Reviewing Impact of Leadership & Culture on Employee Performance

This literature review examines the crucial factors influencing employee performance, focusing on leadership, organizational culture, motivation, and training within small to medium-sized enterprises (SMEs). It defines effective employee performance as aligning organizational goals with employee skills and development. Leadership is explored as a catalyst for business growth, emphasizing various leadership styles such as autocratic, transformational, and cross-cultural, and their impact on employee motivation and productivity. The review delves into organizational culture, highlighting its role in shaping employee behavior and identity, and discusses strategies for fostering a positive culture through communication, collaboration, transparency, and effective leadership support. Furthermore, it touches upon the importance of motivation through salary, rewards, recognition, and job enrichment, as well as the significance of training programs, including on-the-job training and needs assessments, in enhancing employee capabilities and overall performance. The review also covers shared values, creativity, innovation, customer orientation, leadership coaching, empowerment, and participation as key elements affecting employees’ performance in small medium companies.

Running head: LITERATURE REVIEW
Literature Review
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Introduction
Effective Employee Performance, can be defined as the process by means of which an
organization or a company aligns its objectives, goals as well as the performance
requirements that the company or the organization wants its employees to achieve or fulfill
(Bryman, & Bell, 2015). The expectations of the company or the organizational must be in
sync with the employees’ agreed measures, competency requirements, skills, development
plans as well as the training provided to them. Therefore, the companies try to focus on the
improvement, development as well as the learning process of the employees’ in order to
achieve their overall business strategy and also to create an efficient high performing
workforce. The concept of employee performance management is a recent one with its
beginning some 60 years ago with the motive to explain the concept of income justification
(Bryman, & Bell, 2015). The concept, was initially used to determine the wage of an
employee on the basis of his or her performance. Thereby, various companies started using
this concept to drive behaviors from the employees in order to get goal oriented specific
outcomes. The void between the justification of wage and the development of work related
skills as well as knowledge is the bone of contention in the use of Performance Management.
However, in the present business world, the process of managing people has become more
specialized as well as formalized. The companies have introduced various tools like adequate
job training methods, annual appraisal plans, effective leadership techniques to make the
employees perform better. According to many experts, a proper Learning Management
System can also be used by the companies to boost the performance of the employees.
Leadership
Leadership can be defined as the ability of an organization or company’s management
to set as well as achieve the different challenging objectives as well as goals, take decisive as

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well as swift actions, outperform the competition that organization faces and motivate or
inspire others to perform well (Sotarauta, Horlings, & Liddle,2012). It is difficult to place a
particular value on leadership or any other qualitative aspects of a company or an
organization, in comparison to quantitative metrics which can be easily tracked. It is a
commonly observed phenomenon that the individuals with strong leadership skills often rise
to higher executive designations like CEO,CFO,COO, chairman and president (Carter et al.,
2013). According to a study, the four fundamental factors that affect production can be
enumerated as land, capital, labor as well as entrepreneurship (Jayawarna, Rouse, &
Kitching, 2013). The last mentioned factor relates the importance of the concept of leadership
in the business world. Leadership can seen as a catalyst which makes all the other factors
work together in sync or in other words it can be said that all other business resources lie
dormant in the absence of effective leadership.
It is a commonly observed phenomenon that an effective leadership can lead to the
overall growth as well as the development of an organization or a company. Effective
leadership depends on the personality as well as the character of the leader. There are various
qualities or personality that makes a leader stand out from the rest of the employees of the
organization. These qualities or personality traits can be enumerated as-
 The ability to listen to the opinions of others
 The capability or the ability to make decisions at crucial moments on their
own.
 The quality or the ability to retain the efficient employees who are valuable
assets to the company or organization.
 The ability to make the people listen as well follow what he or she is trying to
convey.

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 The ability to implement new as well as innovative plans for the future
benefit or the company or the organization.
The overall growth as well as the development of the organization or the company
also depends on the style of leadership that is being followed by the leader. The leader needs
to analyze the situations effectively as well as understand the demands of the present situation
in order to adopt as well as implement the style of leadership that is the best for the present as
well as the future of the organization or the company. There are around 12 different styles of
leadership that have been utilized by different global leaders over the course of years to
achieve the different goal as well as the objectives of the organization or the company
(Northouse, 2015). The common styles of leadership are-
 Autocratic
 Transformational
 Strategic Leadership style
 Democratic
 Visionary
 Charismatic
 Laissez-faire
 Transactional
 Facilitative
 Coaching
 Cross-cultural
 Team Leadership
In the recent years, it has been noticed that some particular methods are given
preference over others by the global leaders keeping in view the requirements of the industry

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in which they are working. Bill Gates, for example, is an ardent advocate of the transactional
leadership style. Following the precepts of the transactional leadership style, he used to visit
the new products at Microsoft and until various difficult questions until he was satisfied that
the various members of the team understood the objectives as well as the goals of the
products and the services. Howard Schultz, the ex-CEO of Starbucks, is an advocate of the
transformational leadership style, which depends on the concept of motivating the employees
in order to achieve the desired results (Schultz, 2012). Guido Gianasso, the president of the
International Air Transport Association, on the other hand is a follower of the cross-cultural
style of leadership, which involves the ability of the leader to motivate as well as influence
the attitudes as well as the behaviors of the people in the global community to reach a
common organizational goal.
The role that leaders play in the growth as well as the development of the organization
or the company is very important. According to many experts, a leaderless company or
organization is like an army without generals. Therefore, workforce needs the leadership of
experienced as well as skilled individuals so that proper guidance is given to the other
employees in order to make them work together towards the same achievement of the same
goals. They are also responsible for the training process which aims to equip the employees
to perform their roles and responsibilities in a better manner. However, the most important
task that they need to perform is the task of motivating the employees and pushing them to
excel.
Organization Culture
Organizational culture can be defined as the values as well as the behaviours which
contributes to the unique psychological and the social environment of a company or
organization (Alvesson, 2012). It also represents the collective beliefs, values as well as the

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principles of organizational members. It is generally considered to be a compilation of the
following factors as product, technology, management style, history, strategy, market, types
of national culture as well as employees. Culture includes the systems, norms, assumptions ,
values, symbols, location, environment, visions, language, beliefs as well as the habits of the
organization or the company. Business executive Bernard L. Rosauer, developed an
actionable definition of organizational culture according to which organizational culture
depends on three manageable ingredients like employee, work and the customer (Green,
2012). As opined by Ravasi and Schultz, organizational culture can be defined as the
outcomes of the shared assumptions which channelizes or guides the things that happens in
an organization by defining appropriate behavior on the part of the employees in various
situations (Green, 2012). It can also be described as the pattern of all the collective
assumptions as well as behaviors that are imparted to the new employees of the organization
as a way of perceiving, feeling and even thinking. Therefore, it can be said that organizational
culture affects the way in which the different people associated with the organization interact
with each other. It can also be defined as the way in which the employees as well as the
clients identify with the brand identity of the organization or the company.
Organizational culture forms one of the most important aspects of any organization or
company. A proper organizational culture can help the organization or the company work in a
more efficient manner where everyone related to the organization works towards the
achievement of the same objectives. Therefore, the presence of a proper organizational
culture becomes of paramount importance to the organization. There are several ways by
which a proper organizational culture can be achieved. They include-
 Effective communication is important, wherein the goals as well as the objectives of
the organization are properly conveyed to the employees as well as the clients.

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 The authorities in the higher designations should give the employees a chance to
speak as well as put their opinions before the higher authorities. According to a report,
around 75% of the employees are of the opinion that they would stay longer with an
organization that listens as well as tries to address the issues faced by them ("Forbes
Welcome", 2017).
 The encouragement to collaborate also helps in the creation of proper organizational
culture. According to a report, around 86% of the employees as well as executives cite
the lack of collaboration as well as communication for the failure of any business
organization ("Forbes Welcome", 2017).
 According to a report, 50% of the employees feel that the bosses sharing information
as well as the data has a significantly positive impact on the workplace ("Forbes
Welcome", 2017). Therefore, transparency is another factor that helps in the creation
of proper organizational culture.
 According to a report, 89% of employees are of the opinion that they would like to
stay longer as well as recommend the company as a good place to work which
provides them with effective leadership support ("Forbes Welcome", 2017).
Therefore, effective leadership is another factor that helps in the creation of proper
organizational culture.
 According to a report, 69% of employees who receive consistent as well as accurate
feedback feel fulfilled in their jobs ("Forbes Welcome", 2017). Therefore effective
feedback system is another factor that helps in the creation of proper organizational
culture.
 Rewarding the employees regularly with salary hikes as well as providing a healthy
work place environment also helps in the creation of effective organizational culture.

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The benefits of the organizational culture depends on the kind of organizational culture
style adapted by the company or the organization as per their requirement. There the choice
of the style becomes very important as an incompatible style can instead of adding to the
growth of performance as well as annual revenue will lead to a decrease in the same. The
most important styles of organizational culture are-
 The Clan Culture
 The Hierarchy Culture
 The Market Culture
 The Adhocracy Culture
A company or an organization must choose the organizational culture kind depending on
the kind of industry they are in. A good example of the Clan Culture is the business model of
the Zappos Shoes, which is oriented towards being family-like, with special focus on
mentoring, doing things together as well as nurturing (Zip et al., 2017). Taskworld on the
other hand, follows the Adhocracy cultural style in which an organization or a company
adopts a flexible, adaptable as well as informal form of culture that can be defined by a lack
of formal structure ("Work Smarter Together", 2017). General Electric, under the leadership
of its former CEO Jack Welch, can be cited as a good example of a market culture, in which,
instead of reorganizing the company or the organization from inside they focus more on the
outward orientation and they value differentiation over integration ("GE | The Digital
Industrial Company | Imagination at Work", 2017).
There are several benefits that a proper organizational culture can provide to the
organization or the company concerned. Some of the benefits can be enumerated as follows-
 The quality of the work performed by the employees is significantly improved.
 On-boarding is more efficient

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 Teamwork is encouraged
 Informal learning is encouraged
 Culture goes a long way in creating a positive brand image of the company.
 Cross-cultural miscommunication, can be overcome by an efficient organizational
culture.
Motivation
The word “motivation” is derived from “motive”, which denotes drives, wants, needs
or desires within the employees or the individuals. It can also be defined, as the process by
means of which the employees or the individuals can be stimulated to actions to accomplish
the desired goals. It is often seen as one of the most important functions of the higher
authorities of the company or the organization to create a willingness amongst the employees
of the company or the organization to perform their best as per their abilities. Hence, the role
a leader is to motivate the employees so that they can perform well in their task, which will
lead to the overall growth of the organization or company. The process of employee
motivation generally consists of three stages-
 The drive to excel
 Stimulus to excel
 Accomplishment of the goals
Maslow’s Need Hierarchy Model
Maslow’s Need Hierarchy is a theory of psychology which was proposed by Abraham
Maslow in his 1943 paper, ”A Theory of Human Motivation” in his Psychological Review
(Taormina & Gao, 2013). He subsequently extended his observations to include his ideas of
humans’ innate curiosity. His theory can be incorporated with many of the theories of human

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development as well as contemporary psychology, many of which aim to focus on portraying
the levels of growth as well as development in humans. He used the terms love, belonging,
self-transcendence, psychology, esteem, safety and self-actualisation to describe the process,
which the process of human motivation generally goes through. The goal of this theory is to
achieve the sixth stage or level as per the diagram below-
Figure 1: Maslow’s Hierarchy of Needs
Source: (Created by the Author)
The significance of Maslow’s need theory is very much in any company. Nowadays
most of the businesses are applying this concept in business in order to motivate their
employees. The theory states that management should motivate their employees as per the
framework provided by Maslow’s need theory. First of all, there are physiological needs
which includes the basic needs such as clothes, foods and other basic requirements. Then
comes safety needs, which includes employee safety or security that they will not be fired for
any insignificant purpose. At the top level comes esteem and self actualization needs which
are appreciations that the employee receives for his work done or recognition in the
organization (Shields et al., 2015). Any business that aims to achieve its goals must look after
the needs of the employees’ as they are life force of an organization.

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Figure 2: Maslow’s Hierarchy of Needs
Source: (Created by the Author)
There are other laws as well that affect the motivation of the employees like
Herzberg’s Two factor theory, Theory X and Theory Y and others (Ball, 2012). These
theories are used by the different companies as per the industry in which in which they are
operating to motivate the employees in order to get the maximum amount of productivity
from them.
There are various ways by which the employees can be motivated. They are-
 Regular organization of rewards and recognition
 Effective business communication
 Effective and efficient leadership
 Respecting the opinion of the employees

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 Opportunities of advancement to the deserving employees
 Incentives as well as monitory rewards
 The prioritization of work-life balance
Training
Training, can be defined as the process by means of which an individual acquires the
relevant job-related skills as well as knowledge (Elnaga & Imran, 2013). In other words it
can be described as a teaching process which aims to develop in an individual or in groups,
any skills or relevant knowledge that correlate to the specific as well as the useful
competencies. The goals of training can be said to be the achievement of specific motives like
improving one’s capacity, capability, productivity as well as performance. It is also said to
form the core of apprenticeships. Apart from the basic training that is usually provided at the
beginning of any job companies as well as organizations feel the requirement to provide
regular training to the various employees at different points in order to keep them updated to
the recent trends in the global market so that they can meet the expectation levels of the
company (Jiang et al., 2012).
There are various kinds of training methods depending on the kind of job roles as well
as the kind of industry in which an individual is to work in. The training method also depends
on the level at which the training is provided, whether the training is provided at the initiation
of the new job or whether is provided as a part of the employee up-gradation program
(Phillips, & Phillips, 2016). The various kinds of training methods are-
 Management Games
 Role playing
 On-The-Job
 Games and videos