Impact of Leadership Style on Organizational Performance: A Case Study of Nigerian Banks

Leadership style is a key determinant of the success or failure of any organization. A leader is person who influences, directs, and motivates others to perform specific tasks and also inspire his subordinates for efficient performance towards the accomplishment of the stated corporate objectives. Leadership style is the manner and approach of providing direction, implementing plans, and motivating people. According to Ngambi et al. (2010) and Ngambi (2011), cited in Jeremy et al. (2011), leadership is a process of influencing others’ commitment towards realizing their full potential in achieving a valueadded, shared vision, with passion and integrity. The nature of this influence is such that the members of the team cooperate voluntarily with each other in order to achieve the objectives which the leader has set for each member, as well as for the group. The relationships between the leader and employee, as well as the quality of employees’ performance, are significantly influenced by the leadership style adopted by the leader (Jeremy et al., 2011).

Leadership style in an organization is one of the factors that play significant role in enhancing or retarding the interest and commitment of the individuals in the organization (Obiwuru et al., 2011). Leadership is a critical management skill, involving the ability to encourage a group of people towards common goal. Leadership focuses on the development of followers and their needs. Managers exercising transformational leadership style focus on the development of value system of employees, their motivational level and moralities with the development of their skills (Ismail et al., 2009). It basically helps followers achieve their goals as they work in the organizational setting; it encourages followers to be expressive and adaptive to new and improved practices and changes in the environment (Azka et al., 2011). According to Michael (2011) leadership has a direct cause and effect relationship upon organizations and their success. Leaders determine values, culture, change tolerance and employee motivation. They shape institutional strategies including their execution and effectiveness. Leaders can appear at any level of an institution and are not exclusive to management. Successful leaders do, however, have one thing in common. They influence those around them in order to reap maximum benefit from the organization’s resources, including its most vital and expensive.

In recent times, many organizations in the Nigerian banking industry, have recorded cases of immoral and unethical banking practices, gratifications, high labour turnover, inability to meet basic required obligations, and incessant financial distress syndrome, which has led to many banks being merged and acquired. This may be as a result of lack of effective leadership. The prime motive of many organizations is to achieve its stated objectives, hence the need to effectively coordinate and motivate the workers by an effective leader. Unfortunately some organizations do not take cognizance of the leadership style adopted by their managers.

Leadership is life blood of any organization and its importance cannot be underestimated. Many authors have studied this phenomenon, but there is no conscious definition of what leadership is, no dominant paradigm for studying it, and little agreement regarding the best strategies for developing and exercising it (Bennis, 2007; Hackman & Wageman, 2007; Vroom & Jago, 2007). Omolayole (2006) views leadership as that kind of direction, which a person can give to a group of people under him in such a way that these will influence the behavior of another individual, or group. Ngodo (2008) perceives leadership to be a reciprocal process of social influence, in which leaders and subordinates influence each other in order to achieve organisational goals. Leadership style is viewed as the combination of traits, characteristics, skills and behaviours that leaders use when interacting with their subordinates (Marturano & Gosling, 2008, Jeremy et al., 2011). Flippo & Musinger (1999) see leadership as a pattern of managerial behavior designed to integrate personal r organizational interest and effect, in pursuit of some objectives.

Fiedler (1969) postulates that leadership style refers to a kind of relationship whereby someone uses his ways and methods to make many people work together for a common task. In modern leadership theories, five leadership styles have been presented, including (i) charismatic leadership, (ii) transactional leadership, (iii) transformational leadership, (iv) visionary leadership, and (v) culture-based leadership (Yukl, 1994; Bass, 1990; Sashkin, 1996; Sergiovanni, 1987). Tannenbanum and Schmidt (1958) also identify four different types of leaders which have been most widely accepted and used. These leadership styles, which centre around Mc Gregor’s Theory ‘X and Y’ assumptions, are democratic, autocratic, dictatorial, and laissez faire leadership styles.

Question 1 (25 Marks)

With reference to the above case study, critically discuss some of the issues that may be the result of lack of effective leadership in an organisation.

Question 2 (25 Marks)

As alluded in the above case study, leadership style in an organization is one of the factors that play significant role in enhancing or retarding the interest and commitment of the individuals in the organization. Examine some of the most important and effective keys to inspiring business leadership.
Question 3 (25 Marks)

Critically discuss at least two legislations that deal with diversity in the workplace and identify the leadership actions that need to be taken to ensure its implementation.
Question 4 (25 Marks)

To understand leadership, it is important to grasp the difference between leadership and management. We get the clue from the standard conceptualization of the functions of management. Planning, organizing, directing or leading and controlling. Leading is the major part of manager’s job, yet managers must also plan, organize and control. Critically discuss roles of leadership versus management.

Answers to Above Questions on Leadership Style

Answer 1: Leadership plays an important role in an organisation in leading it to a high level of success. However inefficient management of leadership creates significant issues as well. In the given case scenario, there are many issues identified that result from lack of ineffective leadership in the organisation. The inefficient leadership is identified with respect to the practices that are being performed in the Nigerian banking industry whereby there are a significant number of cases of unethical banking practices being followed. The higher turnover rate within the employees of the Nigerian banking industry is also an example of inefficient leadership being followed in such an industry.