Based on a random sample of employees (n = 439) in the United States, this study examined the effect of transformational leadership and transparent organizational communication on cultivating employee organizational trust during an organizational change event. We also investigated the interplay between transformational leadership, transparent communication, and organizational trust, and their impact on employee openness to change. The findings suggested that transformational leadership and transparent communication were positively associated with employee organizational trust, which in turn, positively influenced employee openness to change. Theoretical and managerial contributions of the study were discussed.

Introduction

It has become a norm for organizations to engage in strategic change initiatives to remain competitive (Johansson & Heide, 2008). Nevertheless, characterized by uncertainties and ambiguities (Corley & Gioia, 2004), approximately 40%–۷۰% of change initiatives fail (Burns, 2000). Organizational change not only costs time and money, but, when done inappropriately, also deteriorates employee morale and commitment, resulting in lower work efficacy and higher turnover rates (Chawla & Kevin Kelloway, 2004; Eby, Adams, Russell, & Gaby, 2000; Kotter & Schlesinger, 1979). Organizational changes have increased pressure on organizational leaders, who play an important role in affecting organizational change implementation (Pawar & Eastman, 1997). An American Management Association survey indicated that leadership was the top determinant of successful change, followed by corporate values, and communication (Gill, 2002). Successful leadership not only develops vision, strategy, and culture for change, but also empowers and motivates employees in change engagement (Gill, 2002). Transformational leadership in particular has received a great deal of research attention in change management. Transformational leaders are viewed as charismatic and visionary leaders, and can garner identification, trust, and confidence from the employees. Research has consistently shown the positive impact of transformational leadership on employee outcomes across situations including organizational change (Herold, Fedor, Caldwell, & Liu, 2008; Paulsen, Callan, Ayoko, & Saunders, 2013). The power of transformational leadership to facilitate change implementation lies in its ability to create and communicate a strong vision, provide empowering opportunities, encourage employees to think beyond self-interests, and boost employees’ confidence in adapting to a new environment (Carter, Armenakis, Feild, & Mossholder, 2013; Herold et al., 2008). Another major factor, which emerged from previous research, that impacts change management, is strategic internal communication. Change initiatives that lack strategic internal communication inevitably fail (Elving, 2005).