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LED 690 NU Effects of Leadership Styles on Employee Performance Presentation

LED 690

National University


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Running head: EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 1 Effects of Leadership Styles on Employee Performance Yad Bapir National University LED 690 03/09/2020 EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 2 Literature Review Introduction Leadership has been identified as an important determinant on the failure or success of an organization. Gandolfi and Stone (2018) asserts that leadership normally involves developing a business vision and then organizing different business resources through established strategies to steer the organization towards realizing the company’s long-term vision. Leadership also entails managing the negative impacts of various external factors as well as ensures optimal performance of the organization’s internal environment. Apart from leadership, Osborne and Hammoud (2017) state human resource in organizations is also a crucial component that determines the organization’s operational performance. Studies carried out on the impacts of employee performance and organizational performance show a positive correlation between the two variables (Go et al., 2018). Employee performance is greatly impacted by different factors associated with the organization’s internal environment. Talent management processes adopted in a company is one of the factors that affect employee performance. This entails knowledge and skill development programs carried out by the company. Shiqian (2018) argued that effective talent management strategies usually give organizations the ability to improve business performance through increased productivity among employees. EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 3 Furthermore, employee motivation is also a critical determinant for employee performance. Nevertheless, employee motivation is further influenced by leadership styles. Leadership style refers to the approach in which a leader directs and motivates his subordinates so as to achieve organizational goals (Babatunde, 2015). Al Khejah (2018) implies that leadership styles influence employee performance based on how business goals are communicated as well as how relations between the management level and operational employees are streamlined towards achieving the same goal. Al Khajeh (2018) and Gandolfi and Stone (2018) illustrated that a number of leadership styles have been linked with the failure of an organization, particularly through low employee performance. Gandolfi & Stone (2018) asserts that such leadership styles normally leave out certain aspects such as talent management, whereby efficient talent management processes improve employee performance. Furthermore, effective communication is also seen as an important aspect that leadership styles should facilitate in an organization, so as to cultivate a shared expectations on the achievement of the set goals. In this light, this paper aims to explore the effects of various leadership styles on employee performance, namely transactional and transformational leadership theories. Effective leadership aids in reducing the attrition rate (Wen et al., 2019). Therefore, this study will be performed so as to identify the best leadership style that a leader can adopt for managing business resources, and consequently increase employee performance. The latter will be carried out based on the synthesis level of bloom’s taxonomy framework. Employee Performance EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 4 Torlak and Kuzek (2019) define employee performance as the absolute expected product or service output of an individual over a specific period. Various researchers have developed multidimensional frameworks that measure an employee’s performance, such as Deslie (2015) and Pradhan and Jena (2017). Pawirosumarto et al. (2017) claims that the basic elements measured by employee performance frameworks involve an employee’s expertise, skill, knowledge, and the behavior required for carrying out the particular job. Employee performance is considered as a crucial indicator for achieving company goals as well as sustainable competitive advantage (Wen et al., 2019). Dahkoul (2018) asserts that employee performance may be determined by assessing the levels of engagement employees. This is generally because high job satisfaction among employees made them become more engaged with their employment responsibilities. Mokay and Kipyegon (2014) demonstrated that employee engagement was mainly influenced by alignment of organizational goals with individual goals. This was associated with the aligned perception that attainment of company goals would lead to attainment of their own goal. Training also influenced employee performance by enabling employees develops knowledge and skills that will ultimately improve their performance (Mehrzi & Singh, 2016). Training programs commonly depend on the complexity and changes of the global market. Moreover, training ensures that employees meet the innovation levels and the skill set required for the contemporary market environment (Gruman & Saks, 2011). Most importantly, employee performance is determined by job satisfaction levels of employees (Dahkoul, 2018). Job satisfaction refers to the state of an employee to be happy and contented in their job since it can support their livelihood (Gitongu et al, 2016). Job satisfaction is also influenced by alignment between individual and organizational goals. EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 5 There is a positive correlation between individual goals and organizational goals, whereby if they align; employees will be more engaged with their job (Dahkoul, 2018). Effects of Leadership Style on Employee Performance Chua, Basit and Hassan (2018) assert that leadership style is commonly considered a paramount factor that influences employee’s behaviors and attitudes such as organizational commitment. Leadership styles have been claimed to greatly impact decisions, perceptions, and expectations of the organization. Effective leadership styles have the capacity to establish shared goals and expectation, which enhance the employees’ capability to work efficiently and effectively towards achieving organizational goals. Despite that policies are inhumane in nature; it is the leaders that infuse human resources with business procedures so as to perform business functions. Nevertheless, Iqbal (2015) asserts that effective leadership involves utilizing business resource efficiently to enhance its performance. Leadership Styles Leadership style is defined as the way in which a leader directs and controls business operations so as to achieve the set goals (Asghar & Oino, 2018). Leadership styles differ between organizations and industries (Zahari & Shurbagi, 2012). Moreover, leadership styles differ based on situation, for instance emergency scenarios may utilize a completely different leadership style compared to during normal operations. The leadership style, thus, adopted in an organization must address its business needs as well as the working environment (Asghar & Oino, 2018). The most prominent leadership styles adopted in various organizations are discussed below. EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 6 The democratic leadership style largely involves engaging a number of employees in the organization’s decision making process (Chua et al., 2018). Basit et al. (2017) assert that democratic leadership style involves all aspects of a democratic environment such as equal participation, deliberation, self-determination, and inclusiveness. Puni et al. (2014) assert that democratic leaders actively promote group discussion and decisions. Ray and Ray (2012) implied that characteristics of a democratic leader consisted of knowledgeable, influential, helpful, a good listener, situation-centered, and respecting. The autocratic leadership style involves top-down hierarchical leadership, whereby the apex manager is given as much authority and decision making capabilities in an organization (Khan et al., 2015). Akor (2014) states that autocratic leadership style comprises of a centralized organizational structure, whereby the leader(s) normally approve tasks before happening as well as develop business strategies and issue them to be implemented. Iqbal (2015) infers that the leaders could be referred to as bosses, as they tell and the one told follows. Akor (2014) further asserts that leaders in autocratic business styles exclusively make decisions and demand for strategies to be implemented regardless of human considerations. Koech and Namusonge (2012) claimed that laissez-faire leadership style is the most ineffective, dissatisfying and unproductive style. This was mainly because the leaders under this leadership style avoid appraising their employees as well as avoided making decisions. Basit et al. (2017) cited that the leadership style involved disassociation from responsibilities as well as playing the blame card on negative outcomes of an implemented strategy. Ejimabo (2015) further support the inferences made by fellow researchers on the ineffectiveness of the leadership style to improve performance. EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 7 Leadership Styles Focused on Enhancing Employee Performance Wen et al. (2019) proclaim that transformational leadership style entails more than one person interacting with each other, whereby the followers and leaders inspire each and thus develop a transforming impact on both followers and leaders. The leadership style emphasizes on promoting an employee’s process-orientation, development, and commitment based on social values and expectations. Consequently, the employees become motivated and thus perform better than expected. Robbins and Judge (2017) claim that transformational leaders attempt to challenge employees to perform their work in a selfless manner, which normally results in outstanding performance from the employees. Such leaders usually have effective persuasion and communication skills, which enable them to have extraordinary effect on the employees (Asghar & Oino, 2018). The necessary aspects that characterize a transformational leadership style comprise of inspirational motivation, individualized consideration, intellectual simulation, and idealized influence (Bass & Avolio, 1997). Transactional leadership style, on the other hand, involves leaders asserting authority over their subordinates through incentives and sanctions (Dahkoul, 2018). Robbins et al. (2017) further explain that transactional leaders normally direct and motivate their employees to meet particular goals by elucidating task and roles requirements. Normally, transactional leaders set targets for employees, whereby employees were rewarded for their achievement of the goals. On the other hand, those who did not meet the set target were punished (Banks et al., 2016). Various studies on its effects on employee performance shows that despite that the style did not yield long-term employee commitment to the organization, they indeed led to improved employee performance (Saleem, 2015). Furthermore, transaction leaders appraise their employees based on achieved and set goals (Razack et al., 2018). EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 8 Proposition Development This part of the paper will discuss the correlation between dependent variables and independent variables to identify the most suitable leadership theory to be adopted by leaders in an organization. The transformational and transactional leadership styles will be assessed in relation to employee performance. The four basic elements in transformational leadership play an important role in describing the foundational notions that make up the leadership style. The four elements include: individualized consideration, idealized influence, intellectual simulation, and inspirational motivation (Asghar & Oino, 2018). Abbas (2015) claim that leaders utilizing this approach are perceived as psychoanalysts, since they are supposed to learn, comprehend, and assess their employees’ attitudes, perceptions, and thoughts so as to develop ways to improve employees job performance. Leaders using the transformational leadership model should be able to inspire their followers to aspire for higher collective goals, as well as gives employees feedback, help them be able to be more innovative. Such initiatives are aimed at transforming the employees’ attitudes and beliefs on enhancing their performance (Buil et al., 2019). In support of the literature presented above about transformational leadership style, Wen et al. (2019) concluded that the leadership style is the most effect leadership framework for organizations. They asserted that implementation of the transformational leadership style would advertently improve their employees’ performance, and consequently achieve their organizational vision. Therefore, the literature reviewed herein shows that 1) there is a positive correlation between transformational leadership style and improved employee EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 9 performance, 2) There is a positive correlation between transactional leadership theory and employee performance. Chapter Summary Leadership is an important factor that promotes increased organizational performance as well as achieves sustainable organizational growth. Contextually, the leadership style adopted by an organization has been shown to have a great influence on employee performance and, in turn, the organizational performance. The literature review also presented a number of employee performance determinants, which can be assessed so as to come up with strategies that will address the issue. For instance, if low employee performance is seen to be based on job dissatisfaction due to conflict between individual goals and organizational goals, the management may consider how to address such as issue as well as give feedback on how they plan to address it. Furthermore, various leadership styles were discussed above, which show that various theories may be used on a situational basis. Nevertheless, the leadership styles vary in terms of the leader’s responsibilities as well as how it is carried out. This shows that some of them are industry specific, for example autocratic leadership style effectively fits the military or police service. Furthermore, various scholars have emphasized on the need to identify the right leadership style that will facilitate sustainable organizational growth. The literature also shows that leadership styles, indeed, affect employee performance. Both transformational leadership style and transactional leadership style were identified as the most effective leadership styles to promote employee job performance. Transformational leadership was seen to entail various elements addressed by bloom’s taxonomy framework to EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 10 guide leaders as they interact with employees. The aspects are summarized as four compounded criteria that make up the leadership style, namely: individualized consideration, idealized influence, intellectual simulation, and inspirational motivation. Furthermore, transactional leadership style was also concluded as an effective style for improving employee performance. It basic mechanism involves offering rewards in cases of achievement of the set goal, whereas punishment is given to those who fail to meet the target. Nonetheless, transactional leadership style is seen to not support sustainable growth in an organization. References Abbas, Q. (2015). Effect of Leadership Development on Employee Performance in Pakistan. Pakistan Economic and Social Review 47(2), 269-262. Akor, P. U., (2014). Influence of Autocratic Leadership Style on the Job Performance of Academic Librarians in Benue State. Journal of Educational and Social Research, 4(7), pp. 148-152. Al Khajeh, E. (2018). Impact of Leadership Styles on Organizational Performance. Journal of Human Resources Management Research, 2018(2018), doi: 10.5171/2018.687849 EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 11 Asghar, S., Oino, I. (2018). Leadership Styles and Job Satisfaction. Market Forces: College of Management Sciences, 13(1). Babatunde, O., (2015). The Impact of Leadership Style on Employee’s Performance in an Organization. IISTE, 5(1), pp. 193-206. Banks, G.C., McCauley, K.D., Gardner, W.L., Guler, C.E. (2016), A metaanalytic review of authentic and transformational leadership: A test for redundancy. Leadership Quarterly, 27(4), 634-652. Bassit, A., Sebastian, V., Hassan, Z. (2017). Impact of leadership style on employee performance (a case study on a private organization in malaysia). International Journal of Accounting & Business Management, 5(2),112-130 Buil, I., Martínez, E., & Matute, J. (2019). Transformational leadership and employee performance. The role of identification, engagement and proactive personality, International Journal of Hospitality Management, 77, 64-75. Chua, J., Basit, A., Hassan, Z. (2018). Leadership style and its impact on employee performance. International Journal of Accounting & Business Management, 6(1), 8094. Deslie, N. (2015). The Impact of Leadership Style on Employee Performance, 3–49. Hargis, M. B., Watt, J. D., & Piotrowski, C. (2011). Developing Leaders: Examining the Role of Transactional and Transformational Leadership Across Contexts Business. EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 12 Organization Development Journal 29(3) 51-68-7.2 Doukal, Z. (2018). The Determinants of Employee Performance in Jordanian Organizations. Journal of Economics, Finance and Accounting (JEFA), 5(1), 11-17 Ejimabo, N. O., (2015). An approach to understanding leadership decision making in organization. European Scientific Journal, 11(11), pp. 1-24. Gandofli, F., Stone, S. (2018). Leadership, Leadership Styles, and Servant Leadership. Journal of Management Research, 18(4), 261-269. Go, I., Je, O. (2015). Impact of Leadership Style on Organization Performance: A Critical Literature Review. Arabian J Bus Manag Review, 5(5). Iqbal, N., Anwar, S. & Haider, N., (2015). Effect of Leadership Style on Employee Performance. Arabian Journal of Business and Management Review, 5(5), pp. 1-6. Khan, M. S. et al., (2015). The Styles of Leadership: A Critical Review. International Institute for Science, Technology and Education (IISTE), 5(3), pp. 87-93 Koech, P. M. & Namusonge, P. G., (2012). The Effect of Leadership Styles on Organizational Performance at State Corporations in Kenya. International Journal of Business and Commerce, 2(1), pp. 1-12. Osborne, S., Hammoud, M. (2017). Effective Employee Engagement in the Workplace. International Journal of Applied Management and Technology, 16(1), 50–67 EFFECTS OF LEADERSHIP STYLES ON EMPLOYEE PERFORMANCE 13 Pawirosumarto, S., Sarjana, P. and Muchtar, M. (2017). Factors affecting employee performance of PT.Kiyokuni Indonesia. International Journal of Law and Management, 59(4), 602-614. Pradhan, Rabindra & Jena, Lalatendu. (2016). Employee Performance at Workplace: Conceptual Model and Empirical Validation. Business Perspectives and Research, 5. 1- 17. https:// 10.1177/2278533716671630 Puni, A., Ofei, S. B. & Okoe, A., (2014). The Effect of Leadership Styles on Firm Performance in Ghana. International Journal of Marketing Studies, 6(1), pp. 177-185. Razak, A., Sarpan, S., Ramlan, R. (2018). Effect of Leadership Style, Motivation and Work Discipline on Employee Performance in PT. ABC Makassar. International Review of Management and Marketing, 8(6), 67-71. Ray, S. & Ray, I. A. (2012). Understanding democratic leadership: some key issues and perception with reference to india’s freedom movement. Afro Asian Journal of Social Sciences, 3 ...
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 Employee performance is a vital determinant for the success of an organization.
 Contextually, various researchers have illustrated a positive correlation between leadership

and employee performance (NawoseIng’ollan & Roussel, 2017; Wen et al. 2019).
 Leadership style fundamentally determines how leaders and employees coexist within the

 Thus, the purpose of this paper is to present the conceptual framework developed by Wen et

al. (2019), which examines the impact of the transactional and transformational leadership
styles on employee performance.

Literature Review
 Wen et al. (2019) define leadership as the ability to inspire people towards achieving a set of strategic

goals or vision.
 The researchers find out that teamwork is an important aspect of an organization. Teamwork enhances

collective efforts towards achieving organizational goals.
 Leadership styles directly influences employee performance as well as organizational performance.
 Leaders should adopt their leadership style based on the external and internal business environment.

 This means that leadership styles are normally circumstantial, whereby leaders should understand them so

as to effectively apply them to yield a specific outcome.

Literature Review
 Wen et al. (2019) state that contemporary leadership styles focus primarily on

human resource management.
 This means that leadership primarily entails inspiring employees to efficiently and

optimally utilize organizational components to realize organizational goals.
 The transformational leadership style involves leaders and employees engaging with

each other in a way that empowers each (Robbins & Judge, 2017).
 The transformational leadership style entails mutual employee development, which is

based on trust and meeting expectations.

Literature Review
 Transactional leadership style, on the other hand, includes leaders punishing or

rewarding employees based on merit (Mir & Shah, 2016).
 Transactional leaders normally set target and requirements, whereby employees who

meet them get rewards, for instance recognition or promotion.
 Nevertheless, thought leadership encompasses the use of ideas to change employee

attitudes and empower them (Barry & Gironda, 2017).
 Thought leadership normally involve leaders coming up with novel ideas and

engages in a spree of logical arguments, inspirational appeal, and factual illustration.

Proposition Development
 This section will form a conceptual research framework by exploring the relationship between

the dependent and independent variables of the study.
 Transformational leadership entails empowering employees by influencing them to move from

self-interest by giving feedback, setting high performance standards, and acts to meet
employee needs.
 Transactional leadership, on the other hand, entails three main aspects: management by


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