Analyzing Leadership's Effect on Organizational Performance: A Report

This report delves into the critical role of leadership in shaping organizational performance. It begins by defining leadership as the art of inspiring and influencing individuals and groups to achieve company goals. The report then explores the direct impact of leadership on factors like employee morale, productivity, and the ability to adapt to competitive environments. Different leadership styles, including autocratic, democratic, and laissez-faire, are analyzed, highlighting their respective advantages and disadvantages. The report also examines leadership theories such as trait, behavioral, transformational, and contingency theories, showcasing how each influences leadership effectiveness. Furthermore, the report emphasizes the importance of trust, organizational climate, and employee engagement as mediating factors that contribute to organizational success. The conclusion reiterates the significance of appropriate leadership in fostering business growth and achieving desired outcomes.

LEADERSHIP
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TABLE OF CONTENTS
Introduction .....................................................................................................................................3
TASK ..............................................................................................................................................3
1 Does leadership make a difference to organizational performance .........................................3
CONCLUSION ...............................................................................................................................6
REFERENCE ..................................................................................................................................7
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INTRODUCTION
Leadership is a process of inspiring and influencing groups and individuals to attain the
overall goals of organization. The main objective of exercising leadership is to influence
organizational members to attain overall goals of the business. Leadership aims at determining
clear and well defined vision for the company and transmitting the same to organizational
members. It further involves resolving the issues and conflicts between different groups and
members. The effective leadership helps in coordinating organizational functions and resources
(Clawson, 2008). It assists the business and its members to stay motivated and focused towards
business goals. Therefore, it plays a significant role in enhancing performance of business and
ensuring growth and productivity. It further helps the members in aligning the individual’s goals
with organizational overall objectives. In this report, implication of leadership in business
enterprise will be studied. Further, learning will be shown regarding the difference made by
leadership in organizational performance.
TASK
1 Does leadership make a difference to organizational performance
Leadership is an art of inspiring organizational members to attain shared goal. However,
for this aspect it is significant to have proper coordination, cooperation and cohesive behavior
between organizational members. Thereafter, leadership helps in boosting morale of the
individuals to perform in better manner. In today’s combative environment, company depends
upon their leaders in implementing changes and ensures creativity necessary for sustaining cut
throat competition (Jing and Avery, 2008). An effective leader can stimulate its disciples in
many manners like, coordinating, communicating, cooperating, enhancing training and
developing skills, motivating and appraising performance. In addition to this, it help in
overcoming barriers to success like, conflicts between groups, low morale, negative work
environment, dissatisfaction etc. This further assists in ensuring organizational performance and
increasing productivity (Maxwell, 2009). Therefore, impelling leadership has an overall positive
impact on performance of the company. However, the significance of leadership can be
evaluated through the change in behavior of members, performance of individuals, employee
retention and satisfaction among members.
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Furthermore, the adopting proper leadership style is very much important for the
organizational success. By using appropriate leadership style, leader influence members to
perform in a desired manner. Thereafter, there are different leadership styles that assist leader in
providing guidance to employees, implementing business strategies, inspiring individuals.
Broadly there are three types of leadership style, autocratic, democratic, laissez faire. In
autocratic leadership style, leader has sole power to take business decisions without consulting
organizational members (Ogbonna and Harris, 2000). It further helps the leader in making quick
decision on the basis of its personal experience and knowledge. However, it may result into lack
of morale, decision making ability skills that are barriers for individuals in their career growth
etc. In addition to this aspect, it may restrict the creative thinking ability of members and lead to
high employee turnover and absenteeism. Thereafter, in democratic leadership style leaders
ensure positive participation of members in the business decision making process. However,
final decision is taken by leader after considering the suggestions, creative ideas and viewpoints
of members. The main aim of this leadership style is to stimulate creative thinking skills among
members and developing their area of specialization (Andreu and et. al., 2006.). This aspect is
crucial for individuals engaged in business decision making and development projects.
Therefore, democratic leadership style results into high satisfaction and productivity of members.
However, this style is inappropriate when quick decisions are to be made. Thereafter, in laissez
faire style, there is too much flexibility in the organization. Thereafter, freedom is provided to
members to make decisions within the assigned area of responsibility, to perform task in their
own style and determine their work proprieties (Clawson, 2008). Therefore, it helps in increasing
the confidence, morale, and job satisfaction among members. However, it may result into wrong
decisions by members due to lack of required skills, non attainment of work targets etc.
In addition to the aforementioned styles, there are several leadership theories that can be
used by leader to influence members to perform beyond their potential and assure their high
productivity (Scott and Jaffe, 2004). Some of them are, trait, behavioral, transformational,
contingency, power and influence and transactional theory etc. As per the trait theory, a leader
should have specific attributes that will ensure effectiveness of leadership style (Saeed, 2014).
Therefore, an effective leader must be honest, confident, must possess decision making skills,
positive attitude and sound communication etc. Further, in behavioral leadership emphasis is
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given on the behavior of leader in contrasting situations. Thereafter, the transformational
leadership style states that to stimulate members it is crucial for the leader to inspire its
followers. Therefore, with the help of proper vision, leader can provide right direction to its
members. Further, the contingency leadership style states that effectiveness of leader depends on
the prevailing circumstances and actions taken during that period. Thereafter, as per the power
and influence leadership style, leader can exercise its positional power for the betterment of the
organization. For instance, leader can give rewards to high performing employee and punish the
one who is lethargic, unpunctual etc (Leadership styles and theories. 2009). Further,
transactional leadership style focuses on setting clear goals and using rewards and punishments
to assure conformity with business targets. Thereafter, implementing appropriate leadership style
help in assuring fruitful outcomes and positive performance of the organization. The leadership
style determines the behavior of members and trust level between employee and leader. For
instance, trust level between leader and member is more in transformational style rather than in
transactional one (Bass and Riggio, 2006). This further have strong impact on performance of
company like, business entity where there is high level of trust between leaders and members
shows better fiscal performance as compared to those having low trust. Likewise, the customer
satisfaction ratio is more in organizations having increased trust and cooperation level between
members and leaders. Therefore, trust factor plays a mediating role in bridging communication
gap between leaders and its disciples. Thereafter, the absence of trust element in the relationship
of leader and follower may impact the behavior and performance of the company. For instance,
if a member does not trust its leader than he may not share issues faced by him that will further
result into dissatisfaction, low morale and productivity (Relationship between effective
leadership and employee performance, 2015). Therefore, member may avoid responsibility
which will further lead to higher absenteeism or employee turnover. However, with the aid of
employee engagement and participation, an effective leader can enhance the trust level.
Furthermore, leadership also assists in influencing the nature of organizational climate.
By assuring cooperativeness, cohesiveness in organization leader can develop an overall positive
work environment. This further assists in building environment where members support each
other, work in unified manner and are committed towards business goals. The organizational
climate is represented by factors like, interaction between leader and members, efficiency of
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business, clarity of work, structure of organization etc (Schein, 2006). Thereafter, to assure
positive work environment it is important for leader to make use of rewards, structure,
motivation and recognition etc within firm. Therefore, it plays an important role in retaining
talented employees within the enterprise. Further, the affirmative work environment has positive
impact on the performance of employee and organization.
To ensure smooth functioning and enhanced performance of the company, visionary
leadership can also be adopted. The main aim of this style is to build higher trust, confidence and
morale among members (Selznick, 2011). In addition to this aspect, leader can use visionary
style to induce followers to make business decisions on their own. It further develops confidence
among members and stimulates them to perform beyond their capabilities and their best effort
that will help in the betterment of organization.
The effective leadership helps the leader in framing the benchmarks, goals by considering
the mission and vision of company which management wants to attain. This aspect helps in
setting the standard performance and determining the mode of conduct of members. Further, the
success of business functioning depends upon appropriate conduct of employees. However, with
the aid of suitable leadership style, manager can change an individual into key asset for the
business enterprise (Kouzes and Posner, 2006.). In addition to this aspect, it can result into
creativeness of organization performance. The leader can induce members to put forward their
view points, suggestions etc. therefore, it can be said that for the success and profitability of
business it is important for the organization to make use of appropriate leadership.
CONCLUSION
From the aforementioned report, it can be concluded that leadership plays an important
role in inspiring members to give their best performance. This further helps in shifting the
business to wider horizons of growth and success. The leadership can be regarded as lifeblood of
success of the organization. However, there are many factors which should be considered to
exercise effective leadership like, culture, structure of organization, trust level between leader
and member etc. Further, leadership should aim at developing creative ability among members
so that innovative products and services can be designed to get competitive benefits as compared
to rivals. This will assure enhanced performance of organization in the market. Thereafter, to get
desired performance, leader can use different leadership styles as well as theories.
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REFERENCES
Books and Journals
Andreu, R., and et. al., 2006. Quality performance assessment as a source of motivation for
lecturers: A teaching network experience. International Journal of Educational
Management. 20 (1). pp.73-82.
Bass, B.M. and Riggio, R.E., 2006. Transformational leadership. Psychology Press.
Clawson, J. G. S., 2008. Leadership as managing energy. International Journal of
Organizational Analysis. 16 (3). pp.174 – 181
Jing, F.F and Avery, G.C., 2008. Missing Links In Understanding The Relationship Between
Leadership and Organizational Performance. International Business & Economics
Research Journal. 7(5). p.67-78.
Kouzes, J.M. and Posner, B.Z., 2006. The leadership challenge . John Wiley & Sons.
Maxwell, J., 2009. Teamwork 101: What Every Leader Needs to Know. Thomas Nelson Inc.
Ogbonna, E and Harris, L. 2000. Leadership style, organizational culture and performance:
empirical evidence from UK companies. International Journal of Human Resource
Management. 1(4). p. 766–788.
Saeed, T., 2014. Leadership styles: relationship with conflict management styles. International
Journal of Conflict Management. 25 (3). pp.214 – 225.
Schein, E.H., 2006. Organizational culture and leadership. John Wiley & Sons.
Scott, C. D. and Jaffe, D. T., 2004. Managing Change at Work: Leading People Through
Organizational Transitions. Crisp Publications.
Selznick, P., 2011. Leadership in administration: A sociological interpretation. Quid Pro Books.
Online
Leadership styles and theories. 2009. [PDFs]. Available through:
<https://www.etsu.edu/ahsc/documents/Leadership_Theories.pdf>. [Accessed on 18th
January 2016].
Relationship between effective leadership and employee performance. 2015. [Online]. Available
through: <http://www.ipcsit.com/vol20/37-ICAIT2011-G4062.pdf>. [Accessed on 18th
January 2016].
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