Analysis of Leadership Taxonomies and Organizational
Outcomes by using Multifactor Leadership Questionnaire
Fouzia Naeem Khan* and Kamran Ahmed Malik**
This study was conducted to investigate various leadership taxonomies
in local corporate sector and their impact on certain organizational
outcomes.The importance of and need for leadership in corporate is
ever increasing. Various industries, now a day, are in a constant state
of flux, and leaders in its constituting organizations are liable to alter the
work settings in order to ensure compatibility with the changes.
Furthermore, the recent layers of global recession has also
necessitated a reshaping of organizational strategies. In these testing
times, the organizations need leaders who can effectively deal with the
situation as well as keep their workforce dedicated and motivated.
Although there have been numerous international studies on leadership
behaviours and organizational outcomes by using Multifactor
Leadership Questionnaire, yet such comprehensive studies in the local
corporate context have been missing. This was a pure quantitative
research aimed at analyzing leadership styles and organizational
outcomes through survey research design. For this purpose a
questionnaire was designed and data was collected from a sample of
120 respondents. Four hypotheses were developed and tested through
regression analysis. Various other statistical techniques including
demographical analysis, reliability analysis and correlations were also
employed for data analysis. The survey findings show strong
correlations between some particular leadership styles and the
organizational outcomes. The research significantly highlights the true
fit between leadership taxonomies and the organizational outcomes.
The research concludes with various ways of devising strategies which
can enhance organizational outcomes by adopting appropriate
leadership style.
Keywords: Leadership taxonomies, organizational outcomes, Multifactor leadership
questionnaire
1. INTRODUCTION
1.1 BACKGROUND OF STUDY
Leadership has been an a fundamental and extensively researched part of
management literature. No other aspect has received much attention in management
than the leadership. Various Leadership theories have evolved with changing
technologies and environments. With the passage of time, the importance of and need
for effective leadership in almost every organizational setting has been increased. The
organizations, now a day, are in a constant state of flux, and leaders in its constituting
*Sindh Madrasatul Islam University (SMIU), Karachi Pakistan
** Pakistan AirForce
1
organizations are liable to alter the work settings in order to ensure compatibility with
the changes. Furthermore, the recent layers of global recession has also necessitated a
reshaping of organizational strategies . In these testing times, the organizations need
leaders who can effectively deal with the situation as well as keep their workforce
dedicated and motivated.
These current and future challenges that are faced by organizations today require
effective leadership if these are to remain vital enclaves of productivity, effectiveness,
and service. The recent researches have expressed the concern that leaders in various
fields are not sufficiently utilizing the dynamic leadership styles needed to maintain and
enhance the organizational outcomes in today's increasingly complex internal and
external environments. This study has been conducted to analyze leadership
taxonomies among leaders in local corporate sector as how different leadership styles
adopted by bosses contribute towards organizational outcomes. Certain leadership
behaviors and perceived organizational outcomes are measured by using the
Multifactor Leadership Questionnaire (MLQ Form 5X-Short).
Although there have been numerous international studies on leadership behaviours and
organizational outcomes by using Multifactor Leadership Questionnaire, yet such
comprehensive studies in the local corporate context have been missing. This research
significantly highlights how various leadership taxonomies impact certain organizational
outcomes and also brings forth a comprehensive view of adopting appropriate
leadership style with regards to a particular situation and organizational settings.
1.2 RESEARCH OBJECTIVES
The objective of this research is to understand;
 Various leadership styles displayed by local bosses
 The organizational outcomes related to the leadership style
 Which leadership styles are frequently displayed in the local corporate sector
 The suitable leadership style adopted by bosses as per organizational settings
 The impact of leadership taxonomies on organizational outcomes with a focus on
effectiveness, extra effort and satisfaction
1.3 PROBLEM STATEMENT
The problem statement is as follows:

Different leadership taxonomies prevail in the local corporate sector with
the objective of enhancing outputs. What are the desired leadership
taxonomies which can be exploited for improved outputs and how do
these behaviors affect certain organizational outcomes?
2
1.4 RESEARCH METHODOLOGY
Leadership taxonomies and their related organizational outcomes have rarely been
studied in the local context. A pure quantitative approach has been used in this
research to measure the leadership styles and organizational outcomes. Bass and
Avolio’s Multifactor Leadership Questionnaire Form has been used for collecting data
and information from the sample of population. This tool proved extremely helpful in
obtaining information as it permitted employees to express their feelings anonymously
and safely. The research aimed to bring forth different leadership styles displayed in the
local corporate sector and how these styles affect certain organizational outcomes. The
research was limited to the corporate organizations operating in Karachi.
1.4.1 RESEARCH TOOL
This was a survey design research in which questionnaires were administered to a pool
of respondents. Multifactor Leadership Questionnaire (MLQ) developed by Boss and
Avolio has been utilized as data collection tool in this study. The MLQ measures certain
leadership taxonomies which include transformational leadership, transactional
leadership and laissez faire leadership. The MLQ also measures certain organizational
outcomes related to leadership styles of bosses. These organizational outcomes include
effectiveness, extra effort and satisfaction.
1.4.2 RESEARCH VARIABLES
The leadership factors (Transformational, Transactional and Laissez Faire) are taken as
the independent variables for this research while organizational outcomes are taken as
dependent variables. The independent variables (leadership factors) have been
categorized as;
1.
2.
3.
4.
5.
6.
7.
8.
9.
Idealized influence (attributed)
Idealized influence (behavior)
Inspirational motivation
Intellectual stimulation
Individual consideration
Contingent reward
Management by exception (active)
Management by exception (passive)
Laissez Faire
As per the conceptual framework of the study, the organizational outcomes are
dependent on certain leadership factors. These dependent variables of organizational
outcomes have been classified as follows:
1. Effectiveness
2. Extra effort
3
3. Satisfaction
1.4.3 HYPOTHESIS:
Following are the hypothesis of this study:
H1–Transformational leadership is positively and
organizational outcomes
H2–Contingent reward is positively and significantly
outcomes
H3–Management by exception is positively and
organizational outcomes
H4- Laissez Faire leadership is positively and
organizational outcomes
significantly related to
related to organizational
significantly related to
significantly related to
1.4.4 RESPONDENTS
The respondents were middle management; managers, front-line managers, assistant
managers, young executives and junior officers. Their bosses were mostly general
managers, team/project leaders, assistant vice presidents etc. The sample included a
total of 120 respondents.
1.4.5 SAMPLING
Non probability sampling was designated for this research under which Convenience
sampling was utilized.
2. LEADERSHIP
When one individual attempts to affect the behavior of others in a group without using
the coercive form of power, we describe the effort as leadership (Gibson, Ivancevich &
Donnelly, 1991). The literature of leadership has progressed along several paths, with
most of the earlier definitions and writings focused on the use of power and authority.
Later research shifts attention to the traits of leaders and their behavioral styles, e.g.
autocratic, participative. Another path emphasized the situation and how the leaders,
followers, and situation interact and work. Other parameters that have been considered
in the development of leadership theories include the organization’s governance
structure, such as bureaucratic, collegial, or political; leadership styles, such as
democratic, laissez-faire, or political; functions of leadership, describing what leaders
do; organizational task analysis, such as management by objectives (Drucker, 1954);
types of people, such as Theory X and Theory Y leadership (McGregor, 1960); and
relationships between tasks and people (Fleishman, 1953; Likert, 1961).
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2.1 THEORIES OF LEADERSHIP
2.2 TRAIT THEORY
In the middle of the twentieth century, discussion and research was focused on
identifying certain traits associated with effective leadership. Some writers have argued
that personality is unrelated to leadership, but this view is not widely accepted because
personality is related to perception, attitudes, learning, and motivation Krasner &
Ullman, 1973; Lundin, 1974). Finding valid ways to measure personality traits has been
a problem for researchers (Gibson et al, 1991). Trait theories of leadership have
attempted to correlate effective leadership with physical characteristics, such as age,
height, weight, and appearance. These studies have produced contradictory results
(Stogdill, 1948). The traits most associated with leadership effectiveness in studies
conducted in the mid 1900’s were: intelligence, judgment, creativity, integrity,
independence, cooperation, self confidence, emotional balance and diplomacy (Stogdill,
1974, Argyris, 1955) However, leadership success is neither primarily nor completely a
function of these or other traits, and many contradictory research findings still exist.
2.3 PERSONAL-BEHAVIORAL THEORIES
In the late 1940's the studies which were conducted were focused on evaluating the
behavior of individuals and relating that to leadership impact. Rather than searching for
personality traits, these studies endeavored to analyze the behavioral manifestations of
a person exhibiting leadership. This resulted in a number of well-known personalbehavioral leadership theories. These two-facto theories isolated characteristics of
leaders who focused on human concerns from leaders whose main focus was the task,
or getting the job done. This person-task dichotomy led to the development of the
employee-centered and job- centered leadership styles identified by Likert (1961) and
his colleagues at the University of Michigan. The principle subjects in their research
were formal leaders and followers in public utilities, banks, hospitals, manufacturing,
food, and government agencies. An employee-centered leader delegates decisionmaking and helps followers satisfy their needs by creating a supportive work
environment. This type of leader is concerned with the personal advancement, growth,
and achievement of followers. Job- centered leaders, on the other hand, practice strict
supervision in order to ensure accomplishment of desired task using specific
procedures. This type of leader typically uses coercion, reward, and positional power to
influence the performance of followers. The University of Michigan studies concluded
that although employee-centered and job-centered styles resulted in production
improvement, after a brief period of time the job-centered style created pressure that
was resisted through absenteeism, turnover, grievances, and poor attitudes. Although it
appeared that the best style of leadership was employee-centered, the studies did not
clearly show that one particular style of leadership was always the most effective.
2.4 THE PATH-GOAL LEADERSHIP THEORY
This theory was originally presented by House in 1971. According to this theory, leaders
5
should increase the number and kinds of rewards available to subordinates, and should
provide guidance and counsel to clarify the manner in which these rewards can be
attained. The leader works at making the path to goals as clear as possible for
subordinates. Although the path-goal model is an improvement over the trait and
personal-behavior theories, the predictive power of the model is questionable. Hersey
and Blanchard (1982) developed a third situational leadership model called the tridimensional leader effectiveness model. In this model, the leadership behavior is
classified as Task behavior and Relationship behavior. For example, with new
employees or employees who are unmotivated or antagonistic, the leader would do
better focusing on getting the job done (high task and low relationship). As the new
employee learns to do the job, or when uncooperative employees change their
attitudes, the leader can give more emotional support (still high task, but also high
relationship). With a mature, experienced staff the leader can decrease emphasis on
the task and invest more effort in getting people involved (low task and high
relationship). The third dimension of the tri-dimensional model is the environment in
which the leader is operating. The effectiveness of the leader depends on how personal
leadership style interrelates with the environment in which he or she operates.
Leadership behaviors in the tri-dimensional model have been studied using the Leader
Effectiveness and Adaptability Description instrument (LEAD) (Hersey & Blanchard,
1974). Researchers have concluded that no leadership style can be regarded as the
ultimate option , and the leaders who are able to modify their leadership style with
regards to a particular situation or external environment can be termed as the effective
leader.
2.5 TRANSFORMATIONAL LEADERSHIP THEORY
Many of the leadership theories discussed thus far have implied that leadership is an
exchange process and that leaders reward followers when they accomplish agreedupon objectives. This exchange role of the leader has been referred to as transactional,
and uses the path-goal model as its framework (Bass, 1985). The transactional leader
uses contingent rewards and will not intervene with employees unless objectives are not
being accomplished (management by exception). A special case of transactional
leadership, but one in which an employee’s reward is internal, is referred to as
transformational. Since the 1980’s, much of the discussion on leadership has focused
on transformational characteristics. A theory of leadership proposed by Burns (1978)
and elaborated by Bass (1985) identifies the transformational leader as one who
motivates followers to work for transcendental goals and for higher level self-actualizing
needs instead of working through simple exchange relationships with followers (Bass,
Avolio, & Goodheim, 1987). Transformational leader provides a vision and then inspires
the followers to dedicate themselves for achievement of envisioned objectives. While
transactional leaders clarify routines, give directions and adjust work settings,
transformational leaders make major changes in the mission, business methodologies
and workforce management, in order to achieve the envisioned philosophies. The
transformational leader may change the entire philosophy, systems, and culture of an
organization.
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2.6 SUMMARY OF LEADERSHIP THEORIES
A summary of leadership theories indicates that leadership involves the use of power
and acceptance of the leader by the followers. This ability to influence followers is
related to followers' need satisfaction. The trait approach has attempted to predict
leadership effectiveness from physical, sociological, and psychological traits. Personalbehavioral descriptions of what the leader does use terms such as employee-centered,
job-centered, initiating structure, and consideration, resulting in a great deal of semantic
confusion and overlap in the definition of leadership behavior. The personal-behavioral
approach suggests that leaders should consider situational variables, and they can do
little to improve effectiveness unless they can properly modify these variables or change
their leadership style. The situational approach emphasizes the importance of forces
within the leader, subordinates, and the organization. To achieve effectiveness, the
interaction of these forces must be properly diagnosed Transformational leadership
theory describes the leader who motivates followers to work for transcendental goals by
subordinating personal self interest in the favor of self actualization and achievement of
organizational objectives.
3. THE MULTIFACTOR LEADERSHIP QUESTIONNAIRE (MLQ)
The Multifactor Leadership Questionnaire (MLQ) is an instrument which measures
different leadership styles of the leader/employer. It was developed by Bass and Avolio
in 1985. The questions included in MLQ are divided into two broad categories. The first
category is of the Leadership styles in which Transactional, Transformational, and
Laissez Faire leadership is included. Transformational leadership factors are:
inspirational motivation, idealized influence (attributed), intellectual stimulation, idealized
influence (behavior), and individual consideration. Transactional leadership is
composed of three factors: contingent reward, management-by-exception (passive) and
management-by-exception (active). Laissez-faire leadership is a single factor. The other
category is of the Organizational outcomes which include Extra effort, Satisfaction and
Effectiveness.
3.1 TRANSFORMATIONAL LEADERSHIP FACTORS
(1) Idealized influence (attributed): The employees perceive their leaders as
influential, charismatic and dedicated to attainment of higher objectives.
(2) Idealized influence (behavior): The steps taken by the leader are based upon
certain ethics, values and achievement of mission.
3) Inspirational motivation: Leaders effectively presents a roadmap for life cycle
of the organization, and motivate the subordinates to subordinate their personal
agendas in favor of organizational preferences.
7
(4) Intellectual stimulation: Leaders foster a learning and adaptive culture where
freedom of expression of ideas exist. People are willing to take risks and
innovation & creativity is encouraged by the superiors.
(5) Individual consideration: Leaders deal with their subordinates individually;
boost their confidence personally and groom them to the fullest of their potential.
3.2 TRANSACTIONAL LEADERSHIP FACTORS
(6) Contingent reward: Leaders give certain reward to the subordinates who are
able to complete the assigned job meticulously.
(7) Management-by-exception (active): The Leaders actively check the
subordinates and take immediate remedial measures when some mistakes are
being done.
(8) Management-by-exception (passive): The Leaders provide freedom to
subordinates to perform their routine tasks and take action only in case of
emergence of certain problems or deteriorating of established standards.
3.3 NON-LEADERSHIP FACTOR
(9) Laissez-faire: Leaders take no responsibility, give no feedback to followers,
and put forth minimal effort to meet followers’ needs
3.4 ORGANIZATIONAL OUTCOMES
(10) Effectiveness: Individuals are part of an effective group as evidenced by jobrelated goals being met, the leader being effective in representing the needs of
individuals to higher authority and individuals meeting organizational
requirements.
(11) Extra Effort: Individuals are willing to try harder and give output more than
what is expected out of them.
(12) Satisfaction: The employees are satisfied with the prevailing working
relations with their leader.
3.5 STUDIES IN LEADERSHIP USING THE MLQ
Research using the MLQ to study leaders in a wide variety of fields has consistently
shown stronger relationships to organizational outcomes for transformational leadership
than between organizational outcomes and transactional leadership (Seltzer & Bass,
1990). The relationship between transformational leadership behaviors and various
organizational outcomes has been a prime aspect of research, and studies have
indicated that job satisfaction of subordinates is enhanced by transformational
8
leadership behaviors. Yusof (1998) investigated the relationship between coaches’ job
satisfaction and transformational leadership behaviors of athletic directors and found
that subordinates’ job satisfaction is enhanced by transformational leadership
behaviors. Thus, coaches who evaluated their superiors as low in transformational
leadership behaviors were less likely to be satisfied with their job than their counterparts
who viewed their athletic directors as highly transformational.
Another important question in leadership research is the relationship between
transformational leadership and learning, particularly where learning is transformed into
useable knowledge to accomplish objectives or solve problems. Ash (1997) studied the
influence of leadership style on work teams and found that transformational leadership
behaviors and actions often do influence individual and group learning.
Transformational leaders created a climate for learning by encouragement, establishing
cooperation and the identifying and using team talent. These leaders enabled team
members to learn how their actions and decisions affect larger systems and provided
team members with opportunities to become their own leader.
3.6 LEADERSHIP BEHAVIORS AND DEMOGRAPHICS OF LEADERS
Numerous studies in the past decade have attempted to determine if there are
differences in the leadership behaviors of men and women and whether the differences
have an influence on effectiveness outcomes. Questions regarding leadership and
gender have been researched in a variety of fields and have been debated and
discussed by executives, academics, and the media (Billard, 1992). The debate
addresses whether women have a different management style than their male
counterparts, and if so, do the consensus-building, participatory methods usually
attributed to women managers work more effectively. Padde (1995) found that female
supervisors excelled in the practice of transformational leadership in an agricultural
program in Uganda, whereas male supervisors tended to be more transactional.
Gender differences in leadership styles of administrators have been examined in
several research studies using a variety of theoretical models and research tools.
Eberlein (1993) based a study on Loden’s models of masculine and feminine leadership
styles and analyzed approaches to the managerial functions of motivation, teamwork,
decision-making, problem solving, and goal-setting of deans, associate deans, and
assistant deans at the University of Wisconsin. Differences were found in each of the
managerial functions, with male respondents choosing the masculine approach more
frequently than female respondents. Eberlein concluded that there are masculine and
feminine gender differences in the leadership styles of higher education administrators.
An Australian study analyzed how feminists in high administrative positions
conceptualized and practiced administrative leadership in education, focusing on the
way they reconciled their feminist stance to formal authority and power in a dominant
masculine culture (Blackmore, 1989). Interviews indicated that feminists prioritized
educational practices and people values over administrative and economic values.
Studies of leaders in higher education using the MLQ have frequently found that
females score higher in transformational behaviors and their self-ratings of effectiveness
9
are higher than male self-ratings (Young, 1990; Daughtry& Finch, 1997; Maher, 1997).
In a study of vocational administrators who were rated by teachers, no significant
differences appeared in teacher ratings of males and females (Daughtry& Finch, 1997).
In several studies comparing the leadership behaviors and career paths of black and
white administrators, no statistically significant association between race and leadership
behavior were found (Dasher-Alston, 1992; Neal, 1992).
4. DATA ANALYSIS AND FINDINGS
4.1 DEMOGRAPHICAL ANALYSIS
GENDER
Valid
Frequency
Percentage Percent (Valid)
Percent (Cumulative)
Male
89
73.9
73.9
73.9
Female
31
26.1
26.1
100.0
Total
120
100.0
100.0
10
AGE
Valid
Missing
Total
Frequency
Percent
Percentage Percent (Valid) (Cumulative)
20-25
21
17.8
17.8
17.8
26-30
64
53.1
53.1
70.9
31-35
30
25.0
25.0
95.9
36 and above
5
4.1
4.1
100.0
Total
120
100.0
100.0
0
0
0
120
100.0
11
DEPARTMENTS
Valid
Frequency
Percent(Cumulative
Percentage Percent (Valid) )
10
8.3
8.3
8.3
Human Resource 19
15.6
15.6
23.9
Operations
7
6.2
6.2
30.1
Marketing
34
28.1
28.1
58.2
IT
7
6.2
6.2
64.4
Finance
25
20.8
20.8
85.2
Admin
10
8.3
8.3
93.5
Billing
8
6.8
6.8
100.0
120
100.0
100.0
Relationship
Total
QUALIFICATION
Valid
Total
Frequency
Percentag
Percent
e
Percent (Valid) (Cumulative)
Bachelors
28
22.9
22.9
22.9
Masters
75
63.5
63.5
86.4
Post Graduate
13
10.4
10.4
96.8
Other
4
3.2
3.2
100.0
120
100.0
100.0
12
4.2 RELIABILITY ANALYSIS
Overall Reliability of All Items
Reliability
Cronbach's Alpha
N (Items)
.859
45
Reliability of Variables individually
Reliability
Cronbach's Alpha
Variable
N (Items)
.771
Idealized influence (attributed)
4
.825
Idealized influence (behaviour)
4
.714
Inspirational motivation
4
.766
Intellectual stimulation
4
.625
Individual consideration
4
.806
Contingent reward
4
.791
Management
(active)
by
Exception
.594
Management
(passive)
by
Exception
.618
Laissez-Faire
4
.847
Effectiveness
4
.771
Extra effort
3
.839
Satisfaction
2
4
4
It is possible to say that the research is reliable as a whole; according to the coefficient
of reliability of all items which is 0.859. Cronbach’s Alpha was used as an examination
indicator to determine the reliability of the measurement scale of all variables. If the
13
reliability is above 0.7, it can be considered good and otherwise in general the reliability
between 0.5 and 0.7 it is also acceptable.
4.3 CORRELATIONS
The correlation analysis between the various variables of leadership with the variables
of organizational outcomes was carried out. The analysis shows a strong correlation of
transformational leadership factors with the factors of organizational outcomes. One
component of transactional leadership (Contingent reward) has also strong correlations
with the factors of organizational outcomes. However, other component of transactional
leadership (Management by Exception; active) was not strongly correlated with factors
of organizational outcomes. The last factor of transactional leadership (Management by
Exception; Passive) and Laissez Faire leadership was found to be strongly negatively
related with factors of organizational outcomes.
CORRELATION
Effectiveness
Extra effort
Satisfaction
Idealized influence (attributed)
0.8471
0.7713
0.8392
Idealized influence (behavior)
0.7426
0.6617
0.6520
Inspirational motivation
0.7837
0.7073
0.7361
Intellectual stimulation
0.7924
0.7906
0.8151
Individual consideration
0.8346
0.8097
0.8412
Contingent Reward
0.8181
0.7563
0.7962
Management
by
exception
(active)
0.0256
0.0437
-0.0440
Management
by
exception
(passive)
-0.5397
-0.4603
-0.5111
Laissez Faire
-0.6134
-0.5036
-0.5821
Table 4.3.1: Correlation between different leadership factors and variables of
organizational outcomes
4.4 TRANSFORMATIONAL LEADERSHIP & ORGANIZATIONAL OUTCOME
4.4.1 Statistical Analysis:
SUMMARY OUTPUT
Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error
Observations
0.831822
0.691928
0.688785
0.587981
120
14
ANOVA
Regression
Residual
Total
df
1
118
119
SS
76.09599
33.88068
109.9767
Significance
MS
F
F
76.09599 220.1079 8.46E-27
0.345721
Standard
Coefficients Error
t Stat
P-value
Intercept
-0.0613
0.174107
-0.3521
0.725517
TF leadership
1.010886
0.068137
14.83604 8.46E-27
Table 4.4: Regression analysis between transformational leadership and organizational
outcomes
4.4.2 Explanation:
From the table we can see that

F test value is 220 meaning that the model is highly significant

T value is 14.83, showing high significance of the variables
The result of this regression test is given below in form of an equation:
O.O = -0.0613 + 1.011 TF
Or
Organizational Outcome = -0.0613 + 1.011 Transformational Leadership
This equation mathematically shows that If transformational leadership at workplace
increase by 1 then organizational outcome would increase by 0.95 (-0.0613 + 1.011 *
1). This shows that whenever there is an increase/decrease in transformational
leadership at workplace then organizational outcome would increase/decrease in the
same direction to almost the same degree. Hence our following hypothesis is
ACCEPTED:
H1: Transformational Leadership is positively and significantly related to
organizational outcomes.
15
4.5 CONTINGENT REWARD (FACTOR OF TRANSACTIONAL LEADERSHIP) AND
ORGANIZATIONAL OUTCOMES
4.5.1 Statistical Analysis:
SUMMARY OUTPUT
Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error
Observations
0.904979
0.818986
0.817139
0.392736
120
ANOVA
Regression
Residual
Total
df
1
118
119
SS
68.39014
15.11569
83.50583
MS
68.39014
0.154242
F
443.3957
Significance
F
3.76E-38
Standard
Coefficients
Error
t Stat
P-value
Intercept
0.240084
0.116293
2.064472 0.041615
contingent reward
0.958337
0.045512
21.05696 3.76E-38
Table 4.5: Regression analysis between contingent reward and organizational
outcomes
4.5.2 Explanation:
From the table we can see that
 F test value is 443.4 meaning that the model is highly significant
 T value is 21.06, showing high significance of the variables
The result of this regression test is given below in form of an equation:
O.O = 0.24 + 0.96 CR
Or
Organizational Outcome = 0.24 + 0.96 CR
This equation mathematically shows If contingent reward increase by 1 then
organizational outcome would increase by 1.2 (0.24 + 0.96 * 1). This shows that when
ever there is an increase/decrease in contingent reward at workplace then
organizational outcome would increase/decrease in the same direction to almost the
same degree. Hence our following hypothesis is ACCEPTED:
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H2: Contingent Reward is positively and significantly related to organizational
outcomes
4.6 MANAGEMENT BY EXCEPTION (FACTOR
LEADERSHIP) AND ORGANIZATIONAL OUTCOMES
OF
TRANSACTIONAL
4.6.1 Statistical Analysis:
SUMMARY OUTPUT
Regression Statistics
Multiple R
0.838744
R Square
0.703491
Adjusted
R
Square
0.700465
Standard Error
0.502403
Observations
120
ANOVA
Regression
Residual
Total
df
1
118
119
SS
58.68824
24.73605
83.42429
Significance
MS
F
F
58.68824 232.5128 1.29E-27
0.252409
Standard
Coefficients Error
0.166252
0.148767
t Stat
P-value
Intercept
1.117533 0.266499
management by
exception
0.887763
0.05822
15.24837 1.29E-27
Table 4.6: Regression analysis between management by exception and organizational
outcomes
4.6.2 Explanation:
From the table we can see that


F test value is 232.5 meaning that the model is highly significant
T value is 15.2, showing high significance of the variables
The result of this regression test is given below in form of an equation:
O.O = 0.17 + 0.89 MBE
Or
17
(Decline in) Organizational outcomes = 0.17 + 0.89 Management by Exception
This equation mathematically shows that if management by exception increases by 1
then decline in organizational outcome would increase by 1.06 (0.17 + 0.89 * 1). This
means that decline in organizational outcome is directly proportional to or positively
dependent on management by exception i.e. an increase in overall management by
exception means a decline in organizational outcomes. Hence our following hypothesis
is REJECTED:
H3: Management by exception is positively and significantly related to
organizational outcome
4.7 LAISSEZ FAIRE LEADERSHIP AND ORGANIZATIONAL OUTCOMES:
4.7.1 Statistical Analysis:
SUMMARY OUTPUT
Regression Statistics
Multiple R
R Square
Adjusted R Square
Standard Error
Observations
0.823858
0.678742
0.675464
0.514112
120
ANOVA
Regression
Residual
Total
df
1
118
119
SS
54.72591
25.90249
80.6284
Standard
Error
0.152234
MS
54.72591
0.264311
F
207.0511
Significance
F
6.66E-26
Coefficients
t Stat
P-value
Intercept
0.384161
2.52349
0.013228
Laissez
faire
leadership
0.857271
0.059577
14.38927 6.66E-26
Table 4.7.: Regression Analysis between laissez faire leadership and organizational
outcomes
4.7.2 Explanation:
From the table we can see that
18


F test value is 207 meaning that the model is highly significant
T value is 14.4, showing high significance of the variables
The result of this regression test is given below in form of an equation:
O.O = 0.384+ 0.857 LF
Or
(Lack of) Organizational outcome = 0.384+ 0.857 Laissez Faire Leadership
This equation mathematically shows that if laissez faire leadership increase by 1 then
organizational outcome would decline by 1.24 (0.38+ 0.86 * 1). This means that lack of
organizational outcome is directly proportional to or positively dependent on laissez faire
leadership i.e. an increase in overall laissez faire leadership at workplace means an
increase in lack of organizational outcome. Hence our following hypothesis is
REJECTED:
H4: Laissez Faire leadership
organizational outcomes
is
positively and
significantly related
to
5. DISCUSSION
This study clearly shows that Leadership style is a major determinant of organizational
outcomes and is the most vital force in making and shaping organizational contributions
and achievements. It is clear that employees’ output and satisfaction resonates strongly
with the leadership style of their bosses. There is a very strong emotional and
behavioural contagion at work in the workplace where the juniors are greatly and deeply
influenced by the leadership behaviour of their superiors. The survey shows that an
effective leadership style adopted by the boss eventually makes his subordinates
perform better and efficiently. This in turn phenomenally enhances the certain
organizational outcomes.
The first hypothesis of this study is that Transformational leadership is positively and
significantly related to organizational outcomes. This study advocates that there is a
strong positive correlation between transformational behaviors and three organizational
outcomes (Table 4.3.1). All correlations were statistically significant. This hypothesis
was accepted (Table 4.4). This positive relationship has been strongly supported in the
literature, including, but not limited to, studies of world leaders, clergy, business
managers, naval officers, and financial executives.
Yusof (1998) found that
transformational behaviors in athletic coaches resulted in the job satisfaction of their
employees. Ash (1997) found that transformational leaders had the knowledge and
skills to accomplish organizational objectives and solve problems. Research on
leadership in health care has also supported the positive relationship between
19
transformational behaviors and organizational effectiveness (Arends, 1997; Opeil,
1998). The education literature also supports the positive relationship between
transformational leadership and organizational outcomes. In a study of K-12 school
administrators, Stone (1992) observed that transformational styles were related to long
term development and change, produced higher levels of effort and satisfaction of
teachers, and greater productivity and outcomes for the organization.
Leadership behaviors of leaders in local corporate sector have not previously been
studied using the MLQ. The findings in this study on the positive relation among
transformational behaviors and organizational outcomes are consistent with the
leadership research in other fields and contribute to the available literature on
transformational leadership.
The second hypothesis of this study is that Contingent reward is positively and
significantly related to organizational outcomes. As long as the Transactional
Leadership is concerned, Contingent Reward was the one transactional leadership
factor which was found to have strong positive correlations with all three organizational
outcomes (Table 4.3.1). This hypothesis was also accepted (Table 4.5). While
Transformational behaviors define the charismatic, enthusiastic leader who inspires
others with a vision, encourages creativity, and gives personal attention to all
individuals, Transactional behaviors describe a leader who gives individuals a clear
understanding of what is expected of them and “intervenes only if standards are not
being met or if something goes wrong.” While transactional behaviors relate to lower
order managerial objectives and rewards for effort, with transformational leadership the
employee’s reward is internal. In repeated investigations leaders have emerged as
following both transformational and transactional leadership styles for employee
management(Avolio, Bass & Jung, 1995).
The finding that Contingent Reward (CR) did not have a negative correlation with
Organizational outcomes was consistent with transformational leadership theory. When
a factor analysis of relationships among all the scales on the MLQ was done in various
leadership researches, the transactional behavior (Contingent Reward) was highly
correlated with the transformational behaviors (Avolio, Bass & Jung, 1995). The
rigorous following of transactional leadership fosters a culture of managerial trust,
compatibility and consistency, which acts as a foundation for transformational
leadership. These findings have been supported in the literature on leaders in Public
Administration, where Contingent Reward was related to job satisfaction (Correli, 2004).
In the higher education literature, Archie (1997) also found that the transactional
behavior, Contingent Reward, was related to the department chair’s effectiveness,
faculty satisfaction, and extra effort.
The third hypothesis of this study is that Management by Exception is positively and
significantly related to organizational outcomes. The finding in this study that was not
frequently addressed in the leadership literature was the significant negative correlation
between one of the transactional leadership behaviors (Management by ExceptionPassive) and the three perceived organizational outcome scales. Another transactional
20
leadership behavior (Management by Exception-Active) was found to have weak
correlations with all three organizational outcomes (Table 4.3.1). This hypothesis was
rejected (Table 4.6). A study of community college administrators also reported a
negative correlation between Management by Exception-Active and faculty satisfaction
(Archie, 1997).
The last hypothesis of this study is that Laissez Faire leadership is positively and
significantly related to organizational outcomes. The finding of this study which is
consistent with all the previous researches and literature is that Laissez Faire leadership
has significant negative correlation with all the three perceived organizational outcomes
(Table 4.3.1). This hypothesis was also rejected (Table 4.7). Laissez Faire has been
characterized as a Non Leadership factor. A leader is characterized by his/her ability to
mobilize people and guide towards collective achievements. Once a leader becomes
indifference to what all is happening around, he falls into the category of Laissez Faire.
Keeping in view the present era of rapidly changing environments and fluctuations, the
leadership demands continuous presence of mind and appropriate decision makings.
Contary to this, Laissez Faire leadership believes in taking no action when required.
Hence it is understandable that it is negatively related to organizational outcomes.
One of the major findings of this study was that demographic characteristics of leaders
have a mixed relationship with leader behaviors. No significant relationships were
found between transformational leadership behaviors and the leader’s gender. Several
studies have supported the hypothesis that female leadership styles are more
transformational than males (Young, 1990; Padde, 1995; Daughtry& Finch, 1997;
Maher, 1997). Although this finding was not supported in this study, there was a
significant relationship between gender of the leader and the transactional behavior
(Management by Exception-Passive), and Laissez-Faire leadership, with males scoring
higher than females.
The age of the leader was found significantly related to
Transformational behavior (Inspirational Motivation) but the relationship was not linear.
One possible explanation for this finding may be that age is related to years of
experience in the key managerial position.
There was a significant relationship between the transformational behavior (Idealized
Influence- Behavior) and years of experience in the position, and like the findings for
age, the relationship was not linear. The transformational behavior (Intellectual
Stimulation) was also significantly related to years of experience, but once again, this
relationship was not linear. The executives with comparatively lesser years of
experience had significantly higher scores for the transactional behavior (Management
by Exception-Active). These findings demonstrate the full range of leadership behaviors
across the transactional-transformational continuum. The managers who are new to the
position may use both transactional and transformational behaviors in the early stages
of the job. When they are first becoming acquainted with subordinates, they may
choose not to intervene much initially. The fluctuation in their transformational behaviors
over time can be attributed to their own career endeavors. During the middle years of
the managerial career, the transformational behaviors have been found to be on the
decreasing side. A possible explanation to this fact may be that the leaders at this stage
21
may become very much absorbed by promotion and tenure activities, leaving little time
to inspire and motivate the subordinates. It is likely that during later years of their
career, these leaders could once again be an idealized influence on their subordinates.
6. RECOMMENDATIONS AND CONCLUSION
This study investigated various leadership behaviors of bosses and their related
organizational outcomes as measured by Multifactor Leadership Questionnaire. While
this research has shown that transformational leadership is significantly related to
enhanced organizational outcomes, both approaches are needed. Leaders have been
shown in repeated investigations to be both transactional and transformational and both
styles can represent active, positive forms of leadership. Transactional leadership
behaviors are needed for effective department management, identifying performance
standards, clarification of job expectations, and for management by exception when the
organizational culture warrants this behavior in its leaders. Leaders also need
transformational behaviors to provide a vision and to motivate and inspire their followers
during this era of environmental and professional change. It is important to remember
that the transactional-transformational model of leadership is based on a continuum. In
this continuum leaders may reward followers when they accomplish agreed-upon
objectives as well as through motivation and inspiration of followers to work for
transcendental goals where rewards are internal.
Since transformational leadership behaviors are related to worker satisfaction and
organizational effectiveness, the leaders from local corporate sector would benefit from
understanding their own transformational and transactional styles and can use this
awareness as a rationale for career decisions and as a basis for personal growth. The
awareness of one’s leadership style can be used to identify the potential for success or
failure in leadership positions in almost all the organizational settings. Transformational
leadership theory and its relationship to organizational effectiveness can serve as a
basis to form a framework for course content in leadership development.
Transformational leadership behaviors can be taught in departmental in- services and
training seminars, and promoted through designing organizational cultures to
accommodate transformational styles of leadership.
Increasing transformational
leadership within organizations may help in the recruitment of employees, clients, and
students who are likely to be attracted to a department whose leader is charismatic,
successful, optimistic, and dynamic.
Every year millions of dollars are spent on employee and management training &
development, and team interventions etc. but modifying leadership taxonomies of
bosses remain largely ignored and unaffected. It acts as an impediment for any
employee training to be internalized and fully utilized to its maximum potential.
Organizations need to understand that without first working towards leadership aspect
of bosses, none of other trainings would institutionalize the desired changes in the
workforce and organizational outcomes. It is evident from the survey findings that
22
adopting appropriate leadership style can significantly enhance the organizational
outcomes.
Organizations need to include in every training program a module of adopting
appropriate leadership behaviour. Multifactor Leadership Questionnaire can be
administered to find out the existing leadership style of bosses and managers. In this
regard, an “Appropriate Leadership Style Chart” can be introduced which would
precisely highlight the appropriate leadership style as per the situation. This indicator
can then be called as ALSC, (Appropriate Leadership Style Chart). ALSC would then
mean;
1. The degree to which a person or specifically a leader is aware of and
acknowledges his/her existing leadership style.
2. The understanding and recognition of the organizational outcomes related to that
leadership style.
3. Understanding, how to regulate his/her leadership style or adopt a specific
leadership style as per different situations and organizational settings.
The organizations need to make their professional development programs focus on
promoting and developing the sense of adopting appropriate leadership style as per the
situation or opportunity.
7. LIMITATIONS & SCOPE FOR FUTURE RESEARCH
Leadership has numerous characteristics but for this paper, the research has been
limited to only nine variables mentioned in Multifactor Leadership Questionnaire.
Similarly, only three organizational outcomes are measured by MLQ. The further
research can be conducted by taking into consideration all the variables that combine to
form Leadership (Transformational, Transactional, Laissez-Faire) and Organizational
Outcomes. Leadership styles of bosses can be studied both by psychological testing
and Survey findings from subordinates. Due to the researcher’s little experience of
psychological testing and the time constraints, the research has been restricted to
conducting a survey by administering multifactor leadership questionnaire to employees
in order to find out the existing leadership style of their bosses.
The most notable limitation was that of limited available time. Another major hurdle was
the lack of literature and studies in the local context. Although there are numerous
international researches on such topic but the literature in context with local corporate
sector was not available. Due to the nature of research, a notable limitation has been
getting honest feedback from people. Although it was clearly specified on the survey
questionnaire that the information given would be treated strictly for research purpose,
yet a lot of respondents were reluctant to fill the questionnaires regarding their bosses.
Another limitation is that the sample size is not sufficient enough to reflect the actual
reality of the organizations functioning in Pakistan in context with determining the
leadership style and its impact on organizational outcomes. The research was limited
23
due to time and resource constraints. In order to have a more detailed insight, the future
research may be carried out by taking greater sample size.
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