Impact of Leadership styles on Employee’s Performance

Pakistan Academy of Marketing Journal 2016, Vol. 01, No. 1, 7–13.

Impact of Leadership styles on Employee’s Performance 1 Rashid Saeed, 2 Amjad Hussain , 3 Saadat Ali & 3 Sadique Hussain Department of Business Administration, BZU-Bahadur Sub Campus Layyah, Pakistan Email: [email protected] 

Abstract The study explores the impact of different leadership style (Transactional, transformational, servant and democratic style) on employee’s performance ee’s  performance in a business sector of southern Punjab (Pakistan) area. The survey method ha s been adopted to carry out the r esearch work. A structured multifactor leadership questionnaire (MLQ) was used for data collection. The employees performance was assessed based on two measures take performance and contextual performance. Results of this study are very new to explore the im pact of different leadership traits over employee’s performance in southern Punjab areas (Pakistan). For determining the perf ormance ormance of employees through adopting the behavior of the leadership this is original study for newly and existing leadership behavior knowledge. Any part of this survey research has not been imitated. Key Words: Transactional style, transformational style, democratic style, servant style, performance of employees

1.

Introduction

Leadership can be define as process of motivating, inspiring, monitoring performance, challenging and developing people or employees to achieve overall organization predefine goals and objective. Organization is group of people who work’s together for accomplishment of overall organizational goal in eff  icient and effective way. The word group of people includes personnel from top management to non-managerial employees. Top management i s also responsible for setting overall organization vision, mission, goal and objective. Non-management employees are responsible to performed different types of activities in their respective department to achieve their goals. For achieving the expected target in successful way, effective leaderships become too much necessary because human factor is one who contributes in organization success and failure. Every leader has different skills and traits which help them to get results from their subordinates and followers. These approaches are classified into visionary or charismatic theory under this theory there are two style one is transactional and second is transformation (Burns, 1979) 1979) and second theory is known known as contingent school of thoughts under this theory there are four style directive leader, people oriented, outcome oriented and servant leader (House,1971).  Now the question in that which leadership style is effective the leadership the leadership traits like transactional, transformation, and laissez faire and servant leadership also applied according to situation or given organization context. A specific trait helps to enhance the productivity of both employees and organizations. The transformation leadership style also builds new skill skills among follower to look about their current action in different perspective (Bass and Avolio, 1994). Transformational leadership style encourage follower follower to clear vision, mission and help set high standard for them against which they measure their performance. Transformation T ransformation leadership components have positive impact on employee’s performance (Barbuto, 2005) Transformational leader ha s some positive impact on employee’s performance. In transaction leadership style leader set goals and assign responsibilities and get results, rather than motivating and directing follower during process actual carry down. Transformational leader pay their maximum focus on the employees communication and create the link with the subordinate to their to manager. Transformational leader show their word in such a way which positive effect for the follower and leader. According to the Bass and Avoloi (1994) that the fundamental concern of the transformational leader to create interest among the group so the maximum return can generate with the high quality. There are some leader which avoid to take responsibilities and highly depend up well learned team (Robbins, 2007) this is known as non-transformational leadership style  because there is no relationship exchange between leader and his followers. Such types of leader provide basic but not complete information and impact to their subordinates but such types of style given maximum opportunities to make decision by their subordinates at their expectation or willingness without approval from top authority in case of safety factor. 1.1. Problem statement

Effective leadership is important for increase the performance of the employees so the organization should meet the competition in market. The style of the leader may impact in negative or positive way. Leadership may propose much reason for the negative p erformance. There should be relationship between the leader and organizational commitment. 1.2. Research Objectives This research survey having the following objective To find out the democratic effect on the employees performance To find out the relationship of transformational style and performances of the employees To identity the commonly practiced principals’ transactional leadership styles 1.3. Research questions   

   

2.

Does the democratic style have an effect on staff affective commitment to the organization? Does the transactional style have an effect on staff continuance commitment to the organization? Does the transformational style have an effect on staff normative commitment to the organization? Does the servant style impact on the performance of the employees?

Literature Review

2.1. Employee’s performance

Performance can be defined in tern of effectiveness and efficiency effectiveness means achievement of results and efficiency related with inputs and outcome. It also involves the accomplishment, attainment and execution of takes. Performance can be divided into task performance and contextual performance. Task performance means effectively carry work that helps organization core competencies (Borman and Motowildo, 1997). Contextual performance in dude performance not job requirement but improve employees social and psychology depicts (Borman and Motocvidle 1993). It has future two aspects

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interpersonal facilitation and job dedication interpersonal facilitation means help other developing and motivating others and job dedication psyche indicate means put extra efforts, innovation, rules oriented behavior (Van Scotter and Motowidlo, 1996, P 525). Leadership is also traits that have both effects such as task performance and contextual performance. In current scenario of competitive world in business area the human resources become too much critical factor of production to, manage human resources these is need person that improve the working skills of employees. The leader is someone who developed employees by motivating, coaching, training and encouraging employees to active organization goals by motivating people (Hersey etal, 2001) if leader role ignored the organization achievement loose and cause organization failure (Kotter, 1992) leadership encourage collaboration resolved contradiction among the employees and help employees to introduce and apply new ideas in his, her working activity (Koech, Peris and namusonge GS, 2012) leadership develop employees future skills (Fry, 2003) there are different leadership style that can lead to because employees more productive or it can discourage to put extra efforts for organization effectiveness effective leadership style is also positively effect on em ployees performance (Turner and Muller, 2005) leadership focus on how to use best strategy that get c ommitment, change behavioral acti on in different organization structure to achieve the overall organizational goals(Bass, 2000) leader use different method or different approaches for guiding, directing, inspiring, possessing, encouraging by providing incentive and rewards to individuals or groups to achieve organization effectiveness in competitive market the leadership styles are transformational, transactional and laissez fair and democratic that leader use in different organization depending upon situational factors (Contingency factor). Leader can be classified on basis of theories of leadership 1. 2. 3. 4.

The trait school theory says t hat leadership skills c ome in leader by birth(Turner and Muller, 2005) The school is a behavioral or style schools is consider a relevant from 1940 to 1960which says that leader are developed or made (Turner and Muller ,2005) Third one is known as the contingent school says that leadership is depend on surrounding environment in organization there a re focus major trait is focused directive leader democratize leader, result oriented leader and servant leader(House,1971) The fourth theory is known as visionary or charismatic school, which is best recognized from 1980-1990 (Turner &Muller 2005). According to  business (1979) the two leader traits are under this theory transformational and transactional.

In this article we will focus on different major leader style transacti onal, transformational participative, laissez faire and servant leadership style. 2.2. Transactional style

In this type of style leader is result oriented and he just power on outcomes. He reward good performer and punish for poor results. He sat out clear vision, mission, goals and objective and assigns the task to followers and at end compared performance with set standard. These types of leadership style is appro priate where problem or task is more complex treat from completion and when overall organization performance is suffered. Tra nsaction leader have legal  power on follower he use performance appraisal to give reward for extra ordinary performance and also held responsible for not compliance of set stand ards to the follower (Burns, 1979) these are tree components in transactional leadership style such as contingent reward which depends upon follows vest performance and have effective collaboration with leader and followers active management by exception in which leader oversee employees performance and mange it passive management by exception which a how leader only take action when results occurred or task completed (Bass, 1997) Transactional leader  just consider the basic necessity of their follower not focus how followers can be motivated changed attitude toward job and dedication of employees toward organization (Bass,1985) Transactional leader not develop the employees for future because he not consider employees motivation commitment toward the organization goals there are weak positi ve relationship between transaction leadership style and organization performance(Koech namusonge, 2012) transactional leadership in not appropriate because it not involve followers to participate in goal setting decision-making and empowering them to make it decision in their respective field. It is appropriate and depends upon given situation (Cf. Dundum, lowe and Avolio 2002, Lowe, kroeek and sivasu bramaniam, 1996) such as financial performance employees creativity and ethical improvement of workers. According to rejas, ponce almonce , 2006 Transactional leadership negatively impact on performance while other studies like obiwrun okwu, Akpa and nwankere 20% transactional leadership have positive impact on organization performance and employees performance. H1: transactional leadership trait have a least positive i mpact on employees performance 2.3. Transformational style

According (ogbonna and harris 2002). Transformational leadership is totally opposite from transactional leadership trait. The major focus of this trait is developed connection between leader and other followers inspiration of employees to bring creativity motivating them by effective way commitment on trust on leader ability and more value of followers that help them to exceed their expectation (Bass, 1985) the follower are ready to put extra effort, show integrity, competency consistency in their efforts (Bass, 1985) (katz and kahn, 1978) and individual focus on collective performance (Barling et.al 1996) transformational leader have number of other traits such as idealized influence in which lea der become influential personal for others focus on norms, values and stan dard of community give importance to other win’s rather than own share new ideas and results to followers and celebrate their  success by arranging great seminar etc. The second trait is inspirational motivation, where leader share clear vision provide best way to performance current task and develop them for future by assigning challengeable job. Increase team encouragement by optimization results of organization. The third attribute of transformational lead is an intellectual stimulation. Transformational styles which focus on bring creativity among the subordinates by interviewing find solution of problems through discussion the current task. The fourth element of transformational leadership focus on individrialired c onsiderations by highlight what individual basic need what he demand what he want to achieve and recognized his or her individual performance the past studies like (rejas, ponce , almonte and ponce, 2006) indicate transformational leadership is known as extraordinary concept (Saowalux and peny 2007) burn (1978) because it focus on developing and changing attitude of employees

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Rashid Saeed, Amjad Hussain , Saadat Ali & Sadique Hussain

toward organization mission and objective that encourage them put extra effort for the success of organization. Another study such as prudeep and prabhu (2011) indicate that both transformation and transactional leadership have positively affected the employee’s performance. An other study which is carried out in Pakistan indicate that both transactional and transformational studies have positive transaction style is more effective (Paracha, Qamar, Mirza, Hassan and Waqas 2012). Charismatic leadership trait indicate the boss have clear vision and have effective to clear direction and motivation which leader to innovation and creativity and increase employees performance in term put extra efforts show citizenship behavior this types of leader have some negative point such as when he/she leave the follower suffer. (Michael, 2010) H2: transformational style has a strong positive impact on employee’s performance 2.4. Servant leader

Servant leader is someone who focuses on moral love of employees by protecting them given priority their requirement necessity and wants (Winston 2002) Humility in which employees is supported recognition from leader and given respect to employees (Dennis and Bocarnea, 2005, Cromis 1998). Third one is vision in which leader would be happened in conning three to five years, fourth is trust which consist of integrity, consistency, competency, loyalty fifth is empowerment of employees how to handle and make decision in their daily life. H3: servant leadership style has positive association with the employee’s performance 2.5. Democratic styles

A types of leadership style in which, problems salving and decision making process is also decentralized to low level and final decision is made after the consul of all relative person (Tonnebanum and Schmielt, 1958). It has weak point of slow process and low accountability of participants. The transactional leadership trait, autocratic only effect tax performance but transactional democratic and laissez fair also have effect on both task and contextual performance.Leadership is a process of influencing, guiding, inspiring, directing followers toward a clear vision, goals and target and developing people or em ployees that help organization to achieve competitive advantages. H4: democratic leadership style have a likely positively impact on employees performance. Theoretical Framework 

2.6. Hypothetical development H1; Transactional leadership trait have a least positive impact on employees performance H2; Transformational style have a strong positive impact on employees pr oductivity H3: Servant leadership style has positive association with the employees’ performance H4: Democratic leadership style have a likely positively impact on employees performance

3.

Research Methodology

Random sampling technique is used for finding the purpose of the research. Test hypothesis from the collected data. This research is based only on the primary data from the specific area of southern Punjab. Be seeing the structures of the purpose questionnaire are developing after studying the comprehensive literature. Questionnaires are filled from the various industries of the southern Punjab. Likert scale like (1for strongly agree, 2-agree, 3- neutral, 4-disagree and 5 for strongly disagree) is used for obtaining the response of the questionnaires. The target population of our research from the southern Punjab District ( Ranj pur, D.G.Khan, Muzafar Garh and Layyah). There are 29 different types of the question relating with the variable of independent and dependent variables which are ask from the total sample size which is 150 respondent. Questionnaires also consist on the demographic parts for meeting the research pur pose.

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4.

Data analysis Technique

After collection of the questionnaire response, statistical package for the social science (SPSS) are used for analysis of the data and measurement of the reliability of the questionnaires’. Frequency distribution, reliability analysis, correlation analysi s and regression analysis are obtained from the SPSS-19 for finding the research purpose. 4.1. Scale: ALL VARIABLES Table 01 showing the case processing summary of the result and showing all the variable are enter for obtaining the research result as well as showing the  procedure of deletion which is depending on all the given variables. Table one show that all the respondents which are valid respondent and excluded a nd show that all the respondent are valid excluded is 0% from the data.

Case Processing Summary Cases

Valid Excludeda Total

 N 100 0 100

% 100.0 .0 100.0

a. Listwise deletion based on all variables in the procedure. 4.2. Reliability Statistics The research data show the reasonable reliability and validity which is .68 which is nearby the standard level but it is also acceptable for the further research  purpose the table 02 show the Cronbach’s alpha model consistency score. This table shows the r eliability of all five variables. Reliability Statistics Cronbach's Alpha N of Items .68 28 4.3. Frequency distribution Questionnaires tools are used for obtaining the response and collecting the data from the various places. Give below table showing the frequency of the respondent which gives the response of the questionnaires for meeting the response.

Gender

Age

Occupation

Qualification

Male Female Under 25 25 – 40 40 – 60

Frequency 75 25 30 53 17

Percent 75 25 30 53 17

Valid 75 25 30 53 17

Student Professional Businessman Employees Up to secondary school Higher education

18 12 15 55 30 70

18 12 15 55 30 70

18 12 15 55 30 70

There are 75 male and 25 female which given the response of the questionnaires all of that are include in the SPSS for obtaining the result. 30% of the respondent belongs the age which is less than 25 years and their total frequency is 30 from all of the respondents. There are the 53 people which belong to the age range of 25 to 40 years and all of from the different place. The respondents which are belong up to 40 and less than 60 were found 17% of the total respondent which give the response, their t otal frequency is 17 from a ll of the respondents which include in the survey research. 4.4. Correlation analysis For checking the relationship between the dependent variables and independent variables correlation analysis are used, with including range -1 to +1. The value of the significant relationship between 0.01 to 0.05.

ts_MEAN ts_MEAN

trs_MEAN

ss_MEAN

ds_MEAN

ep_MEAN

Pearson Correlation Sig. (2-tailed)  N Pearson Correlation Sig. (2-tailed)  N Pearson Correlation Sig. (2-tailed)  N Pearson Correlation Sig. (2-tailed)  N Pearson Correlation Sig. (2-tailed)  N

1 100 -.136 .178 100 .315** .001 100 -.124 .218 100 -.485** .000 100

Correlations trs_MEAN -.136 .178 100 1 100 .567** .000 100 .235* .018 100 .671** .000 100

ss_MEAN .315** .001 100 .567** .000 100 1 100 .301** .002 100 .481** .000 100

ds_MEAN -.124 .218 100 .235* .018 100 .301** .002 100 1 100 .552** .000 100

ep_MEAN -.485** .000 100 .671** .000 100 .481** .000 100 .552** .000 100 1 100

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Rashid Saeed, Amjad Hussain , Saadat Ali & Sadique Hussain

ts_MEAN ts_MEAN

Pearson Correlation 1 Sig. (2-tailed)  N 100 trs_MEAN Pearson Correlation -.136 Sig. (2-tailed) .178  N 100 ss_MEAN Pearson Correlation .315** Sig. (2-tailed) .001  N 100 ds_MEAN Pearson Correlation -.124 Sig. (2-tailed) .218  N 100 ep_MEAN Pearson Correlation -.485** Sig. (2-tailed) .000  N 100 **. Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed).

Correlations trs_MEAN -.136 .178 100 1 100 .567** .000 100 .235* .018 100 .671** .000 100

ss_MEAN .315** .001 100 .567** .000 100 1 100 .301** .002 100 .481** .000 100

ds_MEAN -.124 .218 100 .235* .018 100 .301** .002 100 1 100 .552** .000 100

ep_MEAN -.485** .000 100 .671** .000 100 .481** .000 100 .552** .000 100 1 100

The given above table show the ts = transactional styles, trs= transformational style, ss=servant style, ds= democratic styles and ep stand for employees  performance. H1: Transactional leadership trait have negative impact on employees performance

As we suggest that there is positive relationship among the variable like transactional leadership style and the employees performance. But it is opposite from that majority of the population not like the transaction leadership style because leader only concern with the result outcome otherwise it punish the employees. Employees not like that type of behavior because they also have some moral, personal feeling and they also face va rious other social problem but they cannot meet the periodical outcome. So as given above the mention table that there is negative relationship among the dependent variable and inde pendent variable with the score of the ( -.485** at P= 0.000) which lies in the significant level. H2: Transformational style have a strong positive impact on employees productivity.

There is positive relationship between the transformational leadership style and the employee’s performance. The given above table of correlation show the score of the transformational leadership style which is 0.671** at P= 0.000 which clearly show that the employees performance positively correlate with the transformational style. In the other word we conclude that the leaders who adopt the transformational style can enhance the performance of the employees. We accept the hypothesis H2 because it alpha level is less than the standard level.

H3: Servant leadership style has positive association with the employees’ performance

The above correlation table shows that there is moderating relationship between the servant leadership style and the employee’s performance. The table show the score of the servant leadership with the employees performance which is 0.481** at P= 0.000. With the 99% of the confident interval vale show the  positive relationship among the dependent variable and independent variable. We ac cept the H3 because it p value is less than the alpha level which is consider the 0.05.

H4: Democratic leadership style has positively impact on employee’s performance

There is positive impact of the democratic leadership behavior on the performance of the employees which is shown in the given above table. The value of the independent variable show the .550** at the P = 0.000 with the performance of the employees. The given value shows that there is highly relationship among the employee’s performance and democratic leadership style but in some manner it can increase the performance of the employees. A s we suggest the hypothesis is accepted because it value is less than the alpha level which is mention in the last of correlation table. 4.5. Regression Analysis Regression analysis is used for predict the effect of the independent variable on the dependent variables also measuring the importance of the independent variable with respect to the dependent variable. In this research survey we used the leadership style and the employee’s performance. The given below table showing the model summary of the R and R square value is 0.813 which show how much overall variation in the ( employees performance) dependent variables. . R value in the given below table indicating the simple correlation among the variables which is 0.92 which indicate higher degree of the correlation. R square indicates to what extent the independent variables determine the employee’s performance. Here there is some mann er strong relationship among the variables. The result clearly indicates that there is 80.5 % variation among the variables.

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Model Summary Model R R Square Adjusted R Square 1 .902a .813 .805 a. Predictors: (Constant), ds_MEAN, ts_MEAN, t rs_MEAN, ss_MEAN

Std. Error of the Estimate 1.15721

Regression analysis regarding the independent variables and dependent variable are given below table. The given table clearly indicates over all fitness of the variables show how regression equation are fitted the data. F value score clearly show that the 73.15 % of the data fitted with the significant score 0.000 at alpha level 0.01 significant. So we conclude that the all (transactional style, transformational leadership, democratic leadership and servant leadership styles) independent variables are significant with the dependent variable like employees performance. The significant level indicates there is significant of the regression model which was run. Here p value is less than the 0.05 which show over all regression model are significant predict the outcome as well as with the 4 score of the confidence. ANOVAb Sum of Squares df Regression 552.573 4 Residual 127.217 95 Total 679.790 99 a. Predictors: (Constant), ds_MEAN, ts_MEAN, trs_MEAN, ss_MEAN  b. Dependent Variable: ep_MEAN Model 1

Mean Square 138.143 1.339

F

Sig. 73.159

.000a

The given below table show the beta coefficient for showing the actual regression equation. This table shows information for predicting the variables. It also determines whether the independent variables are significantly to the model. According to the giv en table there is relationship between all of the variables. In the given out put the value of the t statistic show that there positive relationship among the all of variable except the transactional leadership styles with the employees performance having the negative relationship . Transactional leadership having the -9.981 with the Sig.0.000 score, transformational leadership style 5.370 and servant leadership styles 5.871and the democratic leadership styles ha ving the score of T- Stati stics 6.237. That entire variable lies within the significant level which is considered 0.01 to 0.05. So we can draw the regression equation for the employees performance is

Y = 10.023+-.516+.229+.273+.344 Coefficientsa

Model 1

(Constant) ts_MEAN trs_MEAN ss_MEAN ds_MEAN a. Dependent Variable: ep_MEAN

5.

Unstandardized Coefficients B Std. Error 10.023 1.362 -.516 .052 .229 .043 .273 .046 .344 .055

Standardized Coefficients Beta -.524 .316 .377 .299

t

Sig. 7.358 -9.981 5.370 5.871 6.237

.000 .000 .000 .000 .000

Conclusion and findings

The main objective of our research survey is to obtain the result that whether there is impact of the leadership styles on the performance of the employees. In this survey we examine the four leadership styles which is (transactional leadership, transformational leadership, and democratic leadership and servant leadership styles) for measuring the relationship with the employees performance. Conclusions of this survey depend on the se lected data and ta rgeted populations. Leadership style is one of the major tool for measuring the performance of the employees. From all of the research we draw conclusion that employees performance can increase i f the leader provide the good behavior in the organizati on. Finding of our research show that t ransactional leadership style has the negative impact on the performance of the employees because they want only result not concern with the any type of the personal feeling or any other activity whether how mush important or not. So we can say that other variables like the democratic, transformational, servant leadership style can enhance the performance of the employees. This research only covers the southern areas of the Punjab. But it can enhance and their result may change in the outcome. By looking on the above result we recommend that there are some intrinsic rewards which can enhance the performance of the employees. Delighted motivation can enhance the performance of the employees. Hence we can say that every action of the leader become reaction like the transaction leadership styles employees leave the organization due to personal social life. Moreover with starting the new business leaders must recognized the needs and want of the workers and ensure all categories staff. Maximum benefit can give to organization and employees from the leader.

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Rashid Saeed, Amjad Hussain , Saadat Ali & Sadique Hussain

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