The Impact Of Effective Leadership

Abstract

Purpose – This study helps us to determine how sales managers’ leadership style impacts their subordinates’ organizational work performance on routine tasks as well as on work unit projects. The study will further help the managers to adapt their leadership styles in order to enhance subordinates’ work performance, and consequently increase overall efficiency of the organization. Academically, this compilation will provide additional insights into the leadership field by contributing to the future development of this study area.

Design/methodology/approach – Leadership styles and work performance will be measured by a self formulated questionnaire after assessing their reliability and validity. A total of 200 respondents (middle managers with their respective subordinates) working in oil companies of Lahore, Pakistan will be surveyed in the study.

Significance of the study – By applying the results in practice, managers can adjust their

leadership style to facilitate their subordinates to yield high work performance, whereas the human resource management function of oil companies can integrate these results for further enhancing leadership development in their organization.

Originality/value – This paper is the first attempt to understand the influence of transformational, transactional and laissez-faire leadership styles on work performances of subordinates in the oil industry of Pakistan.

Introduction

Effective leadership is a driving force for the accomplishment of organizational goals and leadership behavior is an important variable having significant impact on the success of project management (Gharehbaghi and McManus, 2003). Enshassi and Burgess (1991) studied the relationship between leadership styles of several managers and their effectiveness in the Middle East. They found a strong association between managers’ style and their effectiveness. The high task and high employee orientation style is the most effective style in managing multi-cultural workforces. Managers need to be friendly, accessible, and understanding of their subordinates’ personalities and requirements with all employees on a project. In addition, they have to be task oriented in order to have control over the process of the work and achieve the target. In the real world there are many subordinates are facing problems which impact their work performances which can be traced to the leadership practices adopted by their respective supervisors. Some of these subordinates may have insufficient competencies or their traits may not fit with the nature of their work or in many cases the supervisor also tend to use inappropriate leadership styles in dealing with their subordinates at various points of times. Superior performance that helps the organization to achieve organizational goals is the prime aim of effective leadership.

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To achieve superior performance from subordinates, Supervisors must make use of appropriate leadership styles. They should also recognize their subordinates’ individual needs and their future career goals. Leadership research in oil companies can give us insight on work performance and its impact on companies routinely project outcomes. Appropriate leadership approach can shape subordinates’ performance in a desirable way and facilitate managerial projects to go smoothly. In addition, adopting suitable leadership approach will create subordinate satisfaction. Satisfied subordinates are likely to put much effort into their work. This study explores the actual leadership styles of few oil companies of, Pakistan and examines the relationships between:

Leadership styles on work performance

The purpose is to determine “What is the most appropriate leadership style for Pakistani Supervisors in this modern time?” Once the right leadership style has been identified, applying the style in practice should lead to efficiency in subordinate’s work performance, and consequently benefit these supervisors who are ultimately responsible for the success of achieving and exceeding sale quotas and other managerial projects. The right leadership style should be able to “push” subordinates to complete assignments timely and correctly while at the same time, bringing out the best in them. Lastly, professional respect and commitment to the Organization is additional benefits that may accrue through effective leadership

Leadership and work performance

Leadership can be described in terms of the power, position, personality, authority and responsibility, mostly used as a facilitation process to achieve a goal. Therefore, the definition of leadership used in the present study is the process is defines as “(act) of influencing the activities of an organized group in its efforts toward goal setting and goal achievement (Stogdill, 1950)”

Statement of the problem

This study aims at analyzing the relationship of three Leadership Styles i.e. Laissez-faire, Transformational and Transactional leadership styles and subordinates work performance in the marketing and sales departments of various oil and gas companies operating in Pakistan. The study will take into account the effect of the 9 leadership behaviors i.e. idealized influence (attributed), idealized influence (behavioral), intellectual stimulation, individualized consideration, inspirational motivation, contingent reward, management-by-exception (active), management-by-exception (passive) and laissez-faire (no leadership) on the 7 work performance variables i.e. quality of work, quantity of work, creativity in problem solving, team work, discipline, dependable And overall job satisfaction

Significance of the problem

This study helps us to understand how marketing and sales managers’ leadership styles and affect their subordinates’ organizational work performance on various managerial projects.By applying the results in practice, managers can adjust their Leadership style to facilitate their subordinates to yield high work performance, whereas the human resource management function of oil companies can integrate these results for further enhancing leadership development in their organization.

Objectives of the study

1) To what extent are these leadership styles present at the managerial level in these departments

2) To determine any relationship, if it exists, between a particular leadership style of sales/ marketing managers/supervisors and its subordinate perceived job performance and/or job satisfaction

Scope of the Study

The study aimed at answering the following research questions:

Q1. Which is leadership style (laissez-faire, transactional or transformational) is present in the organization?

Q2. What is the relationship between transformational leadership style and greater quality of work from the subordinate?

Q3. What is the relationship between transformational leadership style and greater quantity of work from the subordinate?

Q4. What is the relationship between transformational leadership style and higher creativity in problem solving of the subordinate?

Q5. What is the relationship between transformational leadership style and higher level of discipline in the subordinate?

Q6. What is the relationship between transformational leadership style and higher dependability in the subordinate?

Q7. What is the relationship between transformational leadership style and higher teamwork in the subordinate?

Q8. What is the relationship between transformational leadership style and overall satisfaction in the subordinate?

Q9. What is the between transactional leadership style and greater quality of work from the subordinate?

Q10. What is the relationship between transactional leadership style and greater quantity of work from the subordinate?

Q11. What is the relationship between transactional leadership style and higher creativity in problem solving of the subordinate?

Q12. What is the relationship transactional between leadership style and higher level of discipline in the subordinate?

Q13. What is the relationship transactional between leadership style and higher dependability in the subordinate?

Q14. What is the relationship between transactional leadership style and higher teamwork in the subordinate?

Q15. What is the relationship between transactional leadership style and overall satisfaction in the subordinate?

Q16. What is the between Laissez-faire leadership style and greater quality of work from the subordinate?

Q17. What is the relationship between Laissez-faire leadership style and greater quantity of work from the subordinate?

Q18. What is the relationship between Laissez-faire leadership style and higher creativity in problem solving of the subordinate?

Q19. What is the relationship Laissez-faire between leadership style and higher level of discipline in the subordinate?

Q20. What is the relationship Laissez-faire between leadership style and higher dependability in the subordinate?

Q21. What is the relationship between Laissez-faire leadership style and higher teamwork in the subordinate?

Q22. What is the relationship between Laissez-faire leadership style and overall satisfaction in the subordinate?

Definition of major terms and formation of the questionnaire

Effective Leadership

The present study uses effective leadership approach to identify the leadership style of middle management. In this approach, leadership is conceptualized by the behavioral areas from laissez-faire style (non-leadership), through transactional leadership (which hinges on reward system and punishments), to transformational leadership (which is based on inspiration and behavioral charisma) (Bass and Avolio, 1993).

The various components are now elaborated.

Laissez-faire style. An avoidant leader may either not intervene in the work affairs of subordinates or may completely avoid responsibilities as a superior and is unlikely to put in effort to build a relationship with them. Laissez-faire style is associated with dissatisfaction, unproductiveness and ineffectiveness (Deluga, 1992).

Transactional style. Transactional leaders focus mainly on the physical and the security needs of subordinates. The relationship that evolves between the leader and the follower is based on bargaining exchange or reward systems (Bass, 1985; Bass and Avolio, 1993).

Transformational style. Transformational leader encourages subordinates to put in extra effort and to go beyond what they (subordinates) expected before (Burns, 1978). The subordinates of transformational leaders feel trust, admiration, loyalty, and respect toward leaders and are motivated to perform extra-role behaviors (Bass, 1985; Katz and Kahn, 1978).Transformational leaders achieve the greatest performance from subordinates since they are able to inspire their subordinates to raise their capabilities for success and develop subordinates’ innovative problem solving skills (Bass, 1985; Yammarino and Bass, 1990).This leadership style has also been found to lead to higher levels of organizational commitment and is associated with business unit performance (Barling et al., 1996).

The following discussions on leadership factors and leadership outcomes are extracted from Bass and Avolio’s (2004) MLQ manual.

Leadership factors

The leadership factors used to measure transformational, transactional and laissez-faire leadership style in this study are from the Multifactor Leadership Questionnaire (MLQ) developed by Bass and Avolio based on the theory of

Transformational leadership.

They are:

(1) Laissez-faire factor:

The non-leadership. Leaders in this type will always avoid getting involved when important issues arise and avoid making decisions.

(2) Transactional leadership factors:

Contingent reward. This factor is based on a bargaining exchange system in which the leader and subordinates agree together to accomplish the organizational goals and the leader will provide rewards to them. Leaders must clarify the expectations and offer recognition when goals are achieved.

Management-by-exception (active). The leader specifies the standards for compliance, as well as what constitutes ineffective performance, and may punish subordinates for being out of compliance with those standards. This style of leadership implies closely monitoring for mistakes, and errors and then taking corrective action as quickly as needed.

Management-by-exception (passive). Passive leaders avoid specifying agreements, clarifying expectations and standards to be achieved by subordinates, but will intervene when specific problems become apparent. This style does not respond to situations and problems systematically.

(3) Transformational leadership factors:

Idealized influence charisma. This factor consists of firstly, idealized influence attributed, and secondly, idealized influence behavioral. They are the charismatic elements in which leaders become role models who are trusted by subordinates. The leaders show great persistence and determination in the pursuit of objectives, show high standards of ethical, principles, and moral conduct, sacrifice self-gain for the gain of others, consider subordinates’ needs over their own needs and share successes and risks with subordinates.

Inspirational motivation. Leaders behave in ways that motivate subordinates by providing meaning and challenge to their work. The spirit of the team is aroused while enthusiasm and optimism are displayed. The leader encourages subordinates to envision attractive future states while communicating expectations and demonstrating a commitment to goals and a shared vision.

Intellectual stimulation. Leaders stimulate their subordinates’ efforts to be innovative and creative by questioning assumptions, reframing problems, and approaching old situations in new ways. The intellectually stimulating leader encourages subordinates to try new approaches but emphasizes rationality.

Individualized consideration. Leaders build a considerate relationship with each individual, pay attention to each individual’s need for achievement and growth by acting as a coach or mentor, developing subordinates in a supportive climate to higher levels of potential. Individual differences in terms of needs and desires are recognized.

Work performance

The success of a project is usually stated in terms of meeting three major objectives: completion on time, completion within budget, completion at the desired level of quality or technical specification (Tukel and Rom, 2001; Xiao and Proverbs, 2003).Atkinson (1999) called these three criteria the “iron triangle” or “golden triangle”. In this study, the performance levels of subordinate were measured in the direction which would support the success of meeting deadlines achieving sales targets and completion of various other managerial projects. Thus they were measured from firstly, work quantity (achievement compared with the planned schedule), and secondly, work quality (fit with the desire level of supervisory requirement). In addition, when working in the organization on various projects, people have to coordinate and work together as a team hence teamwork and work disciplines are the important qualities they should occupy (Sanvido et al., 1992; Nguyen et al., 2004). Besides, meeting with various customers nature is a daily operation where unpredictable problems occur regularly, creativity in problem solving and the level of dependability on handling routine work and new assignments is an essential quality that the subordinates must posses (Nguyen et al., 2004; Nitithamyong and Tan, 2007). Thus these performance aspects needing to be measured from subordinates include: work quantity, work quality, dependability, team work; creativity in problem solving, work discipline and overall job satisfaction. Together, the seven are used as measures of work performance.

The samples

There is no list of routinely managerial work projects of oil and gas companies of Pakistan, therefore a non-probability sampling incorporating snowball technique will be adopted selecting 25 qualified Areas Sales Managers (supervisors) and 175 sales manager(subordinates)

Research instrument

A questionnaire survey was adopted for collecting data because of its advantage in yielding responses in standard format from a large number of respondents and the benefit of collecting data from respondents from geographically dispersed locations.

The measurements adopted in the questionnaires are:

Effective Leadership styles in this research will be measured by studying the definitions as given by Bass and Avolio’s (2004) in their multifactor leadership questionnaire (MLQ) Form 5X. and then formulating a questionnaire on leadership style. 2 statements are used to measure each behavior therefore a total of 18 statements of Likert scale are self formulated. The measurement required sales managers to rate each statement on a five-point rating scale ranging from “strongly disagree” to “Strongly agree” based on their experience with their supervisor.

Work performance. A rating tool was devised for Area Sales Managers (supervisors) to evaluate their subordinates’ work performance. The measurement required Area Sales Managers to rate each statement on a five-point rating scale ranging from “strongly Disagree” to “Strongly Agree” based on their experience with the subordinates. Statements focused on 7 components of subordinates’ work performance as discussed previously.

Literature Review

According to Mustapha and Naoum (1998), team management style (9, 9) was chosen by all high performing managers as their preferred management style. The finding further showed a significant association between the level of authority given to the managers and their level of effectiveness. High performing managers were given higher authority than moderate performing ones. Odusami et al. (2003) concluded that there was significant relationship between the project leader’s professional qualification, his leadership style, team composition and overall project performance. The most appropriate leadership style identified in their research is consultative autocrat which is similar to team management used in Mustapha and Naoum’s (1998) study.

Other group of scholars explained that leadership behaviour is culturally determined and different from culture to culture. (Burger and Bass, 1979; Lok and Crawford, 2004). National culture can produce statistically significant moderating effects on the impact of leadership on outcomes, subordinates’ performance, expectations, organizational commitment and job satisfaction are vary from country to country because of the dissimilarity in cultures as well (Al-Meer, 1989; Hofstede, 1991). Besides, some scholars have conducted the research on the relationship between leadership and its outcomes such as satisfaction, work performance, commitment and their result showed the positive association between them (Euske and Jackson, 1980; Savery, 1994). Therefore, it can be assumed that the variations in leadership styles and individuals preferences are influences from cultures’ variations would lead to differences in outcomes. Yukongdi (2004) revealed that the most preferred management style by the employees was consultative management, followed by participative, paternalistic, while the least proportion of employees preferred an autocratic manager. Employees who perceived their managers to be more democratic also reported a higher level of influence in decision making, greater satisfaction with participation, and job satisfaction. Numerous scholars have provided evidence contradicting the above. For instance; Kumbanaruk (1987) observed that employees are accustomed to a tradition of a top-down approach with employees receiving orders rather than thinking by themselves and expressing their own ideas. Thai culture is characterised by a tight hierarchical social system, accepted existential inequality and a strong value of relationships (Komin, 1990). Kumbanaruk (1987) and Komin (1990) suggested that employees might feel uncomfortable working in a participative work setting. Involvement in decision-making may bring unwanted responsibilities to subordinates (Rohitratana, 1998). Thai culture, long time ago, does not encourage subordinates to dare to make mistakes, nor to take initiative but favour avoiding taking risks, because risk means bringing on more uncertain situations and increasing responsibilities (Holmes and Tangtongtavy, 1995). Therefore, it seems reasonable to reveal that working under a participative leader may not necessarily lead to greater job satisfaction among some employees. Hofstede (1980) remarked that in countries in which most employees are afraid to disagree with their managers (high power distance countries); subordinates prefer managers spread across the autocratic or paternalistic styles. Consequently, it is logical to predict that a larger proportion of such employees will prefer either an autocratic or paternalistic manager, while fewer employees would prefer a consultative manager. According to Lok and Crawford (2004), it was expected that higher “initiating structure” leadership style would provide greater commitment and job satisfaction in Asian firms whereas, higher “consideration” leadership style would provide greater commitment and job satisfaction in a western firm. Brown (2003) summarised the concept of task-oriented and relation-oriented leadership from several scholars in his research. He revealed that task oriented leadership have included initiating structure; concern with production; autocratic; achievement oriented; goal-achieving include contingent reward; management by exception (active) and management by exception (passive). Relations oriented leadership, or consideration consists of idealized influence (attributed); idealized influence (behavior); individualized consideration; intellectual stimulation and inspirational motivation. According to Burns (1978), transactional leadership is the fundamental of one person taking the initiative in making contact with others for the purpose of an exchange of valued things or bargaining process. It involves rewards and Punishments. Transactional leaders must identify and clarify to subordinates about the setting role, task requirements, performance expectations and the distribution of rewards and punishment according to performance (Bass, 1985) whereas transformational leadership occurs when leaders and followers raise one another to higher levels of motivation and morality. The transformational leader exhibits charisma, develops a vision, provides inspiration, motivates by creating high expectations and modeling appropriate behaviors, gives consideration to the individual, pays personal attention to followers, provides intellectual stimulation, and challenges followers with new ideas and approaches (Burns, 1978). From the foregoing, transactional leadership is akin to initiating structure or task orientation whereas the transformational style is similar to consideration or relations orientation. Brazier (2005) indicated that organic or flatter structures type of organization with decentralized decision making and low power distance of most Western firms tends to facilitate a more transformational leadership style while bureaucratic structures with high power distance and high collectivism of Asian firms encourage a more transactional style. Besides, the relationship between organizational commitment and work performance has also been examined by Mowday et al. (1974) and their result indicated that these two variables are positively linked to each other whereas Porter and Steers (1973) found positive relationship between organizational commitment and job satisfaction. Therefore, a transactional leader is capable of facilitating the formation of a group which performs at higher commitment and work performance level to the organization in the Asian context or eastern background.

Hypothesis Development

I therefore hypothesized the following for Pakistan:

H0. There is no leadership approach present in the organization

H1. There is no relationship between Laissez-faire leadership style and work performance of the subordinate

H2. There is no relationship between transactional leadership style and work performance of the subordinate

H3. There is no relationship between transformational leadership style work performance of the subordinate

The focus of this research is on leadership styles and their effects on subordinates’ work performance. Data on leadership style shall be gathered from the subordinate group whereas supervisors will be providing data on their subordinates’ work performance level based on their judgment. The sales and marketing departments of oil companies mainly multinationals operating in Pakistan usually have one area sales manager who receives direct instructions from the national sales manager at the same time supervises 5 to 8 sales officers (subordinates). Thus, there are direct contacts and relationships between area sales managers and his subordinates.

Therefore, sales officers, as direct subordinates of the Area Sales Managers are chosen as the respondents to provide data on the leadership

styles and personal competencies of their Area Sales Managers. On the other hand, Area Sales Managers provided data on the work performance of their direct subordinates. The Job description of Area sales manager is managing portfolios, developing a customer base necessary to meet all forecasts and budgets, aligning the number of distributors in the territory by strategic consolidation to increase companies ROI, articulating year on year sales forecasts for procurements at supply chain which helps in minimizing warehousing costs, developing trade promotions scheme for distributors to enhance brand image and sales volume, in close coordination with the brand team, working as a point of contact for customers which ensures smooth business transactions at all levels, keeping close follow ups with all team members prospecting for new business, preparing and presenting proposals and maintaining existing relationships. Thus, it is necessary that both Supervisors and their subordinates are qualified to be selected for data collection. This reduces the potential bias. The top oil companies of Pakistan were identified and a full set of questionnaires (one for the Area Sales Managers and four to eight for subordinates) were then sent to each qualified work unit with the covering letter explaining the objectives of the study and assuring respondents of confidentiality and urging them to participate in the study.