Leadership Styles in a retail business influence performance

The aim of this study is to establish the link between the leadership styles used by store managers in a UK based retail chain and their impact on performance. The study seeks to understand the role of leaders in positively influencing the behaviour of their employees to enhance their performance. The study compares literature on this subject from various authors and offers a discussion on various leadership approaches. The effectiveness of leadership is also discussed from an emotional view and the relationship between leadership and knowledge management laid out. The study is quantitative in nature. Data will be collected, coded and analysed using SPSS and ANOVA. Statistical techniques like Spearman’s rho and regression will be used to establish the relationships between the dependent and independent variables. Data will be presented in tables and graphs. Ethical considerations to be made are also clearly articulated.

How do Leadership Styles of Managers in a retail business influence performance?

Background of study

There is growing interest in the role of leaders fostering employees to take initiative, embrace risk, stimulate innovation and cope with uncertainty (Spreitzer, 1995). Additionally, recent work on shared or distributed leadership emphasizes the importance of leaders empowering followers and accepting mutual influence to facilitate performance (Gronn, 2000). The empowerment of employees is vital for organizational effectiveness. There is also a growing body of work that demonstrates the importance of trust in the leader as a mediator of leadership effects on followers.

Leaders need to be trusted by their followers because trust is the mortar that binds the follower to the leader (Nanus, 1989). Trust in the leader correlates positively with various outcomes such as organizational citizenship behaviours, performance, and satisfaction (Jung and Avolio, 2000). It is suggested that trust is a vital antecedent of satisfaction with the leader because both stem from affective states (for example, admiration of the leader) and cognitive states (for example, the leader is held in high esteem because of capabilities or attributes) rather than from observed behaviours of the leader (Conger, Kanungo, Menon, 2000).

Trust can be defined as a willingness to depend on another party (Mayer, Davis, Schoorman, 1995) as well as an expectation that the other party will reciprocate if one cooperates. Perceived ability (Cook and Wall, 1980) or competence is essential to trust in organizational leader-follower relationships because followers are unlikely to develop trust in their leader unless they believe the leader is capable of fulfilling the leadership role (Whitener, Brodt, Korsgaard & Werner 1998). Trust also stems from an individual’s confidence in another party’s intentions and motives towards oneself and others (Butler and Cantrell, 1984). Credibility and integrity are also cornerstones of trust (Kouzes and Posner, 1993).

1.1 Research aims

The aim of the present study is to understand the relationship between the leadership style of store managers in a UK retail chain and the performance of their individual stores.

1.2 Significance of study

The findings of the study will be useful in developing a clear relationship between leadership styles and performance within the retail business. It can further be used to help selection and recruitment of managers for such stores based on their desirable leadership qualities candidates should possess.

2.0 Literature Review

This section discusses the concept of leadership and offers an insight on the various leadership styles used by business managers. A discussion of leadership from an emotional perspective is also offered.

2.1 A typology of leadership approaches

There is an extensive body of research looking into different models of leadership defining a broad range of effective behaviours for leaders. A historical analysis by Pearce, Sims, Schnell, Cox, Ball, Smith & Trevino (2003) provides a typology distinguishing four main leadership types each focussing on a specific set of behaviours: directive, transactional, transformational and empowering leadership. In theory the differences between the four types are clear. Directive leadership refers to behaviours that are primarily associated with task-focused directions such as issuing instructions and assigning goals. Transactional leadership focuses on the creation of reward contingencies and exchange relationships leading to a calculative compliance of the follower and includes behaviours such as the use of personal or material rewards. Transformational leadership involves the creation and communication of a vision in a charismatic way leading to emotional commitment from the followers emphasising behaviours such as providing a sense of vision, engaging of idealism and providing stimulation and inspiration. Finally, empowering leadership is aimed at the self-development of followers encouraging behaviours such as self-leadership, participative goal setting and teamwork (Pearce et.al., 2003; Houghton and Yoho, 2005).

2.2 Emotional intelligence (EI) and leadership effectiveness

Past researchers suggest that EI will be linked to transformational leadership (Gardner and Stough, 2002). Transformational leaders are seen as those executives that are able to create a vision, communicate this vision, build commitment amongst subordinates to the vision and model the vision within the workplace. Transactional leaders are viewed more as managers that maintain the status quo. Their focus is on linking job performance to rewards and ensuring subordinates have the necessary resources to undertake their roles. It is felt that as transformational leaders are able to deal with strategic matters more efficiently and in turn are able to build commitment in employees; these leaders are more likely to take an organization forward. Thus the assumption is that transformational leaders are more effective than transactional leaders, at least in some instances (McShane and Von Glinow, 2000).

2.3 Leadership and Knowledge Management

Due to the role leaders’ play, they have an enormous impact on knowledge management (KM) practices within their organizations. Leaders create the conditions that allow (or otherwise) participants to exercise and cultivate their knowledge manipulation skills, to contribute their own individual knowledge resources to the organization’s pool of knowledge, and to have easy access to relevant knowledge (Crawford, 2005; Politis, 2002). It is inferred that leaders must attach a high value of knowledge, encourage questioning and experimentation through staff empowerment, building trust, and facilitating experiential learning on knowledge (Castiglione, 2006).

Importantly, Politis (2002) suggests that the role of leadership is increasingly changing from information and knowledge gate-keeping to knowledge creation and knowledge sharing for all employees. The challenge for most leaders is to develop capacity in others by creating a climate in which acquiring and sharing knowledge is encouraged or even demanded. Bukowitz and Williams (1999) echoed the same sentiment when suggesting that, in a knowledge organization, leaders are no longer the source of knowledge and are no longer perched at the top of organization, but rather in the center. Consequently, KM processes cannot be managed in the traditional sense of management which centers on controlling the flow of information (Nonaka & Konno 2000).

3.0 Research Design

This study is exploratory in nature and the survey method will be used. The research is quantitative and is based on two hypotheses;

H1: The leadership style of the store manager is positively correlated with the performance of the particular store managed.

H2: The leadership style of the store manager is not positively correlated with the performance of the particular store managed.

3.1Populations and Sampling Design

3.1.1 Population Description

The population of interest constitutes of store managers of a retail chain in the UK. These are the individuals with the day to day management of specific retail outlets.

3.1.2 Sampling

The sample frame will consist of a list of all store managers obtained from the head office of the retail chain. The simple random sampling technique will be used to select the sample from the population. The sample size will consist of 450 store managers

 3.2 Data Collection Method

Data will be collected using pretested structured questionnaires personally served on the respondents. This will ensure validity and reliability. Data will be collected on two perspectives, to allow for objective evaluation of performance and leadership style. Return on Assets (ROA), Return on Sales (ROS) and Return on Investment (ROI) will be used for performance and the MLQ-5X short form for the leadership style.

Store managers and their employees will fill in the MLQ-5X short form (Bass & Avolio,1995). The rationale for the juniors to fill is that they report more accurately. Items on the MLQ 5X are rated on a 5 point scale from Not at All (0),to Frequently, If Not Always (4).

3.3 Data Analysis and Presentation

Multiple regression analysis will be used as it is a multivariate statistical technique that will allow prediction of a single dependent variable from more than one independent variable. Multiple regression analysis will hence be performed to test the two hypotheses where performance was considered to be a single dependent variable and the leadership styles were independent variables. Spearman’s rho will be used to test the correlations in the hypotheses. In order to minimise possibility of error, the error rate was set at an alpha level of 0.05. An independent sample t-test will be used to increase the power.

4.0 Ethical considerations

The ethical issues that will be taken into consideration are:

confidentiality

anonymity

consent and

cause no harm to respondents

All information collected with be treated confidentiality, this means that respondents will not be linked to any statements they make. In addition, anonymity will be ensured and respondents will not give out their names or reference numbers that may identify them as the particular individual that filled out certain questionnaires (Punch, 2005).

Consent will be sought from participants and they be briefed on the purpose of the study. No participants will be subjected to any harm (Fowler, 2008).

The research will adhere to the BPS Code of Conduct. All data collected will be stored according to the Data Protection Act.

5.0 References

Bukowitz, W.R., Williams, R.L. (1999), “Looking through the knowledge glass”, CIO, Vol. 13 pp.76-80.

Butler, J., Cantrell, R. (1984), “A behavioral decision theory approach to modeling dyadic trust in superiors and subordinates”, Psychological Reports, Vol. 55 pp.19-28.

Castiglione, J. (2006), “Organizational learning and transformational leadership in the library environment”, Library Management, Vol. 27 pp.289-99.

Crawford, C.B. (2005), “Effects of transformational leadership and organizational position on knowledge management”, Journal of Knowledge Management, Vol. 9 pp.6-16.

Fowler, F. (2008). Survey research methods. London: Sage Publishers.

Gardner, L., Stough, C. (2002), “Examining the relationship between leadership and emotional intelligence in senior level managers”, Leadership & Organization Development Journal, Vol. 23 No.2, pp.68-78.

Houghton, J.D., Yoho, S.K. (2005), “Toward a contingency model of leadership and psychological empowerment: when should self-leadership encouraged?”, Journal of Leadership and Organizational Studies, Vol. 11 No.4, pp.65-83.

Jung, D., Avolio, B. (2000). Opening the blackbox: an experimental investigation of the mediating effects of trust and value congruence on transformational and transactional leadership. Journal of Organisational Behaviour. Vol.21 No.8,pp 949-64.

Kouzes, J., Posner, B. (1993), Credibility: How leaders Gain and Lose It, and Why People Demand It, Jossey-Bass, San Francisco, CA, .

McShane, S.L., Von Glinow, M.A. (2000), Organizational Behavior, McGraw-Hill, New York, NY, .

Nanus, B. (1989), The Leader’s Edge: The Seven Keys to Leadership in a Turbulent World, Contemporary Books, Chicago, IL,.

Pearce, C.L., Sims, H.P. Jr, Cox, J.F., Ball, G., Schnell, K.A., Smith, K.A., Trevino, L. (2003), “Transactors, transformers and beyond: a multi-method development of a theoretical typology of leadership”, Journal of Management Development, Vol. 22 No.4, pp.273-307.

Politis, J.D. (2002), “Transformational and transactional leadership enabling (disabling), knowledge acquisition of self-managed teams: the consequences for performance”, Leadership & Organization Development

Punch, K. (2005), Introduction to social research: quantitative and qualitative approaches. Oxford: Wiley and sons.

Spreitzer, G. (1995). Psychological empowerment in the workplace: dimensions, measurements and validation. Academy Management of Journal,Vol.38. pp.1442-56

6.0 Appendices

Appendix 1

Multifactor Leadership Questionnaire (MLQ- 5X)

Forty-five descriptive statements are listed on the following pages. Judge how frequently each statement fits the person you are describing. Use the following rating scale:

0

1

2

3

4

Not At All

Once in a While

Sometimes

Fairly Often

Frequently, if not always

Leadership Trait Subscale

Descriptions

Rate

Indivdualised Consideration

Coaches Individuals

Intellectual Stimulation

Interested in different perspectives

Attributed Charisma

Thinks of others

Inspirational Motivation

Conveys a positive vision of the future

Idealized influence

Emphasizes the group