Impacts of Leadership Style Effectiveness of Managers and ...

[Pages:18]International Journal of Recent Advances in Organizational Behaviour and Decision Sciences (IJRAOB) An Online International Research Journal (ISSN: 2311-3197) 2016 Vol: 2 Issue: 2

Impacts of Leadership Style Effectiveness of Managers and Department Heads to Employees' Job Satisfaction and Performance

on Selected Small-Scale Businesses in Cavite, Philippines

Dr. Van S. Dalluay, Assistant Professor, Al-Zahra College for Women, Sultanate of Oman.

Dr. Revenio C. Jalagat, Jr., Assistant Professor, Al-Zahra College for Women, Sultanate of Oman. Email: revjalagatjr@

________________________________________________________________________ Abstract

This study primarily centered on determining the impact of leadership style effectiveness of managers and department heads to employees' job satisfaction and performance on selected small-scale businesses in Cavite, Philippines. It utilized the descriptive research design and survey questionnaires as its research instrument which were floated to 150 employees randomly selected for the purpose of this study. The questionnaires contained the leadership interaction characteristics of the managers and the department heads to his/her employees or subordinates in relation to its impact to the job satisfaction and performance of these employees. All the questionnaires were retrieved and the responses were analyzed with the use of percentages. Findings of the study revealed that the leadership style prevalent is the participative leadership, the impact of the leadership style on employees' job satisfaction is satisfactory as well as increased productivity in terms of performance. Statistical analysis using correlation and multiple regression, the results revealed that, leadership styles significantly impacts both job satisfaction and performance. Based on these findings, the author concluded that the company should continuously utilized and sustain the participative leadership style which will promote employees' productive performance and satisfactory level of job satisfaction although there is always room for improvement. However, the author has recognized that further studies shall be conducted to further investigate the effect of leadership style in another setting and contexts. ___________________________________________________________________________ Keywords: leadership, leadership styles, job satisfaction, and small-scale businesses

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International Journal of Recent Advances in Organizational Behaviour and Decision Sciences (IJRAOB) An Online International Research Journal (ISSN: 2311-3197) 2016 Vol: 2 Issue: 2

1. Introduction

It is largely viewed that leadership is part and parcel of organization's existence regardless of the type of business organization. Whether the business structure is sole proprietorship, partnership, corporation and other types, leadership plays an important role in managing and leading the human resources, facilities, budgets and other resources in an efficient and effective manner. More so, for employees who are considered the organization's best assets and talents, effective leadership enable them to become highly productive and more satisfied with their jobs. According to Mosadeghrad (2003), there are different styles of leadership and it depends on the situations and circumstances of the organization and what type it sees fit. It consists of autocratic, laissez-faire, and transformational leadership. Moreover, in small businesses these leadership styles are often considered and are mainly contingent with the organization's climate and culture of the people within the company. Furthermore, consensus from several studies and researches suggest the common leadership styles that are currently practiced by most organizations include but not limited to the following: : (1) autocratic, (2) bureaucratic, (3) laissez faire, (4) charismatic, (5) democratic, participative, (6) situational, (7) transactional, and (8) transformational (Goleman, 1998; Yukl, 2002; Smith, 2006); and, Rothschild, 2008). However, Rad and Yarmohammadian (2006) maintains that, the use of leadership style is relative to the situations and conditions of the company or organization. In relation to this study, it sought to determine the type of leadership style/s best suited to the organization in selected small-scale businesses in Cavite, Philippines being considered as a fast growing and relatively stable business destination outside of Manila. The main objective of the study is to measure how effective is the leadership style of the managers and department heads as perceived by the employees and staffs of these businesses.

According to Omolayo (2007), managing small-scale businesses are very challenging considering the lack of standard procedures and the increasing cases of employee turnovers. For this reason, it would be a challenging tasks for these small businesses most especially that many of the experienced and highly skilled employees leave the organization without clear reasons of leaving. Hence, the leadership style of the managers and heads creates impact on the employees' productivity and job satisfaction that will be extensively examined in the succeeding sections (Al-Ahmadi, 2009).

In view of the problem often encountered in small-scale businesses about leadership, the aim of this study is to determine the relationship and impact between leadership style to employees' job satisfaction and performance. It will also investigate what leadership style is evident and commonly used by the managers and heads of the selected cooperatives. Based on this concept, the null hypotheses can be drawn:

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International Journal of Recent Advances in Organizational Behaviour and Decision Sciences (IJRAOB) An Online International Research Journal (ISSN: 2311-3197) 2016 Vol: 2 Issue: 2

H1: There is no significant impact between leadership styles (Autocratic, Participative/Democratic, Laissez-Faire) to employee job satisfaction and performance.

H2: There is no significant relationship between leadership style and employee job performance.

2. Literature Review

Borkowski, et. al. (2011) posits that, effective leadership defines the success of any organization. Accordingly, the view of Gary K. Hines posits that "It is through dynamism and effective leadership that plays a vital role in the success of company's management (Gadot, 2007; Hugnes, R. L., Gonnett, R. C., & Curphy, G. J., 2006; Northouse, 2009; Cohen & Golan, 2007). However, leadership and management although often intertwined is a different concept. Leadership refers to people who have the visionary mindset and can be able to lead and influence others to become leaders in attaining the goals and objectives of the business. The supervisor's position with the firm is to impose their authority which is driven by respect and trust from their followers. This in turn aids the leader to achieve the goals, plans and purpose of the entire organization with joint efforts between the supervisor and the subordinates.

Management on the other hand is focused on the functions of running the business and takes into major considerations such as authority, control and instruction. It includes the main functions such as planning, organizing, directing, controlling, budgeting, and decision making. However, they are interconnected in the sense that, managers get things done through other people by using appropriate leadership. To be ideal, leaders are using different leadership styles to determine which style best fits with the different situations to gain best advantage. The qualities of an effective leader should include its ability to create a balance between concerns on people and production. Developing and building situations that enable the employees to unite and work with cooperation and collaboration to arrive at quality results and outcomes. Many authors have recognize the fact that, there is strong relationship between leadership style and job satisfaction and performance (Laohavichien et al., 2009, Chen et al., 2005, Bolden, 2004). To be an effective leader, the following qualities can be considered: flexibility and be able to choose from wide range of leader behavior; has awareness to self, the group and the situation with which he should consider before choosing a leadership style; replicates leaders and not only limits on supervision, management and control; utilize transformational strategy and methods over transactional style of supervision; foresees not only short term problem but also long-term challenges; he should have visionary mindset and foresees future events and decisions; ensures that timely and appropriate decisions are made

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International Journal of Recent Advances in Organizational Behaviour and Decision Sciences (IJRAOB) An Online International Research Journal (ISSN: 2311-3197) 2016 Vol: 2 Issue: 2

whether in individual or group capacities; should take into consideration the ideas of subordinates and solicit their ideas that helps develop good and sound decisions; responsive as much as possible to subordinate's concerns whether job related or personal concerns and show interest to address them with sincerity and with no runaround; and, should give sound instructions regarding job methods, safety improvements and help subordinates minimize errors considering their level of experiences and develop their potentials to become future leaders.

Ideal perspectives on leadership had been discussed since 1939 by famous strategist Kurt Lewin and his colleagues through experimentation that resulted into the three common leadership styles: Autocratic, Democratic, and Laissez-Faire. As utilized in the study, these three leadership styles were considered and tested to determine its relationship with job satisfaction and performance. 2.1 Autocratic

Hoel and Salin (2003) stressed that autocratic leadership is a leadership style where all of the decisions originate from the top level of the management while the lower-level management are the followers and doers of the responsibilities/tasks. Mainly, the tasks are assigned from the top managements for the subordinates to perform. Leaders make the decisions without consultation with the subordinates. It works with the organization who adopted the top-bottom management style. According to the experiments by Probst and Raisch, 2005), autocratic leadership can cause leaders to possess too much power which can resort to negative implications to the performance of organization. Moreover, the employees are not involved in making decisions and whatever the top management wanted to impose, it will be carried whether the lower management agree to it or not. However, autocratic leadership has advantages and disadvantages. Its main advantage is that decisions are made quickly and it makes sure that the decisions are distributed and followed by the subordinates from the top to the bottom of the hierarchy. On the other hand, it also offers many disadvantages. For one, organizations that rely to the leadership of one person can be dangerous and too much power can increase the chances of corruption by leaders (Probst and Raisch, 2005). Autocratic leadership also limits the potentials of other members to excel and thus, discourages employee participation and contributes to low level of job satisfaction and trust in the organization. 2.2 Democratic/Participative

One of the trademarks of the democratic style is the freedom of the workers to express their views and participation in the decision making process as it is most known as bureaucracy with bureaucratic view. Specifically, every decisions undertaken by the management should first consider consultation with the workers and they can suggest ways in

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International Journal of Recent Advances in Organizational Behaviour and Decision Sciences (IJRAOB) An Online International Research Journal (ISSN: 2311-3197) 2016 Vol: 2 Issue: 2

solving problems or in the decision process by participating in the decision although the leader has still the final say in those decisions. Many organizations have used this leadership style because they felt that when employees are involved in the decisions, employees would also feel that they are important and the management recognize their abilities and capacities. The leader imposed the consultative approach to enable the members to participate in the company's decisions. Democratic leaders decide based on the outcomes from group participation and discussions to make sure that the decisions are done fairly and cooperatively (Koopman and Wierdsma, 1998). However, like autocratic leadership it has both advantages and disadvantages and one of the advantages is that, all the members involved in the decisions will show full support since they are part of those decisions. Moreover, the style encourages and increase the level of trust, cooperation, motivation and job satisfaction in the organization. But its disadvantage is also evident as it requires more time to arrive at the decision and difficulty to sort out from wide range of opinions which may result to decisionbiased. 2.3 Laissez-Faire

The laissez-faire leadership is leadership style that that gives more authority for the workers or employees to make their own decisions and the leader limits himself in making decisions although the accountability still lies on the leaders. It also refers to the extreme loose principle where the management has agreed with non-interference policy that enables the subordinates for complete freedom (Omolayo, 2007). It is suitable for organizations where the people working have the capabilities and motivated to make their own decisions and the structure of the organization is highly decentralized. As an example, sharing resources across a range of different people and group. According to Skogstad, Matthiesen and Einarsen (2007), this type of leadership relies the decisions to the subordinates to the extent that the management has not set a specific time for arriving at sound and right decisions. Its main advantage is that, the subordinates have more time to come up with the best decisions if the members are serious with their responsibilities. However, there are more disadvantages with this leadership style. Because of the lack of guidance by the management, it is likely that subordinates might come up with wrong decisions which can cause devastating impact to organization's performance (Hoel and Salin, 2003). In addition, it also encourage for other members to dominate other members in decision making which might result to competition instead of cooperation. And, it can boost overconfidence by the subordinates which make the management actions and decisions irrelevant and useless. 2.4 Leadership Style and Job Satisfaction

Work is essential to anyone as it considers many reasons why people should work. Furnham (2005) explained that people work because of the benefits work can offer such as

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International Journal of Recent Advances in Organizational Behaviour and Decision Sciences (IJRAOB) An Online International Research Journal (ISSN: 2311-3197) 2016 Vol: 2 Issue: 2

earnings, organizes timely management of job to be done, it provides source of selffulfillment and self-actualization and create a source of social contacts. When one person has positive feeling with his job, it will lead to job satisfaction as job satisfaction is an important facet to work. According to Spector (2008), job satisfaction is influenced by the person's positive outlook with his/her job and the leadership style that the leaders manifest in the workplace. Stressful situations in the workplace might lead to dissatisfaction and because of this, leaders have greater role to play to lessen the stressful conditions.

The employees play an important role to any organizations because without them, the organization cannot function (Worthington and Britton, 2006). Wright, et. al. (2003) suggests that management and leaders should be effective with their leadership to match the employees' skills, effort, productivity and creativeness that they can offer to them. Leaders who are proven to be effective with their leadership style encourage employees to perform better and are more satisfied with their jobs (Allen, 2002). When employees are satisfied with their jobs, they are also contented with their status and will stay with their present organizations. Organizations with satisfied workers perform better than competitors (Ostroff, 1992). Therefore, it is important to link job satisfaction with the quality of leadership style that leaders should possess in the organization.

Job satisfaction is undeniably important for employees because it determines how they will perform in the organizations. Boseman (2008) exclaimed that when employees are not satisfied with their jobs, they are proven to perform poorly. However, if they are satisfied they are motivated to do their tasks better. Various studies confirmed that, effective leadership style transform both the organization and employees to a better performance as well as employees' job satisfaction (Connelly, Gilbert, Zaccaro, Threlfall, Marks, & Mumford, 2000). DeRue, Nahrgang, Wellman, and Humphrey (2011) stressed that, leadership models should be implemented to determine the relationship between the leadership style and its impact on job satisfaction and performance. Moreover, Wang, Law, Hackett, Wang, and Chen (2005) had proven from their studies that leadership styles correlates with job satisfaction and performance. How effective the leadership style used determines how satisfied the employees in their jobs and are likely to perform better. In Howell and Avolio's (1993) study, it indicates that there is significant relationship between participative leadership and the employees' job satisfaction and performance. It further revealed that, when employees are more involved in decision makings, they feel more satisfied and motivated to perform beyond expectations.

Several studies link positively the leadership style and job satisfaction. Ramey (2002) for example, found out in his study the significant relationship between leadership style and employee job satisfaction stating further the effective use of participative leadership style.

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International Journal of Recent Advances in Organizational Behaviour and Decision Sciences (IJRAOB) An Online International Research Journal (ISSN: 2311-3197) 2016 Vol: 2 Issue: 2

Similar to this study was conducted by Hamidifar (2010) on the relationship between leadership style and job satisfaction. He made the study at Islamic Azad University with 16 Branches in Tehran for 400 samples and results of the study suggests that leadership styles such as transformational leadership and participative leadership significantly correlates to job satisfaction. However, laissez faire leadership is poorly correlated with job satisfaction. However, in many studies transformational leadership style proved to have strong correlation to job satisfaction (Walumbwa et al., 2004; Choi et al., 2007; Yusof and Shah; 2008; Burton and Peachey, 2009; Wells and Peachey, 2010). 2.5 Influence of Leadership Style on the Employee Job Performance

A new concept has been introduced by Miller et.al., (2007) considering the ROI not a return on investment but return on individual where he pointed out that leadership and style can only be measured on how the employees performed and how efficient and productive they are in the performance of their responsibilities. Similar study conducted by Mullins (2008) concluded that employees would likely work effectively if they are satisfied and contented with the leadership and style demonstrated by the leader. However, Luthans (2011) had emphasized that leadership style does not only provide positive results but also negative consequences. For instance, a research survey conducted with senior managers to assess the leadership styles of their CEOs revealed that it is more acceptable for leadership styles to be pragmatic rather than conceptual and conservative rather than risk taking (Tale, 2010). For example, participative leadership suggests that leaders should set clear direction, encourage employees to use their talents and gifts to actively participate in the decision making thus, allowing them to maximize their potentials (Jamal, 2012).

Previous researches link leadership style and job satisfaction and job performance. Andre (2008) exclaimed that a good leadership should enable the subordinates to turn their deficiencies into job satisfaction and enhanced individual and group performance. When employees are satisfied with their work, they tend to help others duplicate their performance and are likely to perform beyond expectations like doing extra duties, and support the organization's objectives. How effective is the leadership style impacts the employees' satisfaction, motivation towards their work and the job performance (Lussier, 2013). Furthermore, Riggio and Conger (2007) stressed that choosing a leader is also equally important with leadership style and added that it should not be taken for granted. Leaders who are ineffective especially in the top-level management can be costly to the organization and in many situations causes failure to the organization. As Lussier (2013) reiterated, a leader with effective leadership style not only enhance individual performance but also organizational performance.

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International Journal of Recent Advances in Organizational Behaviour and Decision Sciences (IJRAOB) An Online International Research Journal (ISSN: 2311-3197) 2016 Vol: 2 Issue: 2

3. Methodology

To attain objective of this study, the researcher utilized the research design with the survey questionnaires. The main emphasis of the study is to determine the effects of the manager's leadership style on the employees' satisfaction and employees' performance of the company. The survey questionnaires were floated to the 150 respondents from selected cooperative organizations in Cavite, Philippines selected through random sampling with the use of Slovin's formula wit n = N/(1+Ne2). Of the 150 questionnaires, all respondents were able to answer the questions and were retrieved within the time span of the study. The questionnaires were also validated and tested before distributed to the respondents. The data were analyzed using percentages, weighted mean, correlation coefficient, and multiple regression. Specifically, percentages were used to analyze demographic variables such as age, gender, length of service and leadership styles while weighted mean were utilized to survey questionnaires on leadership style. To determine the relationship between variables: Leadership style; Job Satisfaction; and Job Performance; the correlation coefficient and multiple regression were employed. 3.1 The Instrument

This research utilized the structured survey and were specifically designed to address the problems identified in the study. The data were gathered to addressed the research questions and the content of the questionnaires mainly dealt with leadership interaction characteristics to the managers and heads to their subordinates vis a vis its impact to the satisfaction and performance of the employees. The questionnaire contains the demographic information such as age, gender, length of service, leadership style, and questions on leadership style, job satisfaction and job performance. The questionnaire also utilized the 5-point Likert Scale to obtain responses from the respondents which were rated from excellent (5) to poor (1). 3.2 Rationale of the Study

Various researches linked leadership style to job satisfaction and job performance but only limited studies specifically correlates specific leadership style such as autocratic, participative and laissez-faire to job satisfaction and performance. As such, it is timely and relevant to pursue with this study to provide further justification on the significant impact of leadership style when applied to the chosen organization, the selected small-scale businesses in Cavite, Philippines.

4. Discussions and Findings

The researcher utilized statistical tools such as percentages, weighted mean, correlation coefficient, and multiple regression to interpret the data gathered in this study. The data are tabulated and coded with the tables presented hereunder.

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