What kind of leadership style improves employee satisfaction in China - Literature review Example

?Employee satisfaction: What kind of leadership style improves employee satisfaction in China? The study aims to understand what leadership style is best suited for firms in China to impact employee satisfaction. Different researchers have studied the subject in different angles of leadership style, employee satisfaction and kind of firm ownership. This study gains importance in the present context of human capital and talent shortage in China in majority of the privately owned firms. A joint survey by Kelly Services and Harvard Business Review and an independent survey by Manpower Inc. have revealed talent shortage as a serious concern among Chinese privately owned firms. Several researchers have focused on defining leadership styles of the managers in the different companies while others have attempted to relate leadership styles of the managers to have an impact on employee satisfaction. While some studies have directly assessed leadership styles and their impact on employee satisfaction in Chinese firms, other studies have explicitly tied leadership styles to employee outcomes. Transformational leadership as exhibited by managers in Hong Kong and Taiwanese privately owned and multinational firms has been found to positively impact employee satisfaction with the added benefit of organizational commitment, although the level of commitment varied based on age, gender, pay, co-worker, supervision and pay among all the four components of HRM: recruitment and selection, training and development, performance appraisal and reward and compensation. Table of Contents Research purpose Topic review Conclusion References Research purpose The purpose of this research is to study the different leadership styles employed by managers in the different organizational settings to assess the impact on employee satisfaction in China. The focus of the study is to understand the different kinds of organizational settings or firm ownership and identify what specific patterns of leadership exist within these different organizations to affect employee motivation and job satisfaction. This study is important in the background of China facing talent shortage as per a 2010 survey by Manpower Inc. and another joint survey conducted by Kelly Services and Harvard Business Review (Fu et al, 2011, pp 537, 540). Work by 9 different authors (Fu et al (2011), Shen, J (2010), Talehgani et al (2010), Hsu and Chen (2011), Ngo et al (2008), Wong et al (2007), Madlcok (2008), Loi and Ngo (2010) and Wu and Chiang (2007)) between 2007 and 2012 have been primarily discussed in the study to identify their methodology for studying the different factors determining employee job satisfaction, the reliability and validity of the data and methodology, their findings and to identify if any major similarities or differences exist in their observations. This critical review of the mentioned available literature is useful in understanding the relationship between leadership styles and employee satisfaction. Topic review It is understood that leadership is a process that has influence on the motivation and performance of group activities as the group works towards realizing the common goals. The type of leadership provided by the leader or manager and the specific environment are seen to determine the successful achievement of the organizational goals in every organization or group across the globe (Talehgani et al, 2010, p 92). This prompts one to explore what leadership style or styles exist that is identified to be more successful than others and what impact these styles have on factors including employee motivation and subsequent job satisfaction. Their study draws on a combination of Robert House’s direction-goal model (House, 1996) and Geert Hofstede’s study on dividing of cultural dimensions (Hofstede and Hofstede, 2012) to develop a model that aimed to assess the cultural behaviour pattern in 18 countries. The researchers divided leadership styles into four categories: directional, supportive, participatory and success oriented leadership. Their study revealed that participative leadership is the best suited style of leadership in every culture. However, the same cannot be said for intercultural management. Further, participatory leadership style is not found suitable in North Europe, Australia and New Zealand. And leadership style in Philippines and Hong Kong are found to be diverse, leading to the conclusion that leadership style is adapted to the cultural environment of the organization like in China where the family-led businesses have a leadership style that is more of Confucius in nature that may be compared to a somewhat autocratic functioning. The researchers have done a comprehensive study with data from different industrialized, developed and developing countries and find that Chinese organizations have a leadership with centralized power that focuses on the interests of the secondary group (decision makers) rather than the primary group of workers and the success and progress to a large extent depends on the workers’ relationship with the secondary group. A comparison of cultural attributes of different countries and attributes of a leader that are deemed fit in the specific culture has also been carried out to conclude that the relationship between culture and leadership style needs to be considered in context. The study by Wong et al (2007) reveals that both task performance and interpersonal relationships are considered important. Questionnaire data from 45 managers and 61 subordinates that included both Chinese and Western expatriates working in multinational construction firms in Hong Kong were studied to arrive at this conclusion. Although it is perceived that Westerners are usually task oriented while Chinese are people oriented, it is seen that this is applicable within the respective cultures and not applicable in multi-cultural environments. This can be explained by the fact that each of the groups tend to adjust to the cultural environment that exists in the firm, to result in an adaptation of both styles of leadership. This study tries to bridge the knowledge gap to clearly identify the specific leadership perceptions and relationship cultures (power distributions) of the local managers. A comparison of leadership styles of Western expatriates and Chinese Managers was conducted to reveal that there is almost no difference in the leadership styles of the two except for minor differences in the way they perceive conflict with subordinates owing to deep-rooted cultural values and beliefs. There has been little attempt to tie leadership styles with employee performance and job satisfaction although attempt has been made to imply the relationship by comparing with Hofstede’s individualism/collectivism construct to understand impact of the leadership style adopted, which itself is dependent on the context. 362 employees of Mainland China and Taiwan were surveyed by the study conducted by Hsu and Chen (2011) which resulted in identifying the differences in leadership styles of the two neighbouring countries and the possible impact on employee satisfaction. It is noted that managers in Taiwan were more inclined to adopt transformational style of leadership than the Chinese managers to positively impact the morale of the employees. It is also noted that leadership style adopted by managers in Taiwan depended on the employee’s job location, although no specific reason has been given in the study. The reason for Taiwanese managers adopting different styles of leadership in dealing with employees based on job location has been explained by Wu and Chiang (2007) as they note that managers of Taiwanese companies with parent companies in Taiwan and offices in China tend to adopt this change in leadership style while they shift from their usual transformational leadership style in Taiwan to basically suit the needs and cultural expectations of the Chinese employees in China and Taiwan. For Chinese employees, the management system is more important although they tend to compromise on personal benefits. They study also notes that Taiwanese employees have more employee satisfaction than their Chinese counterparts in both regions, stressing on the cultural diversity between the two neighbouring countries and within each country. A questionnaire survey of 750 employees of 18 companies mostly in the production sector was used for this study along with literature review. Liang et al (2010) conducted an extensive study of six leading management journals to understand Chinese management in terms of HRM in China by gathering 186 articles published between 2001 and 2007 during which period there was a rapid development in Chinese HRM practices. The research is more inclined to define the research quality by topic while understanding Chinese HRM literature based on different areas of study including compensation and rewards, individual job satisfaction and commitment among others. They simply note that organizational commitment results are not consistent with study results of Western researchers who explain the inconsistency to be based on cross-cultural differences and variance in measurement. Shen (2010) studied Chinese privately owned firms which are mostly operating in rural areas as SMEs based on employee satisfaction on four major constructs of HRM: recruitment and selection, training and development, performance appraisal and reward and compensation. It is revealed that privatization of most of the firms in the country has affected labour relations as the firms increasingly focus on performance related appraisals within a highly power-oriented context resulting in low employee satisfaction and conflicts between employees and management. 500 questionnaires distributed between four participating private companies yielded this result which directly relates the leadership style or more specifically the cultural and organizational environment to the level of employee satisfaction. Ngo et al (2008) gathered qualitative and quantitative data from 600 companies in four different regions of China for their study of ownership styles, strategic human resource management and HR practices in evaluating firm performance and employee relations. They note that although not all firms implement strategic human resources management and HR practices, those that implemented these HR practices witnessed improved employee relations climate within the organizational climate to imply that worker’s involvement and cooperation yield positive outcomes for the firms. This stresses on the need for effective managerial skills to create a positive employee relationship climate which also translates to improved financial performance. Madlock’s (2008) study of 220 individuals working in firms in the Midwest tries to relate the leadership style, leader’s communication competency and employees’ communication and job satisfaction where it is observed that leaders who exhibit leadership style that implements both task orientation and relationship orientation result in increased employee satisfaction with a variance in results of almost 18 percent. Effective communication between leaders and subordinates that contains a relational (affective) component and task (content) component can result in higher levels of satisfaction among subordinates as the different variables: task leadership, relational leadership, leadership communication competence and employee communication and job satisfaction are tied together in the context of supervisor communication competency and employee job outcomes. It is seen that employee satisfaction is highest when supervisors are perceived to be exhibiting both relational and task oriented behaviour styles, there is direct relationship between subordinate job and communication satisfaction and the employee’s perception of supervisor’s leadership style and the supervisor’s communication competency is a direct and the greatest predictor of employee job and communication satisfaction. Further, supervisor relational leadership style is a predictor of subordinate communication satisfaction but it is not the case with task leadership style in being able to predict subordinate job or communication satisfaction. 214 employees of a state-owned steel company in China were examined by Fu et al (2011) for their commitment to the organization which is supposed to be an indicator of the behaviour of peers and managers at workplace. Ethical behaviour by peers as well as managers is said to influence organizational commitment among employees. Organizational commitment is also affected by the four facets of job satisfaction: pay, co-worker, supervision, and work along with age of the respondent. Organizational commitment is defined as an individual’s level of self-identification in the context of the organizational culture and objectives and the level of involvement or participation. With organizational commitment, employees show an unwillingness to change employment for moderate personal gains. The researchers try to correlate the four facets of job satisfaction with organizational commitment of Chinese employees by hypothesizing that job satisfaction in terms of the four facets will significantly impact organizational commitment. Demographics like age, gender, job experience, type of job and social desirability bias were also considered in the study. It is revealed that co-worker job satisfaction had more impact than pay satisfaction with ethical behaviour by co-worker impacting positively on other employee’s organizational commitment. Ethical behaviour of successful managers also impacted organizational commitment by employees. Also, older employees were found to be more committed to the organization than the younger ones. And social desirability bias is found to be related to perception of ethical behaviour of managers, gender and satisfaction with work. The researchers also note that managers who behaved ethically are more successful than those who behaved less ethically. The study result may not be applicable to other kinds of organizations as there is a significant difference in state-owned firms. Also, since the steel company where the study was conducted had majority of male employees, the researchers did not consider the bias or difference in organizational or cultural environment if there were more female employees. Though the study sufficiently considered age factor in determining the relationship between job satisfaction and organizational commitment, it lacks sufficient data on predicting job satisfaction and related organizational commitment with a balanced mix of both genders. Loi and Ngo (2008) observe that employees with job satisfaction are less likely to leave their organizations. Procedural justice and perceived organizational support are the two constructs that have significant effect on employees’ job satisfaction. Further, predisposition of employees on the procedural and perceived organizational support also determines the employee’s job satisfaction. The researchers tried to address these two areas of research and noted the relation by examining responses from 256 technical or administrative staff. While procedural justice represents contest mobility (fair and consistent procedures) and perceived organizational support represents sponsored mobility (supportive relationship with organization) norm, the two contribute positively to job satisfaction with sponsored mobility contributing more to employee job satisfaction. Treatment of employees by organization relates to leadership style of the managers which is a direct indicator of employee job satisfaction. Conclusion Works of the various different authors have been reviewed to understand what kind of leadership helps improve employee satisfaction in Chinese firms. The different studies have attempted to gather information from privately owned, state owned and foreign invested companies in China, Hong Kong and Taiwan. Different researchers have focused on different aspects of employee perceptions in determining their influence on their job satisfaction. However, these perceptions are based primarily on leadership styles exhibited by the managers. Different leadership styles exist in different regions around the globe and within an organization or a country. Leadership styles like autocratic leadership, democratic leadership, transformational leadership, etc. exist that have been used in both Chinese companies as well as Western firms. However, it is observed that Chinese firms have predominantly leadership style that is considered more autocratic by their Western counterparts. Hofstede’s theory of individualism/collectivism is the basis for most of the researchers’ comparison for the effectiveness of these various leadership styles in impacting employee job satisfaction. It is seen that while Chinese firms tend to be people-oriented in approaching their day-to-day work where relationship building impacts heavily on the decision making and approach to leadership itself, other neighbouring countries like Hong Kong and Taiwan have exhibited both styles of leadership by their managers. It can be noted that companies investigated in the research studies are multinational and privately owned firms. Further, it is found that managers in these two countries adopted a combination of leadership styles to suit the context and cultural expectations in a bid to adjust to the cultural environment. It is also seen that managers in Taiwanese firms behaved in a task oriented style with Taiwanese employees and approached Chinese employees more with a people oriented approach. Further, in privately owned Chinese firms, there is low employee satisfaction owing to performance based approach of the management. Firms implementing strategic HR practices are likely to impact employee relations and communication satisfaction positively but not job satisfaction. Effective communication competency is said to add to leadership style as managers are more inclined to communicate the relational and task component. Ethical behaviour of successful managers is also said to impact employee organizational commitment that translates into job satisfaction as the procedural justice and perceived organizational support impact employee’s commitment. Perceived organizational support representing sponsored mobility norm in the organization reflects the support from the organization or the manager in terms of the employees realizing their interests and goals for well-being. It is noted that while managers in Chinese firms of all kinds are increasingly witnessing shortage of talent, there is a change in the way firms are run in turning to more adaptable leadership styles from the family-run autocratic or people oriented approach in the context of the cultural climate. As privatisation has increased with the majority of the firms being privately owned, and job satisfaction observed to be low in such firms, it is inferred that these firms need to increasingly consider adopting strategic HR practices that focus on implementing a mix of leadership styles of task and people orientation to suit the cultural climate of the country. As many foreign investment companies exist in China, it will also be useful for the firms to consider transnational style of leadership to positively impact employee job satisfaction, organizational commitment and performance. Also since Taiwanese employees are found to be more satisfied with their jobs and since both styles of leadership is being adopted in Taiwanese firms, Chinese firms too can benefit from the same style of leadership. References Fu, W, Deshpande, PS and Zhao, X. The Impact of Ethical Behaviour and Facets of Job Satisfaction on Organizational Commitment of Chinese Employees. J Bus Ethics: 104. Springer. DOI 10.1007/s10551-011-0928-4. http://cbe.bentley.edu/sites/cbe/files/the-impact-of-ethical-behavior.pdf Hofstede, G and Hofstede, JG. 2012. Dimensions of national Cultures. http://www.geerthofstede.nl/culture/dimensions-of-national-cultures.aspx House, JR. 1996. Path-goal theory of leadership: Lessons, legacy and a reformulated theory. Leadership Quarterly: 7(3). http://knowledge.wharton.upenn.edu/papers/674.pdf Hsu, YC and Chen, YW. 2011. Subordinates’ perception of managers’ transformational leadership style and satisfaction: a comparison of electronic manufacturing companies in Mainland China and Taiwan. The International Journal of Human Resource Management. Vol. 22, No. 15. Taylor and Francis Group. Loi, R and Ngo, YH. 2008. Mobility norms, risk aversion, and career satisfaction of Chinese employees. Asia Pac J Manag.: 27. Springer. DOI 10.1007/s10490-008-9119-y. http://scholar.google.co.in/scholar_url?hl=en&q=http://umir.umac.mo/jspui/bitstream/123456789/14602/1/3722_0_APJOM_career_pdf.pdf&sa=X&scisig=AAGBfm2RLd8SiHAAjbVgPF5wMS3p-mVQZQ&oi=scholarr&ei=nwhXT9LkJ8rHrQf_i_mlDA&ved=0CBoQgAMoADAA Madlock, EP. The link between leadership style, communicator competence, and employee satisfaction. Journal of Business Communication, Volume 45, Number 1. Association for Business Communication. DOI: 10.1177/0021943607309351. http://mmunsoed27.files.wordpress.com/2010/11/28382682.pdf Ngo, YH, Lau, MC and Foley, S. 2008. Strategic human resource management, firm performance, and employee relations climate in china. Human Resource Management. Vol. 47, No. 1. Wiley InterScience. DOI: 10.1002/hrm.20198. http://crm.sem.tsinghua.edu.cn/UploadFiles/File/5%281%29.pdf Shen, J. 2010. Employees’ satisfaction with HRM in Chinese privately-owned enterprises. Asia Pacific Business Review. Vol. 16, No. 3. Taylor and Francis. DOI: 10.1080/13602380902846659. Taleghani, G, Salmani, D and Taatian, A. 2010. Survey of leadership styles in different cultures. Iranian Journal of Management Studies (IJMS). Vol 3. No.3. http://www.ijms.ir/pg/03/ijms0306.pdf Wong, J, Wong, KNP and Heng, L. 2007. An investigation of leadership styles and relationship cultures of Chinese and expatriate managers in multinational construction companies in Hong Kong. Construction Management and Economics: 25. Taylor and Francis. DOI: 10.1080/01446190600632573. Wu, CC and Chiang, CY. 2007. The impact on the cultural diversity to employees’ job satisfaction between mainland China and Taiwan: a comparison of Taiwanese invested companies. Int. J. of Human Resource Management 18:4. Taylor and Francis. DOI: 10.1080/09585190601179099. Read More