Authentic Leadership, Sustained Performance, Job Satisfaction, and Inclusive Culture: The Role of Psychological Empowerment

Salini S Pillai
Research Scholar, Faculty of Management, IBS Hyderabad (Under IFHE - A Deemed to be University u/s 3 of the UGC Act, 1956), Hyderabad, Telangana, India; and is the corresponding author. E-mail: salinisasidharan.pillai20@ibsindia.org

Sitamma Mikkilineni
Professor and Area Head (HR & OB), Faculty of Management, IBS Hyderabad (Under IFHE - A Deemed to be University u/s 3 of the UGC Act, 1956), Hyderabad, Telangana, India. E-mail: sita@ibsindia.org

With disruptions due to technology/transformations and changing market/client landscapes, organizations are constantly adapting to keep up with the external environment. This in turn is driving organizations to be nimble, agile, and flexible in their structures and people practices. The need for the study in the emerging field of Authentic Leadership points to the need for organizations to focus on authentic leadership to create impact, build culture and influence the teams towards achieving the organizational objectives. The paper examines the research on AL and its impact on key variables of sustained performance, job satisfaction and inclusive culture. The paper is unique compared to prior research due to the inclusion of the role of psychological empowerment beyond the structural empowerment discussed in prior research. The paper presents a detailed literature review, key definitions of the variables and multi-level perspectives of the variables. It also provides the prior research measures and tools used to establish the relationship of various variables with Authentic Leadership. The paper concludes with multiple hypotheses to be studied for establishing the impact of psychological empowerment on the AL components, if any.

Introduction

The Covid-19 pandemic, the greatest global crisis of our times, has placed an unprecedented strain on the social, economic, and governance structures worldwide, and leadership has been extremely critical for organizations to face and deal with challenges (Antonakis, 2021) like evolving market landscapes, technology transformations or more importantly the changing workplaces. In the past few years, scholars and practitioners have been trying to comprehend the future of work-from a work, workforce, and workplace perspective and trying to come out with interventions and changes. Fueled by remarkable technology transformations, organizations in identified sectors not only continued to function but thrived with a clear impact on their margins and growth. As organizations embark towards the post-pandemic era, it is important to understand the role of leadership in the unprecedented-virtual workspaces, for retaining employee morale, enhancing job satisfaction and enabling sustained performance (Liao et al., 2021). Leaders from across the world are working on the cultures, structures, work roles/tasks etc. in building up a hybrid work model to balance virtual and offline working, retaining the benefits offered by both.

All the above are viable only if organizations have spirited and legitimate leaders. Organizations need leaders who lead with purpose, values, and integrity. The growing significance of authentic leadership is therefore a subject to be deliberated, the impact factors, the outcomes and what mediates and moderates the same needs to be theoretically and empirically evaluated by researchers.

While extant literature has focused on the mediating effect of structural empowerment on variables such as performance, organizational citizenship behaviors and job satisfaction (Towsen et al., 2020), there is limited work on the impact of psychological empowerment and its impact on authentic leadership. This paper attempts to build a model around this research gap.

Literature Review
The definition of Authentic Leadership (AL) has evolved over the years beginning from the 1960s, with the underlying notion that organizational authenticity is revealed through leadership (Novicevic et al., 2006). Henderson and Hoy (1982) were amongst the first who attempted to operationalize authentic leadership into three components: first, the ability to take responsibility for actions, outcomes and failures; second, non-manipulation of subordinates; and third, prioritizing the needs of oneself over that of the role. Bhindi and Duignan (1997) summarized authentic leadership as having four key components- authenticity, intentionality, spirituality and sensibility.

One of the most popular conceptualizations of Authentic Leadership is by Luthans and Avolio (2003) who built on positive psychology using both positive capacities and a well-developed organizational environment to result in greater self-awareness and selfregulated positive behaviors of leaders and followers, nurturing positive self-development. The authentic leader's values, beliefs, and behaviors help to model the development of followers. Authentic leadership here is often seen as a blend of transformational and ethical leadership.

Derived from positive psychology, authentic leadership theories highlighted that leaders are free to adopt or develop their own leadership style so long as that style is consistent with their own personality and values. Leaders are those who are driven by their life instances and the psychological characteristics of optimism, hope, resilience, and self efficacy. These positive attributes are said to influence positive behaviors from an organizational context. Positive leadership behaviors are a set of actions taken up by leaders to motivate and influence the followers towards organizational goals. An authentic leader is said to possess four capabilities-self-awareness (understanding oneself and the impact they have on others), internalized moral perspective (high moral values and do not compromise during challenges and pressures), balanced processing (are objective and take informed decisions on the basis of detailed analysis of information and data) and relational transparency (ensures dealings with others are transparent, fair and consistent) (Walumbwa et al., 2008). By demonstrating transparency, authentic leaders build trust and stronger relationships with their followers (McAuliffe et al., 2019).

Since the time when the initial model of Authentic Leadership by Luthans and Avolio (2003) was developed, several other conceptual models of this process have been proposed. Each model offers an understanding not only of the development of authentic leadership, but also of its antecedents and consequences. Gardner et al. (2011) conducted a thorough content analysis of existing research and grouped authentic leadership theories into the following broad categories:

• Authentic Leadership Theory: Those that propose conceptual underpinnings.
• Authenticity/Self/Identity: Those that propose authenticity and self-based constructs as the core of AL theory.
• Affective Processes: Those that focus on the emotional processes that are essential to the leader-follower relationship.
• Attribution Theory/Social Perception: Those that explain how an accurate and balanced attribution style can facilitate AL.
• Ethics/Values/Ethical Leadership: Those that consider the role of ethics, values, ethical leadership, spiritual leadership on AL.
• Neo-Charismatic Leadership Theories: Emergent leadership paradigm that encompasses theories of leadership styles such as charismatic, transformational, and visionary leadership.
• Positive Psychology: Those that use positive organizational behavior concepts to understand AL.
• Wellbeing/Vital Engagement: Those theories that recognize the relationships between authenticity, engagement, and wellbeing.

While scholars have shown interest in Authentic Leadership over the past two decades, research in this area is still in its infancy. Empirical research in this area has been facilitated through the development of instruments for the measurement of AL. The first attempt to develop a Leadership Authenticity scale was by Henderson and Hoy (1982), and till date there are several measures that have been developed to measure authentic leadership. One of the most popular measures of AL is the 16-item self-reported scale developed by Walumbwa et al. (2008).

Scholarly efforts have gone beyond the development of questionnaires, and some empirical studies have been conducted relating AL to different concepts. Evidence of the impact of Authentic Leadership on employee's performance (Wang et al., 2014), work behaviors, outcomes and overall organizational effectiveness (Avolio and Luthans, 2006; and Avolio and Walumbwa, 2006) and work engagement (Wang et al., 2014) exists.

What is needed in this area is research on the assessment of the conditions under which AL could be maximized and sustained, as well as the organizational context which fosters such growth. In addition, the development of principles and models based on AL and their application in management practice may provide concepts and tools to supplement the mainstream methods for Authentic Leadership development in organizations.

Psychological Empowerment (PE)
PE is an individual's psychological state, reflecting an active involvement towards one's role and work (Thomas and Velthouse, 1990). It is a motivational construct with four sets of cognitions-impact, competence, meaning and self-determination. Authentic leaders want to develop and empower their followers to achieve goals and facilitate employees' involvement in decision-making processes. Perceived Authentic Leadership has been shown to be positively related to Psychological Empowerment (Walumbwa et al., 2011). Authentic leaders examine relevant information and share that with their employees, thereby empowering them.

Employee psychological empowerment assumes critical importance in today's context of increasing remote and virtual work where knowledge workers are pervasive and employees need to have intrinsic motivation to take personal ownership of their jobs and organizations have decentralized organizational structures.

However, research on empowerment by authentic leaders in the Indian context is relevant as there is limited information about this leadership. For measuring the construct of PE, the PE Questionnaire (PEQ) developed by Spreitzer (1995), is widely used.

Sustained Performance
Sustained performance here stands for consistent performance from both the employee and supervisor perspective. Performance is the actions and behaviors of employees on the job that has an influence on the organizational goals (Rotundo and Sackett, 2002). A firm's competitive advantage is normally inferred from sustained performance over a period of time (Rouse and Daellenbach, 1999). Authentic leadership produces high levels of psychological empowerment in employees, which in turn leads to sustained work performance.

This study proposes to focus on sustained performance as a variable from multi-level perspectives that is individual, group and organizational. Consistency in performance will be measured through self-rating and supervisor rating on identified parameters. Since the reference here is about consistency, data sets across a set period will be looked at.

Job Satisfaction
Job satisfaction means employees' positive and affective reactions to their job based on a range of elements. The relationship between Job satisfaction and Authentic Leadership has been widely researched in the past. Walumbwa et al. (2008) in their study on 11 multinational firms suggest that followers' perception of authentic leadership had an impact on job satisfaction. Psychological empowerment has been treated as an important factor for employees' satisfaction (Spreitzer, 1995).

Inclusive Culture
Inclusive culture is about integrating people from diverse backgrounds and perspectives to achieve a common goal. Beyond the demographic and background differences of color, gender, race, etc., inclusion focuses on creating equal access to decision making, resources and mobility opportunities horizontally and vertically. In the past, various inclusion constructs have been described, including leader inclusion, work group inclusion, perceived organizational inclusion, organizational practices inclusion, inclusion climate. The current study would revolve around the leader inclusion construct.

The leader is an important factor in influencing the employee experience of inclusion. Research (Gallegos, 2013; Booysen, 2014; and Boekhorst, 2015) shows that leaders from inclusive organizations build opportunities to have open dialogues about and across differences, show an interest in understanding different perspectives, and encourage the development of the authentic self. We believe that authentic leaders empower employees, which in turn leads to an inclusive culture in organizations. A workplace culture survey tool will be used to measure employee perceptions of inclusive culture.

The Study
The aim of this paper is to develop a model linking Authentic Leadership to sustained performance, job satisfaction and inclusive culture, through the mediating effects of psychological empowerment.

On the basis of the literature review, it is hypothesized that authentic leadership positively influences sustained performance, inclusive culture, and job satisfaction through employee psychological empowerment. The theoretical framework is presented in Figure 1.

Based on the literature review, the study proposes the following hypotheses:

H₁: Authentic leadership is positively related to psychological empowerment.

H₂: Authentic leadership is positively related to sustained performance.

H₃: Authentic leadership is positively related to job satisfaction.

H₄: Authentic leadership is positively related to inclusive culture.

H₅: Psychological empowerment is positively related to sustained performance.

H₆: Psychological empowerment is positively related to job satisfaction.

H₇: Psychological empowerment is positively related to inclusive culture.

H₈: Psychological empowerment mediates the effect of Authentic Leadership on job satisfaction.

H₉: Psychological empowerment mediates the effect of Authentic Leadership on inclusive culture.

H₁₀: Psychological empowerment mediates the effect of Authentic Leadership on sustained performance

Multilevel Perspective of AL, Sustained Performance, Job Satisfaction and Inclusive Culture
With an attempt to look beyond the individual-level view, the paper focuses on understanding the multi-level perspective of AL, sustained performance, job satisfaction, and inclusive culture. An attempt is made to understand the influence of AL from an individual, dyadic, and group perspective. The variables to be assessed and empirically evaluated at different levels are illustrated in Figure 2.

Correlations between the authentic leadership and psychological empowerment attributes need to be established to prove the above hypothesis.

Each of the parameters highlighted in Table 1 is proposed to be empirically reviewed to understand the impact on identified variables.

Conclusion
The paper provides recommendations to take the existing research forward. It strengthens the understanding of the mediating role of psychological empowerment. The paper calls out the hypothesis and the settings for empirical study to help practitioners in coaching and grooming authentic leaders.

Implications and Future Scope: Considering prior research on this topic, the impact of the study can be observed through conducting a multi-level, cross-sectional and longitudinal study in the Indian context.

• The study will establish the key relationships and will be able to outline clear practical implications.
• Further research can be done to understand the influence of psychological empowerment on leadership styles-transformational, charismatic, transactional, servant leadership, etc.
• Leadership evaluations, training and coaching interventions can be targeted by focusing on aspects pertaining to psychological empowerment and authentic leadership.

References

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Reference # 06J-2021-10-09-01