The Dimensions of Transformational Leadership and Their Impacts
on the Performance of Construction Business during Covid-19
Pandemic
Erwin Permana
1a
, Widarto Rachbini
2b
, Wasi Widayadi
1c
and Rukun Santoso
3d
1
Faculty of Business and Management, Universitas Pancasila, Jl. Srengseng Sawah, Jakarta Selatan, Indonesia
2
Graduate School, Universitas Pancasila, Jl. Borobudur No.7, RT.9/RW.2, Menteng, Jakarta Pusat, Indonesia
3
Faculty of Economics, Jakarta Islamic University, Jl. TB Simatupang No.1, Daerah Khusus Ibukota Jakarta, Indonesia
Keywords: Transformational Leadership, Performance, Construction Business.
Abstract: As a leadership concept that is concerned with building employee creativity at the individual level to perform,
it is very important to examine the concept of transformational leadership during a pandemic, especially for
the construction industry, because this industry is heavily affected by the Covid-19 pandemic. The purpose
of this research is to analyze the effects of the transformational leadership dimensions on the performance of
the construction business in Jakarta during the Covid-19 pandemic. Structural Equation Model (SEM) with
smart PLS was used to analyze the data. The respondents were businesspeople, members of the Association
of the Construction Service Businessperson (Aspekindo). The statistical analysis shows that individual-
consideration and idealized-influence dimension significantly affect the business performance. On the other
hand, intellectual stimulation and inspirational motivation do not have significant impact on the performance.
This research confirms that the attention to the individuals and the role model of a charismatic and amiable
leader are fundamentals in the construction business during Covid-19 pandemic. In order to make sure the
implementation of individual consideration and idealized influence are in the ethical corridor. this research
recommends further research to use ethics as a variable to study transformational leadership in construction
service during this pandemic.
1 INTRODUCTION
Since the first case of Corona Virus Disease 2019
(COVID-19) in Wuhan China was declared in
November 2019, in one year the virus has spread
worldwide and become a pandemic.
The fast and wide spread of the Covid-19 lead to
world health crisis that have taken millions of lives.
This health crisis affects the economy and make
strategic plans put on hold and replaced by
emergency policy. Many resources are mobilized to
overcome the pandemic. Companies which
previously had expansive business plans turn to
protective plan.
a
https://orcid.org/0000-0002-9975-4755
b
https://orcid.org/0000-0003-3702-5116
c
https://orcid.org/0000-0003-0320-8838
d
https://orcid.org/0000-0002-1582-311X
According to a release by International Labour
Organization (ILO), construction industry is one
sector of many that hit hard by Covid-19 pandemic.
Because of the sensitivity of this sector to economic
cycle, the construction companies and the workers are
susceptible to the drastic decrease in economic
activities due to the pandemic. Consequently,
recovery steps are urgently needed through the
transformation of industrial sector toward
sustainability and digitalization (ILO, 2021).
Based on the information from the Ministry of
Public Work and Public Housing (PUPR) of Republic
of Indonesia, the Covid 19 pandemic has a direct
impact on the cutting of implementation budget, the
delay of project completion, material hindrances,
496
Permana, E., Rachbini, W., Widayadi, W. and Santoso, R.
The Dimensions of Transformational Leadership and Their Impacts on the Performance of Construction Business during Covid-19 Pandemic.
DOI: 10.5220/0010754800003112
In Proceedings of the 1st International Conference on Emerging Issues in Humanity Studies and Social Sciences (ICE-HUMS 2021), pages 496-503
ISBN: 978-989-758-604-0
Copyright
c
 2022 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved

labour, and cost overruns. Out of 5,564 projects, only
2,373 (43%) are completed in 2020 (Kementerian
PUPR, 2020).
Higher company workload which is due to the
pandemic affects significantly on the sustainability of
construction companies. Some companies even stop
their operation. The National Association of
Construction Entrepreneurs of Indonesia stated that at
this time 25% out of 30 thousands construction
companies have not reregistered as members,
probably because they cannot continue their
operation (Ferdinata, 2021).
In order to survive various business situations
(Permana, Purwoko, Widyastuti, Rachbini, & Qosasi,
2020) states that top management is the key to the
company success. Top management plays important
roles to lead the whole company and coordinate the
main functions to reach a company’s objectives
(Gallén, 2009). The ability to face changes effectively
needs leadership behaviour in line with the
transformational leadership (Gopal et al., 2014).
Recently, researchers has taken interest in this topic
because the concept of transformational leadership
has become one of the fundamental elements or
modern organizations.
Transformational leadership refers to the attitude
of leaders creating new ideas and perspectives to
develop strategies towards sustainable and
prosperous companies (Bedi et al., 2016). This kind
of leadership mobilizes the members of an
organization to make fundamental changes through
the development of commitment, spirit and loyalty
among the managers and the staff. Subsequently, the
organization is ready and capable of moving to a new
direction to achieve higher peak of performance
(Mirkamali et al., 2011). Transformation leadership
pushes the subordinates to develop the capability
beyond their individual aspirations for the good of the
company. Through transformational leadership, the
employees is able to reach the performance exceeding
the leaders’ expectation. (Kusdi et. al., 2018).
To summarize the previous explanation, the
experts posit four dimensions of transformational
leadership, namely: (1) idealized influence; (2)
inspirational motivation; (3) intellectual stimulation;
and (4) individual consideration (Acharya & Anand,
2020; ; Hoch et al., 2018; Hoffmeister et al., 2014).
It is beyond doubt that leadership affects business
performance (Fabio, Hubeis, & Puspitawati, 2015;
Syafei, Fahmi, & Hubeis, 2016). In the research of
leadership in the ever changing business organization,
the study of transformational leadership is always at
the forefront (Copeland, 2014; Stewart, 2006). A
transformational leader considers a business
organization as an entity to persuade, motivate, push,
ensure and finally drive changes (Diaz, 2016; Rusch
& Brunner, 2013; Schein, 2017) They encourage
changes by inspiring, motivating, finding growth
opportunity, increasing effectiveness, and guiding the
organization through higher values and ideals
selected as the long term vision of the organization.
The concept of organization performance shows
the view of the whole condition of a company during
certain period of time, which is the results or
achievement the operational activities utilizing their
resources (Schönborn, 2010). The performance of a
business organization is one of the indicators to
measure how good the business organization in
achieving its objectives (Permana, Widyastuti, &
Qosasi, 2020).
Some researchers claim that transformational
leadership is closely related to the creativity of the
followers on individual level (Chang, Chao, Chang,
& Chi, 2018; Gumusluoglu & Ilsev, 2009). It is for
the reason that transformational leaders can inspire
subordinates to exceed their own ability in providing
better service or better technique to complete their
tasks. Moreover, transformational leadership is able
to reduce conflicts by being sensitive to the needs of
the subordinates. This individual consideration may
encourage employees to respect and understand the
positions and the need of others and overcome the
rigid position they possibly hold (Yahaya & Ebrahim,
2016). Transformational leadership consists of four
main dimensions, namely: individual consideration,
intellectual stimulation, inspirational motivation and
idealized influence (Acharya & Anand, 2020; Diaz,
2016; Hoch et al., 2018; Hoffmeister et al., 2014).
The idealized influence is a concept where the
leader becomes the role model for their followers
through amiable and charismatic behaviour, They
admire, respect and trust their followers. The leaders
give more attention the needs of their followers, more
than their own needs, and avoid the use of power for
personal interests (Bono & Judge, 2004; Hoffmeister
et al., 2014; Mirkamali et al., 2011).
Inspirational motivation is a concept emphasizing
the effort on challenging the employees in their work
and creating clear perspective to achieve the
objectives, as well as, leading to the future by
improving the efficiency of the work place.
Inspirational motivation characterizes how far a
leader provides visions to motivate the followers
(Bass & Steidlmeier, 1999; Bono & Judge, 2004;
Deinert et al., 2015).
Intellectual stimulation is an approach from a
leader that encourage their subordinates to try creating
motivations and creativity by changing the approach
The Dimensions of Transformational Leadership and Their Impacts on the Performance of Construction Business during Covid-19 Pandemic
497

and opportunity of the subordinates themselves. The
main goal of the leader is to offer the free flow of ideas
and imagination so that the followers and the
subordinates try to find new techniques and
approaches (Bass & Steidlmeier, 1999; Bono & Judge,
2004; Rafferty & Griffin, 2004).
Individual consideration is a concept of the
interaction between a leader and the subordinates in
line with their own characteristics and capabilities.
The leader give personal attention to individuals by
providing new opportunity to learn based on the
individual’s interests and skills to build a healthy
relationship. Individual consideration also
characterizes how far the a leader cares about the need
of individual follower (Avolio & Bass, 1995; Gopal
et al., 2014; Hoffmeister et al., 2014).
The effect of transformational leadership is based
on its principles which is oriented on and motivates
employees to do better than they have already done.
In other words, the leader can increase the confidence
of employees and in turn, this confidence will raise
the company performance. The fundamental
responsibility of transformational leadership is to
improve moral values, work capacity, and finally the
organizational performance.
Because the measurement of a company
performance is always changing in keeping with the
ever increasing complexity of business environment,
the dimensions of performance term expand
(Valmohammadi, 2017). Senior executives recognize
that the measurements based on traditional financial
accounting, such as return-on-investment and earning-
per-share, may give false signals
for sustainable
improvement and innovation (Kaplan, 2009). The need
to adopt balanced financial performance and non-
financial performance indicators is now accepted
widely (Sneyd & Rowley, 2004).
The experts have provided financial and
nonfinancial performance measurements (Aliyu,
2016; Kaplan, 2009; Sneyd & Rowley, 2004;
Valmohammadi & Roshanzamir, 2015). In this
research, we adopt business performance based on the
dimensions proposed by Valmohammadi & Ahmadi
(2015) for the reasons that those dimensions measure
the improvement of business organization in the main
areas, namely: product and process outcomes,
customer-focused outcomes, workforce-focused
outcomes, leadership and governance outcomes, and
financial and market outcomes.
The purpose of this research is to analyze the
effects of transformational leadership dimensions on
the performance of construction-business companies.
This research is also expected to be the conceptual
basis for the owners / leaders of the construction
business to continue producing high performance
supported by specific steps during this Covid-10
pandemic. Based on this explanation, we propose our
research hypothesis:
• H1: Individual consideration significantly
affects the business performance.
• H2: Intellectual stimulation significantly
affects the business performance.
• H3: Inspirational motivation significantly
affects the business performance.
• H4: Idealized influence significantly affects
the business performance.
2 METHODS
This research was started by doing the literature
review to define and identify the dimensions
constructing the transformational leadership and
performance in the construction business. After the
research variables were defined and the dimensions to
measure the variables were obtained, the research
continues with the questionnaire. Based on the first
phase, the questionnaire has 34 question items. The
measurement scale is Likert scale: 1 = strongly
disagree; 2 = disagree; 3 = neither disagree or agree;
4 = agree; and 5 = strongly agree (Joshi et al., 2015;
Kim, 2011).
According to experts, the number of the
respondents of a proper sample for a quantitative
research are 100 people (Augusty, 2006). The
questionnaire was sent to the respondents who are
members of the Association of Construction Business
Entrepreneurs (Aspekindo). One company is
represented by one respondent. The number of the
respondents filling out the questionnaire are 83
people. Therefore, the return rate of the questionnaire
return is 83%. Sekaran & Bougie (2016) offer a rule
of thumb that for most research, the size of a sample
is between 30 and 500 respondents. Consequently, the
questionnaire answers from 83 respondents are worth
to be examined further.
Structural Equation Model (SEM) with Partial
Least Square (PLS) was used to analyze the data. This
SEM-PLS can perform confirmatory analysis (Ringle
et al., 2005). Confirmatory Factor Analysis (CFA) is
a statistical method to find a set of manifested
constructs or to check a variable based on the
manifested assumptions which construct it (Ghozali,
2014). The consideration to use is because it is
developed based the modelling path and bootstrap, as
well as, it is recommended by (Tenenhaus &
Esposito, 2005). The model of the research is
ICE-HUMS 2021 - International Conference on Emerging Issues in Humanity Studies and Social Sciences
498

Table 1: Validity and reliability criteria.
Cronbach's
Alpha
Rho_A
Composite
Reliabilit
y
Average Variance Extracted
(AVE)
Idealized_influence 0.973 0.973 0.979 0.904
Individual
_
Consideration 0.975 0.977 0.980 0.889
Motivation_Inspirational 0.96 0.962 0.971 0.894
Intellectual_Stimulation 0.978 0.978 0.984 0.938
Performance 0.989 0.989 0.991 0.957
Source: Output: SmartPLS (2021)
reflective model. The objective of this model is data
analysis, where the researchers can further confirm
the result of the results based on the constructed
theories.
3 RESULTS AND DISCUSSION
3.1 The Profiles of the Research
Respondents
The profiles of the research respondents provide
information about the respondents participating in the
research. Their profiles are: based on the gender, 66
males (80%) and 17 females (20%); based on the
company size, 13 small companies (16%), 46 medium
companies (55%) and 24 big companies (29%); based
on the company age, 7 companies (9%) under 5 years,
16 companies (19%) between 5 and 10 years, 34
companies (41%) between 11 and 15 years, and 26
companies (31%) more than 15 years; and based in
the ISO Standards, 35 company (42%) follow ISO
standards and 48 don’t.
3.2 Measurement Model
3.2.1 Outer Model Analysis
Based on the data running using smart PLS software,
the research model is fit. It meets the criteria required
by outer model smart PLS, namely: the values of
cronbach’s alpha & rho_A > 0.6, composite reliability
value > 0.7 dan AVE > 0.5 (Cheung & Rensvold,
2002). Table 1 above shows the output of Smart PLS.
Table 1 shows that all of the criteria of a fit model
satisfy the cut off value. Therefore, the data analysis
may continue with inner model analysis.
3.2.2 Inner Model Analysis
The inner model analysis can be identified by several
indicators: coefficient of determination (R
2
);
Predictive Relevance (Q2); Goodness of Fit Index
(GoF) (Chin, 1998). The calculation for each
indicator is explained below:
1. Coefficient of Determination (R
2
)
Here is the value of R
2
based on the output of
smartPLS software.
Table 2: R
2
Values.
R Square Adjusted R Square
Performance 0.896 0.890
Source: Output SmarPLS (2021)
According to Chin (1998) R square values
between 0.67 and 0 is moderate, and the one below
0.19 is weak. Sarwono (2010) adds that R
2
values
higher than 0.7 is strong. Therefore, all of the
transformational-leadership variables creating the
performance has strong relationship.
2. Predictive Relevance (Q
2
)
To calculate Q
2
, this formula is used:
Q
2
= 1-(1-R1
2
) (1-R2
2
) ……(1-Rn
2
)
Q
2
= 1-((1-0.89)
Q
2
=0.890
(1
)
(2
)
(3
)
This test is used to know the predictive capability
with the blindfolding procedure. According to Chin
(1998) if the value is from 0,02 to 0.15, the model has
low ability to predict. If the value is between 0.15 and
0.35, the model has medium ability to predict.
Finally, if the value is above 0.35, the model has high
ability to predict. This research has Q2 value of 0,89.
Hence, this model has high capability to predict.
3. Goodness of Fit Index (GoF)
The value of GoF in SEM with PLS was
calculated manually (Tenenhaus & Esposito, 2005)
with this formula:
GoF= √ AVE
2
x R
2
GoF= 0.903
(4
)
(5
)
The Dimensions of Transformational Leadership and Their Impacts on the Performance of Construction Business during Covid-19 Pandemic
499

Figure 1: The output of smartPLS algorithm. (Source: Research result, 2021).
Table 3: The output of data processsing with smartPLS.
Sample
Origin
(O)
Sample
Mean
(M)
Deviation
Standard
T Statistik P Value Conclusions
Idealized_influence -> Performance 0.302 0.306 0.139 2.17 0.030 Accepted
Individual_Consideration -> Performance 0.471 0.464 0.141 3.339 0.001 Accepted
Motivation_Inspirational -> Performance 0.292 0.159 0.125 1.237 2.17 Rejected
Intellectual_Stimulation -> Performance 0.038 0.038 0.13 0.294 0.769 Rejected
Output: Research Result (2021)
Tenenhaus & Esposito (2005) formulates that
GoF value is low when it is 0.1, medium when it is
0,25 and high when it 0.38. This research proves it
has GoF value of 0.903. Therefore, this research is
able to capture real phenomenon which is the effect
of transformational leadership on the business
performance of construction service during Covid-19
pandemic. Thus, the inner-model tests have proved
that the research results meet all of the relevant
criteria.
3.2.3 Hypotheses Testing
The structural model of SEM PLS with bootstrapping
process produces t-statistic value. If the t-statistics is
higher than t-table with the level of confidence 95%
(> 1.96), the effect is significant. Picture 1 above
shows Structural Equation Model (SEM) Diagram
run by PLS.
The picture 1 above shows two significant
hypotheses at the level of confidence at 95% (>1.96),
namely the effect of idealized influence on
performance and the effect of individual
consideration on performance. Table 3 below
presents the conclusions of hypotheses testing:
3.3 Discussions
This study attempts to analyze the model of
transformational leadership on the performance of
construction business during Covid-19 pandemic.
The test results on the research model prove that two
dimensions of transformational leadership which are
idealized influence and individual consideration
affects on the business performance. On the other
hand, two other dimension which are motivation
inspirational and intellectual stimulation don’t have
significant impact. From the results, these are the
summary:
First, the research results show that idealized
influence and individual consideration significantly
develop the performance of construction business
during Covid-19 pandemic. In the current situation,
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500

the success of transformational leadership is due to
the real closeness in all things between the leaders and
their subordinate/ employees. The theory of
transformational leadership is manifested in the form
of communicative attitude of the leaders.
Communicative leaders interact more with
employees so that a good and close relation between
the leaders and the employees under pressure is
developed. This excellent relation between the
leaders and the employees create cohesiveness and
togetherness to take the company out of the problems.
This concept is really relevant in this pandemic
situation, where companies try very hard to maximize
the role of employees, as well as, pay attention to the
rationality of the employee numbers during this
pandemic. This is reflected on the company
adaptation to the new normal. Besides adapting to the
standard needs of the new normal, for example, health
protocol and work from home (WFH), companies
reluctantly lay off employees as the last step. During
Covid-19 pandemic, companies reduce production
and operational costs by cutting employee working
hours, as well as, maintain ongoing project to keep
obstacle minimum that can increase the cost.
Employee rationalization is to cut down the surplus
of employees in some work. For example, if
administrative work can be done by one person, a
company lays off the surplus, including warehouse
keepers, staff, operators, and other positions.
Therefore, the remaining employees are able to do
their jobs efficiently. The decrease of employees in
the same positions also reduces unhealthy
competition than can have negative impact on the
company. They can focus on improving the
performance. Eventually, the construction companies
practicing the dimensions of idealized influence and
individual consideration have good business
performance.
Transformational leaders who often convey the
visions and the target to their subordinates surely
make a positive impact on TQM, especially in things
related to continuous improvement. Creativity and
innovation inside a transformational leader will lead
to the improvement of the methods and equipment
used in TQM. The leaders will employ new
approaches and points of view to solve problems. The
stipulation of high standard will encourage the
employees and the companies to fix the weaknesses
continuously. Besides employing new approaches, in
the efforts in increasing performance as well
achieving the standard the transformational leaders
will conduct employee training so they can apply the
new methods in solving company problems, or in this
case, TQM.
Second, the data of the research respondents show
that the majority of construction business employees
are males (82.28%). The literature of management
and social psychology states that the feeling toward
risks of senior male manager is different from the one
of senior female managers. Male managers tend to be
more proactive, more attracted to risks, and over
confident (Li, 2017). Therefore, male executives are
more daring and employ relatively more aggressive
business strategy activities (Yang & Wang, 2014).
This means that from the gender-based approach,
male employees are more likely to apply business
agility concept then female employees are. On the
other hand, the construction business borders on
perfect competition. It can be seen from the numbers
of the Asperindo members which are 536 companies.
The competition situation is more drastic during the
pandemic. This reality demands all the courage of a
company’s components, especially the management,
to take the company out of this difficult situation.
Third, operationally this research provides an
overview showing that the practice of
transformational leaders during the pandemic is
highly valuable. This result is a serious respond to the
business pressure due to the pandemic. All of the
dimensions of transformational leadership have high
values, among others: first, inspirational motivation
(0.979); second, idealized influence (0.976); third,
intellectual stimulation (0.976) and fourth, individual
consideration (0.973). These results prove that during
Covid-19 pandemic, construction companies employ
transformational leadership almost perfectly.
4 CONCLUSIONS
This research constructs theoretical framework which
can guide the practice of transformational leadership
in construction business to deliver high performance
in Covid-19 pandemic through business agility. The
results show that the theoretical framework of this
research can explain the relations between
transformational leadership, business agility and the
performance of construction business. The research
proves that there are significant effects of
transformational leadership on the business
performance, as well as, on the business agility, and
business agility significantly affects the performance.
Based on the statistical analysis, the direct influence
of transformational leadership on the company
performance is lower (0.292, with the level of
confidence of 90%) than the influence of
transformational leadership on the performance
through business agility (0.651, with the level of
The Dimensions of Transformational Leadership and Their Impacts on the Performance of Construction Business during Covid-19 Pandemic
501

confidence of 99%). It means that business agility has
full mediation effect on the effect of transformational
leadership on company performance during the
pandemic. Hence, the application of business agility
approach in construction business becomes more
crucial in the future. The results of this research can
be a reference for businesspeople in the construction
service so they are able to actively develop
operational and marketing agility. Both concept of
agility can be conducted by facilitating the
employees’ need for health protocol and by upgrading
the digital service for the customers to access. The
variable of agility was chosen as the mediation
variable of this research since it is relevant in this
pandemic situation, Suggested further research is to
develop other relevant variables in the pandemic
situation, such as, digital capability and its impact on
construction business during Covid-19 pandemic.
ACKNOWLEDGEMENTS
We would like to thank the Aspekindo for supporting
the data during the research
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