Effects Of Leadership Style On Organizational Performance

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Effects Of Leadership Style On Organizational Performance


This research study “EFFECTS OF LEADERSHIP STYLE ON ORGANIZATIONAL PERFORMANCE (A STUDY OF UNION BANK PLC)”was conducted to investigate how leadership styles impacts the performance of an organization, examining the attitudes and behavior of a leader and his carries out his role and responsibility in pioneering the affairs of the organization he is heading. This research revealed that a leaders style of leadership plays a very vital role to the success of any organization towards the achievement of its set goals and objectives. The survey research method was adopted and a sample size of 30 respondents was selected using the survey method. Data collection was done through questionnaire administration and analysis of data was carried out by adopting statistical tools of analysis. A conclusion was drawn that the leadership style existing within an organization contributes so much in the performance level of such organization as was seen from this research work which studied Union Bank Plc. It was however recommended that the organization high performance can be achieved and maintained when the workers are present, highly motivated, satisfied and given the conductive environment to operate.

Chapter One


1.1 Background of the Study

The concept and definition of leadership style may differ from one person, or situation, to the other. The word “Leadership” has been used in various aspects of human endeavor such as politics, businesses, academics, and social works and had been the focus of research and discussion of scholars in a variety of disciplines. Previous views about leadership show it as personal ability. Literacy authors and philosophers provided the initials descriptions and guidance for leader of their time. With the evolution of social sciences, scholars of political science, anthropology, sociology, psychology and business have all explored the nature of leaders and the process of leadership. Terry (1958; 20) opines that leadership between a superior and a subordinate “triggers a person’s will-to-do and transforms lukewarm desires for achievement into burning mission for successful accomplishments. This is an essence of good leadership especially by a human resources manager. According to McClelland (1961; 10), a strong drive for achievement is an important attribute for motivation and the quality which characterizes outstanding leaders. Mc Gregory (1960; 15) mentions four main variables of the leadership, name:

  • The follower’s attributes needs and personal characteristic.
  • The organization characteristic such as its basic purpose, habits, customs, traditions, structure, and nature of task performed.
  • The leader’s characteristics,
  • The Social, economic, and political milieu.

He does not however explain how such variables affect one another. Tennenbaum (1960) who connects them by the idea of influence has also used these types of variables. According to him leadership is defined as the “inter-personal influence exercised in the situation and directed through the communication process towards the attainment of goals”.

Weihdrich and Koontz’s (1994) described leadership “as influence, that is, art or process of influencing people so that they will strive willingly and enthusiastically towards the achievement of group goals”. They added “leaders act to help a group attain objectives through the maximum application of its capabilities”. They do not stand behind a group to push and prod; they place themselves before the group as they facilitate progress and inspire the group to accomplish organizational goals. In all of these definitions, there is the implication that leadership is concerned with the process of purposive behaviour. In management, the term leadership is concerned with guiding orders or the activities of the followers towards predetermined objectives or goals. Therefore, leader’s act must be goal-oriented. He must use his influence to achieve some desire goals through his followers.

The qualities of leaders and process of leadership have long been considered an important field of study, and from the beginning of social psychology, researchers have repeatedly explored this area. Early speculations about the personality trait or qualities of the successful leader has largely given way to the study of actual leadership behaviour analysis of situation factors, such as the type of group and the nature of group’s task. Leadership has been described as a process of influence on a group and in a particular situation, at a given point in time and in a specific act of circumstance that stimulate people to strive willingly to attain organizational objectives. Leadership styles as will be used here refers specifically to the pattern of philosophies, beliefs, attitude, feelings and assumptions an individual has about leadership which influence how, as a manager, he actually behaves when managing people. More specifically, it is a set of expectations an individual has as to use his leadership position to involve him and to involve people in the achievement of results. Yukl, Gordon & Taber, (2002; 12) opines that effective leaders guide & facilitate the work to accomplish tasks & objectives while at the same time maintaining cooperative relationships and teamwork. Mesick and Kramer (2004;31) argued that the degree to which the individual exhibits leadership traits depends not only on his characteristics and personal abilities, but also on the characteristics of the situation and environment in which he finds himself. Since human beings could become members of an organization in other to achieve certain personal objectives, the extent to which they are active members depends on how they are convinced that their membership will enable them to achieve their predetermined objectives. Therefore, an individual will support an organization if he believes that through it his personal objectives and goals could be met; if not, the person’s interest will decline. Leadership style in an organization is one of the factors that play significant role in enhancing or retarding the interest and commitment of the individuals in the organization. Thus, Glantz (2002; 22) emphasizes the need for a manager to find his leadership style. Among the objectives of any enterprise are profit making and attainment of maturity and liquidity status. In the pursuit of these objectives, enterprises allocate scarce resources to competing ends. In the process they provide employment, provide goods and services, purchase goods and services and, thus, contribute to the growth of the society and economy at large. Unamaka (1995) observes that in most Nigerian enterprise settings, the effectiveness of this process is greatly determined by the availability of and access to personnel, finance, and possibility of making their goods and services available to their customers and the nation at large.

The extent to which members of an organization contribute in harnessing the resources of the organization equally depends on how well the managers (leaders) of the organization understand and adopt appropriate leadership style in performing their roles as managers and leaders. Thus, efficiency in resources mobilization, allocation, utilization and enhancement of organizational performance depends, to a large extent, on leadership style, among other factors. Akpala (1998) identifies attitude to work, leadership style and motivation as some of the factors that exert negative effect on organizational performance in Nigeria.

In the environment of fierce competition, an enterprise faces multiple challenges. Thus, it has become the primary target to create competitive advantages of how an enterprise draws up strategies suitable to improve its operational performance (Jaramilo et al., 2005). In the past, enterprises emphasized financial performance. But now, information development has transformed their competitive basis into the intangible assets and the leadership performance from previous tangible financial performance. Therefore, it should include non-financial indices such as quality and customer satisfaction, which can be used for an enterprise to effectively evaluate its operational performance and consolidate competitive advantages. However, if an enterprise wants to improve the organizational performance, the leadership style of administrative supervisors will play a crucial role in its overall operational performance. When reviewing literature related to leadership and performance, we found that most papers emphasized effects of the leadership style on organizational promise and performance, but few discussed correlations amongst the leadership style and the organizational performance. It was also seldom considered that the leadership style may be a key factor to affect its smooth progresses implemented.

It is noteworthy that human resource has been regarded as another important factor for an organization to gain competitive advantages and realize organizational targets since the emergence and prevalence of firm resource-based views (Barney, 2001; Wright et al., 2001). “Human” is the theoretical basis of establishing the important assets for an organization. The success of many organizations possibly results from the leadership sagacity and will power, the technical prominence and innovation, the excellent quality or the distinguished reputation, but all these relate to “human”.

1.2 Statement of the Problem

There are so many factors that affect organization job performance but we will be considering leadership styles.

Every group of people that perform near its capabilities had a person at its head who precisely is shrilled in the art of leadership i.e. the ability to understand that human resources have different motivational forces at various times and in different circumstance as well as requiring a positive climate for favourable response to arousing motivation. Leadership is characterized by several problems such as: can anyone at all undertake leadership role or mainly a favoured few? Are the favoured few born or made? Is there any particular style that could be mastered? Does one have to be well liked to be effective or the other way around? What will really motivate an employee in the organization? All these problems and many others has add to many studies, theories and even approaches of leadership, motivation, while some speculated that the secret of effective leaders lies in the style of the leader, others insist that the nature of task and situation is essential. Still other emphasized on the personality of the leader. At the same time, many factors had been noticed as contributing to increase or decrease in productively with the view that for increase in job performance and productivity to be maintained workers must be motivated to work and thus indicate that all dissatisfaction factors should be given proper attention to be solved. In this sense, the study tries to investigate the leadership styles and skills and what motivate employee and their impact on the productivity of organization.

1.3 Objective of the Study

The objectives of the study are;

  1. To ascertain the effect of leadership style on organizational performance
  2. There is no significance relationship between leadership style and organizational performance
  3. To ascertain whether leadership style can make organization to grow
  4. To ascertain the effect of leadership style on employee performance

1.4 Research Hypotheses

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

  1. H0: there is no effect of leadership style on organizational performance
    H1: there is effect of leadership style on organizational performance
  2. H02: there is no relationship between leadership style and organizational performance.
    H2: there is relationship between leadership style and organizational performance.

1.5 Significance of the Study

The study will give clear insight on effect of leadership style on organizational performance. The study will be beneficial to students, organizations and general public. The study will serve as a reference to other researchers that will embark on this topic.

1.6 Scope and Limitation of the Study

The scope of the study covers effect of leadership style on organizational performance. The researcher encounters some constrain which limited the scope of the study;

a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study

b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational Privacy:

Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities

1.7 Definition of Terms

Leadership Style:

A leadership style is a leader’s style of providing direction, implementing plans, and motivating people. Various authors have proposed identifying many different leadership styles as exhibited by leaders in the political, business or other fields.

Organizational Performance:

Organizational performance comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives).

1.8 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
  • Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion, and recommendations made of the study

Chapter Five

Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain effect of leadership style on organizational performance

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of leadership style on organizational performance

5.2 Summary

This study was on effect of leadership style on organizational performance. Three objectives were raised which included: To ascertain the effect of leadership style on organizational performance, there is no significance relationship between leadership style and organizational performance, to ascertain whether leadership style can make organization to grow. In line with these objectives, two research hypotheses were formulated and twonull hypotheses were posited. The total population for the study is 200 staff ofUnion bank in Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up human resource managers,accountants, customer care officers and marketerswere used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

5.3 Conclusion

This study has evaluated the effect of leadership styles on organizational performance in selected small scale enterprises. The analysis has shown that each of charisma and intellectual stimulation/individual consideration traits of transformational leadership style exerts positive but insignificant effect on followers and performance. The other trait, inspirational motivation, exerts negative but insignificant effect on performance, and. The traits are weak in explaining variations in performance. On the other hand, each trait of transactional leadership style considered in this study, constructive/contingent reward and corrective and management by exception has significant positive effect on followers and performance, and both jointly explain very high proportion of variations in performance.

5.4 Recommendation

Recommends that Union bank should adopt transactional leadership style at point of entry into business but strategize to transit to transformational leadership style as their enterprises develop, grow and mature.

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