Literature Review

Leadership in Organisations & How it Impacts on Employee Performance

1.) Topic

The point of this research is to compare and contrast the three styles of leadership in determining employee performance. There are three distinct styles of management authentic, directive and transactional. There are many arguments for and against choosing one of these styles for running an organisation. Research into these methods indicates that the relationship between leadership styles and employee performances have a direct effect. Managers are aware that employees are the lynchpin of any organisation and in being so make the critical difference between success and failure. It is therefore critically important how organisations motivate and involve employees in order to attain a high level of commitment from them as the resulting factor will determine how well the organisation performs. Hence it is critically important to achieve a leadership style which is beneficial to the organisation in order to be successful.

2.) Bibliography

1. Chiaburu, S. D., Diaz, I., Pitts, E. V. (2011) “Social and economic exchanges with the organization: do leader behaviours matter?” (Electronic Version) Leadership & Organization Development Journal, Vol. 32 Issue: 5, pp. 442 – 461

2. Tjosvold, D., Moy, W. J. (1998) “Managing employees in China from Hong Kong: interaction, relationships and productivity as antecedents to motivation.” (Electronic Version) Leadership & Organization Development Journal, Vol. 19 Issue: 3 pp. 147-156.

3. Obiwuru, C. T., Okwu, T. A., Akpa, O. V., Nwankwere, A. I. (Oct 1 2011) Effects of leadership style on organisational performance: A survey of selected small scale enterprises in Ikosi-Ketu council development area of Lagos state, Nigeria. (Electronic Version) Australian Journal of Business & Management Research, Vol. 1, Issue: 7, pp. 100-111

4. Chaudhry, Q. A., Husnain, J. (Apr 01, 2012) Impact of Transactional and Laissez Faire Leadership Style on Motivation. (Electronic Version) International Journal of Business & Social Science, Vol. 3, Issue: 7, pp. 258-264

5. Hersey, P., Blanchard, H. K., Natemeyer, E. W. (Dec 1979) Situational Leadership, Perception, and the Impact of Power (Electronic Version) Group Organization Management, Vol. 4 Issue: 4, pp. 418-428

6. Pološki, N. (2001) Basic requirements for the successful implementation of the “feminine leadership” style in Croatian enterprises. (Electronic Version) Management Journal of Contemporary Management Issues, Vol. 6, No.1-2. pp. 119-131

7. Eagly, H. A., Johannesen-Schmidt, C. M. (2001). The Leadership Styles of Women and Men. (Electronic Version) Journal of Social Issues, Vol. 57, Issue 4, pp. 781–797

8. Bass, B. M. (1990). From transactional to transformational leadership: Learning to share the vision. (Electronic Version) Organisational Dynamics, Vol. 18 Issue 3, pp. 19-31

9. Peterson, S. R., (May 1997) A directive leadership style in group decision making can be both virtue and vice: Evidence from elite and experimental groups. (Electronic Version) Journal of Personality and Social Psychology, Vol. 72 Issue 5, pp. 1107-1121

10. Gardner, L. W., Schermerhorn, R. J. (2004) Performance Gains Through Positive Organizational Behaviour and Authentic Leadership Organizational Dynamics. (Electronic Journal) Organisational Gains, Vol. 33, No. 3, pp. 270–281,

Chiaburu, S. D., Diaz, I., Pitts, E. V. (2011) “Social and economic exchanges with the organization: do leader behaviours matter?” (Electronic Version) Leadership & Organization Development Journal, Vol. 32 Issue: 5, pp. 442 – 461

• Source Type: Research paper published in the Leadership and Organisational Development journal

• Discovery Strategy: I used key terms to narrow the search down such as leadership style, management style, authentic, directive or transactional. Once an appropriate journal (Leadership and Organisational Development journal) was found the next step was to find articles that were relative to this area of research.

• Search Tool/Resource: UCD library, eJournals

• Useful For: The findings would be good indicators to any organisation looking for leaders who match up to employee behaviours. Another reason these findings could be beneficial would be for training purposes, specifically authentic leaders. If organisations were to implement training courses in order to find leaders from within the findings in this research lend themselves to this scenario also.

• Argument: The purpose of the paper is to investigate the extent to which leadership styles affected employee performance as well as how committed they were to the firm. Using the three styles of leadership authentic, directive and transactional the paper wanted to indicate a distinct difference in terms of how employees interacted with their organisations. This was done on two fronts, social exchanges and secondly economic exchanges.

• Evidence: The results of the paper fall in line with other articles I discovered. The more open a leader is to employees, empowers them to perform better whereas if they are treated as a just another cog in the process they react badly and performance drops. This was highlighted in the results of the paper where transitional leadership was a negative predictor for economic exchange.

• Methodology: data was collected from 165 employees within the USA through questionnaires in different organisations using a scale of 1 strongly disagree to 7 strongly agree. It was then subjected to statistical analysis in accordance with several proposed hypotheses.

• Explain the credibility and reliability and expertise of the author: Dr. Chiaburu is the Assistant Management Professor in Mays Business School at Texas A&M University and teaches and conducts research in the area of organizational behaviour and human resources. Dr. Chiaburu received his education at Pennsylvania State University (PhD), Case Western Reserve University (MBA), Petrosani University (BSc). Dr. Chiaburu has received many rewards such as received the American Society for Training and Development (ASTD) Excellence in Research-to-Practice Award (Practitioner Category) in 2004 as well as having work published in journals such as the one mentioned but also Journal of Applied Psychology, Journal of International Business Studies.

• A brief description of the intended audience: The intended audience in my opinion would be fellow academics who are looking to continue research in this field. While the results reached are useful it is stated that further research is needed. A lot of the paper is steeped in statistical analysis so someone with a background in this field would be best suited to analyse it. While I stated who this paper would be useful for it would have to be interrupted by someone with prior knowledge in the field to fully understand the breakdown of the results.


The way in which I would go about doing the literature review is to present the evidence that I have found by breaking it down into the different leadership styles. In doing so readers could see for themselves what way the research is pointing. It is important in understanding how these work and then how they can be applied to the results found. Subtopics of motivation, satisfaction, commitment and job performance are useful when discussing the different styles. An area that I found was lacking was the negative side of the different styles. Quite often the research culminated in one being better than another rather than directly criticising a style. How I came to terms with this is there is always a situation that relies on one of the styles so a negative side isn’t necessarily needed. The important point is to figure out which style suits a specific organisation. This I feel is reflected in my outline

Authentic Leadership

Authentic leaders work hard to create an environment of honesty and meaningfulness. Where employees feel empowered and that their voice can be heard. In doing so they hope the organisation will reap the benefits in job performance. All the research points to this being the case as outlined below
An open environment can increase motivation which directly relates to performance as outlined in Tjosvold, D., Moy, W. J. (1998) which indicates the strengths of this style
This evidence is further tested by Chiaburu, S. D., Diaz, I., Pitts, E. V. (2011) by stating authentic leadership directly promotes job satisfaction and commitment to an organisation.
An interesting twist on this research is the work done by Pološki, N. (2001) on “feminine leadership” which she states shares many characteristics with an authentic leadership and makes the case why women should be employed because of this.

Transactional Leadership

Transactional leaders are seen as controlling in a supervising capacity. Motivation is elicited through rewards as well as punishment.
Transactional leaders tend to stick to a specific framework to get things done. Chaudhry, Q. A., Husnain, J. (Apr 01, 2012) found that in Pakistani banks this to be a good motivator however I would disagree and argue these findings are due to economical reasons.
Research in this area has stated transactional leadership should be transformed to transformational (authentic) Bernard M. Bass, M. B. (1990)
A perfect prelude to Bernard M. Bass (1990) is Obiwuru, C. T., Okwu, T. A., Akpa, O. V., Nwankwere, A. I. (Oct 1 2011) where transactional and transformational leadership styles are compared and contrasted in small scale enterprises.

Directive Leadership

Directive Leadership takes the form of telling employees what to do, and how to do it. Employees are expected to follow strict guidelines and meet deadlines. Put eloquently by Chiaburu, S. D., Diaz, I., Pitts, E. V. (2011) that employees feel like hired hands.
Peterson, S. R. (2001) shows there are two sides to it and there are certain organisations that a directive style would be more suitably for. Manufacturing sector relies on specific jobs executed on time where innovation is not needed and a strong leadership is desired by employees.


In order to fully understand the differences it is important to put them in prospective. Each article dealt with organisations that varied in both business sector and in a geographical sense. This in turn gave a greater understanding of how they differ and may be more suited to one organisation over another.
Co-operation and competition for motivation is a key aspect of leadership. Tjosvold, D., Moy, W. J. (1998) deal with a scenario where mangers come from one culture and background and have to work with employees of another where co-operation is integral to success.

Situational Leadership is the concept that people adapt to the environment they are in. If a situation is perceived to require a certain type of leader (authentic, directive and transactional) then people change to fit the requirements. Power Paul Hersey Kenneth H. Blanchard Walter E (1979)
The studies done on not only how leadership styles differ but also how they differ in men and woman gives a greater insight into what works and doesn’t work. This slightly different angle can give a clearer picture on implementation as alluded to by Eagly, H. A., Johannesen-Schmidt, C. M. (2001)


While there is a clear case to be made for each style there is clear tendency to lean towards an authentic style. This is because employees want to feel valued and that they have a voice. Employees react better when the situation isn’t to leave your brain at the door on the way in.

Gardner, L. W., Schermerhorn, R. J. (2004) critically appraises authentic leadership in line with what is found Eagly, H. A., Johannesen-Schmidt, C. M. (2001) and Chiaburu, S. D., Diaz, I., Pitts, E. V. (2011).
Motivation is something organisations struggle with daily and finding the best leadership style to keep employees motivated through job satisfaction is essential.


Over the course of the research it has become quite apparent how rigid this line of thinking is. Every organisation can be analysed and a conclusion made that they employ leaders that fall under one of these categories. However regarding a gap in the research I came across was the Hersey-Blanchard Situational Leadership. This style of leadership deals with the adaptive side of people. It’s quite an old theory however it is rarely referenced in any articles I came across. This could be down to a number of factors but if I was to continue research into this area it would follow this line of thought.


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