Leadership Styles and Employee Performance

ABSTRACT
This study examines the effect of leadership style practiced in various organizations on employee
performance. The objectives that guided this study were to investigate the effect of autocratic,
democratic, laissez-fair and bureaucratic leadership style. This study is qualitative in nature and
secondary research sources are used for data collection. The study revealed that a significant
relationship exists between leadership style and employee performance in order to attain organizational
goals. To validate the research different scholarly views are presented of all the variables in the study

INTRODUCTION
This research is done in order to study the effect of leadership styles on employees' performances in
organizations. In order to achieve its goals and set objectives, organizations must develop a strong and
healthy relationship between its leaders (management) and employees. Thus realistically, for a high level
of productivity and performance, an organization must achieve efficient and effective level of employees'
performances which entirely depends upon the leadership style adopted by the organization.
People join organizations voluntarily in order to meet their personal needs and ambitions, not necessarily
because of organizational goals and objectives, so a leader tries to inspire and motivate the workers to
work enthusiastically in an organization while helping to realize their personal needs and goals.
To increase the performance of an employee, managers will depend largely on the leadership style that is
operational within an organizational setting. No leader uses any of the leadership style exclusively.
Leaders use different styles depending on the situation faced by them and according to the need of the
hour. A leader may use an autocratic style when necessary to serve a specific purpose or a democratic
style when involvement and suggestions from employees are also important and required. All the styles of
leadership develop and enhance the talent and performance of the employees.

PROBLEM STATEMENT
Several organizations need a strong and appropriate leadership style in order to enhance and stimulate
the performance of its employees. Employee performance includes performing defined duties, meeting
deadlines, employee capabilities and efficiency and effectiveness in doing the assigned work. Many times,
the organizations face the problems of poor innovation, low productivity, inability to meet the set
performance targets and inefficiency in performing duties. Such problems occur due to lack of the
specific leadership styles that are required in a particular situation. This problem was continuously
affecting employees' performances in organizations. Thats why this study is conducted in order to
examine the best leadership styles in different situations that stimulate performance of employees in
organizations.

PURPOSE OF THE STUDY

The purpose of this study is to investigate the effect of different leadership styles (autocratic, democratic,
laissez-faire, and bureaucratic) on employees' performances as it is believed that success and
effectiveness of an organization depends upon the leadership styles adopted by its leaders.
RESEARCH OBJECTIVE
The main objective of this research is to study the different styles of leadership that affects the employee
performance.

SPECIFIC OBJECTIVES
1) To explore the different leadership styles that enhances employee performance.
2) To explain the relationship between effective leadership styles and employees' performances.
3) To examine the value and importance of leadership styles in employee performance.
4) To develop a model explaining the relationship between leadership styles and employee
performance.

RESEARCH QUESTION
Does leadership style have an impact on the employee performance?

SUB QUESTIONS
1. Does effective leadership style changes employee performance?
2. What is the relationship between autocratic leadership style and employee performance?
3. What is the relationship between democratic leadership style and employee performance?
4. To what extent does the laissez-faire (delegative) leadership style affect employee performance?
5. What is the relationship between bureaucratic leadership style and employee performance?
6. Does the effectiveness of employee performance depend upon the proper match between the
leadership style and situational factors?

SCOPE OF THE STUDY

This study has focused on exploring that how autocratic leadership, democratic leadership, bureaucratic
leadership and laissez-faire (delegative) leadership styles have affected the employees' performance
which includes fulfilling desired duties, meeting deadlines, employee capabilities and efficiency and
effectiveness in doing their tasks. It also discusses that how the effectiveness of employee performance
depend upon the proper match between the leadership style and situational factors.

LITERATURE REVIEW

LEADERSHIP
Leadership is a trait by which a manger can guide, influence and direct the behavior and work output of
those under him towards the achievement of specific goals in any situation. Leadership is the unique
ability of a manger to encourage the employees to work with confidence and passion. Leaders are also
required to develop the vision of employees towards future goals and to motivate the members in such a
way that helps them to achieve these visions and to improve their performance. According to Adair,
Leadership is the ability to convince others to seek objectives with passion. It is the human factor which
incorporates a group together and to improve their performance and to push them towards goals [4]
Koudri has suggested that leadership is to deal with change, putting the focus on the big picture, long-
term goals, taking risks, and putting the focus on people and their values, not the bottom line[5]
In recent years, a new approach for managing employees and organization. The traditional approach of
personnel administration has been replaced with HRM (human resource management). This approach
gives importance to the incorporation of new leadership styles to effectively manage the employees and
increase their performance. Kenneth an Heresy [1] state that; The effective leader must be good at
diagnosing and adopting such style to meet the demand of the situation in which they are working.
Different leadership styles fit on different situations based upon a number of factors.
The history of leadership and its effects on employee performance dates back as early as 17 th century[2]

1.EMPLOYEE PERFORMANCE
It can be reasoned that one aspect of employee performance depends upon how their leaders act and treat
them. Leaders are such people that motivate, inspire and coach those under them. Leaders influence
people to reach organizational goals so the behavior of the leader, the style he chooses and the way he
treats his employees can have an impact on the performance outcomes of employees.
Moreover previous researches have proved that their lies a relationship between leadership style and
employee work performance (Avolio et al., 1999). Any organization contains employees with differences
such as different ethnicities, gender and there also lies the generation gap. Due to these differences, each
employees performance differs on the individual level. To achieve the optimal level of performance from
all the employees keeping in regard their differences it depends on the fundamental characteristics of
performance. An important characteristic of employee performance is the chosen leadership style
(Zaccaro, Rittman & Marks, 2001). Fiedler (1996) has stated that leadership is very important and has
argues that effectiveness of leader determines the performance levels of employees, groups or an
organization.
Researches in the field of organizational psychology have done researches upon the level of job
satisfaction and employee performance and have find out that employee performance depends upon job
satisfaction and higher the amount of satisfaction is there , higher the amount of positive work
performance will be there (Insan et al., 2013). Boerner et al. (2007) says that there lies a positive
relationship between transformational leaders and organizational performance.
2. THE STYLES OF LEADERSHIP
As every individual is different from one another so are the leadership styles. There are many ways to
lead, the most common of them are autocratic, bureaucratic, democratic and laissez-faire. In the past,
there have been a great debate among managers in how they define leadership as. Leadership style has
gone from a very classical and autonomous approach of autocratic to a very creative participative
approach. Along the way it was decided that everything old was not bad and everything new was not
good. Rather different styles are suitable for different situations and leaders should know when to use a
particular approach.
2.1 Autocratic style of Leadership
It is the most classical type of leadership style in which complete authority and decision making lies with
the manager and employees are expected to follow
the policies derived, to the scratch, without asking for explanations. Employees are not consulted in
such situations nor they are welcomed to give their own input. The autocratic leaders direct the orders
and do not become part of the team.
A set of rewards and punishment are also listed to keep the employees motivated to do the given tasks.
This leadership style is greatly discouraged as studies show that organizations which have more
autocratic leaders also have high number of turnover and absenteeism from employees.

2.1.1 Advantages of Autocratic style of leadership

Good control
 High level of discipline
Rules ensure security
No long debates
Most effective when there are time constraints

2.1.2 Disadvantages of Autocratic style of leadership

No freedom of choice
Trust issues
Usage of excessive discipline and punishment
Recognition is rarely given
Opinions of employees are not heard
Low employee morale
High turnover and absenteeism
Rivalry amongst group members
Employees become over dependent on managers for decision making
Less or no independence in groups
Employees become tense, fearful, resentful/ aggressive which can cause violence

2.2 Authoritarian Style of Leadership

Authoritarian leaders are also known as autocratic leaders, they leave no stone unturned in making a
clear division between managers/leaders and employees/workers. They make their expectations very
clear of what and when something needs to be done. Such leaders make decisions alone with little or
most likely no involvement from employees. Research has shown that leadership is less creative under
such approach. This style however is, seen as, bossy, controlling and oppressive.
Adair Only one person has full authority over decision making and power, his decision would be seen as
golden rule which has to be followed by everyone without any questions or explanations. The autocratic
leaders have full control over employees/workers and they believe that they can treat them however they
want to. This decision-making style is highly effective immediate and quick decision making is required.
Dawson states that this style may show great results in short term but excessive use of authority will
distort productivity of workers in the long run . Employees would either get bored or unhappy with the
repetitive tasks every day without any creativity and eventually will become discouraged.

2.3 Democratic Style of Leadership

They are often considered a s best kind of leaders as they involve the employees in decision making
process and for this trait this leadership style is called participative style. The democratic leaders keep
their employees up to date about everything related to work and shares the decision making and
problem-solving tasks. Such leaders ask for group opinions and they act as coaches to employees rather
than their bosses, they try to gather as much information they can from staff members before making a
decision.
Many employees like this style of leadership in an organization because of the trust they get and respond
with high morale, cooperation, commitment and team-spirit.
2.3.1 Advantages of Democratic style of leadership
Motivating
Amalgamation of different idea
less repetitive tasks
liberty to grow creatively
independence of opinion
employees feel trusted
everyone has equal rights
negotiations are agreed upon

2.3.2 Disadvantages of Democratic style of leadership

Difficult for leader
Time consuming
Lots of discussion can become often boring for some
No definite solutions
Less affective in short term
2.4 Participative /Democratic Style of Leadership
Participative leaders encourage other group members to participate in the decision-making process but
they hold the authority to finalize the final decision, opinions of others are taken by the leader that helps
them to use this information to make the ultimate decision. Group members are welcomes to propose
changes and give their opinions for long term changes in this way they feel involved in the process and
are more creative and committed towards their work.
Graver and Austin[6] states that this type of leadership will be less productive in short-term but will be
very fruitful for an organization in the long term. Empowerment and motivation increases the
productivity of employees under participative style of leadership.
Waggoner says that this is an effective option as compared to other styles. These leaders delegate the
authority to workforce and guide the trusted team members. They act as mentors and coaches and hardly
take decisions on their own.
2.5 Laissez-Faire Style of Leadership
Laissez-faire leadership also known as delegative leadership or hands-off leadership is the one in which
leaders provide little or no direction to the group members and the employees are given a free hand to
make decisions. Employees are given as much freedom as possible with the responsibility of determining
goals, making decisions and solving problems and providing successful end results on their own. Laissez-
faire leaders can be characterized as uninvolved with their members and followers having little or no
authority within their group organization. This style is appropriate to use in situations where the
employees are highly qualified, experienced and trustworthy, they feel highly committed to their work
and have a keen drive to do it successfully on their own.
History shows that there have a number of political and business leaders following this style of
leadership. Steve Jobs was famous for providing directions about what he would like to see to his team
but then leaving and allowing them to their own plans and strategies to find out how to accomplish his
wishes. Former U.S. President Herbert Hoover was known for taking a more laissez-faire approach to
governing, often by allowing more experienced advisors to take on tasks where he lacked knowledge and
expertise.
These leaders are most successful in environments with highly trained and self-directed followers.
Laissez-faire leadership is suitable in particular settings such as science laboratories or established
companies with long-term employees however it is not suitable for environments in which the members
need regular feedback, direction, oversight, flexibility, or admiration by managers for their good work
(Gastil, 1994).

2.5.1 Advantages of Laissez-Faire Style of Leadership

complete freedom of choice
little or no burden on team members
independence is valued
less chances of the leader being unpopular
highly skilled and experienced employees

2.5.2 Disadvantages of Laissez-Faire Style of Leadership

lack of responsibility
misuse of power and freedom
no limits
poor involvement of leader with group
higher chances of violating supervision laws
lack of unity/cooperation in group
resignation
2.6 Delegative (Laissez-Faire) Leadership
Researchers have found that this style of leadership is generally the one which leads to the lowest and
poor outcomes and productivity level of the employees. Researchers stated that Laissez faire leadership
was only considered applicable when you are leading a team of highly skilled, experienced and motivated
people with an excellent track-record in the past. Laissez-faire leadership may be the best or the worst of
leadership styles (Goodnight, 2011). These leaders usually give their subordinates the control to make
decisions about their work activities (Chaudhry & Javed, 2012). They provide teams with resources and
advice, if required, but otherwise do not get involved. Laissez-faire leaders exhibits very limited
involvement in important organizational matters and try to postpone or avoid their response to critical
issues. The main advantage of laissez-faire leadership is that it provides the employees so much
autonomy which can lead to high level of job satisfaction and increased productivity. It can also be
destructive if team members do not manage their time well or do not have the knowledge, skills, abilities
or motivation to do their work efficiently and effectively. This type of leadership can also take place
when leaders do not have enough control over their staff members (Ololube, 2013).
2.6 Bureaucratic Style of Leadership
This is a style of leadership in which everything is done according to the rules, regulations and policies of
the organization. These leaders follow the rules strictly and also ensure that their employees are also
following the procedures precisely. These managers are more like police officers than leaders. They
enforce rules. This is a suitable leadership style for work that involves performing routine tasks over and
over again, serious safety risks (such as working with dangerous machinery that needs a certain set of
procedures to be followed for operation, harmful and toxic substances, or at any dangerous heights) or
where huge amount of cash is involved. Bureaucratic leadership is also functional in organizations where
employees do routine tasks (Shaefer, 2005). The problem with this type of leadership is that it is
unsuccessful in teams and organizations that depend on flexibility, creativity, or innovation (Santrock,
2007).
2.6.1 Advantages of Bureaucratic Style of Leadership
highly repeatable structure
standardized operating procedures are followed
encourages the hiring of specialized officials
central authority makes it effective in organizing
suitable for large companies, military organizations and government departments, who requires
reliable results

2.6.2 Disadvantages of Bureaucratic Style of Leadership

it causes boredom and can affect productivity
less competition can result in inefficiency
not suitable for startup companies that requires flexibility, creativity
do not work for those employees who are expected to be free thinkers and think outside the box

THEORETICAL FRAMEWORK
Austrian psychologist Fred Edward Fiedler proposed the contingency theory of leadership in which he
stated that the effectiveness of employees' performance depends upon the proper match between the
leadership style and situational factors that include leaders' capabilities, preferred style, and relationship
with members and task structure. He proposed that there are situational-contingent factors that
influence a leader's ability to lead. The efficiency of employees depends upon how good a match is
present between the leadership style of the leader and the demands of the situation. The theory stated
that the leaders should adopt such leadership style which best suits the situation faced by them and that
immediately encourage the performance of employees.
An effective leader is responsible for providing guidance and sharing the knowledge with his employees
to lead them towards performing better and making them an expert in maintaining efficiency,
effectiveness and quality. The introduction of clear standards of leadership promotes the core values and
maturity on their role and responsibility.
There are two factors that result from this: leadership style and situation favorableness (or situational
control).
Leadership Style
Leadership style is determined by rating a leader's least preferred coworker on LPC (least preferred
coworker) scale. A leader is asked to rate his coworker with whom he least liked working with on an
LPC scale of 1-8 in the areas like friendly/unfriendly, cooperative/uncooperative, hostile/supportive,
guarded/ open. The leader adds up the score. This score tells about the leader's behavior towards the
coworker. The leader who scores high on this scale is most likely to be relationship oriented and likes to
build relationships with his employees and avoid conflicts. The leader who scores low on this scale is
task oriented which means he is more interested in the completion of tasks and duties and least bother
about building relationships. Leader with a high LPC score is able to lead a team in a favorable situation,
while a low LPC leader can lead a team in both favorable and unfavorable situations because the low
score LPC leader is interested in completion of tasks rather than on building relationships. The
important element of this theory is that there are different leadership styles for different situations and
the style to adopt depends upon the particular situation. So, in a situation where fast decision making is
needed, the high LPC leader performs well. In the situation where high production is required, the low
LPC leader is better equipped to handle that because that leader is not much interested in the opinions of
the employees and does not care much about what he or she is doing. Once a leader finds out his or her
leadership style, he must then determine the situational control needed for a particular situation.
For example, bureaucratic style of leadership is more suited in situations where routine tasks are to be
carried out over and over again and a highly repeatable structure is required. It is best for large
companies, military organizations and government departments, who require following rules rigorously
and want reliable results. On the other hand, autocratic leadership style is best to use for inexperienced
and less motivated employees. However, if the employees are highly skilled and self-motivated, they will
not be willing to be led by this leadership style since they prefer independence and freedom and thus
democratic or laissez-faire style could be used in such situations according to the demands of the
organization's output.
Three Dimensions of Situational Favorableness
Situational control is characterized by three factors- leader-member relations, task structure, and leader
position power. Situational favorableness occurs when these three dimensions are high.

Leader-member relations refer to the general atmosphere of the group and the feelings such as
trust, loyalty and confidence that exists between the leader and the workers.
Task structure is related to the extent to which tasks are clearly explained and the means to task
accomplishment.
The position power refers to the amount of reward-punishment authority the leader has over
members of the group.
If leader and the employees have trust, confidence and respect for each other, the tasks are well
structured and clearly explained and the leader holds formal authority in his position, the situation is
considered favorable.

SCHEMATIC VIEW
In-dependent Variables

Autocratic Leadership
Style
Dependent Variable

Democratic Leadership
Style
Employee Performance

Laissez-Fair Leadership
Style

Bureaucratic Leadership
Style
HYPOTHESIS (PROPOSITIONS)
H0: There is no significant relationship between effective leadership styles and employee performance.
H1: The autocratic leadership style has a significant effect on employee performance.
H2: The democratic leadership style has a significant effect on employee performance.
H3: The bureaucratic leadership style has a significant effect on employee performance.
H4: The laissez-faire leadership style has a significant effect on employee performance.

RESEARCH DESIGN/METHODOLOGY
The method used for this study is qualitative in nature and secondary source of data collection is done for
this purpose. The sources in this secondary research include the past and existing work done by people in
this area collected from books, journals, previous research reports, articles, and reviews. The
interpretation/findings have been conducted which can be accounted as qualitative in nature.

FINDINGS
Every leadership style has its own importance and ultimate effects on the organizations and businesses,
whether large or small. These styles influence everyone in the organization from top level management to
workers as well as to the new entrants in businesses. The style adopted by the organizations creates the
corporate culture of that organization that ultimately influences the entire working of the firm along with
the employees' performances.
Leadership style refers to a leaders behavior, actions, performance and approach of governance and control.
It is the result of personality characteristics, experience, attitude and philosophy of the leaders. Different
leadership styles have their own advantages and disadvantages as well as circumstances in which each can
be adopted. Leadership is always situational. We cannot say that one style can be appropriate in each and
every situation and for all organizations. For extremely qualified, experienced and ethically developed
people and an aligned team with a homogeneous level of expertise, democratic style of leadership may be
more effective. While for new, inexperienced and undeveloped people and when there is little time to meet
the deadline or to cover an agreement and quick work is required and where a leader/manager has
extensively more experience or expertise than the rest of the team, autocratic style is good. In the same
way, laissez faire leadership style is appropriate to use when employees are trustworthy, highly educated,
experienced, and skilled and take pride in their work and possess the drive to successfully do the task on
their own. Bureaucratic style can be effective when employees need to perform routine tasks over and over,
when certain procedures are to be strictly followed due to safety or security training involved or for tasks
that require handling cash. This is suitable for large organizations and military groups where accurate
results are needed.
Autocratic Style Effects
Dawson [13] stated that the autocratic style may show good results only in a short time period. However,
in long run, unnecessary and extreme use of authority will distort productivity. People either get bored
and dissatisfied because they become restrictive and are involved in repetitive tasks without any type of
creativity, innovation and their involvement.
Democratic Style Effects
Milgron and Ittner [14, 15] stated that democratic style is usually considered beneficial for most of the
companies. In this style, management focuses on providing guidance and help to its team and departments
while receiving, considering and accepting the insights from individual team members. These leaders are
not reserved to their duties and authority only but in fact they bother and value about consulting to their
employees.
Delgative Style Effects
Delegative style also called laissez-faire leadership is normally considered to be the least effective choice.
As compared to the other primary styles, delegative leaders hardly ever make decisions, leaving this
function up to the team members/employees. These leaders rarely provide their guidance to the team and
delegate decision-making to trusted team members. With few advantages, this style often provides some
disadvantages. Job descriptions and lines of authority become unclear, vague and confusing. Due to the
confusion, the team members often lose their interest, motivation and positivity to work.
Bureaucratic Style Effects
Bureaucratic leadership style is normally effective and useful when quick decisions are to be taken, in large
organizations mostly public sector adopt this where it is not practical to consult with everyone. It is useful
in managing low level skilled workers as well as in crisis situations. On the negative side, this style creates
a divide between leaders and employees. No input from employees make them feel insecure and
demotivated sometimes. It sometimes causes lack of motivation and productivity of workers due to lack of
two-way communication.
In a nutshell, all the styles are important in different ways and under different situations and each one have
its unique characteristics, advantages and disadvantages. It will be a huge mistake to adopt single style in
all the situations. Currently people are becoming more aware and socially advanced; therefore democratic
style should be adopted. But the success of leadership style also depends on the quality of influence of
leaders. The leaders should be well qualified, experienced, and morally strong and have an influential
personality in order to manage the followers in a better way while using any type of leadership style. The
style adopted should be the one that most effectively meets the objectives of the organization and task to
be accomplished along with balancing the interests of the team members of that group led by an effective
leader.

CONCLUSION
Myron Rush and Cole has stated that the democratic style of leadership also known as participative style
has great positive impact on the performance of employees in situations in which the employees feel
empowered and confident in doing their job and taking different decisions. As compared to autocratic
style in which only the mangers/leaders have the power to take decisions and employees in such
situations feel inferior in doing their jobs. However, if we take a look at Laissez-Fair style of leadership, it
has its own limitations because the leader takes the minimum role in decision making and authority is
left with the team itself. Although it has high employee satisfaction but this style of leadership cannot
work out in every situation because if the employees are not skilled and responsible to do their job, the
organization can go down in ashes. Bureaucratic style is also the one that does not fit every organization
as it is suitable for organizations following SOPs and repetitive tasks, and not suitable for organizations
that seek creativity, innovation or start-ups.

The Autocratic/Authoritative style is appropriate:

When new employees are unaware of their jobs and how to do them
If the authority is being misused by the employee or group of employees
When rules of the company are violated and the reputation of company is at stake
The Democratic/Participative style is appropriate:
When the organization have talented and skilled members
When the organization needs innovative and creative work
When employee evaluation is done periodically and awards are given
The Laissez-Faire/Free Rein style is appropriate:
When the members of group are highly skilled, self-motivated and task-oriented.
When the leader plays the minimum role and free hand is given to members.
When the absence of leader does not affect the work-output
The Bureaucratic/Administrative style is appropriate:
When the tasks/duties are fixed and there is little or no room for creativity
When positions in the organization are arranged in a hierarchy
When organization prefers everyone to work according the SOP (Standard Operating Procedures)

RECOMMENDATIONS
On the basis of findings, it is recommended that:

Adopt effective leadership style that is in accordance with the situation

Programs should be arranged for awareness and promotion of leadership

Democratic leadership should be adopted as it encourages two-way communication in an organization

Employees should be empowered in decision making process so that they feel like an important part of
the company

Visionary, Faithful and Honest people should be selected as Leaders

Leaders should share information and progress with employees and give value to their opinion as well

Leaders should arrange training programs to increase efficiency, effectiveness and motivation of their
employees.
Authorities should provide more and more helpful and encouraging environment for the employees
Autocratic style should be adopted if the employees are inefficient and less qualified
Laissez-Fair style should be adopted if the employees are highly skilled and qualified
Bureaucratic style should be adopted when following SOP is a necessity for an organization
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