as “the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through two-way communication, reinforcement, and decision-making” ( Brown et al., 2005 , p. 120). With the advent of digital transformation and the massive use of data, scholars have begun to call into question the integrity of leaders. Indeed, the use of data and technologies exposes leaders to new dilemmas, which nature is intertwined with ethical concerns. For instance, the use of sensitive data is driving leaders' increased concerns about privacy protection and controlling mechanisms in the workplace ( Kidwell and Sprague, 2009 ). Electronic surveillance (ES) is a way to collect data about employees and their behavior, so as to improve productivity and monitor behaviors in the workplace ( Kidwell and Sprague, 2009 ). ES rules vary across countries and cultures. For instance, the US Supreme Court of Justice obliged employers to adopt ES to monitor employees in order to prevent sexual harassment ( Kidwell and Sprague, 2009 ). Notwithstanding, Europe has been more concerned with individual privacy. Notably, in 1986, the Organization for Economic Cooperation and Development (OECD) approved a declaration on social aspects of technological change, whereby member states “were concerned that employers and unions ensure that workers' privacy be protected when technological change occurs” ( Kidwell and Sprague, 2009 , p. 199). Perhaps the boldest manifestation of this concern is the recently adopted EU General Data Protection Regulation (GDPR), which has just come into force the past May 25th, 2019.

In this scenario, leaders are required to set clear guidelines and practices that lie within national and international data security policies. In particular, they need to monitor the use of personal sensitive data, if not for the ethical concern per se , because if otherwise caught in unlawful data practices, their organizations' reputation, trustworthiness, and brand image could suffer irreparable damage (e.g., the recent scandal of Cambridge Analytica about an inappropriate use of personal data, has affected the reputation of all organizations involved) ( Gheni et al., 2016 ; Jones, 2017 ). Leaders also need to set clear expectations for employees and act as role models for all members of the organization in order to clarify what ethical behavior regarding personal sensitive data looks like. This is especially true for organizations that strongly rely on virtual communications, as these tend to stimulate more aggressive and unethical behavior, due to their lack of face-to-face interactions ( Gheni et al., 2016 ). Leaders, therefore, have a pivotal role in weeding out potential unethical behaviors from their organizations.

Finally, an emerging topic in leadership concerns the unlawful appropriation of technology from private and public organizations. Specifically, it refers to situations wherein technology is used for purposes other than those it had originally been intended ( Jones, 2017 ). For instance, improper use of technology may result in unauthorized access to data and lead to cyber security breaches ( Jones, 2017 ).

Despite the interdisciplinary relevance of ethics, the debate of ethical concerns within e-leadership seems to be currently confined to the literature on governance and information technology. Yet, there is room for more theoretical and empirical discussion about how ethics is affecting power relations, surveillance, safety perceptions in the workplace, and human resource processes.

Leadership and Digital Tools: Insights From Social Movement Studies

A complementary perspective of leadership and digitalization is provided by several recent studies that analyze social and political events, in particular grassroots movements such as the Occupy and Tea Party ( Agarwal et al., 2014 ), the Umbrella Movement in China ( Lee and Man Chan, 2016 ) and the political tensions in Russia ( Toepfl, 2018 ). These contributions share the notion of leader as someone who directs collective action and creates collective identities ( Morris and Staggenborg, 2004 ). These studies, mainly rooted in communication and political sciences, are certainly relevant to our review as they shed light on the social nature of leadership in the new digital era.

These studies focus on how social media and digital tools are disrupting traditional forms of leadership, altering the structure, norms and hierarchy of organizations, and creating new practices to manage and sustain consensus ( David and Baden, 2018 ). New forms of leadership are for instance defined as horizontal and leaderless ( Castells, 2012 ; Bennett and Segerberg, 2013 ). The horizontality defines movements and groups in which authority is dismissed, whereas leaderless points to the lack of power stratification among the participants ( Sitrin, 2006 ; Gerbaudo, 2017 ).

In a similar vein, recent studies looking at the use of digital tools by participants in social movements, observe how power struggles were changed by new information and communication technologies (ICTs): “ICTs have transformed the power dynamics of social movement politics by challenging traditional forms of [social] organizations” ( Agarwal et al., 2014 , p. 327).

The single case study of the ultra-orthodox community illustrates for instance how authoritarian leadership can be broken down by digital tools and social media ( David and Baden, 2018 ). When the leadership of a closed and conservative religious community is questioned in social media, that creates a new space to renegotiate the community's boundaries and modify its power dynamics: “the fluidity and temporality of digital media have advanced to become an influential, independent factor shaping community opinion” ( David and Baden, 2018 , p. 14). As such, the identity of a closed and inaccessible community and its leadership are challenged by both internal and external actors through the use of digital media.

The study of different digital tools is also considered a relevant subject matter to gain understanding about what tools are more efficient in organizing and mobilizing resources ( Agarwal et al., 2014 ). Technology and digital tools are not value-neutral nor value free, because they influence how people organize, coordinate, and communicate with others ( Hughes, 2004 ; Agarwal et al., 2014 ). For instance, the study on the Russian activists shows how the long-term success of the movement was a result of a centralized, formalized and stable network, wherein its leading representatives and other members were bonded together by a new digital tool ( Toepfl, 2018 ). The use of digital instruments enabled the transformation of an organization that was initially chaotic into a more structured one, as they facilitated the discussion and coordination between the leader and its followers ( Toepfl, 2018 ). This resulted in a more efficient and effective way to achieve consensus.

Taken together, these studies show how technology is far from being a neutral instrument. Rather, digital tools influence power dynamics in any type of organization (e.g., flat, bureaucratic or networked), and at any level. If on one hand, digital tools can lead to the de-structuring of extant hierarchies and challenge organizational boundaries and rules, on the other hand, they can be used as communication and coordination mechanisms that allow leaders to build structured networks from scratch and, through them, reinforce their power.

In sum, these studies stress that, despite the participatory dynamics that characterize social movements, power struggles and hierarchies are still the underlying forces that bond heterogenous groups of people together. Leaders are then the key actors in identifying objectives, orienting followers, and providing a clear identity to organizations, by means of a shared vision ( Gerbaudo, 2017 ; Bakardjieva et al., 2018 ).

The Micro Level of Analysis: Main Categories

The studies that adopt a micro-perspective to the topic of leadership and digital technology can be classified in three different categories, depending on whether they focus on: (1) The increased complexity of C-level roles; (2) The skills e-leaders need; and (3) The practices for leading virtual teams effectively.

The Evolution of C-Level Roles

The huge impact that digitalization has had in the competitive business environment, transforming markets, players, distribution channels, and relationships with customers, has made it necessary for organizations to adopt a high-level strategic view on digital transformation. New responsibilities on the selection of digital technologies that will drive an organization's ability to remain competitive in a highly digitized world, are given mainly to its CEO ( Gerth and Peppard, 2016 ). CEOs in the Digital Age assume the additional role of digital change agents and digital enablers, implying that they should recognize the opportunities offered by new technologies, and also push for their implementation. As suggested by Avolio et al. (2000) , e-leaders have a fundamental role in appropriating the right technology that is suitable to their organizations' needs, but also in transmitting a positive attitude to employees about their adopting of new technology. CEOs are required to instill a digital culture into the top management team, involving it in actively sustain a digital change inside the organization ( Gerth and Peppard, 2016 ). For this matter, a greater interaction is needed between the CEO and the Chief Information Officer (CIO), who will increasingly become a key player in the digital strategy definition and implementation, rather stay confined to an “IT-is-a-mess-now-fix-it” flavor of a role ( Gerth and Peppard, 2016 ; Bekkhus and Hallikainen, 2017 ). Bekkhus and Hallikainen (2017) acknowledge an increased ambidexterity in the role of CIOs and develop a toolbox related to their role as gatekeepers and contributors. In order to reach their goals successfully, CIOs need to have a clear picture of both the characteristics of the digital strategy and the organizational needs it is supposed to satisfy. They should also carefully evaluate the readiness of the organization in every step of the changing process in order to adopt the proper pace. To avoid IT project failures, CEOs need to facilitate the recognition of the CIO's role, as well as promote collaboration between the CIO and other top managers ( Bygstad et al., 2017 ).

As described before, digital technologies are not only used to support internal processes, but are also a way to build relationships with different actors in the external environment. Social media platforms in particular, are de facto powerful tools that C-level executives use to build communications channels with their followers ( Obschonka et al., 2017 ). In a study analyzing the rhetoric of CEOs in social media, Grafström and Falkman (2017) suggest that CEOs' willingness and ability to construct a continuative dialogue through digital channels is a powerful way not only to manage organizational crisis but also to sustain the reputation and the image of the organization, positioning the brand and communicating the organizational values. Thus, as Tsai and Men (2017) unveil, by properly using social media, CEOs, as organizational leaders and spokespersons, can build trust, satisfaction and advocacy among their followers. According to the authors, digital technologies, and social media in particular, support CEOs in becoming “Chief Engagement Officers [who develop] meaningful interpersonal interactions and relationships with today's media savvy publics” ( Tsai and Men, 2017 , p. 1859). Even if CEOs have always been considered the personification of the organization, the rising need for transparency and authenticity has led CEOs to embrace the task of visible, approachable and social leaders who actively contribute to the engagement of followers and costumers ( Tsai and Men, 2017 ).

In sum, C-level managers are faced with higher complexity of roles, related not only to new responsibilities in the digital strategy development, but also in the engagement of stakeholders across the organization's boundaries.

Leaders' Skills in the Digital Era

Defining what skills characterize leaders in the digital era has become a matter of interest in the literature. Studies analyze what are the relevant skills e-leaders should display in order to be effective. In line with the debate on universal and contingency theories, scholars ask to what extent the skills leaders need in order to lead e-businesses differ from the ones needed in traditional organizations ( Horner-Long and Schoenberg, 2002 ). Most studies are based on expert surveys that engage with digital experts, managers, CEOs and Managing Directors of e-businesses ( Lynn Pulley and Sessa, 2001 ; Horner-Long and Schoenberg, 2002 ; Schwarzmüller et al., 2018 ; Sousa and Rocha, 2018 ). A few studies also integrate expert surveys with interviews to IT specialists ( Sousa and Rocha, 2018 ) and C-level managers ( Horner-Long and Schoenberg, 2002 ).

Scholars agree that the introduction of digital tools affects the design of work, and, particularly, how people work together ( Barley, 2015 ; Schwarzmüller et al., 2018 ). For example, digitalization opens up new possibilities such as virtual teams and smart working, introduces new communication tools, increases speed and information access, influences power structures, and increases efficiency and standardization. In order to steer organizations and help them reap the benefits from such digital transformations, leaders may need to develop a variety of different skills. We present below the main skills leaders need in the digital transformation era that have been highlighted in the literature.

Communicating through digital media

Global connectivity and fast exchange of information have created a much more competitive and turbulent environment for e-businesses, which must deal with rapid and discontinuous changes in demand, competition and technology ( Horner-Long and Schoenberg, 2002 ). Scholars agree that the need for speed, flexibility, and easier access to information has facilitated the adoption of flatter and more decentralized organizational structures ( Horner-Long and Schoenberg, 2002 ). In the digital context, knowledge and information become more visible and easier to share, allowing followers to gain more autonomy ( Schwarzmüller et al., 2018 ) and to make their voices heard at all levels of the organization ( Lynn Pulley and Sessa, 2001 ). As information becomes more distributed within the organization, power tends to be decentralized. Digital transformation allows real-time involvement of followers in many decision processes, increasing their participation. Therefore, leaders are expected to adopt a more inclusive style of leading ( Schwarzmüller et al., 2018 ), asking for and taking into account followers' ideas into everyday decision making, using a two-way communication and interaction. Scholars maintain that followers' higher autonomy and participation can lead to a higher sense of responsibility for the work they are accountable for. This in turn should reduce the need for control-seeking behaviors previously exerted by leaders ( Horner-Long and Schoenberg, 2002 ; Schwarzmüller et al., 2018 ).

At the same time, inspiring and motivating employees have become pivotal skills for leaders to master ( Horner-Long and Schoenberg, 2002 ), and seem to be required to an even greater extent in order to encourage the continuous involvement and active participation of followers. Indeed, the same digital tools that provide autonomy to followers, may also drive them toward greater isolation ( Lynn Pulley and Sessa, 2001 ). According to Van Wart et al. (2017) and Roman et al. (2018) , some of the most common problems generated by the digitalization of organizations are worker alienation, weak social bonding, and poor accountability. It is therefore extremely important that leaders support and help followers in dealing with the challenges of greater autonomy and increased job demands, by adopting coaching behaviors that promote their development, provide resources, and assist them in handling tasks ( Schwarzmüller et al., 2018 ).

Similarly, the ability to create a positive organizational environment that fosters a strong sense of collaboration and unity among employees has become vital for leaders to have. Yet, e-leaders' reliance on traditional social skills, such as the abilities of active listening and understanding others' emotions and points of view, may not be enough to warrant success in creating such environments. Rather, they need to integrate these social skills with the ability to master a variety of virtual communication methods ( Roman et al., 2018 ). According to Carte et al. (2006 , p. 326), “while leadership in the more traditional face-to-face context may emerge using a variety of mechanisms, in the virtual context it likely relies largely on the communication effectiveness of the leader.”

Roman et al. (2018 , p. 5) label this skill as e-communication, and define it as “the ability to communicate via ICTs in a manner that is clear and organized, avoids errors and miscommunication, and is not excessive or detrimental to performance.” The leader needs to set the appropriate tone for the communication, while organizing it and providing clear messages. Moreover, the leader needs to master different communication tools, as their communication effectiveness depends largely on the ability to choose the right communication tool. Roman et al. (2018) provide a set of major selection criteria, which includes richness of the tool, synchronicity, speed of feedback, ease of understanding by non-experts, and reprocessing capability (ability to use the communication artifact multiple times in different venues). This ability allows to adapt the communication to the receiver preferences (as it would otherwise happen in a face-to-face interaction), so as to provide a variety of cues that enhance social bonding ( Shachaf and Hara, 2007 ; Stephens and Rains, 2011 ), convey the right message to the target audience, and better manage urgency and complexity.

High speed decision making

One way in which the introduction of technology has changed the organizational life has been the greater need for speed. Scholars agree that e-business leaders are forced to make decisions more rapidly ( Lynn Pulley and Sessa, 2001 ; Horner-Long and Schoenberg, 2002 ). This seems to suggest that decisiveness, and problem-solving abilities keep being extremely relevant for e-leaders, and may become even more prominent in the future ( Horner-Long and Schoenberg, 2002 ). According to Lynn Pulley and Sessa (2001) , never-ending urgency can create situations in which leaders needs to make decisions without having all information or without having time to think and analyze the problem properly, which may lead to falling back onto habitual responses, instead of creating novel and innovative ideas. To help navigate such situations, leaders need to be able to tolerate ambiguity, while being creative at the same time ( Horner-Long and Schoenberg, 2002 ; Schwarzmüller et al., 2018 ). If it is true that the digital world forces leaders to examine problems and provide innovative answers at a faster peace, the use of information technology also allows them to make more informed decisions. Information systems can provide enormous amounts of real-time data. For this reason, the ability to process high volumes of fast-paced incoming and outgoing data (e.g., Big data), in order to analyze it, prioritize and make sense of the relevant information for decision-making, has become and will be even more relevant in the future. Recent research points out that leaders will increasingly need to collaborate with IT managers, providing directions for data analysis and offering meaningful interpretations of results ( Harris and Mehrotra, 2014 ; Vidgen et al., 2017 ).

Managing disruptive change

The fast-paced technological evolution places high demands on organizations' ability to deal with continuously changing conditions and players. Lynn Pulley and Sessa (2001) highlight the constant need for organizations to adapt, foresee opportunities, and sometimes improvise, in order to maintain their competitiveness in the market. Under increasing pressure to innovate, leaders need to undertake an active role in identifying the need for change, as well as handling, and initiating change within their teams and organizations ( Schwarzmüller et al., 2018 ). Horner-Long and Schoenberg (2002) findings confirm that e-leaders tend to show more entrepreneurial and risk-taking characteristics than leaders in traditional contexts. However, continuous change should not disrupt the focus and mission of the organization. While promoting a flexible and innovative attitude in the organization, the leader needs to clarify a common direction. Lynn Pulley and Sessa (2001) identify the ability to inspire and share a common vision about the future of the organization as one of the challenges of e-leaders, who are frequently confronted with the need for change. While acknowledging the importance of this skill, Horner-Long and Schoenberg (2002) did not find it to characterize e-leaders any more than traditional leaders.

Managing connectivity

Scholars maintain that e-leaders also need to foster their networking abilities. Beyond the need to explore and create networks to lobby for resources and stakeholder support ( Horner-Long and Schoenberg, 2002 ) developing social interactions seems to play a key role in favoring innovation. As innovation becomes a top priority, leaders need to understand how to take advantage of networking opportunities ( Avolio et al., 2014 ). The hyper-connected environment, in which leaders operate, especially with the ubiquitous use of social media and other digital platforms, provides new networking opportunities due both to an easier access to larger groups of individuals, and the possibility to establish connections through more immediate communication. New technologies and especially the advent of social networks might have reinforced the perception that being persistently part of the network is compulsory. As reported in Horner-Long and Schoenberg (2002 , p. 616) “in the new economy some leaders do nothing but network - there is no commercial need. It is simply networking for networking's sake.” Although it is a general requirement to be able to create and maintain social relationships with various stakeholders, effective leaders differ specifically in the ability to recognize those relationships that lead to tangible benefits ( Horner-Long and Schoenberg, 2002 ).

The renaissance of technical skills

Lastly, scholars underscore the increased value of technical competencies. This represents a shift from the latest paradigm established over the past four decades, whereby leadership primarily requires emotional and social intelligence competencies that enable the leader to understand, motivate and manage his team effectively. Notwithstanding, leaders also need to understand and manage the use of various technologies. Indeed, IT knowledge and skills have become high on demand requirements to operate in a digitalized environment ( Horner-Long and Schoenberg, 2002 ). Furthermore, the mastery of current technologies must be balanced with the ability to stay current on the newest technological developments ( Roman et al., 2018 ). This emphasizes the need to adopt a life-long learning approach to developing one's digital skills.

Developing leadership skills in the digital era

To lead in the era of digital transformation requires individuals to be both people-oriented and technically minded ( Diamante and London, 2002 ). These two skills often characterize very different profiles of people that, yet, need to come together in order to implement an effective digital transformation in their organization. The case study presented by Coutu (2000) , highlights the need to establish a profitable exchange relationship between leaders of people-oriented (e.g., sales), and IT functions, in order to create a cross-functional and cross-skill contamination. Systematic knowledge dissemination from the individual to the group is highlighted as the most effective way to spread knowledge and expertise across the organization ( Boe and Torgersen, 2018 ). Coutu (2000) addresses how this cross-skill contamination can be performed, by means of implementing reverse-mentoring programs. Nonetheless, the author uncovers the problem of potential generational conflicts, whereby newer generations, who tend to be more knowledgeable and skilled in digital technologies, may gain informational power over others, generating concern and skepticism in older, change averse, individuals ( Coutu, 2000 ).

Studying modern military operational environments, Boe and Torgersen (2018) highlight the need to lead under volatile, uncertain and complex situations, characteristics they find similarly describe the context of modern e-businesses. According to the authors, leadership training needs to combine both technology and change, creating simulations of scenarios in which ambiguous information and improvisation create complex and uncertain conditions.

One way in which exposure to technology and simulations can be combined is through training in virtual spaces ( Lisk et al., 2012 ; Lu et al., 2014 ). In large community games, leaders may have to recruit, motivate, reward, and retain talented team members. They have to make quick decisions that may affect their outcomes in the long-run, for which they need to analyze the environment in order to build and keep their competitive advantage ( Avolio et al., 2014 ). Lu et al. (2014) adopt experiential learning theory ( Kolb and Kolb, 2005 ) to explain e-leadership skills development, referring to activities in which learning is performed in a virtual context. Their study attempts to empirically examine the transferability of virtual experiences into in-role job situations. Results show partial association between virtual games behaviors and hierarchical position of the participants, however, conclusions concerning the transferability of certain skills or experiences gained in virtual games may be highly affected by reverse causality. Ducheneaut and Moore (2005) , conduct a virtual ethnography to show that people participating in multiplayer role-playing games train behaviors related to networking, management and coordination in small groups. However, in a recent review on the use of games, based on digital tools or virtual realities, for training leadership skills, Lopes et al. (2013) highlight a general lack of theoretical grounding in the development and analysis of virtual games. Moreover, they find extant studies rarely show these games affect leadership skill outcomes ( Lopes et al., 2013 ). Robin et al. (2011) find that while simulations facilitate learning, they do not seem to lead to better results than traditional methods. The authors suggest simulations' main advantage lies in the possibility to enable learning in situations where it would otherwise be difficult or impossible. They thus propose the use of a combination of traditional and technology-based training to achieve the most effective learning outcomes.

Leading Virtual Teams

The introduction of digital tools has enable the organizational structure to become not only flatter and decentralized, but also dispersed. One way in which digital technology has shaped organizational life and people management has been by enabling the potential use of virtual teams. Virtual teams are defined as “interdependent groups of individuals that work across time, space, and organizational boundaries with communication links that are heavily dependent upon advanced information technologies” ( Hambley et al., 2007 , p. 1). They have become increasingly pervasive in the last years, especially in multinational organizations ( Gupta and Pathak, 2018 ).

Indeed, several benefits of virtual teams have been acknowledged in the literature. First, the use of virtual teams has allowed for a dramatic reduction of travel times and costs ( Bartol and Liu, 2002 ; Bergiel et al., 2008 ). Second, it has enabled teams to draw upon a varied array of expertise, regardless of location ( Jawadi et al., 2013 ), making it easier to access and recruit talent across the globe. Third, by facilitating the heterogeneity of team members, it has fostered creativity and innovation, due to the possibility of combining different perspectives ( Gupta and Pathak, 2018 ).

Despite its advantages, certain specificities of virtual teams' challenge the traditional way in which teams are managed and led. For instance, virtual teams are characterized by geographical and/or organizational distance. This implies that leaders cannot physically observe team members' behavior nor rely on verbal cues, facial expressions, and other non-verbal communication in order to understand the team's thoughts, feelings, moods and actions. This is considered one of the biggest barriers to developing and managing interpersonal relationships ( Jawadi et al., 2013 ). The heavy dependence on ICT may lead to communication problems, such as failing to distribute information to all team members, understand or convey the level of urgency or importance of the information, and interpret silence ( Cascio and Montealegre, 2016 ). Geographical dispersion often implies cultural diversity between team members, which may affect leaders' ability to build and maintain team spirit and trust ( Gupta and Pathak, 2018 ). According to Sullivan et al. (2015) , space may suppress leadership capacity, even in situations of shared leadership. Moreover, virtual teams are subject to time differences.

In order to overcome these challenges, virtual team leaders need to adopt specific behaviors and practices. One of the most important practices highlighted in the literature involves the setting and periodical revision of communication norms within the team ( Jawadi et al., 2013 ). Instead of focusing on behavioral norms, as in traditional teams, virtual teams require a clear definition of the norms pertaining to their use of communication tools, through witch information flows and activities are performed. Clear communication norms entail a number of advantages for virtual teams, such as: correct exchange of information, regular interaction and feedback, less ambiguity about teamwork processes, better monitoring of each member's contributions, faster detection of problems and mistakes. Moreover, because leaders play a fundamental role in enabling and mediating the communication between team members, they are able to lead them in the construction of a common language. This involves gaining a deep understanding of the underlying meaning of words and expressions used in the team. The mutual understanding of the organizational and social context in which each team member is embedded facilitates this process ( Plowman et al., 2007 ; Bjørn and Ngwenyama, 2009 ; Rafaeli et al., 2009 ).

As mentioned in the previous section, virtual team leaders also need to be able to choose the right communication tools and navigate well through their functionalities and the interactivity across various tools, if they are to avoid disruptions in communication and achieve a more vivid and open communication that favors positive team member relationships ( Jawadi et al., 2013 ). While synchronous communication is considered more appropriate to manage complex, interdependent tasks ( Hambley et al., 2007 ), asynchronous instruments may allow for team members with different backgrounds to adopt their own pace in processing others' ideas or generating new ones ( Malhotra et al., 2007 ). Moreover, asynchronous communication facilitates a continuous flow of information and the ability to work for a greater number of hours ( Gupta and Pathak, 2018 ). Furthermore, leaders need to use multiple channels with different levels of richness ( Hambley et al., 2007 ). According to Hambley et al. (2007) , “a rich medium allows for transmitting multiple verbal and nonverbal clues, using natural language, providing immediate feedback, and conveying personal feelings and emotions.” A richer tool is supposed to lead to better team cohesion. Yet, the authors found mixed results in terms of the association between constructive interaction and task performance ( Hambley et al., 2007 ).

Virtual teams often group together individuals from different educational, functional, geographical and cultural backgrounds. On one hand, such heterogeneity should promote innovative solutions, but on the other hand, it may also undermine collaboration. A virtual team leader thus needs to have good cross-cultural skills ( Schwarzmüller et al., 2018 ), to identify different cultures' characteristics and understand similarities and differences across cultures. Especially at the early stages of a virtual team's lifecycle, the leader needs to assure that the diversity of team members is understood, appreciated, and leveraged. As virtual teams do not usually have the chance to enjoy in-person informal activities typically used to share personal characteristics and abilities and foster team building, the leader needs to share and manage personal information virtually and ensure the team has a clear understanding of each team member's expertise and skills ( Malhotra et al., 2007 ). Once the diversification of skills is acknowledged, virtual teams can also benefit from a clear distribution of roles and tasks ( Jawadi et al., 2013 ). Especially if virtual teams adopt asynchronous communication tools, tasks and schedules need to be clearly defined to avoid delays due to task misallocation or overlapping.

According to Malhotra et al. (2007) , virtual teams may also engage in practices aimed at digitally monitoring the team activity, relying on remote monitoring of virtual communication and participation, as well as document posting. However, Jawadi et al. (2013) notice how monitoring and controlling mechanisms may be negatively perceived by team members. Indeed, their findings show that behaviors directed at monitoring and coordinating team interactions are not associated with higher leader-member relationship quality. According to Carte et al. (2006) , high performing virtual teams are characterized by monitoring behaviors, but only when these are shared between members. Although, traditional performance appraisal and monitoring mechanisms are being replaced by alternative systems that rely on real-time digital feedback, the key features that characterize effective face-to-face feedback have been kept ( Petrucci and Rivera, 2018 ).

Perhaps the best measure of impact of the pervasive adoption of virtual teams in organizations has been the extensive accumulation of literature focused on studying the phenomenon, alongside its antecedents, challenges and outcomes. As our study reveals, scholars have identified a number of best practices, whereby virtual team leaders become the key players in charge of resolving the challenges posed by physical and organizational distance.

However, especially when considering virtual teams, there has been a shift in the literature to steer away from traditional notions of leadership as being assigned to one individual, toward focusing on new conceptualizations of shared and distributed leadership. Virtual teams, which are often cross-functional, are indeed characterized by a relative absence of formal hierarchical authority ( Pearce et al., 2009 ). In the same way that the need for speed in responding to accelerated environmental change and higher connectivity led to the development of virtual teams, that same need may be driving the flattening of hierarchical structures toward more evenly distributed, shared and empowered leadership among virtual team members ( Pearce et al., 2009 ). As such, virtual teams are often left alone to shape and define their own leadership style, which may encourage all team members to perceive themselves as leaders and drive the collective development of leadership skills ( Gupta and Pathak, 2018 ). In these so called self-managing work teams (SMWTs; Manz and Sims, 1987 ; Druskat and Wheeler, 2003 ), decisions and leadership responsibilities are equitably allocated among team members, who are also engaged in supporting and accompanying each other in the accomplishment of their tasks. The concept of shared leadership does not necessarily imply the rejection of a “formal” leader, but introduces the idea that any team member may be a leader, and as such, is expected to assess the team in its context and assert what is best for the team: whether to volunteer himself as team leader or empower any fellow team member(s) to serve the team as leader(s). This process leads to the creation of a shared understanding of both the leadership responsibilities and the power dynamics within the team ( Grisoni and Beeby, 2007 ; Hoch and Kozlowski, 2014 ; Hoegl and Muethel, 2016 ).

Toward The Future: Research Directions

Despite the urgency felt by scholars to understand how leaders keep the pace with technological change, the literature seems to lack a shared approach in studying and theorizing about this phenomenon. Although researchers have been introducing relevant new concepts, such as e-leader and e-organizations, there is a shortage of well-established and consensual definitions in the literature. Our review reveals scholars have relied on several leadership theories to explain the relationship between leadership and digital transformation. However, we question whether theories based on traditional views of industrial organization and business, that still prevail in the literature, are the most suitable to comprehend the multifaceted phenomenon of digital transformation and its impact on all matters leadership of organizations, communities, teams, and even self. As suggested by Kahai et al. (2013) , scholars may need to go beyond traditional leadership theories to explain the impact digitalization exerts on leadership and leaders. Are the existing theories in social sciences able to explain the antecedents, characteristics and outcomes of this disruptive phenomenon or do we need new theoretical lenses to make sense of how leaders may respond to this change?

One of the most complex and pressing issues concerns e-leaders (un)ethical behaviors. Notably, the higher risk leaders now face of engaging in unethical uses of personal and sensitive information, or the inexistence of a code of conduct for ethical leadership behavior are critical concerns to raise in any debate of e-leadership ( Lee, 2009 ). Collaboration through digital technologies brings about new questions regarding the role leaders may play in the digital environment. What is the role of leaders in guiding an ethical appropriation of digital technologies? What can e-leaders do in order to be an example and instill an ethical culture within their followers? How do digital tools such as social media and online communities and forums change the conditions under which interactions occur and how do these affect the maintenance of ethical behaviors? These are questions that future research is pressed to answer. While the theoretical debate has already started to address some of these questions, empirical research remains considerably underdeveloped.

The present review uncovers a shortage of contributions addressing the role that institutions play in supporting ethical behaviors of leaders. In particular, what remains unclear is whether and how leaders will be prepared to face the new wave of data and policies that affect their ability to manage privacy and regulatory issues. Studies in this area are thus highly encouraged.

The leader-follower relationships mediated by ICTs can also be affected by concerns for privacy and information that the parties do not want to share. Social media interactions, for example, leave digital footprints that can be monitored by leaders and organizations, which may compromise the interactions and responses of followers that feel their privacy is at risk. The same can be said regarding the instruments that digital technologies provide for tracing personal productivity. Project management applications, for instance, trace individual contributions to a certain project, but can challenge an impartial evaluation if the relationship between individual effort and contribution to the results is not clear, thus putting into question the trust in the relationship with leaders. Future research should consider these aspects and work toward a broader comprehension of how to balance the need for higher transparency in ICT- mediated relationships with followers' higher autonomy and need for privacy.

We acknowledge that the introduction and use of digital tools it strictly linked to organizational cultures that value the use of technology and establishes the readiness of organizations to successfully implement digital tools. Therefore, we suggest further research needs to investigate the extent to which culture affects the selection and effective implementation of digital technologies within organizations. Answering to this question also provides relevant information on how digital technology alters organizational identity and shapes new organizational boundaries. Exploring this line of inquiry using both theoretical and empirical approaches, may inform the creation of new organizational identities, and their relationship with different types of organizations and institutions.

Since digitalization is enabling a growing propensity to share information, organizational boundaries are becoming more fluid and expanding outside the formal organization. Hence, collective forms of leadership are expected to increase. Notably, distributed or shared leadership is supposed to gain momentum, especially if it is considered a better fit to the characteristics of virtual teams, such as the informal nature of its communication channels, task interdependence and team member autonomy ( Avolio et al., 2014 ; Hoch and Kozlowski, 2014 ). What remains unclear is the role that leaders play in recognizing and encouraging distributed leadership in teams. Moreover, how much does the success of shared leadership styles depend on the organizational culture? What is the effect of shared leadership on virtual team dynamics? We claim that these are questions that should be explored with greater detail in the future.

Networked organizations, as well as the rise of virtual teams, speak volumes about the endless connectivity possibilities that digital technology has enabled. However, empirical studies on virtual teams also highlight that digital tools and media can disconnect individuals and undermine established power dynamics. Despite the relevance of increased connectivity, only a few studies adopt a network approach to understand how leaders and followers are interconnected to one another.

Literature has already acknowledged that the lack of face-to-face interactions makes the task of leading virtual teams a more complex job ( Purvanova and Bono, 2009 ). Indeed, the physical and cultural distance that characterizes virtual teams threatens the ability to build trust, create commitment and enhance cohesion among team members ( Hoch and Kozlowski, 2014 . As suggested by Lee (2009) trust in virtual teams is related to ethics: the way in which leaders and team members behave, the extent to which they demonstrate transparency when interacting with others, the integrity and compliance to the rules and procedures of the organization and the team are key issues that should not be neglected. However, little is known about the methods and behaviors that effective leaders can adopt in order to build trust in virtual teams. Literature on this topic needs contributions that focus specifically on the process of trust creation in virtual teams, describing its characteristics and mechanisms and informing about which digital tools can be used to support such process. Indeed, along with the ability of creating trust among team members, virtual team leaders are required to have the ability of choosing and exploiting the right communication tools ( Jawadi et al., 2013 ; Roman et al., 2018 ). Future research should try to uncover the effect different characteristics of communication tools may have on team dynamics and leader-followers relationships.

The lack of face-to-face interaction also creates new challenges in the deployment of social skills. Processes related to interpersonal understanding may be inhibited by distance and by the use of interfaces. Indeed, comparing traditional face-to-face teams and pure virtual teams, Balthazard et al. (2009) found that leader characteristics that are easier to perceive from nonverbal cues, such as personality traits, predicted the emergence of transformational leadership in face-to-face teams, but not in computer-mediated teams. Considering the importance of social understanding and affect-based perceptions, we encourage future research that analyzes the ways in which leaders can create positive emotional contagion, through technology. For example, it could be interesting to inquire whether the use of facial/emotional recognition devices ( Pentland and Choudhury, 2000 ), and affective haptics ( Arafsha et al., 2012 ) can contribute to interpersonal emotional understanding and sharing, and how it affects leader-follower relationships and team dynamics. Balthazard et al. (2009) found written communication quality to be positively related to the emergence of transformational leadership in virtual teams. Indeed, the increasing adoption of written communication-based tools such as chats, social media, or document sharing platforms, calls for the use of linguistic analysis of online communication to understand how leaders effectively instill emotions, convey their vision, or communicate urgency through text.

As suggested by Avolio et al. (2014) , leadership in the digital world may be influenced by gender. Men and women may adopt different criteria in choosing which technologies to adopt. However, this topic of research has earned little attention in the literature. We claim that other studies are needed to investigate more in depth gender differences, and its effect on organizational outcomes.

Another topic that future researcher needs to address regards the way in which leaders can develop the skills needed to perform in the digital era. Some scholars maintain virtual games might be useful instruments to foster both social and technical skills ( Ducheneaut and Moore, 2005 ; Lu et al., 2014 ). However, findings have not yet showed whether virtual games have a clear effect on social and digital skills development. We suggest future research could inspect what types of virtual behaviors foster team engagement and higher team performance in multiplayer virtual games, while examining the role of these variables in organizational settings. Other scholars propose digital natives and technical experts in organizations may be engaged in the training of those who are less familiar with or demonstrate a negative attitude toward the adoption of technology, for example by means of reverse mentoring programs ( Coutu, 2000 ). However, conditions that can favor a successful digital transformation of organizations should be analyzed. The technological skill advantage of young generations may destabilize traditional power relations. A closer look to this phenomenon is suggested.

In a digital world where physical presence is becoming unnecessary, the possibility that some leadership responsibilities begin to be performed by AI-based technology is not unrealistic. A tough debate is raising awareness as to whether robots can be programmed to express emotions and how this fosters the possibility that robots may be better leaders than humans ( Avolio et al., 2014 ). Complementing the literature that has so far stressed the importance of emotions and emotional intelligence for leaders' performance (see for instance Boyatzis, 2006 ; Boyatzis et al., 2017 ), future research should shed light on whether and how robots, algorithms and technological tools substitute or complement leaders.

Even if macro and micro level of analysis are explored by social science scholars, management literature would still lack the analysis of the phenomenon of leadership and digitalization at the meso-level. A promising way of combining micro and macro levels of theorizing might be to introduce a multiple level of analysis. Some of the papers in our dataset move toward this direction, however, it is not clear how digitalization is affecting relationships between diverse organizations.

Finally, from a methodological point of view, our study shows a plethora of methods employed by scholars to analyze leaders' behavior ( Hambley et al., 2007 ; Malhotra et al., 2007 ; Jawadi et al., 2013 ), leaders' skills ( Horner-Long and Schoenberg, 2002 ; Roman et al., 2018 ), or technology adoption ( Bartol and Liu, 2002 ; Weiner et al., 2015 ). If on one hand, this richness provides a portfolio of techniques that scholars could use depending on the subject of analysis, on the other hand, it confirms that there is still a confusion about how to monitor this recent phenomenon. Moreover, we observe that contributions are confined within their own disciplinary frontiers. For instance, social movements literature, that mainly draws on qualitative methods such as ethnography, case study, and interviews, should inform organizational scholars how to observe power relations within companies. Extant contributions investigating what are the skills leaders facing the digital transformation require are based mainly on experts' surveys and interviews. Literature reveals a lack of empirical research which examines the relationship between identified leadership skills and successful performance in highly digitalized organizations. Future studies should also take into account how much this relationship may be affected by the context in which the leader operates.

Nowadays, digital transformation is an unavoidable choice for any company, regardless of size or sector. Leaders cope with new tools on a daily basis and they make decisions according to the data they have access to. Therefore, we highly encourage future research to shed more light on the effect of digital transformation on leadership, both at organizational and individual level. If the debate about the relationship between human beings and machine is not a recent one ( Turing, 1950 ), not to management literature, nor social sciences in general, the relationship between digital transformation and leadership requires updated lenses. This systematic review offers a structured framework of a promising field, and we hope it will help future research generate coherent efforts to garner novel and relevant knowledge in this research topic.

The purpose of this review was 3-fold. First, we discussed how leadership in the digital era has been conceptualized, reviewing the theoretical perspectives that have been used in prior research. Our review did not reveal a strong unifying theory of the relationship between leadership and digital transformation, thus calling for more attention to theoretical contributions.

Second, we mapped the academic debate on the relationship between digital transformation and leadership, organizing and structuring the main emerging themes at macro and micro level of analysis. We observed that both contributions with micro and macro approaches underscore that information technology and strategic management need greater alignment. Digital transformation is successful in the long term when the overall organizational objectives match the need to adopt a new digital tools or instruments. In a similar vein, individuals embrace technological advancement only when they perceive it is relevant to their tasks. It is an important responsibility of the leader, particularly of C-level leaders, to steer this strategic alignment and the proliferation of a digital culture.

In a networked economy, the digital transformation has led organizations to open their boundaries, and connect with other industries, stakeholders, and customers, to generate innovation. From a micro perspective, this openness is also required by leaders who need to invest in networking. This means to be “out there” ( Grafström and Falkman, 2017 ), present in the network ( Gordon, 2007 ), and willing to communicate with different types of stakeholders, through digital tools and social media. Especially for leaders, the digital tools are no longer a distant container of everyday life; rather, they are instruments in which everyday life emerges ( Gordon, 2007 ).

Although the introduction of digital tools influenced organizational boundaries and leadership boundaries, for instance favoring the development of concepts such as shared leadership, studies show that trust among members and employees is still achieved and maintained through leaders' intervention ( Carte et al., 2006 ). Cascio and Montealegre (2016 , p. 356), reminds us that inspirational leaders will remain pivotal in making the right decisions, as “humans will continue to enjoy a strong comparative advantage over machines.” However, the growing development and use of AI-based technology to make decisions, calls for a closer understanding of what leadership will mean in the future. Growing ethical concerns related to the application of AI in managerial activities as well as to the appropriation of technology and data are becoming an urgent topic to address.

To overcome the challenges derived from the digital transformation, leaders are required to develop a combination of digital and human skills, mainly related to the ability to communicate effectively in a digitalized context, create cohesion between geographically distant followers, foster initiative and change attitudes, and deal with complex and fast problem solving.

Third, we highlighted the current gaps and open questions in the literature, and laid out a future research agenda that targets opportunities for the empirical and theoretical advancement of knowledge.

While our review is timely and includes the most recent contributions, some limitations should be considered and overcome in future studies. First, since our concern was to map prior research, we have not provided detailed propositions to the suggested categories, a void that should be addressed by future studies. The second concern regards the sample. We drew from the Scopus database only. Albeit we checked other databases to avoid potential bias, we may have missed some relevant articles contained elsewhere. Third, despite the rigorous procedure of our systematic review, a limitation is ascribed to the inclusion of only peer-reviewed articles and conference proceedings. A future review should also include industry research reports, professional outlets publishing research-based findings, and other non-pear reviewed manuscripts to better clarify how the multidimensional phenomenon of digitalization is affecting organizations and leadership. Finally, we excluded, as per our boundary conditions, articles that considered organizations as leaders in the digital transformation, and studies that discussed about digital platforms. Future studies should adopt a broader overview of the macro-organizational and strategic effects in order to understand how digital transformation is implemented across different organizations, communities and teams.

Author Contributions

LC and EB contributed conception and design of the study. LC, EB, and RZ organized and analyzed the database. LC and EB wrote the first draft of the manuscript. RZ wrote sections of the manuscript. All authors contributed to manuscript revision, read and approved the submitted version.

Conflict of Interest Statement

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

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Keywords: leadership, e-leadership, digital transformation, digital technology, literature review, skills, ethics, virtual teams

Citation: Cortellazzo L, Bruni E and Zampieri R (2019) The Role of Leadership in a Digitalized World: A Review. Front. Psychol. 10:1938. doi: 10.3389/fpsyg.2019.01938

Received: 25 February 2019; Accepted: 07 August 2019; Published: 27 August 2019.

Reviewed by:

Copyright © 2019 Cortellazzo, Bruni and Zampieri. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) . The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

*Correspondence: Laura Cortellazzo, laura.cortellazzo@unive.it

Disclaimer: All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher.

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Impact of transformational leadership on work performance, burnout and social loafing: a mediation model

• Hira Khan 1 ,
• Maryam Rehmat   ORCID: orcid.org/0000-0002-3377-0082 2 , 3 ,
• Tahira Hassan Butt 3 ,
• Saira Farooqi 2 , 3 &
• Javaria Asim 2 , 3  

Future Business Journal volume  6 , Article number:  40 ( 2020 ) Cite this article

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The aim of this research was to study the effect of transformational leadership on employees’ work outcomes which include their work performances and working burnout, and their working behavior such as social loafing at workplace. Also, it studies the impact of intrinsic motivation as a mediator between transformational leadership and other stated variables. A cross-sectional survey was conducted to collect data from 308 employees working in the telecommunication sector. To test the hypotheses, Model 4 of Process Hayes was used to test direct and mediating effects among transformational leadership and employees’ work outcomes and working behavior. The results showed that transformational leadership has a significant positive relationship with mediator intrinsic motivation. The results also concluded that work performance has positive significant relationship with transformational leadership. However, there is indirect and insignificant relationship of transformational leadership with working burnout and social loafing. Therefore, it can be stated that organizational leaders must have transformational attributes by getting informed of their employees well because transformational leader can inspire employees to achieve anticipated or significant outcomes. It gives employees self-confidence over specific jobs, as well as the power to make decisions once they have been trained.

Introduction

During the last two decades, transformational leadership has gained most conspicuous place in philosophy of leadership [ 81 ]. Therefore, it is not surprising that the current evolution in leadership theory and practice has attracted the interest of both practitioners and researchers and they exhibited great deal of interest toward exploring its ascendancy for organization and individuals as well [ 72 , 87 ]. Particularly, the studies conducted during the previous decades recommends that transformational leadership is considerably related to followers’ behaviors and performance [ 20 , 65 ]. In a review on progress in the domain of leadership printed in “Annual Review of Psychology,” Avolio et al. [ 8 ] stressed the need to establish mechanisms that connect leadership to vital organizational and individual outcomes. They further stressed the need to investigate the role of mediators, so as to clarify the noteworthiness of leadership for organizations. Chan and Mak [ 20 ] in their research contended that “a variety of different influence processes may be involved in transformational leadership yet there is still room for research to further examine the process of the relationship between transformational leadership and follower attitudes and behaviors.” Transformational leadership defined as leadership approach in which a leader transforms his followers, inspires them, builds trust, encourages them, admires their innovative ideas, and develops them [ 12 ], is presently the most extensively acknowledged definition in the leadership literature.

Transformational leadership can be implicated to managerial context. Transformational leadership which is the leader’s competency to get performance of employees beyond expectations, can be more helpful and beneficial in enhancing one’s ability to intrinsically motivate them. It can improve psychological empowerment as well [ 85 ]. Transformational leadership has four components which are: (i) idealized influence, (ii) inspirational motivation to enhance confidence, (iii) intellectual stimulation, and (iv) individualized consideration [ 13 ]. Idealized influence is shown when a leader efficiently makes provision of accurate sense of mission and appropriately visualizes it. Inspirational motivation can be defined as leadership attitude which deals with emotional traits of employees, builds confidence in employees about their performances, appropriately communicates and provides actual feedback [ 68 ]. Individual consideration refers to the support of leader for each follower. It may include training and coaching, allocating tasks according to the competence of each individual and supervision of performances [ 92 ]. Intellectual stimulation describes the effort of leader to motivate and encourage his employees to be more adaptive and follow new technical approaches according to the varied situation. It may be advantageous to overcome the cues and hindrances which occur at multi stages [ 14 ]. Transformational leaders can anticipate that employees will need transformational leadership when the work is more stressful and when the work is more meaningful [ 84 ].

Extant research on the transformational leadership tried to explore its “black box” and presented empirical confirmation of its direct fruitful consequences for followers’ outcomes including work performance [ 16 , 44 , 52 , 90 ], burnout [ 40 , 82 ], and social loafing [ 5 ]. Nevertheless, there exists some room for further research, explaining the specific mechanisms by which transformational leadership influence such individuals’ behavior and psychological state particularly at organizational level [ 16 ]. Hence, this study aims at providing new comprehension of how and why and under what circumstances transformational leadership influences work performance, burnout and social loafing of employees, in Pakistani context.

Transformational leadership tends to maximize the level of professional performance of work In addition to provided literature on association of transformational leadership and work performance; researchers indicate that organizations of diverse structures highly depend upon the performance of its workers. Past studies have empirically established the positive association between work performance and transformational leadership [ 9 ]. Transformational leaders inspire their followers to have shared vision of targeted goals and standards of performance defined by the organization and also facilitate them achieve it [ 4 ]. Another factor which is highly influenced by transformational leadership is employee’s burnout which may be decreased through this particular style of leadership. Prevalence of stress is highly probable in any organizational sector [ 73 ]. Transformational leadership is most influencing factor which enhances the employee’s ability to deal with all kind of circumstances as such leader provide supportive circumstances to employees so that they can maintain the optimum level of mental health through inspirational motivation and also enhances their confidence level [ 28 , 93 ].

“Social loafing is the inclination of putting less effort while working in a team than working alone” [ 5 ]. Transformational leader, while working in a group, follows a strategy in which he can allocate various assignments and tasks according to the competencies of employee and he must evaluate performances of each individual. Social loafing is a psychological aspect of an individual which may differ from situation to situation and individual to individual [ 55 ]. Leadership literature has established that individualized consideration by the leader may deflate the degree of social loafing [ 45 ].

Building on the previous literature, this research incorporated employee intrinsic motivation as a factor that explains the linkage of transformational leadership with employee work performance, burnout and social loafing. Intrinsic motivation which is “the implementation of an action for the inherent satisfaction rather than for external reasons” [ 63 ]. Undeniably, the motivation of current workforce is not much reliant on extrinsic rewards. Rather material rewards may decline job performance in complex jobs with diverse responsibilities [ 30 ]. Further, in order to perform their duties effectively in today’s dynamic work environment, the employees need to have an elastic and highly flexible work arrangement. For that reason and for instilling good motivation among workers, organizations not only offer extrinsic rewards to them but also plan to enhance their intrinsic motivation [ 63 ]. Transformational leadership is the leadership approach which contributes to present a clear and justified organizational vision and mission by motivating workers to work toward idea through developing association with employees, consider employees’ requirements and assisting them to exert their potential positively, participates to positive outcomes for an organization [ 31 ]. Employees whose work competencies are encouraged by the leader are more likely to have higher intrinsic motivation and resultantly perform better at work. They become more focused and try to accomplish organizational goals by taking their own interests. There also exists indirect association between employees’ burnout and transformational leadership through mediating effect of intrinsic motivation [ 28 ]. Transformational leaders focus more on individual requirements and they build strong association with their employees who are supposed to perform with higher objectives, which enhances employees’ intrinsic motivation. Such motivation keeps them away from burning out [ 6 ]. We further argued that intrinsic motivation mediates the relationship between transformational leadership and social loafing. Previous studies indicate that role of intrinsic motivation discourages social loafing as it does not happen circumstantially only, but it also happens whenever an employee is low in intrinsic motivation [ 5 ].

This research makes provision of significant contribution in the literature of organizational behavior by enriching our understanding of the conditions under which transformational leadership influences employee performance, burnout and social loafing. The findings of our research allow organizations and its management to comprehend how efficiently and effectively they can follow a policy or some kind of advanced strategy in order to intrinsically motivate their employees so that they can increase the level of work performance and deflate burnout and social loafing in employees.

Literature review

Transformational leadership and intrinsic motivation.

Envisioning visions and motivating are two core jobs of effective leadership [ 24 ]. According to traditional transformational leadership literature, transformational leaders guide and encourage employee mindfulness by enunciating a vision that escalates employees’ consciousness and consideration for the significance of organizational values, goals, and performances [ 42 ]. Thusly, fundamental to the theory on transformational leadership is a strong accentuation on the part of a combined vision; that is, an idealized arrangement of objectives that the organization seeks to accomplish one day [ 18 ]. Transformational leaders, through clear enunciation, have their utmost influence on the followers’ sentiments by cultivating a feeling of success and proficiency in them. Transformational leaders are much capable to improve organizational outcomes according to the market requirements by developing human resources and creating justified modifications [ 34 ]. The reason to acquire specific knowledge is associated with the degree that what is the level of intrinsic motivation of a person and how he is keen to get knowledge by developing particular competencies and meaningful learning [ 78 ]. Transformational leadership has power to enhance the ability of psychological empowerment which is referred as intrinsic motivation [ 85 ]. According to [ 74 ], the idea of motivation is known as “the set of reasons why people behave in the ways they do”, for example, intrinsic motivation is “the motivational state in which the employees are driven by their interests in the work rather than a contract-for-rewards approach to completing a task” [ 24 ]. A study by Koh et al. [ 51 ] identified that intrinsic motivation is highly influenced by the transformational leadership, as the transformational leader guides and supports effectively, self-motivation to be an effective and beneficial part of an organization increases as well.

Transformational leadership comprises four interconnected behavioral dimensions including “idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration” [ 11 ]. All behavioral dimensions can influence employees’ intrinsic motivation. First, transformational leaders utilize idealized influence and offer inspirational motivation through communicating an alluring collective vision [ 91 ]. This collective vision provides a meaningful idea of team’s tasks by a leader which increase the intrinsic motivation of employees [ 75 ]. Transformational leadership can develop positive outcomes such as optimism and high self-interests in all members of team which ultimately increase the pleasure and job satisfaction relevant to the task [ 26 ]. Second, the intellectual stimulation of transformational leaders boosts team members’ confidence to develop more effective emotional and situational stability and resolving their problems by their own selves [ 11 ]. They are also motivated to understand and encourage the basic knowledge and skills of other coworkers to share new ideologies. Third, transformational leaders differentiate individuals’ ideas and interests, promote their ideas to describe their uniqueness, and consider them through individualized consideration [ 11 ]. When employees observe the behaviors of their leaders, all of them feel motivated and try to construct one another’s ideas and competencies to create innovative solutions of problems. Therefore, in this article, we expect that all dimensions of transformational leadership encourage employees to invest higher willingness and energy in their work and tasks which exhibit their higher intrinsic motivation. Therefore, it can be hypothesized that:

Transformational leadership relates positively to intrinsic motivation.

Transformational leadership, intrinsic motivation and work performance

Intrinsic motivation is highly associated with the work performance. Intrinsic motivation may be defined as “the doing of an activity for its inherent satisfactions rather than for some separable consequence but it is rare for employees to experience intrinsic motivation in all of their tasks” [ 76 ]. Intrinsic motivation is generated for self-developing attributes that refers to make an individual ready to be the part of learning procedure without having interests of extrinsic rewards [ 83 ]. Intrinsic motivation is basically the degree of an individual’s interest in a task completion and how he engages himself in work [ 3 ]. It describes the psychological development process with an employee’s performance [ 85 ].

According to recent operational settings, enhancing the employees’ motivation has become one of most impactful human resources strategy. Most of the organizations are tending to build up, sustain and grow their HR strategies, just to motivate their employees so that short-term and long-term goals and objectives can be achieved. In recent researches, there are numerous variables which can be influenced by employees’ intrinsic motivation like performance, creativity, and relevant outcomes. For example, it has been stated that behavior of an individual influences the work outcomes which are performance and quality as well [ 10 ]. It is strongly evidenced that motivation has a most important role between cognitive abilities and work performance. Gist [ 37 ] suggested that short term goals can be achieved through self-interest of an individual. Also, a research indicates that there is a significant and direct relationship of intrinsic motivation and job performance [ 43 ]. Furthermore, an employee’s intrinsic motivation illustrates an important contribution in organizational progress and growth [ 39 ]. The work performance indices are constructed for the degree of performance, not only for the individual level always; it also includes group and organizational performances [ 2 ]. In most employment situations, where intrinsic motivation of an employee is supposed to be high, the employee usually tries to acquire continual employment,and he/she develops interpersonal associations with his subordinates, perform better at job as they take pleasure in the process of finishing their tasks effectively [ 38 ]. Conversely, if the worker feels de-motivated, it can be resulted in low performance of work. Thus intrinsic motivation may be concluded with better performance of work while meeting organizational targets and goals [ 7 ].

As we propose the direct relationship of intrinsic motivation and performance, it may be stated that the intrinsic motivation can actively influence the performance of work as a significant workplace outcome [ 19 ]. Therefore, we hypothesize that:

Intrinsic motivation relates positively to employee work performance.

In current research, we posit that intrinsic motivation is one of the main mechanisms by which transformational leaders influence employees’ job performance. Transformational leaders may help to ensure individual’s inner motivation to perform a task efficiently which in turn increases their work performance .These leadership approaches are advantageous for both individual and organizational growth [ 36 ]. In fact, it is justified to examine how leaders motivate their employees and this motivation enhances their performance [ 12 ]. In line with the previous literature [ 22 , 23 ], we expect that transformational leadership enhances individuals’ intrinsic motivation which in turn will significantly predict employee job performance. Intrinsic motivation is known as self-directed type of motivation and represents the highest commitment and stability with the self [ 25 ]. A variety of researches indicate that higher intrinsic motivation result in better performance [ 89 ] as intrinsic motivation inspires and encourages employees to work more efficiently. Therefore, it can be hypothesized:

Intrinsic motivation mediates the relationship between transformational leadership and work performance.

Transformational leadership, intrinsic motivation and employee’s working burnout

Intrinsically motivated employees persistently focus on their tasks and jobs because they find themselves more focused, attentive and exert their best efforts while being a part of an organization and in achieving the goals of their employing organization [ 76 ]. Burnout is a psychological and mental condition which happens in response to high stress level at job; it is a multi-dimensional concept which covers the following three aspects: emotional exhaustion, depersonalization, and decreased personal focus for accomplishment of goals [ 77 ]. Burnout affects the interpersonal relationship of employees too [ 58 ].

Prior research indicates that there is contrary effect of intrinsic motivation on employee’s working burnout [ 70 ]. Intrinsically motivated employees find their jobs more interesting, are more optimistic, put more effort in their work, and have higher perseverance level because they gain contentment and fulfillment from performing a task itself [ 15 ]. Vallerand [ 88 ] in his study exhibit that “employees with high intrinsic motivation have higher level of vitality, positive effect, self-esteem, absorption, concentration, effort, and persistence” and when such employees went through the felling of burnout, they have more personal resources to surmount this situation. Such employees feel less exhausted, less stressed and more focused toward contributing in organization’s progress [ 49 ]. Intrinsically motivated employees feel less pressure and low stress level rather than the employees who are low in motivation [ 69 , 71 ]. Intrinsic motivation of employees’ can be negatively associated with their burnout [ 70 ].Therefore; the employees who are high in intrinsic motivation can decrease their burnout at workplace [ 50 ]. Thus, it can be hypothesized that:

Intrinsic motivation is negatively associated to employee’s working burnout.

In current research, we propose that intrinsic motivation plays a mediating role between transformational leadership and burnout. Burnout is the major concern for organizations as it influences the relevant outcomes. It results in low productivity and commitment. Hence, it causes the high turnover and absenteeism in employees [ 82 ]. Studies indicate that leaders highly contribute to employees’ health and welfare as well [ 80 ]. But the relationship between leadership behaviors and employee burnout is less studied yet [ 41 ]. As mentioned earlier, there exists a positive relationship between transformational leadership and intrinsic motivation which in turn make them more competent, teach them how to handle and manage stressful conditions and reduce their burnout. Therefore, we hypothesize that:

Intrinsic motivation mediates the relationship of transformational leadership and employee’s working burnout.

Transformational leadership, intrinsic motivation and social loafing

Social loafing is defined as the tendency of individuals who exert less effort and their productivity decreases when working in groups than working individually [ 21 , 33 , 57 , 79 ]. It is a negative employee behavior and is particularly shown by individuals with lower motivation [ 1 ]. These kinds of behaviors can be resulted in low productivity and poor commitment toward a task [ 62 ] and organization as well.

Social loafing is common practice and can be observed in every organizational setting, across age and gender and in different professions and various cultures [ 46 ]. This is more alarming that it can be seen at every single workplace and considered as misconduct. The variety of factors is studied in influence of social loafing, but there is still an insufficiency of individual inherent factors such as intrinsic motivation which is part of this research framework.

“Intrinsic motivation which describes an inherent tendency that individuals engage in activities due to their inner interests, pleasure and satisfaction” [ 70 ] is negatively linked to Social loafing. George [ 33 ] established in his study on 221 salespeople that intrinsic task involvement is negatively linked to social loafing. He further exerted that intrinsically motivated individuals may have self realization that their efforts are vital for the success of their team/group and for organization as well and therefore they are less likely to be engaged in social loafing. He/she would try his/her own best to exert extra effort to accomplish the goals and tasks assigned by the leader.

Therefore, we hypothesize that:

Intrinsic motivation is negatively linked to social loafing.

Intrinsic motivation may be described as the inherent process that initiates attributes, behaviors and what defines people to moves or act [ 27 ]. Self-determination theory indicates that there are different levels of motivation. Intrinsic motivation is at the most independent end of the scale because an individual opts to get engaged in any conduct according to his own choice [ 32 ]. A leader motivates his employees by incorporated strategies which results in better achievement of goals and objectives of a firm or organization. Gilbert et al. [ 35 ]. Social loafing is defined as a reduced amount of effort and motivation while being a part of group or working in a team as compared to working individually [ 46 ]. Social loafing is well-known phenomena and can be found in all of the organizations, across gender, and age and in various occupations and different cultures [ 46 ].

Social loafing is considered as a big hindrance in organizational growth as well. It causes low potential [ 61 ], low productivity [ 29 ], and low motivation of other team members too [ 67 ]. It decreases the overall efficiency, productivity and performance of the team [ 47 ]. Social loafing is widely spread term which is also known as social disease [ 54 ].

In line with this connection, social loafing is a big moral and social issue since it is an option that “involves modifying the life plan of another individual or group of individuals” [ 60 ]. On contrast, if a transformational leader motivates his employees and encourages their performance on individual basis, then through individualized considerations and inspirational motivation, social loafing can be decreased. Therefore, it can be hypothesized:

Intrinsic motivation mediates the relationship of transformational leadership and social loafing.

Mediating role of intrinsic motivation between transformational leadership and social loafing

(Fig.  1 ).

Theoretical framework

Sample and data collection

The data was collected through survey via emails, online surveys and printed questionnaires through convenience sampling from individuals working in the telecommunication sector. The participants were informed about the objective of this study and the assurance of confidentiality and anonymity of their responses. Respondents were assured that their information will not be assessed by any individuals except those who are authorized. After removing the duplicates, outliers and responses with missing data, we obtained 308 valid responses for further data analysis Table  1 depicts the demographic characteristics of the respondents.

• Transformational leadership

Transformational leadership was measured by McColl-Kennedy and Anderson [ 59 ] four-item scale. Six-point Likert scale (1—strongly disagree to 6 —strongly agree) was used to measure responses. This is the most widely used scale to measure transformational leadership. Cronbach’s alpha for transformational leadership scale is 0.84.

• Intrinsic motivation

In this study, Liu et al. [ 56 ] four-item scale was adopted to measure intrinsic motivation. To record the responses five-point Likert scale was used (1 —strongly disagree to 5—strongly agree). Cronbach’s alpha for intrinsic motivation scale is 0.89.

• Work performance

To measure work performance [ 19 ] four-item scale was adopted. Five-point Likert scale (1—much worse to 5—much better) was used to measure responses. Cronbach’s alpha of work performance scale is 0.80.

• Working burnout

Working burnout was measured by Kristensen et al. [ 53 ]. Seven items with five-point Likert scale (1 –never to 5—always) was used. Cronbach’s alpha of burnout scale is 0.88.

• Social loafing

Social loafing was measured by Akgunduz and Eryilmaz [ 1 ]. Four items with five-point Likert scale (1—strongly disagree to 5—strongly agree) was used. Cronbach’s alpha of social loafing scale is 0.80.

Data analysis

After data collection, the reliability, correlation was calculated by using SPSS software. Research model was tested using Hayes Process Model 4.

Descriptive statistics

Table  2 describes descriptive statistics of all the study variables including the mean, standard deviation, and correlation. Correlation coefficients are in the anticipated directions and provide preliminary support for our study hypotheses. Our results depicts that transformational leadership and intrinsic motivation ( r  = 0. 29, p  < 0.01) are positively and significantly correlated. Further intrinsic motivation is significantly associated with work performance ( r  = .30, p  < 0.01); working burnout ( r  = − 0.59, p  < 0.01); social loafing ( r  = − 0.15, p  < 0.01).

Reliability analysis

To examine the consistency of the variables, reliability analysis is calculated. The reliabilities of all the variables with number of items are summarized in Table  3 . The values between 0.84 and 0.8 indicate good reliability. The reliability of transformational leadership is 0.84 which is good, and intrinsic motivation shows another good reliability which is 0.89. Working burnout shows 0.88 reliability. The reliability of work performance is 0.8 and the reliability of social loafing is 0.8 which is also good. So this explains that the data used is reliable.

Hypothesis testing

Results of mediation for work performance.

Firstly, we investigated the impact of Transformational Leadership (X) on Work Performance (Y) through mediating factor of Intrinsic Motivation (M). Results justify that total effect of transformational leadership on work performance (path c, Fig.  2 ) is significant ( β  = 0.13, t  = 3.07, p  < 0.01) as shown in Table  4 . The relationship between transformational leadership and intrinsic motivation (path a, Fig.  4 ) is highly significant and positive which support Hypothesis 1 also ( β  = 0.31, t  = 5.20, p  < 0.01). Furthermore, the findings showed that the relationship between Intrinsic Motivation and Work Performance (path b, Fig.  2 ) is positive and significant relationship ( β  = 0.19, t  = 4.79, p  < 0.01).

Mediation model—work performance

Our overall findings represent that there is positive and significant impact of transformational leadership on work performance (path c ′, Fig.  2 ) through the mediation of intrinsic motivation ( β  = 0.07, t  = 1.68, p  > 0.01) which accepts Hypothesis 3.

Results for mediation for working burnout

In this model we studied the relationship of Transformational Leadership(X) and Working Burnout (Y) through mediating role Intrinsic Motivation (M). Results indicated that total effect of transformational leadership on working burnout is significant ( β  = − 0.19, t  = − 3.51, p  < 0.01 We examined the relationship between the mediator, Intrinsic Motivation and the dependent variable, Working Burnout (path b , Fig.  3 ). The findings showed a significant and negative relationship ( β  = − 0.50, t  = − 11.98, p  < 0.01). This finding supports Hypothesis 4. As it is shown in Table  5 the final results determined a significant relationship between transformational leadership and working burnout with mediation of intrinsic motivation (path c ′, Fig.  3 ) ( β  = − 0.03, t  = − 0.66, p  > 0.01). Therefore Hypothesis 5 is accepted.

Mediation model—working burnout

Results for mediation for social loafing

Our third and last finding for studied relationship between transformational leadership and social loafing through mediator intrinsic motivation, are presented in Table  6 . According to the total effect model, the relationship between transformational leadership and social loafing (path c , Fig.  4 ) is significant and negative ( β  = − 0.32, t  = − 9.57, p  < 0.01) as shown in Table  6 .

Mediation model—social loafing

The outcomes showed that intrinsic motivation and social loafing (path b , Fig.  4 ) are insignificantly and related relationship ( β  = − 0.01, t  = − 0.31, p  > 0.01) which opposes Hypothesis 6.

Our last finding determined that transformational leadership does not have a significant negative impact on social loafing (path c ′, Fig.  3 ), while controlling intrinsic motivation ( β  = − 0.32, t  = − 9.07, p  < 0.01). Thus Hypothesis 7 is not accepted. Thus, it can be resulted that there is no mediation.

Theoretical contributions

Although, previous researches have vastly recognized the direct impact of transformational leadership on positive employee work outcomes [ 17 , 48 ], yet not all employees do not respond to transformational leadership optimistically [ 66 ]. This study overall, made an important contribution to the available literature mainly by including variables that are very essential for all work environments that are aiming toward high employee motivation and performance. The current study is a unique attempt to look at the relationship between of transformational leadership, employees’ work performance, working burnout, and social loafing and intrinsic motivation in Asian context. This study contributes to the existing literature on transformational leadership since it is among the first to investigate the indirect impact of transformational leadership on employees’ work performance, working burnout, and social loafing through intrinsic motivation. Providing empirical evidence for association between transformational leadership (independent variable), work performance, working burnout and social loafing (dependent variables) through the mediating effect of intrinsic motivation. Our empirical results provide support for our hypothesized model except for the indirect effect of transformational leadership on social loafing through intrinsic motivation. Transformational leadership consists of four elements which are idealized influence, inspirational motivation, intellectual stimulation and Individualized consideration [ 13 ]. All of these elements showed very good reliability and consistency with each other. These elements actively participate to affect the outcome of intrinsic motivation [ 85 ].

This study shows that transformational leadership has a significant and positive relationship with employees’ intrinsic motivation. Previous literature supports this finding that transformational leadership promotes motivation in employees and develops positive psychological states such as meaningfulness of work, experienced responsibility for the outcomes and knowledge of work results. It indicates that transformational leadership directly exerts its influence by helping employees or followers to think more positively about themselves and their tasks, by enhancing the quality of their relationships, and by creating environments that are fair, respectful, and supportive [ 86 ] and all of these factors contribute positively toward employee’s self motivation toward his/her work (i.e., intrinsic motivation).

The positive elements of transformational leadership bring out positive psychological states by escalating intrinsic motivation among employees. Employees with increased intrinsic motivation are more effective and efficient toward their work performances. They are supposed to be converted into responsive and perform efficiently in their work [ 64 ].

This study results showed significant positive relationship of transformational leadership on working burnout through intrinsic motivation. When a transformational leader indicates support for honest and fair matters associated with employees, the employee feels less exhausted and motivated. Intrinsically motivated employees who are driven by enjoyment and interest in their work are more likely to work hard at their jobs and feel less fatigue, less emotional exhaustion, and increased desire to participate in the organization [ 49 ].

Finally, it was examined that how transformational leadership impact social loafing through Intrinsic motivation. Findings depicts that although Social loafing has a significant and negative relationship with transformational leader, but their indirect relationship through intrinsic motivation is not significant The reason behind can be that the direct strong association between transformational leader and social loafing as “transactional leaders effectively inspire followers to identify with a mission while rallying them to work together to achieve organizational objectives.” Further, social loafing in employees is also effected significantly by other factors such as workload, organizational culture, tenure of job. etc.

Practical implications

Our study also provides several practical implications for organizations. Transformational leaders who realize the significance of intrinsic motivation for employees will adopt such behaviors that are conducive for development employees’ intrinsic motivation at the workplace. The results of current study confirmed that transformational leadership through fostering intrinsic motivation create such environment which is stress free and fruitful for employee effective performance. One way to exhibit these behaviors by managers is to aim at encouraging motivation among employees based on their inherent happiness and enjoyment. Another way to enhance employees’ intrinsic motivation and involvement toward organizational success is to value their contributions and sharing organizational goals and objectives with their workers. Further, it is very essential for organizational leaders to be transformed by being informed of their employees well because transformational leader can inspire people to achieve unexpected or remarkable results. It gives workers autonomy over specific jobs, as well as the authority to make decisions once they have been trained. In that the leader can inspire workers to find better ways of achieving a goal as leadership can mobilize people into groups that can get work done, and morale, in that transformational leaders raise the well-being and motivation level of a group through excellent connection. The findings of this study also stressed the need of designing leadership coaching and training programs in order to develop transformational leadership which may include “programs for communication, motivation, and brainstorming, to train employees with the necessary resources to be more articulate and inspirational as well as to think out of the box”.

Limitations and future directions

The first limitation of this research is that cross-sectional survey has been conducted. There may be ambiguity in establishing causal direction. Results may vary while collecting data at various times. It is suggested to conduct longitudinal study design in future research to see how impact of transformational leadership on employee outcomes varies over time. Next, it represented data from only the telecom sector of Lahore, Pakistan which may limit the study generalizability it would have been advantageous to conduct this research across the diverse sectors and n different context. Another limitation of this research is that there can be a probability of response bias as all the data was collected through same source i.e., employees. For example, a person can have deliberate falsification by quoting false responses of statements, just to attain social desirability. An employee in the organization may have high degrees of social loafing but he may not state it appropriately as well. Future researchers may collect data from different sources like work performance data can be collected from supervisors.

Existing literature and this research too is having high tendency toward constructive and significant outcomes to discover impact of transformational leadership so it is suggested that in future studies impact of transformational leadership should be examined in relation to more negative employee outcomes such as turnover intention and cyber loafing.

It is also recommended to see the impact of other mediators like emotional stability between transformational leadership and employees’ various outcomes.

Furthermore, future studies can also observe the effect of different moderators such as performance appraisal politics and contingent awards on the existing research model. It might prove valuable.

Future studies can also respond to the limitations of current research by collecting data across different business sectors (education, banking, etc.) of diverse locations.

This research contributes to the field of organizational behavior by enhancing our knowledge on how a transformational leader upgrades employees’ positive work outcomes by improving their intrinsic motivation. Furthermore, their increased intrinsic motivation will develop their positive work outcomes by increasing employees’ work performance and the same time reducing their burnout and work stress. We hope that our study will stimulate future endeavors to advance our understanding in this domain.

Availability of data and materials

The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.

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Every author made contribution in each of the sections.HK completed her thesis on this topic for her M.Phil degree, MR supervised her in her thesis, THB has helped in proof reading the document and incorporating the reviewer’s comments, SF helped in putting it into paper format and JA helped in the analysis. All the authors have read and approved the document.

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Khan, H., Rehmat, M., Butt, T.H. et al. Impact of transformational leadership on work performance, burnout and social loafing: a mediation model. Futur Bus J 6 , 40 (2020). https://doi.org/10.1186/s43093-020-00043-8

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Received : 30 April 2020

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DOI : https://doi.org/10.1186/s43093-020-00043-8

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Leadership Research Paper

This sample leadership research paper features: 7900 words (approx. 26 pages), an outline, and a bibliography with 38 sources. Browse other research paper examples for more inspiration. If you need a thorough research paper written according to all the academic standards, you can always turn to our experienced writers for help. This is how your paper can get an A! Feel free to contact our writing service for professional assistance. We offer high-quality assignments for reasonable rates.

I. Introduction

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II. Leadership Defined

III. The Trait Approach to Leadership

IV. What Do Leaders Do? The Behavioral Approach

V. Situational Approaches to Leadership

VI. Contingency Theories of Leadership

VII. Leader-Member Exchange Theory

VIII. Charismatic and Transformational Leadership

IX. Leader Emergence and Transition

X. Leadership Development

XI. Summary

XII. Bibliography

More Leadership Research Papers:

• Implicit Leadership Theories Research Paper
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Introduction

There are few things more important to human activity than leadership. Most people, regardless of their occupation, education, political or religious beliefs, or cultural orientation, recognize that leadership is a real and vastly consequential phenomenon. Political candidates proclaim it, pundits discuss it, companies value it, and military organizations depend on it. The French diplomat Talleyrand once said, “I am more afraid of an army of 100 sheep led by a lion than an army of 100 lions led by a sheep.” Effective leadership guides nations in times of peril, promotes effective team and group performance, makes organizations successful, and, in the form of parenting, nurtures the next generation. Winston Churchill, the Prime Minister of Great Britain during World War II, was able to galvanize the resolve of his embattled people with these words: “I have nothing to offer but blood, toil, tears, and sweat.” When leadership is missing, the effects can be equally dramatic; organizations move too slowly, stagnate, and often lose their way. The League of Nations, created after the World War I, failed to meet the challenges of the times in large part because of a failure to secure effective leadership. With regard to bad leaders, Kellerman (2004) makes an important distinction between incompetent leaders and corrupt leaders. To this we might also add leaders who are “toxic.” Bad leadership can perpetuate misery on those who are subject to its domain. Consider the case of Jim Jones, the leader of the Peoples Temple, who in 1978 ordered the mass suicide of his 900 followers in what has been called the Jonestown Massacre, or the corrupt leadership of Enron and Arthur Anderson that impoverished thousands of workers and led to the dissolution of a major organization. These examples remind us that there are many ways in which leadership can fail.

Leadership Defined

When you think of leadership, the ideas of power, authority, and influence may come to mind. You may think of the actions of effective leaders in accomplishing important goals. You may think of actual people who have been recognized for their leadership capabilities. Dwight D. Eisenhower, 34th president of the United States, defined leadership as “the ability to decide what is to be done, and then to get others to want to do it.” Leadership can be defined as the ability of an individual to influence the thoughts, attitudes, and behavior of others. It is the process by which others are motivated to contribute to the success of the groups of which they are members. Leaders set a direction for their followers and help them to focus their energies on achieving their goals. Theorists have developed many different theories about leadership, and although none of the theories completely explains everything about leadership, each has received some scientific support. Some of the theories are based on the idea that there are “born leaders” with particular traits that contribute to their ability to lead. Other theories suggest that leadership consists of specific skills and behaviors. Some theories take a contingency approach that suggests that a leader’s effectiveness depends on the situation requiring leadership. Still other theories examine the relationship between the leader and his or her followers as the key to understanding leadership. In this research paper, we examine these various theories and describe the process of leadership development.

The Trait Approach to Leadership

Aristotle suggested that “men are marked out from the moment of birth to rule or be ruled,” an idea that evolved into the Great Person Theory. Great leaders of the past do seem different from ordinary human beings. When we consider the lives of Gandhi or Martin Luther King, Jr., it is easy to think of their influence as a function of unique personal attributes. This trait approach was one of the first perspectives applied to the study of leadership and for many years dominated leadership research. The list of traits associated with effective leadership is extensive and includes personality characteristics such as being outgoing, assertive, and conscientious. Other traits that have been identified are confidence, integrity, discipline, courage, self-sufficiency, humor, and mystery. Charles de Gaulle described this last trait best when he noted that “A true leader always keeps an element of surprise up his sleeve, which others cannot grasp but which keeps his public excited and breathless.”

Another trait often attributed to effective leaders is intelligence. However, intelligence is a two-edged sword. Although highly intelligent people may be effective leaders, their followers may feel that large differences in intellectual abilities mean large differences in attitudes, values, and interests. Thus, Gibb (1969) has pointed out that many groups prefer to be “ill-governed by people [they] can understand” (p. 218). One important aspect of intelligence that does predict leader effectiveness is emotional intelligence, which includes not only social skills but strong self-monitoring skills, which provide the leader with feedback as to how followers feel about the leader’s actions.

Finally, personal characteristics such as attractiveness, height, and poise are associated with effective leadership. After decades of research, in which the list of traits grew dramatically, researchers realized that the same person could be effective in one context (Winston Churchill as war leader) but ineffective in another context (Winston Churchill, who was removed from office immediately after the war was over). The failure of this approach to recognize the importance of the situation in providing clear distinctions between leaders and followers with regard to their traits caused many scientists to turn their attention elsewhere. However, theorists using more sophisticated methodological and conceptual approaches have revived this approach. Zaccaro (2007) suggests that the revival of the trait approach reflects a shift away from the idea that traits are inherited, as suggested in Galton’s 1869 book Hereditary Genius, and focuses on personal characteristics that reflect a range of acquired individual differences. This approach has three components. First, researchers do not consider traits as separate and distinct contributors to leadership effectiveness but rather as a constellation of characteristics that, taken together, make a good leader.

The second component broadens the concept of trait to refer not only to personality characteristics but also to motives, values, social and problem-solving skills, cognitive abilities, and expertise. For example, in a series of classic studies, McClelland and his colleagues (see McClelland & Boyatzis, 1982) identified three motives that contribute to leadership. They are the need for achievement, the need for power, and the need for affiliation. In their work, leader traits are not attributes of the person but the basis for the leader’s behavior. The need for achievement is manifested in the desire to solve problems and accomplish tasks. In the words of Donald McGannon, “Leadership is action, not position.” The need for power is evident in the desire to influence others without using coercion. As Hubert H. Humphrey once said, “Leadership in today’s world requires far more than a large stock of gunboats and a hard fist at the conference table.” The final motive, need for affiliation, can be a detriment to effective leadership if the leader becomes too concerned with being liked. However, it can provide positive results from the satisfaction a leader derives in helping others succeed. Lao Tse once wrote, “A good leader is a catalyst, and though things would not get done well if he weren’t there, when they succeed he takes no credit. And because he takes no credit, credit never leaves him.”

The third component of this new approach focuses on attributes that both are enduring and occur across a variety of situations. For example, there is strong empirical support for the trait approach when traits are organized according to the five-factor model of personality. Both extraversion and conscientiousness are highly correlated with leader success and, to a lesser extent, so are openness to experience and the lack of neuroticism.

What Do Leaders Do? The Behavioral Approach

Three major schools of thought—the Ohio State Studies, Theory X/Y (McGregor, 1960), and the Managerial Grid (Blake & Mouton, 1984)—have all suggested that differences in leader effectiveness are directly related to the degree to which the leader is task oriented versus person oriented. Task-oriented leaders focus on the group’s work and its goals. They define and structure the roles of their subordinates in order to best obtain organizational goals. Task-oriented leaders set standards and objectives, define responsibilities, evaluate employees, and monitor compliance with their directives. In the Ohio State studies this was referred to as initiating structure, whereas McGregor (1960) refers to it as Theory X, and the Managerial Grid calls it task-centered. Harry S. Truman, 33rd president of the United States, once wrote, “A leader is a man who can persuade people to do what they don’t want to do, or do what they’re too lazy to do, and like it.” Task-oriented leaders often see their followers as undisciplined, lazy, extrinsically motivated, and irresponsible. For these leaders, leadership consists of giving direction, setting goals, and making unilateral decisions. When under pressure, task-oriented leaders become anxious, defensive, and domineering.

In contrast, person-oriented leaders tend to act in a warm and supportive manner, showing concern for the well-being of their followers. Person-oriented leaders boost morale, take steps to reduce conflict, establish rapport with group members, and provide encouragement for obtaining the group’s goals. The Ohio State studies referred to this as consideration, the Managerial Grid calls this country club leadership, and McGregor uses the term Theory Y. Person-oriented leaders see their followers as responsible, self-controlled, and intrinsically motivated. As a result, they are more likely to consult with others before making decisions, praise the accomplishment of their followers, and be less directive in their supervision. Under pressure, person-oriented leaders tend to withdraw socially.

Leadership effectiveness can be gauged in several ways: employee performance, turnover, and dissatisfaction. As you can see in Table 68.1, the most effective leaders are those who are both task and person oriented, whereas the least effective leaders are those who are neither task nor person oriented. A recent meta-analysis found that person-oriented leadership consistently improves group morale, motivation, and job satisfaction, whereas task-oriented leadership only sometimes improves group performance, depending on the types of groups and situations.

In thinking about what leaders do, it is important to distinguish between leadership and management. Warren Bennis (1989) stated, “To survive in the twenty-first century, we are going to need a new generation of leaders— leaders, not managers.” He points out that managers focus on “doing things right” whereas leaders focus on “doing the right things.” Table 68.2 provides a comparison of the characteristics that distinguish a leader from a manager. As you look at the list, it is clear that a person can be a leader without being a manager and be a manager without being a leader.

Situational Approaches to Leadership

The Great Person theory of leadership, represented by such theorists as Sigmund Freud, Thomas Carlyle, and Max Weber, suggests that from time to time, highly capable, talented, charismatic figures emerge, captivate a host of followers, and change history. In contrast to this, Hegel, Marx, and Durkheim suggest that there is a tide running in human affairs, defined by history or the economy, and that leaders are those who ride the tide. The idea of the tide leads us to the role of situational factors in leadership. For example, Perrow (1970) suggests that leadership effectiveness is dependent upon structural aspects of the organization. Longitudinal studies of organizational effectiveness provide support for this idea. For example, Pfeffer (1997) indicated that “If one cannot observe differences when leaders change, then what does it matter who occupies the positions or how they behave?” (p. 108). Vroom and Jago (2007) have identified three distinct roles that situational factors play in leadership effectiveness. First, organizational effectiveness is not strictly a result of good leadership practices. Situational factors beyond the control of the leader often affect the outcomes of any group effort. Whereas leaders, be they navy admirals or football coaches, receive credit or blame for the activities of their followers, success or failure is often the result of external forces: the actions of others, changing technologies, or environmental conditions. Second, situations shape how leaders act. Although much of the literature on leadership has focused on individual differences, social psychologists such as Phil Zimbardo, in his classic Stanford Prison Experiment, and Stanley Milgram, in his studies of obedience, have demonstrated how important the situation is in determining behavior. Third, situations influence the consequences of leader behavior. Although many popular books on leadership provide a checklist of activities in which the leader should engage, most of these lists disregard the impact of the situation. Vroom and Jago (2007) suggest that the importance of the situation is based on three factors: the limited power of many leaders, the fact that applicants for leadership positions go through a uniform screening process that reduces the extent to which they differ from one another, and whatever differences between them still exist will be overwhelmed by situational demands. If all of these factors are present, it is probably true that the individual differences between leaders will not significantly contribute to their effectiveness. Nevertheless, in most of the situations in which leaders find themselves, they are not that powerless and their effectiveness is mostly a result of matching their skills with the demands of the situation, which brings us to a discussion of contingency theories.

Contingency Theories of Leadership

One of the first psychologists to develop a contingency approach to leadership effectiveness was Fred Fiedler (1964, 1967), who believed that a leader’s style is a result of lifelong experiences that are not easy to change. With this in mind, he suggested that leaders need to understand what their style is and to manipulate the situation so that the two match. Like previous researchers, Fiedler’s idea of leadership style included task orientation and person orientation, although his approach for determining a leader’s orientation was unique. Fiedler developed the least-preferred coworker (LPC) scale. On this scale, individuals rate the person with whom they would least want to work on a variety of characteristics. Individuals who rate their LPC as uniformly negative are considered task oriented, whereas those who differentiate among the characteristics are person oriented. The second part of his contingency theory is the favorableness of the situation. Situational favorability is determined by three factors: the extent to which the task facing the group is structured, the legitimate power of the leader, and the relations between the leader and his subordinates. The relation between LPC scores and group performance is complex, as can be seen in Table 68.3. A meta-analysis conducted by Strube and Garcia (1981) found that task-oriented leaders function best in situations that are either favorable (clear task structure, solid position power, and good leader/member relations) or unfavorable (unclear task structure, weak position power, and poor leader/member relations). In contrast, person-oriented leaders function best in situations that are only moderately favorable, which is often based on the quality of leader-member relations.

Another theory that addresses the relation between leadership style and the situation is path-goal theory (House, 1971). In this theory, path refers to the leader’s behaviors that are most likely to help the group attain a desired outcome or goal. Thus, leaders must exhibit different behaviors to reach different goals, depending on the situation. Four different styles of behavior are described:

• Directive leadership. The leader sets standards of performance and provides guidelines and expectations to subordinates on how to achieve those standards.
• Supportive leadership. The leader expresses concern for the subordinates’ well-being and is supportive of them as individuals, not just as workers.
• Participative leadership. The leader solicits ideas and suggestions from subordinates and invites them to participate in decisions that directly affect them.
• Achievement-oriented leadership. The leader sets challenging goals and encourages subordinates to attain those goals.

According to path-goal theory, effective leaders need all four of these styles because each one produces different results. Which style to use depends on two types of situational factors: subordinate characteristics, including ability, locus of control, and authoritarianism; and environmental characteristics, including the nature of the task, work group, and authority system. According to House and Mitchell (1974), when style and situation are properly matched, there is greater job satisfaction and acceptance of the leader, as well as more effort toward obtaining desired goals. A meta-analysis by Indvik (1986) is generally supportive of the theory. Studies of seven organizations found that task-oriented approaches are effective in situations with low task structure, because they help subordinates cope with an ambiguous situation, and ineffective in situations with high task structure, because they appear to be micromanagement. Additional studies have found that supportive leadership is most effective when subordinates are working on stressful, frustrating, or dissatisfying tasks. Researchers found participative leadership to be most effective when subordinates were engaged in nonrepetitive, ego-involving tasks. Finally, achievement-oriented leadership was most effective when subordinates were engaged in ambiguous, nonrepetitive tasks. A clear implication of the theory is that leaders must diagnose the situation before adopting a particular leadership style.

A third contingency approach is the normative and descriptive model of leadership and decision making developed by Vroom and his colleagues (see Vroom & Jago, 2007). This approach examines the extent to which leaders should involve their subordinates in decision-making processes. To answer this question, the researchers developed a matrix that outlines the five decision processes that range from highly autocratic through consultative to highly participative (see Table 68.4). Which of these approaches is the best? The answer is none of them is uniformly preferred, and each process has different costs and benefits. For example, participative approaches are more likely to gain support and acceptance among subordinates for the leader’s ideas, whereas autocratic approaches are quick and efficient, but may cause resentment. The theory suggests that the best approach may be selected by answering several basic questions about the situation that relate to the quality and acceptance of a decision. Some examples of the type of questions that should be asked are “Do I have enough information to make a decision? How structured is the task? Must subordinates accept the decision to make it work?” By answering such questions and applying the specific rules shown in Table 68.5, a leader is able to eliminate approaches that are likely to fail and to choose the approach that seems most feasible from those remaining.

Leader-Member Exchange Theory

A growing number of researchers have found that subordinates may affect leaders as much as leaders affect subordinates. Yukl (1998) pointed out that when subordinates perform poorly, leaders tend to be more task oriented, but when subordinates perform well, leaders are more person oriented. Similarly, Miller, Butler, and Cosentino (2004) found that the effectiveness of followers conformed to the same rules as those Fiedler applied to leaders. It may be that the productivity of a group can have a greater impact on leadership style than leadership style does on the productivity of the group. This reciprocal relation has been formally recognized in the vertical dyad linkage approach (Dansereau, Graen, & Haga, 1975), now commonly referred to as leader-member exchange (LMX) theory (Graen & Uhl-Bien, 1995). This theory describes how leaders maintain their influence by treating individual followers differently. Over time, leaders develop a special relationship with an inner circle of trusted lieutenants, assistants and advisors—the in-group. The members of the in-group are given high levels of responsibility, influence over decision making, and access to resources. Members of the in-group typically are those who are highly committed to the organization, work harder, show loyalty to the leader, and share more administrative duties. Their reward is greater access to the leader’s resources, including information, concern, and confidence. To maintain the exchange, leaders must be careful to nurture the relationship with the in-group, giving them sufficient power to satisfy their needs but not so much power that they become independent. The leader-member relationship generally follows three stages. The first stage is role taking. During this stage the leader assesses the members’ abilities and talents and offers them opportunities to demonstrate their capabilities and commitment. In this stage, both the leader and member discover how the other wants to be respected. The second stage is role making. In this stage, the leader and member take part in unstructured and informal negotiations in order to create a role for the member with a tacit promise of benefits and power in return for dedication and loyalty. In this stage, trust building is very important, and betrayal in any form can result in the member’s being relegated to the out-group. In this stage the leader and member explore relationship factors as well as work-related factors. At this stage, it is clear that perceived similarities between the leader and follower become important. For this reason, a leader may favor a member who is similar in sex, race, or outlook with assignment to the in-group, although research by Murphy and Ensher (1999) indicated that the perception of similarity is more important than actual demographic similarities. The final stage is routinization. In this phase the pattern established by the leader and member becomes established.

The quality of the leader-member relationship is dependent on several factors. It tends to be better when the challenge of the job is either extremely high or extremely low. Other factors that affect the quality of the relationship are the size of the group, availability of resources, and overall workload.

Charismatic and Transformational Leadership

In a speech given at the University of Maryland, Warren Bennis said, “[A] leader has to be able to change an organization that is dreamless, soulless and visionless…someone’s got to make a wake-up call. The first job of a leader is to define a vision for the organization.…Leadership is the capacity to translate vision into reality.” Effective leaders are able to project a vision, explaining to their subordinates the purpose, meaning, and significance of their efforts. As Napoleon once said, “Leaders are dealers in hope.” Although the idea of charismatic leadership goes back as far as biblical times (“Where there is no vision, the people perish”—Proverbs 29:18), its modern development can be attributed to the work of Robert House. House (1977) analyzed political and religious leaders and noted that charismatic leaders are those high in self-confidence and confidence in their subordinates, with high expectations, a clear vision of what can be accomplished, and a willingness to use personal examples. Their followers often identify with the leader and his or her mission, show unswerving loyalty toward and confidence in the leader, and derive a sense of self-esteem from their association with the leader. Charismatic leaders are usually quite articulate, with superior debating and persuasive skills. They also possess the technical expertise to understand what their followers must do. Charismatic leaders usually have high self-confidence, impression-management skills, social sensitivity, and empathy. Finally, they have the skills to promote attitudinal, behavioral, and emotional change in their followers. Those who follow charismatic leaders are often surprised at how much they are able to accomplish that extends beyond their own expectations. Research on charismatic leadership indicates that the impact of such leaders is greatest when the followers engage in high self-monitoring (observing their effect on others) and exhibit high levels of self-awareness. Charismatic leadership enhances followers’ cooperation and motivation.

It is important to recognize that charismatic leadership can have a dark side. We began this research paper with the example of Jim Jones, the charismatic religious leader who led his people to commit mass suicide. Howell and Avolio (1992) describe the difference between ethical and unethical charismatic leaders. According to their analysis, ethical leaders use their power to serve others, not for personal gain. They also promote a vision that aligns with their follower’s needs and aspirations rather than with their own personal vision. Ethical leaders stimulate followers to think independently and to question the leader’s views. They engage in open, two-way communication and are sensitive to their followers’ needs. Finally, ethical leaders rely on internal moral standards to satisfy organizational and societal interests, not their own self-interests.

In helping followers achieve their aspirations, Bernard Bass (1997) has noted that charismatic leadership is a component of a broader-based concept, that of transformational leadership. Bass believed that most leaders are transactional rather than transformational in that they approach their relationships with followers as a transaction, one in which they define expectations and offer rewards that will be forthcoming when those expectations are met. Transactional leaders use a contingent reward system, manage by exception, watch followers to catch them doing something wrong, and intervene only when standards are not met. Finally, transactional leaders tend to adopt a laissez-faire approach by avoiding the need to make hard decisions.

In contrast, transformational leadership goes beyond mutually satisfactory agreements about rewards and punishments to heighten followers’ motivation, confidence, and satisfaction by uniting them in the pursuit of shared, challenging goals. In the process of doing that, they change their followers’ beliefs, values, and needs. Bass and Avolio (1994) identified four components of transformational leadership. The first component is idealized influence (charisma). Leaders provide vision, a sense of mission, and their trust in their followers. Leaders take stands on difficult issues and urge their followers to follow suit. They emphasize the importance of purpose, commitment, and ethical decision making. The second component is inspirational motivation. Leaders communicate high expectations, express important purposes in easy-to-understand ways, talk optimistically and enthusiastically about the tasks facing the organization, and provide encouragement and meaning for what has to be done. They often use symbols to focus the efforts of their followers. The third component is intellectual stimulation. Leaders promote thoughtful, rational, and careful decision making. They stimulate others to discard outmoded assumptions and beliefs and to explore new perspectives and ways of doing things. The fourth component is individualized consideration. Leaders give their followers personal attention and treat each person individually. They listen attentively and consider the individual needs, abilities, and goals of their followers in their decisions. In order to enhance the development of their followers they advise, teach, and coach, as needed. Yukl (2002) offers the following guidelines for transformational leadership:

• Develop a clear and appealing vision.
• Create a strategy for attaining the vision.
• Articulate and promote the vision.
• Act confident and optimistic.
• Express confidence in followers.
• Use early success in achievable tasks to build confidence.
• Celebrate your followers’ successes.
• Use dramatic, symbolic actions to emphasize key values.
• Model the behaviors you want followers to adopt.
• Create or modify cultural forms as symbols, slogans, or ceremonies.

Perhaps Walter Lippman provided the best summary of transformational leadership. He wrote, “The final test of a leader is that he leaves behind him in other men the conviction and the will to carry on…” The genius of good leaders is to leave behind them a situation that common sense, without the grace of genius, can deal with successfully.

Leader Emergence and Transition

Who becomes the leader? The process by which someone becomes formally or informally, perceptually or behaviorally, and implicitly or explicitly recognized as a leader is leadership emergence. Scholars have debated this question for centuries and in this research paper, so far, we have offered several possible answers. The Great Person Theory suggests that some people are marked for greatness and dominate the times in which they live. Tolstoy’s zeitgeist theory suggests that leaders come to prominence because of the spirit of the times. Trait theories suggest leaders are selected based on their personal characteristics, whereas interactional approaches examine the joint effects of the situation and the leader’s behavior. Research suggests that leadership emergence is an orderly process that reflects a rational group process whereby the individual with the most skill or experience or intelligence or capabilities takes charge. Implicit leadership theories (Lord & Maher, 1991) provide a cognitive explanation for leadership emergence. According to these theories, each member of a group comes to the group with a set of expectations and beliefs about leaders and leadership. These cognitive structures are called implicit leadership theories or leader prototypes. Typically these prototypes include both task and relationship skills as well as an expectation that the leader will epitomize the core values of the group. Members use their implicit theories to sort people into either leaders or followers based on the extent to which others conform to their implicit theory of what a leader should be. These implicit theories also guide members in their evaluations of the leader’s effectiveness. Because these theories are implicit, they are rarely subjected to critical scrutiny. As a result, it is not uncommon for followers to demonstrate a bias toward those who fit the mold of a traditional leader: White, male, tall, and vocal, regardless of the qualifications of that individual to be the leader.

Transition, rotation, succession, change of command; all are words used to describe a central facet of organizational leadership—that leaders follow one another. Despite the frequent occurrence of leader successions in nearly all groups, especially in large stable organizations, relatively little research has addressed this phenomenon. An early review by Gibb (1969) reported on studies of leader emergence and succession mode. In particular, Gibb noted the importance of establishing leadership/followership through early, shared, significant experiences; he also stressed that an important aspect of the organizational climate for the new leader derives from the policies of the former leader, the consequence of which shape followers’ expectations, morale, and interpersonal relations. In general, studies have demonstrated that leadership succession causes turbulence and instability resulting in performance decrements in most organizations and thus constitutes a major challenge to organizations. Thus, the process of becoming the new leader is often an arduous, albeit rewarding, journey of learning and self-development. The trials involved in this rite of passage have serious consequences for both the individual and the organization. As organizations have become leaner and more dynamic, new leaders have described a transition that gets more difficult all the time. To make the transition less difficult, leaders might attend to the following suggestions adapted from the works of Betty Price, a management consultant. Some of these suggestions are particularly important for newly appointed leaders in establishing an effective leadership style early in their tenure as leader.

• New leaders should show passion for their group, its purpose, and its people in order to reassure followers that the new leader is there to make the group better, not to further his or her personal ambitions.
• New leaders should think more strategically than tactically. Look for the big picture and don’t become bogged down in implementation processes.
• New leaders should first learn to listen, and then provide leadership. Leaders should be compelling in their ability to help others embrace the values that drive the group’s success. To do this the new leader must listen intently and provide feedback that demonstrates that he or she has truly heard what others have said.
• New leaders should operate in a learning mode. As the new person on the block, the new leader may be unsure about the reputation of the preceding leader. He or she should honor the insights and knowledge of others, believing that one can learn from everyone. The new leader should engage people purposefully at all levels, knowing that the distance between the front line and senior leadership is often so great that one small piece of information may have tremendous impact.
• New leaders should take particular care in doing what’s right and telling the truth, even if it is painful. One of the first tasks of a new leader is building trust. In the face of uncertainties, being honest, direct, and truthful enables people to move forward with faith. It gives them hope.
• New leaders should encourage their people to take risks in order to achieve their goals, and be prepared to pick up the pieces if they fail. The leader’s role is to cushion the risk by providing support and encouragement, and knowing and drawing from his or her people’s best capabilities.

Leadership Development

Not everyone is born with “the right stuff” or finds himself or herself in just the right situation to demonstrate his or her capacity as a leader. However, anyone can improve his or her leadership skills. The process of training people to function effectively in a leadership role is known as leadership development and it is a multimillion-dollar business. Leadership development programs tend to be of two types: internal programs within an organization, designed to strengthen the organization, and external programs that take the form of seminars, workshops, conferences, and retreats.

Typical of external leadership development programs are the seminars offered by the American Management Association. Their training seminars are held annually in cities across the country and address both general leadership skills as well as strategic leadership. Among the seminars offered in the area of general leadership are critical thinking, storytelling, and team development in a variety of areas such as instructional technology or government. Seminars on strategic leadership address such topics as communication strategies, situational leadership, innovation, emotional intelligence, and coaching.

A second approach to leadership development is a technique known as grid training. The first step in grid training is a grid seminar during which members of an organization’s management team help others in their organization identify their management style as one of four management styles: impoverished management, task management, country-club management, and team management. The second step is training, which varies depending on the leader’s management style. The goal of the training is greater productivity, better decision making, increased morale, and focused culture change in the leader’s unique organizational environment. Grid training is directed toward six key areas: leadership development, team building, conflict resolution, customer service, mergers, and selling solutions.

Internal leadership development programs tend to focus on three major areas: the development of social interaction networks both between people within a given organization and between organizations that work with one another, the development of trusting relationships between leaders and followers, and the development of common values and a shared vision among leaders and followers. There are several techniques that promote these goals. One such technique is 360-degree feedback. This is a process whereby leaders may learn what peers, subordinates, and superiors think of their performance. This kind of feedback can be useful in identifying areas in need of improvement. The strength of the technique is that it provides differing perspectives across a variety of situations that help the leader to understand the perceptions of his or her actions. This practice has become very popular and is currently used by virtually all Fortune 500 companies. Like all forms of assessment, 360-degree feedback is only useful if the leader is willing and able to change his or her behavior as a result of the feedback. To ensure that leaders don’t summarily dismiss feedback that doesn’t suit them, many companies have arranged for face-to-face meetings between the leaders and those who have provided the feedback.

Another form of internal leadership development is networking. As a leadership development tool, networking is designed to reduce the isolation of leaders and help them better understand the organization in which they work. Networking is specifically designed to connect leaders with key personnel who can help them accomplish their everyday tasks. Networking promotes peer relationships and allows individuals with similar concerns and responsibilities to learn from one another ways to better do their job. Research indicates that these peer relationships tend to be long-lasting.

Executive coaching is a method for developing leaders that involves custom-tailored, one-on-one interactions. This method generally follows four steps. It begins with an agreement between the coach and the leader as to the nature of the coaching relationship, to include what is to be done and how it will be done. The second step is an expert’s assessment of the leader’s strengths and weaknesses. The third step provides a comprehensive plan for improvement that is usually shared with the leader’s immediate supervisor. The fourth and final step is the implementation of the plan. Coaching is sometimes a onetime event aimed at addressing a particular concern or it can be an ongoing, continuous process.

Another form of internal leadership development is mentoring. The term mentor can mean many things: a trusted counselor or guide, tutor, coach, master, experienced colleague, or role model. A mentor is usually someone older and more experienced who provides advice and support to a younger, less experienced person (protégé). In general, mentors guide, watch over, and encourage the progress of their protégés. Mentors often pave the way for their protégé’s success by providing opportunities for achievement, nominating them for promotion, and arranging for their recognition. As a form of leadership development, there are several advantages to mentoring. A meta-analysis by Allen, Eby, Poteet, Lima, and Lentz (2004) indicated that individuals who were mentored showed greater organizational commitment, lower turnover, higher career satisfaction, enhanced leadership skills, and a better understanding of their organization.

In the future, leadership is likely to become more group centered as organizations become more decentralized. Other changes will come about as a result of new and emerging technologies. Avolio and his colleagues (2003) refer to this as “e-leadership.” Leadership effectiveness will depend on the leader’s ability to integrate the new technologies into the norms and culture of their organization.

Another change is that the future will most likely see more women break through the “glass ceiling” and take leadership positions. Men are considerably more likely to enact leadership behaviors than are women in studies of leaderless groups, and as a result are more likely to emerge as leaders (Eagly, 1987). Even though women do sometimes emerge as leaders, historically they have been excluded from the highest levels of leadership in both politics and business. This exclusion has been called the glass ceiling. Studies of leadership in organizational settings have found that men and women do not differ significantly in their basic approach to leadership, with equal numbers of task- versus person-oriented leaders. However, women are much more likely to adopt a participative or transformational leadership style whereas men are more likely to be autocratic, laissez-faire, or transactional (Eagly & Johnson, 1990). Women’s leadership styles are more closely associated with group performance as well as subordinate satisfaction, and in time our implicit theories about leadership may very well favor those who adopt such approaches.

Diversity and working in a global economy will provide additional challenges to tomorrow’s leaders. Project GLOBE (Global Leadership and Organizational Behavior Effectiveness) is an extensive international project involving 170 researchers who have gathered data from 18,000 managers in 62 countries (House, Hanges, Javidan, Dorman, & Gupta, 2004). A major goal of the project was to develop societal and organizational measures of culture and leader attributes that were appropriate to use across all cultures. There have been several important findings. In some cultures, leadership is denigrated and regarded with suspicion. People in these cultures often fear that leaders will acquire and abuse power and as a result substantial restraints are placed on the exercise of leadership. Twenty-two leadership traits (e.g., foresight and decisiveness) were identified as being desirable across all cultures. Eight leadership traits (e.g., ruthlessness and irritability) were identified as being universally undesirable. Some leadership traits were dependent upon the culture, including ambition and elitism. Six leadership styles common to many cultures were identified. They are charismatic, self-protective, humane, team oriented, participative, and autonomous. Although the charismatic style is familiar to us, some of the others are not. The self-protective style involves following agreed-upon procedures, being cognizant of the status hierarchy, and saving face. The humane style includes modesty and helping others. The team-oriented style includes collaboration, team building, and diplomacy. The participative style encourages getting the opinions and help of others. The autonomous style involves being independent and making one’s own decisions. Cultures differ in their preferences for these styles. For example, leaders from northern European countries are more participative and less self-protective whereas leaders from southern Asia are more humane and less participative.

Although most of us would agree that leadership is extraordinarily important, research in this field has yet to arrive at a generally accepted definition of what leadership is, create a widely accepted paradigm for studying leadership, or find the best strategies for developing and practicing leadership. Hackman and Wageman (2007) attempted to address this problem by reframing the questions we have been asking about leadership effectiveness, with the hope that these questions will be more informative than many of those asked previously.

• Question 1. Ask NOT “Do leaders make a difference?” but “Under what conditions does leadership matter?” The task here is to examine conceptually and empirically the circumstances under which leadership makes a difference and to distinguish those from the circumstances for which leadership is inconsequential.
• Question 2. Ask NOT “What are the traits that define an effective leader?” but “How do leaders’ personal attributes interact with situational properties to shape outcomes?” This approach will require that we reduce our reliance on both fixed traits and complex contingencies. To do this, we should embrace the idea that there are many different ways to achieve the same outcome.
• Question 3. Ask NOT “Are there common dimensions on which all leaders can be arrayed?” but “Are good and poor leadership qualitatively different phenomena?” Recent research has found that ineffective leaders were not ones who scored low on those dimensions for which good leaders scored high, but rather they exhibited entirely different patterns of behavior than those exhibited by good leaders.
• Question 4. Ask NOT “How do leaders and followers differ from one another?” but “How can leadership models be reframed so they treat all members of a group as leaders and followers?” Although it is clear that to be a leader requires that you have followers, it is equally true that most leaders are at times followers and most followers are at times leaders.
• Question 5. Ask NOT “What should be taught in leadership courses?” but “How can leaders be helped to learn?” Research is needed to understand how leaders learn from their experiences, especially when they are coping with crises (see Avolio, 2007).

In the 21st century, the study of leadership will be increasingly collaborative as researchers from multiple disciplines tackle the questions outlined above. Some of the disciplines that must contribute to the study of leadership include media and communications. In today’s world more and more of the relationships between leaders and followers are not face-to-face but mediated through electronic means.

John Kenneth Galbraith, in his book The Age of Uncertainty, wrote that “All of the great leaders have had one characteristic in common: it was the willingness to confront unequivocally the major anxiety of their people in their time. This, and not much else, is the essence of leadership.” In the special issue of the American Psychologist devoted to leadership, Warren Bennis (2007) suggests that the four most important threats facing our world today are these: (a) a nuclear or biological catastrophe; (b) a worldwide pandemic; (c) tribalism and its cruel offspring, assimilation; and (d) leadership of our human institutions. He points out that solving the first three problems will not be possible without exemplary leadership and that an understanding of how to develop such leadership will have serious consequences for the quality of our health and our lives.

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The critical role of HRM in AI-driven digital transformation: a paradigm shift to enable firms to move from AI implementation to human-centric adoption

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• Published: 13 May 2024
• Volume 4 , article number  34 , ( 2024 )

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• Ali Fenwick   ORCID: orcid.org/0000-0002-5412-9745 1 , 2 ,
• Gabor Molnar   ORCID: orcid.org/0000-0002-3536-8599 2 &
• Piper Frangos   ORCID: orcid.org/0000-0002-3560-7473 3  

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The rapid advancement of Artificial Intelligence (AI) in the business sector has led to a new era of digital transformation. AI is transforming processes, functions, and practices throughout organizations creating system and process efficiencies, performing advanced data analysis, and contributing to the value creation process of the organization. However, the implementation and adoption of AI systems in the organization is not without challenges, ranging from technical issues to human-related barriers, leading to failed AI transformation efforts or lower than expected gains. We argue that while engineers and data scientists excel in handling AI and data-related tasks, they often lack insights into the nuanced human aspects critical for organizational AI success. Thus, Human Resource Management (HRM) emerges as a crucial facilitator, ensuring AI implementation and adoption are aligned with human values and organizational goals. This paper explores the critical role of HRM in harmonizing AI's technological capabilities with human-centric needs within organizations while achieving business objectives. Our positioning paper delves into HRM's multifaceted potential to contribute toward AI organizational success, including enabling digital transformation, humanizing AI usage decisions, providing strategic foresight regarding AI, and facilitating AI adoption by addressing concerns related to fears, ethics, and employee well-being. It reviews key considerations and best practices for operationalizing human-centric AI through culture, leadership, knowledge, policies, and tools. By focusing on what HRM can realistically achieve today, we emphasize its role in reshaping roles, advancing skill sets, and curating workplace dynamics to accommodate human-centric AI implementation. This repositioning involves an active HRM role in ensuring that the aspirations, rights, and needs of individuals are integral to the economic, social, and environmental policies within the organization. This study not only fills a critical gap in existing research but also provides a roadmap for organizations seeking to improve AI implementation and adoption and humanizing their digital transformation journey.

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1 Introduction

AI is set to revolutionize the global economy, with projections estimating its contribution to be around $15.7 trillion by 2030. Nevertheless, today's reality differs from the potential: approximately 70–85% of AI initiatives fail, often due to launch issues or lack of business value creation [ 1 , 2 ]. This suggests that the operationalization of AI is complex and can be challenging for organizations making investments in AI-fueled transformation. The journey from AI implementation to effective adoption is fraught with challenges, including technical and human-centric barriers, often leading to disappointing results or non-adoption.

Integrating AI into business operations can reshape how companies function and compete [ 3 , 4 ]. As firms increasingly implement advanced digital AI tools, human resource management (HRM) becomes more complex [ 5 , 6 ]. While AI technologies such as machine learning, natural language processing, and robotics are enhancing workplace efficiency and productivity [ 7 , 8 ], the need for HRM to manage this transition often remains underexplored (e.g., [ 9 ]). Existing literature is abundant in discussing the use of AI within HRM, yet it overlooks how HRM can significantly influence the successful implementation and adoption of AI systems (e.g., [ 10 , 11 ]). Also, the strategic involvement of HRM in influencing adoption and aligning AI initiatives with overall business objectives is scarcely explored or emphasized. Böhmer and Schinnenburg [ 12 ] discuss the potential of AI-driven HRM to contribute to organizational capabilities and the application of AI in strategic HR, respectively, but do not delve into the specific role of HRM in shaping AI initiatives.

Our paper explores the role of HRM in enhancing the efficacy of AI applications within organizational settings. It explores HRM's role in giving strategic advice on AI use, making AI at the workplace more human-centric, and helping people in the organization adapt to and accept AI. The literature on AI-driven HRM is still in its infancy. While some researchers (e.g., [ 12 ]) acknowledge the potential contributions AI-driven HRM departments can make, they do not explore the role of HRM shaping AI digital transformation or how HRM can influence the next generation of AI-HRM technology [ 13 ]. Our paper aims to fill this gap by providing a framework on how and where HRM exert their influence in human-centric decision-making within the organization (e.g., [ 11 ]). We propose a conceptual framework of how HRM can support AI-based digital transformation and facilitate a paradigm shift to help organizations succeed in their AI efforts by outlining and highlighting the implications of culture, leadership, knowledge, policy, and tools on AI adoption. Our perspective is novel because, traditionally, the emphasis on digital transformation has been rather technocratic, focusing primarily on the technical aspects of development and implementation (e.g., [ 14 ]). Our framework shifts this narrative by placing the human component at the forefront, arguing that the success of AI implementation and adoption in organizations is contingent upon the employment of a human-centric approach. Successful AI implementation and adoption will need to be defined by respective internal stakeholder groups and align with overall organizational goals. Success can be co-defined and achieved across various stakeholder groups in collaboration with HRM.

1.1 Definitions

Before explaining how HRM can support AI implementation and adoption in the workplace through a humanizing AI lens, definitions need to be provided to articulate our ideas and discuss how they relate in the context of this research. In this paper, we adopt Boselie's [ 15 ] definition of HRM, which views it as a combination of policies and practices shaping employment relationships to achieve specific objectives, including both organizational and employee/societal outcomes.

The function of HRM traditionally covers HR planning, selection and recruitment, talent progression, learning and development, reward, employee relations, and the management of HR systems (e.g., [ 16 , 17 , 18 ]). Beyond an administration function, HRM has positioned itself in current times as a business partner to the organization (e.g. [ 19 ]). Depending on the size of the organization and the type of industry HRM’s function and responsibilities can differ significantly, which affects how far reaching HRM can be within human-centric AI-driven digital transformation.

Definitions of AI, like those from Afiouni [ 20 ] and Lee et al. [ 21 ], generally describe it as either mimicking human thinking or solving problems like humans. AI combines ‘‘artificial,’’ referring to human-made objects [ 22 ], with ‘‘intelligence,’’ meaning a computer’s ability to learn and reason [ 23 ]. However, intelligence in AI is still debated, with concepts like weak and strong AI [ 24 ] used to differentiate levels of machine intelligence. For this paper, AI is defined following Duan et al. [ 25 ] as machines’ ability to learn from experience and perform human-like tasks. In the paper, our primary focus is weak (or Narrow AI) tools, especially as they relate to workplace usage, but the findings are also relevant to the early appearance of strong AI (or Artificial General Intelligence) tools which aim to reproduce human intelligence capabilities (e.g. [ 26 ]). That is, when talking about AI in this paper, we refer primarily to current generation deep learning models such as Artificial Neural Networks (ANN) and Generative AI (GenAI), unless indicated otherwise.

Implementing AI involves the practical steps of integrating AI technologies into existing processes and systems, including technical setup, data integration, and staff training. It focuses on the operational aspects, ensuring AI tools work effectively within an organization's existing infrastructure [ 27 , 28 , 29 ]. Adoption of AI, in contrast, is about the ‘acceptance’ and ‘usage’ of something new rather than the detailed steps of making it operational [ 30 ]. We argue that adoption should be more deliberate and planned integration of AI, aligning its use with the organization's strategic goals to optimize outcomes. It involves assessing how AI impacts various business areas, planning resources, and managing risks. It considers the long-term role of AI in enhancing competitive advantage and aligns it with ethical and societal values. While implementation deals with the ‘how’ of AI integration, adoption addresses the ‘why’ and ‘what’, ensuring AI contributes to the organization's success and is ‘‘part of the business DNA’’ of the firm [ 1 ]. Both AI implementation and adoption should be guided through a human-centric lens (hereafter also referred to as humanizing AI) to ensure success in the short-term and in the long-term. In this context, human-centric AI describes the outcome or objective of creating AI systems that prioritize human needs, values, and ethical considerations, ensuring that the technology supports and enhances human well-being and decision-making. That is, human-centric AI emphasizes the integration of AI into frameworks in a way that positively impacts human lives.

It is also important to define what humanizing AI means. If the concept of humanizing AI is not adequately defined, it creates ambiguity and uncertainty regarding its implementation and purpose. Humanizing AI, in a narrow definition, (i) involves developing AI that not only comprehends human emotions and subconscious dynamics but also interacts with humans naturally, (ii) supports and augments human characteristics and skills, (iii) is deployed in a trustworthy manner [ 31 ]. Trustworthiness in AI reflects how confident one feels in the decisions that AI makes (e.g., [ 32 , 33 ]). Trustworthiness is enhanced when employees know that AI is used to enhance their skills and experience at work and that it is used in a responsible manner (e.g., [ 34 , 35 ]). We acknowledge that different internal stakeholders (e.g., managers, leaders) can view trustworthiness differently. However, addressing each difference in perspective goes beyond the scope of this paper.

The goal is not to make AI human, but to enhance AI’s ability to relate to and assist humans in a more personalized and context-aware manner. In this context, AI is an augmentative tool, as opposed to solely focusing on automation. AI’s role in complementing and enhancing human skills and decision-making processes, rather than replacing them. Humanizing AI prioritizes enhancing the human experience, making AI more intuitive and empathetic, and aligning with human values and potential [ 36 ]. Humanizing AI by itself does not guarantee a harmonious or symbiotic human-AI relationship, but it is essential for building trust with machines. Humanizing AI should occur at various interconnected levels (within the organization) and act as a conduit to addressing many of the ethical and people challenges between humans and machines [ 31 ]. As AI matures, it moves toward more advanced cognitive architectures [ 13 ], necessitating context-specific interpretations of its use and human-centricity [ 37 ]. However, focusing only on creating AI systems that mimic human characteristics is not sufficient. Humanizing AI also needs to address the behavioral concerns and societal consequences (e.g., [ 38 ]); therefore, our paper defines humanizing AI in the workplace from a behavioral perspective. The behavioral view of humanizing AI blueprints how to develop and apply AI in the workplace from a multidimensional approach. An approach that promotes not only human performance and well-being but also highlights possible solutions on how to address issues concerning AI explainability, AI ethics, and responsible use of AI. Human-centric AI describes the outcome or objective of creating AI systems that prioritize human needs, values, and ethical considerations.

The paper is structured as follows: this first section sets the stage by exploring the human-centric perspective of AI, and defining key terms. The next section delves into the human-centric, integrated approach necessary for implementing and adopting AI in the workplace, emphasizing the role of HRM in fostering a harmonious relationship between humans and AI. Finally, the paper concludes with discussing HRM’s strategic facilitation of AI from implementation to adoption.

2 The critical role of HRM in enabling a more human-centric approach to AI adoption

Despite rapid developments in AI within organizations, its adoption remains challenging due to factors like AI-related fears (e.g., [ 39 ]), trust issues [ 40 , 41 ], knowledge gaps (e.g., [ 27 , 42 ]), and integration difficulties (e.g., [ 43 ]). These barriers are primarily human related, underscoring the importance of a humanizing AI approach in AI implementation and adoption. Many organizations mainly focus on the efficiency and productivity gains of AI, but do not sufficiently address the human factor (e.g., [ 44 ]). HRM's commitment to human-centric approaches to AI is not just about ethical responsibility or a moral imperative; it is also a business and strategic priority for retaining a talented workforce. The failure to prioritize human-centric AI could make it difficult for businesses to attract and retain skilled professionals, undermining their competitive edge. And, similar to diversity and inclusion initiatives today, could make customers less willing to buy from you if your company’s AI policies and practices are perceived to be not human-centric. As HRM inherently concerns itself with the human elements within organizations, it would seem logical and a natural evolution of HRM's function to facilitate the move from AI implementation to a more human-centric adoption. Doing so ensures that technological advancements, like AI, are leveraged to complement and enhance the human workforce rather than marginalize it.

Traditionally, HRM in organizations was considered an administrative function, focusing on compliance and workforce management using rudimentary tools [ 45 ]. In the mid twentieth century, HRM evolved into Personnel Management, adopting technology to manage people as a resource, thus enhancing skills and productivity through behavioral understanding [ 46 , 47 ]. The advent of strategic HRM marked a shift towards a partnership role within organizations, leveraging data through human resources information systems (HRIS) to improve decision-making [ 48 ]. Currently HRM is often considered a business partner in organizations, integrating digital strategies which value employees as competitive assets, prioritizing diversity, and aligning technology with human values [ 49 , 50 ]. With AI's emergence, HRM confronts the challenge of harmonizing technological efficiency with a human-centric approach, addressing AI ethics and value enhancement [ 51 , 52 ]. This forward-focused AI-driven phase represents a critical inflection point, where human centricity plays a more prominent role in the value creation process of the organization.

Besides humanizing AI, to facilitate the symbiotic relationship between humans and machines, it is also important to ‘‘digitize’’ the human. What we mean by digitizing the human in the organizational context is that HR (i) trains employees to understand what AI is and how it works, (ii) enhances employee skills and capabilities to work with AI, and (iii) creates an environment which is conducive to embracing new ways of doing things. By humanizing AI and digitizing humans, HRM takes an active approach to create a more symbiotic relationship between humans and machines in the workplace.

We argue that successful AI-driven digital transformation in organizations depends on five key elements: culture, leadership, knowledge, policies, and tools. In the next section, we explore these five elements that, if addressed in an integrated and human-centric way, can enable firms to move successfully from AI implementation to adoption. Culture drives innovation and adaptability, and it is often cited as critical for AI integration success [ 53 ]. Leadership is important as it drives the strategic vision, ensures alignment of AI initiatives with business goals, and fosters an environment conducive to new technology uptake and experimentation (e.g., [ 4 ]). This is underscored in the literature on transformational leadership in the digital age [ 54 ]. The knowledge element emphasizes the importance of skill development in the workplace to address the gap between current workforce skills and the requirements for effectively implementing and adopting AI systems [ 55 ]. Organizational AI principles, or policies, provide a necessary ethical and governance framework, guiding responsible and sustainable AI use; this aspect is increasingly being highlighted in contemporary research on AI ethics (e.g., [ 56 ]). AI tools, including hardware and software, are also essential for the practical implementation and operationalization of AI, enabling businesses to harness AI capabilities for enhanced decision-making and efficiency. As tools continuously evolve, they need to be more adapted and more integrated. HRM plays a critical role in each of these five elements (see Fig.  1 ). Also indicates that the relationship between these five elements is not of a linear nature.

The critical role of HRM in culture, leadership, knowledge, policies, and tools

3 How HRM can address current AI implementation and adoption challenges using a humanizing AI approach

As AI applicability and outcomes evolve in commercial business environments, so do the associated implementation and adoption challenges. We emphasize the need for more human-centric approaches to help address the key barriers currently affecting AI implementation and adoption. We acknowledge the fact that every organization is unique in terms of structure and stage of AI implementation and outline general overarching challenges and recommendations assuming they will be applied according to each individual organization's circumstances. We address each of these challenges in our conceptual framework (Fig.  2 ), highlighting the critical role HRM plays in facilitating effective AI-driven digital transformation through the support of culture, leadership, knowledge, policy, and tools. Our research and recommendations focus on HRM influencing internal stakeholders throughout organizations yet acknowledge an anticipated flow-on effect beyond organizational boundaries to industry and society.

HRM facilitating human-centric AI implementation and adoption enabled leadership, tools, and policy guided through an organizational cultural framework

3.1 Culture: bringing and binding humans and machines together in the workplace

Culture plays an important role in adopting new technologies, such as AI (e.g., [ 57 ]). Organizational culture has been defined in many ways but converges to the invisible glue that keeps the people together and provides a shared understanding of norms, rituals, and unspoken assumptions about how things function in the organization (e.g., [ 58 ]). The culture of the organization is mainly shaped by the leaders of the organization (e.g., [ 59 ]), and impacts how the operational strategy is executed and the policies are designed. For example, efficiency-based leadership approaches versus transformational leadership approaches will affect the choices made on how to run the organization and which emphasis it places on resource management and optimization differently using AI (e.g., [ 60 , 61 ]).

3.1.1 Culture: key challenges

Organizational culture is necessary to innovate, compete, and thrive in the long-term (e.g., [ 62 ]). In recent years, culture has been cited as a key enabler of AI adoption (e.g., [ 63 , 64 , 65 ]). Various attributes of organizational culture such as innovation drive, trust, learning orientation, risk appetite, and decision-making transparency (e.g., [ 66 , 67 , 68 , 69 ]) amongst others can affect AI implementation and adoption. When talking about AI transparency it’s important to differentiate between transparent AI and transparency in AI use. Transparent AI (or explainable AI as it is often referred to) refers to explainability of AI models. Employees need to know that AI models are explainable when deemed important to understand how AI-tools have made decisions (such as during hiring or firing decisions). Transparency in AI usage is also vital to the organization as it needs to be clear how AI is being used in the organization. Employees will be less willing to use AI or even work for an organization if it is not clear how AI is being used in the workplace (such as for surveillance purposes). The issue arises because higher explainability often results in reduced accuracy. As AI tools become more proficient, it becomes harder to understand how they reach their decisions, making it challenging to trust, debug, or fully leverage in sensitive or critical applications.

3.1.2 Culture: HRM’s active role in creating an AI friendly environment

HRM plays an integral role in developing and guiding organizational culture (e.g., [ 70 , 71 ]). Not only in ensuring that the organization is willing to work with AI, but also to ensure that AI is implemented and deployed in a human-centric manner. This role involves building an environment where employees trust AI systems and are motivated to incorporate AI into their workflows. To achieve this, HRM has to advocate for a culture of transparency and open communication regarding the use of AI tools. HRM must encourage leaders to set examples by using AI tools transparently in their decision-making processes, demonstrating trust in these systems. HRM should facilitate regular feedback loops (e.g., [ 72 ]) where employees can share their experiences and concerns with AI, ensuring their voices are acknowledged, considered, and acted upon appropriately. Additionally, it is important to challenge and reshape inappropriate AI initiatives. Actionable behaviors that promote AI adoption should be embedded into the organization's culture. This can be achieved through recognition and reward systems that incentivize innovative uses of AI and performance metrics that reflect the effective integration of AI in work processes [ 73 ]. By aligning AI adoption with personal and team objectives, employees are more likely to embrace AI as a tool for success rather than a threat to their job security [ 74 ]. By shaping the culture this way, HRM can create a psychologically safe environment where experimentation and risk-taking are encouraged, and employees feel excited to work with AI tools without fear of repercussions or losing one’s job.

Key to adopting AI is the culture's ability to foster a willingness to work with new technologies. Often the behavioral literature is considered when trying to identify reasons why professionals don’t trust working with AI. Interestingly, the automation-augmentation literature provides pathways to increase both trust in, and willingness to adopt AI. For example, Henkel et al. [ 75 ] explain that automation of tasks can help free up needed time and other resources performed on mundane jobs. This free time can be spent on more important and engaging tasks such as creativity and customer interaction. The augmentation literature (e.g., [ 75 , 76 , 77 ] shows that when AI is used to augment people’s skills, professionals are more likely to use AI at work.

Conversely, AI deployment also affects organizational culture. Algorithms and AI tools can change employee behaviors, decision-making processes, and collaboration dynamics [ 78 ]. For instance, AI can influence what information employees receive, shaping beliefs and interactions [ 78 ]. Generative AI, with its programming, can also affect attitudes and behaviors, particularly when it's designed to understand language and emotions (e.g., [ 79 ]). In this context, culture development is reinforced through technical output and engagement with AI. It is therefore important that HRM monitor the effect AI has on cultural formation in the organization. As AI becomes more integrated, organizational culture evolves to include both humans and machines. Strategically leveraging culture through leadership, knowledge, policy, and AI tools is key for successful AI implementation and adoption. If the current culture hinders AI adoption, a cultural shift may be necessary to foster a more technology-friendly environment.

3.2 AI Leadership: evolving leadership requirements

Leadership plays an influential role in how open employees are to change, effectively implementing new technologies, and successfully accepting these technologies (e.g., [ 80 , 81 ]). Organizational leaders increasingly integrate AI tools into the workplace, promoting a data-driven culture, encouraging experimentation, and providing resources and expertise [ 82 ]. Their role is crucial in deploying AI effectively and fostering human-centered AI usage across all employee groups [ 83 ]. By setting a clear AI vision, focusing on innovation, addressing ethical concerns, and prioritizing AI training and upskilling, leaders enable organizations to harness AI's potential fully [ 4 , 84 , 85 ]. They also cultivate an environment open to new technology, which is essential for AI's long term optimization success [ 86 ].

3.2.1 Leadership: key challenges

The literature highlights the vital role of leadership in new technology acceptance and adoption by assessing organizational readiness (e.g., [ 30 , 60 ]) and reducing employee resistance toward new technology, including AI (e.g., [ 60 , 77 ]). However, there is limited evidence on how leaders can effectively adapt and lead in an AI-driven environment (e.g., 60, 88]). This lack of understanding is further perpetuated by literature focusing only on suggesting AI implementation frameworks and strategies on the technical aspects of this exercise and less on the human element [ 88 ]. Common challenges for leaders when dealing with AI implementation and adoption include a lack of digital skills (e.g., [ 87 ]), which leads to a lack of understanding and awareness, lack of AI regulatory and governance experience e.g., [ 89 ], and not being able to deal effectively with lowering employee resistance to change and motivating AI adoption (e.g., [ 90 ]).

3.2.2 Leadership: HRM aligns and facilitates technocratic and human-centric needs for AI success

The strategic facilitation of human-centric AI by HRM in organizations begins at the highest level, working collaboratively with leadership teams to set clear implementation and adoption criteria. This work involves HRM professionals liaising between the domain experts and the executive leadership to map complex AI concepts to strategic business objectives. In this process, HRM must assist leadership in identifying key areas where AI can have the most significant impact, thereby prioritizing AI initiatives that promise high returns and long-term benefits to the organization. To facilitate this, HRM must play an active role in educating the leadership team to understand the potential of AI to enhance productivity, decision-making, and overall business outcomes. This goes beyond the technical aspects of AI, encompassing its ethical implications, risks, and potential biases. By equipping leaders with this knowledge, HRM enables leadership to make informed decisions about AI implementation and required skills and competencies within the organization. A critical aspect of HRM's role is to ensure that leadership approaches AI adoption with a human-centric perspective. HRM must advocate for AI solutions that augment human capabilities and emphasize the importance of employee well-being and ethical considerations in AI deployment. HRM should encourage leaders to communicate transparently with employees about AI initiatives, addressing fears or misconceptions and highlighting the benefits of AI in improving work processes and personal development.

From the behavioral perspective, we focus on the engagement aspects of leadership in lowering resistance to change and AI adoption [ 90 ], as well as the psychological aspect of resistance, such as the threat AI posed on one’s job identity (e.g., [ 91 ]). Leadership engagement as a pathway to lower employee resistance to AI emphasizes the importance of interpersonal qualities of leader–follower engagement, such as the involvement of employees in the decision-making and implementation process [ 92 ], addressing employee concerns about AI through transparent and empathetic dialogue [ 93 ], and collaborating with various stakeholders across the organization to build a culture for AI acceptance (e.g., [ 4 , 94 ]). HRM can play a key part in facilitating this engagement through town hall meetings and organizing regular meetings to better understand how people believe AI will affect their jobs and how the organization can support in alleviating fears. The active role of leadership in creating the vision, creating the right environment, and engaging employees in the AI implementation and adoption process is vital, and HRM plays a critical role in enabling leaders to win the hearts and minds of its followers.

3.3 AI knowledge

The rapid advancement of AI has created a significant demand for specialized AI knowledge and skills in the workforce [ 95 ]. This demand spans various sectors and industries, impacting technology-focused roles and extending to other areas such as healthcare, finance, marketing, and more [ 96 ]. The complexity and novelty of AI technologies equate to a growing gap between the skills available in the current workforce and the skills required to implement and manage AI systems effectively [ 55 ]. The role of HRM is to facilitate human-centric AI digital transformation within organizations. Therefore, its focus is primarily internal. Though HRM doesn’t have a direct impact on society, if more organizations take a similar approach to implementing AI within organizations, then this could generate more trust in AI by the general public” Not taking a human-centric approach to AI usage within HRM not only prevents transformation efforts within organizations and more data-driven decision-making, but also jeopardizes advancements toward safe artificial general intelligence (e.g., [ 97 ]).

3.3.1 Knowledge: key challenges

A key challenge in bridging the knowledge and skills gap is the need for comprehensive AI education and training. Traditional educational systems have been slow to integrate AI and machine learning curricula, leading to a shortage of qualified AI training and development professionals [ 98 ]. Even in technology-forward companies, employees often lack the necessary skills to work alongside AI systems effectively [ 99 ]. This shortage of AI talent can slow down the adoption of AI technologies, limit innovation, and increase reliance on a small pool of experts, which often includes costly external advisors. Moreover, the evolving nature of AI technology means that continuous learning and skill development are essential. Machine learning and AI-embedded technical solutions are fast-paced fields where new advancements and techniques emerge regularly. Professionals in the field must continually update their knowledge to stay relevant and valued. As AI advances, this necessity will flow on throughout the organization to all employee populations. This requires a commitment to lifelong learning and adaptability, which can be a significant challenge for individuals and organizations. In addition to technical skills, there's a growing need for interdisciplinary knowledge that combines AI expertise with domain-specific insights [ 100 ]. For instance, in healthcare, professionals need to understand both AI algorithms and medical practices to develop effective AI solutions [ 101 ]. The requirement for interdisciplinary knowledge further complicates the skill gap issue, as it necessitates a blend of diverse expertise that is rare in the current job market [ 102 ]. Another dimension of this challenge is ethical considerations and AI literacy. As AI systems become more integrated into everyday life, there's a need for a broader understanding of AI among the general public, including ethical implications, privacy concerns, and the potential for bias in AI systems. This understanding is crucial for informed decision-making and responsible use of AI technologies. The role of HRM in organizations in upskilling workforces is critical. This investment is not only technical training but also fostering an AI-ready culture that encourages experimentation, innovation, human-centricity, and continuous learning.

3.3.2 Organizational knowledge and upskilling: HRM advances AI knowledge and skills

When it comes to AI knowledge and skill development, HRM is best positioned to manage this responsibility. HRM is the custodian of the organization’s data and plays an important part in overseeing the correct usage of data within AI-driven applications. This is important to ensure data quality and to minimize the impact of bias in AI decision-making. Not doing so would undermine the success of AI implementation in the workplace for all stakeholders. HRM also takes an active role in upskilling and reskilling initiatives, preparing the workforce for the AI-enabled future [ 103 ]. This task involves anticipating and identifying skill gaps and developing training programs that are tailored to the needs of different employee segments based on the AI solutioned deployed [ 55 ]. By fostering a culture of continuous learning, HRM can ensure that employees are equipped to work with and alongside AI and are empowered to leverage AI tools to enhance their work. One of the biggest causes of resistance to AI in organizations is the lack of awareness and skills [ 104 ]. Addressing this issue will not only improve organizational capabilities, but also address some of the psychological barriers employees have about AI and consequently improve AI adoption [ 105 ]. Understanding how people respond to AI learning opportunities provides HRM insights to improve future training initiatives and inform talent management strategies, policy and AI tool design (e.g., [ 106 ]). Though upskilling and reskilling of the workforce is second nature to HRM, a more integrated perspective to knowledge management and skills development is required in AI environments which can help the organization learn faster and hire more effectively as the organization transitions toward an AI-ready environment. HRM plays an important role in balancing between the technical needs of the organization and the human talent required for AI implementation and adoption (e.g., [ 107 ]).

3.4 AI policies

AI policies play an important role in shaping a productive AI environment in organizations. Company policies are needed to ensure that AI is developed and used ethically, equitably, and transparently in the workplace and to help employees feel safe and more willing to adopt AI tools at work (e.g., [ 108 , 109 ]). In recent years, various ethical concerns have emerged related to AI development and usage such as lack of explainability in AI decision-making e.g., [ 110 ], bias and discrimination (e.g., [ 111 ]), online manipulation by AI e.g., [ 112 ], data privacy scandals (e.g., [ 113 ]), amongst others. Moreover, employees don’t fully trust AI yet and need to feel safe knowing that AI systems won’t be used in a way which will harm them (e.g., [ 114 ]). It is naive to continue to think that human beings are aware of how algorithms affect decision-making and have the abilities to control themselves in the face of increasingly sophisticated manipulation techniques [ 31 ]. The EU AI Act [ 115 ], is the world’s first comprehensive set of rules to protect humans from harm by AI, which will come into effect in 2025, considers AI systems which affect how employees are treated ‘high risk’ AI systems—alongside those used in border control and law enforcement. Having human-centric and ethical AI policies in place at an institutional level which respect and enhance human properties is becoming increasingly important which consequently foster trust and support AI adoption in the workplace.

3.4.1 Policies: key challenges

To implement and adopt AI, firms need to deal with many challenges, foremost being the translation of broad, high-level ethical guidelines into concrete corporate policies. These abstract principles lack specificity, leaving companies to navigate a patchwork of legal frameworks without a prescriptive regulatory approach [ 116 ]. The disparity between the rapid innovation in AI and the sluggish development of legal structures creates a regulatory void, making consistent policy application difficult. Complicating this landscape is the absence of common aims and fiduciary duties in AI, often leading firms to prioritize efficiency and profitability over ethical considerations and public interest [ 90 ]. It is also a problem that AI is used in many different areas and domains, each needing its own rules. Firms also face a challenge in aligning AI policies with the divergent regulatory landscapes across the globe (e.g., [ 117 ]). The interplay of national, international, and professional policy guidelines is outside of the scope of this paper. However, we can determine that the absence of international consensus amplifies non-compliance risk, as companies must interpret and apply a spectrum of high-level guidelines to their specific operations [ 118 ]. As global companies work to implement AI, they must navigate a labyrinth of international regulations that lack a cohesive framework, leading to conflicting approaches in different jurisdictions [ 119 ]. This dissonance creates a significant hurdle for global firms aiming to maintain ethical standards while ensuring legal compliance in various markets. The result is often a fragmented strategy that can hinder the coherent adoption and scaling of AI technologies. Data protection and privacy regulations, varying significantly across jurisdictions, also add complexity for multinational entities [ 120 ].

3.4.2 AI Policies: HRM shapes and monitors human-centric AI implementation and usage

It is important to acknowledge that the ethical framework guiding AI use varies significantly across organizations, often influenced by strategic interests or marketing purposes rather than a genuine commitment to ethical development. This disparity can be amplified by the absence of stringent AI regulations in various jurisdictions, leading to ethical declarations that serve more as corporate virtue signaling than substantive ethical engagement [ 121 ]. To mitigate these risks, it is essential for organizations to advocate for and adhere to robust regulatory standards that ensure AI ethics are deeply integrated into every aspect of technology development and deployment, moving beyond mere compliance to genuinely ethical practices. HRM plays an important role in developing and enforcing AI policy. Taking a human-centric approach to AI policy design, company policies should, from implementation to enforcement, prioritize the protection and well-being of employees while ensuring responsible use of AI. During the initial stages of AI deployment, human-centric AI policies can provide guidelines and mechanisms that safeguard employees' rights, privacy, and job security throughout the AI implementation process. This includes transparent communication about the purpose and effect of AI tools, clear policies regarding data collection and usage, and mechanisms to address any potential biases related to how AI makes decisions in mission critical operations. By actively engaging employees in the initial implementation process, and addressing employee fears and concerns, companies can foster a supportive and inclusive work environment that values employee contributions and ensures fair treatment while adapting to AI work processes and tools. In addition, corporate policies should outline stringent measures to prevent the misuse of technology. Companies should be committed to responsible AI practices, ensuring that the technology is not employed in ways that violate ethical principles or infringe upon individuals' rights. Responsible AI should start during the design process [ 122 ] and continue throughout the implementation and solution/system adoption phases. Regular audits and assessments should be conducted to evaluate the effect of AI on employees and the wider society, identifying and addressing any unintended consequences or risks. By implementing comprehensive AI policies that prioritize employee protection, well-being, and responsible usage, organizations can strike a balance between leveraging the (financial) benefits of AI and ensuring the technology is utilized in a manner that aligns with ethical standards and societal values. HRM plays a crucial role in advocating policies that protect employee privacy and data security, addressing concerns around AI and automation potentially leading to job displacement or unfair treatment. These policies should be crafted to promote ethical AI usage, ensuring transparency, fairness, and accountability in AI systems.

3.5 AI tools

AI tools and solutions are constantly evolving. HRM must be at the forefront of understanding and disseminating the value of company-specific AI applications and employee implications (e.g., [ 11 ]). Most AI development for organizational use focuses on automation, smart solutions, and helping employees make better decisions with the aim to work faster, more efficiently, and gain a competitive advantage (e.g., [ 123 , 124 , 125 ]). With the recent rise of generative AI (e.g., advanced language models and cognitive tools), AI usage in knowledge-based white-collar professions (e.g., accounting, doctors, lawyers) has grown significantly. More recently, application development, graphic, and video AI-powered design tools are now also available, making it possible for employees with limited to no graphic design or coding experience to create digital content and mobile platforms. As AI tools continue to become more accessible and understandable to organizations, HRM will continue to bridge technical specifics and human acceptance at firm-level.

3.5.1 AI tools: key challenges

To humanize AI from an application perspective, HRM needs to focus on asserting human agency through its usage. If cognitive tools support decision-making, then this is considered a human-centered approach. However, if AI tools limit human beings' ability to use their brains effectively (e.g., creative and critical thinking), these tools are not considered human empowering. When people work together, synergies are created through dynamic interactions that cannot be achieved by oneself and that benefit work processes and outputs [ 126 , 127 ]. When knowledge and practice are integrated for automation purposes, it makes work easier and faster to do. However, what gets lost in the automation of workflows and practices are the synergies that naturally occur in collaboration and the benefits that arise from group dynamics [ 128 ]. There is a risk that the drive for productivity based on efficiency and speed alone actually diminishes the benefits of collaborative work done by humans and can harm human potential in the long term. Another concern with AI tools is the fear many workers have when working with AI and the effect AI tools have on one’s professional identity. Not addressing these concerns will prevent the adoption of AI systems in the workplace. Finally, humans need to understand how AI tools make decisions (especially when there is a human in the loop). Feeling confident that (integrated) AI systems are ‘competent’ co-pilots is still a major concern many employees have, especially today.

3.5.2 AI tools: HRM enabling tools to augment human values and capabilities

HRM plays a critical role in driving human-centric AI adoption. It does this by guiding tool selection and formulating organizational policies for AI use (e.g., [ 13 ]). HRM must be actively involved in the selection process of AI tools to ensure they align with the organization's values, culture, and workforce skills. This role thoroughly assesses various AI tools to determine their suitability for ease of use, integration with existing systems, and their potential to enhance employee performance and engagement. Moreover, with the ongoing integration of AI in the workplace and human to machine interaction, future AI applications will become more integrated (e.g., [ 36 ]), assisting workers in their job as co-pilots and augmenting existing skills in co-decision-making and the emergence of collaborative human–machine teams (e.g., [ 129 ]). Being able to translate policies and human needs to AI developers will aid in the development of more human-centric AI tools and systems. HRM plays a pivotal role in how AI tools should be implemented, used, and adapted to ensure uptake and responsible usage.

4 HRM—strategic facilitation of human-centric AI

HRM can effectively navigate the complexities of AI human-centric adoption and engage in multidimensional activities, from collaborating with leadership to setting clear adoption criteria to developing policies and practices prioritizing ethical AI usage and employee well-being (Table  1 ).

5 Conclusion

This paper highlights the multifaceted contributions of HRM in enabling digital transformation, emphasizing the importance of aligning AI initiatives with organizational goals and human values. Through a comprehensive review of organizational culture, leadership, knowledge, policies, and tools, we identified critical strategies for operationalizing human-centric AI, underscoring the need for a holistic approach encompassing technological proficiency and ethical sensitivity. We found that a human-centric paradigm shift is essential for firms to transition from mere AI implementation to strategic adoption.

Our research fills a gap in the existing literature by focusing on the critical role of HRM in AI strategic adoption rather than its application to HR tasks. Our findings suggest that HRM must take an active role in facilitating AI integration, ensuring that the technology enhances rather than replaces human capabilities. This involves prioritizing employee well-being, advocating for ethical AI usage, and fostering a culture of trust and transparency.

While this paper provides a conceptual framework for the role of HRM in AI strategic adoption, empirical studies are needed to validate and refine the framework. Future research could involve case studies or longitudinal research in diverse organizational contexts to observe how the framework operates in real-world settings. In addition, quantitative research could be conducted to statistically analyze the effect of various HRM strategies on the successful strategic adoption of AI in organizations. This could include surveys and data analysis to understand the correlation between HRM practices and AI implementation success rates.

The future of AI in the workplace is not just about technological advancement but also about reshaping organizational culture and leadership approaches. HRM's role in this transformation is critical, requiring a balance between technical expertise and a deep understanding of human psychology and organizational behavior. It can facilitate a more harmonious and productive relationship between humans and machines by advocating for AI solutions that augment human potential and addressing concerns related to fears, ethics, and employee well-being.

Data availability

Data sharing is not applicable to this article.

Code availability

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Fenwick, A., Molnar, G. & Frangos, P. The critical role of HRM in AI-driven digital transformation: a paradigm shift to enable firms to move from AI implementation to human-centric adoption. Discov Artif Intell 4 , 34 (2024). https://doi.org/10.1007/s44163-024-00125-4

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The green IT revolution: A blueprint for CIOs to combat climate change

Companies and governments looking to combat climate change are turning to tech for help. AI, new technologies, and some promising tech-driven business models have raised hopes for dramatic progress.

About the authors

This article is a collaborative effort by Gerrit Becker, Luca Bennici, Anamika Bhargava, Andrea Del Miglio , Jeffrey Lewis , and Pankaj Sachdeva, representing views from McKinsey Technology.

While many organizations’ climate goals are lofty, enterprise technology leaders—CIOs, chief digital innovation officers (CDIOs), and chief technology officers (CTOs), among others—have not always succeeded at turning climate ambitions into reality. One of the biggest reasons is that hard facts and clear paths of action are scarce. Misconceptions and misinformation have clouded the picture of what CIOs and tech leaders should do.

We have done extensive analysis of where technology can have the biggest impact on reducing emissions. To start, we divided technology’s role into two primary types of activities:

• offense—the use of technology and analytics to cut emissions by reducing (improving operational efficiency), replacing (shifting emission-generating activities to cleaner alternatives), and reusing (recycling material)
• defense—the actions IT can take to reduce emissions from the enterprise’s technology estate

Scope of the McKinsey analysis

McKinsey’s emissions analysis for this report focuses on enterprise technology emissions, which are the business IT emissions from the hardware, software, IT services, enterprise communications equipment, mobile devices, fixed and mobile network services, and internal technology teams that a company uses for its own operations and that a CIO has control over. These include the emissions related to the full life cycles of the products and services that an enterprise IT function uses, including their development, delivery, usage, and end of life (exhibit). Our internal services emissions' analysis assumes around 40 percent of IT workers are working from home.

The analysis does not include the emissions from the technology products and services that a company is selling (such as data center capacity sold by hyperscalers), operational technology devices (such as sensors and point-of-sale systems), and cryptocurrency mining.

The defense activities are where the CIO, as the head of IT, can act independently and quickly. This article focuses on defense, specifically the IT elements over which a CIO has direct control. We examined emissions from use of electricity for owned enterprise IT operations, such as the running of on-premises data centers and devices (classified as scope 2 by the Greenhouse Gas Protocol 1 Greenhouse Gas Protocol: Technical Guidance for Calculating Scope 3 Emissions: Supplement to the Corporate Value Chain (Scope 3) Accounting & Reporting Standard , World Resources Institute & World Business Council for Sustainable Development, 2013. Scope 1 emissions are direct emissions from the activities of an organization or under their control, including fuel combustion on site such as gas boilers, fleet vehicles, and air-conditioning leaks; scope 2 emissions are from electricity purchased and used by the organization; and scope 3 emissions are all indirect emissions not included in scope 2 that occur in the value chain of the reporting company, including both upstream and downstream emissions. ), and indirect emissions from technology devices that the CIO buys and disposes of (scope 3). 2 These calculations do not include emissions from technology-driven services sold, such as cloud capacity. (See sidebar, “Scope of the McKinsey analysis.”)

What the facts say

Our analysis has uncovered several facts that contravene some commonly held views about enterprise technology emissions. These facts involve the significant amount of tech-related emissions, the share of emissions from end-user devices, the variety of mitigation options available, and the favorable impact of shifting to cloud computing.

Enterprise technology generates significant emissions

Enterprise technology is responsible for emitting about 350 to 400 megatons of carbon dioxide equivalent gases (CO 2 e), accounting for about 1 percent of total global greenhouse gas (GHG) emissions. At first blush, this might not seem like a lot, but it equals about half of the emissions from aviation or shipping and is the equivalent of the total carbon emitted by the United Kingdom.

The industry sector that contributes the largest share of technology-related scope 2 and scope 3 GHG emissions is communications, media, and services (Exhibit 1). Enterprise technology’s contribution to total emissions is especially high for insurance (45 percent of total scope 2 emissions) and for banking and investment services (36 percent).

This amount of carbon dioxide and equivalent gases is a significant prize for companies under increasing pressure to cut emissions. Progress on climate change requires action on many fronts, and enterprise technology offers an important option that CIOs and companies can act on quickly.

You’re invited

To a McKinsey Technology webinar on the critical role of technology in building a sustainable enterprise on October 25, 9:30–10:30am ET.

The biggest carbon culprit is end-user devices, not on-premises data centers

End-user devices—laptops, tablets, smartphones, and printers—generate 1.5 to 2.0 times more carbon globally than data centers (Exhibit 2). 3 On-premises and co-located data centers used by enterprises, not including data center capacity sold by hyperscalers. One reason is that companies have significantly more end-user devices than servers in on-premises data centers. In addition, the devices typically are replaced much more often: smartphones have an average refresh cycle of two years, laptops four years, and printers five years. On average, servers are replaced every five years, though 19 percent of organizations wait longer. 4 Rhona Ascierto and Andy Lawrence, Uptime Institute global data center survey 2020 , Uptime Institute, July 2020.

More worrisome, emissions from end-user devices are on track to increase at a CAGR of 12.8 percent per year. 5 End-user computing market: Growth, trends, COVID-19 impact, and forecasts (2022–2027) , Mordor Intelligence, January 2022. Efforts to address this could target the major causes of emissions from these devices. About three-fourths of the emissions comes from manufacturing, upstream transportation, and disposal. A significant source of these emissions is the semiconductors that power the devices.

Plenty of low-cost/high-impact options exist, starting with improved sourcing

We have found that when it comes to going green, many CIOs think in terms of investments needed to replace items or upgrade facilities. Our analysis, however, finds that CIOs can capture significant carbon benefits without making a significant investment—and in some cases can even save money (Exhibit 3).

Overall, for example, 50 to 60 percent of emissions related to end-user devices can be addressed through sourcing changes, primarily by procuring fewer devices per person and extending the life cycle of each device through recycling. These options will not require any investment and will lower costs, though companies may want to evaluate the impact on employee experience.

In addition, companies can more aggressively recycle their devices; 89 percent of organizations recycle less than 10 percent of their hardware overall. 6 Sustainable IT: Why it’s time for a green revolution for your organization’s IT , Capgemini Research Institute, 2021. CIOs can put pressure on suppliers to use greener devices, especially as companies in the semiconductor sector are already increasing their commitments to emission reduction. Further low-cost, high-impact actions include optimizing business travel and data center computing needs, as well as increasing the use of cloud to manage workloads.

Moving to cloud has more impact than optimizing data centers

Optimizing an on-premises data center’s power usage effectiveness (PUE) 7 PUE describes how efficiently a computer data center uses energy, expressed as the ratio of total facility energy to IT equipment energy. is expensive and results in limited carbon abatement. If a company were to double what it spends on infrastructure and cloud to reduce PUE, it would cut carbon emissions by only 15 to 20 percent. Structural improvements in data centers and optimized layout can help, but the impact is limited, and many companies have already implemented them. More aggressive measures, such as moving data centers to cooler locations or investing in new cooling tech, are prohibitively expensive.

A more effective approach is to migrate workloads to the cloud. Hyperscalers (also known as cloud service providers) and co-locators are investing significantly to become greener through measures such as buying green energy themselves and investing in ultra-efficient data centers with a PUE equal to or less than 1.10, compared with the average PUE of 1.57 for an on-premises data center. 8 “Uptime Institute 11th annual Global Data Center Survey shows sustainability, outage, and efficiency challenges amid capacity growth,” Uptime Institute, September 14, 2021. (We estimate that companies could achieve just a 1.3 PUE score for their data center if they invested nearly 250 percent more, on average, over what they currently spend for their data centers and cloud presence.)

With thoughtful migration to and optimized usage of the cloud, companies could reduce the carbon emissions from their data centers by more than 55 percent—about 40 megatons of CO 2 e worldwide, the equivalent of the total carbon emissions from Switzerland.

Three steps to take now

With companies and governments under intensifying pressure to cut carbon emissions and with technology playing a key role in delivering on those goals, CIOs will find themselves on the front lines. The challenge will be to reduce IT’s carbon footprint while delivering high-quality, low-cost technology services to customers and employees.

On average, completion of the defensive steps might take three to four years. However, CIOs who act decisively and precisely can achieve 15 to 20 percent of carbon reduction potential in the first year with minimal investment.

CIOs can choose from among a wide array responses, particularly in conjunction with the CEO and the board. However, three measures they can take right now will prepare the organization for longer-term efforts. These measures involve sourcing strategies, key metrics, and a performance management system.

The net-zero transition: What it would cost, what it could bring

Move now on sourcing strategies.

Far and away the fastest and most effective defensive measure for reducing IT carbon emissions is to revise policies for technology sourcing. Optimizing the number of devices in line with standards followed by companies in the top quartile 9 Top quartile in terms of the ratio of devices to people is derived from the number of devices per person. Our analysis uses McKinsey Digital’s Ignite solutions and 2020 data. would reduce about 30 percent of end-user-device emissions, the amount of carbon emitted by Hong Kong. For example, top-quartile companies have one printer for every 16 people in the workplace; the overall average is one printer per eight people.

This sourcing shift does not necessarily lead to a degradation in user experience, because the rollout of 5G and increasingly advanced processing and compute power allow the main processing function to happen at the server. Therefore, devices can be less powerful and consume much less energy. Essentially, this is a software-as-a-service (SaaS) model where high-end and user-friendly experiences happen on the server, not the device. The effectiveness of this approach will depend on having stable networks, less resource-intensive coding at the device level, edge computing capabilities, and shifts of offerings to more efficient platforms (for example, cloud).

As part of this effort, the CIO and the business’s head of procurement will need to collaborate on reviewing and adjusting device refresh timelines and device-to-person ratios, as well as adjusting the basis for purchasing decisions. Procurement generally relies on cost/benefit calculations, and rightly so. That approach will need to expand to account for carbon dioxide emissions. The spirit of collaboration should extend to suppliers as well, with the parties working together to formulate plans that provide the greatest benefits for all.

A more thoughtful sourcing strategy extends beyond end-user devices. CIOs, for example, should look for green sources of the electricity IT uses. When these sources are unavailable, CIOs can direct procurement to power purchase agreements to offset carbon use. CIOs can also set green standards for their vendors and suppliers, requiring GHG emissions disclosures and incorporating them into their criteria for purchase decisions.

Establish a green ROI metric for technology costs

Any real progress on green technology can happen only when companies measure their “green returns.” But today, most green metrics omit cost and savings, which ultimately makes them impractical. A better metric focuses on cost per ton of carbon saved (accounting for costs saved as well). Sophisticated models calculate emissions throughout the full life cycle, including production, transportation, and disposal.

CIOs can further assess suppliers, manufacturers, and service providers based on how advanced they are in recycling and refurbishing electronics; designing circular components; extending product life cycles with better design, higher-quality manufacturing, and more robust materials; offering repair services; and reselling to consumers.

Decisions about IT spending need to consider a range of factors, including technical debt abatement and business strategy. Along with these factors, companies should institutionalize a green ROI metric that is transparent to everybody in the business as an element in IT decision making, including in requests for proposals (RFPs). Doing so will enable companies to better understand the true impact their technology is having on carbon emissions.

Put in place green measurement systems

Establishing a green ROI metric is only a start. CIOs need to establish a baseline of performance, measure progress against the baseline, and track impact in near real time, much as companies track real-time computer and network usage for applications in the cloud. This kind of measuring system ensures that CIOs know what’s working and what isn’t, so they can adjust quickly.

In practice, implementing green measurement can be challenging. Some companies have spent a year measuring their carbon footprint, ending up with an outdated analysis. This tends to happen when companies are determined to measure every bit of carbon emitted, a praiseworthy but time-consuming effort. CIOs can make substantial progress by instead prioritizing measurement where the impact is highest, such as tracking the number of end-user devices purchased and in use, the current duration of use for each device, and the ratio of devices per user. Another way CIOs can make quick progress is to embed emissions- and power-monitoring capabilities into large technology assets and work with external providers, such as electricity companies, to track usage in real time.

Effectively combating climate change won’t happen through one or two big wins; those don’t exist yet. To have real impact, companies and governments will need to act in many areas. Technology has a huge role to play in many of these areas, but CIOs and tech leaders need to act quickly and decisively.

This article is the first in a series about how CIOs can reduce emissions. The next article will explore how CIOs can drive the business’s sustainability agenda by playing offense and implementing reduce, replace, and reuse levers to decarbonize.

Gerrit Becker is an associate partner in McKinsey’s Frankfurt office, Luca Bennici is an associate partner in the Dubai office, Anamika Bhargava is a consultant in the Toronto office, Andrea Del Miglio is a senior partner in the Milan office, Jeffrey Lewis is a senior partner in the New Jersey office, and Pankaj Sachdeva is a partner in the Philadelphia office.

The authors wish to thank Bernardo Betley, Arjita Bhan, Raghuvar Choppakatla, Sebastian Hoffmann, Abdelrahman Mahfouz, Tom Pütz, Jürgen Sailer, Tim Vroman, Alice Yu, and Gisella Zapata for their contributions to this article.

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