Video: Monday, 13 April 2015

Generating ideas is essential for companies to improve processes and create efficiencies. And there are direct links between the type of leadership and the number of successful ideas generated. New research by Assistant Professor Dirk Deichmann of Rotterdam School of Management, Erasmus University (RSM) reveals that leaders who use rewards to motivate employees get the most ideas.

Leadership that offers rewards triggers more employee ideas

Having a regular flow of new ideas within the company can create new sources of income and lead to huge savings and profits. But it appears that the work environment is a determining factor in the quantity of the ideas that employees will submit, so the type of leader running the business plays a very important role. Dr Dirk Deichmann focused on two leadership styles to investigate how they influence the generation of ideas.

Transformational versus transactional

First, the transformational leader motivates the employee on an intrinsic level and articulates and shares a vision of the future, acts as a role model, and supports them to develop themselves.

Second, the transactional leader provides the employee with a goal and offers rewards for achieving it. This leader releases employees' extrinsic motivation through the offer of bonuses or other perks to employees who achieve their goals.

Intrinsic motivation is often linked to creativity so the transformational leader, the one that motivates employees intrinsically would be expected to be most successful in encouraging employees to generate ideas. But the opposite is true.

Deichmann’s research shows that transactional leaders – those offering bonuses and perks – motivate people to submit more ideas. This kind of leader gives employees clear directions and appropriate and tangible rewards for accomplishing goals such as generating more ideas. It’s evident that factors which motivate workers extrinsically – such as rewards – work better than factors which appeal to workers intrinsically.

Dirk Deichmann found that on average, workers with a more transactional leader generated 14 per cent more ideas than workers who were led by a leader with transformational tendencies.

Comparing transactional leaders against each other – leaders who scored low against leaders who scored very highly – the numbers were even more astonishing. Employees with a very transactional leader generated, on average, 62 per cent more ideas than those working for a leader who was not so transactional.

According to Deichmann s research, organisations should promote and raise awareness of the transactional leadership style, and develop management programmes in which leaders explore and develop it.

“When you lead in a transactional style and offer real rewards, you are more likely to get new ideas that can move your organisation forward,” commented Dr Deichmann.

Dr. D. (Dirk) Deichmann
Associate Professor
Rotterdam School of Management (RSM)
Erasmus University Rotterdam
Dirk Deichmann

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