BMM3103 Effect of Leadership Styles on Employee Performance Project Report Answer

Introduction

In the contemporary business environment, it is crucial for firms to manage several aspects of business in order to achieve sustainable competitiveness in the long term. In order to achieve this sustainability, there is a need for effective leadership that can guide the firm and its employees to achieve success (Amanchukwu et al., 2015). Successful management within a firm and overall organisational performance depends on the leadership of the company. The employees working in teams within a firm can be guided and motivated by effective leaders to achieve the goals of the firm. Moreover, effective leadership promotes teamwork and innovative approaches to solving problems. Moreover, leadership also ensures enhanced employee engagement and involvement in decision-making (Amanchukwu et al., 2015). Therefore, leadership is crucial for effective management that positively impacts staff performance in order to achieve success within the firm.

One of the crucial aspects of leadership is the leadership style adopted by leaders to facilitate their leadership responsibilities. Leadership style refers to the behavioural strategies that are used by leaders to carry out their responsibilities by guiding and inspiring their subordinates (Sethuraman & Suresh, 2014). Therefore, it is crucial for leaders to develop and adopt a suitable leadership style that can help them in achieving the organisational goals.

As per research, 38% of new leaders fail to guide their teams successfully within the first 18 months. Moreover, research shows that only 10% of CEOs have been attributed to be natural leaders who have suitable qualities to lead their firms. As a result, it has been found that 77% of business reports lack effective leadership (Djurovic, 2023). Due to these statistics, organisations around the globe spend $366 billion dollars annually on leadership training and development. This results in a 25% improvement in leadership capabilities and a 20% enhancement in performance. Thus, organisations that adopt an inclusive approach to leadership training programs that teach leadership theory and practices are 4.2 times more likely to perform better than those that restrict leadership training for management (Kizer, 2023). Therefore, it is crucial to develop a theoretical understanding of leadership styles which can be used to develop effective leadership skills.

The objectives of the study are as follows:-

1. To study different leadership styles that are relevant in the current management scenario.
2. To study the influence of different styles of leadership on staff performance.
3. To make recommendations for practice in order to provide a theoretical basis for leadership development that can aid leaders in effectively using different leadership styles.

The present report discusses several academic sources that provide an understanding of leadership styles in management. The report provides a brief background and rationale for carrying out this research. Moreover, the report highlights the objectives of the study. Furthermore, the report reviews five academic sources to discuss the impact of leadership styles on staff performance. The report provides a brief summary of finding and carrying out an analysis of the key sources on the basis of similarities and differences between the sources. Finally, the report draws conclusions and provides recommendations on the basis of the discussion.

Review of Literature

1.“Impact of leadership style on Employees Performance: A Case Study on a private organisation in Malaysia by Basit et al. (2017)”

The purpose of this study was to identify the impact of leadership styles on staff performance. The study was conducted in the context of Malaysia where a sample size of 100 employees in a private firm was used to achieve the research objectives. The research emphasised three leadership styles to study their impact on staff performance.

Democratic leadership affects make use of democratic concepts like equal participation and inclusivity. Democratic leaders support and inspire group decisions and group discussions. Moreover, democratic leaders possess characteristics and traits that help them to be good listeners, encouraging and helpful to guide the employees. In addition, a democratic leadership style places emphasis on interpersonal relationships and group involvement (Puni et al., 2014). 

Authoritarian leadership is when the majority of control and authority over decision-making is rested with the managers. The autocratic leaders are the focal point of all organisational operations and have major authority in the key decision made by the firm. Moreover, the autocratic leaders prioritise productivity over the individual needs of the employees (Akor, 2015).

On the other hand, laissez-faire leadership relies on the employees for the decision-making. However, the research criticised this leadership style as one which avoids decision-making, and giving feedback and rewards to the employees. Moreover, it has been characterised as an inactive leadership style that views dissociation from activities as positive. Thus, such leaders avoid active participation in setting goals and objectives for the teams (Ejimabo, 2015).

Data from the study was gathered via questionnaires, and quantitative analysis was done using SPSS software. According to the analysis, democratic leadership enhances employee performance. This is so that they can perform better because this leadership approach inspires employees. Additionally, it was discovered that authoritarian leadership had a detrimental effect on employee performance. This is due to the fact that this management style discourages employee invention and originality, which lowers their performance. Furthermore, because there is more freedom to complete individual duties, laissez-faire leadership has a favourable effect on worker productivity. Overall, the study revealed that the democratic leadership style has a greater positive impact on staff performance, thereby recommending organisations in Malaysia adopt this leadership style.

However, the study has several limitations in the form of accuracy of outcomes. One of the limitations is that the sample data represent the outcome for employees in one organisation. The responses of the employees from other organisations might differ on the basis of the experiences and issues faced by them, which might change the outcome. Moreover, the research also faces limitations in the form of individual biases of the respondents.

2.“Effect of Leadership Style on Employee Performance by Iqbal et al. (2015)”

The purpose of the study is to investigate the effect of leadership styles on staff performance in an organisation. The study focused on participative, democratic and autocratic leadership.

The research stated that examples of good performance of employees include meeting deadlines to execute assigned tasks, demonstrating expertise as well as effectiveness and efficiency in job performance. Therefore, there is a need for strong leadership philosophies that boost worker productivity. As a result, this study was conducted to determine the optimum leadership style for boosting staff performance.

The study provided a theoretical background of the three leadership styles. The participative leadership style is one where the employees participate in the decision-making process. These leaders gather feedback from their teams and use this data to guide decision-making. Moreover, the team members are updated on the situations and given the opportunity to discuss and make suggestions for strategic decision-making. 

The research made use of secondary data sources as well as descriptive analysis using interviews with employees and the CEO of a tractor factory in Pakistan to provide data for qualitative analysis. The research stated that an authoritative leadership style can have a positive impact on employee productivity in the short term. However, excessive use of authority restricts workplace communication and innovation and negatively impacts productivity in the long run. 

Moreover, the research states that a democratic leadership style promotes the delegation of tasks and sharing of responsibilities, thereby facilitating employee development. This increases their commitment towards team goals and enhances their performance. Thus, the research states that this leadership style improves staff performance short term as well as the long term and can be utilised in any type of project.

Furthermore, it was found that the participative leadership style is unproductive in the short term but leads to increased commitment from employees, thereby enhancing productivity in the long run. Moreover, this style leads to a motivated, satisfied and skilled workforce in the long run. However, a drawback is that it is time-consuming for this style to generate outcomes for the firm.

A limitation of this study is that it might be prone to the individual bias of researchers and respondents. However, the research is effective in defining different situations in which each of the three leadership styles is appropriate.

3.“Impact of leadership styles on Employees’ Performance with moderating role of positive psychological capital by Baig et al. (2021)”

The research study aims to find the most effective leadership styles that enhance staff performance. The study focuses on laissez-faire, transformational and transactional leadership. Moreover, the research also explored whether leaders can impact positive psychological capital or positive psychological mindset of employees to enhance their performance.

As per the research, transactional leadership uses a reward system to recognise employees’ achievements. Moreover, transactional leadership use a reward system to engage employees and improve their performance (İşcan et al., 2014).

On the other hand, transformational leadership refers to the capacity of a leader to inspire people with the help of personal attributes and leadership qualities. Transformational leaders are capable of communicating a vision to their followers rather than just appealing to their material interests. Thus, this leadership style is influential in generating innovative ideas. These leaders can influence improved performance from employees, inspiring them and communicating expectations from them (Teoman & Ulengin, 2018).

Moreover, laissez-faire leadership is referred to as a passive management style where leaders do not prefer to take supervisory responsibilities and employees complete their work independently with support from peers. These leaders are dependent on the decisions and capabilities of the employees and stay neutral on all issues, and refrain from offering advice to their employees (Rothfelder et al., 2012). 

The research made use of primary data through questionnaires from employees working in textile firms in Pakistan to carry out quantitative data analysis using PLS-SEM 3.0 software. The research used psychological capital as a moderating variable. The outcomes of the research revealed that there is a positive relationship between transactional as well as transformational leadership and staff performance. However, the outcomes reveal that there is a negative relationship between laissez-faire leadership and staff performance. Therefore, firms with transactional and transformational leadership can effectively utilise the positive psychological capital of employees to enhance their performance.

Although this research is successful in providing effective leadership suggestions to textile firms in Pakistan, a limitation of this research is that it made use of limited data to generalise the research outcomes.

4.“Impact of Transformational and Servant Leadership on Organizational Performance: A Comparative Analysis by Choudhary et al. (2013)”

The study focuses on transformational and servant leadership to find their impact on staff performance. 

The transformational leadership styles have been discussed earlier in the report. The managers who use servant leadership give preference to organisational objectives as well as the welfare of employees over their own objectives. Moreover, they aim to empower the workforce in achieving the common vision of the firm(Gomez, 2022).

The research collects primary data by using surveys based on a five-point Likert scale from service sector employees in Pakistan. Moreover, AMOS and SPSS were used to evaluate the collected data to generate results. The research findings revealed that both leadership styles have positive relationships with organisational learning, which in turn enhances staff performance. Moreover, the quantitative analysis revealed that transformational leadership is more influential than servant leadership in enhancing staff performance.

Therefore, the study stated that the two leadership styles enhance staff performance through the mediating effect of organisational learning. This can help managers in understanding the relevance of leadership styles and organisational learning in improving the performance of their employees. However, a limitation of this research is that it undertook a limited sample size and cultural context. Moreover, it was also focused on firms that primarily aim to maximise profits, thereby being inapplicable to public sector firms.

5.“A Test of the Impact of Leadership Styles on Employee Performance: A Study of Department of Petroleum Resources by Kehinde and Banjo (2014)”

The study aimed to explore the impact of leadership styles on staff performance on the basis of organisational commitment, organisational citizenship behaviour (OCB) and job satisfaction.

The research collected data from employees of the Department of Petroleum Resources, which is a public sector firm in Nigeria. Primary data was collected using questionnaires developed on the basis of a five-point Likert scale, which was analysed using the quantitative technique of regression on SPSS. The study's findings showed that transactional and laissez-faire leadership had no effect on employees' performance since they have a negative link with organisational commitment, work happiness, and OCB. Additionally, it was discovered that transformational leadership enhances OCB, job satisfaction, and organisational commitment. As a result, it was concluded that the most successful leadership style for influencing staff performance is transformational leadership. Therefore, the study recommended that managers should adopt a transformational style of leadership in order to facilitate improved staff performance.

Similarities

The five academic sources provide an assessment of the applicability of leadership philosophies and their effect on worker productivity in modern workplaces. The main consistency across the various academic sources is that they all emphasised the significance of leadership styles and their influence on staff productivity. All of the important sources came to the same conclusion that employee performance is impacted by leadership styles in one way or another. This aligns with a detailed list of academic studies conducted within this area. Thus, this shows that leadership styles are effective in positively influencing staff performance in organisations.

Another similarity is that the articles used a literature review to develop a primary framework to carry out the research. Thus, each research was guided by the theoretical background of existing literature. This is done to get an understanding of existing literature that acts as a basis for original research.

Differences

The primary difference in each of the sources was the context of the research. The research articles were respectively based on private firms in Malaysia, manufacturing firms and services firms in Pakistan and public sector firms in Nigeria.

Another difference was that the articles made use of different leadership styles to conduct the analysis. This is because the research made use of existing literature and the researchers used leadership styles that were comprehensively discussed in the existing literature. 

In addition, the research articles differed on the basis of the data collection and analysis methods. Three sources made use of quantitative analysis with the help of SPSS, one made of quantitative analysis through PLS-SEM 3.0, and one article made use of descriptive qualitative analysis. This difference reflects the preference and availability of technology among researchers.

Although the sources aimed to find the impact of leadership styles on staff performance, there was variance in terms of developing the linkage between the two variables. The first two articles made a direct correlation between the two variables. The article by Baig et al. (2021) developed a correlation between the two variables by using positive psychological capital as a moderating variable that impacts the relationship. Moreover, the article by Choudhary et al. (2013) made use of moderating variables in terms of organisational learning. Lastly, the article by Kehinde and Banjo (2014) made use of organisational commitment, job satisfaction and OCB as moderating variables to develop an interrelationship between leadership style and staff performance. This difference highlights the relevance of leadership styles on the basis of various factors to influence staff performance.

Conclusion

The present report discussed the impact of leadership styles on staff performance. The report provided a brief background and rationale for carrying out this research. Moreover, the report highlighted the objectives of the study. Furthermore, the report reviewed five academic sources to discuss the impact of leadership styles on staff performance. The report provided a brief summary of findings and carried out an analysis of the key sources on the basis of similarities and differences between the sources. Finally, it can be concluded that the leadership styles that are relevant in the current management scenario that have a positive influence on staff performance are:

1. Transformational leadership
2. Democratic leadership
3. Transactional leadership
4. Servant leadership
5. Participative leadership
6. Autocratic leadership (only for the short term)

Reflection

The project provided me with an opportunity to conduct comprehensive research on a topic that I chose from among a given list of projects. The topic was chosen as per my interest in understanding leadership, which I can use in my own professional career. I was able to effectively carry out secondary research on the topic since there was a significant list of articles on the topic. I selected five key sources based on their relevance to the project, the credibility of the publisher and the clarity of teh discussion and conclusion. 

However, I encountered problems in developing a structure wherein I can discuss the key finding and then compare each of them. I overcame this issue by adopting a simple structure in which I discussed each one of them individually and then provided a discussion on similarities and differences in each. In future, if I have to do this project again, I will follow the same structured approach and develop a timeline to ensure timely completion of the project.

Recommendations

The following recommendations are provided on the basis of the discussion in the research study:-

1. Transformational leadership: It is an effective style of leadership to impact the performance of employees. This style can utilise the positive psychological capital of employees effectively to enhance their performance. Moreover, it is more influential for staff performance than servant leadership. Therefore, it can be adopted by managers in order to enhance staff performance.
2. Democratic leadership: This style has a positive impact on staff performance. It facilitates employee development and increases their commitment towards team goals. Thus, it improves staff performance short term as well as long term and can be utilised in any type of project. Therefore, organisational leaders can adopt this leadership style.
3. Participative leadership: it leads to increased commitment from employees, thereby enhancing productivity in the long run. Moreover, it leads to a motivated, satisfied and skilled workforce in the long run. However, it should not be adopted for short-term planning because it is time-consuming for this style to generate positive outcomes on staff performance.
4. Servant leadership: It has a positive impact on staff performance. Therefore, it can be adapted to facilitate organisational learning and enhance staff performance.
5. Transactional leadership: It can utilise the positive psychological capital of employees effectively to enhance their performance and therefore, can be used in the management of the workforce.
6. Autocratic leadership: It improves staff performance only for the short term. However, firms should avoid an autocratic leadership style for long-term planning because it restricts workplace communication and innovation that negatively impacts productivity in the long run.

References

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), 148. http://dx.doi.org/10.5901/jesr.2014.v4n7p148

Amanchukwu, R. N., Stanley, G. J., & Ololube, N. P. (2015). A review of leadership theories, principles and styles and their relevance to educational management. Management, 5(1), 6-14. DOI: 10.5923/j.mm.20150501.02

Baig, S. A., Iqbal, S., Abrar, M., Baig, I. A., Amjad, F., Zia-ur-Rehman, M., & Awan, M. U. (2021). Impact of leadership styles on employees’ performance with moderating role of positive psychological capital. Total Quality Management & Business Excellence, 32(9-10), 1085-1105. https://doi.org/10.1080/14783363.2019.1665011

Basit, 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. https://ftms.edu.my/journals/pdf/IJABM/Nov2017/112-130.pdf

Choudhary, A. I., Akhtar, S. A., & Zaheer, A. (2013). Impact of transformational and servant leadership on organizational performance: A comparative analysis. Journal of business ethics, 116, 433-440. https://doi.org/10.1007/s10551-012-1470-8

Djurovic, A. (2023). 22 Inspiring Leadership Statistics for a Successful 2023. Go Remotely. https://goremotely.net/blog/leadership-statistics/

Ejimabo, N. O. (2015). An approach to understanding leadership decision making in organization. European Scientific Journal, 11(11). https://core.ac.uk/download/pdf/236414463.pdf

Gomez, A.L. (2022). What is servant leadership and how can it empower you team? BetterUp. https://www.betterup.com/blog/servant-leadership-what-makes-it-different

Iqbal, N., Anwar, S., & Haider, N. (2015). Effect of leadership style on employee performance. Arabian journal of business and management review, 5(5), 1-6. http://dx.doi.org/10.4172/2223-5833.1000146

İşcan, Ö. F., Ersarı, G., & Naktiyok, A. (2014). Effect of leadership style on perceived organizational performance and innovation: the role of transformational leadership beyond the impact of transactional leadership–an application among Turkish SME's. Procedia-Social and Behavioral Sciences, 150, 881-889. https://doi.org/10.1016/j.sbspro.2014.09.097

Kizer, K. (2023). 36 Powerful Leadership Statistics [2023]: Things All Aspiring Leaders Should Know. Zippia. https://www.zippia.com/advice/leadership-statistics/#:~:text=78%25%20of%20business%20leaders%20actively,cultivated%20into%20high%2Dquality%20leadership

Obasan Kehinde, A., & Hassan Banjo, A. (2014). A test of the impact of leadership styles on employee performance: A study of department of petroleum resources. International Journal of Management Sciences, 2(3), 149-160.

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), 177. http://dx.doi.org/10.5539/ijms.v6n1p177

Rothfelder, K., Ottenbacher, M. C., & Harrington, R. J. (2012). The impact of transformational, transactional and non-leadership styles on employee job satisfaction in the German hospitality industry. Tourism and Hospitality Research, 12(4), 201-214. https://doi.org/10.1177/1467358413493636

 Sethuraman, K., & Suresh, J. (2014). Effective leadership styles. International Business Research, 7(9), 165. http://dx.doi.org/10.5539/ibr.v7n9p165

Teoman, S., & Ulengin, F. (2018). The impact of management leadership on quality performance throughout a supply chain: an empirical study. Total Quality Management & Business Excellence, 29(11-12), 1427-1451. https://doi.org/10.1080/14783363.2016.1266244

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