What leadership styles dominate the Chinese market - Essay Example

? Purpose of the paper- This paper attempts to understand what leadership styles dominate the Chinese market and how they affect employee job satisfaction and commitment. Methodology/ approach- Qualitative literature review is carried out to achieve the objectives of the paper. Review of journals, articles and published reports helps arrive at conclusions. Findings- It is found that while transformational leadership style has a positive influence on job satisfaction and commitment, Chinese firms tend to exhibit a more authoritative style of leadership owing to its national culture rooted in Confucianism which emphasizes on relationship building and trust that is highly personalized. Also, consideration that tends to motivate higher commitment is lacking in these firms resulting in low job satisfaction and commitment. Research limitations/ implications- The research is limited in its attempt to relate the different leadership styles that dominate Chinese firms with the dominant organizational culture. While it is observed that employees prefer transformational leadership, this research has not studied to what extent it is being implemented or is possible to implement, which is out of the scope of study. Originality/ Value- As Chinese firms are increasingly facing employee retention due to low job satisfaction and commitment owing to the impact of ‘personalized’ organizational culture and authoritative leadership style adopted by most of the managers, it is necessary that the firms’ leadership adopt a more ‘consideration inclined’ style too and strike a balance to address industry needs. Keywords: Job satisfaction, organizational commitment, leadership style, organizational culture, authoritative and Chinese firms. Table of Contents 1. Introduction 2. Literature review a. Introduction b. Leadership styles c. Organizational culture d. Employee satisfaction e. Organizational commitment 3. Methodology 4. Findings a. Relevance of organizational culture to leadership styles of manager in Chinese firms b. Relationship between leadership style, employee satisfaction and organizational commitment 5. Discussion 6. Conclusion References 1. Introduction This paper aims to determine which leadership style is the most suitable for companies in China as it is the leadership style of a manager coupled with organizational culture that determines the employee job satisfaction and organizational commitment (Lok and Crawford, 2004). Leadership styles are employed by managers to suit the needs of the people and the organization that is being led. It is almost always a mix of the six leadership styles: visionary, coaching, affiliative, democratic, pace-setting and commanding, that today’s leaders practice in successfully leading their teams. These styles are adopted by the leader either individually or as a mix of more than one style, within the context of the people and organizational needs at that moment (Murray, 2012). The success with which leaders adopt the different styles, to what extent each style has its influence on employee performance and job satisfaction and how the organizational culture affects the job satisfaction and organizational commitment by the employee will be explored. Further, it will also be understood as to the shelf life of each style or if the adopted style is applicable to all situations and sectors in Chinese organizations. Also, it will help to understand how the leaders can effectively determine which leadership style to use under certain circumstances, and how they communicate through their style of leadership. Finally, qualitative analysis of available literature in published journals, news articles and websites can help understand the most suitable leadership style for my business in the Chinese region that can have the maximum impact on employee job satisfaction and organizational commitment. 2. Literature Review a. Introduction Leadership style adopted by managers in Chinese firms has an impact on job satisfaction and commitment and leadership style is influenced by the organizational culture that exists in these firms. With these assumptions, further literature review of journals, articles and reports is carried out to understand what kind of styles dominate and how and to what extent they impact job satisfaction and commitment? b. Leadership styles Murray (2012) notes the six leadership styles: visionary, coaching, affiliative, democratic, pace-setting and commanding. He suggests that leaders can posses all the six styles but may use the specific style that the situation demands. Visionary leaders set the organization to lead a new path while motivating people and taking calculated risks. A coaching style of leadership emphasizes on developing individuals to improve performance by aligning individual goals to organizational goals. Affiliative style stresses on group engagement with emphasis on trust in the organization. Democratic style tends to draw on the knowledge and skills of people to achieve organizational goals when direction is unclear, but it is not suitable during times of crises as consensus building takes longer time. Pacesetting style strives to improve performance and systems but can create a negative environment while commanding style is the most often used with the least of effectiveness, under-cutting employee morale and job satisfaction. Hsu and Chen (2011) note that managers in Mainland China and Taiwan adopt transformational leadership style with which employees in Taiwan are satisfied with. Su, Jenkins and Liu (2012) observe that nursing managers in China adopt an authoritative leadership style owing to the Chinese culture that is based on the Confucian principles of authoritarianism and obedience. Organizational culture in Chinese hospitals is based on these principles where power is exercised depending on the social ranking in the hierarchy which tends to put the employees or nurses at a disadvantage. Companies working with China and India are honing their retention leadership styles in the brain-based economy to drive success (Brandau, 2007). Brewer (2010) note that a unique leadership style called servant leadership is the need of the hour and has the capacity to reflect and heal the organizational needs more so in the present economic unrest. This style is seen to increase job satisfaction. Buisman (2009) note the four types of leadership: charismatic, transactional, passive and autocratic leadership existing in almost all firms and observe that leadership style impacts job satisfaction in a conflict environment, where an autocratic style has a more positive effect. Soponkij (2012, p 33) notes that in East Asia, particularly in China, Japan and Korea, directive or authoritarian leadership is used to accomplish difficult tasks and a participative or democratic leadership style is used to undertake easy tasks. c. Organizational culture Organizational culture affects employee perception of their tasks and performance and also influences their thinking to the extent of influencing their personal and professional goals. Personal values, beliefs and attitudes are said to be influenced by the national culture while it also influences the organizational culture. Chinese firms exhibit a bureaucratic culture with high power distance values based on Confucian beliefs. Confucian values of respect for authority, obedience and loyalty can be found to be the cornerstones of Chinese firms and this influences the personal values of the individuals too. Attempts by individuals to align personal values, beliefs and attitudes with the organizational culture and values can impact individual’s commitment to the organization. It is observed that three basic types of organizational culture exist: Bureaucratic and innovative and supportive culture which affects an individual’s commitment to the organization (Lok and Crawford, 2004, p 323; Tseng and Lee, 2011, p 98). According to Ansoff (1988), organizational culture can be divided into four types: stable, passive, explorative, and creative (Tseng and Lee, 2011, p 98). Organizational culture is seen to define the operating philosophy and brings together shared values, beliefs and practices of the people associated with the organization to create a unique culture that differentiates it from other organizations. Organizational culture motivates member’s behavioural habits, drives performance and helps regulate individual goals to comply with organizational goals (Tseng and Lee, 2011, pp 95, 98). Hancock (2008, p 22) notes that there are nine types of organizational culture according to Bass and Avolio (1992): coasting organization, garbage can culture, high-contrast organization, loosely guided organization, pedestrian culture, the predominately bureaucratic organization, moderately bureaucratic organization, predominately transformational organization and moderately transformational organizations. d. Employee satisfaction Maslow’s hierarchy of needs is more relevant to employee satisfaction in an organization. Job satisfaction is defined as “the emotional state resulting from the evaluation of one’s job and can be negative, positive, or neutral” (Chen, Chen and Chen, 2010, p 2). Chen et al (2010, p 248) also note that the level of education, leadership styles and gender impacts job satisfaction under transformational or transactional leadership in the Chinese IT firms. Education impacts job satisfaction under both transformational and transactional leadership as it affects the level of trust and in turn organizational commitment but gender impacts job satisfaction in transactional leadership environment. It is seen that 32% of employees chose career development and training as the main engagement driver for job satisfaction (Figure 1) (Employee Engagement Report, 2011). . Figure 1: engagement drivers influencing job satisfaction. Source: (Employee Engagement Report, 2011). This report suggests that the two major driving factors of job satisfaction are employee engagement for potential career development and employee contribution to organizational development. However, it is often observed that employee engagement closely relates to job satisfaction and reflects the existence of transactional leadership style with employee engagement becoming just a part of the engagement equation. In Chinese firms, according to a survey conducted based on Blessing White’s engagement model, these two driving factors are found to dominate other driving factors for job satisfaction (Figure 2), implying that there is a tendency towards a positive correlation between job satisfaction and transactional leadership in the firms not just in China but across the globe. This is in contradiction to the more general opinion that the Chinese organizational culture of authoritarianism is the dominant style of leadership. However, the tenets of transactional or even transformational leadership styles can be found to be based on the organizational culture that exists and the needs of the organization. Figure 2: Job satisfaction drivers by region. Source: (Employee Engagement Report, 2011). e. Organizational commitment According to Employee Engagement Report (2011), the driving factors of organizational commitment are trust, relationships, engagement levels, retention and contribution. Chen et al (2010, p 249) note Nijhof, De Jong and Beukhof’s (1998, p 243) definition of organizational commitment as “the acceptance of organizational values and to the willingness to stay”. Organizational commitment model proposed by Allen and Meyer in 1990 suggests that it is a three component model with supervisor and work group being the other two components to influence organizational commitment of an employee. While the supervisor component can be equated to the leadership style adopted by the manager, the work group translates to the organizational culture. Further, three types of commitment are proposed by Meyer and Allen (1991): affective commitment which is a desire, continuance commitment that reflects the need and normative commitment that reflects the obligation of the employee in respect to the commitment to the organization. Further, level of education is seen to impact job satisfaction that in turn impacts perception of organizational commitment. Trust, which is impacted by the leadership style also impacts organizational commitment (Chen et al, 2010, pp 252-258). There is a negative correlation between job satisfaction and employee turnover intention that reflects employee commitment (Long and Thean, 2011). Intention is key to the employee commitment and can be voluntary or involuntary depending on the style of leadership. It is noted that turnover intentions are low in transformation leadership firms. 3. Methodology Qualitative research methodology involving information gathering mostly through journal publications is the major source for this study. Also, articles on leadership styles and reports on Chinese market, industry practices and trends in employment retention are useful sources of information to relate employee trends with the organizational culture and its influence on leadership styles. The study is based on sources of information that are based on theoretical and empirical evidence provided to understand the Chinese market. Most of the sources of information tend to discuss leadership, culture and employee behaviour in Chinese firms. 4. Findings a. Relevance of organizational culture to leadership styles of manager in Chinese firms Tseng and Lee (2011, p 98) found that transformational leadership helps establish an innovative and supportive organizational culture for enhancing job satisfaction and commitment. Al-Ababneh and Lockwood (2012, p 2) find that the leadership style adopted by the manager is determined by the organizational culture which is strongly influenced by the national culture. In China, the strong influence of Confucian principles on the organizational culture in turn determines the leadership style. Organization culture affects leaders to determine the style they adopt and the limitations to operate within the context of culture. This establishes the fact that a relation exists between leadership and organizational culture (Hancock, 2008, p 30, 31). In effect, leadership style also affects the organizational culture through the driving factors of employee engagement. While transformational leaders their followers or subordinates through their vision to create an organizational culture based on inspiration to align individual goals to organizational goals, individual considerations are the least entertained. But transformational leaders create opportunities for employee engagement and also increase accountability. In transactional leadership, there is an element of benefit derived by both parties through active or passive interaction. However, it is found that transformational leadership favours culture more than transactional leadership (Hancock, 2008, p 27-63; Hsu and Chen, 2011). The collective words and actions of all leaders impact the organizational culture (Employee Engagement Report, 2011). Also, the Chinese organizational culture is highly characterized by personalism and the personal relationships in the hierarchical structure tend to differentiate the leadership style (Lok and Crawford, 2004, p 323). The interplay between leadership and culture tends to focus on the leaders creating a mechanism for cultural development with employee behaviour being inspired within the norms of the organizational culture (Hancock, 2008, p 27). Chen et al (2009, p 248) reveal that building trust through personal relationships is emphasized in the Chinese culture. This means that personalism is highly relevant to organizational culture in the Chinese firms where both leadership styles find relevance, but transformational leadership is found to be more relevant than transactional leadership in China. Leadership style is seen to have the most and direct impact work environment or organizational culture along with work outcomes or organizational commitment and the success of the organization itself (Ahmad and Yekta, 2010, p 163). b. Relationship between leadership style, employee satisfaction and organizational commitment 53% of employees in China find that there is effective leadership in the firms. This was revealed in a study conducted to assess employee motivation, commitment and performance and organizational success. Relationship between leadership style and effectiveness and employee behaviour was studied and it is revealed that employees do care about their leaders’ focus and commitment and this determines their level of emotional attachment to the firm. In other words, employees tend to be more motivated and committed to an organization if they perceive that their leadership is also committed to the organization (Arpankumar, 2012, pp 198, 199). Different leadership styles are seen to have different kinds of impact on employee job satisfaction. In Asian firms, it is the initiating structure leadership style that is seen to impact greater job satisfaction and commitment. Employees who perceive that there is a high level of organizational support tend to have more affective commitment towards the organization as higher level of support is perceived as higher level of leadership commitment. Further, organizational culture in terms of support to employees and also the leadership is perceived as the mediating factor in the relationship between leadership style and employee commitment (Ahmad and Yekta, 2010, p 177). The Chinese culture is less responsive to innovative and supportive culture and a consideration leadership style which are found to have a positive effect on both job satisfaction and commitment in other countries like Australia (Lok and Crawford, 2004, pp 321-338). Lee (2007) notes that there is a relationship between the situational leadership style and job satisfaction in Taiwanese companies operating in Mainland China. Situational leadership styles like selling and participating have garnered more followers and high job satisfaction as there is an element of consideration in the selling style that is highly characterized by high level of relationship building and task which seems to be somewhat lacking in the autocratic firms in China. However, not all firms seem to exhibit the autocratic behaviour although the element of consideration is lacking in Chinese firms. Also, there is a positive relationship between charismatic leadership and job satisfaction. Passive leadership has a negative effect on job satisfaction (Buisman, 2009). Organizational commitment in Chinese firms is low and the number of employees considering exit has risen from 5% to 16% (Employee Engagement Report, 2011). There is a co-relation between leadership style and job satisfaction (Long and Thean, 2011). A theoretical framework for research methodology is developed to understand the relation between leadership styles and job satisfaction. The three different leadership styles: transformational, transactional and Laissez Faire are the independent variables in the framework and different factors influencing job satisfaction and adapted from several models form the dependent variables. It is seen that transformational leadership style affects job satisfaction the most as such leaders exhibit different behaviours at different times depending on the need of the organization (Figure 3) (Hamidifar, 2012, pp 46-49). Figure 3: Theoretical framework for relationship between leadership styles and job satisfaction. Source: (Hamidifar, 2012). 5. Discussion The assumptions of the study that there is a relation between the leadership style and employee job satisfaction and commitment is found to be true with the most dominant style in Chinese firms being that of an authority which is highly personalized. The organizational culture emphasizes on relationship building and trust while but it is difficult for employees to have job satisfaction as per Maslow’s hierarchy of needs. This results in low job satisfaction and organizational commitment which explains the reason why Chinese firms are facing increasing concerns about retention. The findings suggest that there be a more balanced approach to leadership within the context of culture that enables both personalization as well as consideration. 6. Conclusion Contribution-The paper studies the relationship between leadership styles adopted by Chinese managers and the level of employee job satisfaction. As leadership should be focused on aligning individual desires with the organizational needs within the organizational cultural context, the style of leadership in these firms has a high impact on the employee job satisfaction and commitment. Various leadership styles like transformational and transactional leadership styles exist but in the Chinese firms, an authoritative leadership style is found to dominate. This style of leadership has roots in the national culture of Confucian principles that stresses on relationship building and trust. Leaders are found to be just as motivated as the organization supports and employees tend to follow leaders and are just as motivated as the leaders. Implication- Personalism rather than consideration for the needs of the employees dominates the organizational culture in China which tends to undermine the individual needs of the employees to emphasize the collective goals of the organization. However, relationship building and trust determine the success with which employees stay committed to the organization as job satisfaction and commitment are dependent on leadership style as the independent variable. While there is a high level of dependence between organizational culture and leadership style adopted by the manager, it also impacts the employee job satisfaction and commitment which is directly dependent on leadership commitment. As employees perceive the level of leadership commitment to be a direct effect of organizational support, culture indirectly determines job satisfaction and commitment. Since Chinese firms fall short of exhibiting consideration and an innovative and supportive environment, there is bound to be low job satisfaction and commitment. Research limitations- The research is limited in its attempt to relate the different leadership styles that dominate Chinese firms with the dominant organizational culture. While it is observed that employees prefer transformational leadership, this research has not studied to what extent it is being implemented or is possible to implement, which is out of the scope of study. Ideas for further study- The study does not take into consideration the minute details of the effects of the different leadership styles that exist within the Chinese firms and tends to generalize that authoritative leadership style in a more personalized environment is what influences the employee job satisfaction and commitment, which is found to be low. However, a more detailed study with empirical evidence can be useful to give specific direction to the study. References Ahmad, AZ and Yekta, AZ. 2010. Relationship between perceived organizational support, leadership behavior, and job satisfaction: An empirical study in Iran. Intangible Capital: 6(2). Pp 163, 177. doi:10.3926/ic.2010.v6n2.p162-184. Al-Ababneh, M and Lockwood, A. 2012. The influence of managerial leadership style on employee job satisfaction in Jordanian resort hotels. Available online: Accessed on: 24th March 2012. Arpankumar, J. 2012. Title-leadership and employee engagement authors detail. 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