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Full Project – Evaluation of leadership styles and employee performance in selected small scale enterprises

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CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The importance of effective leadership in business enterprises cannot be denied. The activities of the leader have significant influence on the work environment. As Nwachukwu (2008) explains, a leader is the most influential person in an organization who provides direction, guides group activities and ensures that objectives are attained with the application of maximum capabilities. They do not stand behind the group to push and to produce. They rather place themselves before the group as they facilitate progress and inspire the accomplishment of organization goals (Konntz, et al., 2010).

The dynamism in the business environment, and changes in organizational structures, technology and life styles are shifting interest towards leadership development and application in business. Modern businesses face bigger technological, legal and regulatory, socio-cultural, economic, technological, environmental, ethical challenges associated with a rapidly changing world (Toor, et al., 2017) that emphasizes the need for directional input towards efficiency and improved productivity. Leaders apply their skills in discovering solutions that work, effectively navigating changing conditions towards the achievement of the long-term outcomes and future goals of the organization (Kotler, 1990).

Leadership is more about people and less about tasks. Leadership styles have diverse effects on variables such as flexibility, standards, rewards, clarity and commitment and is some cases on organizational climates as the behavior of the leader produces motivation mechanisms which have effects on the performance of employees in the organization (Shamir, et al., 2016). An important part of leadership is thus followership. Effective leadership is the extent to which a leader constantly and progressively leads and directs his or her subordinates towards general organizational performance. According to Lawal, Kio and Adebayo (2000), an entrepreneur has different leadership roles to perform. He is the chief risk bearer, chief administrator and strategy implementer, crisis solver, figurehead, spokesperson and policymaker. Stoner and Gilbert (2001) stressed that an understanding of leadership is important for Small and Medium Scale enterprises (SMEs) as effective leadership is essential for employee coordination and motivation, and such things as development and training, which in turn are essential for the survival and growth of every organization.

Although leadership style plays a vital role in shaping the behavior and attitudes of the members of an organization, there has not being a consensus on the appropriate style of leadership in business organization and this has led to various contributions towards achieving organization efficiency and effectiveness. Baumback (2012, cited in Lawal, et al, 2014) for instance pointed out that often entrepreneurial leaders of SMEs need to adopt an authoritarian style featuring sole decision making, issuance of instructions with expected employee compliance without question or debate. However, there are also cases where a participatory leadership style works best. Here, the leader makes decisions on the basis of consultation, consensus and agreement. Furthermore, leadership roles can be highly visible and extensive and time sensitive, or may be less demanding and require mild routine performances with details delegated to subordinates.

Whatever style of leadership is applied, it is important that it is aimed towards spurring the motivation of workers and their sustained commitment towards the realization of the organization’s set goals both in the short and long term. It is against this background that the study seeks to empirically investigate the impact of leadership style on employee performance in small scale enterprises in Nasarawa state.

1.2 Statement of the Problem

The impact of leadership styles on the performance of employees has been presented to have a direct influence on behaviour, which in turn affects the way employees work, meeting their responsibilities and duties. Despite the importance attached to democratic, laisse faire and autocratic leadership styles aimed at enhancing the performance of employees in small scale business, they are still not performing at the level at which they are expected. More so, enough attention doesn’t seem to be given to this issue in small scale enterprises which possess a slim hierarchical framework. In these business units, appointments to leadership positions are usually done on a subjective basis, in fact, in some cases, the owners are actually actively running such businesses. Attention is not given to assessing how leadership impacts on the behaviour of employees. This is a problem this research aims to investigate and to find out why.

More so, most studies on leadership style and employee performance such as Almer, Djamhur and Iqbal (2017), Khuong and Hoang (2015); Devi and Narayanamma (2016) and Hui (2010) dwelt only on the employees of multinational manufacturing firms and financial institutions. This study seeks to fill this research gap identified in the previous studies by paying attentions on the impact of leadership styles on employee performance, among selected small-scale enterprises in Nasarawa state.

1.3 Research Questions

The study will seek answers to the following research questions:

What is the impact of autocratic leadership style on employee performance among small scale enterprises in Nasarawa state?
What influence does democratic leadership style has on employee performance of these businesses?

What is the impact of laissez faire leadership style on employee performance among small scale enterprises in Nasarawa state?

1.4 Objectives of the Study

The main objective of the study is to evaluate the impact of leadership styles on employee performance among selected small-scale enterprises in Nasarawa state. Specifically, the study has the following objectives and they are to:

determine the impact of autocratic leadership style on employee performance among small scale enterprises in Nasarawa state.
examine the influence of democratic leadership style on employee performance among small scale enterprises in Nasarawa state.

assess the impact of laissez faire leadership style on employee performance among small scale enterprises in Nasarawa state.

1.5 Statement of Hypothesis

The hypotheses of the study are as follows:

H01: Autocratic leadership style has no significant impact on employee performance among small scale enterprises in Nasarawa state.

H02: Democratic leadership style has no significant influence on employee performance in small scale enterprises in Nasarawa state.

H03: Laissez faire leadership style has no significant impact on employee performance in small scale enterprises in Nasarawa state.

1.6 Significance of the Study

The study will be important in various ways:

A comprehension of the relationship between leadership and the performance of employees, as will be provided by the study, will be important for managers and leaders of microenterprises in the creation and implementation of policies that would enhance cooperation and interpersonal relationships and influence employees towards better performance, and the same time allow for the recognition of ways in which issues such as stress, aggression, regression, and friction among and between leaders and workers can be reduced or eradicated.

Additionally, the study will prove an important resource for future researchers in related areas of empirical investigation by serving as a point of reference for other studies, as well as a starting point for expansion of the current study.

Furthermore, professionals and agencies offering leadership training will find the study useful in its coverage on how employees respond to leadership styles, especially at it concerns small scale enterprises, which have been generating a lot of interest.

Finally, the study will be of importance to the general public as it seeks to achieve a general understanding of factors related to leadership and the performance of employees in businesses, as well as the intersection between the two.

1.7 Scope of the Study

The study specifically covers an evaluation of leadership styles and employee performance in Nasarawa state among selected small-scale enterprises. The study specifically covers the role of democratic, autocratic and laissez faire leadership styles on employee performance which all indirectly impact performance of the small-scale enterprises.

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