The Effect of Leadership on Employee Performance

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The Effect of Leadership on Employee Performance in Small and Medium Sized Enterprises
in United Kingdom
Name of the Student
Name of the University
Note of the Author

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Acknowledgement
I thank the almighty God for giving me the grace and strength throughout the study.
My sincere gratitude goes to my supervisor ______________________ for the positive
criticism from the choice of topic to completion of the study and her dedication to making
these projects a success.
Special thanks to my family members and friends for their support and
encouragement throughout the study.
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Abstract
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Table of Contents
Table of Table............................................................................................................................4
Table of Figure...........................................................................................................................4
Chapter 1: Introduction..............................................................................................................5
Chapter 2: Literature Review.....................................................................................................5
2.1 Overview..........................................................................................................................5
2.2 Conceptual Definitions.....................................................................................................5
2.2.1 Leadership and Leadership Styles.............................................................................5
2.2.2 Employee Performance..............................................................................................8
2.3 Theoretical Literature Review..........................................................................................9
2.3.1 Traits and Behavioural Theory..................................................................................9
2.3.2 Situational and Contingency Theory.........................................................................9
2.3.3 Transformational and Transactional Theory............................................................10
2.3.4 Transactional Leadership and Employee Performance...........................................10
2.3.5 Transformational Leadership and Employee Performance.....................................11
2.3.6 Laissez Faire Leadership and Employee Performance............................................12
2.3.7 Autocratic Leadership and Employee Performance................................................12
2.4 Empirical Analysis.........................................................................................................13
2.4.1 General Studies........................................................................................................13
2.4.2 Empirical Analysis...................................................................................................15
2.5 Research Gaps................................................................................................................16
2.6 Conceptual Framework..................................................................................................17
2.7 Statement of Hypothesis.................................................................................................17
Chapter 3: Research Methodology...........................................................................................19
Chapter 4: Data analysis...........................................................................................................19
4.1. Introduction...................................................................................................................19
4.2. Description of the Sample.............................................................................................19
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4.2.1. Distribution of the Appellants by Age....................................................................19
4.2.2. Distribution of the Appellants by Gender...............................................................20
4.2.3. Distribution of the Appellants by Education Level................................................21
4.3. Findings.........................................................................................................................23
4.3.1. Analysis of Leadership Style..................................................................................23
4.3.2. Analysis of Employee Performance.......................................................................26
4.3.3. Analysis of Effect of Leadership Style on Employee Performance.......................28
4.4. Discussion......................................................................................................................32
Chapter 5: Conclusion and Recommendations........................................................................33
Reference..................................................................................................................................34
Appendix..................................................................................................................................41
Table of Table
Table 1: Age Group..................................................................................................................19
Table 2: Gender Classification.................................................................................................21
Table 3: Classification of Educational Classification..............................................................22
Table 4: Summary Statistics of Transformational Leadership.................................................23
Table 5: Summary Statistics of Transactional Leadership.......................................................24
Table 6: Summary Statistics of Authoritative Leadership.......................................................25
Table 7: Summary Statistics of Laissez-Faire Leadership.......................................................26
Table 8: Summary Statistics of Employee Performance..........................................................27
Table 9: Table of Correlation...................................................................................................29
Table 10: Summary Table of Linear Regression.....................................................................29
Table 11: Anova Table of Linear Regression..........................................................................30
Table 12: Co-efficient Table of Linear Regression..................................................................30
Table of Figure
Figure 1: Conceptual Framework.............................................................................................17
Figure 2: Pie-Chart for Age Group of the Employees.............................................................20
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Figure 3: Pie-Chart for Gender Classification of the Employees............................................21
Figure 4: Pie-Chart for Classification of Educational Classification.......................................22
Chapter 1: Introduction
Chapter 2: Literature Review
2.1 Overview
In this section of the chapter, the reviews of different literatures are discussed to
understand the importance of leadership in an employee’s professional life. The different
researches from the past will help as a reference to conduct this research and derive
information regarding the same topic. From the literature review on the types of leadership in
the organizations and their effect on the performance factor of the employees a conceptual
framework is drawn for the study that will incorporate the different leadership styles as the
independent variables and the employee performance as the dependent variable. This chapter
will comprise of the conceptual definitions, the theoretical review, the empirical analysis, the
conceptual framework and the hypothesis statements.
2.2 Conceptual Definitions
2.2.1 Leadership and Leadership Styles
Leadership is an abstract term that is better defined in actions by the person who is
called a leader rather than defining the term in words. According to Novo, Landis and Haley
(2017), it is an effective approach that is incorporated by a person towards a given a set of
employees as his subordinates in an organization. By this approach, the person who acts as
the leader of a team, guides his members in their operational activities, determines their
quality of service and helps them to execute towards a common goal. As stated by Chikeleze
and Baehrend (2017), it can be said that, a leader is the one, who potentially manages a group
of people working under him and influences them to enhance their activities towards the
organization.
A leader is someone who should primarily be aware of the goals of the organization
and accordingly set the individual goals of his team members. Through his guidance and
leadership, the members in the team can all together perform efficiently and successfully
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accomplish their individual goals and in turn make the organization successful in the market.
According to Gandolfi and Stone (2016), to manage the team effectively, a leader is someone
who should possess the attributes of intelligence for decision-making, be matured to handle
adverse conditions within the workplace and carry a professional attitude in his approach.
Without these primary attributes, a leader cannot be successful in making his team perform
efficiently in the organization.
As stated by Bollettino et al. (2019), a person who possesses sufficient amount of
confidence has very low chances of failing in his job. To make a team work successfully in
all aspects, the individual members should have confidence to carry out their responsibilities
in an effective way. Wixom (2016) states that it is the duty of a leader to instil confidence
among his subordinate in their work such that the whole team turns out to be successful in
their mission. He should effectively monitor the interaction taking place amongst the
members and make sure that they have a positive influence towards each other to maintain
harmony of the team environment. He should be able to mould the behavioural attitude of the
whole group and continuously input an effective zeal in the members of the group.
Cohesiveness is another major attribute that should be possessed by a successful
leader of an organization. As Seals and Hertling (2017) said, a leader should be responsible
enough to maintain a cohesive environmentby including all the members of his team in their
assigned work. By implementing an all-inclusive environment, the leader can gain the interest
of the members to work effectively towards their goal. If the leader discusses the issues with
his team members before taking any significant decision of the team, the employees will also
feel their importance of involvement and work with better interest towards the organization.
Thus, a leader should have the capability of involving his members and make them feel an
important part of the team.
The leadership skill is not acquired on birth by a person. According to Gibson (2017),
a person who wants to be a good leader should develop his skills of leadership and gain
experience in his daily activities while guiding the employees working under him. An
effective leader becomes successful in his job profile when he himself is updated about the
technicalities of the work and helps out his team members in their job role and guides them
through wise effort. Rather than he being dependent on the members to complete their
assigned work, the team members should depend on his almost perfect skill sets for the
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accomplishment of their work successfully. The team members should be able to believe in
their team leader for proper guidance and achieving their goals thoroughly.
Leaders in an organization are primarily responsible for setting the objectives and
missions for the organization and make the employees aware of these organizational
objectives. If the leader does not take the initiative for developing future visions of the
organization, the employees of the organization will not be motivated to work with optimum
interest. Hence, to motivate the employees and retain them forever in the organization he
should be able to draw their interest in their professional work and bring about an effective
outcome in the organization. In this way, a leader in an organization successfully instils
enthusiasm about their work within the team members such that they can produce an effective
output through their regular activities in the organization.
Leadership styles are the different kind of approaches incorporated by a leader in
guiding his members through their operational activities in an organization. One style varies
from the other one over a huge aspect due to the variation in the behaviour and the
influencing style of a leader in an organization. According to Sudha, Shahnawaz and Farhat
(2016), leadership styles may also vary according to the levels in an organization that is,
whether the leader is applying his skill set in a department or in a group or being an overall
executive position in an organization. According to Popli and Rizvi (2016), leadership styles
incorporates a consistent set of behavioural attitude and executional tasks that helps a leader
to direct his team of employees, motivate them to work with an effective outcome and
implement plans for the accomplishment of the work procedure.
As stated by Tewari, Gujarathi and Maduletty (2019), a leader cannot choose a
particular leadership style to implement in his behavioural attributes while influencing his
employees in the organization. The best way to implement a leadership style is to assess the
situation and then implement the type of style that will best fit into the scenario. A good
leadership style will help the leader of an organization to increase motivation amongst
employees. It will enhance the moral support of the subordinate employees and make them
work confidently towards the responsibilities assigned to them. In any leadership style, the
leader must be involved with the work procedure of the employees and work together rather
than stay up in the ladder and order the employees to enhance their performance.
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2.2.2 Employee Performance
An employee in an organization is a phenomenal asset by which the organization is
able to carry out its activities and build up a successful business in the market. As stated by
Siahaan (2017), the effective performance of an employee can bring success in the
organizational activities. Hence, it is the duty of an organization to look into the factors that
will help to enhance the job performance of the members who are serving in an organization.
An organizational body hence, appoints executives at different designations as well as
departments to determinately manage the performances of the employees and always
motivate them for a better performance.
Buil, Martínez and Matute (2019) states that it is the duty of a leader to assess the skill
set of an employee to judge on his or her performance. Not all employees can perform
equally in an organization and cannot deliver at the same rate. Thus, a leader should
determine what a particular employee is capable of serving towards the organizational
operations and assign him tasks that he can effectively deliver. Evaluation of the skills and
talents of the employees in an organization is one of the primary tasks of a leader. He should
be responsible for motivating the employees to increase their skills such that it can be
mutually beneficial for both the employees and the organization. According to Singh et al.
(2016), a leader should also manage an underperforming employee and look into the factors
that will enhance his or her performance in the organization. If required, the leader should
arrange for training and development schedules for these particular employees to enhance
their performance that in turn will be beneficial for the institution.
The harmonious relationship amongst the leaders and their subordinate employees has
a strong correlated impact on the employee performance within an organization. If the leaders
have a dominant attitude towards their employees, it will ruin the relationship and will
effectively decrease their interest towards their work. Hence, Mo and Shi (2017) states that
the motivating leadership style of a leader helps the employees psychologically to perform
well and meet the targets of the organization. According to Mahmoud et al. (2019), the
performance of each employee of an organization is of utmost value and thus, the leaders
should share a warm relationship with their employees and build a harmonious work
environment for the accomplishment of their tasks with the best quality. Effective leadership
helps to enhance effective performance of the employees in an organization helping to
generate a productive output from all the members of the organization.
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2.3 Theoretical Literature Review
‘Leadership’ is considered as an important attribute of organizational behaviour that
can affect the productive output of the employees who are working for an organization.
Hence, this has turned out to be the most studied aspect by the behavioural scientists as well
as the sociologists who have a keen interest to derive theories regarding the same topic. They
have analysed the different styles of leadership and its possible consequences on the
employee’s job role over the years.
2.3.1 Traits and Behavioural Theory
According to McHuron et al. (2017), the trait theories determines on the personality
traits of a leader that includes good personality, ability to have an intellectual viewpoint, a
responsible and sincere attitude towards the work and most importantly the vision to
implement strategic decisions at the work place. Sosnowska et al. (2019) states that the traits
of a leader are the determinant factor in making the leader a role model to the employees and
thus decides how successful a leader is with her existing traits. According to Rodrigo and
Jayasekara (2016), the trait theory of leadership however has its own limitations because
different leaders have different traits and thus the theory is not specific in its nature.
According to Amoo and Singh (2018), the behavioural theory on the other hand does
not depend on the traits of a successful leader. It specifically looks into the behavioural
actions of a leader both in specific situations as well as for the regular work environment. If
the behaviour of a leader is both firm and persuasive at the same time, the employees will be
bound to follow the instructions of a leader. Fukada (2018) says, if the leader misbehaves
with the employees, it will certainly have a negative impact on the psychological stability of
the members and prevent them from having a good production.
2.3.2 Situational and Contingency Theory
According to Kundu and Mondal (2019), situational leadership theory, as the name
suggests, determines how effectively a leader is able to manage the adverse situations during
the operations of an organization. Roschk and Hosseinpour (2020) states that an effective
leader is the one who will be able to take decisions that will turn in the favour of the
organization and influence the employees to work accordingly. The situational theory
assesses the skills of a leader that helps the leader to mould itself according to the situational
pressure and produce an effective outcome from the adverse situation. According to Proba
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and Jung (2019), this theory does not focus on the traits of a leader. Instead it majorly
determines the intellect by which the leader handles a situation.
However, Vidal et al. (2017) states that, Fiedler’s contingency theory is broadly
determined by the two elements. They are the motivational structure of a leader and the
leadership style by which the outcome of a situation can be controlled by a successful leader.
In this contingency theory, the task-oriented leadership style influences a leader to determine
the overall aspect of the task and manage the employees to successfully carry out the task
within the stipulated time. According to Murschetz (2017), the person-oriented leadership
determines the capability set of the employees to assign them with the suitable tasks they will
be efficient to perform.
2.3.3 Transformational and Transactional Theory
According to Jensen et al. (2019), transformational leadership as introduced by James
V Downtown in 1978 influences the transformation within the attitude of the employees by
looking up to the leader. According to Cho et al. (2019), this kind of leadership majorly
determines in motivating the employees and enables them to give a better performance
towards the organizational goals. In this kind of leadership theory, the leader emphasizes on
the factors like values, morals and the ideals that will influence the employees to perform
productively and maintain a proper behavioural attitude. Fletcher, Friedman and Piedimonte
(2019), states that this leadership theory maintains a proactive approach and is applicable in a
turbulent environment where the action of the employees needs to be controlled.
Kark, Van Dijk and Vashdi (2018) states that transactional leadership was introduced
in the year 1947 by Max Weber and believes in transaction of rewards and recognition in
exchange of hard work and loyal effort by the employees towards the organization. In this
type of leadership, the leader arranges rewards for hardworking employees that in turn acts as
a motivation for the regarding person. As stated by Ma and Jiang (2018), this also helps to
improve the relationship between the leader and his subordinates. Furthermore, the
employees find this leadership beneficial on their own interest of getting rewards and
incentives from the organization thus enhancing their performance to an enhanced level.
2.3.4 Transactional Leadership and Employee Performance
Mekpor and Dartey-Baah (2017) says that Transactional Leadership as the name
suggests indicates some kind of exchanges or transactions that take place between the
employees and the organizational leaders. As stated by Basri et al. (2017), the leaders of the
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organization promises some kind of rewards or incentives to the employees, if they in return
deliver the input that is required from them to achieve the final output of the tasks. In this
case, the employees show a personal interest in submitting the required deliverables from
them because they make monetary profit in return of their potential effort. According to
Rahmat et al. (2019), this additional reward, apart from their main salary acts as a motivating
factor for improving their work quality and bring in innovative solutions for the organization.
Thus, a transactional leader will be efficient in guiding his employees if he creates an
incentive structure that will enhance the employees to work with their own interest of benefit
for the organization. As said by Manzoor et al. (2019), this is a two-way process because it
not only makes an employee creative in their performance, but also fetches a productive
outcome from the employee that is significantly profitable for the company. Apart from the
incentives and rewards, a transactional leader can provide recognition to the hardworking
employees. Jacobs and Mafini (2019) states that this gesture will not only motivate the
concerned employee to maintain consistency in his work, but also have an effective influence
on the performance of other employees.
2.3.5 Transformational Leadership and Employee Performance
As stated by Duan et al. (2017), Leadership is considered to be a shared process
where one individual has an overall impact on a group of members while achieving the
mutual objectives of the organization they are working for. Mozammel and Haan (2016)
states that the leader needs to create an impactful influence over his subordinate employee to
meet the requirements of the clients and serve the organization better. According to Jiang,
Zhao and Ni (2017), a transformational leader is someone who can motivate their employees
with his inspirational speeches and intellectually stimulate them to meet the ideal production.
By applying transformational leadership, a leader is able to assess the individual quality set of
the employees and influence them to give the desired output.
According to Besieux et al. (2018), the result of the transformational leadership is a
positive impact on the production of the employees because this leadership style yields
motivation as well as harmony in the relationship shared by the employees and their leader.
According to Tabassi et al. (2017), the transactional leadership is the most common style
adopted by most of the organizations nowadays, people from the previous era believed in
ideals and morals that were delivered by the leader in their working group, thus making
transformational leadership famous in that era.
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2.3.6 Laissez Faire Leadership and Employee Performance
According to Wong and Giessner (2018), the Laissez Faire Leadership style
incorporates the minimal role of the leader in the organization and maximizes the evaluation
of the employee input in the assigned tasks of the organization. In this scenario, the leaders
allow the members of the team to take the most suitable decisions while working for the
organization and does not instruct them the path they should follow to complete the job
successfully. As stated by Breevaart and Zacher (2019), this gesture helps the members to
experiment with their methods and gain practical experience rather than following an
instructed methodology. As stated by Norris and Norris (2019), a leader who follows such
leadership style informs the members about the final goal of the task and leaves it to the
members to think about the way outs that will help to reach the particular goal.
According to Nguyen et al. (2017), however, this leadership style shall be
incorporated in groups where people are extremely skilful and can manage risks and
problems on their own. If a group does not comprise of expert personnel then the outcome of
the task might not be productive. There also remain chances of missing the deadline within
which the task needs to be completed due to lack of experience as well as expertise. Legood
et al. (2018) states that this leadership style tends to create confusion about the job role of the
group members because the leader does not specify anything and thus hampers the
performance of the individual employees.
2.3.7 Autocratic Leadership and Employee Performance
According to Gadirajurrett et al. (2018), Autocratic Leadership is the absolute
opposite of the Laissez Faire Leadership style that forces the employees to follow the orders
of the leaders with ultimate obedience on the employee end. In the autocratic leadership style,
the leaders instead of guiding the employees through the right path, controls the actions of the
employees at each step of executing an action and compels them to follow their orders
extensively. Yao et al. (2017), states that this leadership does not create a positive effect on
the performance of the team members. This happens because the employees do not enjoy
their freedom of performance.
Hidayah and Nazaruddin (2017) states that this leadership style tend to generate a
demotivated feeling amongst the employees because the authoritarian leader does not allow
them to perform creatively at their own pace leading to extreme unsatisfied job environment.
As stated by Ogalo and Yambo (2017), the employees cannot express their own ideas and
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have to follow the instructions of the leader without any contradiction. According to Ch et al.
(2017), this leads to frustration and anger of the employees that ultimately affects in the
production and hence is not helpful for the organization.
2.4 Empirical Analysis
2.4.1 General Studies
By the empirical evidences collected from all the instances in the world it is seen that
the leaders of the small or medium sized enterprises requires extraordinary skills to manage
the organizational activities and the members involved in the organization. As stated by
Alberto, Amar and Patrisia (2019), the small or medium sized enterprises require leadership
of extreme efficiency and continuous involvement to develop the organizational structure to
the next higher level. It is seen that the executives of the start-up organizations are always in
a constant state of invariability, who are busy managing the daily operations and executing
almost all of the management single-handedly. On the other hand, the leaders of mammoth
companies mainly draw conclusions on business analysis and focuses on making broader
visions or long term planning to stand against the other competitors and retain their position
in the market. The leaders of the small or medium sized enterprises neither have to be
involved in the daily activities nor do they have to think about the progressive business
making concepts. They majorly focus on the strategic decisions that need to be made and
enhance the performance quality of the employees such that the enterprises can make an
impactful position in the market.
Alshahrani and Baig (2016) states that from the evidences collected around the
different small and medium sized organizations, it is seen that the transformational leadership
style is the most commonly used by the leaders of the organization to enhance the productive
performance of the low-level employees. Any low-level employee looks up to the factors like
motivation, influence, idealism and assistance that are prominently available from a
transformational leader. It is found from the researches that employees get motivated with the
guiding style of the leaders and thus have an effective production for their working
department. Thus, transformational leadership helps to produce a stable structure of the
organization and implant discipline amongst the members of the organization.
However, the reviews of the employees’ states that they are more influenced by the
transactional leadership style and tend to provide better quality of services due to the
incentive and rewards factor of the organization. According to Alghamdi, Topp and AlYami
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(2018), by transactional leadership, it is easier for them to develop a personal interest for their
job role and meet the deliverable expectations of the leaders by their own interest to work.
Hence, transactional leaders in the smaller organizations tend to create a greater impact on
the employee production than the transformational leaders. However, the transactional
leaders do not prove to be useful for the smaller or medium sized organizations because the
incentives and rewards tend to be cost-effective for the enterprises. If the organizations do not
attain financial stability, they will not be able to afford transactional leadership in the
structure of their system.
Although transactional and transformational leadership have a positive impact on the
employees, according to Kuria, Namusonge and Iravo (2016), the Laissez-faire leadership as
well as the autocratic leadership style has no stable impact for the organizations at their
developing stage. Researchers say that, due to liberation of the workers in the Laissez-faire
leadership style, the outcome turns out to be a disaster due to the lack of guidance and
involvement of the leaders. Hence, an organization that is small or medium and is tending to
carve a niche in the market will never be able to gain stability in their work sphere due to the
ineffective performance of the employees. This kind of leadership is only applicable for the
larger organizations who can take risk and allow their employees to experiment with the
products.
Palupi, Cahjono and Satyawati (2017) states that the employees who have
experienced autocratic leadership shares their terrible experience of boredom and suffocating
work experience due to lack of freedom in their performance activities. The past literature
reviews highlight that due to autocratic leadership, the employees experienced an increase in
their passive anger and extreme frustration that only lead to hamper of their productivity. The
most common negative impact of this kind of leadership is the loss of employees from the
organization because they cannot experiment with creative and innovative solutions and has
to follow the instructions of the leader whether it is right or wrong.
Hence, from the different studies Ilyas and Abdullah (2016) states that it can be stated
that the leaders and their leadership styles have a strong impact on the psychological state of
the employees that either prevents them or helps them to perform at excellence for the
organization. The behavioural attitude of the leadership also tends to have an impact on the
mind of the employees. A good behavioural attitude always influences an employee to
increase productivity and influence other members to perform well and work all-together as a
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team. It is thus essential of a leader to attract the interest of the employees towards their work
and influence them to perform at their best.
2.4.2 Empirical Analysis
In the evidences that is collected from the developing enterprises of the United
Kingdom, as stated by Makinde and Agu (2018), transformational leadership and
transactional leadership has gained a huge popularity amongst the satisfied employees and
continued to be successful in developing the performance quotient of the employees due to
the influence factor of the leaders. According to Li et al. (2016), the significant studies
suggest that both transactional and transformational leadership forms a strong correlation
with the employee performance factor and is able to bring a harmonious work environment in
the organizations. These leadership also helped the employees share a strong professional
bond with their leaders because of the increased employee interaction and personal assistance
of the leaders to each individual member.
Del Giudice et al. (2017), states that in many of the organizations incorporating a
certain kind of leadership has led to disastrous impact on the employees of the organization
because every style of leadership has its own advantages and disadvantages. For instance,
incorporating Laissez-faire leadership allowed the employees to experiment with different
innovative solutions and incorporate the best one amongst them. Although, this kind of
leadership lacked time management within the organization and suffered delay in the work
procedure leading to client dissatisfaction. Hence, it was difficult for the small organizations
in United Kingdom to incorporate this kind of leadership style as it could not afford to allow
for experiments within the organization and instead believed in following a regular structure.
According to Madanchian and Taherdoost (2019), many of the smaller developing
enterprises of United Kingdom unfortunately experience a combination of both the autocratic
and transformational leadership style to bring about success and discipline in the
organization. The leaders incorporated transformational leadership to influence the
organizational members about the positive impact of serving the organization better and
influenced them to categorize their work such that they form a disciplinary structure in the
organization. On the other hand, Parnell and Brady (2019) states that incorporating autocratic
leadership helped the leaders to manage the undisciplined and casual members of the
organization and made them bring an effective and successful production. This led to the rise
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in the development of the small and medium sized enterprises and helped them to gain a
position in the market.
2.5 Research Gaps
The literatures discussed the impact of the positive and negative attributes of the
leadership style on the environment of the organizations and the employees within it. It is
clearly evident that only a good and enthusiastic leader with hands-on helping attitude
towards the employees can bring an enhancement in the productivity of the members of the
organization and help them to perform better. On the other hand, An et al. (2019) states that
the leaders with a negative attitude led to the demotivation of the employees. Finally, the
employees were forced to leave the organizations due to the pressure and the effect of the
autocratic leadership. Thus, Dunne et al. (2016) states that the medium sized developing
organizations generally incorporate the transformational and transactional leadership to retain
the employees and satisfy them such that they provide quality services to the organization.
However, the impact of the Laissez-faire relationship is not clearly discussed in the
theoretical review section as well as the empirical analysis of the smaller enterprises in the
United Kingdom. The Laissez-faire leadership have its positive as well as negative impacts
however, it was not clearly discussed whether it is suitable to adopt for the developing
organizations of the nations. Moreover, Rao (2017) states that the leadership style is not
consistent in all the organizations of the nation. The researchers failed to understand the
definite impact of the Laissez-faire leadership style in the developing organizations of United
Kingdom. Moreover, the leadership style that is incorporated in the governmental or larger
organizations is not discussed in this research. The gaps in the literature exist in
understanding what factors can evaluate the Laissez-faire leadership style that will be suitable
to apply in the small and medium sized enterprises. The study henceforth will discuss the
leadership style that a leader should follow that will prove to be significant in the small and
medium sized organizations of the United Kingdom.
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Transactional Leadership Style
Transformational Leadership Style
Laissez Faire Leadership Style
Autocratic Leadership Style
Employee Performance
Independent Variables
Dependent Variable
2.6 Conceptual Framework
Figure 1: Conceptual Framework
(Source: Created by Author)
2.7 Statement of Hypothesis
H0=the Transformational leadership style does not positively affects employee performance
in the small and medium sized enterprises of United Kingdom.
H1= the Transformational leadership style positively affects employee performance in the
small and medium sized enterprises of United Kingdom.
H0= the Transactional leadership style does not positively affects employee performance in
the small and medium sized enterprises of United Kingdom.
H2= the Transactional leadership style positively affects employee performance in the small
and medium sized enterprises of United Kingdom.
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H0= the Laissez-faire leadership style does not positively affects employee performance in
the small and medium sized enterprises of United Kingdom.
H3= the Laissez-faire leadership style does not affect employee performance in the small and
medium sized enterprises of United Kingdom.
H0= the Autocratic leadership style does not positively affects employee performance in the
small and medium sized enterprises of United Kingdom.
H4= the Autocratic leadership style positively affects employee performance in the small and
medium sized enterprises of United Kingdom.
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Chapter 3: Research Methodology
Chapter 4: Data analysis
4.1. Introduction
This particular chapter analyses the results and discusses it in details. The first section
of the chapter thoroughly discusses about the descriptive analysis of the sample collected for
the research study. The second section highlights the findings of the different types of
leadership styles and its effect on the labourers. The final section discusses the analysis and
focuses on the findings based on the analysis.
4.2. Description of the Sample
The demographic data that is collected for the sample includes variables such as
gender, age and education.
4.2.1. Distribution of the Appellants by Age
What is your age?
Frequency Percent
Valid Below 25 years 17 17.0
25-30 years 32 32.0
31-35 years 16 16.0
36-40 years 1 1.0
41-45 years 8 8.0
46 + 25 25.0
Total 99 99.0
Missing System 1 1.0
Total 100 100.0
Table 1: Age Group
(Source: Data based)
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Figure 2: Pie-Chart for Age Group of the Employees
(Source: Created by Author)
From the above table, it is evident that the employers were classified into six age
groups for the data that is collected from the small and medium sized enterprises of the
United Kingdom. A bar chart is generated based on the demographic analysis of the data
highlighting the number of employees in each age group. It is seen that 17 employees from
the data belong to the age group of below 25 years revealing that they are completely new in
the industry. Moreover, 32 employees belong to the age group of (25-30) years and senior to
them are 16 employees that are in the age group of (31-35) years. One employee had its age
between the age group of (36-40) years. The experienced employees were eight in number
who belonged to the age group of (41-45) years. The senior most employees were 25 in
number belonging to the age group of above 46 years. Hence, it is clear that the maximum
employees of the data sample are either new in the industry or are highly experienced.
4.2.2. Distribution of the Appellants by Gender
What is your gender?
Frequency Percent
Valid Male 41 41.0
Female 59 59.0
Total 100 100.0
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21DISSERTATION
Table 2: Gender Classification
(Source: Data based)
Figure 3: Pie-Chart for Gender Classification of the Employees
(Source: Created by Author)
While collecting the data from the sample, all the 100 employees were also
categorized based on their gender. The two categories of the Gender group are the ‘Male’ and
the ‘Female’. A pie-chart is generated after the classification of the data amongst the
employees of the medium and small sized organizations at the United Kingdom. From the
chart, it is clear that the female employees were 59% while the male employees were 49%.
This depicts that the number of male employees from the data is less than the number of
female employees. However, the range of difference between the male and the female
employees is quite minimal and negligible. Thus, there is almost an equal distribution of the
male and female employees in the developing organization of the States.
4.2.3. Distribution of the Appellants by Education Level
What is your highest education qualification?
Frequency Percent
Valid Certificate/diploma 19 19.0
Higher diploma 30 30.0
Bachelor 18 18.0
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Master 33 33.0
Total 100 100.0
Table 3: Classification of Educational Classification
(Source: Data based)
Figure 4: Pie-Chart for Classification of Educational Classification
(Source: Created by Author)
The data is also classified into various educational qualification groups to check how
much education is achieved by the employees who work for the small and medium
organization in the United States. The four groups of qualifications are the ‘Diploma’, the
‘Higher Diploma’, the ‘Bachelor’ and the ‘Master’. A bar chart specifically states the number
of employees in each qualification group. It is seen that 19 of the 100 employees has
achieved the minimal qualification of the ‘Diploma’ degree, 30 employees have the ‘Higher
Diploma’ degree, 18 employees has acquired the ‘Bachelor’ degree and 33 employees have
completed their ‘Masters’ before joining the industry. Hence, from the data it is clear that the
maximum number of employees are educated and have the highest qualification. However,
there are employees who have not done much studies and have acquired only a higher
diploma degree to join the industry. Thus, the educational range of the employees in the data
sample varies signifying that they can provide with a varied amount of answers based on their
educational perception.
22

23DISSERTATION
4.3. Findings
4.3.1. Analysis of Leadership Style
Four types of leadership styles were assessed for the research study. These were the
Transformational leadership style, the Transactional leadership style, the Authoritative
leadership style and the Laissez-faire leadership style. All the 100 employees were instructed
to rate the survey questionnaire according to the Likert-scale of 5 ratings. The five ratings
were represented as 1= ‘Strongly Disagree’, 2=’Disagree’, 3=’Neutral’, 4=’Agree’ and 5=’
Strongly Agree’. Descriptive statistics were generated to evaluate the respondent’s answers
and understand their view and their preference of the leadership styles. The descriptive
statistics incorporating the mean and standard deviation of each leadership style is
highlighted in the tables below.
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Transformational Leadership
Idealized Influence
100 1.00 5.00 3.4400 .93550
Transformational Leadership
Inspirational Motivation
100 1.00 5.00 3.4200 .90095
Transformational Leadership
Intellectual Simulation
100 1.00 5.00 3.3100 .91778
Transformational Leadership
Individual Consideration
100 1.00 5.00 3.5500 .90314
Table 4: Summary Statistics of Transformational Leadership
(Source: Data based)
The transformational leadership style are categorized into four items such as the
‘Idealized Influence’, the ‘Inspirational Motivation’, the ‘Intellectual Stimulation’ and the
‘Individual Consideration’. It is evident from the summary statistics of transformational
leadership that ‘Idealized Influence’ possesses a mean value of 3.44 while the standard
deviation is 0.93. The ‘Inspirational Motivation’ incorporates a mean value of 3.42 while the
standard deviation is 0.90095. This is followed by the ‘Intellectual Stimulation’ that
possesses a mean value of 3.31 while the standard deviation is 0.91778. Finally, the
‘Individual Consideration’ stands at a mean value of 3.55 and the value of standard deviation
is 0.90314. Hence, for all the types of categories in transformational leadership style it is seen
that the mean value is always above the mid-point value. This signifies that the developing
23

24DISSERTATION
enterprises in the United States practices the transformational leadership style and the
employees are quite accustomed with this style of leadership.
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Transactional Leadership
Contingent Reward
100 1.00 5.00 3.6500 .88048
Transactional Leadership
Management by Exception
100 1.00 5.00 3.5900 .85393
Table 5: Summary Statistics of Transactional Leadership
(Source: Data based)
The transactional leadership style too is categorized into two sections known as the
‘Management by Exception’ and the ‘Contingent Reward’. These two categories incorporated
questionnaire that were answered by the respondents to understand whether this type of
leadership style were practiced upon the employees in the small and medium sized
organizations of the United States. From the table, it is seen that the ‘Contingent Reward’
incorporates a mean value of 3.65 and the value of standard deviation is 0.88048. Again, the
mean value of ‘Management by Exception’ is 3.59 while the value for standard deviation is
0.85393. Both the categories has mean value above the mid-point. This statistics represent
that the organizations in the United States that are still developing practice transactional
leadership style for employee engagement.
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
My supervisor believes
employees need to be
supervised closely they are not
likely to do their work.
100 1 5 3.55 1.058
As a rule, my supervisor
believes that employees must
be given rewards or
punishments in order to
motivate them to achieve
organizational objectives.
100 1 5 3.50 .959
I feel insecure about my work
and need direction
100 1 5 3.53 .904
My supervisor is the chief judge
of the achievements of
employees.
100 1 5 3.66 .956
24

25DISSERTATION
My supervisor gives orders and
clarifies procedures
100 1 5 3.63 .939
My supervisor believes that
most employees in the general
population are lazy.
100 1 5 3.58 1.027
Table 6: Summary Statistics of Authoritative Leadership
(Source: Data based)
The above table represents the summary statistics of the respondent’s answers based
on the questionnaire set of authoritative leadership style. The mean value of the respondent
for the statement ‘My supervisor is the chief judge for the achievement of the employees’ is
the highest amongst all that is 3.66 while the lowest mean value is 3.50 for the statement ‘As
a rule, my supervisor believes that employees must be given rewards or punishments in order
to motivate them to achieve organizational objectives’. For the statement ‘My supervisor
believes that most employees in the general population are lazy’ the mean value is 3.58
signifying quite a high range above the mid-point, however it also has a high standard
deviation of 1.027. The statement ‘my supervisor believes employees need to be supervised
closely they are not likely to do their work’ incorporates mean value of 3.55. Moreover, the
employees were not confident about their work and is evaluated from the line ‘I feel insecure
about my work and need direction’ with mean value of 3.53. The employees were
continuously directed with their regular activities and is revealed from the mean value of 3.63
from the statement ‘My supervisor gives orders and clarifies procedures’. Thus, from the
above statistics it is evident that the supervisors from the developing organizations in United
States practise authoritative leadership style to direct their employees.
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
In complex situations my
supervisor allows me to work
my problems out on my own
way
100 1 5 3.27 1.325
My supervisor stays out of the
way as I do my work
100 1 5 3.47 1.087
As a rule, my supervisor allows
me to appraise my own work.
100 1 5 3.51 1.020
My supervisor gives me
complete freedom to solve
problems on my own
100 1 5 3.54 1.077
25

26DISSERTATION
In most situations I prefer little
input from my supervisor
100 1 5 3.53 1.226
In general my supervisor feels
it's best to leave subordinates
alone
100 1 5 3.54 1.243
Table 7: Summary Statistics of Laissez-Faire Leadership
(Source: Data based)
The Laissez-Faire Leadership questionnaire set has the mean values from the
respondents above the value of three signifying that the respondents were experienced with
this kind of leadership style. The statement of ‘In complex situations my supervisor allows
me to work my problems out on my own way’ has the lowest mean value of 3.27 whereas the
highest mean value is of 3.54 for the statements ‘In general my supervisor feels it's best to
leave subordinates alone’ and ‘My supervisor gives me complete freedom to solve problems
on my own’. The other statements of the questionnaire for Laissez-Faire Leadership style also
incorporates mean values of 3.47, 3.53 and 3.51 signifying that the average mean value is
more than 3. Hence, the statistics states that Laissez-Faire Leadership style is also practised in
the average sized companies of United States.
4.3.2. Analysis of Employee Performance
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
How do you rate quality of your
performance?
100 1 5 3.21 .977
How do you rate your productivity
on the job
100 1 5 3.57 .924
How do you evaluate the
performance of your peers at their
jobs compared with yourself doing
the same kind of work?
100 1 5 3.44 .914
How do you evaluate the
performance of yourself at your job
compared with your peers doing the
same kind of work?
100 1 5 3.54 1.009
Table 8: Summary Statistics of Employee Performance
(Source: Data based)
The employee performance is evaluated on the response acquired from the data
sample of 100 employees. The mean value of 3.21 on the question of ‘How do you rate
26

27DISSERTATION
quality of your performance?’ signifies that more than the average people agreed positively
that they had a high quality performance. Similarly, for the question of ‘How do you rate
your productivity on the job’ the average value of 3.57 signifies that the employees were
productive enough under their respective leadership styles. While comparing with the value
of work of the other peer’s work with oneself, the mean value incorporated is 3.44 while
comparing the value of work of oneself with other peers the mean value is 3.54 signifying
that the employees incorporated healthy competition amongst themselves in the work sphere.
27

28DISSERTATION
4.3.3. Analysis of Effect of Leadership Style on Employee Performance
Correlations
Transformational
Leadership
Idealised
Influence
Transformational
Leadership
Inspirational
Motivation
Transformational
Leadership
Intellectual
Simulation
Transformational
Leadership
Individual
Consideration
Transactional
Leadership
Contingent
Reward
Transactional
Leadership
Management
by Exception
Authoritative
Leadership
Laissez
Faire
Leadership
Employee
Performance
Transformational
Leadership
Idealised
Influence
Pearson
Correlation
1 .558** .581** .607** .643** .709** .698** .075 .633**
Sig. (2-
tailed)
.000 .000 .000 .000 .000 .000 .461 .000
N 100 100 100 100 100 100 100 100 100
Transformational
Leadership
Inspirational
Motivation
Pearson
Correlation
.558** 1 .611** .595** .556** .594** .615** .054 .508**
Sig. (2-
tailed)
.000 .000 .000 .000 .000 .000 .594 .000
N 100 100 100 100 100 100 100 100 100
Transformational
Leadership
Intellectual
Simulation
Pearson
Correlation
.581** .611** 1 .633** .548** .525** .624** .083 .542**
Sig. (2-
tailed)
.000 .000 .000 .000 .000 .000 .410 .000
N 100 100 100 100 100 100 100 100 100
Transformational
Leadership
Individual
Consideration
Pearson
Correlation
.607** .595** .633** 1 .664** .623** .865** .070 .655**
Sig. (2-
tailed)
.000 .000 .000 .000 .000 .000 .489 .000
N 100 100 100 100 100 100 100 100 100
28

29DISSERTATION
Transactional
Leadership
Contingent
Reward
Pearson
Correlation
.643** .556** .548** .664** 1 .600** .905** .052 .709**
Sig. (2-
tailed)
.000 .000 .000 .000 .000 .000 .604 .000
N 100 100 100 100 100 100 100 100 100
Transactional
Leadership
Management by
Exception
Pearson
Correlation
.709** .594** .525** .623** .600** 1 .668** -.014 .556**
Sig. (2-
tailed)
.000 .000 .000 .000 .000 .000 .893 .000
N 100 100 100 100 100 100 100 100 100
Authoritative
Leadership
Pearson
Correlation
.698** .615** .624** .865** .905** .668** 1 .045 .739**
Sig. (2-
tailed)
.000 .000 .000 .000 .000 .000 .656 .000
N 100 100 100 100 100 100 100 100 100
Laissez Faire
Leadership
Pearson
Correlation
.075 .054 .083 .070 .052 -.014 .045 1 .015
Sig. (2-
tailed)
.461 .594 .410 .489 .604 .893 .656 .885
N 100 100 100 100 100 100 100 100 100
Employee
Performance
Pearson
Correlation
.633** .508** .542** .655** .709** .556** .739** .015 1
Sig. (2-
tailed)
.000 .000 .000 .000 .000 .000 .000 .885
N 100 100 100 100 100 100 100 100 100
**. Correlation is significant at the 0.01 level (2-tailed).
29

30DISSERTATION
Table 9: Table of Correlation
(Source: Data based)
30

From the above correlation table, it is seen that the Pearson’s Correlation coefficient
of the ‘Idealized Influence’ of transformational leadership is 0.633, which signifies that the
employees are quite influenced by the leader’s influence. Moreover, the ‘Inspirational
Motivation’ coefficient is 0.508 which signifies it does not share much strong correlation
with employee performance. The ‘Intellectual Stimulation’ too shares an average correlation
of 0.542 with the employee performance, whereas the ‘Individual Consideration’ shares a
stronger correlation signified by the coefficient value of 0.655. The ‘Contingent Reward’ of
transactional leadership shares a strong correlation with employee performance because it
signifies a coefficient value of 0.709. On the other hand, ‘Management by Exception’ shares
an averagely strong correlation with employee performance with a coefficient value of 0.556.
In case of authoritative leadership, the leadership style incorporates a strong correlation with
employee performance signifying the coefficient value of 0.739. The Laissez-faire leadership
too, incorporates the strongest association with employee performance and possesses a
coefficient value of 0.885.
Model Summary
Model R R Square
Adjusted R
Square
Std. Error of the
Estimate
1 .752a .566 .548 .51037
a. Predictors: (Constant), TL2, Laissez Faire Leadership, TL1, Authoritative
Leadership
Table 10: Summary Table of Linear Regression
(Source: Data based)
The dependent variable for the multiple regression analysis is the ‘Employee
Performance’ whereas the independent variables are the four types of Leadership styles. The
Model summary table highlights the R2 value that is 0.556. It signifies that the impact of the
different types of leadership styles can predict 56.6% of the variety in employee performance.
ANOVAa
Model Sum of Squares df Mean Square F Sig.
1 Regression 32.302 4 8.075 31.002 .000b
Residual 24.746 95 .260
Total 57.048 99
a. Dependent Variable: Employee Performance
b. Predictors: (Constant), TL2, Laissez Faire Leadership, TL1, Authoritative Leadership
Table 11: Anova Table of Linear Regression
(Source: Data based)
The Anova table of the regression analysis incorporates the F-statistic value of
31.002. The F ratio is quite large that proves the null hypothesis to be wrong. If the null
hypothesis is considered to be ‘the model can predict the effect of leadership style on
employee’s performance’, then the F ratio signifies that the hypothesis is wrong. Due to the
large variation in data, the prediction of the result cannot be made from the Anova table.
Coefficientsa

32DISSERTATION
Model
Unstandardized Coefficients
Standardized
Coefficients
t Sig.B Std. Error Beta
1 (Constant) .764 .311 2.456 .016
Authoritative Leadership .417 .157 .436 2.662 .009
Laissez Faire Leadership -.017 .054 -.021 -.306 .760
TL1 .122 .118 .125 1.034 .304
TL2 .225 .142 .229 1.584 .116
a. Dependent Variable: Employee Performance
Table 12: Co-efficient Table of Linear Regression
(Source: Data based)
The above table represents the coefficient value of the different leadership styles
comparatively on the employee performance. It is seen that the Authoritative Leadership style
can positively predict the performance of the employees with standardised B= 0.436. The
other two leadership styles, the transactional as well as the transformational leadership style
can too positively predict the evaluation of employee performance with standardised B=
0.125 and 0.229 respectively. However, from the data it can be seen that the Laissez-faire
leadership style negatively predicts the dependant variable with value of standardised B= -
0.021. This signifies that with implementation of Laissez faire leadership style, the
performance of the employees is significantly reduced in the small and medium sized
organizations of United States.
4.4. Discussion
From the results, it is seen that the different types of leadership styles has different
presumable effects on the performance of the employees in the organization. The
authoritative leadership style has the most significant effect on the employees. The medium
and small organizations are in the motto to develop themselves to stand in the market. Hence,
the employees would require a strict guidance and a firm attitude from the leader’s end to
establish the goodwill of the organizations and enhance their productivity. The organizations
can also implement transformational and transactional leadership to encourage and motivate
them to work better. However, these developing companies should not incorporate the
Laissez-faire leadership style, because if any operation fail to produce the required outcome,
the organization might face a loss that will be unrecoverable. Hence, the experimental
attitude of the employees in case of Laissez-faire leadership style will be a risky choice for
the organizations of United States that are still in its developing stage.
32

33DISSERTATION
Chapter 5: Conclusion and Recommendations
33

34DISSERTATION
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Appendix
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