Leadership Theory and Styles Related to Employee Motivation

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Leadership style, employee motivation and commitment:

The study investigated the relationship between different leadership styles and employee motivation and commitment after a merger in a retail bank operating in an economically volatile environment. Data were collected from 121 employees (17 managers and 104 non-managerial) using three closed-ended questionnaires. Using measures of central tendency and correlation analyses, results indicated weak but significantly positive relationship between different leadership styles and employee motivation and commitment. The advantage of this study is that it can provide a practical framework for designing management systems that can be used by other financial institutions in depressed economies in the future. Key words: Banking consolidation, merger, financial institution.

INTRODUCTION: During the period between the years 2000 and 2008, the Zimbabwean economy was on the decline. Political instability, bad corporate governance and corruption are cited as reasons for the dwindling economy during that period (The Zimbabwean Herald, 2005). The result was a volatile economic environment characterised by high inflation of about 6.500% which culminated in mergers, acquisitions, retrenchments and a high level of brain drain in almost every sector of the economy. Most notably was the financial sector which suffered from under-capitalisation, instability and bad corporate governance for most of the year 2004 (Zimbabwe Business Watch, 2008). To cushion the banks from the economic meltdown, the government tasked the central bank to revive the declining financial sector. To this effect, in September 2004, a deadline for all financial institutions to declare their capital reserves and show that they had enough liquidity to continue operating was set. Some of the banks were found wanting in this regard. Seven troubled banks were placed under curatorship while four others were liquidated. Such a strategic decision by the central bank created the conditions for the merging of the liquidated banks to form a completely new consolidated retail bank. Literature (Yu, 2009) argue that despite seemingly favourable strategic, financial and operational assessments made during pre-merger feasibility studies, mergers have less than a 50:50 chance of being successful. When a merger takes place, it brings together different corporate cultures and different leadership styles (Lind and Stevens, 2004). Thus, management often becomes concerned about which leadership style is best for the new organization, at the same time, also getting concerned about the economic performance of their business against rival competitors, resulting in the issues of employee commitment and motivation being put at the very bottom of its priority lists (Heenan, 1989). Yet, on the other hand, employees in the newly created organisations have been found to be concerned about perceived job loss, changes in responsibilities, performance and future transfer of authority (Yu, 2009). These concerns have a direct relationship with employees’ commitment and motivation in the workplace (Meyer et al., 2007). With evidence of both employees and management concerned differently in the context of a merger, there is scope for studying the relationship between different leadership styles, employee commitment, and motivation in different economic contexts. There is empirical evidence that when a merger, incorporation or acquisition takes place, there is a corresponding increase in employee uncertainty, decrease in satisfaction, and commitment, increase in intentions to quit the organisation, and decrease in perceptions of the trustworthiness, honesty and caring (Covin et al., 1997). Yu (2009) and Hellriegel et al. (2001) point out that, any form of organisational change, whether intended or unintended, can be viewed as the greatest source of job uncertainty and stress in an employee's life. Concurring, Schabracq and Cooper (1998) found that,...
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