A critical review of literature on the impact of leadership on organisational performance is illustrated in the study. Leadership styles have been considered as the independent variable, while organisational performance is seen as the dependent variable. Two major attributes of leadership are presented in the study, which relates to relationship between organisational performance and leadership along with different leadership approaches. Further, organisational performance is discussed with some theories and models and various ways of measuring organisational performance. In the final section the relationship between leadership and organisational performance is also discussed aligned to theories and models.
In an organisation, different employees may have different descriptions for the meaning of leadership. Leadership has been defined differently based on perceptions. It is not that any of the definitions are right or wrong, rather all leadership definitionsexpose different but valuable facets of leadership. McCleskey (2014:117) stated that, capacity for influencing others by motivating and inspiring them is known as leadership. A leader mostly influences other employees in an organisation by conviction, generating a vision or by igniting a purpose. Delegach, Kark, Katz-Navon, and Van Dijk (2017:735) contradicted this and stated that leadership does not influence an individual, but it influences the activities of an individual or a group of individuals in order to achieve a common goal in a given situation.
Similarly, organisational performance is also defined by different authors based on varied perceptions. According to Birasnav (2014:1625), organisational performance refers to overall performance of a firm, which includes efficiency, productivity, market value, profitability as well as competitive advantage of that organisation. However, Deichmann and Stam (2015:215) referred to organisational performance as the execution of different activities related to work that are expected from employees from an organisation in order to successfully achieve targeted objectives of that organisation. Hamstra (2014:416) stated that organisational performance is the organisational outcome that can be measured with various perspectives such as market performance and financial performance.
Leadership is seenas the independent variable and organisational performance as the dependent variable as with change in leadership practices, organisational performance will also change in this research paper.
Understanding of leadership is a crucial task in a business organisation to assess its impact on the organisational performance. A leader holds a viewpoint that employees are an integral part of an organisational team. In this way, team leaders are able to empower their employees so that employees can go beyond their minimal expectations. Leadership styles can be considered as a form of adoption of a particular leadership that can be used to maintain a team and encourage the members to continue the good work.
Leadership styles can be attributed to providing direction, motivating people and implementing given plans. Different leadership styles are thus discussed below as follows:
Authoritative leadership style is one of the starting leadership styles that are practiced excessively in modern business organisations. According to Laureani and Antony (2017:415), an authoritative leader is focused on achieving goals, through controlling the activities of team. Authoritative leaders are very articulate with their vision and they force the workers to follow their path and reach their vision. People who work under authoritative leaders know what the consequences are of doing work and what are the rewards related to it. Iqbal, Anwar and Haider (2015:5) stated that in this type of leadership, leaders are more interested in giving orders and expect instant obedience from their workers. Policy matters are prepared in an isolated group and many people are not involved in the policy-making process.
The followers follow orders made by autocratic leaders and leaders themselves do not become part of that decision they merely dictate those decisions. Decision-making power stays with the leader himself and most of these decisions are unrealistic. Other than the leader himself, others are not entitled to ask questions about any decision taken. Workers are directed through excessive discipline and punishment rules. As stated by Bertsch et al. (2017:34) employees are told exactly what they have to do or what the leader wants from them.
Bureaucratic leadership style is one of the most predominant and prevalent forms of leadership style in today’s work culture. This bureaucratic style was proposed by Max Weber and is still famous today. In this style of leadership, there is a hierarchy structure which is present in an organisation and the topmost person of this hierarchy is the leader of the team. In highly directed and regulated lines of employee structures in today’s organisation, this structure is very impressive. The main feature of this leadership structure is that it can be broken into smaller hierarchies with different leaders for each of these groups (Eckhaus, 2016:90).
Bureaucratic leadership is today’s demand and is adversely used in today’s working culture. As stated by Khan,Khan, Qureshi, Ismail, Rauf, Latif, and Tahir (2015:90), with the bureaucratic leadership style managers follow a copybook style where everything is done according to policies or norms of the company.During that time manager asks his senior authority and follows setinstructions. In this type of leadership, the main objective of managers is to just do policing and to enforce policy guidelines to the employees. Employees are mainly concerned with doing their routine task regularly, employees should understand regulating procedures and policies of a company. Laureani and Antony (2017:6) states that in this type of leadership managers are more concerned with following their historical notions and not doing anything new.
Laissez-Faire leadership style or the delegating leadership style can be attributed to a delegation type of leadership. In the view of Iqbal, Anwar and Haider (2015:23), autocratic leadership style is more beneficial for decision in critical situation. However, on the other and democratic leadership focuses on employee engagement, which helps to gain diversified ideas and concepts. Both autocratic and democratic leadership style have invested much in developing laissez-faire leadership style. In this leadership style, leaders are not directly involved in decision making. In place of leaders, group members are allowed to take decisions on behalf of leaders. This style of leadership leads to the lowest productivity amongst group members. This leadership style is generally characterised by low guidance from the main leader. Followers get complete freedom in doing any task. Leaders provide all tools and resources for a task and group members try to solve their problems at their own risk.
Former United State (US) President Herbert Hoover was very famous for taking decisions in this style (Skogstad 2015:223). In a range of studies, it has been indicated that this leadership style is not at all suited for general use and is significantly and negatively associated with various problems. In addition to that, most of such issues rise from the attitude and behavioural aspects of leaders and employees. On the other hand, attitude and behavioural problems can lead to conflicts in the team, which can hamper quality of the job along with the employee satisfaction. There is a strong implicit relationship between leadership and job satisfaction, which substantiates the above-mentioned fact. As stated by Vann, Coleman, and Simpson (2014:32) this leadership style is taken from an economic theory with the same name. In this theory, it is pre-assumed that followers know their jobs beforehand and can do it without any problem. Because of this passive nature of leadership followers can lose motivation.
Charismatic leadership is defined as encouraging behavioural changes by developing good eloquent communication, forceful personality, and persuasion (Zehir, et al. 2014:1368). Charismatic leaders have a very impeccable skill of making their followers do the job or improve the style of the job. In this type of leadership, leaders rely on their style or charm of persuasiveness by which they make their followers do the job. For example, Martin Luther King Junior was a charismatic leader (Vann, Coleman, and Simpson 2014:334). The definition of a charismatic leader is incomplete unless emphasis is placed on the behavioural representation of the leader. In fact, in the viewpoint of Zehir, et al. (2014:1368), charismatic leaders are expected to have a set of leadership behaviours that are actually helpful to grow factual knowledge about employee perception regarding impact of leaders on organisation’s performance. Leaders with charismatic nature are mostly confident, opportunistic and inspirational in nature.
Charismatic leaders are the ones who can single-handedly change or transform the status quo in any organisation. As stated by Zehir et al. (2018:1368), organisational charismatic leadership plays a crucial role in motivating the team members in a positive manner. One of the major advantages, which can be gained by charismatic leadership, is that, such leaders reflects on the details of employees, which helps the other employees to have an opportunity of growth. A charismatic leader can be defined as someone who can exclaim commitment of followers towards their leaders (Hornstein, 2015:295). From this definition itself a clear perspective of a charismatic leader can be drawn. Extraordinarily gifted with power to influence a large group of followers in doing any particular job is an attribute of a charismatic leader. As suggested by Grabo, Spisak, and Van Vugt (2017:482) this term charisma is very old and can be dated back to antiquity. Max Weber (cited in Eckhaus, 2016:90) developed the charismatic leadership style approach in his theories of leadership. Followers primarily follow leaders by intuition and their word of mouth.
Democratic leadership can be renamed to participative leadership or shared leadership, as there is more leadership participation in this type of leadership. Democratic leadership can be easily incorporated into any type of organisation operating in any sector. In this type of leadership, all the members are equally allowed to participate in the decision-making discussions. In a democratic form of leadership, the free flowing of ideas is allowed fromevery level in theorganisation. The democratic leadership style is open-ended and there is a presence of a leader who guides his followers with his experience (Hornstein, 2015:295).
As stated by Smolovi? et al. (2016:442), through post fundamental theory, democracy can be described as good means of leadership and collective work by the followers. Described by Max Weber (cited in Eckhaus, 2016:90), it can be summarised as a leadership style, which portraysthe approach of organisational leadership in the present time. Motivating followers is the biggest aim of a democratic leader as stated by Cunningham, Salomone and Wielgus (2015:27). In this type of leadership, followers are motivated to take part in decision making.
A transactional leader is that individual who gives preference to structure and orders. Transactional leaders have a tendency for commending military operations and managing large corporations. These leaders are also effective in leading international projects by incorporating varied regulations and rules in order to achieve desired objectives on time. The transactional leaders are also capable of moving supplies or other employees fromone working sector to another in an organisedmanner. Vann, Coleman, and Simpson (2014:30) reported that a transactional leader is not good enough for organisations where innovative ideas or creativity is preferred.
Otley (2016:47) observed that a transactional leader gives more focus on outcomes and results and placesemphasis on ensuring organisation structure that is already established in an organised manner. Authority is shown by the transactional leader and they usually are in a responsible position in an organisation. Otley (2016:47) also added that a transactional leader is mostly responsible for routine maintenance and can effectively manage performance of individual employees by facilitating group performance.
Transactional leaders also focus on setting thorough and well-designed criteria for all employees in accordance to work requirements that were divided previously within organisation workplace. Fiedler (2015:35) indicated that transactional leaders most commonly choose a performance review for these employees in order to judge their performance. Thus, a transactional leader can work most effectively with those employees who have a thorough concept and understanding of their own job and can be motivated by a system of reward. In this way transactional leaders helps in maintaining a good status quo of an organisation.
Max Weber first coined the concept of transactional leadership during the 20th century (Olivier, 2018:50). After doing an extensive study on different leadership styles, Weber (cited in Eckhaus, 2016:90) named transactional leadership as a rational legal leadership style. Weber (cited in Eckhaus, 2016:90) describes transactional leadership as an exercise of controlling of bias of profound knowledge possessed by the leader. Transitional leadership theory implies that a leader gives employees those tasks, which are appropriate for those employees (Wolf and Floyd 2017:1764). This leadership style does not allow employees to be self-motivated; rather employees are bounded within monitoring, instruction and an organisational structure under which these employees are ensured to complete their tasks within provided deadline.
Bill Gates can be referred to an example of transactional leader. As layered with transactional characteristics, Bill Gates used to visit employee team’s in responsible for new products and asked them some difficult questions. The employees needed thorough knowledge and understanding of their work in order to answer those questions. These practises helped Bill Gates to get satisfaction that all team members have understood their job and organisational goal and they are working in right track (Barley, 2016:6)
Some advantages of transactional leadership include:
Transformational leadership inspires and enables organisational employees to achieve remarkable and unexpected results. A transformational leader gives emphasises that a worker will have autonomy of their specific job. Employees have authority to make their own decisions afterbeen trained properly. Aharoni (2014:379) identified that common characteristics of a transformational leader is to inspire their team members. Employees are inspired to find innovative and better ways in order to achieve their targeted goals in an effective manner. Transformational leaderalso inspires employees to mobilise. Mobilisation is performed in groups which enable targeted work to be done in a much better and effective manner.
In the opinion of McCleskey (2014:117), transformational leaders are also defined as quiet leaders and their tendency is to lead their employees by example. The style used by the transformational leader helps in building rapport and empathy that engages followers. In addition to this, transformational leaders are also an inspiration to other employees of organisation as they are mostly known for their confidence, courage they possess and their willingness for making sacrifices so that success can be achieved in a positive manner (Stone 2015:43). Weber, Fulk, and Monge (2016:325) commented that all transformational leaders have a single-minded need. Their main aim is to change or streamline those things which are not required for organisational purpose any more or are no longer in use. In this context it can be stated that transformational leaders are those leaders how can not only motivate their employees but also understand them as well. Transformational leaders can effectively inspire other organisational employees to work together with other employees as a team.
Transformational leaders tend to perform the following listed activities:
James Downtown first proposed the concept of transformational leadership in 1973. It was stated that transformational leaders are those leaders who aims in changing organisational thoughts that exist in order to achieve much better result (Stone, 2015:43). Transformational leaders also try to change existing goals and techniques used for achieving those goals in an organisation. This aspect helps leaders to give more focus on needs of organisational employees thus ensuring that performance of these employeeswill be elevated.
Application of transformational leadership is diverse in terms of measuring the organisational capabilities and performance. One aspect of transformational leadership is inspirational leadership. Inspirational leadership can bring in inspirational motivation among employees through energising as well as creating a directional approach that would be purposeful for the employees to nurture change in terms of workforce (Hamstra, 2014:420). Intellectual leadership is also an integral part of transformational leadership that has the ability to encourage innovation along with critical thinking followed by problem solving. In relation to that transformation leadership, business performance can be enhanced in an efficient manner, as the transformational leadership soothes to identify the required changes along with creating vision for change with inspiration. It has a strong relation with career certainty, job satisfaction as well as effective commitment to a business firm. In this context it is notable that idealised influence is inspirational for the transformational leaders to show themselves as role models for their followers.
Ross Perot is an evident example of transformational leader whose main aim was to bring innovation within his organisation. Perot gave proper training to all employees of his organisation and instructed to do whatever they feel right that will be beneficial for their organisation and need not wait for any approval (Bogaert, Boone, Negro, and Van Witteloostuijn,2016:1358). Perot showed a strong sense of business towards actions taken by each of employees in his organisation. Although during initial days, Perot incorporated strategic planning within his organisation, however, after a few years he recruited employees who not only took orders but were also able to give orders effectively as well (Bogaert et al.,2016:1358).
Some of the key characteristics possessed by transformational leader are listed below:
Organisational performance is a vast field of study that needs to be approached with a peer evaluative mind-set so that actual output of a business organisation can be measured with respect to intended outputs (objectives and goals of the organisation).
Theoretical approaches explicitly relevant to assess and monitor the overall performance of an organisation are discussed below. In this context, it is worth mentioning that organisational performance is integrally attached with various fields of work or various people of the organisation such as strategic planners, operational and financial managers along with legal advisors. Thus, it can be stated that organisational performance is innately linked with organisational development.
Most of the business organisations are embracing an analysis and study of organisational behaviour as well as organisational performance. This enables business organisations to understand how effectively employees are performing in their working culture in a better manner. It is worth mentioning that work culture is personality and character of a business organisation. The uniqueness of an organisation can be measured from its work culture and thus, work culture is responsible for summing up traditions, legacy, values, interactions, beliefs, attitudes and behaviours of a business organisation. Organisational performance is mostly used for predicting, managing and accessing the performance level of each of the employees who are working in that organisation. In contingency theory it is stated that the success of a leader has some effective impact on the performance of employees of an organisation (Stone, 2015:43). However, in a given situation there are certain factors that define if a leader will be successful or not. Some of these factors include personality of a leader, task that is aimed to be completed by employees of that organisation and working capacity of employees who are working in that specified group.
As stated by Rosenbaum,More, and Steane(2018:294), organisational contingency theory showsthat an organisation cannot be organised in a much better manner without involving the contingent factor on both internal as well as external situation. In this context leadership and employee motivation are conceded to be the independent variables whereas the dependent variables are absenteeism, employee turnover and productivity. According to the contingency theory it can be stated that the independent variable (that is employee motivation and leadership) will be able to change the dependent variable (that is employee performance and productivity).
Thus, if the employee motivation and leadership practices of an organisation are effective, then organisational performance will be high and with ineffective employee motivation and poor leadership practices, organisational performance will be reduced.
Effectiveness of an organisation is seldom measured by the efficiency with which organisations achieve their targeted goals. Effectiveness of an organisation is primarily based in the working environment on which an organisation performs it business functions. According to the theory proposed by Hannan and Freeman (cited in Padfield, 2017:415), those organisations which performs their business in a challenging environment is likely to be more effective than organisations who perform their business operations in a comparatively comfortable working environment.
In context to this theory, Olivier (2018:49) stated that an organisation may face hurdles and constraints from both external as well as internal factors. Some of these constraints include lack of capital in order to have raw materials, ineffective human resource and failure to collect optimal solutions. According to this theory, these factors are also different aspects of organisation environment which are required to be managed in an effective manner in order to have effective organisational performance.
Mone and London (2018:73), stated that these undesired constraints can be dealt effectively by adapting the working environment. If an organisation does not have enough capital to get the best raw material orthe most efficient human resource, then they can look for less expensive manner to serve the required purpose. The human resources can later be trained for enabling them to carry out their desired job. Thus, those organisations that are able to adapt the constraints of working environment are referred to be more efficient than the organisations who fail to carry on their business in these harsh situations.
Two organisational change consultants, Burke and Litwin developed a model of performance and change in the year 1992. This model is used to analyse various component parts of an organisation and to identify how these organisational component parts changes with time. Barley (2016:02) stated thatorganisational performance management model is capable enough to build a bridge between varied organisational dimension and cause-effect relationship. These factors are also responsible for incorporating organisational change as well. This model of change also focuses on assessing environmental factors and organisational factors which are being tweaked by the model.
Some of the key factors that are being identified by the change model of Burke and Litwin, (cited in Padfield 2017) include:
According to Padfield (2017) the 12-dimensional keys are as follows:
The external factors need to be identified, which might affect the organisation with a direct or an indirect impact.
The mission of the organisation needs to be examined in relation to the employee’s views.
Leadership structure in an organisation needs to be considered, which identifies as role model.
An organisation needs to follow the functional based structure, which needs to consider the roles and responsibilities along with communication, decision making and control process.
Organisational culture needs to maintain regulation, ethics, policies along with the principles and values.
All the procedures and policies need to be included in systems in relation to organisation operation.
Work unit climate includes the feelings and thinking of the employees.
Management practices portray the skills of managers in terms of strategizing the organisational resources and capabilities.
Understanding of job position, demand along with skills need to be fulfilled with responsibilities.
Motivational level can help to ensure the effort of employees to achieve the organisational goal.
This phase determines the individual performance level along with the organisational level in terms of efficiency, quality and budget.
Employee’s satisfaction criteria need to be considered in order to gain quality outcomes and job satisfaction.
In order to monitor progress in an organisation it is very vital to measure performance of that organisation effectively. Monitoring performance is done by measuring outcome of actual performances with respect to the intended goal of that specific organisation. Measuring organisational performance required an approach of setting performance criteria on a top- down basis. As per Stone (2015:45), some strategies that are incorporated by organisational leaders in order to measure organisational performance are listed below:
It becomes very challenging in determining how to measure the performance level of employees. For this purpose, leaders of an organisation need to form certain strategic plans that will be cascaded toemployees. This includes analysing the effectiveness of employees for achieving organisational mission and vision in an effective manner.
Smart goals should be set for employees that will be specific in nature, measurable, actionable, relevant and can be finished timely.
The leading indicators should be measured which includes factors like revenue, cash on hand, inventory turnover, stock price as well as time by which targeted projects are being accompanied.
There are ample of pathways that can lead the organisational leaders to know more about the performance graph of their organisation. InFigure 2.5 the plausible ways to measure organisational performanceare schematicallydepicted.
An organisation needs to set specific goals to measure the right things. Proper goal setting can help in approaching proper marketing strategy, which can help to achieve the set outcomes. Moreover, the results can also help to measure the performance against the set goal criteria.
Leadership being experienced by an organisation is responsible for paving the performance pathway of that organisation. Leaders are motivators by virtue of which workforce can be emphasised in a complex business environment. In addition, leaders are exceptional for backing their employees by providing sophisticated work culture. Based on the finding of Iqbal et al., (2015:95), it has been seen that the impact of leadership affects the organisational performance in a significant manner. Leadership approaches shapes the employee skills and motivations, which helps in gaining high productivity along with quality services. In order to have better results, employees need to be motivated and delegated in proper direction, which can be done through approaching proper leadership
Various theories and models relevant to explore the existing relationship between leadership and organisational performance are discussed as follows:
Personality theory implies a set of characteristics in an individual with different thought processes, behaviours and feelings. In business firms, every employee has distinct capabilities, skills and knowledge to use in their respective work. Workers act as backbone of every organisation and their distinct personalities help a company to increase their growth and expand their market in a global market. Personality traits enhance the productivity of every employee in a corporate world and thereby better growth can happen in a business organisation (Padfield, 2017:415). There lies a connection between personality and work engagement. This connection affects positive on work outcomes and to do business deals. The various personality traits of employees give them strength to face any major issue inany organisation. By making use of their skills, they can handle big problems. taking attitude, intelligence and cognitive skills can help the organisation to meet itsgoals and objectives, through delegating the employees in proper direction.
The personality theory is beneficial for every organisation. The advantages of this theory are that positive personality traits employees possesses will assist them to take on new challenges in the workplace and so they get motivated to produce productive work. In addition, complex projects can be accomplished successfully to enhance company’s growth rate, customer base and sales target (O’Reilly III, Caldwell, Chatman andDoerr, 2014:595). In addition to that, the risk-taking personality of the leaders can assist in gaining innovation and changes in the organisation, which can be a benefit in terms of competitive advantage. On the other hand, cognitive skills of leaders soothe the organisational knowledge along with the activities related to the job. Knowledge of the leaders thus can soothe in analysing the situation and taking decisions accordingly.
The disadvantages of personality theory are that it is quite difficult to measure an employee’s personality. It is quite hard to know from the beginning which employee can contribute how much work and betterment in a company’s working environment. Business organisations, such as Sasol, South African Breweries in South Africa can grow at a fast pace. In addition, just by applying this theory in workplace, they can find out slowly and steadily which employees have leadership skills and can assist business leaders to achieve success globally. However, even after using this theory, it cannot be ascertained how behaviour and skills of employees can be known beforehand, which can be accessed through different simulation and psychometric exercises.
Situational theory is a type of leadership theory where every leader has the ability to change their working styles, policies and strategies to do different work successfully. A leader who has positivity, motivation, risk taking attitude can deal with complex situations and do not have any issue to lead their company (McCleskey, 2014:117). The problem-solving attitude is one of the ways by which leaders can be able to address any finance related or technical related issue in their company. A better relationship with internal stakeholders and external stakeholders can assist a leader to take major decisions in distinct situations. The situational leadership has four segments, namely supporting, coaching, telling and delegating.
In the telling phase, the leaders take decision on behalf of organisation, which has to be followed by the employees. Telling is basically considered as the authoritative approach. In the coaching phase, the decision is taken by leaders; however, employees are engaged in discussion of the decision. In the delegating phase, leaders are not involved much with the employees, where the decisions and tasks are taken by the employees. On the other hand, the supporting phase portrays the leaders to support the employees to take decision through providing them direction and feedback (Shin and Konrad, 2017:975). Leaders in the supporting phase take the decision together with the employees rather than directing them directly.
The situational theory is helpful if every leader applies it in their workplace otherwise no leader can reap any benefits. A leader can make his company run successfully if he will tell his employees and management team what major changes are about to happen in a company. Apart from that, it is a leader’s duty to inform every working staff what benefits they can get from such changes (Shin and Konrad, 2017:973). Based on the theory, it can be said that an effective leader needs to adapt their leadership style based on the situation. In addition to that, situational leadership can be a beneficial factor, in terms of critical situations of an organisation, where the leaders can understand the situation and act accordingly.
The demerits of situational theory are that it is quite hard for a leader to remain flexible every time in distinct situation. Moreover, by trying to take advantage of every situation, a business owner has to shift their needs from long-term goals to current goals. Due to this reason, the growth of any company can be disrupted in future years. Through the application of this theory, every leader can know how they should keep a good relationship with every working person. However, even after using this theory, business owners may not be able to show maturity, flexibility in distinct situations to resolve major issues.
Trait theory is a type of leadership theory. As per Akhtar et al. (2015), people who have intelligence, work-specific personality, knowledge, cognitive skills, business knowledge and creativity can become good leaders.
The charismatic leadership style depends on the persuasiveness and charm of a leader, where the personality of such leaders might be driven through their commitment and convictions to cause. The charismatic leaders guide the team members and employees in a particular direction considering their emotional appeal. Decision making process acquires vital skill and knowledge within a business workplace, mainly for the managers within their leadership positions. A logical procedure is needed to be outlined for ensuring positive results of decision making with all possible perspectives.Towards enhancing and maintaining productivity, flexible leaders have the possible to ability at the competency and embrace change of business (Akhtar et al. 2015). Within this situation flexible leaders open new and modern ideas in order to work with wide spectrum of people within an organisation.Creativity of leadership traits considers novel and modern approach within their business operations by which it is possible to reach the global scale in a sustainable manner. Creative leaders’ prior’s new technological approaches towards enhancing the creativity in business.
It is hailed that great men have capability to influence other people through their charisma, intellect, virtues, and will power. Personal characteristics of a leader, such as temperament and work engagement tendency can help leaders to motivate their company’s workforce. The skills needed to be a leader can be gained only through experience. Constructive information about the leadership can be identified through trait theory. Based on the identified traits of leadership, such as business knowledge, creativity, integrity, self-confidence, emotional maturity and others, employees can develop their leadership skills in an effective manner (Akhtar et al. 2015).
Merits of this theory are that it places focus mainly on leaders and not just on followers or in any situation. According to Hyland, Lee and Mills (2015:576), an effective leadership style has given many positive results in business organisations, small and large sized business firms.
There are some demerits of this trait theory of leadership. It is quite difficult to ascertain that even if some leaders have risk taking attitude, work management, better cognitive skills, some people donot do leadership roles in a proper way. Thus, it can be said that only by having certain traits a non-leader cannot become a great leader. Due to this reason, ideas present in this theory have become outdated; however, some leaders still have faith in this theory (Akhtar et al., 2015).
This theory can be beneficial if it is applied by leaders take better decisions in their work. In addition, they can lead their employees properly too. However, leaders have to take better strategies and alter policies so that their leadership traits can bring success to their business organisations.
There was no such revolutionary model beforehand. A decade ago and even today business owners make use of transformational and transactional leadership styles instead of a revolutionary leadership style to do business (Eckhaus, 2016:90). However, this model was studied from 2016 after Ricardo Semler had won the award of “Human Resource Management/ Organisational Behaviour” for his revolutionary style in business. The leadership style of Ricardo Semler permits employees to take their own decisions if they can finish their goal. This leader pays attention to each need of his employees and thereby his rapport with employees is good. In addition, he is a laissez-faire type of leader. Ricardo Semler is the President and Chief Executive Officer (CEO) of Semco S.A. On the other hand, Jan Carlzon, a former CEO of Scandinavian Airlines (SAS) had made use of revolutionary ideas to lead his company. In addition, an upside-down pyramid was used in a revolutionary way by the CEO of SAS (Mueller, 2014:48). The advantages of this model are that the majority of the employees can be able to do more work as there are less pressure.
However, some demerits of this model are that decision-making procedure can take a lot time. In addition, there can be issues to manage time and thereby conflict among employees can arise(Stone, 2015:38). These issues can be resolved by doing discussion properly and to address difficult situations from the beginning. Through the application of this theory, relationship between business owners and their employees are tending to become better. However, for running organisations, avoiding conflicts, proper discussions have to be done.
Corporate culture is difficult to understand, and different types of behavioural norms are incorporated in this corporate culture. The different policies and regulations of business firms affect work culture of employees from time to time. However, there lies a direct connection between a business firm’s culture and its effectiveness (Fonseca, 2015:169). Better work culture and policies of organisations enhance growth rate of business firms and foster amicable professional relationships among employees. Positive work culture can motivate each employee to give their best in their work every time. In addition, positive work culture can lessen employee turnover in business firms and thereby business owners’ donot have to recruit new employees in their company (Zimon, 2016:62).
Just by applying Total Quality Management (TQM), a management philosophy in business environment, the effectiveness of organisational, flexibility of organisations can become better. This management philosophy has been used in several business firms to meet needs of every customer, internal stakeholders, such as employees, managers and external stakeholders, such as suppliers and investors. Those companies which make use of such philosophies can be able to satisfy every demand of their customers, business clients from time to time. In this way, any company can be able to gain customer loyalty and can retain customers. By making use of such a management philosophy, issues, such as financial problems, technological, job and other problems can be resolved at a fast pace. Thus, a company can expand in different countries, such as in South Africa, the United Kingdom (UK), and United States of America (USA) (Wolf andFloyd, 2017:1760).
Some business owners think that only by meeting demands of clients, any organisation can gain a lot of money in return. However, this is a wrong notion. In order to achieve both national and international success, every company has to satisfy both their employees and external stakeholders. By making use of such a philosophy, better innovative ideas can come up in the minds of every employee to do their work (Soto-Acosta, Popaand Palacios-Marqués, 2016:885). The management team has to perform well in telecommunications companies and in the postal services so that working staff can make no major mistakes in their jobs at any time. In addition, training should be provided to every employee on how they should use different equipment and technology (Hornstein, 2015:291). Apart from giving enough money to their employees, every business leader has to provide necessary equipment and resources and materials which can make the working environment comfortable for employees.
Several companies are present in South Africa, which are doing successful business by utilising wide range of leadership styles in their organisation. For instance, Sasol is a South African based company and it manufactures chemicals. This company has undergone lots of leadership changes in recent years to make its performance level a lot better in coming years. Another famous company of South Africa, Shoprite, and the business owner has been making use of charismatic leadership style. Whitey Basson, the Chief Executive Director of Shoprite Company has been making use of charismatic leadership style to run the company in a better way and to gain competitive advantage. Due to his charismatic leadership style, Shoprite Company has grown in a better way and entered into market capitalisation successfully. After entering into market capitalisation, this company had earned R114 billion for at least two decades. Employee turnover had happened less in Shoprite and this company had 140, 000 employees (Zimon, 2016).
Conclusion
In the literature review section, at first a brief introduction of entire section was given. After that, a brief overview of two variables of this research, such as independent and dependent variables had been given. Leadership was the independent variable and the dependent variable was organisational performance. Several theories and models had been taken to discuss and critically analyse distinct leadership styles and their effect on business organisations. Leadership theories based on authority, such as authoritative, bureaucratic, laissez-faire, charismaticand democratic were discussed. Thereafter, leadership theories based on relationship, such as transactional leadership and transformational leadership were taken to evaluate different leadership roles in corporate world in various countries. Moreover, the effects of leadership styles and models on business organisations of several countries, such as South Africa and so on were discussed. Moreover, theories, such as contingency theory, Burke-Litwin change model, Hannan and Freeman organisational theory had been taken to discuss its effect on organisational performance. Ways to measure organisational performance, theories on organisational performance, such as personality theory, trait theory, situational theory and revolutionary model were considered. Empirical studies on South African leadership were explained. In the next chapter the research methodology used in this study will be discussed.
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