Critically evaluate the importance of having strong organisational leadership in relation to
organisational performance.
Introduction
Leadership is a key element in an organizational success. Effective leadership helps our nation
through times of risk. It enables a profit and non-profit organization to meet its goal. Leadership,
defined as establishing a clear vision, communicating the vision with others and resolving the
conflicts between various individuals who are responsible for meeting the organization targets.
Management is the organization and coordination of various economic resources in a business.
Leadership can have a significant impact on a company performance. (Vitez)
Leadership can be defined as a course which one person affects the thoughts, attitudes, and
behaviors of others. Kenneth Blanchard said once, “The key to successful leadership today is
influence, not authority”, which is very suitable for the direct definition of the leadership as for
organisational performance, a leader should influence by his ideas and philosophies to meet the
organization goals and targets. (Mills, 2005)
There are three types of leadership styles in general as in the form of theoretical aspect on
leadership. They are authoritarian / autocratic leadership, democratic leadership and Laissez-faire
Leadership. Basically, autocratic leaders lead by providing clear expectations on what does his
attributes need to be done, when it should be done, and how it should be done. They make
decisions without depending anyone and normally no input from the rest of the group. They’re the
key person in authoritarian leadership and the entire process or operation of the organization
depends upon them. The employees and attributes of the organisation under an authoritarian
leader are passive, lack inventiveness and show powerlessness to accept accountability. The
organization is so dependent on them that it cannot function in their absence. According to Kurt
Lewin, decision-making is less creative under authoritarian leadership and also it’s not easy to apply
the transformation from authoritarian to democratic leadership and vice versa. This style is more to
instructive and bossy. (Cherry)
Democratic leadership which is known as participative leadership is the widely applied leadership
styles in current modern management behaviour. This effective leadership style offer guidance to
the organisation members and also make them actively participate in giving ideas and building them
more inventiveness and accountable towards the organisations goals. In Lewin’s study, it shows that
participative leaders encourage group members to involve, but retain the final say over the decision-
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making process. The organisations attributes are feel engaged in the operations and encouraged and
creative. (Cherry)
Delegative leadership or well known as laissez-fair leadership which literally means free decision
making or let the attributes do what they wants to do without any specific directions. This
complicated setup has not shown a concrete leader’s influence in decision making and normally it’s
depends on a specific group members. While this style can be effective in situations where group
members are highly qualified in an area of expertise, it often leads to poorly defined roles and a lack
of motivation. The setback in this style is the leader’s primary focus is on the paper works or
documents or procurements setup while the employees are direction less most of the time. (Cherry)
Successful organisation performance is totally relies on the way the managers and employees
collaborate together in one direction. From human resource aspect, leaders are a key human
resource in any organisation. Companies normally compete using their products and services but in
today’s business world there are cases where companies do compete more by their leaders or CEO’s
than their products. This is factually proven in many cases and former Chief Executive Officer /
founder and innovator for Apple incorporation Steve Jobs is an evident for this theory. Apple was
very famous during their 80’s era with their information technology products dominations than
lately was facing a unfortunate season in their business till the comeback of Steve Jobs as the CEO to
lead the whole team with his innovative ideas and influence leadership. (Kahney, 2012)To conclude,
leadership styles are very important for a successful leader and for a successful organisation.
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The impact of leadership for organisational performance
Good leaders create positive work environment and positive working attitudes towards company’s
goals and targets. When the leaders develop better employees and working attitudes, they both
create better ideas, products and services for the company. A good leadership can be sensed in an
entire organisation as basically the corporate culture in that particular organisation is not forced but
at the same time it is developed. Communication within an organisation is the key element to
achieve goals and aims. When communication is open for daily, it makes the organisations
subordinates to understand clearly on the vision and the mission that particularly the company
working on. This is only possible when there is a good leader behind this guiding and monitoring the
whole communication flow within the organisation. When the leader ensures a smooth
communication flow within the organisation, by automatically the trend makes everyone especially
the subordinates to feel that they are an important entity and every job priority within the
organisation. Good leaders are invaluable as when they play their role well, employees will feel
encouraged and will compete for better performance and promotion which increase the
organisation performance and revenue. (Anderson, 2013)
By influencing the subordinates, a leader is not only developing smooth communication which
already has been discussed above yet also can dominate the behaviour of the employees with the
leadership ability. Influencing and being an autocratic leader is theoretically brings a lot of
differences. According to David Hahn the LinkedIn’s vice president of product management, Jeff
Weiner the CEO of LinkedIn is a constructive critic who personally impressed and influenced his
subordinates especially whenever they sit together for meetings or discussions. Weiner usually takes
time to recognise and accept deeds and critics by his subordinates and he quite often finishes his
meetings by asking what he could have done better and that’s really put him as a credible leader in
front of his employees especially for David Hahn. (Entrepreneur, 2013)
By the way, Jeff Weiner leadership style earn respect from his employees which are more than 3000
and steadily ranks as one of the best places to work by earning 92% staff- approval rating in a survey
published in Glasssdoor.com. Influencing employees is a very traditional way of a leadership method
to make the employees to stay as loyal followers for better organisation performances.
There is discrepancy between the active and passive management determined by on the timing of
the leader in the management intervene or acting on the situations occurs. In more active kind of
management, the leader tend to work and monitor closely to the performance by the followers and
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he / she always expect mistakes before it’s turned into big chaotic matter for the organisation itself.
In passive management, the leader only intervenes with the criticism right after a mistake is done
and the set of qualities are not met. Usually, the leader tends to set the expectations right after a
mess had been done in a specific task and not a strategic thinker. To be a performing organisation, it
has to be an active management led by a transformational mind kind of a leader.
There are two types of leadership theories critically researched and linked usually for organisational
performances through dynamic capabilities of organisational learning and innovation. According to
Bass’s transformational theory that transformational leadership is more than trading
encouragements for expected performance in developing, intellectualising, and stimulating
employees or followers to surpass their own ability, self- interest for a mission or vision. (Bass, 2008)
A transformational leader able to lead, inspire, motivate , role model, a teacher who may able to
bring the followers into a group and work towards a mission the organisation set. Apart from being a
role model, a leader should be able to challenge the existing order by applying revolutionary make
over for the organisation benefits. In my studies, I found that the revolutionary makeover happened
in late 1996 where the sales for Apple incorporation was going down badly by 30% until the return
of Steve Jobs in 1997 who did a massive transformation in Apple’s business plan, organisational
structure, working culture and also who lead the whole organisation to transcend back after that.
Jobs strategy was to produce identical four products only from Apple, after downsizing the number
of Apple products by 70%. This move is intentionally for quality products and innovation ideas which
benefited the company after one year by gaining $309 million profit. (Kahney, 2012)
On the other hand, contingent reward leadership or which is also known as transactional leadership
is also hypothesised to result in followers to perform for the organisation. According to Bernard
Bass, transactional leadership is the sequence of transactions where the actions of subordinates
result in either a reward or punishment.(Bass, 2008) In this leadership where parties, leader and the
subordinates come to an agreement that the subordinates deserves a reward for the outstanding
performance which at the end of the day it benefits the organisations revenue and profit. This
leadership is commonly seen as a positive approach for performance. (Howell and Avolio, 1993)
Even though the theoretical concepts represent transactional leadership as a negative approach
biasing transformational leadership in leadership researches but for today’s modern business and
management world transactional leadership is very practical and also proved the organisations
performances. Technically, transactional leadership will create an organisational culture where the
subordinates perform they deserves a reward and when they fail to do it, it effects their own
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performance appraisals. This phenomenon creates a set of standard in working culture which at the
end of the day it turns into the organisational culture itself.
The new study and previously quoted researches has shown that transformational leadership and
transactional leadership behaviours can be represented by the same leader in various kinds of
situations and concentrations. In the modern theory of leadership, a transformational leader who
makes his subordinates to accomplish more difficult tasks and approaching to solve critical issues
and develop higher capabilities also should be able to be a transactional leader who wants to reward
the subordinates to for the outstanding performance level he or she expects.
The following figure 1.0, explains on how the transformational and transactional leadership works
within an organisation to produce high level of performance.
Figure 1.0: Transformational and Transactional Leadership, (journey, 2013)
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The contradictory theories on leadership relationship with organizational performances
Even though conservative views say or assumed that leadership is a significant impact on
organizational performance but it’s totally absurd and raised doubts by the “frameworkers” who
explain that leaders are just a situational factor for an organisation’s strong performance. On the
other hand, scholars has researched and cited Lieberson and O’Connor’s and has explained that
organisational performance which determined by leadership has shown minute percentage. Leaders
performance can be vary according to the firm size. If the firm size is small, it can affect the
leadership attribute or normally the leaders can’t be recognised as the key person for the
organisation’s success. There are other elements which surpassed and the leadership performance
and contribution and shown potential reason for the organization performance. (Thomas, 1988)
A study has been done in United Kingdom’s retailing by comparing the organisations by having a
choice of Industry based companies and retail based companies and has concluded that the
environmental flexible has more liability than the leadership where leaders have significant
contribution on the performance which not justified by the framework factors.(Thomas, 1988)
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The impactful factors that influence the organisation performance
There are empirical studies done upon organisation performances and there’re other theories found
which critically influencing more than the leadership impact on an organisations competent level in
business market. Successful organisations are famed by their capability in encouraging the cultural
values which reliable with the strategy you work with. A research of the writings is likely explaining
that organisational culture is one of the most important, relevant and significant contributor by
leading to greater financial performance of that particular organisation. There are many experts has
argued that the degree of the performance of an organisation is critically valued by the culture
which is widely shared which is very strong among the employees. The prerogative is that the
culture linked to organisation performance is founded on the professed role which can cause and
cultivate competitive advantage by explaining the margins of the organisation in the sense of
simplifies individual communication and or by providing a straightforward scope or vision which
processed and shared at all the level within the organsiation. (Ogbonna and Harris, 2000)
It is claimed that the “exceptional quality” of an organsiational culture makes it very powerful source
in creating advantage over the competitors and made them to lead in the business market where
their performance is notable. According to a business case study on Siemens which highly valuing on
organisational culture and values which they shared among by everyone from the most senior
employee up to the newest trainee over the periods for successful market leaders where leadership
discussed in a small level by portraying as the “stewardship” for the culture which created at the
initial level. Siemens AG is one of the famous company which is based in Munich, Germany and UK
which mainly deal with electrical and electronics business globally. Their operations are based on
teamwork culture where it is emphasized more and wants all of its workforces to be genuinely
involved in the business to feel part of its success. It’s very important for the employees to know
where they fit in the business and also Siemens ideology is their business success depending on each
of their workforce and team performance to achieve better results. (Studies, 1995-2014)
It’s is clearly reasonable from the case study that, the leadership roles are just to maintain the
culture and values been created within the organisation and also shared among the employees and
they have a very strong belief in sharing their organisation values from top level management to the
individual employees made them to have a sustainable competition in their business market.
Leadership is just an entity where, to maintain the organisational culture and value by having
strategic planning for the Siemens.
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But on the other hand, there are studies clearly indicating that organisational culture and leadership
are linked rationally and practically. It is identified that the culture and values which have been set
can be a variable and manipulative. Thus, to nature and direct in an established way the
organisational values and culture needs leadership so with the right skills and abilities it can be
directed well among the subordinates. Based on the studies, leadership styles forms the
organisational culture and playing a vital role to maintain and enforce them throughout the best
performance of a particular organisation. Based on the critical examination throughout this study,
scholars explained that the recent study of organisational change in the United States federal civil
service shows leadership played a big role in “reinventing government” by nurturing appropriate
organisational culture which at the end of the day it increases the effectiveness and efficiency of the
civil services. (Ogbonna and Harris, 2000)
The following figure 2, explains in the form of diagram on how the leadership and organisational
culture can be operational for organisational performance.
Figure 2.0 : The links between leadership style, organisational culture and performance, (Ogbonna
and Harris, 2000)
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Conclusion
In conclusion, the whole studies in evaluating the importance of having strong organisational
leadership in relation to organisational performance shows a very realistic arguments on the impact
of leadership in organisational profit / revenue makings. In a simplified way, leadership can influence
people to perform well and work accordingly for company’s benefits. By applying personal
relationhip with the followers, leaders can fulfill their needs and that creates a positive impression of
the follower to more positive to work in an applied work culture. Leadership, helps briefing the
required changes within an organisation. Leaders can be the changing factors in an organisation.
Leaders are the only reliable human resource in a practical and “authoritical” way to solve conflicts.
By allowing the followers to express their views on conflicts which can be among employees or
against management, using their influence leaders can suppress the conflict and finds a solution.
Leaders are the key elements in training and developing their subordinates for the needs of an
organisation. Bad leadership may affect the organisation in ways, as create an unhealthy corporate
culture, lack in communications where can create assumptions, conflicts and rumors on the
management credibility among the subordinates. Employees may tend to be uncertain to the
organisations goals and visions. Bad leadership may also leads to bad decision and bias in staff
promotions which can reflect incompetent values of the organisation itself. Even tough, there is
research study showing that leaders are just a “stewardess” for the strategic and corporate culture
created by the organisation yet their role and impact for organisation performance is invaluable. In
my opinion, leadership is very important for any organisation which is wishing to do an outstanding
performance in their business making. A good leadership will be a good impression for the whole
organisation and also for their employees. Therefore, I concur that, it is really very important to
have a strong leadership for an outstanding organisational performance.
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