CHAPTER ONE

INTRODUCTION

1.1 Introduction

This study is about the effect of leadership styles on employee performance in SONARA and mainly focused on employees and managers in the different departments that as a whole makeup SONARA. This chapter further explored the Background (historical and theoretical perspectives), Problem statement, Purpose, Specific objectives, Research questions, Hypotheses, Study scope and Significance of the study.

The World has been changed into a small global village due to globalization; many organizations are trying to improve their performance to meet challenges of competitive globalized environment.

Therefore, primary targets of organizations have been to draw suitable strategies to increase their efficiency, productivity and operational performance (Jaramilo et al., 2005). A strategic shift by organizations from emphasis on tangible attributes of performance to emphasis on intangible aspects can be seen. Organizations has focused on quality, customer satisfaction and leadership attributes rather than financial attributes for improvement in their performance. Organizations which struggle only to survive cannot stand in this global competitive environment. Appropriate increase in organizations operational performance is required to sustain in competition (Arslan & Staub 2013). Stakeholder satisfaction as well as fulfilling basic needs of employees is necessary for an organization.

Leadership has direct cause and effect impact on management of organizations whole performance. Therefore, impact of leadership on organization performance seems to be vital for organization success. Prestwood and Schumann (2002) viewed leadership as “Leadership is a state of mind not a position. In this age of competition need of capable leadership is more than ever now days to sense the different aspects of organization and manage it accordingly.’’

However, leadership aspect in management of organization, and its role in organization success have not been targeted extensively in academic research (Turner & Müller, 2005). Researches in past, have suggested that manager’s leadership style will have significant effect on the outcomes of the organization performance (Geoghegan & Dulewicz, 2008; Müller & Turner, 2007, 2010,Nixon et al., 2011:213).

The role of leaders in ensuring excellent organisational performance cannot be overemphasized. Adequate motivation, suitable work environment, compensation, efficient communication between managers and subordinates play an important role in promoting this goal. Planning and organisation of work are also very crucial in organisational attainment.

In today’s competitive environment, organization expand globally and face a lot of challenges to meet their objectives and to be more successful than others .leadership plays a vital role in the accomplishment of these goals and boost employees performances by satisfying them with their jobs, this has therefore it grasp the attention of researchers for many years, yet were unable to focus on a single definition. Many researchers focus on a different aspect of leadership. According to Mintzberg (2010) leadership is the key to trust that comes from the respect of others. While Raelin (2011) stated that, leadership is directly connected to the practice to which most people are dedicated.

Human resource is one of the prime capitals of any organisation which is not only to improve the outcome but also to compete with others. Hence, improving the performance of the employees is one of the most important goals of the organisation today. In recent years, both academicians and practitioners have highly recognized the significance of effective employees and good leadership in a firm’s performance (Kehoe and Wright, 2013). The performance of an organisation depends on the performance of people in the organisation. The success of an organisation contributes to the growth of the economy in general and the society in particular by providing jobs, service and goods which will boost the economy.

Leadership has been explained as a reciprocal relationship between those who choose to lead and those who decide to follow and it is not something you do to people but something you do with people (Binfor et al, 2013). Studies by Wang et al, (2005) show that there is a reciprocal process in the relationship between leader and follower where each party brings to the relationship different kind of reasons for exchange. This depicts the point that there exists a relationship between leader and follower and both should work together. The existence of a reciprocal relationship will affect employee’s performance and this study aims at clarifying this effect on employee performance.

The rise of behaviourism to the dominant psychology guided leadership during the 1940s and 1950s towards the study of leadership’s behaviour. Two independent programs of leadership behaviour were the recognition that effective leadership requires both a forceful and directive component as well as an enabling component that takes account of the needs of those being influenced.

The vestiges of scientific management and the “one best way” assumption gave way to a new and more complex level of thinking about leadership style in the mid-1960s. Parallel to this was the growth in psychology regarding whether the personal characteristic was the more powerful determinants of behaviour, with” situations” gaining the most support. Fielder’s (1964) contingency model spawned that the reason previous research had failed to identify a universally “best” leadership style is that the effectiveness of a given style depends on the context in which it takes place.

Building on the many research of the 1950s, Fielder’s model portrayed leaders as motivated primarily by either task accomplishment or the development of supportive relationships with group members.  Leadership situations could be defined on a continuum of availability, depending on the degree of group dependability, task clarity, and the leader’s formal power.

Task-motivated leaders were said to perform best in extremes of high or low situational favorability, relationship-motivated leaders were said to perform best in the moderately favourable condition. The theory has been extensively tested (Peters et al, 1985; Strube and Garcia, 1981), and this body of research generally supports it. The historical validation of the idea states that the optimal leadership style depends on the situational context.

Interestingly, Fielder’s successful leaderships match training program uses his theory to teach leaders how to change their leadership style to match their leadership situation, reflecting Fielder’s scholarly roots in behaviourism and emphasis on situational causality.

The late 1960s and early 1970s witnessed the advancement of several contingency leadership theories. At the time, there was a growing person-situation debate in psychology, with both sides presenting compelling evidence for their position. Accordingly, situational leadership theory, path-goal theory, and the normative decision theory each prescribed leaders should alter their style to suit the conditions of changing situations.

Hersey and Blanchard’s (1969) situational leadership theory extended Blake and mouton’s managerial grid approach by incorporating the group’s maturity level as a situational variable.

The theory suggests that a leader’s style should emphasize task-oriented or relations-oriented behaviour, depending on how willing the group is to perform the task. Groups are seen as maturing in a lifecycle from unable and unwilling to able and willing respectively. The prescribe leadership style are a task-orientated telling style, relation-oriented selling style, a relation-oriented participating style and finally a delegation style of low task and relation oriented behaviour. This has been highly criticized because of the conceptual ambiguities, lack of a logical or empirical foundation for the group maturity lifecycle construct, and little empirical validity evidence. Nonetheless, the model has been immensely popular in practice and has served as the basis for many leadership training programs

House’s (1971) path-goal theory was based on a variable representing situational factors, follower characteristics, and several moderator variables. The theory assumed that motivation and performance are enhanced when a leader help group member understand how their personal needs can be met through contribution to the organisation or group and help to clarify strategies for members to achieve this path. To summaries this complex model, task-oriented behaviours are prescribed when the path is unclear and not recommended when the path is aversion or boring. Research suggests that employee job satisfaction and motivation can be enhanced by following path-goal theory’s prescriptions, but performance may be only marginally affected (Woffard and Liska, 1993).

A good deal of leadership research has been concerned with decision-making. The normative decision theory of Vroom and Yetton (1974) specified which decision-making style (autocratic, consultation or democratic) is likely to lead to higher decision quality and follower acceptance under various situational contingencies. In this model, managers must make a series of judgment about their subordinate such as the amount of relevant knowledge the leader and the subordinate, the likelihood of subordinates to accept an autocratic decision, the likelihood of follower’s cooperation, the extent of disagreement among the followers regarding alternative, and the degree of task ambiguity. Plotting to answer these questions in a flow chart leads to a recommended decision decision-making style. The latest version of the theory (Vroom and Jag, 1988) takes into account the relative importance of the various situational variables and includes an additional decision-making style. Of all the contingency theories, vroom’s theory has gained the strongest empirical support (Yukl, 1998,).

In the recent past, leadership has been involved in terms such as a new way of managing employees and the organisation at large. The concept of human resource management has however gradually replaced the traditional concept of personnel administration. This has necessitated the strategic integration of new leadership style into the effective management of the human capital.

Kenneth and Heresy (1998) asserted that; “The effective leader must be a good diagnostician and adopt styles to meet the demands of the situation in which they operate”. The amount of direction and social backup a leader gives to subordinates depends on their style to fit the context.

Different leadership styles are used that fit to employees on the basis of the number of directions, empowerment and decision-making power. An administrative phenomenon reflects the contingency of leadership and style, situation and performance criteria have been left to suffocate on their own. As a result, employees’ performance was affected due to the lack of proper direction and application of strategic style in managing daily duties.

1.2 Problem statement

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