Running head: EFFECTIVE LEADERSHIP AND EMPLOYEE PERFOMANCE
Effective Leadership and Employee Performance
Yad Bapir
National University
LED 690
04/16/2020
1
Chapter 1: Introduction
Employee performance is a vital determinant for the success of an organization.
Similarly, various researchers have illustrated a positive correlation between leadership and
employee performance (NawoseIng’ollan & Roussel, 2017). This means that leaders are
responsible for empowering their employees so as to facilitate optimal organizational
performance. Nevertheless, leadership directly, or indirectly, influences employee
performance through a number of ways. Gandolfi & Stone (2018) assert that leadership can
influence employee performance through its corporate governance strategy. This is achieved
by establishing a corporate governance framework that promotes employee engagement in
the organization, for instance, allowing employees to take part in the decision-making
process. This plays a pivotal role in empowering employees by making them be aware of
company goals as well as take part in steering the organization towards achieving
organizational goals.
Furthermore, the leadership style also plays a fundamental role in increasing employee
performance. Leadership style differs from corporate governance by a slight margin, whereby
as corporate governance entails controlling and managing internal as well as external
resources so as to enhance organizational performance. Leadership style directly influences
employee performance since it mainly focuses on the interaction between leaders and their
subordinates. Leadership style fundamentally determines how leaders and employees coexist
within the organization; therefore, leadership directly influences employee performance
(Razak, Sarpan & Ramlan, 2018).
Contextually, the purpose of this paper is to determine contemporary leadership styles
that enhance employee performance. It is important to note that an organization is not limited
to one leadership style, but rather adapt a leadership style that will get what needs to be done.
For instance, a democratic leadership style could be used during the decision-making process,
whereas an autocratic leadership style could be used during the delegation of job tasks.
Background of the Study
This purpose of this paper is to determine effective contemporary leadership styles that
improve employee performance. Currently, various leadership models have been developed
to directly influence employee performance. This section will discuss the background of the
study, which shall build upon the study’s thesis.
Historical Perspective. Conventional leadership styles, namely democratic, autocratic, and
Laissez-Faire, are presented as involving personnel administration and thus facilitate
corporate governance (Babatunde, 2015). Nevertheless, leadership styles have gradually
shifted towards human resource management, whereby employees are viewed as the apex
resources in the organization. Employee performance is the main aim of these leadership
styles, which are measured through evaluation of employee job satisfaction, motivation, work
discipline, as well as employee engagement. Razak, Sarpan & Ramlan (2018) assert that
leaders can assess the impact of their leadership style by assessing the aforementioned
indicators and consequently establish the effective leadership style that will enhance
employee performance.
Conceptual Perspective. In this study, contemporary leadership types consisting of
transformational leadership style and transactional leadership style will make up the
independent variables. On the other hand, employee performance will act as dependent
variables in the study. The conceptual model is formed based on the relationship of a
particular leadership style with employee performance in an organization. Accordingly,
employee performance was measured based on work discipline, motivation, job satisfaction,
as well as employee engagement. The degree in which these are upheld in an organization
shall further be perceived on the basis of executing delegated duties, meeting deadlines, as
well as the realization of departmental goals.
Significance of the Study
It is important that there still exists an apparent gap between effective leadership and
employee performance on using the latter to efficiently tackle current market changes that
threaten the sustainable development of organizations (Iqbal, Anwar & Haider, 2015).
Therefore, this is a significant topic since it focuses on current leadership styles and how they
enhance sustainable organizational growth by leveraging internal resources. Gandolfi &
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 the optimal performance of the
organization’s internal environment. Moreover, apart from administration, Osborne &
Hammoud (2017) state that human resource management in organizations is also a crucial
component that promotes the optimal operational performance of an organization.
Research Questions
This paper attempts to explore how transformational and transactional leadership
styles enhance employee performance based on determining employee performance
indicators. Ultimately, the study will determine whether and how transformational and
transactional leadership styles adopted in organizations enhance employee performance.
It is widely inferred by various researchers that improving employee performance
through effective leadership relied on the leadership style established in an organization
(Osbourne & Hammoud, 2017; Al Khajeh, 2018). Hence, leaders should adopt a style that
best suits a situation as well as motivates employee performance. Leadership is currently
viewed as involving persuasion and clarification as well as the ability to assess, validate, and
establish new values of their subordinates that they lead. Effective leadership also entails
offering guidance and sharing of knowledge to employees so as to empower them so as to
consequently enhance employee performance. Leadership style refers to the approach in
which a leader directs and motivates their 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.
Direction of the Study
The intent of this study is to determine how transformational and transactional
leadership styles influence employee performance. Employee performance will be assessed
based on job satisfaction, work discipline, employee engagement, and motivation. Both
transactional and transformational leadership styles will be assessed based on these employee
performance metrics. This will enable us to come to the conclusion of probable situations that
each leadership style could be adopted to enhance employee performance. The study will take
on a quantitative research approach. The primary data collection will be carried out through
questionnaires, which will be distributed to selected companies. The participants will be
made up of various leaders as well as employees from each company.
The questionnaire will entail open-ended questions showing an ordinal level of
measurement to assess employee performance based on the identified indicators, namely
individual response on the level of motivation, work discipline, job satisfaction, and
employee engagement. We will also assess the current leadership style adopted in the
organizations as well as how they influence employee performance based on the established
indicators. This will enable us to reach an objective conclusion on how the current style
improves or affects employee performance. The next set of questions will entail asserting
how their leadership compares to transactional leadership style as well as a transformational
leadership style. This will assist in determining whether organizations still use conventional
leadership styles or have transitioned to contemporary leadership styles. The last set of
questions will assess how transformational or transactional leadership styles will impact
employee performance. The last section basically assesses employee attitudes towards both
transformational and transactional leadership styles in their organizations. The questionnaire
was adopted from Razak, Sarpan & Ramlan (2018).
The conclusion of the study will be determined based on the leadership style that
most participants prefer. Furthermore, the results of the study will feature how motivation,
work discipline, employee engagement, and job satisfaction are effective in assessing how
leadership styles affect employee performance. This is important as it enables us to quantify
the validity of our conclusion.
Chapter 2: Literature Review
Introduction
Leadership has been identified as an important determinant on the failure or success
of an organization. Gandolfi and Stone (2018) assert 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 the 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.
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 had 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 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
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) claim that the basic
elements measured by employee performance frameworks involve an employee’s expertise,
skill, knowledge, and the behavior required for carrying out a particular job. Employee
performance is considered as a crucial indicator for achieving company goals as well as a
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 the
alignment of organizational goals with individual goals. This was associated with the aligned
perception that attainment of company goals would lead to the attainment of their own goal.
Training also influenced employee performance by enabling employees to develop
knowledge and skills that will ultimately improve their performance (Mehrzi & Singh, 2016).
Training programs commonly depend on the complexity and changes in 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 the alignment between individual and organizational goals.
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 the 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.
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 the characteristics of a democratic leader consisted of knowledgeable,
influential, helpful, a good listener, situation-centred, and respect.
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.
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 an 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 show 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).
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
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
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.
Chapter 3: Research Methodology
The purpose of this paper is to determine contemporary leadership styles that enhance
employee performance. It is important to note that an organization is not limited to one
leadership style, but rather adopt a leadership style that will get what needs to be done.
Hence, a mixed research methodology was used to meet the research objectives of the study.
Both the quantitative and qualitative research methods were used in the study so as to obtain
data that encompassed all aspects of the study. Nonetheless, the purpose of this research
methodology is to meet the research plan as well as the target set by the research team.
According to Schoonenboom & Johnson (2017), the research methodology is used by
researchers to show the path by which they formulate the study and objectives, and report
their study results from the data collected as they were carrying out the study. This entails
validating the study results with regard to the initial research objectives. For emphasis, this
section will discuss the study process overview, the research strategy, the relevance of the
research design, the primary and secondary data sources, population consideration, and
determination of the sample size. The limitations of the research will also be addressed,
whereby factors such as cultural diversity will not be explored so as to determine how
leadership influences employee performance. Furthermore, the section will break down on
the data analysis methods used involving qualitative and quantitative data analysis, the
reliability and validity analysis of the collected quantitative data will also be outlined.
Eventually, the section will discuss the next steps of the study, whereby this will consist of
aspects such as ethical considerations, presentation of the result and its use.
Research Design
The purpose of the research design is to establish a suitable framework to be applied in
the research. Abatubenjeh & Jaradat (2018) assert that the research design enables
researchers to decide on the ideal research approach to use because it governs how relevant
data for the study will be collected. Nevertheless, the research design process entails various
interrelated options.
For this study, a mixed type of methods was used. The first phase of this research will
comprise of quantitative data collection methods, which will involve an online survey with a
sequence of well-structured questionnaires. The questionnaires will be disseminated to a
sample made up of representatives of the management and employees through an online
survey platform, particularly the SoGoSurvey online platform. The second design phase, on
the other hand, will involve qualitative data collection methods. This will consist of an
interview that will be carried out on the employees. This will enable the researchers to
determine their opinion on how their current leadership style compares to transactional and
transformational leadership styles.
In the first quantitative data collection approach, a sample made up of five hundred
participants, made up of management-level and subordinate employees, will be used to
collect information so as to determine how leadership influences employee performance. The
participants will represent various departments in a company, and the companies targeted will
involve different market sectors, including technological companies, commercial businesses,
and restaurants. These market sectors were identified due to their high number of employees
as well as different leadership styles are applied in each of them (Oberer & Erkollar, 2018;
Oaya, 2017; Needham, 2018). Razak, Sarpan & Ramlan (2018) identified four indicators that
can be used to assess employee performance; these include the level of motivation, work
discipline, job satisfaction, and employee engagement. The data collected will entail openended questions that will assess the degree to which the current leadership styles used in the
selected companies influence employee performance based on these performance metrics.
This will enable us to come to the conclusion of probable situations that each leadership style
could be adopted to enhance employee performance.
The quantitative information collected during the first stage will be further explored
through qualitative methods involving an interview with a selected number of participants.
Schoonenboom & Johnson (2017) assert that qualitative interviews aid in verifying the data
collected through quantitative methods, whereby they assist in further assisting researchers
understand the context by which particular opinions were given by respondents. The data
collected through the qualitative interviews will verify the information given through the
research, as well as collect information deemed as sensitive by leaders and employees.
Moreover, the data will be compared to data provided in the quantitative phase of the study
concerning the existent leadership styles in comparison to transformational and transactional
leadership styles.
Procedure Overview
The research will entail a number of steps during its execution; the initial step will
involve seeking consent on carrying out research in the selected companies. All three
companies will encompass prime companies in their respective sectors locally. Consent to
use Razak, Sarpan & Ramlan’s (2018) employee performance indicators will not be required
since it is offered as a self-determined set of performance measurements. As aforementioned,
since the quantitative phase will involve an online survey through SoGoSurvey online
platform, a free account will be developed through its online webpage. A presentation will be
carried out in the companies, whereby the researchers will explain that the role of the study is
to identify how the leadership used in the company compares to transformational and
transactional leadership styles, and the potential of using the latter leadership styles will
enhance employee performance. Furthermore, the level of anonymity will be plainly
summarized and discussed. It is during this step that the need for an interview after the
quantitative method will be communicated.
Leaders and employees portraying a high resemblance to applying either transactional
or transformational leadership styles will be selected for the qualitative interview process.
The interview will assess the influence of these leadership styles on employee performance.
This interview will offer insight on how the leadership styles are applied, and how employees
perceive these types of leaderships.
Assumptions and Limitations
The initial assumption of the study is that the best-performing companies, in terms of
visibility and sales, will give consent to carry out the research in the companies. The scope of
the research is how leadership styles influence the performance of employees and how
employee performance is reflected through organizational performance. Another assumption
is that particular departments within the companies will be using a form of either
transactional or transformational leadership style. Moreover, the research assumes that at
least five hundred employees from the companies will take part in the initial quantitative
survey and that at least three employees from each department will take part in this first step.
Nevertheless, the research will be limited to assessing how leadership styles influence
employee performance. This will not include other business management concepts, such as
talent development or knowledge management. Furthermore, the study will not assess other
market-oriented factors, such as customer satisfaction. It should also be noted that the
research should be considered as a descriptive instrument based on the four outlined
predictors. Furthermore, this research will require further revision and may need further
refinement to determine content validity (Razak, Sarpan & Ramlan, 2018).
Next Steps
So as to simplify conclusions, a larger sample of leaders and employees will need to
take part in such research. This means that various companies from a number of industrial
centers should be included in such research. Additionally, the suitable conditions for applying
either leadership style should be determined so as to enable leaders in the various market
sectors and companies to know when to execute them. Furthermore, future research should
determine the role of external factors in the leadership style being used and consequently,
how they impact employee performance as well as organizational performance.
Other research questions to consider for future research involving the relationship
between human resource management practices and leadership styles. This is based on the
fact that transformational and transactional leadership styles are deeply based on human
resource management in an organization. As well, the research could be carried out on
whether leadership styles are influenced by the size and performance of an organization. This
will enable us to determine how the size of a company influences the leadership style applied
in an organization.
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