MBA Dissertation: Leadership Styles and Employee Performance at HSBC

This MBA dissertation investigates the influence of leadership styles on employee performance at HSBC Sri Lanka. It examines transformational, transactional, and contingency leadership theories, utilizing quantitative data and a positivist research approach. The study assesses the effectiveness of different leadership styles within HSBC's organizational context. The research uses reliability and validity testing, demographic analysis, correlation analysis, and regression analysis to derive findings and conclusions. The results suggest that transformational leadership is most effective in enhancing employee performance at HSBC. Based on these findings, the dissertation provides relevant recommendations for improving leadership capabilities and organizational effectiveness. Desklib provides access to this document and a wealth of study resources for students.

Running head: RESEARCH PAPER
MASTER OF BUSINESS ADMINISTRATION DISSERTATION SESSION 2018/9
TITLE
Evaluation of the Role of leadership style for the performances of employees at HSBC
bank in Sri Lanka.
AUTHOR
Dilan Dharmaratne 420296632

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MBA Project Declaration
I declare that the work contained in this project has not been submitted for any other
award and that it is all my own work. To the best of my knowledge, the work contains
no material previously published or written by another person except where due
reference is made in the text of the project.
Title of project:
Effect of Role of leadership style for the performances of employees at HSBC bank in
Sri Lanka.
Name (Print): Dilan Dharmaratne
Signature: ______________________________________________
Date: 14th December 2018

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Table of Contents
Acknowledgement.................................................................................................................. 4
Abstract.................................................................................................................................. 5
Chapter 1: Introduction...........................................................................................................6
1.0 Introduction...................................................................................................................... 6
1.1 Background of the study...................................................................................................6
1.2 Research Problem............................................................................................................7
1.3 Rationale.......................................................................................................................... 8
1.4 Objective of the research..................................................................................................8
1.5 Research Question...........................................................................................................8
1.6 Research Hypothesis.......................................................................................................9
1.7 Structure of the dissertation..............................................................................................9
1.8 Summary........................................................................................................................ 10
Chapter 2: Literature review.................................................................................................12
2.1 Introduction..................................................................................................................... 12
2.2 Leadership..................................................................................................................... 12
2.3 Theories on leadership and leadership styles.................................................................13
2.3.1 Trait Approaches.........................................................................................................13
2.3.2 Behavioural Approaches.............................................................................................14
2.3.3 Contingency Theories..................................................................................................14
2.3.4 Situational Theories.....................................................................................................15
2.3.5 Transformational leadership........................................................................................16
2.3.6 Transactional leadership.............................................................................................18
2.4 Employee performance..................................................................................................20
2.5 Conceptual Framework..................................................................................................21
2.6 Literature gap................................................................................................................. 22
2.7 Summary........................................................................................................................ 22
Chapter 3: Research Methodology.......................................................................................23
3.1 Introduction..................................................................................................................... 23

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3.2 Research Philosophy......................................................................................................23
3.3 Research Approach........................................................................................................24
3.4 Research Design............................................................................................................ 24
3.5 Data collection and analysis...........................................................................................25
3.6 Sampling technique........................................................................................................26
3.7 Reliability and validity.....................................................................................................26
3.8 Ethical consideration......................................................................................................27
3.9 Summary........................................................................................................................ 27
Chapter 4: Findings and Analysis.........................................................................................28
4.1 Introduction..................................................................................................................... 28
4.2 Reliability and Validity testing.........................................................................................28
4.3 Demographic questions..................................................................................................31
4.4 Questions on Transformational leadership.....................................................................34
4.5 Questions on Transactional leadership...........................................................................41
4.6 Questions contingency theory of leadership...................................................................46
4.7 Questions on employee performance.............................................................................49
4.7 Correlation Analysis........................................................................................................52
4.8 Regression Analysis.......................................................................................................58
4.9 Discussion...................................................................................................................... 64
4.10 Summary...................................................................................................................... 64
Chapter 5: Conclusion..........................................................................................................65
5.1 Introduction..................................................................................................................... 65
5.2 Conclusion...................................................................................................................... 65
5.3 Recommendation........................................................................................................... 66
5.4 Self reflection.................................................................................................................. 66
5.5 future scope.................................................................................................................... 67
References........................................................................................................................... 68
Appendix.............................................................................................................................. 72

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ACKNOWLEDGEMENT
I also would like to extend my sincere thanks to the academic and administrative staff at
BMS institute Colombo and the Edinburgh Napier university for the support given to me in
completing this task, who shared their knowledge and assisted me in many ways to achieve
my academic success in completing this MBA.
My special thanks are due to the participants who spend their valuable time in completing
the questionnaire.

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ABSTRACT
This research had examined the impact of leadership styles on the performance of the
employees. HSBC SriLanka was chosen as the case study for the research. Leadership is a
key aspect of modern business as it assists the workforce in striving towards their personal
and professional goals. The analysis of the past literature had shown that there had been
significant contribution in the field of leadership and employee performance. However, very
few literature that had evaluated which of the leadership styles are more effective in modern
organizational context. The research had used a single research design which used the
positivist view and conducted quantitative data to examine the impact of leadership on the
performance of the employees. The findings show that transformational leadership was the
most effective as per the research problem in HSBC. The research had provided relevant
conclusion and recommendation based on the results.

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CHAPTER 1: INTRODUCTION
1.0 INTRODUCTION
This research has aimed to examine the impact of leadership styles on the
performance of the employees. HSBC SriLanka has been chosen as the case study for the
research. Leadership is a key aspect of modern business as it assists the workforce in
striving towards their personal and professional goals. It also generates an organizational
culture that is conducive for improving the productivity and team work of employees. Khoza,
Chetty and Karodia (2016) stated that effective leadership can promote excellent
development for the employees within the organization. The theoretical perspective
presented by Fred Fiedler highlighted the contingency model theory of leadership that
proposed that effectiveness of the employee performance depends on ability of the leader to
lead is contingent on situational factor (Matthews, Daigle & Houston, 2018). These factors
include preferred style, behavior, capabilities and competency of the employees. This
signifies that leaders should adapt to the styles that is best to a current situation and use
different styles to stimulate the performance of the employees. However, there has been
arguments in the past literature over the appropriate style of leadership to motivate the
employees and enhance their performance. This research has aimed to highlight the
leadership style which is most significantly effective for improving the performance of the
employees or whether the contingency theory holds true in the context of HSBC SriLanka.
1.1 BACKGROUND OF THE STUDY
Leadership has been understood as the method of explanation and persuasion along
with the ability to classify, confirm and reintroduce the values of the groups represented by
the leader. Leadership is not bounded by virtues technical skills, managerial expertise,
cultural literacy and other skills (Khoza, Chetty & Karodia, 2016). Effective leaders have the
duty to guide the workforce by sharing knowledge so that they achieve highest quality of
performance. Business entities have been trying to hire the best possible leaders for their
respective organizations. Moreover, past researches show that various researches have
been conducted to understand the ways great leaders operate. This has resulted in the
development of various leadership theories. The significance of leadership styles is known
from the past researches as various investigations has been performed in developing and
developed countries. This research has considered the case of HSBC to understand the
suitable leadership style for the employees within the organization.
HSBC is one of the most renowned international brands and considered one of the
market leaders in the global banking industry. The company is one of the largest operating in

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more than 60 countries all over the world (HSBC Sri Lanka, 2019). The company is providing
service to more than 38 million consumers all over the world through their 3900 branches all
across the globe (HSBC Sri Lanka, 2019). HSBC is one of the oldest banks in SriLanka and
has been awarded repeatedly in the past which highlights the performance they have
achieved over the decades. HSBC has been the first movers in the Sri Lankan market in
terms of various services offered to the consumer, such as digital banking (HSBC Sri Lanka,
2019). The company not provides commercial banking services but also personal banking
services consisting of individual and corporate consumers. The target consumers of the
bank are high end consumers having high net worth in the market. Therefore, in order to
maintain sustainable competitive advantage, the organization requires effective performance
levels from the workforce.
1.2 RESEARCH PROBLEM
The organization lost revenue in the year of 2017, when their revenue decreased to
5.275 billion rupees compared to the 5.598 billion rupees. HSBC continued to lose their
funds in the next year and the whole year was a setback for the company. This shows that
the company has failed to hold to their growth and sustain in the Sri Lankan market.
Workforce is one of the major sources of competitive advantage for the company and the
data clearly shows that there is deterioration in the performance of the employees. However,
this can only be confirmed by conducting an extensive study on the employees to
understand the impact of leadership on the loss of the company. Moreover, SriLanka is a
country with high power distance resulting in a hierarchical structure. Therefore, the research
has aimed to examine the leadership style at HSBC Sri Lanka to understand any
irregularities that may affect the performance of the employees and the company. The
company lost revenue at the global level which shows that there are in efficiencies which
needs to be taken care of. HSBC’s inability to grow while keeping their cost intact is one of
the major concerns for the investors and bank has been missing their target income more
frequently than before. The organization also reported expected loss in credit that is much
higher than the expected amount. Moreover, the company has been under the limelight for
the wrong reasons where they had to pay heavy fine due to tax related issues which is also
affecting their performance. Therefore, in this situation of crisis, the organization needs to
develop effective strategies to improve the performance level of the employees. The
research has examined the leadership style of the management in HSBC to understand the
contribution of leadership on the performance of the employees.

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1.3 RATIONALE
Leadership has been considered as a necessary component for the developing an
effective organizational culture and motivating workforce. There have been significant
changes in the nature of workforce in different countries so adaptability is the key to
sustainability for the companies in the global market. HSBC has been facing major issues in
the global market where there is steep decrease in their revenue (HSBC Sri Lanka, 2019).
However, there may be various reasons due to which the organization has been losing
revenue but this research aims to measure the impact of leadership on the performance of
the employees and the organization. The employee performance is a key component of
organizational performance so the research aims to develop relevant findings to increase the
awareness of the management in HSBC. The findings can also be used by other companies
in similar setting facing similar issues to improve their organizational culture and employee
performance. This research has also developed a model which aims to understand whether
any particular leadership style is effective or different styles based on the situation needs to
be implemented. Therefore, this research has aimed to understand the implication of
proposed contingency theory and other leadership theories to decide which leadership style
is more effective in HSBC SriLanka.
1.4 OBJECTIVE OF THE RESEARCH
The main objective of the research are as follows:
 To examine the impact of different leadership styles on the performance of the
employees
 To evaluate the leadership style that is more suited to the needs of workforce at
HSBC
 To determine whether the contingency theory hold true or not in this given context
 To provide suitable recommendations to improve the leadership capabilities
1.5 RESEARCH QUESTION
Primary Research Question
What is the impact of different leadership styles on the performance of the employees?
Secondary Research Questions
What is the most appropriate style of leadership at HSBC SriLanka?
What is the implication of contingency theory at HSBC SriLanka?

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1.6 RESEARCH HYPOTHESIS
H01: There is no significant impact of transformational style of leadership on the performance
of employees
H11: There is significant impact of transformational styles of leadership on the performance of
employees
H02: There is no significant impact of transactional style of leadership on the performance of
employees
H12: There is significant impact of transactional styles of leadership on the performance of
employees
H03: Favourability of the leadership situation does not have positive impact on the
performance of the employees
H13: Favourability of the leadership situation does have positive impact on the performance
of the employees
1.7 STRUCTURE OF THE DISSERTATION
The dissertation consists of five chapters where the first chapter is introduction which
provides vivid description of the research problem, objective and purpose of conducting the
research. This chapter has also provided details of the research question and reason for
choosing the research topic.
The next chapter of the dissertation is the literature review which critically evaluates
the past literature on leadership styles and identifies the gap in literature. The hypothesis in
the first chapter has been developed based on the evaluation of the literature conducted on
the past literatures. This literature review also has performed synthesis of past data to
understand the difference in results and opinions of different authors.
The third chapter has developed research methods, frameworks and assumptions
based on the research onion. It has provided detailed description of the research philosophy,
approach, design, data collection, data analysis method, reliability, validity and ethical
consideration. This research has provided a systematic description of the way different data
instruments have been used to collect data and analyse it.
The next chapter has performed analysis on the collected data by using statistical
tools and techniques where inferential statistics has been used to draw inference from the
collected data. This chapter has also discussed the findings by linking it with the literature
review.

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The final chapter in the dissertation provides a significant conclusion linking the
objectives of the research with the key findings. It has provided suitable recommendations
that can be implemented by HSCBC bank in Sri Lanka. The research has provided scope of
future research and limitation of the current study. The final conclusion drawn with a
personal reflection on the learning from the overall research project.
Figure 1: Structure of the dissertation
Source: (As created by author)
1.8 SUMMARY
This chapter has provided the outline of the overall research project which describes
the purpose of conducting the research and what it aims to achieve. The research context
has been described to understand the research and its significance to the chosen topic of
research. The objectives, research questions and hypotheses have been stated to provide
Chapter 1: Introduction
Chapter 2: Literature Review
Chapter 3: Research methodology
Chapter 4: Analysis and Findings
Chapter 5: Conclusion and
recommendation

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an understanding of the direction in which the research is expected to move. The next
chapter has conducted a critical analysis of past literatures to highlight the gap in past
studies.