Leadership and Organisational Performance - Literature review Example

Evaluation of literature on leadership and organisational performance BY YOU YOUR SCHOOL INFO HERE HERE Evaluation of literature on leadership and organisational performance Introduction In most business environments, traditional management practices include planning, organising and controlling and these are critical steps toward ensuring proper resource allocation, development of strategic objectives, as well monitoring employee behaviour and establishing the metrics to ensure top productivity and organisational efficiency. However, contemporary organisations are recognising that in order to maximise total organisational performance, managers must develop strong leadership skills in order to gain employee commitment, loyalty toward the organisation, and ensure voluntary followership. Leadership is defined as a type of social persuasion in which the leader recruits support of others in the organisation in order to achieve common goals (Dasborough 2006; Chemers 1997). It is an individual in the organisation that coaches and directs others whilst maintaining capacity and competency to organise groups and teams in the pursuit of achievement of strategic goals. This essay describes the imperatives of leadership in the contemporary organisation as a means of fostering increased organisational performance. The linkage between leadership and organisational performance Armstrong (2007) suggests that it is necessary for management of an organisation to utilise a soft approach to administration in order to properly motivate and satisfy employees. For instance, when leaders continue to assert that employees are considered valued resources to the business, it builds trust between management and subordinates and develops a high commitment organisational culture (Armstrong 2007). Why is this? According to the literature, in order for employees to be loyal to the organisation, it must provide opportunities for personal growth and employees must feel a sense of ownership over their job role activities (Hersey, Blanchard and Johnson 2008). Under traditional management practices, it is common for managers to attempt to establish control systems and ensure that decision-making is centralised with minimal opportunities for shared decision-making. Leadership, however, allows for more participative decision-making that is horizontal across the organisation and the leader works consistently to develop social and professional competencies with individual employees or groups. When employees are shown that they are valued and appreciated, with supplemental efforts to coach employee development, they gain confidence in themselves and establish a perception of faith and trust in the organisational leader. When employees gain the aforementioned self-confidence and trust in the organisation as a result of leader activities, it improves organisational performance. This is because employees maintain basic psychological needs that are relatively universal in all demographics and cultural backgrounds, an emotional requirement for the achievement of belonging in the organisation. According to a trusted psychological model of human motivations, known as Maslow’s Hierarchy of Needs, social belonging in the organisation is absolutely paramount for employees to gain self-esteem and reach the pinnacle of their capabilities and potential in the job role (Maslow 1998). Managers, when using a hard approach to administration, consider employees to be like tangible resources that should be allocated in the same rational fashion as any other physical resource that should be exploited to achieve maximum productive return. This provides no opportunities for motivation or inspiration and does not energise employees. Kotter (2001) offers that inspiration and enthusiasm are outcomes of giving people a sense of personal accomplishment and that they belong within an organisational dynamic that legitimately cares about their well-being. When a sense of belonging is established, and employees feel encouraged as valuable resources, organisational performance is improved with more ambitious employees, productive work outputs, and the establishment of more cooperative behaviours. One of the most effective method of establishing both motivation and a sense of personal belonging is the transformational leadership model, in which the manager role models desired behaviours, acts as a visionary for employees, inspires through reiteration of vision and mission, and serves as a coach that works toward developing employee competencies (Fairholm 2009). Transformational leadership is bolstered by the strength of personal leader personality and vision which provides inspiration for employees to alter their perceptions and motivations to work collaborative towards the achievement of common goals. Transformational leaders are considered ethical exemplars that utilise charismatic behaviours and establish encouraging dialogue with employees where both social and professional focus are to persuade team members toward working for the benefit of the organisation or the group (Bass and Riggio 2006). Why does transformational leadership ideology work toward improving organisational performance? This approach which establishes a critical perception of social belonging as well as builds inspiration and enthusiasm leads to employee job satisfaction. Satisfaction improves motivation to achieve organisational objectives and individual job roles more effectively. Satisfaction is established “as a result of employee perceptions of a leader and their ability to work independently of management control systems” (Emery and Barker 2007, p.77). Traditional management approaches, where there is much more management visibility in the administrative process and where control mechanisms are established erode the establishment of socially-relevant relationships and do not provide opportunities for managers to utilise more humanistic methods of employee engagement. Transformational leadership, and its fundamental ideologies, provide opportunities for autonomous working environments that are established through coaching and mentoring, hence enhancing a sense of personal satisfaction about their role within the organisational culture. The end result is a set of psycho-social outcomes of contentment and appreciation which builds important loyalties toward the leader and the organisation that, overall, improves job productivity, performance and delivery of more quality work outputs. This ultimately leads toward a business achieving competitive advantage through human capital benefits. From a different perspective, quality leadership strategies allow an organisation to enact change practices more effectively and efficiently without recurrence of employee resistance. Ford, Ford and D’Amelio (2008) identify that when employees are not committed to the organisation, managers are subject to irrational and unrealistic responses to the change in an effort to resist new organisational procedures and job role activities. This is a substantiated psychological phenomenon that is common in organisations sustaining diverse employee populations. In organisations that must be adaptive and flexible, regularly, to changing external market conditions, ensuring that employees embrace the change and work toward positive implementation of the change is crucial to achieving positive organisational performance. One type of leadership that assists in reducing change resistance is transactional leadership. Under this ideology, leaders build psychological contracts with employees that highlight a series of rewards that will be received if employees meet a certain set of performance outcomes or job role improvements (Antonakis, Avolio and Sivasubramaniam 2003). Transactional leadership improves organisational performance as it removes ambiguity in the relationship between leader and employee, something that provides uncertainty and can ultimately de-motivate performance over time. Ambiguity is one of the most detrimental aspects of communications in the organisation and can lead to poor job performance and erosion of inter-organisational trust. The domain of human resources recognises that the receipt of rewards is a fundamental motivator that increases productivity and job performance (Armstrong 2007). Hence, transactional leadership provides two important outcomes: injecting clarity into communications strategies between leader and follower and providing employees with fundamental compensation for achieving organisational goals and building a high productivity culture that is motivated in the pursuit of receiving incentives for accomplishment. Yet another type of leadership that improves employee job satisfaction is laissez-faire leadership style. It is a passive style of leadership in which employees are given ample opportunities for interacting and working within autonomous working environments. In this type of leadership style, employees or teams are given the majority of decision-making authority (Osborn 2008). The leadership ideology has leaders only intervening when mistakes occur in performance or tasks and when feedback is required as it pertains to individual or team performance. Kotter (2001) identified that when employees have opportunities to work independently of management controls, it improves satisfaction which, in turn, enhances holistic organisational performance through more dedicated and motivated employee populations. Hence, laissez-faire leadership style provides the foundation for increased organisational performance as a result of the autonomy provided to employees in a variety of different work situations. Chaudhry and Javed (2012) conducted a primary research study on laissez-faire leadership and learned that this ideology is significantly correlated with increased motivation. Langfred and Moye (2004) identify that increased autonomy leads to enhanced motivation. Though some might argue that laissez-faire is actually a complete lack of leadership, it is just an ideology where the leader takes a more submissive position whilst allowing employees to draw on their own competencies (or training-induced learnings) in an environment where they are capable of making decisions whilst still producing quality organisational outputs. The ability to work independently without managerial dominance or authority-based manipulations common in structured management philosophy builds a sense of empowerment that is critical in most Westernised organisations where individualism is an important social construct. A critical discussion of findings Nearly every respected model of management describes the necessity for the establishment of controls as a managerial obligation. However, Deming (2002) clearly asserts that failure or successes of the organisation are directly related to managerial competency. Deming states that management is directly responsible for 85 percent of problems and statistical variations are directly attributed to managerial competency levels. The management roles of planning, organising and controlling do not emphasise that leadership as a fourth obligation should be given more emphasis than other managerial activities. Hence, traditional management practices should be recognised as being ineffective for changing employee behaviours and culture which can lead to decreased organisational performance. Leadership is, based on all research findings, clearly a more effective method of changing sociological and psychological outcomes for employees that enhances productivity, hence improving organisational performance and competitive advantages in market-centric organisations. Leadership is a contemporary strategy that provides fundamental, positive benefits on human behaviour and attitude as it builds social belonging, better relationship development, enhances employee development, and creates general job satisfaction with employees. It is a philosophy in the organisation that builds more interactivity, more quality engagement, and maintains more positive emotional responses to change and organisational policy. Leadership should therefore be recognised as being significantly more important and crucial to organisational performance than traditional management practices and ideologies. ` It cannot be understated, based on findings, that employee emotions and psychological responses to various organisational stimulus are critical components of what constitutes organisational performance. As contributors to the organisational model and the pursuit of achieving important organisational goals, employees cannot be dismissed as valuable resources. Without their support and productivity, an organisation cannot sustain its mission and vision effectively which is especially true in larger organisations with multiple support divisions that are inter-connected in a fashion that creates a type of uncontrollable inter-dependency. One team or individual that is de-motivated or dissatisfied with their job role can break down the structural systems required to operate co-dependently to achieve positive organisational outcomes. Leadership is the most beneficial method of ensuring these breakdowns do not occur and that all employees work collaboratively and with high levels of motivation for an organisation to boast high productivity and overall performance achievements. Conclusion Research provided no evidence that leadership strategies have negative outcomes on organisational performance, therefore leadership strategies should be applauded as the most beneficial contributor to increased, holistic organisational performance. Whether utilising transformational leadership which inspires and motivates employees through magnetic leader engagement and support for employees, transactional leadership which provides clarity and establishment of rewards for performance, or laissez-faire leadership that gives ample opportunities for autonomy, all strategies would appear to improve employee attitudes and perceptions of organisational integrity. Leadership improves organisational performance not through structured systems and proper resource allocation, but by changing the hearts and minds of employees in a fashion that provides greater levels of commitment, loyalty and trust for the organisation. As indicated by the literature, leaders serve as positive representatives of the organisation and when trust and confidence are established in the leader, it extends to the organisation. Organisations require committed and devoted employees if the organisation is to achieve its long-term strategic goals or short-term objectives that are critical to enhancing organisational longevity and competitiveness (when relevant). It is clear that leadership, as opposed to management ideology, builds the foundation of enhanced organisational performance. References Antonakis, J., Avolio, B. J., & Sivasubramaniam, N. (2003). Context and leadership: an examination of the nine-factor full-range leadership theory using the Multifactor Leadership Questionnaire, The Leadership Quarterly, 14, pp. 261-295. Armstrong, M. (2007). Handbook of strategic human resource management, 5th edn. London: Kogan Page. Bass, B.M. and Riggio, R.E. (2006). Transformational leadership, 2nd edn. Mahwah: Lawrence Erlbaum Associates. Chemers, M. (1997). An integrative theory of leadership. Lawrence Erlbaum Associates. Dasborough, M.T. (2006). Cognitive asymmetry in employee abnormal reactions to leadership behaviours, The Leadership Quarterly, 17(2), pp.163-178. Deming, W.E. (2002). Chapter 6, in J. Beckford (ed.), Quality: an introduction. London: Routledge. Emery, C.R. and Barker, K.J. (2007). The effect of transactional and transformational leadership styles on the organisational commitment and job satisfaction of customer contact personnel, Journal of Organisational Culture, Communication and Conflict, 11(1), p.77. Fairholm, M. (2009). Leadership and organisation, The Public Sector Innovation Journal, 14(1), pp.26-27. Ford, J.D., Ford, L.W. and D’Amelio, A. (2008). Resistance to change: The rest of the story, Academy of Management Review, 33(2), pp.362-377. Hersey, P., Blanchard, K., Johnson, D. (2008). Management of organisational behaviour: leading human resources, 9th edn. Upper Saddle River: Pearson Education. Kotter, J.P. (2001). Breakthrough leadership, Harvard Business Review. December. Langfred, C.W. and Moye, N.A. (2004). Effects of task autonomy on performance: an extended model considering motivation, information and structural mechanisms, Journal of Applied Psychology, 89(6), pp.934-945. Maslow, A. (1998). Maslow on management. New York: Wiley. Osborn, S. (2008). Organisational behaviour, 10th edn. John Wiley & Sons, Inc. Read More