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Effect of Leadership Styles on Employee Performance: An Empirical Study

1Research Scholar, 2Assistant Professor 1,2Dept. Of Management, Rayalaseema University, Kurnool, A.P., India


In this global competitive environment, effective leadership style is important to diminish the steady loss rate. From the
effective leadership styles just it is conceivable to accomplish hierarchical objective profitably. Leadership styles affect on the employee
performance and productivity. A leader can be characterized as a person who appoints or impacting others to act in order to complete
determined destinations. Today's organizations require successful leaders who comprehend the complexities of the quickly changing
worldwide environment. The objective of this study is to analyze the impact of leadership integrity on employees performance. This
study attempts to explain that leadership honesty and integrity is the source of enhancing job satisfaction and employees commitment.
The empirical study followed the qualitative approaches, Secondary research will be integrated. The reason for this is to be able to
provide adequate discussion for the readers that will enable them to see more about the issue and the various variables that include
with it. Then again, sources in auxiliary research will incorporate past research reports, news paper, magazine and journal content. In
the event that the assignment is exceptionally organized and the leader has great association with the employees, viability will be high
with respect to the employees. Existing discoveries on diaries and existing information on books will be utilized as optional research.
The interpretation will be conducted which can account as subjective in nature. To validate the research objective different scholarly
views are presented of each independent variable effect on the dependent variable. Toward the end it was concluded that the
transformational leadership style and transactional leadership style are most useful in long term and effect on employees is positive. At
end a few recommendations are discussed.

Keywords: Employee performance, Transformational Leadership Styles, Transactional Leadership Styles, Employees
commitment and Job Satisfaction.

Leadership is a process by which an executive can direct, guide and influence the behavior and work of others toward the
accomplishment of specific goals in a given situation. Leadership is an ability of a manager to induce the subordinates to work with
confidence and zeal. Leadership can be defined as the capacity to influence a group realization of the goal. Leaders are required to
develop the future vision, and to motivate the organizational members to want to achieve the visions and to improve the performance.
According to Adair, Leadership is the ability to persuade others to seek defined objectives enthusiastically. It is the human factor
which binds a group together and to improve their performance and to direct them towards goals.

Leadership has become the crux of issues in the corporate world of today. This is because it is responsible for the
harmonization and integration of both human and material resources to produce the output or services for which the body is created.
It has been one of the mans major concerns since the days of antiquity. Leadership was a matter of concern in the days when
Alexander set out with a small band of Greeks to conquer the world, when Caeser led his troops across the Rubicon and when
Columbus set out with a mutinous crew in leaky boats to discover a new world.

In the modern times, during the great Economic Depression, the American people needed someone to restore their
confidence and to provide a method of combating the economic crises they were facing; Franklin Delano Roosevelt became a leader to
accomplish these tasks.

The modern day leaders all over the world have taken their places in guiding the thoughts and efforts of people to the
achievements of the common goals. Coming to the business organizations, people working there need leaders individuals who would
be instrumental in guiding the efforts of groups of workers to the achievement of goals and objectives both of the individuals and the
organization. Directing others for the purpose of accomplishing a common task is necessary and desirable as long as we must
undertake tasks which one man cannot accomplish without the assistance of others.

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Thus, leadership has been recognized to an increasingly greater extent as one of the significant aspects of human activity.
Because of the interest was taken by laymen as well as social and behavioral scientists, the qualities which distinguish the one whom
others obey him, as also their interactional behavior patterns, have often been the object of speculation and scientific investigation.
There is a tremendous growth professionalizing the management of large scale industries. Every major activity has been given under
the care of professional managing. The owners of capital have shifted the job of managing to the professionals. The success of the
industry very much depends on the ability of the managers to manage the activities on a scientific basis. The bigger industries can
afford to have the service of professional people paying huge salaries and the entrepreneurs must naturally acquire the quality of
professional management in order to successfully run the industry.

Professional management is a combination of greater learning and wide experience. There is a growing tendency of large-scale
industries entering into sickness. The causes may be many, but among the factors, the vital reason is attributed to the professional
leader. Most of the industry's failures are leadership failures. A leader as a manager must have the ability to adopt necessary style(s) in
accordance with the situation. The 21st century shapes the future organization. In the last century, the machine was the model of the

However, organizations in this Millennium will not be Machines, they will be characterized by alliances, networks, working
groups and temporary, ad-hoc, fluid and amoeba-like organizations. Charles Handy, a great management philosopher of current time
has argued that 21st-centuryorganizations will not have plans, but only options, they will not seek obedience, only encourage
participation and involvement and the managerial role will be restricted to the coordinator, partner, facilitator, and catalyst (or)
leadership roles. For ages, Leadership has been a subject of much civil argument and pondering and how the diverse styles of
leadership inspire distinctive reactions from devotees.

In corporate setting the flow of these two elements "the leader" and "the led" assume a key part in molding the
predetermination of the organization. The study took after the positivist worldview which gave a target reality against which claims
were looked at and truth was found out. In this distinct study, the objective has been to find the example of circumstances and end
results, which can anticipate marvel. As a part of the descriptive research strategy, information gathered has been subjected to the
reasoning procedure as far as requested reasoning.

Individuals will not be given authority, they will have to earn it. And, leaders will be those who will not receive power from
position (or) election but through competence and commitment. Leaders will be those who will make things happen, prove themselves
in times and space, and are skilled enough to handle virtual reality. They will be confident and trusted exuding belief in themselves,
showing respect for others, with a passion for excellence. These will be their key characteristics.

Many Indian companies including MNCs are not doing well as they are unable to withstand competition, pressure and take
quick right decisions. A manager has to develop good leadership quality in order to take the company to the top. The style keeps
changing as the situation with the types of people. An ideal example is Steve Job, founder of Apple computer processors by
consummating charm, infections enthusiasm and overdose of charisma. This really helped the company to take the lead.

Definition of Leadership:
The word leader stems from the word Leden which implies to show the way. The true measure of successful leader is his
ability to lead by example and live the brand values of his organization. A true leader is the one who motivates and inspires others to
go in the right direction along with everyone else and aim to achieve the organizational goals. The foremost among leadership
attributes are values, integrity and honesty. Trust and personal responsibility in all relationships successful leaders have a firm belief in
these values and they walk the talk by setting an example.
Koudri suggests that leadership is to deal and cope with change, focusing on the long-term and the big picture, not always
doing to safe himself in fact to take risks, and concentrating on people and their values, not just the bottom line.
Koontz ODonnell defines leadership as influencing people to follow the achievement of common goals. It is the ability to
exert interpersonal influence by means of communication towards the achievements of goals.
Jim Collins published an article in the Harvard Business Review about leadership good to Great. In that article, titled
leadership, the most powerfully transforming executives possess a paradoxical mixture of personal humility and professional
willthey are timid and ferocious. They are focus on empowerment rather than control for the development of employees

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In the modern times, during the great Economic depression, the American people needed someone to restore their
confidence and to provide a method of combating the economic crises they were facing, Franklin Delano Roosevelt became a leader to
accomplish these tasks.

In India, Mohandas Karam Chand Gandhi and his predecessors M.G.Ranade, B.G.Tilak and Lajpat Rai provided the much-
needed leadership to get India out of the clutches of the British regime. The modern day leaders all over the world have taken their
places in guiding the thoughts and efforts of people to the achievements of the common goals.

An effective leader influences followers in a desired manner to achieve desired goals. Different leadership styles may affect
organizational effectiveness or performance. Transformational leadership is a stronger predictor of both job satisfaction and overall
satisfaction. In this study, the organizational performance is influenced by a competitive and innovative culture. Organizational Culture
is influenced by leadership style and consequently, leadership style affects organizational performance.


In this study, there are different leadership styles such as transformational and transactional leadership styles which taken as
independent variables and employee commitment, job satisfaction, job involvement and organizational behavior would be taken as
dependent variables. A conceptual model is developed on the basis of their relationship with a view to analyze which one leadership
style is most appropriate to improve the performance of employees of an organization. Consequently, performance was operationally
perceived as: executing defined duties, meeting deadlines, team input, and achieving departmental goals. The above should lead to
efficiency, specialization, effective feedback and good organizational relations. Both terms (leadership and employee performance)
cohesion should be proved through styles and approaches in attempt to cause efficiency which variable in this study was leadership and
indeed Carter defined leadership as the ability to employ managerial competencies to organized performance processes by inspiring,
igniting and motivating teams to meet set organizational goals.


The Fred Fiedler presents the theory of Fiedler leadership contingency model theory in which he proposed that effective
employees performance depended upon the proper match between a leaders ability to lead is contingent upon situational factors that
include the leaders capabilities, preferred style, and behavior, competency of employees. This theory propounded that leaders should
adopt that style which best to the situation and immediately stimulate the employee performance. Leadership is increasingly
understood to involve persuasion and explanation as well as ability to identify, affirm, and renew the values of the group the leader
represents. Managerial expertise, technical skills, cultural literacy and other relevant knowledge and skills are not sufficient virtues for
the leaders whose lives will be dedicated to public services. An effective leader has a responsibility to provide guidance and share the
knowledge to the employee to lead them for better performance and make them expert for maintaining the quality. And become head
of all team members is such a great responsibility. The introduction of the clear standards of leadership promotes the core values and
maturity on their role and responsibility.

Leadership styles are the consistent ways in which leaders interact with their subordinates across situations. Styles are
developed partly as a function of leaders personality and past experiences and partly as a function of their response to organizational
culture. Leaders create organizational culture and are simultaneously influenced by the culture to assume certain style.

This is a leadership style where one or more persons engage with others in such a way that leaders and followers raise one
another to higher levels of motivation and morality. This is a process that changes and transforms and also it is concerned with the
emotions, values, standards, ethics, and long term goals. A transformational leader motivates followers to accomplish more than what
is usually expected. The sum becomes more powerful than its parts.

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4 I's of Transformational Leadership:

1. Idealized Influence:
Leader serves as an ideal role model for followers and is admired for this.
2. Inspirational Motivation:
Transformational leaders have the ability to inspire and motivate followers.
3. Intellectual Stimulation:
Transformational leaders challenge followers to be innovative and creative.
4. Individualized Consideration:
Transformational leaders demonstrate genuine concern for the needs and feelings of followers which brings out the best efforts from
each individual.

Fig.1. Vision of Leadership [source: Bass & Avolio, 1990]

Fig.2.Componenst of Transformational Leadership

Steps for Transformational Leadership:

Developing Vision:
Starts with creating a vision
Vision that is exciting and attract potential followers
Selling the Vision:
Constantly sell the vision and build a strong network of high potential
Road Map:
Transformation leaders have a clear vision
Have a fair idea about the direction to move and want followers to move in the same direction
Ready to accept failures
Leading the charge:
Transformation leaders remain in the force-front during the action
Always visible and stand up to be counted
Bolster and infect the followers with commitment and enthusiasm

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Application of Transformational Leadership:

Provides ideas as to what a leader should be in a transforming environment
Vision statements create discussion
Can be used in recruitment, selection and promotion, and training and development

Effect of Transformational Leadership Style on Organizational Structure:

Transformational leadership and organizational culture hold the key to understanding organizational effectiveness
Decisions taken by a manager are very important as they affect a large number of people
Thus the leadership skills of the manager have to be very pronounced
An organic, non-formalized organization with a larger span of control are conductive for transformational leadership to appear

Fig.3.Effect of Transformational Leadership Style on Organization Structure

Corporate Social Responsibility and Brand Communities:

To perform Corporate Social Responsibility (CSR) activities, one needs to have leadership with an objective to transform society
Due to company's contribution to society, the company's social image changes
The customer starts expecting the firm to act in a manner consisten with its image
Therefore, customer starts associating certain expected actions with traditions
This, thus, initiate or leverage brand loyalty and helps attract brand communities

Benefits of Transformational Leadership Style:

Widely researched intuitive appeal
Focuses on the follower too
Emphasis on follower's needs, values, and morals
Enthusiastic work atmosphere
Higher output and efficiency
Develops future leaders
People will work for leader even if monetary compensation is less

Limitations of Transformational Leadership Style:

Lacks conceptual clarity
Validity of MLQ is questionable
Fixed trait or malleable state
Potentially elitist or antidemocratic
Totally depends on ability of leader
Leaders might lack the required characteristics

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This is also called as true leadership style or managerial leadership. Transactional leadership is a style of leadership in which
the leader promotes compliance of his/her followers through both rewards and punishments. The term "transactional" refers to the
fact that this type of leader essentially motivates subordinates by exchanging rewards for performance. Transactional leadership has
more of a telling style. These leaders display behaviors associated with constructive and corrective transactions. They define
expectations and promote performance to achieve these levels (See fig.1):

Contingent Reward:
Establishes goals and agrees on what followers will do to achieve the stated objectives. Exchanges rewards for effort and recognizes
Provide others with assistance in exchange for their efforts
Discuss in specific terms who is responsible for achieving performance targets
Make clear what one can expect to receive when performance goals are met

Management by Exception (active):

Monitors deviations from rules and mistakes and takes corrective action
Focus attention on irregularities, mistakes, exceptions and deviations from standards
Concentrate full attention on dealing with mistakes, complaints and failures
Keep track of all mistakes

Advantages of Transactional Leadership Style:

Rewards and Incentives
Structure is Clear
Short Term Goal
Control Rewards

Disadvantages of Transactional Leadership:

Transactional leaders tend to be more reactive to changes in market conditions.
Transactional leadership also promotes a rigid hierarchy
Slow to respond to and take advantage
This type of leadership is flawed since it motivates people only on the base level
This is poor when higher thinking skills level is needed to utilize.
This also limits its follower that wishes to engage with higher level of professional environment.

Fig.4.Transformational Vs Transactional Leadership Styles


This study concludes the increasing and ever expanding scope of morality in terms of leadership behavior and its effects on
molding the employees performance towards their job. This study conclude that if the leaders will be honest, do what they say, shows
consistency of words and actions and discourage hypocrisy they will tend to impact the employees performance towards their job.
Employees will be more satisfied and more committed towards their job and organization which will ultimately increase the
organization effectiveness.

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All the studies conducted are related to the large sector which interns reveal that leadership style, organizational commitment
and work satisfaction are interrelated. Thus, leadership styles can affect the quality of work life.

Following are the recommendations of the study:

Employees follow the performance of their leaders therefore leaders should always focus upon the positivity of their performance.
Leaders must be consistent about their words and actions in organizational settings in order to make the employees more satisfied
about their jobs.
Honesty of the leaders causes the increase in commitment of employees.
Organization should initiate the training programs for the development of the ethical leadership which will positively affect the
leadership integrity and ultimately change the attitude of employees towards their job and make the employees more satisfied and

[1] Bass, B. M., Handbook of Leadership: Theory, Research, & Managerial Applications, (Third edition, New York: Free Press. 1981).
[2] Bass & Avolio., Manual: The Multifactor Leadership Questionnaire. (Palo Alto, CA: Consulting Psychologists Press, 1989)
[3] Bass B. M. and Avolio B. J., Developing transformational leadership: 1992 and beyond, Journal of European Industrial Training, 14, 2127 (1990)
[4] Bass B. M. and Avolio B. J., Transformational Leadership and Organizational Culture, Public Administration Quarterly, 12, 113-121 (1993)
[5] Bass B. M., The ethics of transformational leadership, KLSP:Transformational Leadership, Working Papers (1997)
[6] Robert J.Allio(2003), The seven faces of Leadership Tata Mc Graw-hill publishing company Ltd, New Delhi, P.2
[7] Scott E. B., The role of transformational and transactional leadership in creating, sharing and exploiting organizational knowledge, Journal of Leadership &
Organization Studies, 9(4), 32-44 (2003)
[8] Jaya Srivastav, The Essence of leadership, Effective Executive, April2005, P 65.
[9] Lirong Long and Minxin Mao, Impact of leadership style on organizational change, IEEE (2008)

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