Business Administration Project Topics

The Influence of Effective Leadership on Organizational Performance

The Influence of Effective Leadership on Organizational Performance (a Case of Selected Small Scale Industries in Aba State, Nigeria)

CHAPTER TWO

LITERATURE REVIEW

2.1 INTRODUCTION

This chapter shall give a literature review of what leadership is all about; traditional meaning, the concept and the relationship between leadership and organizational performance.

There are many ways of looking at leadership and interpretations about what it means. Leadership means different things to different people.

Leadership is a process by which an executive can direct, guide and influence the behavior and work of others towards accomplishment of specific goals in a given situation. Leadership is the ability of a manager to induce the subordinates to work with confidence and zeal.

Leadership is the potential to influence behaviour of others. It is also defined as the capacity to influence a group towards the realization of a goal. Leaders are required to develop future visions, and to motivate the organizational members to want to achieve the visions.

2.2 THE CONCEPT OF LEADERSHIP

The state of the art focusing on problems of leadership and organization is covered in this chapter. Just as humans, the needs of an organization are numerous. Therefore it is important for an organization to effectively coordinate the behavior of people in order to achieve its aims and objectives.

According to London (2001), objectives assist executives in performing leadership roles by providing the basis for uniting the efforts of the workers within the organization. It was further stressed that achieving set objectives help to give identity to an organization as well as recognition and status.

As mentioned by Dubrin (2007), there are different classes of needs.

These include: physical, social and egoistic needs. However, job satisfaction is often associated with human need and condition.

Leadership has been linked to management as it involves directing, controlling to an extent the nature, degree, extent and passé of activities and changes occurring within the organization. Management as a process is rooted in the interactions of people at work directed towards maximization of efficiency and scarce resources: labor, machines, raw materials and information (Hoover HW_DO_, 2001).

Importantly, leadership of an organization should be given adequate attention, if the organization intends to achieve its objectives. The practice of leadership as it were involves taking charge and streamlining the activities of organization members to ensure that desired results are achieved.

In context, leadership development can be viewed as the planned experience, guided growth and training opportunities provided for those in position of authority. To this effect the leader of a small scale business should recognize that their responsibilities include performing management function, which according to Dubrin (2007) are planning, organizing, directing, controlling and co-ordination of all activities as they relate to the activities of the firm in order to achieve the firm’s objectives.

Paley (2004) explained that planning is a process of looking ahead to determine the course of action(s) a firm or organization will follow to achieve its objectives. Both short and long term plans should be duly considered for an organization’s success. The contributor further buttressed that organizing as a function involves correlating the basic components of the firm: people, tasks and materials so that they follow and align with the set goals and objectives.

In most organization, directing involves face-to-face supervision of employment. In the daily business activities, the effectiveness of the manager or leader in directing is a major factor in determining the success of the industry.

Controlling as another duty of a leader is the function that provided the manager with the means of checking to ensure that the plans that were developed were properly implemented.

This was further explained by Huisman and Wissen (2004); control involves having the capacity to guide and correct activities, which does not promote achieving the organization’s goals. However, control could be said to consist of four basic steps:

  1. Set standard of performance (establish acceptable levels of employee output)
  2. Check performance at regular intervals: hourly, daily, weekly or monthly.

III. Determine if there are deviations from the performance standard

  1. If there are deviations, take corrective measures such as more training or retraining. If no deviation exists, continue with the activity.

2.3 LEADERSHIP PROCESS

A leader is anyone who directs and controls a group of people to achieve a set purpose (Hicks and Gullet, 1975). However a social organization has many leaders operating at the same time. They may be rivals but they share the various leadership functions of planning, directing, reviewing, and coordinating and so on. Circumstance may cause changes in leadership pattern thus leading to classification of leadership, based on how it is performed (Hicks and Gullet, 1975).

According to Goldman (2006), early writers were of the opinion that leaders or managers were given birth to and not made, perhaps they came from a specific family or lineage. Thus, there is only one specific form of leadership style. However, later studies focusing on behavioural point of view of both leaders and subordinates in actual work situation showed that there exist different forms of leadership styles.

Worker’s participation refers to the inclusion of workers in decision making

process in the organization. This means that the employees could have adequate information on which to base their decision (Dubrin, 2007). Some times, when the involvement of employees in decision-making is much, it could be because they are co-owners of the business. At times, management makes the major decisions and later invites the employees for comments. The extent to which the worker’s participation is possible and desirable is a very controversial issue as it entails political overtones (Allan, 2003).

A renounced teacher of business management Douglas McGregor propounded the THEORY X and Y. The theory gave two contrasting assumptions on employee behaviour. The summary of this theory is often woven into management styles. The profounder was of the opinion that Theory Y was the correct assumption to make and that organization should be organized on that basis. He stressed that Theory X gave employees the opportunity to satisfy only basic and security needs, while theory Y enables to satisfy Maslaw’s higher needs such as ego and self-actualization. However, today, no manager is all of theory X or Y (Wikipedia, 2007).

Effective leadership: the role of reduction in labor turnover as well as grievances are factors affecting leadership process, the principal aim of this research in management style is to establish its relation to effectiveness. Effective leadership is determined by the degree to which it facilitates adequate or high productivity (Dubrin, 2007).

Boswell (1973) explained that some studies have shown that effective managers stress the need for supportive people. Other studies did not produce clearly defined results on this. Some have however showed reverse relationship to the following: size of the firm, the nature of the production process, personalities of subordinates, the feelings of the subordinates and the manager’s power in the organization.

In context, there may be no management style that could be effective in every situation. Thus, there has to be modifications. Agboli and Chikwendu (2006) further stressed that different work situations need different styles if they are to perform optimally. Often, manager’s skills could be said to be diagnostic. The manager assesses all relevant factors affecting work. However, diagnosis may not always be followed by proper behavior because managers could find it difficult to change their styles (Boswell, 1973).

Task structure (extent to which a work is defined or programmed) could be said to be an important factor determining the management style.

Gerhard (2002) explained that technology often influences task structures and this is best illustrated by two extremes:

  1. Structures or highly programmed work; an assemblage in a mass production factor, is strictly defines with respect to method and time. Every job is specific as regards time and method. Every job is specialized and should be carried out with strict compliance to achieve the desired result. Based on this, the subordinate is left to take little or no individual decision on the job.
  2. Unstructured or loosely programmed: this has a wider perspective. It allows the subordinate to make decisions regarding methodology and sequence of performing his job.

Occasionally, the job may be unspecific hence there could be many means of doing it. Thus, it can be said that the subordinate is at his own liberty.

2.4 THE ROLE OF EFFECTIVE LEADERSHIP IN AN ORGANIZATION

It is unquestionable that there are unlimited researches on how people acquire leadership ability. However, the Aristocrats believe that it is in born (in the blood): just like monarchy. Most work known today attempts to describe leadership act and techniques, theorize about why leaders emerge; understand people and the dynamics of interpersonal relations.

Both near and far, there exist highly talented people with leadership ability. Various informal groups: preparatory to university, families to social institutions, traditional settings to modern setting all have distinguished set of people who have demonstrated superior leadership act. However, teaching this process could be difficult. This could be due to the fact that leadership is a dynamic personal process (Gerhard, 2002).

Leadership could be said to be dynamic because it varies with circumstances and individuals involved. It is also said to be personal because of the inter-personal influences allowed. However, this does not necessarily mean direct contact between the leader and the subordinates. While some leaders are known to have direct contacts with their subordinates as evidenced in most small scale industries in Nigeria, others are void of this process, possibly because of larger number of subordinates involved.

In business, excellent leadership ability appears rare. This may be partly due to the fact that great ability is rare, employees could work without zeal, lack of alternatives for the employees, inability to finance a change, and the subordinates are lazy or are hindered by a union (Budhwar and Yaw, 2001). In this situation, a manager does not need to use much leadership. Therefore he may depend on negative motivation and authority to command (Budhwar and Yaw, 2001).

Budhwar and Yaw (2001) further stressed that this situation is unfortunate and unfriendly for both superior and subordinates. It leads to defensive and unsupportive behavior on the part of the subordinates.

Nature of environment in which interpersonal group relationship occurs also affects quality of leadership. The environment is affected by leader’s success and failures, which in turn is also affected partly by other external factors like government policy (Cleland, 1998). Among the environmental factor is the hygienic factor. Supervision, working condition, wages, policies, interpersonal relation, policies and job security are easy to come by during prosperity. During adversity, the hygienic factors may gradually reduce in volume, scope and quality: benefits and salaries are reduced. However, human relations and supervision may improve, certain efforts may yield better results than the others and their may be shift of attention as the case may be. At this point, it may be important if reward and self-development aspects of motivation system become prominent (Cleland, 1998).

As explained by Donnelly (1999), adversity could fasten zeal. Some individuals like to be inefficient at every possible opportunity. Using the contrast between the zeal expressed by the British workers during the 1930’s and during the Second World War, or between the American railroads workers before and after the changes made to the Union and government regulations. In both cases, decisive leadership was demonstrated. However, the former changed from desultory to brilliance, while converse could be said of the later.

Donnelly (1999) further explained that in the 1930s the British were  pacifist-minded; they choose political leadership, which promised security and sharing of wealth. However, during critical challenge, they choose preservation of their freedom above any other thing. Thus, a leader that could satisfy this need was chosen. As regards the American railroad, the employee morale was high in the years of construction. But with the introduction of railroad unions and government regulations, the employees took solace in others aside from their managers for fulfillment of their needs.

Whatever the environment is, leaders emerge to make decisions and make positive impacts. Strategic planning is very important while making decisions. According to Dubrin (2007), self-analysis of the company is needed to assess past performance and present position of the organization. Strategic planning is designed based on realistic assessment of the capacity: strength and weakness of the organization, which are of great managerial value (Dubrin, 2007).

The study of leadership has gone through three major phases. The first phase focused on trait theory, the second was on behavioral theory while the third was on situational theory. Explained below are these theories.

2.4 THEORY OF LEADERSHIP

2.4.1 TRAIT THEORY OF LEADERSHIP

In the past, researchers and theorists in leadership focused on the features of leaders. This belief was probably due to the belief that leadership ability stemmed effective leadership. In turn this emanated from personality characteristics, which are either innate or acquired.

This reasoning method lost favor during the first part of this century.

In fore front of explaining this reasoning is ‘’great man’’ theory and personality theory. According to Wikipedia (2007), Great man’s theory was explained to be a theory supported by some people who were of the opinion that history should be explained by impacts of great men or heroes. It was believed that great men influence individuals through their charisma, virtues, intellect or political will. It was further explained that progress could be accounted for by individual efforts and that accomplishment of these great men who have some special personal trait makes them suitable as effective leaders.

Studies in leadership were dominated by researches into traits studies between the end of World War I and after World War II. However, results produced by various researches in this area were inconsistent.

As early as 1948, Skogdill reviewed about 124 studies of leadership traits and found out that leaders are fluent, more popular and know how to fix their jobs. Other characteristics revealed that the results were not clear and uncertain. In light of this, six studies revealed that younger leaders supported trait theory. Skogdill concluded that it would be necessary to view leadership as a relationship between people in a social setting than as a set of characteristics possessed by the leader based on the extent to which traits differ Skogdill (1981). It was further stressed that the extent of the pattern of personal qualities of the leader should have some links to the characteristics, goals and activities of the followers. Leadership was also considered to have

interactions of variables and changes.

In 1949, Nixon and Carter published a study, which was influential in discrediting universal trait theory. The study was on high school students who were members of a particular group. They were assigned three tasks on grounds of intellectual, clerical and the last one; mechanical.

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2.4.2 BEHAVIORAL THEORY

Over time when trait theory was discredited, interest was focused on exploring the relationship between behavior of leader and workers’ group performance as well as satisfaction. Quite a number of research works contributed to understanding the leader’s behavior in determining performance. Among the most important studies of the past were studies carried out at the Ohio state University and the University of Michigan.

The research carried out in Ohio state research focused mainly on varying issues affecting effectiveness and impact of leader behavior on the actions of the subordinates. However, the Michigan studies were concerned with interactions among leader behavior, employee satisfaction, group processes and performance.

2.4.3 THE OHIO STATE UNIVERSITY STUDY

In a publication by Martin (1970), a large amount of different information was researched upon about management and leadership style. This was done via interviews, observations and questions.

Among the main objectives of the research was to test the hypothesis concerning the structural determination of leader’s behavior. The writer further buttressed that much of the program were targeted at identifying the types of behavior displayed by leaders and the effect of leadership style on group work performance as well as satisfaction.

According to Van and Hogg (2004), though there are nine dimensions of evaluating managerial behavior, statistically, two factors were obtained through which leadership styles could be described:

  1. A view, which indicates that leadership behavior, could be defined as being indicative of friendship, respect, mutual trust and warmth. This stresses mutual trust and respect between subordinates and managers
  2. The second important factor was initiating structure. This was defined as those factors which assist flight commanders to organize and define the kind of relationship they have with their subordinates Martin (1970) described these other factors as being useful in researching into management style:
  3. Production Emphasis: though this factor was of less significance than the first two mentioned above, behaviors in this category included attempts to motivate crewmembers to better performance by focusing on undone jobs.
  4. Sensitivity: this is also called social awareness. Of least importance is sensitivity. In this research, this category entails behaviors showing that the commander of the aircraft is sensitive and aware of social relations in existence within and outside the crews’ environment.

Initial structure and consideration were assumed to be two independent dimensions of behavior; this reflects that a leader with high performance in one may not be low in the other. Based on this, four leadership styles were of priority:

  1. Low consideration and low initiating structure
  2. High consideration and high initiating structure

III. Low consideration and high initiating structure

  1. High consideration and low initiating structure

Based on the number of studies conducted at Ohio State University and other places to evaluate the effects of this four styles on subordinate performance and satisfaction, no individual leadership style emerge as being suitable for all. The high consideration and high initiating structure was evaluated to result to high satisfaction and performance more often than any other one.

2.4.4 THE MICHIGAN STUDIES

Likert (1967) explained that Michigan researchers conducted their first research on clerical workers in an insurance organization. The results obtained from the research did not show any statistical significance, however, supervisors in highly productive sections behaved differently as compared to those in less productive sector. Katz and Kahn (1952) further explained that supervisors who spent more time planning as compared to engaging in task operations are associated with higher producing groups. Their idea was to give broader goals to work and allow them more opportunity in determining the manner of accomplishing their tasks.

They were said to be more concerned with their subordinates and their supervision tend to develop them for advancement and demonstrated concerns for personal gains. Based on this, four major factors were identified by Michigan researchers to influence employee performance and satisfaction (Katz and Kahn, 1952).

  1. Differentiation of supervisor’s role: managers or supervisors of effective group always perform the top roles while they leave the production or other work to their subordinates.
  2. Looseness of supervision: subordinates in an effective group are often given adequate room to determine to perform their jobs or tasks

III. Employee orientation: Supervisors of this type of group often have and show interest in their subordinates on individual bases.

  1. Group relationship: No exact relationship could be found between morale and productivity. Probably work group satisfaction could affect things like absenteeism and turnover.

Other important results were made from the Michigan studies. The most important are two factors, which help to integrate the results from Michigan studies with those of Ohio State University. These factors showed that while the results from the studies may hold in general, their level of application to individual situations is questionable.

2.4.5 LIKERT LEADERSHIP THEORY

Likert propounded this theory. According to Likert (1967) basic styles used in categorizing task orientation and employee orientation were incorporated to develop Likert’s model of management effectiveness.

Based on this model, there are four possible leadership systems.

Namely:

  1. Exploitative and authoritative
  2. Benevolent and authoritative

III. Consultative

  1. Participative

With respect to the exploitative and authoritative system, the subordinates carry out the tasks while manager makes all work related decision. Managers tend to set rigid standard and methods for the subordinates to work with. Departure from this standards and methods by subordinates attract threats and punishments from the supervisor.

The managers entrust little confidence in their subordinates and in return, the subordinates fear their superiors and feel that they are inferior or different from them.

Benevolent and authoritative management style operates with the manager in control and issues orders, while subordinates are given some level of flexibility in carrying out their work, however, within specific limits and procedure.

 2.4.6 SITUATIONAL THEORY

Quite a number of leadership theories were developed over time, most of them were in the late 1950’s and 1960’s. These theories emphasized the need for traits and behaviors of leaders to vary with situations if they are to be effective at work (Patchian, 1962). Patchian listed the following factors to affect leadership effectiveness:

  1. Personality of the leader
  2. Performance requirements of the tasks for both leader and follower

III. Attitudes, needs and expectations of his followers

  1. Organizational and physical environment of the leader and the group.

Though a number of situational theories are known only a few will be treated here.

2.4.7 FIELDER’S CONTINGENCY THEORY

According to Likert (1967), Fielder commenced studies on the relationship among structures of leader’s need, productivity and morale as well as his interactions with the subordinates. Though no clear pattern was discovered in these studies, Fielder went ahead to present his “contingency mode of effective leadership”.

Likert (1967) further explained that work group was classified into three categories in the original model proposed by Fiedler. The first group is the interacting group. The reflection on this group shows that the ability of an individual to carry out his job could depend upon another that has completed his part of the total task. An example is members of a football team. The second group is the coaching group.

This group also works together on the same task; however, group performance is a result of cumulative performance of all members in the group. Thirdly is the counteracting group. This group consists of members who work to achieve only individual goals at the detriment of others. For, example a negotiation between a Union management and employer for more wages.

Initially, Fielder suggested his theory was applicable to only to interacting group. However, additional evidence prompted him to extend the model to coaching groups, while counteracting groups were left out (Filley and House, 1971)

Need structure of leader is the next major element in Fielder’s original theory. This was measured by use of his LPC questionnaire. This questionnaire assessed the level in which a leader holds his least preferred co-workers (LPC).

2.4.8 FIELDER’S REVERSED THEORY

According to Fielder (1971), the initial theory was revised and reinterpreted based on the meaning of the LPC to accommodate research results which indicated that in highly favorable situations, high-LPC leaders will generally display task oriented behaviors, while in unfavorable and moderately favorable situations, the usually displayed relationship is oriented behaviors.

Low LPC, which is task, oriented often display relationship-oriented behaviors in favorable situations, but display task oriented behaviors during unfavorable and moderately favorable situations. Though Fielder was not explicit concerning the expected behaviors from high and low-LPC leaders in different situations, it could be said that the original theory predicted leader’s behavior directly opposite to those obtained.

Fielder developed the idea that LPC measures the leader’s primary motivational goals and that every individual possess a goal structure, which is classified as primary and secondary levels. Individuals with high LPC were postulated to have relationship maintenance as first goal level, while task accomplishment was his second level. Converse of this occur for low-LPC leaders.

Fielder further buttressed that in favorable situations; leaders will either attain or feel that they can attain their primary goals. Therefore they concentrate their effort on realizing secondary goals. However, the leader may feel threatened and may concentrate on securing primary goals to the neglect of secondary ones during moderately favorable situations.

2.5 LEADERSHIP IN ORGANIZATION

“The common problem pronounced against organizational performance in Nigerian business and institutions, social, economic and particularly governmental establishments are poor organizational performance, bad attitude to work among Nigeria workers, inefficiency in most circles.

Some writers critically examine this and pointed out that organizations in Nigerian are managed through a management system that is strange to the country’s culture” (Akpala, 1998 P.26).

Akpala stressed his point by focusing his study on lgbo organizational performance with focus on traditional social and political organizations. He sought to find out weather there are any factors in the traditional Igbo democracy that have not been brought into play in modern organizational performance and the individuals attitude to work productively. He said that the paternalistic management system of family shows up in economic system in agriculture in Igbo land.

According to Ewurum (1991) family work force comprises mainly of the family members. But with increasing work operations, there is need to tackle the job by temporary and flexible arrangement: supplementing the work force with co-operative work arrangement, age mates, reciprocal and slave labour. In this type of arrangement, there is no clear distinction between owners who control work and workers who render service for pay. The participants may cast in ideas on ‘how’ actions for better performance of operations; therefore they do not work by common actions.

The monetizing economy in Nigeria is evident by the traditional work system, where the Ibos have been establishing indigenous small business enterprise. Twice of those who work in these enterprises are more of family members than external bodies. Those in employment are either the family members or outsiders that help to build up the enterprise to better stability and growth and in return, the enterprise in which they had worked would provide them with capital and equipment to start on their own (Ewurum, 1991)

This established work relations expectations of benevolent paternalism devoid of autocracy are taken to be monetized indigenous economic systems and this forms the expectations that Igbo workers have when working at the modern and large economic organizations. This forms the foundation of their attitude to work (Ewurum, 1991)

2.6 LEADERSHIP AMONG CULTURAL GROUP

A prospective leader has to prepare his way for acceptance by demonstrating personal qualities for guiding people, the willingness for promoting the group’s field of activity and personal success in the prospective leader’s particular field of activity and this arises as (Akpala, 1988) describes that the fundamental principle of which leadership is based is meritocracy.

Leadership comes into the management of Igbo social and political organization and the requirements for leadership may have some bearing with managing larger organizations in modern Nigerian institutions among such leadership requirements are ability and advantage. Organizational good performance is the function of paternalistic leadership rather than that of empty autocratic leadership.

Paternalistic management in lgbo economic relations embodies recognition of human dignity. The people of Aba, In Abia state Nigeria are among the Igbos.

The lgbo traditional management seems to have full appreciation of what in producer management are known as management functions and principals in planning, organizing and controlling and also a deep knowledge of what directing, including information exchange, motivation and leadership is. But this is not usually recognized because the indigenous economic organizations remain small with an organization system of the type described by Handy (1978) as common culture organization design, whose management system bears on what was done traditionally in managing the family economy. These present the benevolent paternalism environment where every member of the system sees himself as part owner of the system and deserves full integration, expects a large measure of recognition with information feed in and back. This gives the entire actual working environment expected by workers in the small-scale industries. Failure to provide a work environment with these factors produces the phenomena which Nigerian terms bad attitude to work.

Nigerians who take up job in modern institutions whose management system fail in their expectation of horizontal management systems, also fail in their expectation of horizontal inter factional relations, free exchange of information and the organization and paternalistic care –taking of the staff (Handy, 1978).

Akpala concluded by saying that what the lgbo in employment at all levels need is to promote their positive attitude to work not by autocratic direction but by paternalistic management with benevolence in it.

From this, the worker is looked at as an integral member of the organization in which he works. We know that Japan has established international recognition of managing enterprises in this kind of organizational system and Nigeria can learn from them. The lgbos resist management by interference in which the higher official interferes in decision-making and actions at management level lower than his and in this way, he manages by autocratic direction for the subordinate managers and the operative.

All members and workers in work situation are expected to be managed at their respective levels. “This rests on the traditional principle of “Egbe bere, Ugo bere”. That is the principal of “Live and Let Live” or Manage and let manage and sufficient information which promotes effective knowledge of the objectives of the unit where he works.

Amaechi and Uche (1984) in Akpala (1998:48) have stressed that the prime motivator of Nigerian workers to do their best at work is information and personal recognition.

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