Running head: EFFECTIVE LEADERSHIP AND EMPLOYEE PERFOMANCE
Effective Leadership and Employee Performance
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
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
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.
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
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.
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 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
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).
This part of the paper will discuss the correlation between dependent variables ...
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