Leadership Styles and Employee performance: Empirical Evidence from Selected

Banks in Edo State

Corresponding Author* bamidele.lawal@uniben.edu +2348073391374

Bamidele Akeem LAWAL (Assistant Lecturer)
Department of Business Administration, Faculty of Management Sciences
University of Benin

Dr. Samuel Jesuorobo OSIFO

Samuel. osifo@uniben.edu +2348097032370
Department of Business Administration, Faculty of Management Sciences
University of Benin
 Leadership Styles and Employee performance: Empirical Evidence from Selected

Banks in Edo State

Abstract

The paper examine the extent to which leadership style (democratic, autocratic and

transactional) affect employee performance among selected banks in Edo State. The research

design for the study was survey. Questionnaires were administered to responses from

employee in the selected banks in Edo State. A total number of Two hundred (220)

questionnaires were conveniently distributed among the sampled banks. A total of 200

questionnaires were retrieved amounting to (87.3%) response rate. Thus, the analyses were

based on 200 questionnaires. The findings from the study indicated that all the style of

leadership were positive and significant to employee performance except autocratic style

positive but not significant to employee performance.

Keywords – Leadership styles, autocratic, democratic, transactional, employee, performance,

Banks, Edo State.

Introduction

Leadership style in an organization is one of the factors that play significant role in enhancing

or retarding the interest and commitment of the individuals in the organization (Obiwuru,

Okwu & Nwankere 2011). The leadership style adopted by organisation enhances the

achievement of corporate goals. Empirical research on leadership style has indicated that the

performance of an organisation to ensure the survival and growth of an organisation can be

doubted in any way. Ojokuku, Odetayo and Sajuyigbe (2012) observed that leadership style

is one of the determinant of the success and failure of any proactive organisation. Lawal, Kio

and Adebayo (2000) agreed that good leadership is a condition for effective accomplishment

of these tasks. Effective leadership style of management is a pre-requisite to organizational

accomplishment (Uchenwamgbe, 2013).

Business management attributes their successes to leadership efficiency, that is, the

leadership style of administrative supervisors has a considerable effect on employee

performance (Sun, 2002). McGrath and MacMillan (2000) reported that there is significant

relationship between leadership styles and organizational performance. Relationship between

leadership style and employee performance has been discussed often. Most research showed

that leadership style has a significant relation with employee performance, and different

leadership styles may have a positive correlation or negative correlation with the employee

performance, depending on the variables used by researchers ( Ojokuku, Odetayo, & Sajuyigbe

2012).

Statement of the Research Problem

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There is no doubt that leadership plays significant role in the management of the affairs of the

banking sectors. There are many factors affecting the performance of employee in

organisation such as training, salary, organisational culture, structure, hierarchies, positions

among others but leadership styles has been neglected. Sun (2002) compared leadership style

with the leadership performance in schools and enterprises, and found that leadership style

had a significantly positive correlation with the organizational performance in both schools

and enterprises. Most organisations do not attribute organisational problems particularly poor

performance to poor leadership qualities of the leader. Most empirical evidence such as

Northouse (2007) and Ohunakin, Adeniji & Akintayo (2016) does not agree on the exact

relationship between influence of leadership style and organisational performance. Due to the

inconclusiveness on the whether there is relationship between the impact of leadership style

and performance of organisation in Nigeria. This study intends to fill the gap in knowledge

by examining the impact of leadership style and employee performance in selected banks in

Edo State.

Research Question

Is there relationship between leadership style (democratic, autocratic, transactional and

employee performance among selected banks in Edo State.

Research Objective

The broad objective is to examine the extent to which leadership style (democratic, autocratic

and transactional) affect employee performance among selected banks in Edo State.

Literature Review

Concept of Employee Performance

Employee performance is a multi-dimensional construct. It denotes what individual has

accomplished in the past. Performance is something that the individual or team leaves behind

(Butler & Rose, 2015). It is doing given job assignment or responsibilities effectively and
efficiently. In addition to this, employee performance consists of observable behaviors that

people demonstrate in performing their jobs (Campbell, 1990). Performance management

facilitates adaptability and continuous improvement in the ever-changing business

environment (London, 2003). In measuring employee performance, it is imperative to

recognize task and behavior performance (Fisher, 2003). Employee performance refers to the

behavior individuals engage themselves in or produce that are in line with and contribute to

an organization’s goal (Ikyanyon & Ucho, 2014). Extant literatures such as Aguinis (2009);

Torrington and Hall (2006); and Porter and Lawler (1974) both agreed that high performing

organizations are more likely to survive and compete favourable in this ever changing and

competitive business environment. Various factors like skills, training, motivation,

dedication, welfare, management policies, fringe benefits, salary and packages, promotion,

amongst others are responsible to encourage the people to work sincerely and give their best

output.

Concept of Leadership

Avolio, Walumbwa, and Todd (2009) argues that the field of leadership focuses not only on

leader alone but on followers, peers, supervisors, work setting/context, culture and including

a much a broader array of individuals representing the entire spectrum of diversity. House

and Shamir (1993) argues that leadership is the ability of an individual to motivate others to

forego self-interest in the interest of a collective vision and to contribute to the attainment of

that vision. Yukl (1986) sees leadership as the processes affecting the interpretation of events

for followers, the choice of objectives for the group or organization and work activities to

accomplish the objectives for the group or organization. Northouse (2007) defined leadership

as a process whereby an individual influences a group of individual to achieved specified

goals and objectives. Sharma, Jain, and Rajasthan (2013) explained that leadership is a

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process whereby a person influences others to accomplish objectives and direct the

organisation in a way that make it more cohesive and coherent.

Relationship Between Leadership Style and Employee Performance

The nature of leadership style will determine the extent to which employee can performance

effectively in the organisation. The links between leadership style and employee performance

is important because it will expand our understanding on how different variables that affect

performance. Participative style of leadership has a greater positive effect on employee

performance in which situation employee feel power and confidence in doing their job and in

making different decisions. In addition, in autocratic style leaders only have the authority to

take decisions in which employees’ feels inferior in doing jobs and decisions. In democratic

style employee have to some extent discretionary power to do work so their performance is

better than in autocratic style.

Methodology

The study adopted survey research design. The population is employee of selected banks

operating university of Benin Ugbowo Benin City, Edo state. These banks will include

Guarantee Trust Bank, Fidelity Bank, First Bank and WEMA Bank. Cochran’s formula was

used to determine an undefined sample size due the degree of confidentiality attached to

number of employees in the banks. The formula is thus stated as: n0= (t)2*(p)(q)/(d)2; where

n0 = sample size; t = Significant level (5% = 1.96); p = proportion (50%); q = 1- p (50%); d =

margin error (10%). Based on this formula, Ninety- Six (96) questionnaires will be

distributed but in anticipation possible invalids and wrong completion of questionnaire, two

hundred (220) questionnaires were conveniently distributed among the sampled banks. A

total of 200 questionnaires were retrieved amounting to (87.3%) response rate.

The research instrument is a structured questionnaire that contains information on both

personal details of the respondent and questions on dependent and independent variable. The
questions were measured on a 5-point likert scale ranging from ‘5= strongly disagree to 1=

Agree. A pilot test using Cronbach’s Alpha was obtained from 0.73 to 0.85 indicating that the

parameters selected highly reliable. The study adopted inferential statistic using linear

multiple regression at 5% level of significance to test relationship.

Model Specification

The Ordinary Least Squares (OLS) method was the estimation technique for this study. The
model is given as: EMPERF = Po + P1DLS +P2ALS +P3TLS + e………… (1)
EMPERF= Employee performance
DLS = Democratic leadership Style
DLS = Autocratic Leadership Style
TLS = Transactional Leadership Style
i= regression parameters or coefficients to be estimated; i = 1 ... 3
And a priori expectations:  

Demographic Distribution of Respondent

The table below described the demographic profile of the respondent with 125 (62.5%) for

male and 75 (37.5%) were female. The age distribution for 18–30 years were 131 (65.5%), 31

-40 years were 55 (27.5%), 41 -50 years accounts for 13 (6.5%) and those who are 51 years

and above 1 (0.5%). This implied that majority of the respondent’s age falls within 31 -40

years. Out of the 200 respondents majority of them are single with 137 (68.5%). For years of

experience, those whose year falls within 1-5 years are 66.5 (87%) are the highest.

Educational qualification of the respondent indicated that those with HND/B.Sc/Others are

highest with 138 (69%).

Items Frequency Percent (%) Cumulative%

Gender of Respondents
Male 125 62.5 62.5
Female 75 37.5 100
Total 200 100  
Age Distribution
18 – 30 Year 131 65.5 65.5
31 -40 Years 55 27.5 93
41 -50 Years 13 6.5 99.5
51 Years and Above 1 0.5 100
Total 200 100  
Marital Status
Single 137 68.5 68.5
Married 56 28 96.5
Divorced/Separated 3 1.5 98
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 Widowed 4 2 100
Total 200 100  
Tenure (Years of Experience)
1- 5 Years 133 66.5 66.5
6 -10 Years 26 13 79.5
11 -15 Years 30 1.5 94.5
16 -20 Years 10 5 99.5
21 Years and Above 1 0.5 100
Total 200 100  
Educational Qualification
SSCE/OND/NCE 36 18 18
HND/BSc 138 69 87
M.Sc/MBA/OTHER 26 13 100
Total 200 100  
Name of the Bank
Guaranty Trust 43 21.5 21.5
First Bank 44 22 43.5
Fidelity Bank 69 34.5 78
WEMA Bank 44 22 100
Total 200 100  
Source: Researcher’s Compilation (2018).

Analysis of the dependent variable (Employee performance)

Majority of the respondent agreed with most of all the questions with response rate with least

value of 75% and highest value of 96%. This implied that questions measuring dependent

variable are mostly agreed by respondents that it measured employee performance. The

response rate for the strongly disagree questions.

s/n Statement SD D U A SA
1 I have career opportunities available 8(4%) 48(24%) 8(4%) 84(42%) 52(26%)
to me
2 The bank is willing to accept change 13(6.5%) 20(10%) 6(3%) 94(47%) 67(33.5%)
3 I am allowed by my department to 6(3%) 29(14.5%) 9(4.5%) 75(37.5%) 81(40.5%)
take initiative in my job
4 I thinks the benefits offered to me by 15(7.5%) 50(25%) 3(1.5%) 96(48%) 36(18%)
the bank meet my needs
5 In my bank my opinion counts a lot. 21(10.5%) 38(19%) 11(5.5%) 89(44.5%) 41(20.5%)
6 I received personal satisfaction from 14(7%) 29(14.5%) 3(1.5%) 93(46.5%) 61(30.5%)
doing a good job in my department.
7 Employees’ in my department 18(9%) 19(9.5%) 10(5%) 87(43.5%) 66(33%)
regularly share and exchange ideas.
8 I enjoy coming to work 1(.5%) 19(9.5%) 10(5%) 87(43.5%) 66(33%)
Source: Researcher’s Compilation (2018).
 Analyses of Democratic Style among Employee in the Selected Banks

The questions relating to democratic style are strongly agree by the respondents as the value

ranging from 76% to 84% indicating a high degree of acceptance for the questions measuring

the leadership style.

S/N Statement SD D U SA A
1 The management resolved to vote whenever 19(9.5%) 39(19.5%) 4(2%) 76(38%) 62(31%)
a major decision has to be made.
2 My ideas and inputs into upcoming plans are 15(7.5%) 49(24.5%) 8(4%) 77(38.5%) 51(25.5%)
welcomed
3 The management allow employee to 7(3.5%) 17(8.5%) 8(4%) 79(39.5%) 89(44.5%)
determine their needs
4 The bank believe in team objectives and 12(6.0) 66(33%)   84(42%) 38(19%)
results
5 The management believe in use of team and 21(10.5 51(25.5%) 9(4.5%) 76(38%) 43(21.5%)
committees %)
6 Every employee is carried along in 13(6.5%) 38(19%) 6(3%) 82(41%) 61(30.5%)
discussion
7 Responsibilities are given with target goals 10(5%) 32(16%) 9(4.5%) 81(40.5%) 68(34%)
and objectives
8 I always retain the final decision making 4(2%) 51(25.5%) 9(4.5%) 76(38%) 43(21.5%)
authority within my department.
Source: Researcher’s Compilation (2018).

Analyses of Autocratic Style among Employee in the Selected Banks

The table below showed that most of the questions measuring autocratic style of leadership

are both strongly agreed and agree with a moderate value ranging from 34% to 59% and 26%

to 48% respectively. The value indicated that most of the questions averagely measured the

nature of autocratic style of leading in their bank.

S/N Statement SD D U SA A
1 The management act as a spokesperson for 5(2.5%) 21(10.5%) 3(1.5%) 119(59.5%) 52 (26%)
the employee
2 The management push projects forwards 5 (2.5%) 56 (28%) 12 (6%) 66 (33%) 61(30.5%)
without any commitment
3 The management determine strategies to 13(6.5%) 39(19.5%) 4(2%) 104(52%) 40 (20%)
organise other people
4 Management set high standard and want 14 (7%) 30 (15%) 2 (1%) 80 (40%) 74 (37%)
other to follow suit.
5 New employee are not allow to make any 4(2%) 29(14.5%) 4(2%) 68(34%) 95(47.5%)
decision unless approved
6 My ideas does not count in the 11(5.5%) 34(17%) 10(5%) 92(46%) 53(26.5%)
organisation
Source: Researcher’s Compilation (2018).

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 Analyses of Transactional Style among Employee in the Selected Banks

Based on the table it is obvious that majority of the questions are both strongly agree and

agreed respectively. More than 90% strongly agreed to the questions on transactional style of

leadership while almost 70% agreed. This implied that majority of the respondents agreed

transactional style can affect their performance.

S/N Statement SD D U SA A
1 When employee make mistake the management 3(1.5%) 30(15%) 2(1%) 86(43%) 79(39.5%)
correct such person
2 The management focused on opportunities and not 9(4.5%) 30(15%) 5(2.5%) 83(41.5%) 73(36.5%)
problems
3 The management avoid evaluating problem and 41(20.5%) 1(.5%)   95(47.5%) 63(31.5%)
concerns as they are identified
4 The management expects employee to create their 8(4%) 76(38%) 1(.5%) 82(41%) 33(16.5%)
own goals and objectives
5 There is relationship between the manager and the 8(4%) 65(32.5%) 8(4%) 79(39.5%) 40(20%)
subordinate
Source: Researcher’s Compilation (2018)

Relationship between Leadership Styles and Employee Performance

The table establishes relationship between leadership styles and employee performance

among selected employee in the Nigerian banking sector in Benin City Edo State.

Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 0.701a 0.492 0.484 0.64237
a. Predictors: (Constant), Transactional Style, Democratic Style, Autocratic Style

The dependent variable is the employee performance. The independent variable is regressed

against the dependent variable obtaining R2 value of 0.492. This indicates that the

independent variables jointly explain 49.2% of the variation in the dependent variable

(employee performance). 50.8% of the changes cannot be justified by the variable used in this

study.

ANOVAa
 S Sum of Df Mean Square F Sig.
Squares
Regression 78.204 3 26.068 63.173 0.000b
1 Residual 80.878 196 0.413    
Total 159.082 199      
a. Dependent Variable: Employee Performance
b. Predictors: (Constant), Transactional, Democratic, Autocratic style of Leadership

The F-statistic of 63.173 at prob. (Sig) = 0.000b conducted at 5% level of significant is used

to determine the overall/group significance of regression model. This means that there is a

statistically significant linear relationship between the independent variable (leadership style)

and the dependent variable (employee performance) as a whole (group).

Coefficientsa
Unstandardized Standardized T Sig.
Model Coefficients Coefficients
B Std. Error Beta
1 (Constant) 0.777 0.617   1.259 0.210
Democratic Leadership 0.947 0.075 0.661 12.629 0.000
Autocratic Leadership 0.075 0.097 0.042 0.768 0.443
Transactional Leadership 0.308 0.077 0.212 3.987 0.000
a. Dependent Variable: Employee Performance
The table above revealed that democratic and transactional style of leadership significantly

influence employee work performance at p<0.05. However, autocratic style of leadership is

not significant to employee performance at 0.05%. The sign of the coefficients of the

variables are all positive.

Hypotheses Testing

There is no significant relationship between autocratic style of leadership and employee

performance: The t-statistic of 0.443 is more than p-value of 0.05%, which confirmed the

result. Based on the result, we do not reject the null hypotheses. We therefore conclude that

there is no significant relationship between autocratic style of leadership and employee

performance.

There is no significant relationship between democratic style of leadership and employee

performance: The value of t-statistic of 0.000, which is less than 0.05%, confirmed the result.
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Thus, we do not reject the null hypotheses that implied that there is a significant relationship

between democratic style of leadership and employee performance.

There is no significant relationship between transactional style of leadership and employee

performance. The t-statistic of 0.000, which is less than 0.05%, agreed with the result. This

implied that there is significant relationship between transactional style of leadership and

employee performance. Therefore, we do not we do not reject the null hypotheses.

Discussion of Finding

This study is similar to THE work of Obiwuru, Okwu & Nwankere (2011); Mohammed,

Yusuf, Sanni & Ifeyinwa (2014) that the importance of a democratic leadership style as a

veritable tool for employee performance and effectiveness as indicated by the high regression

between the leadership style and prosperity of the independent variable (employee

performance). Secondly, the findings from the study indicated that transactional leadership

style is critical for employee to perform in the interest of the organisation. This study is in

line with the work of Mahdinezhad, Bin Suandi, Bin Silong & Binti Omar (2013) that

transactional leadership recognizes particular expectations of the leader, offers rewards in

return for performance of the leader, and unambiguously planned to express clearly and

recompense in-role performance.

Contribution to Knowledge

This study has expanded the frontier of knowledge in general management in establishing

relationship between leadership styles and employee performance in the selected banks in

Edo State as compared to Ojokuku, Odetayo &Sajuyigbe (2012); and Uchenwamgbe (2013)

that sampled selected banks in Oyo State and small-scale business in Lagos State.

Recommendation and Implication

 It was concluded that transformational and democratic leadership styles are the best for the

management of Nigerian banks to be adopted in order for them to wax stronger in a global

financial competitive environment. Organizations should adopt democratic style of leadership

and humane management practices in order to adequately commit the workforce to the work

activities.

Suggestion for future Research

Apart from leadership style adopted by an organisation, there are other factors one must take

into consideration that can affect positively or negatively the level of employee performance

in the Nigerian financial institutions such as organizational conflict, organizational politics,

organizational climate and motivation. Future studies should focus on the aforementioned

variables and empirically establish their relationship with employee performance.

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