THE IMPACT OF LEADERSHIP STYLE ON ORGANIZATIONAL PERFORMANCE

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Leadership style is a key determinant of the success or failure of any organization. A leader is person who influences, directs, and motivates others to perform specific tasks and also inspire his subordinates for efficient performance towards the accomplishment of the stated corporate objectives. Leadership style is the manner and approach of providing direction, implementing plans, and motivating people.

According to Ngambi et al. (2010) and Ngambi (2011), cited in Jeremy et al. (2011), leadership is a process of influencing others’ commitment towards realizing  their  full  potential  in  achieving a  value- added,  shared  vision,  with  passion  and  integrity. The nature of this influence is such that the members of the team cooperate voluntarily with each other in order to achieve the objectives which the leader has set for each member, as well as for the group. The relationships between the leader and employee, as well as the quality of employees’ performance, are significantly influenced by the leadership style adopted by the leader (Jeremy et al., 2011). 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 (Obiwuru et al., 2011).

Leadership is a critical management skill, involving the ability to encourage a group of people towards common goal. Leadership focuses on the development of followers and their needs. Managers exercising transformational leadership style focus on the development of value system of employees, their motivational level and moralities with the development of their skills (Ismail et al., 2009).It basically helps followers achieve their goals as they work in the organizational setting; it encourages followers to be expressive and adaptive to new and improved practices and changes in the environment (Azka et al., 2011).

According to Michael (2011) leadership has a direct cause and effect relationship upon organizations and their  success. Leaders determine values, culture, change tolerance and employee motivation. They shape institutional strategies including their execution and effectiveness. Leaders can appear at any level of an institution and are not exclusive to management. Successful leaders do, however, have one thing in common. They influence those around them in order to reap maximum benefit from the organization’s resources, including its most vital and expensive.

In recent times, many organizations have recorded cases of immoral and unethical practices, gratifications, high labour turnover, inability to meet basic required obligations, which has led to much business failure. This may be as a result of lack of effective leadership. The prime motive of many organizations is to achieve its stated objectives, hence the need to effectively coordinate and motivate the workers by an effective leader. Unfortunately some organizations do not take cognizance of the leadership style adopted by their managers. It is on this premise that this research work set out to examine leadership style and organizational performance.

1.2 PROBLEM STATEMENT

Widely celebrated cases of a direct leadership–performance link may be found in numerous accounts of improvements of company’s performance attributed to changes in leadership (Nicholls, 1988; Simms, 1997). However, empirical studies into the links between leadership and performance have been lacking (Quick, 1992).  One notable exception is the detailed study of the impact of leadership on performance in the context of the educational sector. Thorlindsson (1987) suggests that variations in the performance of different ships, under identical conditions, can be accounted for by the leadership skills of managers. Other studies which examine the links between leadership and performance coincide with the re-emergence of the one best way to lead‟ debate. Of particular relevance is the resurgence of interest into charismatic leadership, which is frequently referred to as transformational leadership (Bass and Avolio, 1993).

A number of researchers theorize that leadership style is linked to organizational performance (Howell and Avolio, 1993).  Conceptually, it is argued that the visionary and inspirational skills of transformational leaders motivate followers to deliver superior performance (Nicholls, 1988; Quick, 1992). In summary, much of the above evidence presented as supporting the claim of a leadership–performance link is anecdotal and frequently over-concentrates on the „transformational‟ role of leaders in corporate successes (Quick, 1992; Simms, 1997). It would appear that few studies have responded to the observation of Porter and Mckibbin (1988) that much of the research reported as supporting this claim is either inconclusive or empirically suspect. The limited or inconclusive character of research findings in this area suggests the need to investigate further the nature of the relationship between leadership and performance. This study is a step in this direction.

1.3 PURPOSE OF THE STUDY

The main purpose of the study is to investigate the impact of leadership styles on organizational performance.

1. To examine the relationship between laissez-faire style on organizational performance.
2. To examine the relationship between Transactional style on organizational performance.

iii. To examine the relationship between transformational leadership styles on organizational performance.

1. To examine the influence of leadership on organizational performance.

1.4 SIGNIFICANCE OF THE STUDY

1. As such, the completion of this dissertation will provide understanding of the concept present so as to generate data and information that every planner could use in order to come up with strategies, plans and designs that will strategically position them in the highly competitive, diverse, and complex business environment that is experienced at present.
2. By fulfilling the aims that were stated in the objectives section, this study will be helpful for other researchers who may be focusing on understanding the concept of effective leadership. The notable significance of this study is the possibility that other researchers may be able to use the findings in this study for future studies that will create a huge impact on society. This study finding can be used for other findings that might prove to be helpful in introducing changes to the business.

iii. The present study findings have been significant in number of ways. It has been contributed to the body of knowledge.

1.5 RESEARCH QUESTION

1. To what extent does laissez-faire leadership style affect organizational performance?
2. To what extent does Transactional leadership style affect organizational performance?

iii. To what extent does a transformational leadership style associate with organizational performance?

1. To what extent does leadership influence organizational performance?

1.6 SCOPE OF THE STUDY

The study is limited to find out the impact of leadership style on organizational performance. Only office managers and Top level managers from selected banks in Port Harcourt, Rivers State, such as First Bank PLC, and Union Bank PLC were used in the study.

1.7 DEFINITION OF TERMS

Employees: A person employed for wages or salary, especially at non-executive level.

Leadership: The action of leading a group of people or an organization, or the ability to do this.

Subordinate: A person under the authority or control of another within an organization.

Performance: The action or process of performing a task or function.