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Abstract: This paper investigates the relationship between leadership styles and
organisational performance and employee satisfaction. Effective leadership is essential for
driving organisational success and nurturing a positive workplace culture. The study
investigates the influence of various leadership styles, such as autocratic, democratic, laissez-
faire, transformational, and transactional, on crucial organisational outcomes. The paper
establishes a theoretical framework and a conceptual comprehension of leadership styles
through a comprehensive review of the existing literature. It identifies the relationships between
leadership styles and organisational performance indicators such as productivity, profitability,
innovation, and employee satisfaction by analysing empirical studies. Combining qualitative
interviews and quantitative surveys, the study collects data from a wide spectrum of
organisations and industries using a mixed-methods approach. The acquired data is then
evaluated using regression analysis and other statistical methods to put the hypotheses to the
test. The results and discussion part investigates the impact of various leadership styles on
organisational success and employee happiness, as well as the data analysis findings. It
analyses and contrasts the findings with previous studies, noting any parallels or discrepancies
and explaining the observed trends. The conclusion of the research project consists of a
comprehensives assessment of the findings, with an emphasis on the study's theoretical,
practical, and management implications. It acknowledges the limits of the research and makes
suggestions for more research that should be conducted in the futures to deepen our
understandings of different leadership styles and how they affect the performance of
organisations and the happiness of their employees.
445
Volume: 8 Issues: 50 [September, 2023] pp. 445 - 455
International Journal of Accounting, Finance and Business (IJAFB)
eISSN: 0128-1844
Journal website: www.ijafb.com
DOI: 10.55573/IJAFB.085031
Introduction
Effective leaderships is crucial to the success and sustainability of organisations in today's
dynamic and competitive business environment. Particularly, leaderships styles have a
substantial effect on various organisational outcomes, such as performance and employee
satisfaction. Understanding the relationship between leadership styles, organisational
performance, and employee satisfaction is essential for businesses attempting to optimise
operations and foster a positive work environment (Hutagalung et al., 2020).
Literature Review
The purpose of this literature review is to provide a thorough comprehension of the connection
between leadership styles, organisational performance, and employee satisfaction (Alblooshi et
al., 2021). This section examines the underlying theories and conceptual frameworks that
explain the impact of leadership styles on organisational outcomes and employee well-being by
analysing a variety of scholarly works.
Transformational leaders serve as examples for their followers to emulate, which helps them
win the respect and trust of those followers (Loang & Ahmad, 2021). They act with high ethical
standards, honesty, and a strong sense of purpose, which motivates followers to model their
behaviour after their own and coordinate their goals with those of the organisation.
Transformational leaders have the ability to articulate a compelling vision and inspire their
followers to strive for excellence through inspiring motivation. This allows them to transform
their organisations into more effective organisations. They motivate followers to put the success
of the organisation ahead of their own self-interests by communicating clear expectations,
establishing difficult objectives, and creating a shared feeling of purpose and passion (Avolio
et al., 2022).
Encouragement of the Mind: Creativity, invention, and critical thinking are all qualities that are
inspired in followers by transformational leaders. They do this through challenging the status
446
Volume: 8 Issues: 50 [September, 2023] pp. 445 - 455
International Journal of Accounting, Finance and Business (IJAFB)
eISSN: 0128-1844
Journal website: www.ijafb.com
DOI: 10.55573/IJAFB.085031
quo, stimulating intellectual curiosity, and encouraging intellectual curiosity. This contributes
to the overall promotion of a culture of learning within the company (Loang, 2023).
Transformational leaders make it possible for their followers to grow to their full potential and
contribute to the organisation to the greatest extent possible by cultivating an environment that
values novel ideas and points of view and placing a premium on new viewpoints.
Individualised Concerns and Thoughts Leaders that have the potential to change the lives of
their followers are aware of their followers' individual qualities, expectations, and ambitions.
They provide customised assistance, counselling, and mentorship in order to foster each
person's healthy and positive growth and development (Loang & Ahmad, 2023).
Transformational leaders may build a sense of belonging inside the company, strengthen
connections with their followers, and increase work satisfaction by catering to the individual
requirements of their followers (Bass et al., 2022).
According to the notion of transformational leadership, leaders who exhibit these four
characteristics have a greater chance of inspiring their followers, of increasing their intrinsic
drive, and of creating a favourable environment in the workplace. As a consequence of this,
businesses that are headed by transformational leaders often enjoy improved organisational
performance, higher levels of employee happiness and engagement, lower rates of staff
turnover, and other positive outcomes.
Leaders that participate in transactional relationships with their followers engage in interactions
with their followers that are characterised by explicit communication of expectations and
rewards for performance. The following features distinguish this leadership strategy from
others (Bono et al, 2022).
Through the use of dependent rewards, transactional leaders provide their followers with
crystal-clear direction regarding what is expected of them and what precise performance goals
they should strive to achieve (Loang & Ahmad, 2022). They promise followers incentives,
recognition, or promotions in exchange for accomplishing goals or going above and beyond
what was expected of them. A transactional leader will devise a system of incentives and
punishments for followers to use in order to inspire them and direct their behaviour.
This link, which is built on exchanges between leaders and followers, has the potential to
accomplish the desired results inside an organisation, in accordance with the transactional
theory of leadership.. Transactional leaders build a well-organized and productive work
environment by outlining the employees' responsibilities and outlining the benefits of meeting
those responsibilities. The possibility of receiving rewards is what drives employees, and they
are well aware of the standards to which they are held. The attainment of set goals and
performance standards is the primary focus (Dvir et al., 2022).
Transactional leadership has been attacked for its lack attention on intrinsic motivation,
creativity, and long-term employee engagement. While it has been related to positive results
such as higher productivity and task performance, this style of leadership has also been linked
to positive outcomes such as increased productivity (Traore & Loang, 2023). Transactional
leadership is most effective when actions are regular and well defined, and when followers are
driven by external incentives and penalties. This is frequently referred to as "command and
control" leadership.
Finally, transactional leadership theory provides some insight into the roles that contingent
compensation, management by exception, and laissez-faire leadership play in influencing
followers' behaviour and accomplishing an organization's goals (Liu & Loang, 2023).
Understanding this theory may help businesses examine the sustainability of transactional
leadership in various circumstances and choose the sort of leadership that is most suited to their
unique goals and conditions.
Autocratic Administration
Autocratic leaderships is known as authoritarian leadership, is characterised by a high level of
control and a concentration of power in the hands of the leader. Authoritarians countries such
as the Soviet Union exemplify this leadership style. In this ways, bosses make choices without
discussing their subordinates and insist that their directions be followed to the letter.
Autocratic leaders typically follow a top-down management style, in which they educate their
subordinates in great detail and carefully observe how they carry out their responsibilities. They
are in complete control of the decision-making process and rarely ask other members of the
team for their thoughts or comments (Eisenbeiss & van Knippenberg, 2022).
Directness and assertiveness are hallmarks of the transmission of directions and instructions
issued by autocratic leaders (XiXi & Loang, 2023). They have a zero-tolerance policy towards
448
Volume: 8 Issues: 50 [September, 2023] pp. 445 - 455
International Journal of Accounting, Finance and Business (IJAFB)
eISSN: 0128-1844
Journal website: www.ijafb.com
DOI: 10.55573/IJAFB.085031
any questions or resistance to their authority and require complete conformity with the
commands they issue. As a result of the predominance of one-way communication, typically
from the leader to the followers, there are very few opportunities for open discourse or
discussion.
The job that their followers do is rigorously monitored and supervised by autocratic leaders in
order to guarantee that their orders and expectations are adhered to. They preserve a hierarchical
organisational structure, in which power and authority are delegated progressively lower.
Followers are subject to strict observation and control, and it is expected of them that they will
diligently follow to the orders (Gong et al., 2022).
Autocratic leaderships can be beneficials in specific situations, such as times of crisis or when
there is a need for prompts and decisive action; however, this type of leadership is not always
the best option. It is possible for it to bring clarity, structure, and efficiency to companies that
are operatings in high-risk or highly regulated situations. In addition, authoritarian leadership
can be beneficial in situations where the followers lack the knowledge or experience required
to make judgements based on informed considerations.
However, authoritarian leadership does have a number of drawbacks and potential risks
associated with it. Because it restricts the autonomy of subordinates and disregards their opinion
and ideas, it can result in low employee morale, decreased job satisfaction, and diminished
motivation. These issues might arise as a directs consequence of the situations. The lack of
participations of all members in decision-making within an organisation can be detrimental to
the growth of creativity, innovation, and leadership within that organisation. In additions,
followers of an autocratic leaders may feel devalued and disengaged, which can reduce their
levels of devotion to the leader and their loyalty to the organisation.
Democratic Administration
The concept of democratic leadership, which is synonymous with the term "participative
leadership," places a focus on collaboration, the making of decisions in a group setting, and the
involvement of followers in the decision-making process. This method of leadership recognises
the value of followers' opinions and contributions to the team, so fostering in those who follow
a sense of ownership and independence.
Democratic leaders routinely involve members of their teams in the deliberation and decision-
making processes. They actively encourage engagement, actively seek out ideas and
recommendations, and respect a variety of points of view. When democratics leaders include
their followers in the decision-making process, they tap into the collectives knowledge and skill
of their team. As a result, the decisions that are made are better informed, and followers are
more willings to accept and support them.
Democratic leaders should encourage communication that is both open and honest within their
organisations. They cultivate an atmosphere that is warm and friendly as well as safe, making
it easy for believers to express their thoughts, feelings, and worries. Through effective
communication, democratic leaders cultivate trust, improve connections, and inspire
collaboration and cooperation (Hui & Graen, 2022).
The leaders of democratic systems give their followers more power by giving them more
responsibility and more freedom. They make it possible for individuals to take responsibility
449
Volume: 8 Issues: 50 [September, 2023] pp. 445 - 455
International Journal of Accounting, Finance and Business (IJAFB)
eISSN: 0128-1844
Journal website: www.ijafb.com
DOI: 10.55573/IJAFB.085031
for the work they do, come to their own conclusions about how to proceed, and contribute to
the general success of the organisation (Northouse, 2022). This empowerment not only boosts
the engagement of followers and the degree to which they are satisfied, but it also encourages
innovation and creativity.
There are a great number of benefits associated with democratic forms of leadership.
Democratic leaders tap on the collective knowledge and experience of their followers when
they include those followers in the decision-making process. This ultimately results in better
decisions and more creative ways to solve problems. By encouraging a sense of ownership and
participation among workers, this management approach helps boost employee engagement and
happiness. Moreover, Jung and Avolio (2022) found that democratic leadership can foster a
favourable working atmosphere, increase collaboration, and improve the quality of connections
within a team.
Nevertheless, democratic leaderships might not always be the best choice in some situations.
When time is of the essences or there is a lots of pressure on the issue, it might be wasteful to
gather feedback and try to reach consensus because it takes time and effort. Additionally, there
is the possibility that not all believers may be willings or able to actively participate in decision-
making, which can lowers the effectiveness of democratic leadership.
1. Transformational leadership influences organisational performance and employee
satisfaction positively.
2. Hypothesis 2: Transactional leadership positively influences organisational
performance but has a weakened association with employee satisfaction.
3. Hypothesis 3: Autocratic leadership is detrimental to both organisational performance
and employee satisfaction.
The literature review lays the groundwork for comprehending the connection between
leadership styles, organisational performance, and employee satisfaction. It provides theoretical
insights, synthesises pertinent empirical studies, and lays the groundwork for subsequent
analysis and testing of hypotheses in this research study.
Research Methodology
450
Volume: 8 Issues: 50 [September, 2023] pp. 445 - 455
International Journal of Accounting, Finance and Business (IJAFB)
eISSN: 0128-1844
Journal website: www.ijafb.com
DOI: 10.55573/IJAFB.085031
A comprehensive statistical analysis will be performed on the gathered data in order to evaluate
the links between leadership styles, organisational performance, and employee satisfaction.
This will be done using the data that was obtained. Multiple regression analysis will be utilised
in order to establish the degree to which different leadership styles may accurately predict the
success of a business as well as the level of pleasure felt by its employees (Li & Chen, 2022).
We will be able to determines the distinctive contribution provided by each form of leadership
with the aid of this study, while also taking into consideration any potentially complicating
factors.
The leadership style of transformational leadership gets the highest mean score out of all the
leadership styles, which indicates that it is believed to be the leadership style that is most
widespread in the organisations that were surveyed. The autocratic leadership style received the
lowest mean score, indicating that it is practised less frequently than the other leadership types.
The average score is relatively highs, which indicates that employees have generally
favourables impressions of the organization's performance. It is possible to draws this
conclusion from the fact that the mean scores is connected to the performance of the
organisation. Additionally, the mean scores for employee satisfactions was positive, indicating
that the workforces as a whole is contents with their jobs. This can be inferred from the fact that
the score was positive.
451
Volume: 8 Issues: 50 [September, 2023] pp. 445 - 455
International Journal of Accounting, Finance and Business (IJAFB)
eISSN: 0128-1844
Journal website: www.ijafb.com
DOI: 10.55573/IJAFB.085031
As we continue on with the discussions of the findings and the research questions and
hypotheses will be taken into consideration.
How do the results compare to those of previous studies and pertinent literature?
The result are consistent with previous studies that have highlighted the positive impact of
transformational leadership on organisational performance and employee satisfaction. This
consistency provides additionals support for the validity of the results of the current study.
These findings suggest that organisations should aspire to develop a transformational leadership
style in order to improve organisational performance and employee satisfaction. In contrast,
autocratic leadership may have negative consequences.
This study contributes to the existing body of knowledge by confirming the significance of
leadership styles on organisational performance and employee satisfaction. They provide
empirical evidence for the efficacy of transformational leadership and highlight the negative
aspects of autocratic leadership. The implications of these findings for organisations attempting
to optimise performance and foster a positive work environment are substantial.
Conclusion
The purposes of this study was to investigates the relationship between leadership styles,
organisational performances, and employee satisfaction. The findings of a 500-participant
quantitative study casts light on the relationships between leadership styles, organisational
performance, and employee satisfactions.Transformational leadership was found to have a
significant positive correlation with both organisational performance and employee
satisfaction. In contrast, autocratic leadership had a detrimental effect on these outcomes. These
results demonstrate the significance of leadership styles in determining organisational success
and employee satisfaction.
addition to this, it highlights the negatives impacts that come from having an autocratic leaders.
The findings lend credence to the notions that leadership is an essentials component of
organisational dynamics while also extending the scope of previously conducted studies.
The findings imply, from a more pragmatics point of views, that businesses and other
organisations should place a high priority on the development and growth of transformational
leadership qualities. Organisations have the ability to increases employee performance and
create a more enjoyable place of employment by encouraging a style of leaderships that inspires
and motivates its staff members. Additionally, the negative ramifications of autocratic
leadership urge prudence in its application and push leaders to pursue techniques that are more
participatory and empowering. This is due to the fact that autocratic leadership may be
detrimental to an organisation.
From a managerial point of view, this study demonstrates the value of leadership selection
programmes, training and development programmes, and development programmes overall.
The transformative leadership development initiatives should be a priority for organisations to
invest in. It is possible that this investment may lead to an improvement in the performance of
the company, a rise in employee happiness, and, eventually, a higher level of employee
engagement and commitment.
Longitudinal studies, which involve observing and analyzing datas over an extended period,
can provide valuable insights into how leadership styles unfold over time and their impact on
organizational outcomes. By trackings leadership behaviors and their consequences over
months or even years, researchers can better understand the causal relationships and identify
any potential delayed effects or patterns that emerge in differents contexts. Such studies could
help determine whether certain leadership styles are more effective in the short-term or if they
have lasting positive or negative consequences.
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