Role of Leadership Style in Employee Engagement: A Case Study of Wesfarmers, Australia

This research study focuses on the role of leadership style in employee engagement in the Australian retail industry, with a case study of Wesfarmers. It explores the influence of leadership styles on employee attitudes and behavior.

Running head: MANAGEMENT
An Assessment of the Role of Leadership Style in Employee Engagement: A Case Study of
Wesfarmers, Australia
Name of the Student:
Name of the University:
Author Note:

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Abstract:
This particular research study focuses on the role of leadership style in employee engagement of
Australian industry with special focus on Wesfarmers. Employees have been a key asset of the
organization as they represent the one who determine the failure or the success of organization.
Organizations considering the importance of employees have put across various policies and
strategies for ensuring the well being and becoming engaged. Besides this, the leadership style
has played a key role in influencing the attitude of employees. The study thus investigates
influences the styles of the leadership on the employee in respect to the Australian retail industry.

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Table of Contents
Chapter 2: Literature Review...........................................................................................................3
2.1 Introduction............................................................................................................................3
2.2 Employee Engagement..........................................................................................................4
2.3 Outcomes from Employee Engagement................................................................................4
2.4 Employee Engagement and Productivity...............................................................................7
2.5 Necessity of Effective Employee Engagement in Australian Retail Industry.......................8
2. 6 Drivers of Disengagement....................................................................................................8
2.3. Leadership Style....................................................................................................................9
2.4 The Relationship between Leadership Styles and Employee Engagement.........................10
2.5 Conclusion...........................................................................................................................11

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Chapter 2: Literature Review
2.1 Introduction
The literature review is the second chapter of business research methodology. This
chapter aims at providing a deeper insight into role of leadership style in engagement of
employees in regard to Australian retail industry with special focus on the Wesfarmers. This
chapter puts forward a comprehensive coverage by focusing more on the theoretical concepts.
This chapter also contains critical analysis and evaluation of relevant literature in relation to the
research top.
The intense competition within the market place has forced the organizations to put
higher emphasis on the human capital or the talent management. Human Resource Management
is often given topmost priority for ensuring the selection and the recruitment of the right talent.
There are also various strategies that are devised and implemented for ensuring that the
employees are completely optimized and developed for gaining highest productivity levels
(Othman et al., 2017). However, in order to ensure the retention of the talent, fair promotion and
remuneration is often implemented. Although the strategies, seems to adequately motivate and
retain human capital within organizations, there lies certain instances that does not engage them
sufficiently within organizations. Except for perennial matter related to task reward equity, there
has been emergence of several issues that might reduce the employee engagement to simply
another human resource craze (Guest, 2013). Task fragmentation arising from ill planned
outsourcing strategy leads to the creation of functional silos which hold back the people from
remaining responsibly attached to the task assigned (Van Caeneghem and Bequevort, 2016).

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These issues might be tackled by creating sense of meaning and purpose to the jobs of
employees. In order to deal with these matters, leadership style acts as the determinant of the
employee engagement. Unquestionably, leaders remain assigned as the agents trusted by
organization for reinforcing and instilling sense of meaning and purpose amongst the community
of the follower.
2.2 Employee Engagement
According to Anitha (2014), an engaged employee is represented by someone who
remains emotionally attached to the organization, remains passionate about their work and care
about the organizational success. When employees become deeply involved within the
organization they seem to be positive and engaged. Mishra, Boynton & Mishra (2014) stated that
the best effort for determining success within the organization lies in the feeling of satisfaction
with work related factors within the organization. Macey and Schneider (2008) defined the
employee engagement as one of the desirable conditions amongst the employees encompassing
attributes like possession of an organizational purpose, sense of commitment, involvement,
passion, enthusiasm, energy and effort. In fact, they involve both the attitude and the behavioral
component. While the work engagement involves the optimistic vibes of the employees towards
work engagement deals with the positive feelings of the employees towards organization. Work
engagement and employee engagement are used in an interchangeable manner in literature as a
result of the psychological needs and the satisfaction associated with both the constructs
(Schaufeli, 2013). Thus, engagement remains theoretically distinguishable from the overlapping
constructs like the organizational commitment, job involvement and the citizenship behavior

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(Saks, 2006). Nevertheless, leadership style is considered one of the prominent factors in leading
the employee engagement.
2.3 Outcomes from Employee Engagement
Bailey et al., (2017) stated that commitment and engagement of employees results in
positive outcomes. Some outcomes related to the engagement link relates to the affective
responses of the employees at work. For instance, it has been found through Australian
Workplace Survey that increased number of the engaged employees had higher level of
employee participation in the organizational programs related to the receptiveness, retention,
loyalty and change. Besides employee engagement has resulted in lower levels of the following
(Rana, Ardichvili & Tkachenko, 2014):
 Stress and role conflict
 Cynicism about organization and the goals
 Control over someone’s work environment
 Confidence in future prospects of organization
 Self confidence in the ability of making change within the organization
 Willingness of learning and experimentation and stay within the firm
 Constant Improvement
 Organizational identity
According to Albrecht et al. (2015), it has been found that most individuals are able to reflect
on the personal experience when they feel more engaged within the organization. Such feelings
have been associated with greater levels of willingness in working harder, feeling of connection
towards work, sharper focus on the achievement of organizational goals and feeling of being a

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part of the organization. Researchers have generalized and confirmed the personal experience.
For example, research put forward by Saks (2006), revealed that the engagement levels have
been predicted by the perceived support granted to the employees by an organization and the
measures of the engagement predict the levels of the job satisfaction, intentions of quitting,
commitment measures along with the positive behaviors within organization. Besides, personal
outcomes an organization is believed to perform better with more number of engaged employees.
In other words, the organization is believed to deliver better performance. The relationship
between the employee engagement and performance has been found in the empirical research
that tried relating it to the business unit or the firm outcome. Empirical findings have been
illustrated as: Companies having 60 percent of engaged workforce ensures 20 percent more
return to the shareholders for an average five year period. This brings about a comparison to the
companies that have employee engagement in the range of 40 to 60 percent that accounts for
closer to a total shareholder return (TSR) of 6 percent. It has been found that the highly involved
employees are able to achieve 12 percent of the goals compared to the employees with lower
levels of involvement. On an average, twelve percent of employees having salary of $35,000
equate something closer to $4,200. While considering impact on an organization with close to
10,000 employees, the value might result in an impact of close to $42 million. Meta-analysis
conducted by Harter, Schmidt & Hayes (2002) resulted in similar findings. It revealed stronger
impacts employee engagement might have on customer loyalty and satisfaction. Nevertheless,
weaker levels of impact are found between measures of satisfaction and engagement and the
business level outcomes. In a different meta-analysis conducted by Riketta (2012) she derived a
correlation between the measures of the attitudinal organizational commitment and the job
performance. The strength of the correlation has been moderated by the kind of the data collected

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and remained stronger when the ratings have been compared to the objectives or the supervisor
rated measures. On the other hand, Luthans Luthans, Peterson & Farmer (2012) examined role of
managers in regard to the level of employee engagement and determined that the levels of the
self efficacy of the managers partially helped in mediating relationships. Hence, the research
conducted by both the academic and the consulting firms suggested that engagement has been
related to the outcomes considered vital by the organizational managers both at the
organizational and the individual levels.
2.4 Employee Engagement and Productivity
According to Kataria, Rastogi & Garg (2013), the success of the business depends on
the engaged workforce with the research portraying that the firms not only engages but also
enables the employees for achieving 4.5 times growth in its revenue. With organizations
becoming increasingly global there lay a need for rethinking the engagement approaches. There
has been rapid growth in the emerging market and the economic power and organizations needed
to consider diverse need of the global workforces that accommodated the needs in a more
personalized manner. It became necessary for developing the engagement strategies for
supporting the employees in the teams based on the unique needs, expectations and values.
Taneja, Sewell & Odom (2015) stated that the labor market went global resulting in
newer competitive landscape for the talent retention and acquisition. The ability of effectively
collaborating across the border has been the key. For responding effectively, organizations will
remain challenged form establishing process, cultures and systems that would ensure meaningful
collaboration thereby inspiring and motivating performance in newer manner.

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Data collected through research portrays that the engagement scores in New Zealand and
Australia improved in the last year in comparison to the previous year but it is yet to catch up
with the Americans where the employee engagement has been higher and the employees have
reported higher levels of willingness in staying with the organizations for five years. The
engagement aspect is also higher in the Africa and the Middle East. It is essential for the leaders
to understand how the employee engagement differs across the world since they are ones who
would be inspiring the employees to be their best thereby interpreting the levels of engagement
in the appropriate context.
2.5 Necessity of Effective Employee Engagement in Australian Retail Industry
According to Hicks, O'Reilly & Bahr (2014), retail industry in Australia has problem
with the employee engagement. The Employee Engagement Trends Report has put across that
close to 35 percent of the retail employees have a feeling of disengagement towards the work.
This is a major problem because when the people are engaged they have lower rate of turnover,
higher level of sales and higher levels of customer metrics. A more alarming study puts across
coworker relationship amongst the retail employees. Assessment shows decreases in the
percentage from previous year. It has been found the percentage of the coworkers in going that
extra mile in achieving greater results have been -2.7 percent while the dependence on other
members had been -0.6 percent. The people committed to producing quality work had been -0.5
percent.
Retailers needed to be worried about the engagement problems. This is because
disengagement led to higher rates of turnover that has a direct impact on the customer
experience. It is also becomes increasingly difficult in building the customer loyalty if the

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customers keeps viewing a newer face each time it is entering the store. In contrast to this,
Purcell (2014) mentions that the engaged and the motivated employees not only stays longer but
also helps in inspiring others in performing along with various positive outcomes.
2. 6 Drivers of Disengagement
According to Christian & Ellis (2014), certain retail trends are helping in bolstering
higher levels of the disengagement. As the online retailers grows in popularity and size, retail
employees of the traditional stores remains worried about the future employment. Shifts like
these create an impact on traditional retailers like Coles, Woolworth and Wesfarmers. Another
factor that is resulting in employee non engagement is the non desk workers. Irrespective of
whether the retail team is working on retail shop, warehouse or call centre, they create the special
needs for the communication and logistics. Eriksson, Hilletofth & Hilmola (2013) put across,
that one such well known strategy of improving the employee experience has been in boosting
the retail wages of Wesfarmers.
2.3. Leadership Style
A precise and concise consensus of leadership does not exist. The theory of leadership
does not have universal definition (Gill, 2011). However, it has been found that transformational
leadership is amongst the most discussed style of leadership in modern literature. Effelsberg &
Solga (2015) described transformational leaders as the individuals as the individuals who
challenges the subordinates and inspires them in going beyond the personal interest for achieving
the benefits and the goals of wider organization or group. In contrast, as stated by McCleskey
(2014), transactional relationship between the follower and the leader acts as means of exchange

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for well defined transactions. Transformational leadership is considered a fervent approach to
the visionary leaders and empowered the followers amongst the practitioners and the
academicians. Nevertheless, the nitty-gritty of the problem lay within insufficiency of
transformational theory of leadership in addressing the political, economic and social issues from
organizational context (Malloch, 2014). The relationship and the task centered relationship
theories of leadership are considered the earliest in contributing to enriching the ideologies that
underlined the different interpretations of the leadership styles. Leadership styles have been
categorized into three different dimensions that comprised of the production orientation,
employee orientation and the change orientation. Although employee and the production
orientation seem to reflect essence of relationship and task oriented styles of leadership, the
change related orientation have been empirically proven as the valid construct that remains
independent of the two factors . However, there have been limited studies that have been
carried out in relation to this aspect.
2.4 The Relationship between Leadership Styles and Employee Engagement
Previous studies conducted for investigating the influence of the various factors
contributed to the employee engagement. Among the factors, leadership styles have been the
significant predictors of the employee engagement. According to Breevaart et al. (2014), the
leadership related predictors includes the transformational, charismatic leadership, team
supportive and the authentic leadership. Besides, the competency related to the employee
engagement of leaders in regard to the concern and the respect for the others to ensure the well
being and the development have been found as the good predictors of job performance,
satisfaction and the organizational commitment. The findings of the studies have not been

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consistent as some of the studies delivered mixed results. There exist a missing link between the
‘good management and mentoring’ style of leadership and the employee engagement amongst
the entrepreneurial subordinates. The style of leadership related to good management and
mentoring encapsulates management practices that included effective administration,
performance orientation, role clarification, self confidence, integrity and intellectual stimulation.
On the other hand, the elements of the employee development included power sharing,
confidence and communication (Papalexandris and Galanaki, 2009). Besides, study undertaken
by Britt, Thomas and Dawson (2006). indicated that transformational leadership do not result in
significant impact towards the engagement of employees. According to Markos and Sridevi
(2010), there has been a dearth in the research that links both the leadership and the employee
engagement in the third world countries.
According to the Gallup report, it has been found that close to 14 percent of the
employees in Australia as well as New Zealand remains engaged in the jobs. A whopping 71
percent does not remain engaged while 15 percent remains disengaged. Nevertheless, those in
the leadership positions fared worse since only one in overall five leaders remained engaged in
jobs. The report ranked Australia in the seventh position out of the eleven global regions.
2.5 Conclusion
On a concluding note, it can be said that the issues surrounding an organization lies in
how to totally engage the human capital since the engaged employees remain increasingly happy
in aiding the organization to prosper. The present study portrayed how the leadership style
contributed in ensuring higher engagement levels of the employees within the organization. The
study also discovered the importance of employee engagement in the retail industry. The paper

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also discusses the drivers of employee disengagement. Leadership style is also used for
enhancing levels of the employee engagement. The findings of this study have significant
repercussion in the organization. Employee engagement has been attracting greater deal of
employer’s interest across the numerous sectors. It is to be noted that the desire of the employees
in finding newer ways of increasing motivation of the employees thereby winning more
commitment towards the job and the organization

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