PERCEIVED LEADERSHIP STYLE AND

PERCEIVED FINANCIAL PERFORMANCE:

LEADERS VS FOLLOWERS

By
Gul E Zahra
Thesis Submitted to Lahore School of Economics in Partial Fulfillment
of The Requirements for The Degree of
MPhil. Business Administration
2022
Supervised By: Dr. Mehreen Furqan
 ABSTRACT

It is a research study on the impact of leadership styles on the perceived financial performance of

organizations. The extent to which leadership styles contribute to the success of the financial

performance is an underexplored area in research.This studyinvestigates the influence of

Goleman’s leadership styles based on emotional intelligence which include authoritative,

affiliative, democratic, coaching, coercive, and pace-setting styles on the financial performance

of an organization. Multi group analysis is used which includes two groups of perceptions that is

the manager’s perception and the follower’s perception of leadership style. Survey-based

research methodology is implemented using questionnaire. Purposive sampling is used for this

research to select leaders with 5-10 subordinates. This researchtargets banks and is based on the

branch-level data as the subordinates in a branch are directly associated with their leaders. It has

beenfound that authoritative, affiliative, pace-setting, and democratic styles have significant

impact on financial performance whereas coercive and coaching styles haveinsignificant impact

on financial performance. Two groups were made as group one included followers’ data and

group two included leaders’ data. The difference between both groups was significant except for

coaching and coercive leadership style. The inclusion of emotional intelligence and dual

approach has been the major contribution of this study. The research sets a pathway to give

information to organizations for efficiently adapting leadership styles to maximize financial

performance.

Keywords: Leadership styles, emotional intelligence, financial performance, banks, Pakistan.

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 Declaration
I hereby declare that this thesis presented here is my own work. Any part of this thesis has never

been submitted before for any degree or any other research purpose. This is solely an original

pro, 0065cept for the part where I have properly cited the resources of research and the materials

used. My contribution for this thesis is adhered to academic integrity and ethics and none of the

facts or ideas were fabricated.

Gul E Zahra

Dated: 07/20/2022

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 Acknowledgements

My all praises are for Allah Almighty Who has blessed me with the strength and ability for

completing my tasks.

I would specially like to give my warmest thanks Dr. Mehreen who has been a continuous

support for me and has guided me throughout with her understanding nature. Her priceless

guidance and experience have helped me to yield this research. I would also like to acknowledge

Dr. Kumail Abbass for his direction and support.

The words might not do justice in expressing my gratitude towards my parents and my family as

a whole for their continuous support and encouragement. It would have never been possible

without their matchless efforts and irreplaceable love for me.Their belief in my made me what I

am today. Lastly, a debt of gratitude is owned by my brother Sajjad who has been my inspiration.

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Table of Contents
ABSTRACT................................................................................................................................................1
Chapter 1....................................................................................................................................................7
INTRODUCTION.......................................................................................................................................7
1.1 BACKGROUND...............................................................................................................................7
1.2 STUDY PROBLEM........................................................................................................................11
1.3 OBJECTIVES OF THE STUDY.....................................................................................................11
1.4 RESEARCH QUESTION................................................................................................................12
1.5 SIGNIFICANCE OF THE STUDY.................................................................................................13
1.6 ASSUMPTIONS, LIMITATIONS & DELIMITATIONS...............................................................14
1.6.1 ASSUMPTIONS.......................................................................................................................14
1.6.2 LIMITATIONS........................................................................................................................14
1.6.3 DELIMITATION OF THE STUDY.........................................................................................15
1.7 OPERATIONAL DEFINITION OF THE TERMS.........................................................................16
1.7.1 LEADER..................................................................................................................................16
1.7.2 LEADERSHIP..........................................................................................................................16
1.7.3 LEADERSHIP STYLES..........................................................................................................17
1.7.4 EMOTIONAL INTELLIGENCE.............................................................................................17
1.7.5 ACCEPTANCE OF LEADER..................................................................................................18
1.7.6 FINANCIAL PERFORMANCE...............................................................................................19
1.8 OUTLINE OF THE STUDY...........................................................................................................20
Chapter 2..................................................................................................................................................21
LITERATURE REVIEW..........................................................................................................................21
2.1 LEADERSHIP STYLE: THEORETICAL OVERVIEW................................................................21
2.2 EARLY LEADERSHIP STYLE THEORIES.................................................................................22
2.3 CONCEPTUAL BACKGROUND OF LEADERSHIP STYLE AND FINANCIAL
PERFORMANCE..................................................................................................................................25
2.4 CONTRIBUTION OF LEADERSHIP STYLE TO FINANCIAL PERFORMANCE OF FIRMS..27
2.5 GOLEMAN’S LEADERSHIP STYLES AND FINANCIAL PERFORMANCE............................27
2.5.1 AUTHORITATIVE LEADERSHIP AND FINANCIAL PERFORMANCE...........................29
2.5.2 COACHING LEADERSHIP AND FINANCIAL PERFORMANCE......................................31

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 2.5.3 AFFILIATIVE LEADERSHIP AND FINANCIAL PERFORMANCE...................................33
2.5.4 DEMOCRATIC LEADERSHIP AND FINANCIAL PERFORMANCE.................................34
2.5.5 COERCIVE LEADERSHIP AND FINANCIAL PERFORMANCE........................................36
2.5.6 PACESETTING LEADERSHIP AND FINANCIAL PERFORMANCE.................................38
2.6 GAP IN LITERATURE..................................................................................................................40
2.7 FINANCIAL PERFORMANCE.....................................................................................................41
2.8 LEADERSHIP STYLE...................................................................................................................42
2.9 THEORETICAL FRAMEWORK............................................................................................................43
Chapter 3..................................................................................................................................................46
RESEARCH DESIGN AND METHODOLOGY......................................................................................46
3.1DATA COLLECTION.....................................................................................................................46
3.2 RESEARCH PARTICIPANTS.......................................................................................................47
3.3 PROCEDURE.................................................................................................................................49
3.4 INSTRUMENTS.............................................................................................................................50
3.5 DEVELOPMENT............................................................................................................................50
3.6 MEASURES.......................................................................................................................................51
3.6.1 Financial Performance..............................................................................................................51
3.6.2 Leadership Style:......................................................................................................................51
3.7 QUESTIONNAIRE ITEMS............................................................................................................52
3.7.1 Socio-demographic Variables...................................................................................................52
3.7.2 Control Variables:.....................................................................................................................53
RESEARCH QUESTION and SUB-QUESTIONS SURVEY VARIABLES.......................................53
3.8 DATA ANALYSIS METHODS.....................................................................................................54
3.9 PRELIMINARY DATA ANALYSIS..............................................................................................54
3.10 MULTI-GROUP ANALYSIS.......................................................................................................54
Chapter 4..................................................................................................................................................57
RESULTS.................................................................................................................................................57
4.1 DESCRIPTIVES.........................................................................................................................57
Confirmatory factor analysis is done in order to check the factor loadings of the relative constructs.
The factor loadings of these variables indicate whether there is relation between the underlying
constructs or not (Shipley, 2009). The results for the analysis are as below:.....................................60
The factor loadings show that all the values are above 5.0. This indicates that all the items for
constructs have valuable influence and relation. Therefore, the model is good for testing the
hypothesis..........................................................................................................................................61

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 4.2.3 MEANS AND STANDARD DEVIATIONS...........................................................................61
4.1.4 CONSTRUCT RELIABILITY AND CONVERGENT VALIDITY........................................63
4.1.5 DISCRIMINANT VALIDITY.................................................................................................63
4.1.6 SAMPLE ADEQUACY AND INTERNAL CONSISTENCY.................................................64
4.1.7 MULTI-COLLINEARITY...................................................................................................................65
4.2 STRUCTURAL MODEL................................................................................................................65
4.2.1 PATH ANALYSIS...................................................................................................................66
4.2.2 MULTI-GROUP ANALYSIS..................................................................................................67
Chapter 5..................................................................................................................................................71
DISCUSSION...........................................................................................................................................71
5.1 THEORETICAL DISCUSSION.....................................................................................................71
5.2 PRACTICAL IMPLICATION AND RECOMMENDATIONS......................................................73
5.3 CONCLUSION...............................................................................................................................74
5.4 FUTURE DIRECTIONS.................................................................................................................75
REFERENCES..........................................................................................................................................76
Appendix - SURVEY................................................................................................................................91

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 Chapter 1
INTRODUCTION
1.1 BACKGROUND
“A leader's singular job is to get results”
-Daniel Goleman

In every business, leadership is considered to be a major prerequisite for effective goal

attainment. Leadership is essential to collective human endeavor, from setting goals and

accomplishing them, to running a fortune company.It has played a vital role in building societies,

nations, and developing groups(Giambatista et al., 2005). As administration and civilization have

changed over the centuries, leadership also emerged and has been improvised. It is the key to

good performance. It determines the success and failure of the organizations. Through the

insightful research of Ogbonna and Harris (2000), it was observed that leadership not only

directs human resources with the firm's other resources but also motivates employees to perform

in the best possible way. This motivation not only results in a good performance, but it also

adheres to commitment towards the organization, improving organizational performance by

making it more profitable (Ing’ollan and Roussel, 2019). In this competitive environment that is

strongly influenced by upcoming issues, the businesses must focus on improving their leadership

abilities. Individual leadership styles are the key ingredient in the recipe for building successful

teams which consequently leads to the success of the organization (Darling and Leffel, 2010).

Leadership is a multifaceted phenomenon that is defined in certain different ways. Many

distinctive leadership styles have been introduced till now. Due to uncertainty and political aware

turmoil around the globe, organizations’ business performance is undergoing relentless

fluctuation now and then. Amid these circumstances, upright leadership with suitableassistances

can be a backbone to the industries(Zuned, 2017).The leadership style used by leaders is

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considered to be a major factor to influence employee’s participation that leads to an improved

financial performance of organization. With that being said, managers are capable of influencing

their subordinates to be more productive, hence leading to more profit for the organization. In the

past few years, due to revolutionary change in leadership, leaders are moving towards a more

participative approach. People are becoming more educated and eloquent; they require an

environment which values emotional skills as much as cognitive skills. Many successful leaders

possess strengths in numerous emotional intelligence competencies including self-regulation,

self-awareness, empathy, social skill, and motivation. Moreover, there are six elementary styles

of leadership described by Goleman(2000b)with each making use of the crucial components of

emotional intelligence in diverse blends(Dulewicz and Higgs, 2003). In conclusion, the greatest

leaders are acquainted with not merely one style of leadership, but rather they make use of

several and have the elasticity to modify between styles according to the need of

conditions.According to Boyatzis et al.(2009), leadership styles have a great and direct impact on

the organizational climate which accounts for approximately one third of financial performance.

To know the overall health of an organization, observing its financial performance, concerning

its ability to create dynamic and effective leaders is important. Financial performance, as in the

broader sense, relates to measuring any firm’s operations, strategies, policies, and procedures in

monetary terms(Orlitzky et al., 2003). It helps in measuring the comparison between different

companies in the same industry as well. For shareholders, tax authorities, managers, and

creditors it is important to know and answer two major things; what has been the financial

performance of a financial institution over some time and what is the financial position of the

firm at present(Choi and Lee, 2018). It is considered to be one of the most important tasks of the

firm's operations. The transition of the planning process of firms majorly depends on the

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financial situation of the firm. If a business is running smoothly according to its financial

situation, then it can plan out other transition processes as well(Levine, 2003).

Financial institutions are constantly being challenged by circumstances that are categorized by

technological advancements, rough competition, customers’ changing requirements, and

uncertainty about the future. To overcome these transformations, these institutions have to

introduce innovation every now and then, rebuild their strategies to tackle the ongoing challenges

and to strengthen their competitive advantage by improving performance (Drucker, 1985). In this

perspective, the firm’s ability to be manageable and to resolve problems requires a supportive

work environment(Albertini, 2013; Eniola and Entebang, 2015). In particular, prior studies have

considered leadership styles for addressing this subject (Champoux and Champoux, 2020; Lo et

al., 2013; Özer and Tınaztepe, 2014). The discussion regarding whether leadership style can lead

to financial performance has been principally contested. Those who back the efficacy and

veracity of financial performance and leadership style are certain that nature of leaders, their

responsibilities and roles in decision-making contribute in helping organizations to find

resolutions to challenges, eventually adapting to the changing environment (Bass, 1990).

Effective leaders are crucial for the success of any organization. In many ways, leadership relates

to management as it requires working with human resources just as management influences

working with people of the organization (Amanchukwu et al., 2015). The studiesexposed that

without uprightverdicts,businesses would have inefficient competitive advantage. The research

on leadership style and financial performance has focused on leadership behavior, effect of

leadership styles on employee satisfaction and organizational performance, link between

innovation, diversity, and financial performance, charismatic leadership and financial measures,

9
effect of CSR and leadership style on financial performance(Gardner and Carlson, 2015; Graetz,

2000; Greenfield, 2007; McWilliams and Siegel, 2000; Waldman et al., 2001).

Financial performance has long been considered to be influenced by several financial and non-

financial factors, however, practitioners and scholars have been examining the leadership styles

of CEO of firms and have concluded that leadership plays a significant role in building the

financial performance of the firms (Flanigan et al., 2017). Leadership style does not need to be

just fixed, rather it should be adapted according to the needs of the people involved and

conferring to the requirements of the situation. Gardner and Carlson(2015) did a content analysis

of over 90 publications and asserted that leadership styles of managers considerably effect and

reform the financial performance of the firm. In Ghana, Kuada(2010) used the moderation effect

of leadership between the firm's innovation and firm's financial performance across different

service firms and stated the significant effect of leadership on financial performance. It was

found in his study that leadership not only serves as a predictor for the formulation of the

strategy, rather it helps in creating a better fit between business environment and strategic

orientation to prosper financial performance of an organization.

The problem most of the organizations face primarily is that these industries focus on the

cognitive abilities of the leaders, neglecting the interpersonal skills, for instance, emotional

intelligence of these leaders(Miller and Moultrie, 2013). The most important aspect of a leader is

its emotional intelligence(Fowlie and Wood, 2009). Goleman (2000a)has described six main

leadership styles that includes authoritative, affiliative, democratic, coaching, pace-setting, and

coercive leadership, in his book "The New Leaders", based on the different characteristics of

emotional intelligence. He has based emotional intelligence on four dimensions as self-

awareness, social- awareness, social skill, and self-management. According to Goleman (2000,

10
pg. 11), “leaders who have mastered four or more especially authoritative, democratic,

affiliative, and coaching styles- have the best climate and business performance”.

1.2 STUDY PROBLEM

Leadership styles affect the overall performance of the employees, consequently affecting the

overall performance of the firms. The organizations are often not certain about the effects of

various leadership styles on their financial performance. There is a need to understand how

different leadership styles can impact the actual financial performance of organizations. There

are several dozen different leadership styles that impact an organization and business leaders get

confused as to what style should they pick up. The dilemma extends to those who have to handle

leadership styles for different assignments in organizations. These several dozen leadership

styles are, however, overlapping in nature. Financial performance is a subject that has received

noteworthy consideration from many researchers and scholars regarding different areas of

management and businesses. To know the strength, weaknesses, and opportunities of any

financial institution/ business/ firm/ organization/ company/, it is important to know the state of

its financial performance. In this research, Goleman’s(2000a) six leadership styles are chosen

based on emotional intelligence, that are representative of other styles as well. There has been

much devotion to research on linking the effects of leadership to the financial performance of the

firms. However, there needs to be profound research to see whether, these six leadership styles

have an impact on the perceived financial performance of the organizations or not.

1.3 OBJECTIVES OF THE STUDY

The financial institutions are characterized by organizationalsteadiness and play a very important

role in the economic progress of the country. This research, hence, aims to focuson the perceived

11
financial performance of the banking industry and leadership styles followed in banks. The

banking industry is very dominant in Pakistan. The major objective of this research intends to

guide managers and staff for the improvement of the financial performance of their organization.

Through this, the study predicts that leadership style can impact the financial performance of

firmsand also states which styles of leaders are rated as crucial by employees. The study uses the

dual approach to capture the leadership styles used by leaders and it includes two groups;

Leaders and followers. To fulfill these aims, this study is directed to achieve the following

objectives:

-To study the relationship between perceived leadership styles and perceived financial

performance,

-To find out which leadership style is best in impacting the financial performance,

-To find if there is any difference in leader’s and their followers’ perception of the leadership

style and its impact on perceived financial performance.

-To find out which style is better among all leadership styles.

1.4 RESEARCH QUESTION

The aim of this study is to explore the effect of leadership style on financial performance of

firms. The central research question for this study is:

Do leadership styles have an impact on the financial performance of organizations?

Based on the objectives of the research, we have our following questions which this study has

answered:

- What is the effect of leadership style on the financial performance of organizations?

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1.5 SIGNIFICANCE OF THE STUDY

This studypurposes to contribute to an understanding of tactical matters of financial performance

and leadership styles of administrations in Pakistan. The main objective of this study is that it

intends to focus on how to measure the strength of financial performance through the leadership

style observed in organizations. It is important to investigate a leader’s influence and his role in

enhancing the financial and organizational performance. Therefore, the status of this research is

to shed light on the impact and impact of leadership style on financial performance. The

proposed research is expected to be significant for firms at large and explicitly managers and

managerialemployees who, after considering the impact of leadership can analyze its existence

and take it seriously. This research purposes at linking all the six distinct leadership styles

defined by Goleman (2017)with the financial performance of firms. Foremost, it is imperative

for the businesses to identify the presence and influence of the leadership for a successful work

environment.

There is a necessity to analyze the impact of this phenomenon in organizations and banking

sector in Pakistan is presumed to be the most accessible sector that can explicitly explain the

direct impact of leadership styles on its financial performance. The component of dual approach

and inclusion of emotional intelligence will be the major contribution of this research. This

research will distinguish leadership styles based on the leaders’ and followers’ perceptions.

Conferring to the review of literature, it is implied that minimal effort has been made to test all

these six leadership styles which are authoritative, affiliative, democratic, coaching, coercive,

13
and pace-setting style- and their impact on the financial performance oforganizations inPakistan

with this dual approach. The current study examined the relationship between perceived

leadership styles of leaders, and the impact of these styles on the perceived financial

performance of firms. The results of this study can be used to improve leadership training and

progress. Organizations can get valuable data about how their personneldistinguish their leader’s

managerial behavior. This researchalso provides valuable insight to both leaders and their

personnel about how their leadership style affects the financial performance of their

organization. Moreover, this research provides contextual and methodological contribution. As

previously, this context has not been studied in Pakistan’s bank industry and the multi group

analysis has also not been previously conducted.

1.6 ASSUMPTIONS, LIMITATIONS& DELIMITATIONS

1.6.1 ASSUMPTIONS

There are some assumptions concerning the main objective of this research which are as follows:

1. The respondents will provide honest response and in the best interest of their knowledge.

2. The respondents are motivated to perform their respective tasks on the job as it shows

their work efficiency and relates to financial performance.

3. The respondents will be familiar with their leader’s style.

1.6.2 LIMITATIONS

As this research is novel in Pakistani organizational setting, it certainly has some common

limitations. Following are few of these limitations:

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1. Considering the dynamic skills of leadership by Goleman (2004), there are many

employees’ and leaders’ personal factors, along with other organizational factors that are

eliminated from the research. The purpose of selecting some variables and dropping

others is because of their relative significance in this research.

2. The study population consists of the bankers holding managerial positions as well as the

followersworking under them. This may be prone to restricting the generalizability of the

results.

3. Nevertheless, the search has been done expansively, it is still constrained to the literature

accessible to the researcher.

4. The discrepancies and uncertainties in measuring leadership style might be one of the

major limitations concerning the practicality of this research. The researcher has selected

the instrument that has been widely used and is conveniently accessible.

5. Self-administered questionnaire and web survey techniques are used for data collection. It

may have the probability to result in biased samples. According to Roster et al. (2004),

Web surveys for data collection majorly do not demonstrate the notions of general

populations and are restricted to targeted populations, such as Internet Users. However,

the researcher aimed at a finite sample of bankers. Consequently, this limitation was less

distressing as the bankers based outside Lahore will be contacted through emails.

Therefore, only those bankers are targeted that have access to Internet (for emails).

Considerably, the generalizability of the results is limited to those who have access to this

tool of communication.

6. Finally, this research uses a cross-sectional design. Although the associations are

cautiously proposed, it is observed that only a longitudinal design can additionally

15
 explore the in-depth impact of leadership styles on financial performance and its

consequences.

1.6.3 DELIMITATION OF THE STUDY

The research is delimited to opinions of managers as leaders and employees as followers. The

nature of this research is attitudinal as the followers or leaders at the time of completing the

questionnaire might not be in certain auspicious setting for filling the survey. Moreover, the

participants are only delimited to the banking industry. The setting in banking sector is strict and

bankers have to follow strict guidance and the leadership style implied there is different as

compared to other industries.

1.7 OPERATIONAL DEFINITION OF THE TERMS

1.7.1 LEADER

A leader is the office-in charge that leads his service unit. He is considered responsible for his

unit's development, administration, coordination between employees, and supervision of

followers. The leader assigns goals for his team, builds up the team to attain these objectives, and

sets them in a straight direction. Every leader faces the similar challenge where they are given

financial, human, and technological resources to manage in order to make these resources more

treasured for future. The main aspect of a leader is to “add value” and has the ability to influence

other’s performance (Bass, 1999). Goleman (2000) has also based his definition of leader on

Bass’s study.

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1.7.2 LEADERSHIP

Leadership is the art through which a leader persuades his team members towards a specific

objective. This research works with Bass (1990) definition of leadership according to which

leadership is the process of communication through which leaders assess visions, ideas, and

motives to employees for the attainment of goals.

1.7.3 LEADERSHIP STYLES

Leadership style is the way a leader follows his team/group. It is defined as the pattern of

conduct that is displayed by the leader in an attempt to reach organizational goals. For this

research, six styles of leadership are used based on emotional intelligence of leaders that are

authoritative, coaching, democratic, affiliative, coercive, and pace-setting leadership styles. The

judgment index questionnaire by Litwin andStringer (2015)is used to measure the leadership

styles for this study.

1.7.4 EMOTIONAL INTELLIGENCE

The skill of managing oneself and his or her associations effectually is known as our emotional

intelligence (EI). EI primarily relates to softer skills of a leader (Goleman, 2000a). Goleman

states that one common thing among all leaders is their “emotional intelligence”. He says that

technical skills and IQ of a leader are important but only serve the entry-level necessities for

managerial positions. Goleman (2004)says that without EI, a leader does not fall in the category

of “great leader” in spite of having all the training. It is the capacity of identifying our needs and

17
that of others as well. This helps in motivating ourselves and others for dealing effectually with

emotions. According to Goleman(2004), EI is based on four capabilities known; self-awareness,

self-management, social awareness, and social skill. This set of capabilities are based on specific

traits that are described below in the table:

Table 1: Emotional Intelligence Traits

Self-awareness

Emotional self-awareness: The ability to read and comprehend your own emotions and analyze

their impact on work performance

Accurate self-assessment: The aptitude of recognizing one’s strengths and weaknesses.

Self-management

Self-control: The ability to control and manage disruptive and impulsive emotions.

Achievement orientation: The desire to meet an internal standard of brilliance.

Initiative: Willingness to seize opportunities

Adaptability: Aptitude of adjusting to the changing environment and overcoming hurdles.

Social awareness

Empathy: Ability to sense other people’s emotions and seeing things from their viewpoint.

Organizational awareness: Ability to observe current organization’s life and navigate politics

to elevate transitional performance

Service orientation: Ability to foresee and recognizing consumer needs.

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 Social skill

Visionary leadership: The ability to inspire others by a persuasive vision

Teamwork: Ability to build teams and work for collaborations

Change catalyst: Ability to initiate new ideas and leading people in a new direction

Developing others: Capability to bolster people by giving guidance and constructive feedback

Conflict management: Proficiency in de-escalating conflicts and orchestrating resolutions.

1.7.5 ACCEPTANCE OF LEADER

This concept refers to the approval or acceptance of leader by his followers. The followers

follow the directions of the leaders and willingly accept the decisions made by the leader. They

are supposed to follow the instructions and give consent in being led by a leader. This concept is

essential as if the followers do not accept their leader, their performance is then not effected by

their leader’s leadership style.

1.7.6 FINANCIAL PERFORMANCE

This is the subjective measure of the success of any organization. It states the overall financial

health of the firm. This is based upon the return on investment, growth of deposit slips, and

return on assets. The wellbeing of financial performance states how the organization is directed

towards success and achievements.

Following are the variables used in this study:

Table 2:Variables under study

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Dependent Variable Secondary Variables Description

Financial Performance ---------------------- A subjective measure of how

firm uses assets and generate
growth. This is measure
through questionnaire based
on growth deposits of banks.

Independent Variables Authoritative Leadership The leader who mobilizes

people towards a vision and
uses “Come with me”
mentality and helps followers
for understanding strategy.

Leadership Styles Affiliative leadership The leader that creates

harmony and says “people
come first”. This will be
measured on the grounds that
the followers trust him,
creates strong emotional
bonds, etcetera.

Democratic leadership The leader that forges others

to participate and asks “what
do you think”. For example, it
is based on the observation as
the manager spends more
time in getting ideas from the
team.

Coaching Leadership This leader helps in

developing followers for
future and says “try this”. For
instance, he will delegate
challenging tasks to his team.

Coercive leadership The leader that demands

immediate obedience and
works with “Do what I tell
you” approach.

Pacesetting leadership This one set high standards

20
 for his team and expects them
to do the same. His approach
is “do as I do now”.

1.8 OUTLINE OF THE STUDY

The outline of the study is done in the following way:

Chapter I consists of introduction of this study which is composed of the background of

research, statement and significance of problem, scope and objectives of research, limitations,

assumptions, and delimitations of the research, and operational definitions of the terms which are

used in this study.

Chapter II explains the advent and advancement of the leadership styles under study and the

analysis of associatedresearches that are done on these selected variables under study. The

literature also puts emphasis on the significance of leadership styles on financial performance

with respect to different variables such as organizational climate, organizational performance,

and employee performance.

Chapter III talks about theproposed methodology of this research. It consists of research design,

procedures, methods, data collection, sample size, instrumentation, and apposite statistical

techniques that best suit to test the hypotheses of the study. The description and method of using

the statistical techniques is also mentioned.

Chapter IVis based on results of the study that are derived through calculation and statistical

analysis.

21
Chapter Vincludes theoretical discussion, practical implication and future limitationsof the

study.

Chapter 2
LITERATURE REVIEW

2.1 LEADERSHIP STYLE: THEORETICAL OVERVIEW

Leadership is the impact of social influence on the subordinates, employees, workers of an

organization (DeSorbo, 1994) which requires them to participate and engage and work in a

uniform direction (Omolayo, 2007). Over the years, there has been many definitions regarding

leadership. Rost (1993) gave around 221 redefined definitions of leadership.Bass(1990) stated

that leadership cannot be defined by a single definition. A review on leadership literature

proposes that it has been discussed ages ago in the Arabian and Egyptian era. Throughout the

time, there had been much research on leadership.During 20 th century, practitioners and

researchers have put on significant efforts to define the dimensions of leadership.Business

literature is filled with theories, dimensions, and models of leadership(Eckmann, 2014).Many

theories regarding this topic emerged, however, none of the theory has been irrelevant in

practical life. Leadership is considered to be a topic that has been most argued and debated

about, yet the loop holes remain and researchers are still unable to come up with the exact

building blocks that define leadership as a whole (Zaker et al., 2016). The core literature about

leadership does not specifically depict what strategic leadership is (Shafiu et al., 2019). With the

wing progress in organization, there is also a growing need to have pragmatic leaders, those who

can come up with solutions when needed to cope up with the complexities in an organization.

22
The dimensions of leadershiphelp mold the organization as a whole by allowing the leaders to

have a complementary approach towards the weaknesses they possess as well as to exploit their

opportunities and strength.

2.2 EARLY LEADERSHIP STYLE THEORIES

Leadership theories that have been implied in the organizations are Great Man Theory, Trait

Theory, Environmental Theory, Style and Behavioral theory, Transactional leadership,

Transformational leadership, and Laissez Fair leadership. These are the theories that have been

known and implied in the 21st century. The early theories related to leadership revolve around

successful mentors and those who possess daring traits (Madanchian et al., 2016). The Great

Man Theory was introduced in the 19th century. According to Carlyle, leaders are born with

heroic acts and have the ability to practice their leadership personalities in businesses,

organizations, companies etcetera., He believed that this personality trait is descended in

inheritance among people (Fivush Levine, 2000). Their study also showed that transformational

leaders were more likely to enhance job satisfaction in the organizations. Cawthon(1996)

explained that expert leaders throughout the generations have been the one who inherited the trait

of leading. This study had been emphasized by Morton(1980)as his hereditary genius build up

the foundation for this theory; that these extra-ordinary qualities are passed down thegenetic

lineage. Eckman(2014) elaboratedthat these leaders are energetic, more intelligent than their

fellow members, and are superior in many ways.

Then comes the Trait theory which focused on the diverse traits of people that make them a

leader. Sethuraman (2014) developed a conceptual model to explain that an effective leadership

23
style dependedupon the developing situations of the organization. He conducted an empirical

study to see the impact of trait theory and effective organizational performance. Trait theory

stated that people may inherit specific traits that can make them to be a good leader and qualify

themselves as future leaders and these qualities distinguish the leaders from its

followers(Novikova, 2013; Pervin, 1994; Swan, 2016). Sethuraman (2014)explained that

tolerance, intelligence, energy, vigilance, optimism, appearance, and self-confidence are innate

traits that leaders usually accede to, hence leaders do not seek for these qualities.

The environmental theories of leadership assume that leaders are made under different

circumstances, situations, place, and time(Jago, 1982). Regarding to Yahya (2016) many leaders

in history were different from each other and that happened because of the different situational

factors they had to face in different time and places, for example, Washington, Lincoln,

Roosevelt allwere different. The style and behavior theoryare a bit different from the above-

mentioned theories as it states that leaders have their own specific style that differentiates them

from the rest of people. The following Table 3 summarizes the timeline of Leadership theories:

Table 3:Leadership theories

ERAS OF LEADERSHIP THEORIES

Leadership Theory Time Frame Explanation

Great Man Theory Pre 1900s The theory focused on advent

of a powerful figure that
influences the organization.

Trait Theory 1930s This approach emphasized

leader’s traits and skills that
efficiently influence the
organization and the society.

Behavior Theory 1940-1950 This approach stated that

24
 leaders can be made and are
not rather just born and claims
that certain behavioral traits
differentiate effective leaders
from ineffective ones.

Contingency Theory 1960-1970 This theory highlighted the

situational variables that
leaders are supposed to deal
with, for example, job
satisfaction.

Transactional Leadership 1970 This concept is based on

common agreement of leader
and his team.

Transformational Leadership 1976 This theory involves the

conceptual transformation of
leadership styles

Laissez-fair Leadership 1960s This style is based on trust.

The leader lets the team
members do their work with
freedom as long as they get the
job done rightly.

Environmental Theory 1950s This theory states that it is the

duty of leader to create the
environment for his followers
to make success

Goleman Leadership Styles 2002-present Goleman described six distinct

leadership styles that can all be
used according to related
scenarios. These styles are
based on emotional
intelligence of leaders.

2.3 CONCEPTUAL BACKGROUND OF LEADERSHIP STYLE AND FINANCIAL

PERFORMANCE

25
Leadership has much influence on the efficiency and effectiveness of workers in an organization

(Keohane, 2005). It can lead to refined and improved business performances if effectually driven

by execution (Koene et al., 2002). The role of a leader in comprehending the demands of a

stakeholder cannot be undervalued. In his research, Koene et al. (2002)explained that the better

the execution of leadership, the better will be the results of financial performance. Most

researchers have found out that measuring the financial performance is a very significant tool for

a balanced scorecard structure (Orlitzky et al., 2003). Financial performances are needed to be

improved as these can help to increase shareholder value. These steps help the organization in

making more revenue and increasing productivity, which is achieved by introducing new

products in the emerging markets and by sensibly utilize company’s existing assets, respectively.

(Eljelly, 2004). These both steps need to be implied simultaneously to achieve the shareholder

value and to minimize the risk factor of the organization.

Financial performance can be explained in many ways and one of the indicators for measuring it

has been leadership style. HR is the heart of the organization; it has an important role in

enhancing the efficacy of an organization. It can be defined as a driving force of competitive

advantage which is incomparable. For an organization to have successful and productive

performance,Yukl(2017)described following important factors that achieve this purpose as

shown in the figure as well :

1. HR and leadership style

2. Effective procedures

3. Modernization and adaptation to surroundings.

HR & Manager’s 26
leadership style
 Organizational
performance

Effective (Financial and non-

procedures financial)

Modernization and
adaptation to
surroundings

ub: Factors of productive performance

Human resource relation recounts to being integrated, committed to the organization, and sharing

of common interests and goals. The leadership style used by leaders is the most communal factor

to effect attitudes of employees towards improved firm’s performance that include both the

financial and non-financial performance. Effectiveness is something that an organization

implements for its employees to move them in one direction to execute main job activities, which

consequently cut down major expenses. In every branch of the organization, it is the

responsibility of the relative manager to reduce expenses which lead to gaining competitive

advantage and improving net profit margin. And lastly, innovation relates to retaining

employees, improving growth, and enhancing profit volumes. These are the factors that lead to a

better financial as well as non-financial performance of an organization. The major factor that

links these factors is the leadership style (Yukl, 2017).

2.4 CONTRIBUTION OF LEADERSHIP STYLE TO FINANCIAL PERFORMANCE

OF FIRMS

Leadership is considered to be one of the most important management functions as it is about

how to deal with people, organizing harmony among workers, and focusing on motivating

people so they work efficiently (DeSorbo, 1994). Leading refers to set goals for the employees
27
so they work competently. The firm’s success majorly depends upon successful leadership

(Yahaya and Ebrahim, 2016). It is considered as one of the major driving force that can uplift an

organization’s performance (Shafiu et al., 2019).Yukl(2008) found in his study that executive

leaders can effectively boost the financial performance of enterprises. He proposed three basic

determinants of financial performance that include adaptation, efficiency, and human capital. He

concluded that leadership behaviors can influence these determinants of performance. Many

studies have shown that authoritative leadership style can improve subordinate performance as

well as boost their motivation levels(Ackoff, 1999; Judge, and Piccol, 2004; McCleskey, 2014).

Milolož (2018) explained how the financial performances of enterprises is dependent upon the

style of leadership followed in that enterprise. The main essence of his research was to see the

impact of leadership effectiveness to financial performances in most of the Croatian

organizations. He used survey methodology and found out that democratic and laissez-faire

styles were mostly implied in these companies. He concluded that small firms were more

successful under a democratic leadership style. Thus, organizations need leaders that can drive

their visions to withstand the competitive advantage.

2.5 GOLEMAN’S LEADERSHIP STYLES AND FINANCIAL PERFORMANCE

Disruptive, rapid and constant changes in business markets have now become the norm. What

help us succeed in the past will not serve as a guide for the future. To face these challenges and

to survive in this new realism, firms are moving away from traditional approaches and advancing

towards a model portraying that manager not only just give instructions to their subordinates, but

also learn and develop the flexibility to manage with the constant changes. In this research, the

focus is majorly on leadership styles based on emotional competency of leaders, described by

Goleman(2000a), a pioneer of Emotional Intelligence (EI) and a renowned psychologist. EI not

28
only affects the success of a firm, rather it is important in all the dealings of a leader. The moods

and behaviors of workers are also driven by their leader’s emotional style. The research findings

by Graetz (2000) suggest that the more emotionally stable a leader, better is the business’s

results. Those companies which have more emotionally intelligent capable leaders were found to

deliver better financial results (Pillai and Williams, 1998). The state of mind of a leader

dynamically affects the performance of the whole organization. As a whole, leaders who are

emotionally intelligent help in achieving competitive advantage through their improved

performances. These leaders help the firms in creating better teamwork, more effective

leadership, enhanced motivation, and improved innovation (Power, 2004). If leaders can apply

the Goleman’s leadership styles effectively in the right situations, they will become more flexible

with the changing environments (Saxena et al., 2017).

Goleman(2004) has described six distinct leadership styles that are authoritative/ visionary,

coaching, affiliative, democratic, commanding/ coercive, and pacesetting. These leadership

styles are included as majorly these styles are adopted by leaders in latest and modern firms

(Goleman, 2000a). All these styles have distinct effect on emotions of people. The first four

styles (authoritative, coaching, affiliative, and democratic) have constructive impacts and

endorse harmony. These styles lead in a positive direction; however, the other two styles

(commanding and pacesetting) are forceful in nature and are advised to be used in specific

circumstances. According to Goleman(2009), the organizations need to follow each style

regarding the specific situation and not being fixed on just one style, as all these styles make the

basis of a leadership landscape, for all types of organizations. As per the research of McClelland

(1982) a renowned American psychologist, those leaders who have had a match of these six

emotional intelligence competencies were found to be way more operative as compared to their

29
peers who did not have such capabilities and strengths. A leader who depicts all these six shades

of leadership and knows when to use each style, is considered to be an effective leader.

2.5.1AUTHORITATIVE LEADERSHIP AND FINANCIAL PERFORMANCE

This leadership style is more focused on driving people towards a common goal and providing

them a vision. These leaders follow the traditional concept of obedience and reverence for their

positional authority (Dinham, 2007). This style is empowering as the leader initiates the change

when he feels the need to and sets a new horizon with vibrant enthusiasm for his people. These

leaders give transparent visions and set clear goals for their employees as to avoid any ambiguity

(Zhang et al., 2012). The best feature of this leadership style is that these leaders focus on long-

term goals and set a lasting view for their organization, hence known as visionary leaders. Parco-

Tropicales (2014) conducted a research for school leaders to help leaders understand how to cope

up with the changing environments of schools. The four leadership styles were tested in his

research that included visionary/ authoritative, transformational, charismatic, and ethical

leadership style. He used a multi-aspect questionnaire and concluded that i) visionary and

transformational leadership styles had the most impact on wise leadership development and ii)

all leadership styles had significant impact on wise leadership development . As argued by Wang

(2014)a shared vision by the leader transforms the teams’ attitudinal results as well as their

behavior patterns and drives them towards the firm’s common goal.This style of leadership is

considered to be most effective in boosting up the work atmosphere mainly as clear goals are set,

people have a clear vision on what to follow, and it also has an optimistic influence on clarity.

The main underlying emotional intelligence competencies in authoritative leadership include

change catalyst, empathy, and self-confidence (L. Gardner and Stough, 2002).

30
Iowa University conducted some studies related to leadership styles of leaders. These studies

recognized autocratic/authoritative and democratic as the basic leadership styles to be adopted by

managers at Apple company (Gilley et al., 2009) . Steve jobs implemented this style to make

sure that customers are delivered the product they demanded. This style is adaptable in almost

every business environment because of its positive impact (Veale, 2010). This leadership has an

exceptional advantage that it leads to speedy-decision making which helps in achieving greater

productivity (Allen et al., 2012). A multi-source study by Kearney (2019) posits that visionary

and empowering leadership synergistically mediate the goals of an organization and help in

amplifying the financial performance of that organization. This style also makes the most of

commitment to theorganization, its goals and strategies. These leaders give the liberty to their

people to experiment, innovate, and for taking risks. Pillai (1998) has argued in his research that

authoritative leaders use effective communication which eventually helps in changing attitudes

of subordinates and yields outputs which lead to transformation of that organization.

Conceivably, this effective communication is the most effective feature of an authoritative leader

to endure support from their people. Lack of clear communication leads to ambiguity; hence

people turn out to be unresponsive towards the vision of the organization. Adnan(2019) confirm

that different studies suggested authoritative leaders play a very vital role in improving the

profits of theirorganizations and positively impact the success and growth of their organization.

Thus, the first hypothesis for this study is as follows:

H1: Authoritative leadership style will have a significant effect on the financial performance of

the organization.

2.5.2COACHING LEADERSHIP AND FINANCIAL PERFORMANCE

31
Goleman (2004) identified coaching leaders as the ones who let employees find their strengths,

weaknesses, and uniqueness for finding their own career aspirations. These leaders help

employees with their personal matters and act as counsellors whenever needed. One of the best

thing about this leadership style is that it connects the goals of people to the goal of the

organization (Ladegard and Gjerde, 2014). However, according to Goleman(2004), this

leadership style is least used among all the styles as this one requires a lot of effort, energy, and

individual-coaching of the employees. The output from this style is at times suspected as the

main aim of the leader becomes the coaching of employees rather than just work-related goals.

Rather than teaching, it is based on learning. Coaching has become relevant as the companies

want to retain their best followers for a longer period for achieving their specific goals and

objectives (Athanasopoulou and Dopson, 2018).

A surveyby Tooth (2013)of over 300 companies in China presented that coaching leadership is

responsible for enhancing employee’s learning capabilities and making the company more

competitive. Performance consultants have developed tools for measuring ROI using coaching

valuation technique. This allows to measure the impact of coaching leadership and its

effectiveness on the organization’s financial performance (Lawrence and Whyte, 2014).

Coaching leadership focuses on correction of an existing problem. Coaching is now being

impacted by behavioral finance and behavioral economics which focus on final decisions based

on coaching style of leaders at macro and micro economic level (Peng et al., 2019). Njue (2016)

did a research on the effect of coaching leadership on fiscal performance of 398microfinancing

institutions in Kenya. The author concluded that coaching as a development practice has a

substantial impact on financial operations of microfinance institutes. Coaching has been

considered as a two-way communication style as it not only specifies the problem but also

32
addresses on how to tackle those problems. Further, it identifies the behavior that hinder

performances of employees (Holmes, 2016).

This style is becoming more prevalent in organizations because of many reasons. Firstly, leaders

need to adapt to organizational changes and be prepared for learning how to cope up with

changing and greater competition.Ely et al.,(2010)have defined that coaching leadership fits well

in the jigsaw of constant changes in organizations due to a more competitive environment. It

increases flexibility of leaders to identify the issue, reflect upon it, and lastly take required action

to survive in this complex business ecosphere. Secondly, executive organization success*

depends upon subordinates’ productivity, eventually demanding better interpersonal skills and

passion towards team-work which is reinforced by coaching leadership (Brennan and Hellbom,

2016). Thirdly, leadership has been considered to be reactive as it helps in modifying behaviors

for a remedial change in organizations. Therefore, today organizations are accepting the fact that

pro-active coaching leadership bring its own benefits to the business (Ratiu et al., 2016). Lastly,

for the retention of valuable assets of organization, including executives, there is a need to imply

tacit knowledge which is practiced by leadership. Gradually, this leadership style is becoming

integral for a learning culture. Coaching is a skill that all good leaders need to develop and

deploy at certain levels to improve the financial performance of their companies.Therefore, the

second hypothesis of this study is stated as follows:

H2: Coaching leadership style will have asignificanteffect on the financial performance of the

organization.

2.5.3AFFILIATIVE LEADERSHIP AND FINANCIAL PERFORMANCE

33
For affiliate leaders, “people come first”. Affiliative leader will build social and emotional

connection with employees, following the literal meaning of the word “affiliative: ability to form

connection with others”.When managerial things go wrong in an organization, for example, loss

of customer, problems in dealings etcetera., then affiliative leadership is the most effective style

to adapt for leaders as it helps employees to deal with the situation and clear the stress of

organization by growing back healthy profitability(McClelland and Burnham, 2017). This type

of leadership is most beneficial when organization is facing a stressful time and there is a need to

bring people together to reinforce their ideas. It is, therefore, implied that the working

atmosphere under an affiliate leader is very much collaborative and flexible. These leaders

shower their employees with positive feedback whenever necessary. This feedback has a potency

in work climate to motivate employees beyond their expectations, hence leading to better work

performances. Research by Nawoseing’ollan and Roussel(2017)showed that employees’

performance was 49.57% effected by affiliative leadership, and financial performance was 52%

influenced by it. They concluded that affiliative leaders influence performance as they let

employees believe in themselves and motivate them to be innovative hence binging monetary

benefits to the organization. Authoritative leaders care about accountability, whereas these

leaders prioritize harmony among their followers, but also create harmony among organization

and employees. They value people more rather than achieving goals (Goleman, 2000a).

Therefore, this style is suggested to be implied when trying to repair broken trust, refine

communication, build harmony, or improve morale among employees. This style is used in core

conjecture with the authoritative leadership style as affiliative leaders focus more on praise than

giving practical advises.

34
A multi-source survey study by Belschak et al.(2018) used affiliative leadership as a moderator

on the relationship between employee performance and financial performance. They concluded

that affiliative leaders act as a remedy for a firm at its weakest period and help in grouping

people together, hence improving firm’s development and financial performance. On contrary to

this, Gadot(2007)highlighted in his research that employees working under affiliative leaders

become highly dependent on their managers. He clarified that it happens mainly because these

leaders become the emotional backbone of the firm, hence employees become shady when it

comes to dealing with workplace chaos. It is more aligned towards people. The focus of these

leaders is more directed towards employees’ satisfaction rather than accomplishing

organizational goals.Sulamuthu and Yusof(2018) investigated the banking sector and deduced

that employees working under affiliative leaders were likely to be more loyal than ones working

with coercive or democratic leaders. An affiliative leader also puts up his emotions on sleeves to

help people adapt the same behavior. Along with nursing the emotions of people, this leadership

style has a very positive result as a good all-weather style. This leader is compatible and

communicative, encourages employees, treats them with respect, and also provoke them for new

ideas (Briggs, 2014). Therefore, it is commendable that the working environment under this

leadership is collaborative and flexible. This style is mostly followed in organizations that

principally support team work. Therefore, it is stated that:

H3: Affiliative leadership style will have a significanteffect on the financial performance of the

organization.

2.5.4DEMOCRATIC LEADERSHIP AND FINANCIAL PERFORMANCE

Democratic leadership style is considered to be one of the most collegial style for leading a team.

Decisions are made based on everyone’s collective opinion.Democratic leaders include people

35
rather than just making them follow the decisions. Democracy is a concept that has various

meanings and definitions. In late 1930’s and 40’s,this style was introduced in the

organizations.Along with autocratic and laissez-faire, it is considered third primary leadership

style. Hollander et al.(1973) have stated that this style constitutes of two strands; one is

democracy-doing and the other one is democracy-creating. The former consists of discussion and

selection while the latter involves creating a participative atmosphere while implementing

democratic processes. Luthans et al. (1998)reviewed eight distinct styles of democratic

leadership.Researchers consider this style as one of the most effective style which lead to

increased productivity, worthy contributions of employees, and also maintains high morale of

employees as all employees feel valued by participating in sharing opinions(Choi, 2007).

Tannenbaum et al. (2013) have defined it as a decentralized decision-making style as per it

involves shared ideas of all subordinates.A democratic leader promotes a flexible environment

by letting employees participate in the process of decision making. conducted a study on and

concluded that democratic leaders give a realistic vision to their employees as they set goals by

listening to employee’s concerns and helps employee understand what can and what cannot be

accomplished.A study by Elenkov (2002) on Russian companies showed significant positive

effect of democratic leadership on financial performance. Gardner (2015)also analyzed the effect

of this style on organizational and financial performance.

Although it is considered to be one of the most effective leadership styles, it still has some

potential downsides. Democratic leaders may lead to uncompleted projects in situations when

timeline has the major essence and the roles are uncertain (Rubin, 2013). In the time of crisis,

this style can be risky as team will spend a lot of time in just getting input and data from the

members. Rukmani et al.(2010) figured out a notable issue related to this style was the

36
supposition that every member involved has equal expertise and an equal chance in decision-

making. However, given the fact that most of the powerful and influential leaders use either

autocratic or democratic style of leadership, both practices have been implied in many of the

economic sectors (Miloloža, 2018).July.P(2009) studied management and leadership practices at

Nestle. He focused on the simulation methodology and figured out the effect of leadership style

on the company’s financial performance. Nestle has claimed itself as “people inspired company”

as it is a more people-oriented company. They put people as center of everything they do. In the

same way,Isaacson(2012) did a case study research on the leadership styles that Steve Jobs of

Apple implied in his life. In mid-1990, Apple failed, lost its vision, but then regained success and

its vision. The survival happened because Jobs became more participative and learned how to

adapt. Starting his company out as a charismatic leader, he became a democratic leader. For

building his company he combined leadership styles in order to tackle the challenges, and added

democratic leadership to his repertoire.Manoj (2019) stated that democratic leadership styles

work best in creative industries, educational organizations which promote collaborative

atmosphere, design firms, firms driven by innovation, etcetera. This style helps in developing

skills in employees. In a way, democratic style is rich in collaborating as it encourages sharing of

ideas by minimizing power differences, therefore, all the participants proactively take their path

towards innovation leading to benefits and stability with ambitious focus.This style also focuses

on the value of structural context. Therefore, the next hypothesis is stated as:

H4: Democratic leadership style will have a significant effect on the financial performance of

the organization.

2.5.5 COERCIVE LEADERSHIP AND FINANCIAL PERFORMANCE

37
This one is considered to be the most directive style of leadership. It follows the rule “do as I tell

you”. This leader rules by fear and strains on instant obedience. This leadership style should be

approached only when an organization is going through rough time and needs to follow some

tough decisions (Goleman, 2000b). This style can be effective when used under crisis. While

managers are advised to use different styles of leadership according to the nature of the situation.

Coercive leaders’ prominent means is their hierarchy to get things done by their employees. This

trick is useful when organization is facing any downfall or is under duress. However, this style is

recommended to be used with caution. This style has led to maximum negative effect on

employees, even more as compared to pace-setting leadership (Rahim et al., 2000). According to

Trottier et al. (2008), the coercive leader gives transparent instructions to the employees and

expects them to follow these guidelines exactly.It concentrates on the carrot and stick approach

(Hannah and Lester, 2009). Often, this style is used in military, as top commanders make up the

complex decisions. Out of all the leadership styles, this style used in isolation is the least

effective one because of its ruthless nature and leaves very little space for errors. Nuclear plants,

medical,banking, and manufacturing industries sort of imply coercive leadership style for

employees to follow strict rules for their safety(Jogulu, 2010). Coercive style emphases on close

monitoring of employees and taking strict actions when needed (Obiwuru et al., 2011). Unlike

other styles of leadership, this style does not have a specific criterion to be fit by any person to

work with coercion, as we humans are sought to bring thought process, desire to guide others,

and a soft-corner to appreciate other. These traits are thoroughly denied in this style of leadership

and its sole focus is on the “authority”. These leaders are impatient towards any mistake and are

intolerant when it comes to insubordination.

38
Thoroughgood et al. (2011) studied the relation of destructive (coercive) leadership with

financial performance with respect to genderand organization’s climate. Their research stated

that coercive leader was linked to unstable financial performance of the organization as they

were more aversive in nature. Their study also posited that female coercive leader were more

aversive in nature. For organizations or company’s optimal success, the relation between

employees and leader plays a crucial role. Caughron and Mumford (2012) studied the effects of

superiors using coercive style and its organizational consequences. They examined the effects of

participative and coercive leadership behavior of embedded leaders (leaders of middle

management) and found out that a coercive leader can affect the organization in a complex

manner, whereas a participative leader had comparatively better influence on the organization.

Hess and Bacigalupo(2013) surveyed non-profit organizations to see the impact of emotional

intelligence skills of leaders on the financial performance of the organizations. Their results

depict that coercive leadership degrades the financial status of the organization as employees’

job satisfaction level and job retainment level decreases.As a coercive leader just boss around the

staff, the employees do not feel worthy of sharing their ideas for any situation and feel

disrespected. It also damages the reward system as some employees tend to be more motivated

and satisfied by appreciation in comparison with monetary rewards (Landa and Tyson, 2017). As

Goleman (2017) also suggested that coercive leadership style obliterates leaders of one of the

most beautiful aspect of leadership-appreciation, motivation, and a way to lead and guide others.

This leadership style is least effective and is not proposed to be used throughout the period of a

leader. Therefore, the sixth hypothesis is stated as:

H5: Coercive leadership style will have a significanteffect on the financial performance of the

organization.

39
2.5.6PACESETTING LEADERSHIP AND FINANCIAL PERFORMANCE

These leader demand quick results after setting higher expectations and goals. This style follows

the rule “do as I do,now”. This type of leader forms deadlines, high standards and expects the

employees to deliver the best quality results. This leader is impatient for slow progress. Goleman

(2000a) has acknowledged pacesetting leader as the one who sets high standards and is obsessive

for getting better and timely results. He said that this leadership style works well in technical

fields, sales teams, for skilled experts. But Goleman has also suggested that this style should be

used sparingly as the prolonged use of this style leads to negative effects specially if the

environment of a company is not ideal. This style is considered monitoring and controlling. A

pace-setting leader gets opportunity to showcase his mastery skills to employees who will gain

these expert skills of leader through osmosis or are already pretty much trained to follow-up the

tasks(Rabey, 2010). According to Benincasa(2016), pacesetting style is to be used when the staff

is already motivated and skilled and there is just a need for guidance to do a certain project.

Pacesetting style is not favorable in environments when the employees need coaching and

motivation. While this style works well in achieving short-term goals, the long-term effect of this

style leaves employees feeling pushed to do their tasks and demotivates them. It sometime

suffocates creativity and motivation among employees (Rabey, 2010). These types of leaders are

mostly found in military settings.

Singh (2001)suggested through his research that a high performing company achieves high

financial goals. In his research he related organization’s high performance and financial goals

with emotional intelligence, leadership, and organizational culture. He studied these styles with

respect to six climate dimensions that were clarity, rewards, standards, responsibility, flexibility,

and commitment. The research concluded that authoritative, affiliative, coaching, and democratic

40
leadership positively affectedorganization’s performance, its climate and financial performance,

Whereas, coercive and pace-setting leadership had negative impacts. Hussain and Hassan (2016)

did an exploratory study to find out the effect of leadership style on financial performance of 31

automobile companies of Pakistan. The results showed that pace-setting leadership had the most

negative effect on financial performance and did not contribute in keeping up with the financial

goals of the companies. Similarly, Sudha et al. (2016) concluded in their research that a pace-

setting leader negatively effects the financial performance of the company. The web Money-

zine.com used Jack Welch as a perfect exampleof pace-setting leader(Pacesetting Leaders,

2020). He worked as the CEO of General Electric from the year 1981 till 2001 and in this time,

he worked as a pace-setting leader. Welch believed in inspiring others; he did that by interacting

with employees at all levels of organization. Although he seemed accessible to his staff, yet he

had been very demanding of highest and great quality results. And many times, the employees

were not able to meet up with his expectations and it did affect the monetary image of the

organization. Hence, it can be concluded that pace-setting leadership works best in small doses,

however, it leaves negative impacts on the financial performance of the company/organization.

Therefore, we state that;

H6: Pacesetting leadership style has a significanteffect on the financial performance of the

organization.

2.6GAP IN LITERATURE
Despite the benefits of using each leadership style, these styles are not preferred to be used alone

by a manager of any firm.Johnson(2015)described some downsides of each style. He explained

that if affiliative style is used alone, then employees will have to find out their flaws themselves

as affiliative leaders are rarely constructive. Similarly,Yukl (1971) introduced three main

41
leadership styles that include democratic, laissez-faire, and autocratic style. Democratic leaders

are the one with creativity, higher satisfaction levels, and motivational skills. Autocratic leaders

focus much on the efficiency and effectiveness of employees and are more devoted to the output.

Laissez faire leadership is an exact opposite of the autocratic leadership style as it requires

followers who have excellent skills so that the staff can choose decisions based on their

contextual situations. Tosi (1991) explained that different leaders might fit into anyone of these

characteristics or all three styles can be found in one leader. The literature that surrounds around

leadership has been modified with the passage of time. However, the theories about leadership

styles have narrowly just focused on how these leaders can affect the financial performances.

There lies some void to be filled as to see what a visionary leader has done or will do in a

practical situation as to dodge any financial disaster. Mostly studies have focused on how

transformational or transactional leadership can enhance the firm’s overall performance and to

improve firm’s financial performance (Bass, 1999; W. L. Gardner and Carlson, 2015; Judge and

Piccol, 2004; Shafiu et al., 2019). Moreover, many studies have taken into consideration the

effect of leadership on financial performance merely as a perception (Bernheim and Bodoh-

Creed, 2017; FAOSTAT, 2019; Fivush Levine, 2000; W. L. Gardner and Carlson, 2015; Stoker

et al., 2019).Thus, a gap in literature requires studies from organizations to see whether the

leadership styles, defined by Goleman(2000b),affect the financial performances of firms and to

what extent do these styles matter. It should also see which leadership style has been most

effective in the organizations.

2.7FINANCIAL PERFORMANCE

Financial performance depicts how the strategy implementation adds contribution to the final

results of a firm. Objectives achieved from financial perspective tend to bring out improving

42
results, consequently effecting the outcomes of other perspectives (Aigner, 2016). Increasing

shareholder value is the main aspect of financial performance which is achieved in two best

ways: firstly, by increasing revenue of the firm, secondly, by increasing the productivity. First

way can be achieved by offering novel products in market, appealing new customers, and by

development of new markets. Second way can be reached by improvising cost structures and by

exploiting existing assets in an effective manner (Beckers et al., 2017). The main point to ponder

upon is that both these ways should be used simultaneously and actively to increase shareholder

value. It is seen to be the aim of every profit-oriented firm to achieve upright financial

performance. Financial performance is the fundamental achievement of an organization. It is the

measure of a firm’s capability to generate revenues and create profits. Apart from shareholder

value, it is determined by financial statements. It indicates the overall financial health of the firm.

Therefore, it is important to understand the leaders of the organization as they are the core of that

organization (Chadwick and Dawson, 2018). Previously, Chammas and Hernandez (2019) have

used perception-based research on financial and firm performance using leadership styles as

independent variables. Similarly, this study targets bank branches to see the impact of manager’s

leadership styles on the financial performance of the branch. In this research,thefinancial

performance of organization is measured by survey questionnaire answered by the managers as

leaders and their subordinates as their followers of the bank branches.

2.8LEADERSHIP STYLE

43
As the scientists supported behavior-based leadership theories led to several other theories about

leadership style and models as described in the above literature. Given the advantages and

disadvantages of all the six leadership styles, it can be concluded that no one style is the best and

only leadership style that should be adopted, nonetheless the leaders must adapt to situation for

achieving the best results. Leader-Member-Exchange approach relates to leadership style as a

swap between workplace units and leaders (Northouse, 2010). The Psychodynamic approach

states that leader is self-aware of his personality type along with his followers’ personality types

(De Vries and Balazs, 2010; Gabriel, 2011). The initial work can be traced in the research of

Lewin (1939).

Goleman’s(2018) major work is dedicated to emotional intelligence that includes these six

leadership styles used in this research. The emotional intelligence is considered to be a

combination of cognitive and non-cognitive abilities that make the leader competent to succeed.

The leadership style used in this researchis measured through the survey based on Goleman’s

leadership style questionnaire as used by (Bashir and Khalil, 2017). An important aspect of this

research is the incorporation of managers’ as well as employees’ perception of leadership styles.

This has taken into consideration as to not miss any loopholes in determining the leadership style

of the manager.

2.9 THEORETICAL FRAMEWORK

According to purpose, objectives, explanations, and literature reviews mentioned above in the

study, this research uses leadership style as an independent variable to explore its impact on

financial performance, which is the dependent variable of the study. The independent variables

include all six distinct leadership styles. The dependent variable here is the financial

44
 performance The control variables used in this research include the demographic factors such as

age, gender, experience, and qualification of the manager.

The analytical framework is the combination of theoretical and conceptual framework and

describes how the research is going to be conducted (Therond et al., 2017). By synthesizing

across leadership styles defined by managers and employees, this study integrates multi-group

framework for explaining the relationship complexity among proposed variables with both the

groups. The model below serves the purpose of illustrating how managers and employees

perceptions aligns with their perceived leadership style (Gooty et al., 2010). This theoretical

framework integrates leadership practices along two dimensions of perceptions as shown below

followed by summary of hypotheses in table 4:

Authoritative

Style
Coaching

Style

AffiliativeStyle

Democratic Financial Performance

Style

Coercive

Style

Pacesetting

Style Figure 2:Theoretical Framework

45
 Control Variables

● Age

● Gender

● Experience

● Qualification

Table 4: Summary of Hypotheses

H1 Authoritative leadership style has a significant effect on the financial performance of the
organization.
H2 Coaching leadership style hasa significant effect on the financial performance of the organization.

H3 Affiliative leadership style hasa significanteffect on the financial performance of the organization.

H4 Democratic leadership style hasa significanteffect on the financial performance of the

organization.
H5 Coercive leadership style hasa significant effect on the financial performance of the organization.

H6 Pacesetting leadership style hasa significanteffect on the financial performance of the organization.

46
 Chapter 3
RESEARCH DESIGN AND METHODOLOGY

The logical and systematic study of principles that help in philosophical and scientific

investigation is known as methodology (Malthus, 2017). According to Henderson (2011), if there

is a topic or subject, there is a method for investigation. However, there can be more than one

method for solving a research problem. In this case, methodology serves as a discipline which

tends to describe method that fits best and aids in providing required results. Research

methodology can be defined in two types: qualitative and quantitative research. For this research,

quantitative study has been conducted. Primary research is done through banks’ branches in the

context of an emerging economy, Pakistan. Thisallowedthe researcher to get the insider's

perspective in the report. This research is categorized as fundamental research as its utility will

be universal. In conclusion, the philosophical nature of this research specifies that it requires a

quantitative research methodology.

3.1DATA COLLECTION

The study is based on survey research. The data was collected and then translated to a

meaningful conclusion. Moustakas(2011), suggested that social science research utilizes

questionnaires as these provide a more holistic approach, therefore, for adequately addressing the

research question, the responses uncovered the depth of the leadership style being implemented

in the companies.This is quantitative exploratory research. Statistical regression was used to

analyze the relationship between independent variables (leadership styles; authoritative,

affiliative, democratic, coaching, coercive, pacesetting) and dependent variable (financial

47
performance). Demographic variables were used as control variables that measure the gender,

qualification, experience level, relative department, and age of the participants. Leedy and

Ormond (2018) proposed that research design selection should be aligned with the research

problem, research question, and/or hypothesis. Table 5 explains research approach used inthesis

as follows:

Table 5:Research approach used in

thesis
Research Philosophy Positivist
Research Strategy Quantitative
Time Horizon Cross-Sectional
Data Collection Method Survey questionnaire

3.2RESEARCH PARTICIPANTS

This researchtargetsbanks with different markets. The banking sector isused as it provides a

foundation for a broad range of corporate sectors. The research isbased on branch-level data

from banks as the structural hierarchy gives a clear view of leader and his relation with the rest

of the teamwhich is shown as follows:

48
 Branch Manager

Assistant Manager

Relationship
Head Teller Operation Manager
Manager

Figure 3: Hierarchy in banking sector

The approach used in this research follows taking in the employee’s responses about their

manager’s leadership style as group 1 and manager’s responses as group 2. The branch operation

managers (BOM), regional operation managers (ROM), and retail banking group head (RBG)

were approached for sharing the questionnaire with their followers. The BOM also shared emails

of their subordinates for making it easier to approach the employees. Reminder emails were also

sent after a week. After the responses were gathered, these were measured through questionnaire

rater to figure out the specific leadership style. The following framework shows how leadership

style (independent variable) practiced by the managers is measured and shows its influence on

the financial performance (dependent variable). The study selects target sample of155

respondents (59%followers and 41%leaders) as done by research of Iscan, Ersari and Naktiyok

(2014). Purposive sampling is used for this research to select leaders with 5-10 subordinates as

49
this is a reasonable number of employees that leaders can influence effectively and their

effectiveness can be assessed yielding meaningful conclusions. Managers, operational managers,

and compliance officers are the target sample for covering leadership style through manager’s

perspective and their employees are targeted for covering leadership style through employee’s

perception. A minimum of 5followers from each branchhas been targeted to answer the selected

questionnaire on leadership style.

3.3PROCEDURE

For studying the level of emotional intelligence of a leader, an emotional competency inventory

(ECI-2.0) will be administered. The questionnaire is based on the work of Litwin and

Stringer(2015)It considers the same six distinct styles of leadership as Goleman(2018). The

response set has a 1-5 scale as; this is always true: 5 points, this is often true:4 points, this is true

50% of the time:3 points, this is largely:2 points, and this is untrue:1 point. The questionnaire

related to perceived financial performance is based on the work of theresearch protocols that

weretested by verifying data collecting instruments, and to confirm sample recruitment strategy

due to sample limitation and representatives. The questionnaires were distributed using Google

forms and data was interpreted using Microsoft Office Excel Programme. Reminders and follow-

ups were sent to the respondents that took more than a week to respond back. The items for all

leadership styles were shortlisted and 6 items for each style were selected based on the study by

Burke (1992). The following data collection procedures were followed:

a) A covering letter was prepared explaining the aim of the research, the confidentiality of

the responses and instructions for completion. (Please refer to Appendix).

b) A demographic questionnaire was drawn up containing questions on the variables: gender;

age; department, educational level; and tenure.

50
c) Leadership Style Questionnaire was sent to leaders with five to tenfollowers. The leaders were

asked about the perceived financial performance of the branch through the questionnaire.

d) Both the leaders and their followerswere asked to complete the questionnaire

anonymously and return them directly to the researcher.

For evaluating non-response bias, independent sample t-tests were conducted on interest

variables related to late day and early day respondents.

3.4INSTRUMENTS

The data was collected through standardized questionnaire which comprises of three parts. The

first part relates to the demographics of respondents which include department, gender, age,

education, and employment years. The second part measures the independent variables which

include our chosen six dimensions of leadership styles. And lastly, the third part covers for the

perceived financial performance of respective branch.

3.5DEVELOPMENT

This questionnaire was expanded to see the scope of leadership measured in surveys. It relates to

the leadership styles described by Goleman (2018)which are based on emotional intelligence. In

addition to that, it represents a broad range of leadership attributes and behaviors. The scales

used in this research are ordinal and nominal. Nominal includes the demographic variables and

the questions based on Likert scale are included in the ordinal scale. The five-point rating is used

which requires the respondents to choose an option based on their level of agreement to the

statement. The rating is carefully chosen and the neutral category for rating is included as the

exclusion of mid-point causes distortions in the results (Garland, 1991). Only the statements that

have been answered by the participants are included.

51
3.6MEASURES

Following measures are set for this research:

3.6.1 Financial PerformanceFinancial performance of the bank branches wasestimated through

survey questionnaire where the leaderis asked questions regarding the financial performance of

the branch. The questionnaire items are chosen as used in recent studies (Pakurár et al., 2019;

Rashid et al., 2020). The reliability and validity of these items is already measured by Pakurár et

al. (2019), therefore, it is suitable for this study. Further, the leaders were asked questions

relating to the financial performance of their branch and is based on the research done by Pastor

et al.(2006). The questionnaire has been developed over time and additional categories were also

added to it.

3.6.2Leadership Style:Leadership style is measured based on the emotional intelligence of

leaders. This research assesses the leadership style concerning how leaders influence the

followers and consequently impact the financial performance of the banking branch. It is used in

this study to imitate the role of management in ensuring better financial performance by

providing with needed provision. If a leader uses a leadership style situationally and handles the

state of affairs well, then it leads to productive financial performance for that organization

(Benincasa, 2016). Leadership style is measured through employee's perceptions as well as the

manager's (leader’s) perception. The leadership style perception questionnaire has previously

been tested in studies investigating perception and preferences in politics (Drzewiecka and

Roczniewska, 2018). The same questionnaire is used for this comparative study. The questions

are designed to measure all six distinct leadership styles. The questionnaire consists of 36

statements which is divided into six groups. A five-point Likert scale was used.

52
3.7QUESTIONNAIRE ITEMS

The survey consists of close-ended questions. The questionnaire is made using closed-ended to

keep the context of the question same for all the respondents.The questionnaire is formulated to

be understandable and to avoid any ambiguity while filling the survey. The survey is anonymous

which gave more comfort to the respondents while participating. Sample items for authoritative

style include "more interested in setting long term goals than in being involved in the detailed

day to day work”, “translate the organization’s strategy into terms that the team can understand”,

for affiliative; “work hard to create a strong sense of belonging for all the team”, for coaching;

“delegate challenging assignments, even if they will not be accomplished quickly”, for

democratic; “spend a lot of time getting buy-in to ideas from team members’”, for pacesetting;

“identify poor performers and demand more from them”, and for coercive style, sample item

include; “expect people to do as they are told, without questioning”, “People who do not do what

their leaders tell them deserve to be reprimanded immediately”.For measuring the financial

performance, sample items include questions based on perceptions of the followers and leaders

about the financial performance of the branch.

3.7.1 Socio-demographic Variables

1) Gender: Respondents were required to choose either “male” or “female”.

2) Age: Respondents checked any of the one option of given age brackets.

3) Marital status: Respondents were required to check any one option from the given choices. Divorced

and separated were considered same keeping Pakistani culture in mind.

4) Employee department: Respondents were required to check any one option from the given choice.

5) Years of Experience: Respondents were asked their years of experience in the current organization.

53
6) Qualification: Respondents were asked about their level of education.

3.7.2 Control Variables: Control variables were also set so that the main focus of research is

directed towards leadership style and financial performance of firms. These control variables

include the following socio-demographic variables that include age, gender, experience, and

education level of the leaders in correspondence with the study of Miloloža(2018).

RESEARCH QUESTION and SUB-QUESTIONS SURVEY VARIABLES

Research Question (RQ): Do leadership styles have an impact on the financial performance of

firms?

SQ (1) At what level is each leadership style
being practiced by the leader?
SQ (2) What is the difference between results
perceived by leaders and follower’s
perceptions
Survey Questions: Leadership Data
style Questionnaire (LSQ) Analysis
Method:
SQ (1): 1, 2, 3,4,5, 6
(authoritative leadership style)
SQ (1): 7, 8, 9, 10, 11, 12
(Affiliative leadership style)
CFA
SQ (1): 13, 14, 15, 16, 17, 18
SEM
(Coaching leadership style)
SQ (1): 19, 20, 21, 22, 23, 24
(Democratic leadership style)
SQ (1): 25, 26, 27, 28, 29, 30
(Coercive leadership style)
SQ (1): 31, 32, 33, 34, 35, 36
(Pacesetting leadership style)
SQ (2): Survey questionnaire Data
Analysis
Method:
Multi-
group
analysis

54
SQ (4) What is the impact of leadership style SQ (3): Survey questionnaire Data
on financial performance? Analysis
Method:

Path
Analysis

3.8DATA ANALYSIS METHODS

According to Shipley (2009), the main goal of “the statistical techniques are to assist in

establishing the plausibility of the theoretical model and to estimate the extent to which the

various explanatory factors seem to be influencing the dependent variable”. In order to measure

the effect of leadership style of leaders on banks’ financial performance,SMART PLSis used for

data analysis. The responses from leaders and followers were managed using Microsoft Excel.

Descriptive statistics are used to describe sample. Mean and standard deviations for both

independent and dependent variables were calculated. Simple regression and bootstrapping were

applied for data analysis to see the impact of respective leadership style on financial

performance. Further, it also reviews the demographics of the respondents (Sekaran and Bougie,

2016). This analysis distinguishes which leadership style has the best impact on financial

performance of banks. The relationship between constructs was tested by path analysis (Shipley,

2009).

3.9PRELIMINARY DATA ANALYSIS

55
For analyzing the quantitative data which was obtained from survey questionnaire, Google forms

and Microsoft Excel was used and after that, PLS algorithm was applied.This helped in screening

of missing values and its treatment, data coding, identifying outliers, and for normality of data. It

also calculated the descriptive statistics for this research. Independent sample T-tests were

carried out to see statistical differences between both the groups of followers and leaders.

3.10MULTI-GROUP ANALYSIS

When the data structure is nested, multi-group analysis is used. Nested data relates to the data

which is collected from multiple individuals in a group and in which the responses may deviate

from one and other (Hriţcu, 2015). This analysis helps in simultaneously analyzing variables on

different groups by also integrating various dependencies (Hox, 2010). By the help of this

analysis, we can find out the effect of group 1 characteristics that impact the outcome and also

group 2 characteristics that influence the dependent outcome. In this study, group 1 is considered

as the data of followers and group 2 is taken as the data of leaders. It is relatable in this study as

it is intensively applied to real world problems regarding agriculture, social and human sciences,

medicine, and health sciences. It is applied to grouped data with hierarchal levels with single

output. The basic multi-group model used here is the two-group model. The study has six

independent variables that are the leadership styles and one dependent variable which is financial

performance.

These multi-group models presume data set with two groups and all the small standard errors are

obtained to get correct results and conclusions (O’Connell, 2010). Through multi-group analysis,

we have seen the impact of these groups’ perceived leadership styles on financial performance.

56
Multi-group analysis is used to test the differences between leader’s perceptions of their own

leadership styles and employee’s perception of their leader’s leadership style and its effect on

financial performance. This is required as it was implied there are differences in the responses of

leaders and followers about the leadership styles. Therefore, if the responses are nested and

differences may occur, then surely multi-group analysis is required (Hriţcu, 2015). This

technique also helps in measuring and testing the relationship among multiple independent

variables and is useful for longitudinal and cross-sectional data(Steele, 2008). The multi-group

analysis shows the extent to which leadership styles influence financial performance as a

comparison of PLS estimates across the subpopulation. Path co-efficient of each group was

measured against the variables. First, the bootstrapping results are shown in the results which

depict path coefficients of both groups with their significance level.

57
 Chapter 4
RESULTS

4.1 DESCRIPTIVES
The sample description is defined through the following table:
Table 6: Sample Descriptive
Category N Percentage

Age 15 10%

<24 30 20%

25-29 23 15%

30-34 49 32%

35-39 18 12%

40-44 20 13%

45-49

Education 51 32.9%

Undergraduate Local 17 10.5%

Undergraduate Foreign 61 38.9%

Masters Local 6 4%

Masters Foreign 20 13.2%

M.Phil. --- ---

PhD

58
Gender 116 62%

Male 59 38%

Female

The demographics show that 62% of the participants were male and 38% of the participants were

female. Out of the total number of respondents, 59% were followers and 41% were leaders. The

age group of respondents varied, however, the highest number of responses received were from

the age group of 35-39. Looking at the table, we observe that most of the respondents had done

undergraduate local and masters local. Following are the banks that participated in the analysis:

Table 7: Bank and No. of Responses

Bank No. of Responses of No. of Responses of

followers Leaders

Muslim Commercial Bank (MCB) 14 3

National Bank of Pakistan (NBP) 20 4

Bank Alhabib (BAHL) 30 6

United Bank Limited (UBL) 18 4

Bank of Punjab (BoP) 43 8

Habib Bank Limited (HBL) 15 3

Allied Bank Limited (ABL) 13 2

Meezan Bank 10 2

59
The following results show the department wise division of the leaders:

Figure 4: Department Leaders

Whereas, the following chart shows the department wise division of the followers:

60
 Figure 5: Department Followers

4.2MEASUREMENT MODEL
4.2.1CONFIRMATORY FACTOR ANALYSIS
Confirmatory factor analysis is done in order to check the factor loadings of the relative

constructs. The factor loadings of these variables indicate whether there is relation between the

underlying constructs or not (Shipley, 2009). The results for the analysis are as below:

Table 8: Factor Loadings

Affiliative Authoritative Coaching Coercive Democratic Financial Pacesetting

Performance

Affil1 0.703

Affil2 0.874

Affil3 0.834

Affil4 0.895

Affil5 0.919

Affil6 0.864

61
Auth1 0.523

Auth2 0.708

Auth3 0.808

Auth4 0.957

Auth5 0.683

Auth6 0.817

Coach1 0.513

Coach2 0.768

Coach3 0.819

Coach4 0.703

Coach5 0.864

Coach6 0.906

Corcv1 0.844

Corcv2 0.907

Corcv3 0.904

Corcv4 0.907

Corcv5 0.887

Corcv6 0.8

Demo1 0.937

Demo2 0.918

Demo3 0.845

Demo4 0.915

Demo5 0.904

Demo6 0.935

FP1 0.866

FP2 0.868

FP3 0.74

FP4 0.861

62
FP5 0.846

FP6 0.896

FP7 0.801

FP8 0.853

Pace1 0.884

Pace2 0.892

Pace3 0.909

Pace4 0.914

Pace5 0.906

Pace6 0.872

The factor loadings show that all the values are above 5.0. This indicates that all the items for

constructs have valuable influence and relation. Therefore, the model is good for testing the

hypothesis.

4.2.3 MEANS AND STANDARD DEVIATIONS

For validating the preliminary results of the constructs and for the greater understanding of the

data, correlations and descriptive statistics were analyzed. The following table states the means

and standard deviations. The analysis for followers and leaders was conducted to see the p-

values to see the difference between both the means:

Table 9.2: Mean and STDEV (Followers)

Sample Standard Minimum Maximum

Mean (M) Deviation
(STDEV)

Affiliative 4.16 1.117 1 5

Authoritative 4.25 1.19 1 5

The table
Coaching 3.24 2.391 1 5

Coercive 3.87 0.894 1 5 shows that

Democratic 3.21 1.543 1 5 followers

Pacesetting 4.44 2.616 1 5
63
Financial Performance 3.71 2.18 2 5
perceive their leaders to be more commanding in nature. The highest votes were of the

pacesetting and authoritative leadership style followed by affiliative and coercive style. This

indicates that leaders in branches are more authoritative in nature as perceived by the followers.

Further, the financial performance perceived by followers has the mean of 4.11 which indicates

that followers consider the financial performance of their respective branches to be relatively

good. The standard deviation values indicate how much the data is spread and the extent to

which it varies from one individual to the other. As the individuals belonged to different

branches and shared their answers related to their respective leaders, therefore, standard

deviation of some variables is high and for some it is low.

Table 9.3: Mean and STDEV (Leaders)

Sample Standard Minimum Maximum

Mean (M) Deviation
(STDEV)

Affiliative 4.41 2.262 1 5

Authoritative 3.10 0.812 1 5

Coaching 4.23 0.819 1 5

Coercive 3.12 1.176 1 5

Democratic 3.41 2.112 1 5

Pacesetting 3.79 0.674 1 5

Financial Performance 3.82 0.691 1 5

Looking at the results from above table, it is interesting to see that as compared to followers, the

mean value is 3.82 which shows that managers consider their branch’s financial performance to

be slightly less sound as compared to their team members. Moreover, the leaders here perceive

themselves to be more affiliative in nature followed by coaching, pacesetting, democratic,

64
coercive, and authoritative. The minimum and maximum value of data is 1 and 5 respectively.

The contrast in both the results is noteworthy as the managers do not consider themselves to be

more authoritative in nature whereas, employees perceive their managers to be more

authoritative in nature. Another interesting result is that leaders also perceive themselves to

follow pacesetting leadership style.

4.1.4CONSTRUCT RELIABILITY AND CONVERGENT VALIDITY

The reliability and validity of all the construct items were tested by the help of PLS CFA. The

threshold for composite reliability is >0.7 (Shukla and Babin, 2013). The value for average

extracted variance (AVE) must also exceed the threshold of 0.5 as per literature (Keringer,

1986). The value for Cronbach’s alpha must also be >0.7 as it states the internal consistency of

items in the group.

Table 10: Construct Reliability and Validity

Cronbach's Composite Average Variance
Alpha Reliability Extracted (AVE)

Affiliative 0.832 0.940 0.724 Here in the table,

Authoritative 0.801 0.889 0.679
all the values for
Coaching 0.814 0.896 0.708
Cronbach’s
Coercive 0.902 0.952 0.767

Democratic 0.858 0.906 0.827

alpha are greater

Financial 0.821 0.871 0.71 than 0.8 which

Performance
depicts the best
Pacesetting 0.911 0.961 0.803
internal

consistency among construct items. The values for composite reliability and AVE are also close

to the best fit.

65
4.1.5 DISCRIMINANT VALIDITY

The Heterotrait-Monotrait (HTMT) Ratio was calculated to analyze the discriminant validity of

the model. The threshold for this is <0.9 (Hensler and Ringle, 2015). The table shows results for

this analysis:

Table 11: Discriminant Validity

Affiliativ Authoritativ Coachin Coerciv Democrati Financial Pacesettin
e e g e c Performanc g
e

Affiliative

Authoritativ 0.237
e

Coaching 0.83 0.382

Coercive 0.366 0.126 0.43

Democratic 0.693 0.239 0.757 0.521

Financial 0.239 0.112 0.191 0.55 0.384

Performance

Pacesetting 0.325 0.113 0.38 0.796 0.438 0.6

The values for all the independent variables and the dependent variable are less than 0.9 and are

significant in indicating the discriminant validity of the model. This means that constructs are not

highly related to each other and measure unique values.

4.1.6 SAMPLE ADEQUACY AND INTERNAL CONSISTENCY

4.1.6.1 MODEL FIT
PLS algorithm gave the results for model fit for this analysis and the results are described below:

Table 12: Model Fit

66
 Saturated Estimated
Model Model

SRMR 0.081 0.081

d_ULS 15.72 15.72

d_G 6.618 6.618

Chi-Square 3609.527 3609.527

NFI 0.95 0.95

The value for NFI is 0.95 which is close to 1 and hence it depicts a good model fit (Byrne, 2008).

The closer the value to one, the better it is the match for a good fit. The SRMR index has a value

of 0.081 which is acceptable as the optimal range for SRMR index is 0 to 0.08 (Hu and Bentler,

1999). These are the mean square error of the estimated values and correlations. The value for

chi-square results is the p-value 0.001. Therefore, we support our hypothesis for the model that

leadership styles do impact the financial performance as analyzed.

4.1.7 MULTI-COLLINEARITY
For analyzing the multi-collinearity of the constructs, variance inflation factor (VIF) values were

determined using the same analysis. This is essential as these independent variables are

correlated as these stems out from emotional intelligence. In our research, we have used the

threshold of 3.3 for this test (Alin, 2010). The results of inner VIF values are as shown below:

Table 13: Inner VIF

Financial
Performance

Affiliative 3.032

Authoritative 1.16

Coaching 2.961

Coercive 2.545

67
 Democratic 3.062

Financial
Performance

Pacesetting 2.308

The results calculated here are all below 3.3 which state acceptable results of our analysis. Based

on the above results as a whole, it was observed that model was suitable for further path analysis

and multi-group analysis.

4.2 STRUCTURAL MODEL

The next step was to use path analysis by SMART PLS to see the impact of independent

variables like authoritative, affiliative, coaching, coercive, democratic, and pacesetting

leadership styles on financial performance. This current research further applies the multi-group

analysis model to see the difference between both the groups of respondents that is followers and

leaders. The results are also shown in the study.

4.2.1 PATH ANALYSIS

The study has found out the impact of all six leadership styles on the financial performance

based on both the employee’s and leader’s responses. For analyzing the impact, SMART PLS

bootstrapping is used (Hayes, 2013). This was calculated to see the effect keeping the data from

both the groups.

According to the bootstrapping result, affiliative, authoritative, democratic, and pacesetting have

significant impact on the financial performance. Whereas, coaching and coercive leadership

styles have insignificant impact on the financial performance of the branch.

Table 14: Path Co-efficient

68
 Financial P
Performance Values

Affiliative 0.417 0.000

Authoritative 0.428 0.001

Coaching -0.086 0.404

Coercive 0.057 0.261

Democratic 0.493 0.001

Pacesetting 0.455 0.000

The results show that coercive and coaching leadership styles do not have significant impact,

however, affiliative, authoritative, democratic, and pacesetting have noteworthy impact on

financial performance of branches as seen through the path analysis. The results are calculated

using both the data groups. The p-value for these independent variables is less than 0.005 which

is supported by literature. However, the values for coaching and coercive leadership styles are

not significant, hence, these do not support our hypothesis and conclude that coaching and

coercive leadership styles do not have a significant impact on the financial performance.

4.2.2 MULTI-GROUP ANALYSIS

Lastly, as the major contribution of analysis, multi-group analysis (MGA) was used to see if

there were any differences between two sets of groups. Firstly, separate analysis is conducted to

see the results of employee’s responses and then leader’s responses. The results for leader’s

analysis are as below:

Table 15: Path-Coefficients (Leaders)

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 Financial p-values

Performance

Affiliative 0.556 0.021

Authoritative 1.021 0.015

Coaching 1.175 0.087

Coercive 0.682 0.121

Democratic 1.092 0.024

Pacesetting 0.482 0.001

The values indicate that all the independent variables have direct impact on the dependent

variable. The value for coaching, authoritative, and democratic indicate that according to leaders,

these have the highest impact on the financial performance of the organization.

The results for employee’s responses are as below:

Table 16: Path-Coefficients (Followers)

Financial p-value

Performance

Affiliative 0.646 0.041

Authoritative 1.561 0.002

Coaching 0.554 0.542

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 Coercive 0.52 0.521

Democratic 0.18 0.023

Pacesetting 0.954 0.000

The results for followers show that according to followers, authoritative and pacesetting

leadership style has the highest impact on financial performance.

The groups were generated; employee’s data was named group 1 (59% of the data) and leaders

data was named group 2 (41% of the data). After that, PLS MGA was run with bootstrapping

value of 5000.The results are as below:

Table 17: PLS MGA

PLS MGA

Path Path Path p-Value new (Followers vs

Coefficients Coefficients Coefficients- Leaders)
Followers Leaders diff (Followers
- Leaders)

Affiliative -> 0.646 0.556 0.09 0.803

Financial
Performance

Authoritative - 1.561 1.021 0.54 0.143

> Financial
Performance

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Coaching -> 0.554 1.175 -0.621 0.127
Financial
Performance

Coercive -> 0.52 -0.162 0.52

Financial
Performance
0.682

Democratic -> 0.18 -0.912 0.013

Financial
Performance
1.092

Pacesetting -> Financial 0.954 0.472 0.025

Performance

0.482

This is basically the difference between co-efficient paths of the data set. If the p value is greater

than 0.05 then it means the differences are not significant. Whereas, if the value is less than 0.05,

then the differences are significant.

Here in this analysis, the difference is only significant for two styles; democratic and pacesetting

style on financial performance. This concludes that responses of both leaders and followers have

been similar regarding the first four factors, while these were significantly different for the last

two variables. However, if we see the path co-efficient difference, then according to the analysis,

then followers believe that impact of leader’s affiliative leadership style is significant and the

leaders think less of that as their beta value was lesser than that of in the results of followers.

Similarly, for authoritative and pacesetting style, followers believe that the if their leader/leader

follows these leadership styles, then this will have better impact on the financial performance of

their branch. On the other hand, leaders perceive that the more they follow democratic, coaching,

and coercive styles, the better the impact will be on the financial performance.

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 Chapter 5
DISCUSSION

5.1 THEORETICAL DISCUSSION

This research attempted to study the effect of leadership style on financial performance. The

study targeted bank branches. The major contribution of the study is the dual approach utilized to

study the impact of leadership style on financial performance. Unlike other research studies, this

one investigated the answers from both groups that areleaders and followers and analyzed the

difference between the two groups as well. There has been much devoted research to find out

how the leadership styles impact financial performance. However, there is still scarce studies that

see the impact of Goleman’s leadership styles that sprung from the levels of emotional

intelligence and the effect of these styles on financial performance. The study targeted branches

as there is direct link of leaders with their followers and followers are better judge of their

managers’ leadership style. Using the research by (Gardner and Carlson, 2015; Graetz, 2000;

Greenfield, 2007; McWilliams and Siegel, 2000; Waldman et al., 2001), the current study

extended the study problem and used the dual approach for achieving the objective of this

research. This study laid out important insights and lessons of managerial relevance.

The research finds that there is a significant impact of four of the leadership styles on the

financial performance of the bank branches. These leadership styles are affiliative, authoritative,

democratic, and pace-setting. However, as per analysis, coercive and coaching styles did not

have significant impact on the financial performance of the branches. However, it was startling

to see that coaching leadership style has no significant impact on the financial performance.

According to Jasper (2018), coercive leadership is not applicable in all kinds of situations and is

best applied while the organization is going through a phase of crisis. It is best to use coercive

73
leadership style when the business unit is not making noteworthy profit. The insignificant result

might be due to organizational hierarchy and the normal state of business unit (Jasper, 2018). As

found by Drzewiecka and Roczniewska, (2018), a significant impact of authoritative,

democratic, and affiliative leadership style was noted. Surprisingly, pace-setting style turned out

to be the most significant one.

Major interesting result is to see the difference between the mean of both groups and how their

values differ. The team members consider their leader to be more authoritative, pacesetting, and

affiliative in nature. The results for followers also state that financial performance is relatively

good. Whereas, the results from followers showed that the financial performance is slightly less

stable as compared by perceptions of employees. Moreover, the leaders consider themselves to

be the more affiliative, coaching, pacesetting, and democratic in nature.

Furthermore, as found by Andreia (2018) there have been significant difference observed in

pace-setting and democratic leadership style as perceived by leaders and followers. One rationale

behind this is that leaders think highly of themselves and rate themselves accordingly. Whereas,

followers who consider their leaders as a pace-setting leader rate them as a strict leader (Andreia,

2018). The results of the multi-group analysis showed that there were no significant differences

among the two groups (leaders and followers) in four of the leadership styles that are affiliative,

coercive, coaching, and authoritative. Bako (2018) also found similar results that showed

significant differences in three of the sixteen leadership styles. The justification for this is that

where followers perceived their leaders to be more democratic in nature and pace-setter, the

leaders perceived them to be significantly a different type of leader. Overall, the scores are

positive and none of the leadership styles has negative impact on the financial performance. On

Likert scale, it is seen that leaders consider themselves to be more authoritative and affiliative

74
leaders. According to Bako (2018), the difference may be due to the organizational level

differences as some of the banks were private and some of these banks were government banks.

Therefore, different leadership style is observed in different banks(Bashir and Khalil, 2018).

5.2PRACTICAL IMPLICATION AND RECOMMENDATIONS

The practical implication of the research is to improve the financial performance of bank

branches by suggesting leadership style. The interest of studying the impact of leadership style

on financial performance is to help leaders to focus on the leadership styles that gets results and

is more profitable for the organization. In this regard, Goleman (2002) suggests that all the six

leadership styles springing from emotional intelligence must be used by the leaders for short

period of time and based on the state of affairs. As discussed, there are great similarities of this

study with literature, however, keeping in view the context of Pakistan, following

recommendations must be followed:

● The top management should appoint pace-setting/commanding leadership style leaders

only when it is needed, and only for a short period of time as in the time of crisis.

● Leaders that use more democratic, pace-setting, and authoritative leadership style should

have open meetings with their followers.

● There is a dire need to develop understanding among leaders and their followers for

minimizing the communication gap and this should be done by formulating and

promoting open discussions and meetings.

75
 ● The leaders should practice leadership style that has significant impact on employee and

financial performance.

● Leadership courses should also be managed for the leaders to follow leadership style

based on emotional intelligence.

5.3CONCLUSION
The literature regarding leadership styles has been pretty much revolved around the technical

capabilities of a leader. There needs to be more research on the cognitive abilities of the leaders

that also include their emotional intelligence as a greater force driving the leadership style.

Therefore, this study attempted to find out the impact of leadership styles of leaders on the

perceived financial performance of the bank branches in Pakistan, Lahore. Further, the problem

that followers and leaders perception about the leader’s leadership style are actually different

from each other and this state of affairs may lead to a connection gap between leaders and

followers has not got the attention it deserves.

As this study proved, there are differences between leaders’ and followers’ perceptions.

Although the followers and leaders agree on most of the leadership style and their results are

somewhat similar, they still disagree in two of the styles that are democratic and pacesetting

leadership style. The analysis helped in finding out that there is impact of leadership styles on the

financial performance. Moreover, it is found out that there is difference how leaders perceive the

results based on their leadership styles and how their followers perceive the results. This answers

the research questions and objectives proposed for the research. The methodological contribution

76
here is noteworthy as the analysis included the dual approach of getting data from both groups

under study and seeing impact as well as differences in results of both groups.

It is hoped that this research paves the path for other researchers to carry out the differences of

leaders and their followers in other fields of work as well. Further, in the light of above-

mentioned results and discussions, it is observed that there are many similarities between the

results of other researches and this study. Most of the researches have also used Likert scale of

same questionnaire for studying the multi-group analysis. Goleman’s leadership styles are found

to be valid and equally practiced in Pakistan. Both of the groups believed that coaching and

coercive style were not significantly impacting financial performance.

5.4 FUTURE DIRECTIONS

This research has following limitations as it is studied in the context of Pakistan. Following are

some of the limitations and guidance for future research:

● The research can utilize two or more mediating factors such as employee performance,

organizational commitment, and etcetera.

● The results need to be more generalized and include answers from other cities/countries

and organizations as well.

● PLS-MGA results lie on distributional assumptions, therefore, MANOVA can also be

used.

● The study only targeted banks, whereas, this can be extended to other industries as well.

77
● A touch of longitudinal or cross-sectional experimental research can be a better future

research and it will lead to more generalized results and add causality to the research.

78
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 Appendix - SURVEY
Thank you for being willing to take part in this survey. I am conducting this research as part of

my thesis for my Master in Philosophy from Lahore School of Economics. I assure you this

information will be used only for the academic purposes and that your identity will be kept

secret. You will remain completely anonymous and no records will be maintained with your

name on them. I will appreciate your truthful input.

The questionnaire has two sections. Please check only one option which may deemed appropriate

to you. I request you to please answer all the questions. Thank you.

About you

1) Your gender

a. Male

b. Female

2) Your age bracket

a. 24 and less

b. 25 – 29

c. 30 – 34

d. 35 – 39

e. 40 – 44

f. 45 – 49

g. 50 – 54

h. 55 and above

94
3) Your marital status

a. Single

b. Married

4) Your current department/division

a. Human resource

b. General services

c. Operations

d. Legal

e. Service quality

f. Branch banking

g. Credit administration

h. Training and development

i. Marketing

j. Audit

k. Compliance and regulatory

l. IT

m. Risk management

95
5) Your education (Pleas mention the highest degree you have completed. Any certification will

not be treated as a proper degree)

a. Undergraduate local

b. Undergraduate foreign

c. Masters local

d. Masters foreign

e. M.Phil.

f. PhD

7) Your years of experience (in current organization)

a. Less than 2

b. 3 – 7

c. 8 – 12

d. 13 – 17

e. More than 17

8) Your employment status

a. Full time

b. Part time

(For employees working under manager)

Purpose
1. To identify the style of leadership in your branch / department
2. To examine how this leadership style relates to other styles of leadership
Read the following statements and against each statement allocate a score about your manager’s
leadership skills:

Code: 1 = untrue 2 = largely untrue 3 = true of him 50% 4 = often true 5 = always true

96
Statements 1 2 3 4 5

1. Team trusts him implicitly 1 2 3 4 5

2. He would prefer that team members be happy in their work 1 2 3 4 5

than spend his time correcting each fault

3. He works hard to create a strong sense of belonging for all 1 2 3 4 5

the team

4. He works hard to establish strong emotional bonds between 1 2 3 4 5

himself and his team

5. He gives his team members regular feedback on their 1 2 3 4 5

performance

6. He gives the team the freedom to achieve our goals 1 2 3 4 5

7. He sets out where he wants the team to get to, and expect 1 2 3 4 5

them to use their initiative in getting there.

8. He is more interested in setting long term goals than in 1 2 3 4 5

being involved in the detailed day to day work is

9. He translates the organization's strategy into terms that the 1 2 3 4 5

team can understand

10. He gives his team the leeway to take calculated risks and 1 2 3 4 5

be innovative, once he has set out the direction, we should

take

97
11. He tries to set a vision and get staff to come along with him 1 2 3 4 5

in creating that vision

12. In giving feedback he looks at the extent to which a 1 2 3 4 5

person's work has furthered the group vision

13. He gives plentiful instruction and feedback 1 2 3 4 5

14. He encourages people to create long-term development 1 2 3 4 5

goals

15. He spends time helping staff to identify their strengths and 1 2 3 4 5

areas for development

16. He believes in investing time in people 1 2 3 4 5

17. He delegates challenging assignments, even if they will not 1 2 3 4 5

be accomplished quickly

18.He spends a lot of his time getting buy-in to ideas from team 1 2 3 4 5

members

19. He thinks that we can all get a good deal of insight into an 1 2 3 4 5

issue if we discuss it as a team

20. He holds a lot of meetings with his team to ensure that they 1 2 3 4 5

are happy with the way that the team is working

21. He believes in letting the team have a say in the way the 1 2 3 4 5

team is managed

98
22. He thinks that team members should have a say in setting 1 2 3 4 5

goals and objectives

23. For him, collective decision-making is the most effective 1 2 3 4 5

form of decision-making

24. He identifies poor performers and demand more from them 1 2 3 4 5

25. If people do not perform well enough, he believes they 1 2 3 4 5

should be quickly replaced

26. If he believed an existing system was hampering good 1 2 3 4 5

work, he would have no hesitation in getting rid of it

27. In giving feedback he looks at the extent to which a 1 2 3 4 5

person's work has furthered the group vision

28. He encourages people to create long-term development 1 2 3 4 5

goals

29. He gives his team members regular feedback on their 1 2 3 4 5

performance

30. He sets out where he wants the team to get to, and expect 1 2 3 4 5

them to use their initiative in getting there

31. He believes that we can always find ways to do things 1 2 3 4 5

better and faster

32. He makes agreements with his team about their roles and 1 2 3 4 5

responsibilities and enacts development plans

33. He gives the team the freedom to achieve our goals 1 2 3 4 5

99
34. He believes in letting the team have a say in the way the 1 2 3 4 5

team is managed

35. He has great self-control and expects to use his initiative 1 2 3 4 5

alone in managing others

36. He thinks that team members should have a say in setting 1 2 3 4 5

goals and objectives

Financial Performance

1. Over the past two years, the branch financial 1 2 3 4 5

performance has exceeded that of the

competitors.

2. The past two years have been more profitable for the 1 2 3 4 5

branch than our competitors.

3. Return on assets has been substantially increased 1 2 3 4 5

during this period.

4. Sales rate for primary customers has been markedly 1 2 3 4 5

improved.

5. Growth deposits of branch have been increasing over 1 2 3 4 5

last two years.

6. The bank meets its target of deposit performance by 1 2 3 4 5

regularly conducting marketing strategy on customers

test and preference

100
 7. The product and service of the bank attracts more 1 2 3 4

deposit customers

8. Branch location of the bank is easily accessible and 1 2 3 4 5

convenient to customers

(For managers of these employees)

Code: 1 = untrue 2 = largely untrue 3 = true of me 50% 4 = often true 5 = always true

Statements 1 2 3 4 5

1. My team trust me implicitly 1 2 3 4 5

2. I spend a lot of my time getting buy-in to ideas from my 1 2 3 4 5

team members

3. I expect people to do as they are told, without questioning 1 2 3 4 5

my motives

4. I am more interested in setting long term goals than in being 1 2 3 4 5

involved in the detailed day to day work

5. I delegate challenging assignments, even if they will not be 1 2 3 4 5

accomplished quickly

6. I would prefer that team members be happy in their work 1 2 3 4 5

than spend my time correcting each fault

7. I exemplify all the standards that I expect from my team 1 2 3 4 5

8. I believe in investing time in people 1 2 3 4 5

9. I translate the organization's strategy into terms that the team 1 2 3 4 5

101
can understand

10. People who do not do what their leaders tell them to 1 2 3 4 5

deserve to be reprimanded immediately

11. I work hard to create a strong sense of belonging for all the 1 2 3 4 5

team

12. I think that we can all get a good deal of insight into an 1 2 3 4 5

issue if we discuss it as a team

13. Work should be very task-focused 1 2 3 4 5

14. I spend time helping staff to identify their strengths and 1 2 3 4 5

areas for development

15. I believe that decision-making in the organization should be 1 2 3 4 5

top-down

16. I give my team the leeway to take calculated risks and be 1 2 3 4 5

innovative, once I have set out the direction, they should take

17. I try to set a vision and get staff to come along with me in 1 2 3 4 5

creating that vision

18.I am not convinced the team will work with initiative if I 1 2 3 4 5

don't demonstrate what to do and how to do it

19. I work hard to establish strong emotional bonds between 1 2 3 4 5

myself and my team

20. I give plentiful instruction and feedback 1 2 3 4 5

102
21. I hold a lot of meetings with my team to ensure that they 1 2 3 4 5

are happy with the way that the team is working

22. I know what is best for my team and expect them to do 1 2 3 4 5

what I ask

23. Collective decision-making is the most effective form of 1 2 3 4 5

decision-making

24. I identify poor performers and demand more from them 1 2 3 4 5

25. If people do not perform well enough, I believe they should 1 2 3 4 5

be quickly replaced

26. If I believed an existing system was hampering good work, 1 2 3 4 5

I would have no hesitation in getting rid of it

27. In giving feedback I look at the extent to which a person's 1 2 3 4 5

work has furthered the group vision 1 2 3 4 5

28. I encourage people to create long-term development goals 1 2 3 4 5

29. I give my team members regular feedback on their 1 2 3 4 5

performance

30. I set out where I want the team to get to, and expect them to 1 2 3 4 5

use their initiative in getting there

31. I believe that we can always find ways to do things better 1 2 3 4 5

and faster

32. I make agreements with my team about their roles and 1 2 3 4 5

103
responsibilities and enact development plans

33. I give the team the freedom to achieve our goals 1 2 3 4 5

34. I believe in letting the team have a say in the way the team 1 2 3 4 5

is managed

35. I have great self-control and expect to use my initiative 1 2 3 4 5

alone in managing others

36. I think that team members should have a say in setting 1 2 3 4 5

goals and objectives

Financial Performance

9. Over the past two years, the branch financial 1 2 3 4 5

performance has exceeded that of the

competitors.

10. The past two years have been more profitable for the 1 2 3 4 5

branch than our competitors.

11. Return on assets has been substantially increased 1 2 3 4 5

during this period.

12. Sales rate for primary customers has been markedly 1 2 3 4 5

improved.

13. Growth deposits of branch have been increasing over 1 2 3 4 5

last two years.

14. The bank meets its target of deposit performance by 1 2 3 4 5

104
 regularly conducting marketing strategy on customers

test and preference

15. The product and service of the bank attracts more 1 2 3 4 5

deposit customers

16. Branch location of the bank is easily accessible and 1 2 3 4 5

convenient to customers

105