Leadership Characteristics and Employee Satisfaction by Karl Hittle University of the Incarnate Word DBA 8340 Submitted to: Dr. Kruti Lehenbauer Fall, 2021 1 Leadership Characteristics and Employee Satisfaction Table of Contents Abstract ……………………………………………... 3 Research Statement and Introduction ….……….…... 4 History and Context of the Problem ………………... 4 Consequences of the Problem ………………………. 6 Solutions to the Problem………….…………………. 8 Conclusion and Future Scope.………….……………. 10 References ….…………………….…………………. 11 2 Abstract The need to determine what satisfies employees is a persistent issue for leaders because the desires of the workforce are ever-changing. There is an abundance of literature available concerning the characteristics of successful leaders. Through a literature analysis conducted for this study, the leadership characteristics which influence employee satisfaction are revealed. Fairness, communication, teaching ability, and credibility most often appeared as the characteristics of leaders that are likely to generate higher employee satisfaction. By identifying these specific characteristics, this study serves as a consolidated resource for leaders focused on the improvement of employee morale. This study also provides results that are helpful to those who make hiring decisions within organizations where improved employee satisfaction is desired. 3 Leadership Characteristics and Employee Satisfaction Research Statement and Introduction An impactful leader demonstrates characteristics that enhance relationships with all stakeholders within an organization. In their research, Fleishman (1953) and Likert (1961) found that effective leadership needs to be concerned not only with production but also provide consideration for the people responsible for the work. Positively impacting employee morale is a desire of leaders because high employee satisfaction usually contributes to the success of an organization, while poor job satisfaction may harm it (Galup, 2008). This paper focuses upon four of the most impactful leadership characteristics in the context of employee satisfaction. When employees view their working conditions favorably, their output, efficiency, and commitment levels often rise accordingly (“Increasing employee job satisfaction,” 2020). The amount of literature available regarding this topic is immense; however, the body of available literature does not provide a concise list of effective leadership characteristics focused on improving employee satisfaction. This paper reviews the context of the problem and the consequences of not having a condensed list of characteristics available to improve employee morale. The attributes of successful leaders are then reviewed and reduced to four specific characteristics that effectively improve the satisfaction of workers. A discussion of the findings is provided followed by concluding remarks. History and Context of the Problem Leadership is a management function directed towards social interaction and influencing people so that they will work to achieve the goals of the organization (Skansi, 2000). Organizational leaders continuously seek ways to improve the satisfaction of the employees for which they oversee. Employee satisfaction can be defined as the gratification or prosperity that the 4 employees receive from their job (Springer, 2010). Researchers, such as Brown and Leigh (1996), believe that the culture within an organization is more important than ever in the global marketplace. Employee satisfaction also leads to greater retention of employees who add value to the bottom line and continue to work to achieve the organization’s goals. Lado and Wilson (1994) also found in their research that successful organizations depend on the high performance of their employees to meet objectives. To achieve the strategic goals of an organization the employees must perform at elevated levels. Current research contains a considerable number of studies that discuss organizational changes, not specifically leadership approaches, which improve employee satisfaction. Changes such as salaries, fringe benefits, achievement, autonomy, recognition, communication, working conditions, job importance for coworkers, interpersonal relationships, working for a reputable company, job security, and workplace flexibility improve employee satisfaction (Rad & Yarmohammadian, 2006). Leadership may address these issues to improve morale, however, having a respected boss may be important when improving morale is a specific goal for leadership. The Rad and Yarmohammadian (2006) study also found that employees demonstrated less satisfaction with salaries, benefits, work conditions, promotion, and communication and higher levels of satisfaction with employees who had a leader that possessed a participative style of leadership. The study of leadership characteristics has spanned across cultures, decades, and theoretical beliefs (Horner, 1997). When looking for general attributes of successful leaders, one finds that the current literature contains research regarding leadership characteristics in general. However, there is limited information focused specifically on characteristics of leaders that have the greatest impact on worker satisfaction. As an example of the leadership theories in the 5 literature, Transformational Leadership Theory (Bass, 2006) is a well-tested and often cited theory. This theory reveals that leaders who are successful in positively transforming their organizations possess four qualities. Those qualities include idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration (Bass, 2006). Transformational leaders have a positive relationship with their employees; however, this theory does not discuss specific characteristics which lead to that positive relationship. The literature also reveals universal characteristics of successful leaders. As an example of this type of research, the study conducted by Astin and Astin (2012) of leaders in higher education found that effective leaders were committed, empathetic, competent, authentic, and self-aware. The effective leaders in the study had employees who were supportive and satisfied; however, the study did not discuss specifically which of these characteristics had the greatest influence on employee satisfaction. Research concerning leadership characteristics that directly impact employee satisfaction is not as prevalent within the current body of information. In the healthcare industry, as an example, studies were conducted in several countries regarding leaders and their impact on morale. These studies have demonstrated that there is a positive correlation between leadership and the job satisfaction of healthcare providers (Berson & Linton, 2005; Sfantou et al., 2017; and Mosadeghrad & Ferdos, 2013). There is not, however, a concise summary of those characteristics shown to directly improve the satisfaction of the workforce. Consequences of the Problem Leaders who ignore the importance of employee satisfaction may experience higher turnover, longer periods to fill vacant positions, and more stress-related issues (Barling et al. 2005). Each of these issues adds cost to the organization including the hidden cost of turnover, the loss 6 of productivity due to vacant positions remaining open for extended periods, and the additional healthcare costs experienced by organizations for stress-related health issues and increased absenteeism (Barling et al. 2005). The need to determine what satisfies employees is a persistent issue for leaders because the desires of the workforce are dynamic and ever-changing. The pace of change in the business world is ever-increasing and the needs of those working in the business environment are also changing rapidly. Determining what is important to employees is a moving target that must be continually assessed and addressed. Leaders interested in improving their approach to building trust and commitment within a group of employees must evolve to survive in the global marketplace (Levi & Askay, 2021). One example of the changing needs of the workforce is the age diversity of today’s employees. Bottomley and Burgess (2018) explain that today’s workforce contains three different generations of employees with a fourth generation about to enter the mix. Leaders must satisfy the needs of the Baby Boomers (1943-1960), Generation X (1961-1981), and the Millennials (19822004) in today’s workforce. Each generation has different wants, needs, and desires that leaders must address. Generation Z (2005-present) will join the workforce in the coming years causing another evolution in these needs. In addition to age-related issues, today’s workforce is diverse in other ways with each component having dynamic needs. Those leaders who do not learn and adapt to the changing needs of the workforce could face the consequence of losing their competitive edge as an organization. A survey of 60 human resource professionals, conducted by Deloitte (2021), found that the organization’s ability to attract and retain new talent was perceived by these professionals as being a critical management issue for their organizations. The survey also revealed that businesses that fail to address employee 7 concerns may face the consequence of losing skilled professionals in the years ahead. Increased retention and a higher degree of job satisfaction are often the result of a positive work atmosphere the leaders provide for their employees (“Increasing employee job satisfaction,” 2020). Those leaders who fail to determine the issues that are important to their employees could lose the highperforming members of their workforce to organizations that value their efforts. Of the consequences reviewed above, the most significant consequence may be the company’s loss of its competitive edge. Global competition, volatile markets, and a demanding cost accounting environment have put pressure on organizations to remain successful and solvent (Kocakulah et al., 2017). In today’s economy, competing in a global marketplace and the local market is more difficult than ever. A company that fails to make satisfying their employees a priority may not be competitive with other industries providing comparable products and services. Unsatisfied employees will also add cost to the organization through higher turnover, vacant positions impacting productivity, and stress-related issues mentioned. These added costs will also make it difficult for an organization to compete. Solutions to the Problem Leaders who desire to improve their approach to collaborating with subordinates to build a positive workforce and avoid the consequences of losing their competitive edge should consider improving their leadership approach. They should modify their approach to become a fair leader who communicates, teaches, and build credibility with their employees. In the analysis of the current research for this study, fairness, communication, teaching ability, and credibility most often appeared as characteristics that are likely to generate higher employee satisfaction. As an example of studies that revealed fairness, the findings in the Qiu et al. (2009) study of 50 Product Development Teams (PDTs) in the Midwest portion of the United States revealed 8 that team members of supervisors who exhibited fairness as a leadership trait were more productive and displayed better citizenship behavior. This study also revealed that fair interactions between supervisors and their team resulted in greater job engagement The ability of leaders to effectively communicate was often found in the literature as a characteristic that improved employee satisfaction. Madlock (2008) studied 220 working adults who ranged in age from 18 to 64 and worked in a variety of organizations. This research concluded that when leaders communicate effectively, their followers experience significantly greater levels of satisfaction. Effective communication also resulted in having employees ranking a positive work environment ahead of higher pay. Other research revealed teaching as an impactful characteristic of leaders. Lazear et al. (2015) surveyed 23,878 workers and 1,940 supervisors from 2006 and 2010 and found that training a worker to do their job better motivates them to work harder and enjoy their work. The worker will also retain more of their performance improvements as they progress within the company. This research documented that having a boss that is a good teacher has a positive and long-term effect on employee satisfaction and performance. The final characteristic of a successful leader most often found in the peer-reviewed literature for this study was credibility. A study conducted by Goodall et al. (2011) provides a good example of the available research regarding this trait. Goodall et al. (2011) studied a population of 42 clinical lab managers, some of which recognized as experts in their field. The findings revealed that those recognized as experts had a greater impact on improving morale. Expert managers can recognize talents in the employees they oversee and bring out the best in them. Similar to star athletes who become great coaches, coaches who have had success as an athlete in their sport can 9 share knowledge that helped them achieve greatness. This leads to improved morale with the supervisor viewed as a credible leader by their team. The characteristics of fairness, effective communication, teaching, and credibility were identified in this literature analysis as critical attributes for leaders who desire to influence the satisfaction of employees. By compiling these four characteristics into one paper, this study contains a consolidated list for leaders interested specifically in attributes they should develop if they desire to improve their employees’ satisfaction. Conclusions and Future Scope There is extensive research available regarding the characteristics of successful leaders, with less research available focused specifically on leadership characteristics that have the greatest impact on worker satisfaction. By providing research that reveals specific characteristics which improve the satisfaction of employees, as presented by Qiu et al. (2009), Madlock (2008), Lazear et al. (2015), and Goodall et al. (2011), this study provides a consolidated resource for leaders that may assist them when their focus is to improve employee morale. In addition to these findings, this study provides results that are helpful to those who make hiring decisions within organizations where employee satisfaction is an issue. There is a need for further research on this specific topic. A comprehensive literature review, as opposed to the literature analysis conducted in this study, which reveals the characteristics of leaders that directly impact employee satisfaction, would fill a void in the currently available information. Once the characteristics are identified in a comprehensive literature review, a quantifiable comparison of the characteristics would further reveal those attributes that are statistically most effective for leaders. This would further supplement the information found in this study and provide a unique contribution to the literature. 10 References Astin, A.W., & Astin, H.S. (2000). Leadership reconsidered: Engaging higher education in social change. Battle Creek, MI; W. K. Kellogg Foundation. Barling, J., Kelloway, E. K., Frone, M. R., (2005). Handbook of work stress. Thousand Oaks, California. SAGE Publications. Bass, B. M. (2006). Transformational leadership (2nd ed.). Mahwah, N.J. : L. Erlbaum Associates. Bottomley, K., & Willie Burgess, S. (2018). Changing generations in today's workforce: Leadership skills for Millennials. Employment Relations Today, 44(4), 5-9. 10.1002/ert.21651 Berson, Y., & Linton, J. D. (2005). An examination of the relationships between leadership style, quality, and employee satisfaction in R&D versus administrative environments. R&D Management, 35(1), 51-60. 10.1111/j.1467-9310.2005.00371.x Brown, S. P., & Leigh, T. W. (1996). A new look at psychological climate and its relationship to job involvement, effort, and performance. Journal of Applied Psychology, 81(4), 358368. Deloitte. (2021). The 2021 Deloitte global 2021 millennial and gen z survey. Deloitte Touche Tohmatsu Limited. The Deloitte Global 2021 Millennial and Gen Z Survey Fleishman, E. A. (1953). The description of supervisory behavior. Journal of Applied Psychology, 37(1), 1-6. Galup, S. D., Klein, G., & Jiang, J. J. (2008). The impacts of job characteristics on employee satisfaction: A comparison between permanent and temporary employees. The Journal of Computer Information Systems, 48(4), 58- 11 68. https://uiwtx.idm.oclc.org/login?url=https://www-proquestcom.uiwtx.idm.oclc.org/scholarly-journals/impacts-job-characteristics-on-isemployee/docview/232574603/se-2?accountid=7139 Goodall, A. H., Kahn, L.M., & Oswald (2011). Why do leaders matter? A study of expert knowledge in a superstar setting. Journal of Economic Behavior & Organization, 77(3), 265-284. Horner, M. (1997). Leadership theory: past, present, and future. Team Performance Management, 3(4), 270. https://http://dx.doi.org.uiwtx.idm.oclc.org/10.1108/13527599710195402 Increasing employee job satisfaction: Factors that have a positive effect. (2020). Development and Learning in Organizations, 34(4), 53-55. 10.1108/DLO-10-2019-0239 Kocakulah, M.C., Foroughl, A., Stott, A., and Manyoky, L. (2017). Activity-based costing: Helping small and medium-sized firms achieve a competitive edge in the global marketplace. Journal of Accounting & Marketing, 6(3), 245-253. 10.4172/21689601.1000245 Lado, A. A., & Wilson, M. C. (1994). Human Resource Systems and Sustained Competitive Advantage: A Competency-Based Perspective. The Academy of Management Review, 19(4), 699-727. 10.2307/258742 Lazear, E. P., Shaw, K. L., & Stanton, C. T. (2015). The value of bosses. Journal of Labor Economics, 33(4), 823-861. 10.1086/681097 Levi, D. & Askay, D. A. (2021). Group dynamics for teams. SAGE Publications. Thousand Oaks, CA. Likert, R. (1961). New Patterns of Management. New York: McGraw-Hill. 12 Madlock, P. E. (2008). The link between leadership style, communicator competence, and employee satisfaction. The Journal of Business Communication (1973), 45(1), 61-78. 10.1177/0021943607309351 Mosadeghrad, A. M., & Ferdosi, M. (2013). Leadership, job satisfaction and organizational commitment in the healthcare sector: Proposing and testing a model. Materia SocioMedica, 25(2), 121-126. 10.5455/msm.2013.25.121-126 Qiu, T., Qualls, W., Bohlmann, J., & Rupp, D. E. (2009). The effect of interactional fairness on the performance of cross-functional product development teams: A multilevel mediated model. The Journal of Product Innovation Management, 26(2), 173-187. 10.1111/j.15405885.2009.00344.x Rad, A.M.M. & Yarmohammadian, M. H. (2006). A study of the relationship between managers' leadership style and employees' job satisfaction. Leadership in Health Services, 19(2), 11-28. http://dx.doi.org.uiwtx.idm.oclc.org/10.1108/13660750610665008 Sfantou, D. F., Laliotis, A., Patelarou, A. E., Sifaki-Pistolla, D., Matalliotakis, M., & Patelarou, E. (2017). Importance of leadership style towards the quality of care measures in healthcare settings: A systematic review. Healthcare (Basel), 5(4), 73. 10.3390/healthcare5040073 Skansi, D. (2017). Relation of managerial efficiency and leadership styles – empirical study in Hrvatska. Management, 5(2), 52. Springer, M. (2010). Project and program management: A competency-based approach (10th ed.). Purdue University Press. West Lafayette, Indiana. 13