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EFFECT OF DEMOCRATIC LEADERSHIP STYLES ON CORPORATE PERFORMANCE

Format: MS WORD  |  Chapter: 1-5  |  Pages: 77  |  2389 Users found this project useful  |  Price NGN5,000

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EFFECT OF DEMOCRATIC LEADERSHIP STYLES ON CORPORATE PERFORMANCE

 

ABSTRACT

This project is on the effect of  democratic leadership style on corporate performance in an organization, a study of Nigerian Television Authority (NTA) Abakaliki. The main objective of the study is to analyze the effect of democratic leadership style on corporate performance. The methodology used in the data collection was survey design. The sample size was all the staff of NTA Abakaliki. The study discovered that the Television station in terms of management was fairly democratic in nature. But they need to fully imbibe democratic principles in the running of the affairs of the station. The study recommends that NTA Abakaliki should also employ team leadership style in its style of management; that management should ensure that too much time is not wasted in meetings and consultations before decisions are made.

CHAPTER ONE

INTRODUCTION

Background of the study

Leadership does not have a single definition as it has been defined differently by different writers and scholars. Leadership is defined as the ability to inspire confidence and support among the people who are needed to achieve organizational goals (DuBrin, 2012). Another definition most appropriate to this paper and worth mentioning is the one given by the Investopedia. According to the Investopedia, “Leadership is the ability of a company's management to set and achieve challenging goals, take swift and decisive action, outperform the competition, and inspire others to perform well.” The ability of a leader to inspire and motivate followers to achieve organizational goals is very essential for achievement of holistic organizational performance.

Regardless of their respective organization’s size or structure, most leaders strive to maximize the performance of their subordinates in order to achieve organizational goals. This means that leadership is the gathering together of the workforce in order to attain set organi sational goal. It is a group of people with shared vision to see the work done. It is not surprising, therefore, that considerable attention has been focused on attempting to motivate the workforce to this end.

Eliwa (2001), believes that leadership is a practice for the organization's administrative leader in the area of decision-making and issuance, orders and administrative supervision, and the use of official authority, and through influences, with the intention of achieving a specific goal. Al-Harahsheh (2010) says that a leadership style is a repetitive and characteristic behavior of a person.

Now the combination of various characteristics, traits and behaviors used by leaders to interact with their subordinates is called leadership style. (Mitonga-Monga & oetzee, 2012). Purwanto et al (2020) consider leadership style as a pattern associated with managerial behavior, designed to integrate organizational or personal interests and effects to achieve certain goals. A pattern here means a repeated set of actions that set in motion to do that which guarantees maximal success in an organisation.  Asbari &Wijayanti (2020) also postulate that leadership style can be defined as the type of relationship used by such an individual to make people work together for a common goal. The leader’s style is also considered important in being able to evoke performance among subordinates (Berson et al, 2001). However, the leader’s style alone cannot be responsible for the performance of workers, nor for the attainment of organizational goals. The workers too play an important role. More aptly, the overall perceptions of workers, notions about their superiors and their ability to perform and achieve organizational goals are also as important.

Furthermore, the employee’s interactions with their manager, and in
particular the level of support they receive from their manager determines their output or performance. Past researches have shown relationships along the following angles:

 (a) Leadership style and attainment of organizational goals;

(b) Leadership style and emotions; and

(c) Feelings of optimism and performance.

Leaders adopt different leadership styles in leading their followers. The style (s) the leader applies depends on a host of factors including the situational factors, personality traits and experience. According to the Wikipedia, “A leadership style is a leader's style of providing direction, implementing plans, and motivating people.” Different leaders lead differently but as to which style produces the best results, depends on situational factors and experience of the leader at a particular time. To help determine which leadership style is dominant in Ahantaman Rural Bank and its effect on bank performance, the study adopted five out the six leadership styles opined by Daniel Goleman (2000) in his article "Leadership that Gets Results.” The five leadership styles include: Authoritarian style, Democratic style, Laissez-faire style, Transactional style and transformational style. These leadership styles are briefly described in the section that follows. It is recognized that the managers play a significant role in the organizational performance, work improvements and employee satisfaction. The leadership styles have given the managers the ability to take the decisions, participate with others or ask their employees to handle the matters. United Arabic Emirates is looking to be one of the highest effective countries in the world. Therefore, they created different programs to encourage the government to build their leaders capabilities and enforce them to enhance the performance by monitoring and creating several excellence awards. The government work has very different challenges of the private business. With these explained, there are four types of leadership and their links with organizational performance. In organizations, it is often necessary to involve others in the process of decision making in order to get decisions approved and implemented. Democratic leaders not only guide group members but also participate actively in the group and acknowledge inputs from group members when making decisions and solving problems. Given that no leader can be a specialist in all fields, decisions reached in this way are more effective and precise. The issue of how much authority others are given to depends on the manager's preferences and attitudes, as well as on the nature of decision-making. In Central Java, Indonesia, the organizational performance has not been achieved optimally and still needs improvement. Many public health centers in Central Java, Indonesia, to achieve their stated goals, need a public health center leader who effectively coordinates and motivates their employees (Vigoda-Gadot, 2012). Unfortunately some basic public health centers have not taken into account the leadership style adopted by their superiors. According to Hyun (2020), Mirayani (2020), leaders are effective for several reasons such as charismatic leaders in terms of inspiring their subordinates or subordinates, transformational leaders can meet the emotional needs of subordinates or they can stimulate subordinates intellectually (Bass & Avolio, 1994). Wang et al (2011) found that transformational leadership and follower level of individual performance were positively connected. Furthermore, this study also shows that transformational leadership and team performance at the organizational level are positively associated. Xu and Wang (2010) state that performance is a function of skills, abilities, knowledge and motivation that are directed towards defined behavior. Research conducted by the authors mentioned above shows that transformational leadership enhances the overall development of followers. The followers of transformational leadership associate with self-defining and satisfying, relationships with individuals or groups. The ideal charisma and behavior of transformational leaders motivates followers to identify with the leader (Jyoti & Bhau, 2015). The personalized relationships developed by transformational leaders develop an environment in which subordinates feel happy and hence, their overall performance is enhanced. Therefore, it can be said that transformational leadership and organizational performance are positively related (Jyoti & Bhau, 2015). Sofi and Devanadhen (2015) state that transformational leadership has a significant impact on organizational performance. Research conducted by Purwanto (2020), Asbari (2020), Wijayanti (2020), Santoso (2020), Hyun (2020) and Mirayani (2020) showed that transformational leadership has a direct positive impact on organizational performance. In democratic leadership style, the leader shares the decision-making process with members of the organization by way of employee involvement and participation. Democratic leadership style promotes teamwork and strong group cohesion among members of an organization. This leadership style can bring about increased productivity because it encourages sharing of better ideas which eventually could lead to creative and innovative solutions to organizational problems. The laissez-faire leadership style gives all the right and power to decision-making to the staff to perform their duties assigned them. Here, the leader provides all the necessary resources for staff to perform their functions. Employees have the freedom and liberty to take decisions that will inure to the benefit of the organization without unnecessary interference from the leader. The leader only comes in when employees invite the participation of their leader otherwise, the leader’s involvement will be resisted by employees. Laissez-faire leadership style works best when: the organizational culture in an organization promotes employee commitment and loyalty, employees are highly skilled and experienced, employees are specialist in their domain of work and when the leader has put in place monitoring mechanisms to track the performance of each employee in the organization Transactional leaders focus on increasing the efficiency of established routines and procedures. Finally, a transformational leader is the one who helps organizations and people make positive changes in the way they do things (DuBrin, 2012). This leadership style combines charisma, inspirational leadership, and intellectual stimulation in leading organizational members. By combining charisma, inspirational leadership and intellectual stimulation, this type of leader is able to cause a dramatic change in the way organizations work and achieves significant results. The organizational characteristics and the leader’s charisma are key to how transformations take place in organizations. Transformational leaders attempt to overhaul the organizational culture or subculture and to make a difference in people’s lives. To bring about the overhaul, transformations take place in one or more of three ways.

 

Many organizations has failed due to ineffective leadership style of the management team of such organization and institution on such situation, the workers are not well organized, controlled or co-ordinated, the effect of this attitude arises from ineffective leadership style, low productivity, high operating cost, uncooperative attitude of employees etc. All these at the long run leads to the closure of the organisation. Some organizations are faced with the problem of sourcing for competent leaders who have personality, knowledge, intelligence and experience to lead. Leadership, according to McGregor (1978) is one of the major determinants of success of any enterprise, organization or nation. To Ukeje and Okorie (1990), leadership makes the difference between success and failure, between profit and loss, between development and underdevelopment of any organization, nation or enterprise. By adopting the appropriate leadership style, management can impact positively on the performance of their organization. However, leadership style is a double-edged tool in work-organizations. As a human resource management skill, it has both the constructive as well as disruptive dimensions in the workplace. Depending on the circumstance and appropriateness, leadership style can pose as a pure incentive and positive in building a performance oriented organisation. On the other hand, it can also act as a disincentive and negative backlash corroding responsibility for performance in organisations. This ambivalence in the outcomes of leadership style compel management to be more concerned about which leadership approach suits best their organization. Given this scenario, business establishment must continuously emend their leadership styles based on organisational situations and circumstances. Therefore, this study is of importance because it will offer valuable insight to management and also provide information on the limited empirical knowledge on the link between the democratic leadership mode and corporate performance. Besides, leadership styles and organizational performance have been subject of much attention by scholars with the change-initiatives being pursued in the manufacturing sector, particularly in the cement industry within the past ten years in Nigeria. For instance, Lafarge holds a leadership position in the Nigerian cement industry and has fully integrated the acquisitioned companies into the Lafarge humanist culture, culminating into changes in management and leadership styles.

 

Based on this premise, this paper has been prepared to explore the relationship between the democratic leadership style and overall corporate performance. From the foregoing, several types of leadership styles can be established such as transformational, transactional, democratic and autocratic leadership styles. Specifically, this study will identify and compare the various leadership styles that have been adopted in the running of the selected big companies and with the aim to investigate the impact of the democratic leadership style on the performance of an organisation.

Statement of the problem

Poor leadership style can stop management from producing new ideas and solution to problems. Of all these, the poor leadership style of the heads have been the major cause of the declining standard education, something that warrants an investigation. When it comes to management, people with regards to the style of leading them are a part and parcel of the process. Therefore, managers should realize that both are the critical elements in organisations and that they should be recognized as being synonymous with the organisation. The leadership behaviour/style in most organisations, which believe that workers could be treated anyhow as a result of unemployment situation in the country and makes job switch difficult, has resulted in the hardship faced by workers who are the emblem of the organisation itself. It generally leads to low productivity under the watch of poor leaders and managers, staff morale declines and workers feel less committed to the organization and its mission that tends to lead to work of

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