Transformational Leadership: Models, Factors, and Outcomes Explained

This report provides a comprehensive overview of transformational leadership, a complex process that binds leaders and followers in transformative change. It explores the core concepts, distinguishing between transformational and transactional leadership, and highlighting the role of charismatic leadership. The report delves into the transformational leadership model, outlining its eight key factors, including idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration, as well as transactional and non-leadership factors. It also discusses other perspectives of transformational leadership, including models developed by Bennis and Nanus, and Kouzes and Posner. The report emphasizes the positive outcomes of transformational leadership, which inspires followers to work for the good of the organization, and subordinate their own self-interests to those of the organization.

258
TransformationalTransformational
LeadershipLeadership
Leaders who can spark our imaginations with a compelling vision of a worth-
while end that stretches us beyond what is known today and who can show us a
clear path to our objectives are the ones we follow. In the future, the leadership
role will focus more on the development of an effective strategy, the creation of the
vision, and an understanding of their impact, and will empower others to carry
out the implementation of the plan.
—Goldsmith, Greenberg, Robertson, & Hu-Chan (2003, p. 118)
Transformational leadership is an involved, complex process that binds leaders and
followers together in the transformation or changing of followers, organizations, or
even whole nations.It involves leaders interacting with followers with respect to
their “emotions,values,ethics,standards,and long-term goals,and includes assessing
followers’motives,satisfying theirneeds,and treating them asfull human beings”
(Northouse,2010). While alltheories of leadership involve influence,transformational
leadership is aboutan extraordinary ability to influence thatencourages followers to
achieve something well above what was expected by themselves or their leaders.
Early researchersin the areaof transformationalleadership coined theterm
(Downton,1973) and tried to integrate the responsibilities ofleaders and followers
(Burns, 1978). In particular, Burns (1978) described leaders as people who could under-
stand the motives of followers and, therefore, be able to achieve the goals of followers and
leaders.As we discussed in Chapter 1,he considered leadership different from power
because leadership is a concept that cannot be separated from the needs of followers.
C H A P T E R
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C H A P T E R
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Chapter 9: TransformationalLeadership 259
Burns (1978) differentiated between transactional and transformational leadership.
He described transactional leadership as that which emphasizes exchanges between fol-
lowers and leaders. This idea of exchange is easily seen at most levels in many different
types of organizations.
He described transformationalleadership as thatprocess through which leaders
engage with followers and develop a connection (one that did not previously exist) that
increases the morals and motivation ofthe follower and the leader.Because ofthis
process, leaders assist followers in achieving their potential to the fullest (Yukl, 2006).
Bass and colleagues (Bass, 1998; Bass & Riggio, 2006; Bass & Steidlmeier, 1999) dif-
ferentiated between leadership that raised the morals of followers and that which trans-
formed people,organizations,and nationsin a negative manner.They called this
pseudotransformational leadership, to describe leaders who are power hungry, have per-
verted moral values, and are exploitative. In particular, this form of leadership empha-
sizes the leader’s self-interest in a manner that is self-aggrandizing and contrary to the
interests of his or her followers (Northouse, 2010). Kenneth Lay and Jeff Skilling might
be examples of this form of leadership in their roles as chair and CEO of Enron, respec-
tively. Authentic transformational leaders put the interests of followers above their own
interestsand,in so doing,emphasize the collective good for leadersand followers
(Howell & Avolio, 1992).
Charismatic Leadership
“Charisma is a specialquality ofleaders whose purposes,powers,and extraordinary
determination differentiate them from others” (Dubrin,2007,p. 68).Weber (1947)
emphasized the extraordinary nature of this personality trait but also argued that follow-
ers were important in that they confirmed that their leaders had charisma (Bryman, 1992
House, 1976). The influence exercised by charismatic leaders comes from their personal
power,not their position power.Their personalqualities help their personalpower to
transcend the influence they have from position power (Daft, 2005).
House (1976) provided a theory of charismatic leadership that linked personality char
acteristics to leader behaviors and,through leader behaviors,effects on followers. Weber
(1947) and House (1976) both argued that these effects would be more likely to happen
when followers were in stressful situations because this is when followers want deliveran
from their problems. A major revision to House’s conceptualization has been offered by
Shamir, House, and Arthur (1993). They argue that charismatic leadership transforms ho
followers view themselves and strives to tie each follower’s identity to the organization’s
lective identity (Northouse, 2010). In other words, charismatic leadership is effective bec
each follower’s sense of identity is linked to the identity of his or her organization.
A Transformational Leadership Model
Bass and his colleagues (Avolio, 1999; Bass, 1985, 1990; Bass & Avolio, 1993, 1994) refin
and expanded the models suggested by Burns (1978) and House (1976). Bass (1985) add
to Burns’s model by focusing more on the needs of followers than on the needs of leader
focusing on situations where the outcomes could be negative, and by placing transforma
tional and transactional leadership on a single continuum as opposed to considering them
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260 CASES IN LEADERSHIP
independent continua. He extended House’s model by emphasizing the emotional compo-
nents of charisma and by arguing that while charisma may be a necessary condition for
transformational leadership, it is not a sufficient condition—more than charisma is needed.
Transformationalleadership inspires subordinates to achieve more than expected
because (a) itincreases individuals’awareness regarding the significance oftask out-
comes, (b) it encourages subordinates to go beyond their own self-interest to the interests
of others in their team and organization, and (c) it motivates subordinates to take care of
needs that operate at a higher level (Bass, 1985; Yukl, 2006).
There are eight factors in the transformational and transactional leadership model.
These are separated into three types of factors: (1) transformational factors consisting of
idealized influence, individualized consideration, inspirational motivation, and intellec-
tual stimulation; (2) transactional factors consisting of contingent reward, management by
exception (active), and management by exception (passive); and (3) one nontransformatio
nontransactional factor, that being laissez-faire (Yukl, 2006).
Transformational Leadership Factors
This form of leadership is about improving each follower’s performance and helping fol-
lowers develop to their highest potential (Avolio, 1999; Bass & Avolio, 1990). In addition,
transformational leaders move subordinates to work for the interests of others over and
above their own interests and, in so doing, cause significant, positive changes to happen
for the good of the team and organization (Dubrin, 2007; Kuhnert, 1994).
Idealized Influence or Charisma. Leaders with this factor are strong role models followers
want to emulate and with whom they want to identify. They generally exhibit very high
moral and ethical standards of conduct and usually do the right thing when confronted
with ethicaland moralchoices. Followers develop a deep respect for these leaders and
generally have a high level of trust in them. These leaders give followers a shared vision
and a strong sense of mission with which followers identify (Northouse, 2010).
InspirationalMotivation.Leaders with this factor share high expectations with followers
and motivate them to share in the organization’s vision with a high degree of commitment
These leaders encourage followers to achieve more in the interests of the group than they
would if they tried to achieve their own self-interests. These leaders increase team spirit
through coaching, encouraging, and supporting followers (Yukl, 2006).
Intellectual Stimulation. Leaders with this factor encourage subordinates to be innovative
and creative. These leaders support followers as they challenge the deeply held beliefs and
values of their leaders, their organizations, and themselves. This encourages followers to
innovatively handle organizational problems (Yukl, 2006).
Individualized Consideration. Leaders with this factor are very supportive and take great ca
to listen to and understand their followers’ needs. They appropriately coach and give advic
to their followers and help them to achieve self-actualization. These leaders delegate to as
followers in developing through work-related challenges and care for employees in a way
appropriate for each employee. If employees need nurturance, the leader will nurture;if
employees need task structure, the leader will provide structure (Northouse, 2010).
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Chapter 9: TransformationalLeadership 261
Transformationalleadership achieves differentand more positive outcomes than
transactionalleadership. The latter achieves expected results while the former achieves
much more than expected. The reason is that under transformational leaders, followers
are inspired to work for the good of the organization and subordinate their own self-
interests to those of the organization.
Transactional Leadership Factors
As suggested above, transactional leadership is different from transformational leadershi
in expected outcomes. The reason is that under transactional leaders, there is no individ-
ualization offollowers’needs and no emphasis on followers’personaldevelopment—
these leaders treat their followers as members of a homogeneous group.These leaders
develop a relationship with their followers based on the exchange of something valuable
to followers for the achievement of the leader’s goals and the goals of the followers. Thes
leaders are influential because their subordinates’ interests are connected to the interest
of each leader (Kuhnert, 1994; Kuhnert & Lewis, 1987).
ContingentReward.This factordescribesa processwhereby leadersand followers
exchange effort by followers for specific rewards from leaders. This process implies agree
ment between leaders and followers on what needs to be accomplished and what each
person in the process will receive. This agreement is usually done prior to the exchange o
effort and reward.
Management by Exception (MBE). This factor has two forms—active and passive. The for-
mer involves corrective criticism, while the latter involves negative feedback and negativ
reinforcement. Leaders who use MBE (active) closely monitor their subordinates to see if
they are violating the rules or making mistakes. When rules are violated and/or mistakes
made, these leaders take corrective action by discussing with their subordinates what the
did wrong and how to do things right. Contrary to the MBE (active) way of leading, lead-
ers who use MBE (passive) do not closely monitor subordinates but wait untilproblems
occur and/or standards are violated. Based on their poor performance, these leaders give
subordinates low evaluations without discussing their performance and how to improve.
Both forms of MBE use a reinforcement pattern that is more negative than the more pos-
itive pattern used by leaders using contingent reward.
The Nonleadership Factor
As leaders move further from transformational leadership through transactional leader-
ship, they come to laissez-faire leadership. Individuals in leadership positions who exer-
cise this type ofleadership actually abdicate their leadership responsibilities.This is
absentee leadership (Northouse,2010).These leaders try to not make decisions or to
delay making decisions longer than they should, provide subordinates with little or no
performance feedback, and ignore the needs of subordinates. These leaders have a “wha
will be will be” or “hands-off, let-things-ride” approach with no effort to even exchange
rewards for effort by subordinates. Leaders who do not communicate with their subordi-
nates or have any plans for their organization exemplify this type of leadership.
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Other Perspectives of Transformational Leadership
Two other streams ofresearch contribute to our comprehension oftransformational
leadership:These streamsare research conducted by Bennisand Nanus(1985) and
Kouzes and Posner (1987,2002).Bennis and Nanus interviewed 90 leaders and,from
these leaders’ answers to several questions, developed strategies that enable organization
to be transformed. Kouzes and Posner interviewed 1,300 middle- to senior-level leaders
in private and public organizations. They asked each leader to tell about his or her “per-
sonalbest” leader experiences.From the answers these leaders provided,Kouzes and
Posner developed their version of a transformational leadership model.
The Bennis and Nanus (1985) Transformational Leadership Model
Bennis and Nanus (1985) asked questions such as the following: “What are your strengths
and weaknesses? What past events most influenced your leadership approach? What were
the critical points in your career?” (Northouse, 2010). The answers to these questions pro-
vided four strategies that transcend leaders or organizations in their usefulness for trans-
forming organizations.
First, leaders need to have a clear, compelling, believable, and attractive vision of their
organization’s future. Second, they need to be social architects who shape the shared mea
ings maintained by individuals in organizations. These leaders set a direction that allows
subordinates to follow new organizational values and share a new organizational identity.
Third, leaders need to develop within followers a trust based on setting and consistently
implementing a direction,even though there may be a high degree ofuncertainty sur-
rounding the vision. Fourth, leaders need to use creative deployment of self through positi
self-regard. This means that leaders know their strengths and weaknesses and focus on th
strengths, not their weaknesses. This creates feelings of confidence and positive expectati
in their followers and builds a learning philosophy throughout their organizations.
The Kouzes and Posner (1987, 2002) Transformational Leadership Model
On the basis of their interviews with middle- to senior-level managers, Kouzes and Posner
(1987, 2002) found five strategies through content analyzing the answers to their “per-
sonal best” leadership experiences questions.
First, leaders need to model the way by knowing their own voice and expressing it to
their followers, peers, and superiors through verbal communication and their own behav-
iors. Second, leaders need to develop and inspire a shared vision that compels individuals
to act or behave in accordance with the vision. These inspired and shared visions chal-
lenge followers, peers, and others to achieve something that goes beyond the status quo.
Third, leaders need to challenge the process. This means having a willingness to step out
into unfamiliar areas, to experiment, to innovate, and to take risks to improve their orga-
nizations. These leaders take risks one step at a time and learn as they make mistakes.
Fourth, leaders need to enable others to act. They collaborate and develop trust with ot
ers; they treat others with respect and dignity; they willingly listen to others’ viewpoints, e
if they are different from the norm; they support others in their decisions; they emphasize
teamwork and cooperation;and,finally,they enable others to give to their organizations
because these others feel good about their leaders, their job, their organizations, and them
Fifth, leaders need to encourage the heart.This suggests that leaders should rec-
ognize the need inherent in people for support and recognition. This means praising
262 CASES IN LEADERSHIP
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Chapter 9: TransformationalLeadership 263
people for work done well and celebrating to demonstrate appreciation when others
do good work.
This model focuses on leader behaviors and is prescriptive. It describes what needs to
done to effectively lead others to embrace and willingly support organizational transform
The model is not about people with special abilities. Kouzes and Posner (1987, 2002) arg
these five principles are available to all who willingly practice them as they lead others.
How Does the Transformational Leadership Approach Work?
This approach to leadership is a broad-based perspective that describes what leaders nee
to do to formulate and implement major organizational change (Daft, 2005). These trans-
formational leaders pursue some or most of the following steps.
First, they develop an organizational culture open to change by empowering subordin
to change, encouraging transparency in conversations related to change, and supporting
in trying innovative and different ways of achieving organizational goals. Second, they pr
a strong example of moral values and ethical behavior that followers want to imitate bec
they have developed a trust and belief in these leaders and what they stand for.
Third, they help a vision to emerge that sets a direction for the organization. This visio
transcends the various interests of individuals and different groups within the organizatio
while clearly determining the organization’s identity. Fourth, they become social architec
clarify the beliefs, values, and norms that are required to accomplish organizational chan
Finally, they encourage people to work together, to build trust in their leaders and each o
and to rejoice when others accomplish goals related to the vision for change (Northouse,
yy References
Avolio, B. J. (1999). Leadership in organizations (6th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall
Bass, B. M. (1985). Leadership and performance beyond expectations. New York: Free Press.
Bass, B. M. (1990). From transactional to transformational leadership: Learning to share the vis
Organizational Dynamics, 18, 19–31.
Bass, B. M. (1998). The ethics of transformational leadership. In J. Ciulla (Ed.), Ethics: The heart of lead-
ership (pp. 169–192). Westport, CT: Praeger.
Bass, B. M., & Avolio, B. J. (1990). The implications of transactional and transformational leadership for
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Bass, B. M., & Avolio, B. J. (1993). Transformational leadership: A response to critiques. In M.
Chemers & R. Ayman (Eds.), Leadership theory and research: Perspectives and directions (pp. 49–80
San Diego: Academic Press.
Bass, B. M., & Avolio, B. J. (1994). Improving organizational effectiveness through transformational lead
ship. Thousand Oaks, CA: Sage.
Bass, B. M., & Riggio, R. E. (2006). Transformational leadership (2nd ed.). Mahwah, NJ: Lawrence Erlbau
Bass, B. M., & Steidlmeier, P. (1999). Ethics, character, and authentic transformational leadersh
Leadership Quarterly, 10, 81–227.
Bennis, W. G., & Nanus, B. (1985). Leaders: The strategies for taking charge. New York: Harper & Row.
Burns, J. M. (1978). Leadership. New York: Harper & Row.
Bryman, A. (1992). Charisma and leadership in organizations. London: Sage.
Daft, R. L. (2005). The leadership experience (3rd ed.). Mason, OH: Thomson, South-Western.
Downton, J. V. (1973). Rebel leadership: Commitment and charisma in a revolutionary process. New Yo
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Dubrin, A. (2007). Leadership: Research findings, practice, and skills. New York: Houghton Mifflin.
Goldsmith, M., Greenberg, C. L., Robertson, A., & Hu-Chan, M. (2003). Global leadership: The next gen-
eration. Upper Saddle River, NJ: Financial Times Prentice Hall.
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Howell, J. M., & Avolio, B. J. (1992). The ethics of charismatic leadership: Submission or liberation
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Kouzes, J. M., & Posner, B. Z. (1987). The leadership challenge: How to get extraordinary things done in
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Kuhnert, K. W. (1994). Transforming leadership: Developing people through delegation. In B. M. Bass &
B. J. Avolio (Eds.), Improving organizational effectiveness through transformational leadership (pp. 10–
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Shamir, B., House, R. J., & Arthur, M. B. (1993). The motivational effects of charismatic leadership: A
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Yukl, G. (2006). Leadership in organizations (6th ed.). Upper Saddle River, NJ: Pearson/Prentice Hall.
yy The Cases
Mayor Rudolph Giuliani, Knight of the British Empire
Rudolph Giuliani was the mayor of New York City during the events of September 11,
2001, and became world renowned for his leadership. Outlined is a description of h
background, his first few years in office, the troubles he faced in his last year in office, and
the sudden shift in his popularity post–September 11, 2001.
Spar Applied Systems: Anna’s Challenge
The director of human resources must contend with internal and external pressures to
make changes quickly and smoothly for the new year. She has been with the company for
6 months. In her capacity as director of human resources, she has spent her time estab-
lishing a baseline for the division so that she can then create a departmental vision and
strategy for 2000. It will be one of the most interesting challenges of her career. Since join
ing, she has gained an understanding of the division’s future direction from its leadership
team. The team is under the direction of the division’s new general manager.
yy The Reading
Drucker’s Challenge: Communication
and the Emotional Glass Ceiling
The supreme challenge for a leader is to change human behavior, a formidable, if not impo
sible, task. But the leader who is emotionally intelligent (who is aware of and comfortable w
264 CASES IN LEADERSHIP
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Mayor Rudolph Giuliani, Knight of the British Empire265
his or her own self) will have a far greater chance of changing the behavior of others than
leader who is not aware of himself or herself. Using theories from esteemed managemen
thinker Peter Drucker, the author points out that leaders who inspire are those who have
resolved their own identity crisis. But that is much easier said than done, and the dauntin
nature of the task is encapsulated in Drucker’s Challenge, which states that every human
being has an emotional glass ceiling, a natural “resistance to changing” identity. This cei
is broken only when communication is so compelling that it overcomes that resistance. H
leaders can accomplish this goal is the subject of this article.
Mayor Rudolph Giuliani,
Knight of the British Empire
Prepared by Ken Mark under the supervision
of Christina A. Cavanagh
yy Introduction
Rudolph Giuliani, the mayor of New York City,
was going to receive a honorary knighthood
from Britain, announced the National Post on
October 15, 2001. The award, reported in the
British press on Saturday and confirmed by
official sources on October 14, 2001, followed
Giuliani’swidelypraisedleadershipin the
wake of the September 11 terrorist attacks on
New York that killed thousands of people and
destroyed the twin towers of the World Trade
Center.The award, “Knightof the British
Empire,” was the highest honor the Queen
could bestow on a foreign citizen.
Britain’s SundayTelegraphnewspaper
quoted a Buckingham Palace official saying:
The Queen believesthat Rudolph
Giuliani was an inspiration to political
leaders around the world, as well as to his
city. She was grateful for his support for
Britons bereaved by the tragedy and feels
that this will also be a gesture of solidar-
ity between America and Britain. Her
regard for Mayor Giuliani is reflected in
her desire to present the honour in per-
son at Buckingham Palace.
yy Rudy Giuliani,
Mayor of New York City
Giuliani had spent his adult life searching for
missions impossible enough to suit his extrav-
agant sense of self. A child of Brooklyn who
was raised in a family of fire fighters, cops and
criminals, he chose the path of righteousness
and turned his life into a war against evil as he
defined it. As a U.S. attorney in New York dur-
ing the 1980s, Giuliani was perhaps the most
effective prosecutor in the country, locking up
Mafia bosses,crookedpoliticiansand Wall
Street inside traders.
When Giuliani was electedmayor of
New York City in 1993, more than a million
AUTHOR’S NOTE: This case has been written on the basis of published sources only. Consequently, the interpretatio
spectives presented in this case are not necessarily those of Rudolph Giuliani or any of his employees.
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266 CHAPTER 9: TRANSFORMATIONAL LEADERSHIP
New Yorkers were on welfare, violent crime
and crack cocaine had ravaged whole neigh-
borhoods, and taxes and unemployment were
sky-high.It was fashionableto dismissthe
place as ungovernable. Mayor Giuliani made
good on his promise, doing away with New
York’s traditional politics of soft and ineffec-
tual symbolism. The public was shocked and
delighted to find that the streets were safer and
cleaner. And the public did not care how he did
it. If Giuliani picked fights big and small, if he
purged government of those he deemed insuf-
ficiently loyal, so be it, “People didn’t elect me
to be a conciliator,” Giuliani said.
He governed by hammering everyone else
into submission, but in areas where that strat-
egy was ineffective, such as the reform of the
city schools, he failed to make improvements.
Although by 1997 he had cut crime by two-
thirds, his job-approval rating had declined to
32 per cent. New York City was getting better,
but the mayor seemed to be getting worse.
Black minority leaders complained that his
aggressive cops were practising racial profil-
ing, stopping and frisking people because of
their race. Giuliani launchedcampaigns
against jaywalkers, street vendors, noisy car
alarms, and a crusade against publicly funded
art that offended his moral sensibilities. But
the pose seemed hypocritical at best when
Giuliani, whose wife had not been seen at
City Hall in years, began courting another
woman, Judi Nathan.
In typicalNew Yorkfashion,he was a
dichotomous mix of public sentiment and dis-
dain. Time magazinereported,on May 28,
2001, that Giuliani was poised to leave his office
on a wave of goodwill, with opportunities for
future office. Despite announcing the end of
his marriage to the press corps before he told
his wife, he had garnered a level of public sym-
pathy not usually availableto adulterers,
thought to be due to his unfortunate bout of
prostatecanceroverridingthe simultaneous
appearance of his new girlfriend.
As a public figure, his life was more than
just an open book. It was a constant and daily
analysis of every aspect of his colorful life.
Perhaps not since the Princess of Wales had a
public figure become so newsworthy even if
only on a local scale. There were hundreds of
stories written about him and just as many
colorful headlines announcing the firing of
his estranged wife’s staff and rumors of him
leaving the New York City mayor’s mansion
due to the ongoing divorce drama.
yy The Transformation Begins
Through circumstances both inexplicable and
extraordinary, a controversial mayor who was
set to leave office in 2002 took the reigns of a
crisis on what became known as the twenty-
first century’s “Day of Infamy”—September
11, 2001. Countless newspapers published sto-
ries of Giuliani mobilizing the city’s emer-
gency services, running through smoke-filled
basements wearing a gas mask and urging sur-
vivors to head north. As Newsweek reported,
September 24, 2001:
Giuliani, wearing a gas mask, was led
running through a smoke-filled base-
ment maze and out the other side of
the Merrill Lynch building on Barclay
Street, where the soot they’re now call-
ing “graysnow”was a foot deep.
Stripping off the gas mask, Giuliani
and a small group set off on foot for a
mile hike up Church Street, urging the
ghostly,ash-cakedsurvivorsto “Go
north! Go north!” A distraught African
Americanwomanapproached,and
the mayor touched her face, telling her
“It’s going to be OK.” Farther up, a
young rowdy got the mayoral
“Shhhhhh!” he deserved. That set the
tone. He was sensitive and tough and
totally on top of everything. Even his
press criticism was, for once, on target.
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Mayor Rudolph Giuliani, Knight of the British Empire267
And even his harshest critics offered noth-
ing but sincere praise.
In recent years, Rudy Giuliani has been
a crankyand not terriblyeffective
mayor, too distracted by marital and
health problems to work on the city’s
surging murder rate. But in this cata-
clysm, which he rightly called “the most
difficult week in the history of New
York,” the city and the country have
found that the most elusive of all demo-
cratic treasures—real leadership.1
A Barron’s report, on September 24, 2001,
was even more on point:
It is no secret that disaster has yielded a
remarkable change in the public per-
sona of Rudy Giuliani. Vanished is the
meanmayorwho badgeredhot-dog
vendors, threatened museums, sought
to bludgeon dissent and indulged in an
open and nasty row with his estranged
wife. And in his place is, well, the essen-
tial Rudy: generous,sympathetic,
indefatigable,levelheaded,unfailingly
reassuring, a man for all crises.
The real Rudy, in other words. We say
that becausewe’veknownRudy for
something close to a quarter of a cen-
tury; indeed, for a spell between govern-
ment jobs he represented Dow Jones, the
parent company of Barron’s, and, we can
personally attest, was one hell of a lawyer.
More to the point, he was also that rare
combination of tough when he had to
be and tender when he should have
been, funny, bright and argumentative
(natch), a great guy to knock off a bottle
or two of vino with. Rudy has done a lot
of silly things as mayor, but it doesn’t
surpriseus one whit that whenthe
unimaginable happened, he did every-
thing right and with incomparable style.2
As his popularity soared, Giuliani played
with thoughts of returning to serve a third
term. Time magazine reported on October 8,
2001 that Giuliani had received 15 per cent of
the primary vote, all from write-in ballots. This
result underlinedGiuliani’s undiminished
popularity in the eyes of the public:
On a typical day last week, he found sim-
ple words to console the two children of
Inspector Anthony Infante at St. Theresa’s
in the morning, then managed the ego of
the Rev. Jesse Jackson as he took advan-
tage of Giuliani’s media entourage to
nominate himself negotiator-in-chief. In
the evening, Giuliani called on a stricken
crowd at Temple Emanu-El to stand and
applaud Neil Levin, the head of the Port
Authority, who died helping his employ-
ees escape. Reverting to tireless cheer-
leader,he endedhis day at Yankee
Stadium watching Roger Clemens pitch
against Tampa Bay.3
Bolstered by this show of support from the
public, Giuliani summoned the three leading
mayoral candidates to his office at Pier 92 and
demanded to be allowed to stay in office for
another three months—or else he would enter
the mayoral race against them and win. Al
Sharpton, a supporter for Fernando Ferrer in
the 2002 New York mayoralelectionwas
unimpressedwith this move.Unmovedby
Giuliani’s achievements, he referred to reports
of Giuliani’s heroics on September 11, 2001,
arguing that on that day, “We would have come
together (as a city) if Bozo was the mayor.”
1Jonathan Alter, “Grit, Guts and Rudy Giuliani”, Newsweek, September 24, 2001.
2Alan Abelson, “Up & Down Wall Street: Weighing Consequences”, Barron’s, September 24, 2001.
3Margaret Carlson, “Patriotic Splurging”, Time, October 15, 2001.
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Copyright © 2011 by Sage Publications, Inc.

It was September 1993 and Anna Solari had
been with Spar Applied Systems for six months.
In her capacity as director of human resources,
she had spent her time establishing a baseline
for the division so that she could then create a
departmental vision and strategy for 2000. It
would be one of the most interesting challenges
of her career. Since joining, Anna had gained an
understanding of the division’s future direction
from its leadership team. The team was under
the direction of Stephen Miller, the division’s
new general manager. Since there was internal
and externalpressureto makethe changes
quickly and smoothly, Anna knew the vision
for human resources had to be in place well
before the new year.
yy Spar Aerospace Limited
Spar Aerospace Limited was Canada’s premier
space company and was a recognized leader in
the space-basedcommunications,robotics,
informatics, aviation and defense industries.
The company began in 1968 as a spin-off from
de Havilland Aircraft, and was re-organized
into four decentralized business segments over
a period of two decades: space, communica-
tions,aviationand defenseand informatics
(see Exhibit 1).
The companyemployedapproximately
2,500peopleworldwideand approximately
60 per cent of Spar’s sales originated outside
Canada. Spar’s expertise enabled Canada to
become the third country in outer space and
the companycontinuedto innovatewith
achievements such as communications satel-
lites, the Canadarm, and the compression of
digital communication signals.
yy Spar Applied Systems
Spar’s Aviation and Defense area featured two
distinct businesses, one of which was Applied
Systems Group (ASG). ASG was born through a
merger between Spar Defense Systems and the
newly acquired, but bankrupt, Leigh Instruments
Limited in 1990. ASG designed and supplied
communication, flight safety, surveillance and
navigationequipmentto space,military,and
aerospace organizations around the world. It also
offeredadvancedmanufacturingservicesfor
complexelectronicassembliesand systems.
These government contracts represented close to
100 per cent of ASG’s business.
The flight safety systems products included
deployable emergency locator beacons, and flight
data and cockpit voice recorders that collected,
monitored, and analyzed aircraft flight informa-
tion to assess equipment condition and improve
flight safety procedures. Communications and
intelligence products included integrated ship-
board naval communications systems, ground-
based aircraft navigation beacons, and infrared
surveillance systems. Advanced manufacturing
incorporated the assembly of high quality, low
volume, highly complex electronic assemblies
and systems to meet stringent military and space
specifications.
ASG operated out of two facilities in the
OttawaValley(Kanataand CarletonPlace),
268 CHAPTER 9: TRANSFORMATIONAL LEADERSHIP
Copyright 1997, Ivey Management Services Version: (A) 2001-08-10
Spar Applied Systems
Anna’s Challenge
Prepared by Laura Erksine under the supervision of Jane M. Howell
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Copyright © 2011 by Sage Publications, Inc.

Spar Applied Systems269
employed 340 people (43 per cent manufacturing,
20 per cent engineering and technical, 17 per cent
sales and professional, and 20 per cent other),
and was the only non-unionized area of Spar.
Historically, ASG’s customers were primarily
government-basedand included Canada’s
Department of National Defense, the U.S. Navy
and Coast Guard, as well as organizations in other
internationalgovernments.For government
customers, ASG had cost-plus contracts which
guaranteed a minimum profit for the company,
even if there were delays or occasions when the
project went over budget. Customers were often
told by ASG what they needed rather than deliv-
ering requirements or specifications to ASG.
Due to shrinking defense budgets, the
aviation and defense industry was becoming
increasingly competitive. As government contracts
diminished, ASG soughtmorecommercially
orientedaviationcustomerswho required
fixed-price contracts. This meant ASG would
have to finish on time and on, or under, budget
in order to guarantee a profit. Time to market
was becoming a critical factor in winning bids.
Competitionwas comingfrom larger-scale,
highly flexible, and vertically integrated compa-
nies such as Hughes Aircraft and McDonnell
Douglas who were global in both strength and
influence.Their capabilities,competencies,
and capacities, especially related to technology
and products, overshadowed those at ASG.
Applied Systems had other reasons to be
concerned. More than 70 per cent of its revenues
came from heritage programs that were nearing
completion; it operated in too many fragmented
lines of business; and a significant portion of the
lines of business in their portfolio were nearing
an ‘end-of-life’ status.The AppliedSystems
ComStream
Corporation
HQ - San
Diego, California
Spar Aviation Services
Mississauga,
Ontario Astro,
Ontario
Spar Applied Systems
Kanata, Ontario
Carleton Place,
Ontario
Aviation and
Defence
Spar Space
Systems
Ste-Anne-de-
Bellevue, Quebec
Brampton, Ontario
Prior Data Sciences
HQ - Kanata, Ontario
Mississauga, Ontario;
Richmond, B.C.
Halifax, Nova Scotia;
Pointe Clarie, Quebec
Spar Corporate
Offices Toronto,
Ontario
SOURCE: Company files.
Exhibit 1Organizational Chart
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Copyright © 2011 by Sage Publications, Inc.