The Effect of Leadership Style on Employee’s Job Satisfaction and Organisational Performance

Topics: Leadership, Organizational studies and human resource management, Laissez-faire Pages: 10 (2947 words) Published: May 7, 2013

Abstract: This paper aims to determine the effect of leadership styles on employee job satisfaction and the effect of employee job satisfaction on employee job performance. A survey was conducted by administering questionnaires to 400 respondents in the banking sector in Bangkok. The results show that most of the bank employees, most of them females between 20 and 39 years old, are neither satisfied nor dissatisfied. They are ambivalent. Transformational leadership style was seen to have a positive effect on various facets of employee job satisfaction. Transactional leadership also turned out to be perceived as having a positive effect on different facets of employee job satisfaction. So did laissez-faire leadership. Employee job satisfaction was seen to have a positive effect on the various aspects of employee job performance analyzed. It was found that leaders and managers combine the various leadership styles identified in the research paper in proportions that produce a positive result when administering their leadership duties. The proportions at which these leadership styles are combined depend on the nature of the situation they encounter in the workplace. Keywords: Leadership, Transformational, Transactional, Laissez-faire, Satisfaction, Performance 1. Introduction Most firms and businesses consist of employers and employees or, put differently, management and staff or leaders and followers. Most of them are goal oriented. In order to achieve the desired objectives, there must be an interaction between employers and employees (or management and staff or leaders and followers). The leadership style that characterizes the interaction between leaders (or managers) and their followers (or staff members) is most important in terms of employees’ efficiency and productivity. Employees are the workforce of any businesses and they carry out the duties required to achieve the desired objective of any firm. As Eskildsen & Nussler (2000) stated, employee satisfaction is impacted by the employees’ perception of their job and the organization for which they work for. Employees’ perception of leadership behavior is an important predictor of employee job satisfaction and commitment (Jaskyte, 2004). Individual perception of the organization is related to job attitudes (Morris & Bloom, 2002). Leadership styles can either motivate or discourage employees, which in return can cause employee’s increase or decrease in their level of performance. According to Schyns & 1

Sanders (2007), the sources of employee job dissatisfaction include inadequate salary, conflicting job demands (from the leadership) and absence of promotion prospects. For efficiency purposes, an effective leadership style, one that positively affects employees’ satisfaction and results in better performances, effectiveness and productivity is clearly desirable (Turner & Muller, 2005). This paper aims to determine the effect of leadership styles on employee job satisfaction and the effect of employee job satisfaction on employee job performance in the banking sector in Bangkok Metropolitan Area. The various schools of thought about leadership and leadership styles will be fully documented in the literature review part of this article. The conceptual framework and methodology will then be considered. Next, the findings will be discussed and recommendations made. 2. Literature Review - Leadership Yukl (1994) defined leadership as the process of influence on the subordinate, in which the subordinate is inspired to achieve the target, the group maintains cooperation, and the established mission is accomplished, with support from external groups obtained. Also, Fry (2003) pointed out leadership means the use of a leading strategy to offer inspiring motives and to enhance the staff’s potential for growth and development. Northouse 111

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