AMBO UNIVERSITY WOLISO CAMPUS

SCHOOL OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT
POSTGRADUATE PROGRAM

THE IMPACT OF LEADERSHIP STYLE ON ORGANIZATIONAL

PERFORMANCE (The case of Commercial Bank of Ethiopia under
Ambo district Selected branches)

A MASTER THESIS SUBMITED TO THE DEPARTMENT OF MANAGEMENT IN

PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR MASTERS OF
BUSINESS ADMINISTRATION IN MANAGEMENT

BY: - TESFAYE SHURE

ADVISOR: - MESFIN TESFAYE (PhD)

MAY, 2023
WOLISO, ETHIOPIA
 AMBO UNIVERSITY
SCHOOL OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT

THE IMPACT OF LEADERSHIP STYLE ON ORGANIZATIONAL

PERFORMANCE (The case of Commercial Bank of Ethiopia under
Ambo district branches)

SUBMITTED BY: Tesfaye Shure

ADVISOR: Mesfin Tesfaye (PhD)

MAY, 2023
WOLISO, ETHIOPIA

ii
 AMBO UNIVERSITY WOLISO CAMPUS
SCHOOL OF BUSINESS AND ECOMOMICS
DEPARTMENT OF MANAGEMENT
POSTGRADUATE PROGRAM

Approval Sheet
As members of Board examiners of the final master’s Thesis open defense examination,
we certify that we have read and evaluated the thesis prepared by Tesfaye Shure entitled
“THE IMPACT OF LEADERSHIP STYLE ON ORGANIZATIONAL PERFORMANCE (The
case of Commercial Bank of Ethiopia Ambo district selected branches “and examined the
candidate. We recommend that thesis be accepted as fulfilling the thesis requirement for
the degree of Masters Business Administration in Management (MBA)

Board of Examiners
External Examiner: Signature Date

Internal Examiner: Signature Date

Chairperson: Signature Date

School dean: Signature Date

Head department: Signature Date

PG Coordinator: Signature Date

iii
 Declaration
I, the undersigned, declare that this study is my original work and has not been presented
for a degree in any other university, and that all sources of materials used for the study
have been duly acknowledged.
Declared by:

Tesfaye Shure 22/05/2023

Name Sign Date

iv
 Letter of Certification
This research thesis has been submitted to Ambo University, Woliso Campus, School of
Business and Economics, Department of Management for examination with my approval
as a university advisor.

Dr. Mesfin Tesfaye (PhD) 22/05/2023

Advisor: Signature Date

v
 Acknowledgement
I would like to express my gratitude to all whom in one way or another made the
accomplishment of this piece of work possible First, I would like to thank the „Almighty
God- JESUS CHRIST” for health, open mind, agape love,a gift of life and wisdom
required to preparing successful and accomplishment of intended thesis.

My heartfelt thanks go to my Advisor Doctor Mesfin Tesfaye (Phd) for his constructive
comments and outstanding help with each stage of this thesis and giving me the
wonderful opportunity to complete my MBA thesis under his supervision, it is truthfully
an honor. Thank you for all the advice, ideas, moral support, and patience in guided me
thoroughly towards research good end.
Next, I cannot afford to leave out the precious support of my mother Keno Duki and my
wife Kena Bekele for their limitless supports all the way through my life and successful
accomplishment. Would like to extend heartfelt appreciation and special thanks to my
beloved friends and classmate for their unlimited encouragement and moral support they
have render to me while doing this research.
Lastly, but not least I would like to thank Commercial bank of Ethiopia Ambo district
selected branches and all respondents from all sectors for their cooperation.
May GOD bless you!

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vii
 Abstract
The general objective of this study was to assess the impact of leadership style on
organizational performance in case of Commercial bank of Ethiopia selected branches under
ambo district. The study was used both descriptive and explanatory research design. The
descriptive research design was describing the present/existing situation of leadership styles;
such as, transformational, transactional and Liaises- faire leadership styles. As well as it was
describing the situation of organizational performance. Explanatory research design was
showing the impact of leadership on the organizational performance. The main source of data
was from both primary and secondary data sources. The study was used both stratified
sampling technique and purposive sampling technique. Cross sectional survey was employed
by taking a sample of 110 respondents from total target population of the study is 152 from six
branches. Questionnaires were used to collect primary data. SPSS statistics was used to
process the primary data which is collected through closed ended likert scale questionnaire.
Data was analyzed and interpreted using descriptive and inferential statistics like mean,
standard deviation, correlation and regression. Based on the results, transformational
leadership style has a significant positive impact on the organizational performance. Generally
based on the findings suggestions and recommendations were forwarded. Leadership style has
a significant impact on the organizational performance. Therefore, Ambo district should
design action plan for training and development program for leaders. Also, it’s better to give
more emphasis on transformational leadership to increase of ambo district CBE performance.
The leaders should enroll themselves individually in leadership styles to influence their
employees. To select the best style that suitable to the organizational goals and employee’
needs and desired. Leaders would try making their effort to improve the laissez-faire
leadership style application in the organization. Laissez-faire leadership style is considered as
a moderate leadership. Finally, the study recommended that good leadership is capability that
supports further improve the performance of the organization. Therefore, serious should be
given to make leadership a higher priority by the leaders of Ambo district branches of
Commercial Bank of Ethiopia.

Key words: Leadership style, Transformational leadership style, Transactional

leadership style, Laisses- faire leadership styles and organizational performance

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Table of Contents
Acknowledgement................................................................................................................................vi

Abstract............................................................................................................................................................viii

Table of Contents...............................................................................................................................ix

Acronyms and Abbreviations.........................................................................................................................xii

CHAPTER ONE.................................................................................................................................................1

1. INTRODUCTION..........................................................................................................................................1

1.1 Background of the Study................................................................................................................1

1.2 Statement of the Problem................................................................................................................5

1.3. Objectives of the Study....................................................................................................................7

1.3.1 General objective.............................................................................................................................7

1.3.2 Specific Objectives...........................................................................................................................7

1.4 Research Hypothesis........................................................................................................................7

1.5 Significance of the Study......................................................................................................8

1.6 Scope of the study............................................................................................................................9

1.7 Limitations of the Study..................................................................................................................9

1.8. Operational Definitions of Terms................................................................................................10

1.9. Organization of the Paper.............................................................................................................10

CHAPTER TWO.............................................................................................................................................11

2. REVIEW OF RELATED LITERATURE.........................................................................11

2.1 Introduction...................................................................................................................................11

2.2 The Concept of Leadership...........................................................................................................11

2.3 Importance of Leadership.............................................................................................................12

2.4 Leadership Theories Overview.....................................................................................................12

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2.4 .1 Great Man Theories...............................................................................................................................13

2.4.2 Trait Theories..........................................................................................................................................13

2.4.3 Behaviorist Theories...............................................................................................................................14

2.4.4 Situational Leadership Theory..............................................................................................................14

2.4.5 Contingency Theory................................................................................................................................15

2.4.6 Transactional Theory.............................................................................................................................16

2.4.7 Transformational Theory.......................................................................................................................16

2.5. Full Range Leadership Model..................................................................................................................17

2.5.1 Transformational Leadership................................................................................................................19

2.5.1.1 Dimensions of Transformational Leadership....................................................................................20

2.5.1.2 Transactional Leadership....................................................................................................................22

2.5.1.2 Dimensions of Transactional Leadership..........................................................................................23

2.5.1.3 Laissez-Faire Leadership....................................................................................................................24

2.6. Organizational performance....................................................................................................................25

2.6.1. Organization performance measurement............................................................................................28

2.7 Empirical Literature Review....................................................................................................................31

2.8 Conceptual Framework of the Study.......................................................................................................36

CHAPTER THREE.........................................................................................................................................37

3. RESEARCH METHODOLOGY...............................................................................................................37

3.1 Introduction................................................................................................................................................37

3.2 Research Design.........................................................................................................................................37

3.3 Research approach.....................................................................................................................................37

3.4 Sources of Data and Data Collection Techniques...................................................................................38

3.4 Target Population.......................................................................................................................................38

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3.6 Sampling Techniques.................................................................................................................................38
3.7 Sample Size Determination.......................................................................................................................39

3.8 Methods of Data Analysis..........................................................................................................................40

3.9 Validity of instrument...................................................................................................................41

3.10. Reliability of Research Instrument.............................................................................................41

3.11 Model Specifications......................................................................................................................42

3.12 Ethical Consideration....................................................................................................................42

4.2. Descriptive Analysis.....................................................................................................................43

4.2.2. Gender and Ages of the respondents.........................................................................................44

4.5.2. Relationship between transformational leadership and performance........................................56

4.5.3. Relationship between transactional leadership and performance..............................................56

4.5.4. Relationship between Laissez-faire leadership and performance.............................................57

4.5.2. Normality Test...........................................................................................................................58

Table 4.15: ANOVA Test.................................................................................................................................60

4.5.3 Regression Coefficients of Leadership Styles and Organizational Performance..............................61

References.........................................................................................................................................................67

APPENDICIES.................................................................................................................................................72

Appendix Questionnaire 1...............................................................................................................................72

Section 3: Leadership Style Description Questionnaires...............................................................74

APPENDICIES.................................................................................................................................................79

Appendix Questionnaire 2...............................................................................................................................79

Section 3: Leadership Style Description Questionnaires...............................................................81

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 Acronyms and Abbreviations

ANOVE Analysis of Variance

CEO Chief Executive Officer

CR Contingent Reward

DV Dependent variable

CBE Commercial bank of Ethiopia

IC Individualized Consideration

IM Inspiration Motivation

IV Independent variable

IS Intellectual Stimulation

LF Laissez-Faire

LPC Least Preferred Co-worker

MBEA Management by Exceptions (Active)

SD Standard Deviation

SPSS Statistical Package for the Social Science

TL Transformational leadership

UAE United Arab Emirate

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 CHAPTER ONE
1. INTRODUCTION
This chapter presents the background of the study, which is basically on leadership style.
It also presents statement of the problem, research hypothesis and objectives of the study
with significant, scope and limitation of the study. Further, it includes definitions of terms
and organization of the study.

1.1 Background of the Study

Leadership is one of the most pressing issues, prominent agenda, and widely discussed
topic across the world and countries. According to Awan and Mahmood, (2010) it was
stated that leadership is one of the most observed and least understood phenomena on
earth. Due to its complexity, there is no single consensually agreed up on definition of
leadership (Yukl, 2002).

Ezeuwa (2005) defined; leadership is the act of influencing people so that they strive
willingly and enthusiastically towards the accomplishment of goal. De Jong and Den
Hartogo (2007) viewed leadership as the process of influencing others towards achieving
some kind of desired outcome. According to Hamidfar (2009), leadership is an influence
relationship among leaders and followers to perform in such a way to reach a defined
goal or goals. What is meant by influence is that the relationship among people is not
passive but multidirectional instead, and is where superiors influence subordinates and
subordinates influence superiors. Leadership is the process of interaction between leaders
and followers where the leader attempts to influence followers to achieve a common goal
(Northouse, 2010; Yukl, 2005).

Organizations in corporate world thoroughly focused on finding, searching and

developing leadership for their respected organizations. This implies that leadership is
gear for the organizations success by establishing vibrant and high performing teams
regardless of the type of organizations. In the modern world era, due to the nature of the
organizations change, complexity and dynamic environment the leaders do face greater
challenges than ever before. Leaders in educational institutions are the same as leaders in
other organizations, and inevitably face the challenge of maintaining the goals of
institutions (Northouse, 2010).

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In recent years, leadership style has become an important topic of study in the
management field (Fang, 2006). There are many different styles of leadership.
Mosadeghard (2003) had pointed out the following styles of leadership: autocratic,
bureaucratic, laissez-faire, charismatic, democratic, participative, situational,
transactional, and transformational leadership. In this study, the researcher uses the
following three leadership styles: transactional, transformational and laissez-faire which
they are together considered as elements of full range model.

These three styles are known as the new leadership theory and are used by most state
enterprises who study organization leaders (Bogler, 2002; Timothy and Ronald, 2004).
FRL theory approach is a new comprehensive leadership model (Walumbwa, et.al 2005)
and universally applicable (Bass,1997). However, the literature on transformational
leadership model/ FRLM is extremely little in the Ethiopia both in governmental and
private organization settings since there were little literatures done on similar setting.
Therefore, it is essential to state some overview about these three leadership styles, hence
the overview serve as entry point for this study.

Transactional leadership style focuses and emphasizes on completion and accomplishing

of allocated tasks on hand. This type of leader maintains and preserves harmony working
relationships coupled with promises on rewards for satisfactory performance (Dessler and
Starke, 2004). It is an exchange-based relationship where self-interest is dominated. As
Bass and Avolio (2004) stated transactional leaders work with their organization culture
and follow existing rules, procedures and operative norms.

According to Pearce and Sims (2002), transactional leadership relies on the use of the
appropriate reward to motivate followers. The rewards shall include negative based
rewards such as punitive and penalized actions in the event that the followers or
subordinates fail to perform as per the instruction, while positive rewards are such as
complimentary comments, praise and recognition upon successful compliance with
instruction from the leaders and achievement of objectives (Riaz and Haider, 2010).

Newly, in the full range leadership (FRL) theory approach the range of behaviors starts
with transformational leader behaviors to transactional leader behaviors reaching to the
lowest leader interaction of laissez-faire leader behaviors which are represented by nine

2
distinct factors (Bass et al., 2003).The most widely used survey instrument to assess these
factors in the FRLT has been the Multifactor Leadership Questionnaire (MLQ) (Hunt,
1999; Lowe, Kroeck, & Sivasubramaniam, 1996; Yukl, 1999).

Leadership style affects a range of factors such as job satisfaction, performance, turnover
intention, and stress and organizational performance (Chen and Silverthorne, 2005) and
so contribute to organizational success (Rad and Yarmohammadian, 2006). As
Laohavichien et al., (2009), transactional and transformational leadership has been of
great interest to many researchers in the current era. Both transformational leadership and
transactional leadership help in predicting subordinates’ satisfaction with their leaders
(Bennett, 2009). However, in some situations both cannot provide the ultimate
satisfaction to their subordinate and partially contribute as explanatory variables. Hence,
leadership style and organizational performance seem to go hand in hand with fulfilling
their roles and functions towards for the sustainable organizational performance, leaders
adopt various leadership styles or they exhibit various behaviors patterns. Due to the
reason that many academicians and researchers considered in the recent years that
transactional and transformational leadership as independent variables and explored their
impact on the dependent variable organizational performance.

In society today, thousands of individuals are appointed or elected to shoulder the role
and responsibilities of leadership. Leadership is practiced in both governmental and
private organizations of a country and public life, at all levels, in short in every walk of
life. These leaders should promote unity, harmony, strength, prosperity and happiness in
society.

The challenges of coping with today’s uncertain business environment have put many
organizations on their toes to struggle for survival in the heat of competition. The driver
of such strategic move towards surviving the competition is the leadership provided by
managers who are expected to influence others in achieving organizational goals and also
boost employee’s performance. Shafie et al. (2013) explains the importance of leadership
in organizations and especially on human beings who are apparently the biggest asset of
any firm; “The main drivers of organizations are usually employees, they give life to the
organizations and provide goals" (Shafie et al., 2013). It is very paramount to provide

3
workers with direction and psychological satisfaction to get the best from them, this
direction can only come from leaders. In fact, leadership is very critical for all
organizations in realizing their set objectives for achieving organizational goal. Since
leadership is a key factor for improving the performance of many if not all organizations
and the success or failure of an organization depends on the effectiveness of leadership at
all levels. Paracha et al (2012) is in support of this “Leaders play essential role in
accomplishment of goals and boost employees’ performance by satisfying employees‟
job for the organizational performance.

CBE is main Banking service provider at the country level. The Bank focusing on the
improvement of customer services considering them as a key lever in the development of
Ethiopia, to develop reliable Banking Services and provide the best quality of service to
its customer. In line with these missions of CBE has ambition goals such as being digital
centric service, offering the best quality of services, meeting world class Commercial
Bank.

CBE set its vision to become a world class commercial bank and a mission to provide
world class modern and high-quality Service for all citizens equitably so as to transform
the multifaceted development of the concern to the highest level. The vision to become
real, to perform the mission and to meet the objective, leadership of the organization play
vital role.

The main purpose of this study was to assess the impact of leadership styles on the
organizational performance. More specifically it aims to find out which styles of
leadership has impact on the organizational performance, and which aspects could be
further developed and improved in order to increase organizational work commitment. In
previous time, CBE, at different Branch Limited research was conducted on the impact of
leadership style on the organization performance, however only little research has been
made on leadership style and organizational performance. Therefore, the finding enabled
both employees and leaders of CBE to give feedback on their on the effect of leadership
style that leads to increase employee’s commitment, company’s profitability and
organizational performance.

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 1.2 Statement of the Problem
As it was stated in Kennelly (2017), the fundamental factors influencing the effectiveness
of an organization are leadership and organizational performance. Leadership is
considered as one of the most important determinants of employee job satisfaction. It
extensively influences employees‟ motivation and dedication. The successes of the
organizations depend on effectiveness and efficiency of both leadership and employees.
Therefore, it is difficult to ensure organizational success without employees‟ cooperation
and leadership efforts. Effective leadership and organizational performance are two
factors that have been regarded as fundamental for organizational success. A capable
leader provides direction for the organization and lead followers towards achieving
desired goals. In similar vein, employees with high job satisfaction are likely to exert
more effort in their assigned tasks and pursue organizational interests. 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 (Mureithi, 2012).

From most previous studies, it can be concluded that the success of an organization is
often tied to the effectiveness of its leaders, especially in managing human resources.
Managers continually strive to improve their leadership styles to increase organizational
performance and they suppose that employees are accepting them. Widely celebrated
cases of a direct leadership performance link may be found in numerous anecdotal
accounts of improvements of company performance attributed to changes in leadership
(Nicholls, 2016; Simms, 2017). However, empirical studies into the links between
leadership and performance have been lacking (Quick, 2012). One notable exception is
the detailed study of the impact of leadership on performance of state enterprises.
Thorlindsson (2015) suggests that variations in the performance of different state
enterprises, under identical conditions, can be accounted for by the leadership skills of
organizations. Over a three-year period, Thorlindsson (2017) revealed that the leadership
qualities of state enterprises accounted for 35 to 49 per cent of variation in the
organization performance. Other studies which examine the links between leadership and
performance coincide with the re-emergence of the ‟one best way to lea’’ debate. Of
particular relevance is the resurgence of interest into charismatic leadership, which is

5
frequently referred to as transformational leadership (Bass and Avolio, 2010). A number
of researchers theorize that transformational leadership is linked to organizational
performance (Yukl, 2010).

Conceptually, it is argued that the visionary and inspirational skills of transformational

leaders motivate followers to deliver superior performance (Nicholls, 2016, Quick, 2012).
In summary, much of the above evidence presented as supporting the claim of a
leadership performance link is anecdotal and frequently over concentrates on the,
‟transformational’’ role of leaders in corporate successes (Quick, 2012; Simms, 2017). It
would appear that few studies have responded to the Observation of Porter and Mckibbin
(2018) that much of the research reported as supporting this claim is either inconclusive
or empirically suspect.

With these understandings, we infer that there was empirical gap on the impact of
leadership styles on the organizational performance. Consequently, the study sought to
explore why there exist gaps between theory and practice, drawing on the leadership at
CBE Branches under ambo district and the broader leadership literature. For example, in
theory, it is understood that transactional leadership focuses on the exchange of goals and
rewards, while transformational leadership focuses on values, inspiration and motivation,
leading to employee motivation and organizational growth. In practice, however,
applying either of these styles may not necessarily lead to the desired outcome. Gaps also
exist in organizational leadership as there happens to be some generalized differences
between senior management and middle management leadership styles. Both levels of
management may have a different way of doing things, tackling problems and managing
their units. The style of leadership practiced is important to ensure a linkage between
strategic and operational activities.

Hence, there is need to effectively coordinate and motivate the employees by an effective
leader. Unfortunately, some of the business organizations in developing countries fail to
notice the leadership style adopted by their managers (Ogbonna and Harris,2000). This
study was therefore to examines the leadership style and organizational performance in
CBE to offer suggestions as to how closer alignment between theory and practice can be
achieved in the leadership at selected CBE branches under ambo district and provides

6
 some recommendations to unify the strategic and operational leadership at CBE in order
to more increase organizational performance.

Also that it need to fill an empirical gap and need to investigate further the nature of
leadership styles on the organizational performance by putting future direction for
improving the organizational performance selected branches under ambo district.
1.3. Objectives of the Study
1.3.1 General objective
The general objective of this study was be to assess the impact of leadership style on
organizational performance.

1.3.2 Specific Objectives

In order to achieve the General objective, the following specific objectives have
been drawn: Therefore, the specific objectives of the study are:
1. To identity the prevalent practiced leadership styles in CBE.
2. To examine the impact of transformational leadership style facets such as idealized
influence, inspirational motivation, intellectual stimulation and individualized
consideration on the organizational performance of selected CBE branches.
3. To investigate the impact of transactional leadership style facets such as contingent
rewards, management by exception (active) and management by exception
(passive), on the organizational performance of CBE.
4. To assess the impact of laissez faire leadership styles on the organizational
performance of CBE.
1.4 Research Hypothesis
A hypothesis can be defined as a logically supposed relationship between two or more
variables expressed in the form of a testable statement (Sekeran, 2005). The expected
nature and directions of relationships between the dependent variable and each
independent variable of the study are briefly explained below. To guide the investigation

of the issue was raise in the problem definition. It is Hypothesized that:

7
 Ha1. There is a statistically significance impact of the facets of transformational
leadership style [idealized influence, inspirational motivation, intellectual stimulation
and individualized consideration] on the organizational performance.
Ha2. There is a statistically significance impact of the facets of transactional
leadership style [contingent rewards, management by exception (active) and
management by exception (passive)] on the organizational performance.
Ha3. There is statistically a significance impact of laissez-faire leadership style
and organizational performance.

1.5 Significance of the Study

The findings of the study are believed to it was primarily significant to leaders of
commercial bank of Ethiopia located under ambo district. The finding of the study was
assist the CBE leaders to understand more clearly whether the organization performance
is related to the company’s leadership style and to differentiate what the organization
need to make necessary improvements based on the findings of the study which may
contribute to improved levels of organizational performance.
The finding of the study was to create the awareness and rises leadership capacity of the
leaders of selected branches Expert of CBE as whole at by examining the three important
leadership styles (transformational, transactional and laissez-faire) and impact on the
organizational performance.
Most of the time leadership styles have been accepted worldwide as instruments for good
organization performance and development. Financial institutions particularly in the
developing countries have made tremendous efforts and establish strategies to enhance
the capacity of their institution’s leaders. Therefore, overall outputs of this finding
contribute other governmental or nongovernmental business organizations as a tool to
customize the suggested models in to bank context to improve their leadership skills
related selected leadership styles.
Furthermore, the study also serves as a stepping-stone and makes the modest contribution
for those who are interested to conduct research on leadership style or future
improvement of the relationship and to take remedial actions in the area of problems

8
identified. This was ultimately contributed to improvement in the overall performance of
the organization.

1.6 Scope of the study

This study was be designed to be carried out to assess the impact of leadership style on
organizational performance in case of Commercial bank of Ethiopia, Ambo district. With
regard to its content, the study was also delimited to the contemporary leadership styles
(transactional, transformational and laissez-faire leadership styles) on organizational
performance. The research is geographically limited CBE Ambo district, Tulu bolo
branch, Asgori branch, Woliso Branch, Afren woliso branch, Burka branch and Geresu
Duki branch located in south west shoa. As a leadership challenges multi dimensions
array focused on three independent variables namely transactional, transformational and
laissez-faire leadership styles only and one research methodology approach and two
research design.
1.7 Limitations of the Study
Due to unavailability of time and other resources to make the study more manageable
and feasible, this study delimited into CBE branches located under Ambo district, only
selected six branches. With regard to its content, the study was also delimited to the
contemporary leadership styles (transactional, transformational and laissez-faire
leadership styles) and organizational performance. These three leadership styles selected
or focused concerning to the following reasons: they are recent, new, timeliness and not
well understood and studied theories. More specifically, transformational leadership style
because of its supportive, motivation, ethical aspirations, productive and innovative
nature; transactional because of its exchanges of value items between leaders and
followers and laissez-faire leadership for it’s the reason that leaders avoid the
responsibilities towards followers and organizations based on how motivate followers.
Furthermore, the other styles, especially like Autocratic (authoritative) and democratic-
have been extensively studied by various researchers in a wide variety of fields and in an
equally wide variety of settings in different parts of world. Besides, it was not possible to
address all the existing styles only by this single thesis within a given short study period
of time. Since the researcher hasn’t sufficient experience on conduct research besides to
this, lack of experience may be other challenges that faced the researcher.
9
1.8. Operational Definitions of Terms
Sometimes words are interpreted in various ways and they may affect plausibility of the
finding. Therefore, in this section Basic Terms are defined operationally according to the
exact meaning they are intended to convey and that the researcher wanted the reader to
understand them to avoid misinterpretation as follows:

Leadership: In the context of current study, leadership ranges along a continuum from
one end by laissez-faire leadership, transactional leadership lies in the middle of the
continuum, and on the other is transformational leadership. The leadership continuum is
within full range leadership (FRL) that covers the highly ineffective laissez-faire
leadership to the highly active and effective inspirational and, ideal influential
transformational leadership (Northouse, 2007). Leadership Styles: In the context of this
study it means the behavior patterns that a leader uses to achieve a goal, as measured by
scores of Multifactor Leadership Questionnaire Instrument (MLQ-5X) and Scoring Guide
(form 5x-short) which are developed by Bass and Avolio (1995).

Performance management: is an ongoing process of communication between a

supervisor and an employee that occurs throughout the year, in support of accomplishing
the strategic objectives of the organization.

Organizational performance: is an analysis of a company’s performance as compared

to goals and objectives.

1.9. Organization of the Paper

The study was organized under five chapters. The first chapter mainly contains
background of the study, statement of the problem, general and specific objectives of the
study, significances of the study and scope of the study, The second chapter deals with
theoretical, empirical review of literature and conceptual frame work. The third chapter
deals with research design, sources of data and data collection techniques, sampling
techniques and sample size, method of data analysis and presentation. Data presentation,
analysis and interpretation highlighted in chapter four. The last chapter contains
summary, conclusions and recommendations.

1
 CHAPTER TWO
2. REVIEW OF RELATED LITERATURE
2.1 Introduction
The purpose of the literature review is to provide insight into information from previous
researches related to this study and the research questions which facilitated the research
process (Rowley,2012). This chapter reviews works on Leadership style in Ethiopia and
other countries in general. This is of help to understand the state of leadership and its
dimensions of leadership styles. This chapter comprises of five sections. These are
concept of leadership, the importance of leadership, Dimensions of leadership, theoretical
and empirical related of the studies and Conceptual framework of the study.

2.2 The Concept of Leadership

Leadership is the key to the progress and survival of any organization whether it is an
enterprise or institution. It is of inestimable importance in because of its far-reaching
effects on the accomplishment of institution programs, objectives and attainment of
organizational goals.
Leadership is one of the most pressing issues, prominent agenda, and widely discussed
topic across the world and countries. Leadership has been widely discussed, written
about, and practiced for thousands of year and still remains an active area of inquiry
(Yukl 2010; Bass,1997; Bass,2004). Though leadership has long been of interest to
historians and philosophers, scientific studies only began in the early 1900s. Still, the
body of knowledge has since been fast growing as attested by the more than 350
definitions of the term which scholars have come up with. Giving one specific definition
of leadership is a thus very complex task (Bass 1985). The term leadership is different
things for different people. Researchers usually define leadership according to their
individual perspectives and the aspects of the phenomenon of most interest to them. After
a comprehensive review of the leadership literature, Stogdill (1974) concluded that “there
are almost as many definitions of leadership as there are persons who have attempted to
define the concept.” The stream of new definitions has continued unabated since Stogdill
made his observation. Leadership has been defined in terms of traits, behaviors,

1
influence, interaction patterns, role relationships, and occupation of an administrative
position.

2.3 Importance of Leadership

Leadership is an important factor for making any type of organizations successful.
Without a good leader, organization cannot function efficiently and effectively. Since the
organization is basically a deliberate creation of human beings for certain specified
objectives, the activities of its members need to be directed in a certain way. The
importance of good leadership Summarized as follows.
(1) Motivating employees: Higher the motivation better would be the performance. A
good leader, by exercising his/her leadership, motivates the employees for higher
performance. Good leader ship in the organization itself is motivating factor for the
individuals.
(2) Creating confidence: A good leader may create confidence in his followers by
directing them, giving them advice and getting through them good results in the
organization.
(3) Building morale: Morale is expressed as attitudes of employees towards
organization, management and voluntary cooperation to offer their ability to the
organization. High Morale leads to high productivity and organizational stability.
(4) Securing co-operation: A good can secure whole hearted cooperation of employee
for Achieving objectives.
(5) Facilitating change: A good leader convinces workers about the need to change,
reduce resistance, takes them into confidence and seek their full co-operation for
implementing the change.

2.4 Leadership Theories Overview

Beginning with the leadership studies of Lewin and Lippitt in 1938, there have been
numerous studies of leadership and numerous leadership theories developed. Major
theories posited include Great Man Theories, Trait Theories, Behaviorist Theories,
Situational Leadership, Contingency Theory, Transactional leadership and
Transformational leadership. While early leadership theories concentrated on the

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characteristics of successful leaders, their traits, behavior, power, influence and
situational approaches (e.g. Likert 1967; Mintzberg 1973; McClelland & Burnham 1976),
recent ones have focused on the role of followers and the Correlated nature of leadership.
The earliest theories of leadership focused on the performance of great men. For instance,
“without Moses, the Jews would have remained in Egypt and without Winston Churchill
the British would have given up in 1940” (James & Burgoyne, 2001). Analysis of such
heroic tributes gave rise to the Great Man Theory of Leadership, which contends that
leaders are born, not made. This theory posits that certain individuals are endowed with
leadership traits that cannot be learned (Perren & Burgoyne, 2011).
The following sub-section provides an overview of some of the leadership theories
developed over the years such as: Great Man Theories, Trait Leadership theory,
Behavioral Leadership theory, Situational Leadership theory, Transactional Leadership
theory, and Transformational Leadership theory.

2.4 .1 Great Man Theories

This theory assumes that great leaders are not made but born. It promotes the mentality
that Leaders inherit inborn leadership skills. In line with this theory, you can be a born
leader or not Made (North use, 2007).
Based on the belief that leaders are exceptional people, born with innate qualities, they
destined to lead. The use of the term 'man' was intentional since until the latter part of the
twentieth century leadership was thought of as a concept which is primarily male,
military and Western. This led to the next school of Trait Theories (Bolden et al., 2003)

2.4.2 Trait Theories

With similarities in some ways to the Great man theories, it promotes the idea that
leadership is Inborn. It means that a successful leader must inherit certain quality that
produces greatness (Northouse,2007).Trait theories profess that leaders are born with
certain traits and characteristics that distinguishes them from other people (Taylor,2009).
Leader characteristics, which involved influence, intelligence, power, and energy were
assumed inborn. Trait theories stress the qualities of the leader without covering the traits
of flowers (Northouse, 2004).

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The lists of traits or qualities associated with leadership exist in abundance and continue
to be produced. They draw on virtually all the adjectives in the dictionary which describe
some positive or virtuous human attribute, from ambition to zest for life (Bolden et al.,
2003).
In such a way that, trait theory differs from other theories in the sense that it focuses on
Personal qualities and characteristics rather than on the behaviors displayed by leaders
(Gehring, 2007).

2.4.3 Behaviorist Theories

After trait theories become popular in the early 20th century, the pendulum swung to
behavioral Theories. Behavioral theories attempted to identify the behaviors that create
effective leadership (Wren, 2010). The fundamental difference between trait theories and
behavioral theories are based on the fact that trait theories maintain that leaders are born
and cannot be created whereas behavioral theories, on the contrary, maintain that leaders
can be created by mimicking the leadership behavior of successful leaders (Robbins et.al,
2009).
These Behaviorist Theories concentrate on what leaders actually do rather than on their
Qualities. Different patterns of behavior are observed and categorized as 'styles of
leadership’. This area has probably attracted most attention from practicing managers
(Bolden et al., 2003).
The leader ship literature identified two types of behavioral styles: (a) task behaviors, and
(b) relation behaviors (Bass, 2004). Task behaviors focus on the tasks and actions needed
to be effective, while relationship behaviors focus on the working relationship between
leader and followers (Bass, 2004).

2.4.4 Situational Leadership Theory

In this school of thought, situational variables are the bases of every action taken. For
example, when a leader is the most experienced, the leader is in the position of calling all
the shots. Different styles of leadership can be applied to different situations (Northouse,
2007).
According to Hersey & Blanchard’s (1993) situational leadership theory, leadership can

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be subdivided into two categories namely task oriented leaders and relationship-oriented
leaders (Blank, et.al, 2010). The correct leadership style would depend on the maturity
level of the follower in a given work situation.
Hersey &Blanchard’s (2013) situational leadership theory includes Directing leadership,
Coaching leadership, participating leadership and Delegating leadership. Directing
leadership will be used in a situation where the follower shows low competence, low
commitment and Unwillingness to do his job. A leader in this situation will show high
task and low relationship focus. Coaching leadership will be used where the follower
shows little competence and Variable commitment, but is willing to do the job. A leader
in this situation will show high task and high relationship focus. Participative leadership
will be used where the follower shows high competence and variable commitment but is
unwilling to do the required job. A leader in this situation will show low task and high
relationship focus. Delegating leadership was used where the follower is competent,
committed and willing to do his job. A leader in this Situation will show low task and low
relationship focus (Bolden, et.al, 2003).
Situational leadership theory approach sees leadership as specific to the situation in
which it is being exercised. For example, whilst some situations may require an autocratic
style, others may need a more participative approach. It also proposes that there may be
differences in required leadership styles at different levels in the same organization
(Bolden et al., 2003).

2.4.5 Contingency Theory

This theory focus on variables that are environmentally related which determines the
style of Leadership that fits the situation best. It also promotes the idea that no single
leadership style is the best; rather success is based on variables, subordinates and type of
the situation (Northouse,2007). Contingency theory is concerned with leadership styles
and situations. Leadership styles are relationship-motivated and task-motivated.
Relationship-motivated Leaders focus on developing close interpersonal relationships,
while task-motivated Leaders primarily focus on reaching a goal. The Least Preferred Co-
worker (LPC) scale developed by Fielder is used to measure leadership styles.
Relationship-motivated leaders have high score on this scale, but task motivated Leaders

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Leaders have low score on this scale. There are three situational variables: leaders-
member relationship, task structure, and position power (Northouse, 2007).
Contingency theory is a refinement of the situational viewpoint and focuses on
identifying the Situational variables which best predict the most appropriate or effective
leadership style to fit the particular circumstances (Bolden et al., 2003).

2.4.6 Transactional Theory

Transactional Leadership Theory professes that people are motivated by rewards and
Punishment. Leaders that practice Transactional Leadership tend to be more to the
management side of the leaders/manager continuum (Taylor, 2009). According to Bass
(2004), Transactional Leaders determine and define goals of their employees (Laka-
Methebula, 2004). Followers are Remunerated with money and other simple rewards if
they complete what they were required to do. The followers are given full responsibly for
the tasks that are delegated to them even though they might not have the required
resources or competencies to perform those tasks (Taylor,2009).
This approach emphasizes the importance of the relationship between leader and
followers, focusing on the mutual benefits derived from a form of 'contract' through
which the leader Delivers such things as rewards or recognition in return for the
commitment or loyalty of the Followers (Bolden et al., 2003).

2.4.7 Transformational Theory

Transformational Leadership Theory focuses on the importance of the relationship
between the Leader and the follower. Nichols & Shaw (as cited in Taylor, 2009) are of
the opinion that Transformational Leadership focuses on the empowerment and
development of follower potential in attaining long term goals. According to Bass (2006),
it is evident that Transformational leaders focus on the long and short term needs of their
followers. Transformational leaders creates an environment of trust in which ideas can be
shared (Laka-Mathebula, 2004). Transformational leaders also transform the values of
followers in such a way that they support the vision and goals of the organization by
creating a climate where Relationships can be formed (Stone, et.al, 2004).
The central concept of transformational theory is change and the role of leadership in

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Envisioning and implementing the transformation of organizational performance (Bolden
et al., 2003). Each of these above discussed theories takes a rather individualistic
perspective of the Leader, although a school of thought gaining increasing recognition is
that of dispersed Leadership. This approach, with its foundations in sociology,
psychology and politics rather Than management science, views leadership as a process
that is diffuse throughout an organization rather than lying solely with the formally
designated „leader‟. The emphasis thus Shifts from developing leaders to developing
leader full organizations with a collective Responsibility for leadership (Bolden et al.,
2003).

2.5. Full Range Leadership Model

Full range leadership model proposed by Burns (1978), developed and refined by Bass
(1985) continuously tested by various researchers, also known as transformational-
transactional leadership theory has been a topic of much interest and research in the
literature. Professor Robbins (2005) has termed the model as cutting-edge leadership
theory. This model is popularly known as full range leadership (FRL) approach (Bass,
1985) and is universally applicable (Bass,1997). However, the literature on the
transformational leadership model is scarce in the Ethiopian context, particularly; in the
specific context of CBE under ambo district branches. Bass (2004) argues that the
worldwide applicability of the paradigm is due to its universal characteristics. The
transactional-transformational leadership paradigm has five universal Characteristics.
These are:
(1) A simple universal-refers to the statement the statement that any time group of
human beings come together, there is always a leader.
(2) A variform universal-refers to a simple regularity influenced to some extent by
organizations or cultures. Business organizations almost everywhere are ordinarily led by
a single executive officer or managing director.
(3) A functional universal-refers to a universal correlation between variables. This
functional Universal is the correlation between perceived ineffectiveness and laissez-faire
Leadership. Everywhere, the leaders who often avoid responsibilities and shrink duties
are perceived as dissatisfying and in effective by followers.

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(4) A systematic universal-refers to the paradigm that involves a theory about
relationships explaining if-then out comes across cultures and organizations. FRL theory
provides the Measurable relationships.
(5) A vermiform functional universal-refers to a positive, sizable relationship being
found Almost everywhere between attributed charisma and job satisfaction (Bass,1997).
The Full Range Leadership Model (FRLM) describes a full range of influencing styles
from “on-leadership‟ to powerful transformational leadership behaviors. The model
captures different kinds of behaviors which make a difference to outcomes for associates
of the leader. In other words, the range of behaviors starts with transformational leader
behaviors to transactional leader behaviors reaching to the lowest leader interaction of
laissez-faire leader Behaviors (Bass et al., 2003).
As we can describe an ideal or "pure" transactional leadership styles and a "pure"
transformational one, it is clear that organizations are likely to have cultures that are
Characterized by both styles of leadership. A leader may employ both styles at different
times or in differing amounts at the same time. Considerable recent research provides
evidence that shows transformational leadership as eliciting extra effort and performance
from followers, over and above that expected in an exchange relationship with a purely
transactional leader.
The authors' argument is that organizations should move in the direction of more
transformational qualities in their cultures while also maintaining a base of effective
transactional qualities (Bass et al., 2003).
Trotter et al. (2008) emphasized that as Bass’s full range leadership model is an important
part of the leadership research as well as it presents researchers with a theory that can be
Empirically tested and provides insight into the duality that leaders face in current
Organizational settings. Full range leadership model comprises of three distinct
leadership styles transformational, transactional and laissez-faire leadership. These three
styles are represented by nine distinct factors of leadership using the survey instrument
called Multifactor Leadership Questionnaire. Original theory of Bass (1985) consisted of
„seven factors”: Charismatic behavior, inspirational leadership, Intellectual stimulation,
Individualized Consideration, Contingent reward, Management by exception and Laissez-
Faire leadership. These seven factors were then reduced in to six factors by merging

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charismatic behavior and Inspirational leadership into a single charisma due to being
empirically indistinguishable despite their unique their constructs. However, a number of
researchers found the six Leadership factors could not be replicated. Therefore, they
recommended revisions of the model (Bass, Avolio, and Jung, 1999).The theory was
further tested validated by Bass and his Colleagues throughout 1985 to1990 and still it is
being tested and validated. Until now the full range theory of leadership comprises of
nine factors: five transformational leadership factors, three transactional leadership
factors and one non-transactional laissez-faire leadership.

Although multifactor theory is probably the most widely cited and comprehensive theory,
Leadership is often conceptualized within behavioral domains varying from non-
leadership, or Laissez-faire, to transactional leadership, which hinges on rewards and
punishments, to Transformational leadership, which is based upon attributed and
behavioral charisma (Bučiūnienė & Škudienė, 2008).

2.5.1 Transformational Leadership

The transformational leaders interact with followers in such a way as to stimulate their
thinking, to inspire their performance and to perform beyond expectations.
Transformational leadership is a process of influencing in which leaders change their
associates‟ awareness of what is important, and move them to see themselves and the
opportunities and challenges of their environment in a new way (Bass & Avolio, 2004).
Transformational leaders are proactive: they seek to optimize individual, group and
organizational development and innovation, not just achieve performance "at
expectations". They convince their associates to strive for higher levels of potential as
well as higher levels of Moral and ethical standards. Transformational leadership does not
replace transactional Leadership, but augments it in achieving the goals of the group
(Hall et al., 2002).
In a transformational style, there is generally a sense of purpose and a feeling of family.
Leaders and followers share mutual interests and a sense of shared fates and
interdependence. They go beyond their self-interests or expected rewards for the good of
the team and the good of the organization. The inclusion of transformational assumptions,

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norms, and values does not preclude individuals pursuing their own goals and rewards.
Superiors serve as mentors, Coaches, role models, and leaders, socializing members into
the culture, not necessarily because They are expected to do so but because they feel a
personal obligation to help new members assimilate into the culture. There is a rich set of
norms which cover a wide range of behaviors, Norms that will adapt to and change with
external changes in the organization's environment (Bolden et al., 2003).
According to Bass et al. (2003), transformational leaders was focus on developing them
followers by tapping them of their potentials, inspiring them, promoting collaboration,
Motivating them, and by reinforcing positive behaviors. The employees often develop a
high level of trust and confidence in such a leader.
The employees are proud to identify themselves with the leader and develop a strong
sense of loyalty to them. Similarly, Bass (1997) argues that transformational leaders are
pertinent especially during turbulent times when rapid changes and globalization takes
place. Transformational leadership fosters capacity development and brings higher levels
of personal commitment amongst followers to organizational objectives. According to
Bass &Avolio (2004) transformational leadership occurs when leaders broaden and
elevate the interests of their employees, when they generate awareness and acceptance of
the purposes and mission of the group, and when they stir employees to look beyond their
own self-interest for the good of the group. Together, heightened capacity and
commitment are held to lead to additional effort and greater productivity (Mannheim &
Halamish, 2008). According to Bass (1997), the goal of transformational leadership is to
„transform‟ people and organizations in a literal sense to change them in mind and heart;
enlarge vision, insight, and understanding; clarify purposes; make behavior congruent
with beliefs, principles, or values; and bring about changes that are permanent, self-
perpetuating, and momentum building.

2.5.1.1 Dimensions of Transformational Leadership

Regarding the dimensions, the original formulation of the theory (Bass, 1985) included
three types of transformational behavior: idealized influence, intellectual stimulation, and
Individualized consideration. A revision of the theory added another transformational
behavior called “inspirational motivation,” which includes communicating an appealing

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vision, and using symbols to focus subordinate effort (Bass &Avolio, 1990a). Yet another
revision by Bass and Avolio (2004) distinguished between idealized influence behavior
and idealized influence attributions. Garden (2010), there are four components of
transformational leadership, namely idealized influence, inspirational motivation,
intellectual stimulation and individualized consideration. They are discussed as follows:
(1) Idealized Influence: Idealized influence describes leaders who function as strong role
Models for their subordinates due to their exceptional abilities and high principles of
ethical and moral conduct. The leader instills pride and faith in followers, provides a
vision and a Sense of mission, gains respect and trust and sets high standards for
emulation. They Prioritize subordinates‟ needs as compared to their own needs and offer
them a vision.
Idealized influence has two aspects: first, idealized influence behavior (II-B), which is
Linked with the leader’s behavior, and second, idealized influence attributed (II-A),
which is Related to the elements that are attributed to the leader by their subordinates
(Gill, 2006). In Idealized influence (attributed) leaders instills pride and builds trust. The
leader has the Followers respect, faith and trust. While leader Idealized influence
(behavior) emphasizes collective sense of mission, and talks about values and beliefs with
the followers.
(2) Inspirational motivation (IM): The leaders increase the optimism, enthusiasm and
Confidence. Accordingly, to Bass (2004), leaders articulate an appealing vision of the
Future, challenge followers with high standards, talk optimistically with enthusiasm,
And provide encouragement and meaning for what needs to be done. Avolio (2006) and
Kelloway and Barling (2010) also discussed that these leaders encourage their
Subordinates to achieve levels of performance beyond their own expectation. They do so
by using stories and symbols to communicate their vision and message.
(3) Intellectual Stimulation (IS): Leaders promote intelligence, rationality, and careful
Problem solving from a new perspective. Leaders question old assumptions, traditions
and beliefs, stimulate in other new perspectives and ways of doing things, and encourage
the expression if ideas and reasons Bass (2008) stated that Intellectual Stimulation is also
helpful when the leader is attempting to maintain excitement and a high level of
motivation among the workforce who prefer to have their options at least Considered by

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the leader. Through intellectual stimulation, transformational leader help followers to
think about problems in new and unique ways. As a consequence of being intellectually
stimulated by their leaders, followers develop their own capabilities to recognize,
understand and eventually solve future problems.
According to Champoux (2000), such leaders induce changes in the values and beliefs of
their subordinates. They stimulate subordinates to imagine new and different future states
for the groups.
(4) Individualized consideration (IC): The leader treats followers as individuals but all
are treated equitably. Individual’s needs are recognized and assignments are delegated
to followers to provide learning opportunities. It refers to leaders paying special Attention
to each individual follower’s need for achievement and growth by acting as a Coach or
mentor (Bass &Riggio, 2006; Nicholason, 2007). According to Kelloway and Barling
(2010), these leaders treat employees as individuals, by being compassionate,
Appreciating and responding to their needs, and recognizing and celebrating their
Achievements. Individualized consideration is practiced when new learning
Opportunities are created with a supportive climate (Bass, 2008). A key assumption of
Individualized consideration is that each employee has different needs and that for a
Specific employee, those needs will change over time, based partially on the influence of
the leader (Avolio et al, 2004).

2.5.1.2 Transactional Leadership

Transactional leadership is underpinned by exchange theory, where a leader and
subordinates decide the aims and the procedure of attaining objectives by means of an
exchange of rewards and the use of coercion to acquire the subordinate’s compliance and
endeavor in order to accomplish organizational performance (Bass, 2004).
A "pure" transactional style focuses on everything in terms of explicit and implicit
contractual Relationships. All job assignments are explicitly spelled out along with
conditions of Employment, disciplinary codes, and benefit structures. Self-interests are
stressed. Employees work as independently as possible from their colleagues.
Cooperation depends on negotiations Not problem solving or a common mission. There is
little identification of the employees with the organization, its mission or vision.

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Superiors primarily are negotiators and resource allocators (Bass and Avolio, 2006).
Transactional leadership is based more on "exchanges" between the leader and follower,
in which followers are rewarded for meeting specific goals or performance criteria
(Trottier et.al,2008).
Rewards and positive reinforcement are provided or mediated by the leader. Thus,
Transactional leadership is more practical in nature because of its emphasis on meeting
specific Targets or objectives (James & Collins, 2008; Sosik & Dinger, 2007). An
effective transactional Leader is able to recognize and reward followers' accomplishments
in a timely way. However, subordinates of transactional leaders are not necessarily
expected to think innovatively and may be monitored on the basis of predetermined
criteria. Poor transactional leaders may be less likely to anticipate problems and to
intervene before problems come to the fore, whereas more Effective transactional leaders
take appropriate action in a timely manner (Bass et al., 2003).

Transactional leaders display behaviors associated with constructive and corrective

Transactions. The constructive style is labeled Contingent Reward and the corrective
style is Labeled Management-by-Exception (active and passive). Transactional leadership
defines Expectations and promotes performance to achieve these levels. Contingent
Reward and Management-by-Exception are two core behaviors associated with
'management' functions in organizations. Full range leaders do this and more (Bass et al.,
2003; Bolden et al., 2003)

2.5.1.2 Dimensions of Transactional Leadership

The three dimensions associated with transactional leadership are discussed below
(Avolio et al., 2004).
(1) Contingent reward (CR): Contingent reward is an exchange process between a
leader and their subordinates in whom a leader with the concurrence of subordinates
decides the aims, defines rewards for achievement of those aims and provides agreed
Compensation when performance objectives are fulfilled (Bass and Avolio, 1994;
Northouse,2010).
(2) Active management by exception (MBE-A): This is a leadership behavior were the

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Leader observes subordinates closely for mistakes and deviances from criteria in their
Jobs, and takes corrective measures as required (Bass, 1998; Gill, 2006).
(3) Passive Management by exception (MBE-P): In this form of leadership the leader
Waits inactively for mistakes and deviances from benchmarks to happen or until issues
have arisen before taking corrective measures (Bass and Riggio, 2006; Northouse,2007).

2.5.1.3 Laissez-Faire Leadership

Both the transformational and transactional leaders are described as leaders who actively
Intervene and try to prevent problems, although they use different approaches. When
researching these two active forms of leadership, one finds that they are often contrasted
with the third style of leadership, called laissez-faire leadership (Bučiūnienė & Škudienė,
2008).
James & Collins (2008) describe the laissez-faire leader as an extreme passive leader who
is Reluctant to influence subordinates‟ considerable freedom, to the point of handing over
his/her Responsibilities. In a sense, this extremely passive type of leadership indicates the
absence of Leadership. Laissez-faire leadership style has a negative impact on followers
and associates- opposite to what is intended by the leader - manager. There are many
behaviors that represent laissez-faire leadership as a “do nothing” or “hands-off”
approach. Such behaviors include staying away from employees, shirking supervisory
duties, and being “inactive, rather than reactive or proactive” (James & Collins, 2008).
It is the avoidance of leadership and is the most ineffective form of leadership style. The
leader Abdicates responsibilities, avoids making decisions. Laissez-faire leadership style
is the most in effective and inactive style of leading and is strongly associated with
subordinate Dissatisfaction, conflict and ineffectiveness (Bass, 2004 and 2006).
Researchers have consistently reported that laissez-faire leadership is the least satisfying
and least effective style of leadership. That is because these leadership behaviors are
accompanied by little sense of accomplishment, little clarity, little sense of group unity,
and followers do not hold as much respect for their supervisors (Trottier et al., 2008).
It is probably for these reasons that many researchers choose to exclude laissez-faire
leadership from their research involving only transformational and transactional
leadership (Bučiūnienė & Škudienė, 2008) uses the following statement to differentiate

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laissez-faire leadership from other Types of leadership behaviors and styles. Laissez-faire
leadership should not be confused with democratic, relations oriented, participative, or
considerate leadership behavior. Nor should it be confused with delegation or
management by exception. Delegation implies the leader’s Active direction of a
subordinate to take responsibility for some role or task. The leader who practices
management by exception allows the subordinate to continue on paths that the
subordinate and the leader agreed on until problems arise or standards are not met, at
which time the leader intervenes to make corrections.

2.6. Organizational performance

In the organizational context, performance is usually defined as the extent to which an
Organizational member contributes to achieving the goals of the organization. Employees
are a primary source of competitive advantage in service-oriented organizations (Luthans
and Stajkovic, 2009).
In addition, a commitment performance approach views employees as resources or
assets, and values their voice. Employee performance plays an important role for
organizational performance.
Organizational Performance is a complex and multi-dimensional phenomenon in the
Business literature organizational performance comprises of the results of an organization
or the actual outputs of an organization, which can be measured against intended outputs,
goals and objectives. The organizational performance involves three areas associated with
the organization financial performance (return on investments, profits etc.), shareholder
return (economic value added, total shareholder, etc.) and the product/service market
performance (market share, sales) etc (Gavrea, et al., 2011). According to Chen, et al.
(2006), organizational performance means the “Transformation of inputs into outputs for
achieving certain outcomes. With regard to its Content, performance informs about the
relation between minimal and effective cost (Economy), between effective cost and
realized output (efficiency) and between output and achieved the outcome
(effectiveness)”.
According to Scot and Davis (2015) there is no general agreement in the literature on the
Standards to be used in measuring the organizational performance. However, there are

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four Main dominant approaches Goal Approach. People create organizations for a
specific purpose which is determined by the stakeholders. The organizational
performance is the ability of the Organization to achieve its goals.
The System Resource Approach: this approach discovers the relation between the
organizations and the environment. As said by Cutler et al. (2003) an organization is
effective when it takes Advantage of its environment in the attainment of high value and
rare resources to approve its operations.
Constituency Approach: According to Agle, et al. (2006), an organization is effective
when multiple stakeholders perceive the organization as effective. The organizations with
more control over resources are likely to have the most influence on the performance
(Scott, Davis, 2007).
Competing Values Approach: it was developed by Cameron and Quinn (2006) and it
states that Organizational goals are created in different ways by the various expectations
of multiple districts. Therefore, organizations may have different criteria to measure
Performance. According to Cameron, et al. (2014), stakeholders support the adaptability
of their organizations; they want them to be flexible, stable and effective. According to
Cohen & Bradford (2005) a per formant and effective organization has a high degree of
collaboration and commitment among stakeholders through work groups and
management. For researchers who are anxious with practically all areas of leadership, the
most significant dependent variable is organizational performance (Richard, et. al., 2009)
for that reason, it explains performances of an organization (Obiwuru et.al, 2011).
According to Yukl (2010) organizational performance discusses the ability of an
organization to reach objectives such as good quality products, high profits, a big market
share, decent financial results, using relevant strategies for action. As stated by
(Choudhary, et.al, 2013), there are various indicators to evaluate the performance of an
organization, most of them are tangible; cost reduction, profits, sales volume, asset
turnover, equity turnover, and inventory turnover. Otherwise, some intangible
performance indicators such as customer satisfaction and product development are used
rarely (Richard, et al., 2009). As said by Hamon (2003) organization performance is a
measure of an organization progress that demonstrates how well an organization is
achieving its goals.

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Fry (2003) explains leadership as use of leading strategy to offer inspiring motive and to
enhance The staff’s potential for growth and development. Several reasons indicate that
there should be a Relationship between leadership style and organizational performance.
The first is that today’s Intensive and dynamic markets feature innovation-based
competition, price/performance rivalry, Decreasing returns, and the creative destruction
of existing competencies (Santora et al., 1999).
Studies have suggested that effective leadership behaviors can facilitate the improvement
of Performance when organizations face these new challenges (Lee and Chuang, 2009).
On the other hand, organizational performance refers to ability of an enterprise to achieve
such objectives as high profit, quality product, large market share, good financial results,
and survival at predetermined time using relevant strategy for action (Choudhary, et.al,
2013).
Organizational performance can also be used to view how an enterprise is doing in terms
of level of profit, market share and product quality in relation to other enterprises in the
same industry. Consequently, it is a reflection of productivity of members of an enterprise
measured in terms of revenue, profit, growth, development and expansion of the
organization.
Effective leadership is seen as a potent source of management development and sustained
Competitive advantage for organizational performance improvement (Rowe, 2001).For
instance, Transactional leadership helps organizations achieve their current objectives
more efficiently by Linking job performance to valued rewards and by ensuring that
employees have the resources Needed to get the job done (Zhu, et.al, 2005).
Visionary leaders create a strategic vision of some future state, communicate that vision
through Framing and use of metaphor, model the vision by acting consistently, and build
commitment towards the vision (Avolio, 1999). Some scholars like Zhu et al. (2005),
suggest that visionary Leadership will result in high levels of cohesion, commitment,
trust, motivation, and hence performance in the new organizational environments. Mehra,
et.al. (2006) argue that when some organizations seek efficient ways to enable them
outperform others; a longstanding approach is to focus on the effects of leadership. Team
leaders are believed to play a pivotal role in shaping collective norms, helping teams cope
with their environments, and coordinating collective action.

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This leader-centered perspective has provided valuable insights into the relationship
between Leadership and team performance (Choudhary, et.al, 2013). Some studies have
explored the strategic role of ethical leadership to investigate how to employ leadership
paradigms and use leadership behavior to improve organizational performance (Purcell,
et.al, 2004; Yukl, 2002).
This is because intangible assets of ethical leadership are: improving organizational
culture, increase employee’s skill and competence, and motivation are seen increasingly
as key sources of Strength in those firms that can combine people and processes and
organizational performance (Purcell et al., 2004).
Previous studies led the expectation that leadership paradigms will have direct effects on
customer satisfaction, staff satisfaction and financial performance. In general, however,
the effects of leadership on organizational performance have not been well studied

(Obiwuru et.al, 2011), Fenwick and Gayle (2008), in their study of the missing links in
understanding the relationship between leadership and organizational performance
conclude that despite a hypothesized leadership performance relationship suggested by
some researchers, current findings are inconclusive and difficult to interpret.

2.6.1. Organization performance measurement

The concepts of performance are studied through evaluation of overall performance and
the Management of the performance and the evaluation of performance is the process
classifying certain outcomes within a definite timeframe (Coens & Jenkins, 2012).
Moreover, the axiom 'If you can't measure it, you can't manage it,' underpins the rationale
for organization having a Completed and comprehensive performance measurement
system such as the Balanced Scorecard or total quality performance management. This
approach connects measures throughout an organization to translate high level objectives
into lower-level activities. Then, measures are imposed on individual employees to
monitor their performance of these activities (Platts & Sobotka, 2010).
Performance criteria need to be unambiguous, clearly explained, relevant to the work
tasks undertaken by employees and achievable. The criteria should not include factors
beyond the control of the individual employee. Supervisors also need to be trained to

2
provide regular, meaningful and constructive feedback. Employees should also be
provided with appropriate training and development opportunities to overcome
weaknesses in Performance identified through the appraisal process. The assessment of
individual employee performance also needs to focus on evaluating employee behavior
and work performance and not the personality of the employee (O' Donnell & O' Brien,
1999).
According to Huselid (1995), employees within firms contribute for organizational
performance and HRM practices can affect individual employee performance through
their influence over Employees‟ skills and motivation and through organizational
structures that allow employees to improve how their jobs are performed. Also, he used
labor turnover, productivity as employee Performance measurement when he test the
influence of HRM practices on employee Performance. Labor turnover is the rate at
which an employer gains and losses employees.
Arnold and Feldman (1982) concluded that perceptions of job security, the presence of a
union, Compensation level, job satisfaction, organizational tenure, demographic variables
such as age, Gender, education, and number of dependents, organizational commitment,
whether a job meets an individual’s expectations, and the expressed intention to search
for another job were all Predictive of employee’s leaving, and Sheridan (1992) also
concluded that perceptions of Organizational culture influenced turnover. Job
dissatisfaction could cause employees to leave once they have reached decisions on the
desirability of movement and the perceived ease of Movement (March and Simon, 1958).
Prior to leaving the organization, individuals Experiencing job dissatisfaction explore job
alternatives and evaluate these in terms of their Expected utility (Mobley, 1977).
The traditional approach therefore views voluntary separation as a consequence of low
job satisfaction combined with alternative labor market opportunities that are subjectively
perceived as having higher utility and relative ease of movement to Alternative
employment (Price, 1977). In order to avoid job dissatisfaction, employees need adequate
remuneration, job security and comfortable working conditions (Jonathan, 2004).
In Bhatti (2007) and Qureshi’s (2007) perspectives, productivity is a performance
measure Encompassing both efficiency and effectiveness. Labor productivity means the
output of Workers per unit of time which is a commonly used and straightforward

2
measure of Productivity. The growth rate of labor productivity is approximately equal to
the difference between the growth rate of output and the growth rate of the number of
hours worked in the Economy (Christopher Gust& Jaime Marquez, 2004). High
performing, effective organizations have a culture that encourages employee
involvement. Therefore, employees are more willing to get involved in decision-making,
goal setting or problem-solving activities, which subsequently result in higher employee
performance. Moreover, labor productivity also could be impact by continuing
information technology innovations which has the potential of changing the competitive
game for many organizations (Javier et.al, 2014). If employee output is produced by two
factors, labor and capital, then the growth of labor productivity depends upon the rate of
“capital deepening‟ and the growth of “multifactor productivity’’ (Christopher, et.al,
2014). Capital deepening refers to a rise in the ratio of capital to labor, that is, an increase
in the amount of capital which includes machines, structures, and infrastructure. For a
given Level of technology, capital deepening raises workers‟ ability to produce more
output with the same level of effort. Increases in multifactor productivity may reflect
advances in technology, but they may also reflect any other developments that result in
greater efficiency, such as Reorganization of tasks in a firm or improvements in
distribution channels used to deliver goods and services.
From this review of related literature, it is evident that although some scholars believe
that ethical leadership enhances organizational performance while others contradict this,
different Concepts of leadership have been employed in different studies, making direct
comparisons virtually impossible.Lusthaus, (2002) stated that ensure organizational
success, the important step is analysis of organizational performance, but there is little
agreement that due to the Complexity of the construct there is still lack of valid set of
criteria to measure organizational Performance. Despite the fact, based on the literature in
organizational performance, as a Dependent variable it has been used widely and also
many studies focused on recognizing the Aspects that influence the inconsistency in
performance outcomes. It is also still an unclear Variable (Lusthaus, 2002).

Organizational success or failure is largely dependent on the leadership style. Many

studies on Leadership and organization performance posited that leadership traits and

3
behavioral Paradigm of the top management affects organizational performance (Yukl,
2010). Luthans (2008) maintained that staff (employees) perceives employers as the
image of the organization; employees therefore internalize the culture and becomes part
and parcel of the organization. Partharch (2005) confirmed the impact of the management
styles on firm’s performance and further found a strong relationship between
management styled and organizational performance.

2.7 Empirical Literature Review

The following are researches conducted regarding to leadership styles and impact on the
Organizational performance. Here under below in this presented various studies on the
subject Matter.
According Choudhady, et.al (2013) stated that leadership has an important role in the
development and growth of any organization. The reason for this fact is that the leaders of
the organization generally consider all the plans and business decisions, effective and
timely Decisions considering by the leadership of the organization can have a wide
impression on the crucial business results. Madanchian, et.al (2010) stated that a decent
leadership behavior have Been recognized as the important factor that contributing to
business organization success.
Furthermore, (Arham, et.al, 2011) emphasized that insufficient leadership skills and poor
management skills are major factors which drive the failure of organizations. It is
approved that an organization needs growth and profitability in their performance, but
having an Effective leadership assist organizations to preserve the operation and direct
the employees to make organizational performance success (Valdiserri, et.al, 2010).
Therefore, organizations require developing comprehensive leadership behavior such as
ethical and effectiveness Leadership to direct their organization through difficulty times (
Madanchian, et.al (2010) Suitable leadership behavior in the organizations can keeps
employees motivated and focused.
A study conducted by (Li, Y., et al, 2015) the authors examined the effects of leadership
Styles on the organizational success and profitability, the study has been done among
business Organization in Pennsylvania and West Virginia, the results showed that
leadership styles has contribution to the organizational successes and profitability. They

3
concluded that regarding to Existing strong correlation between organizational
performances; particularly transformational Leadership style has a positive situation and
motivates employees to have high level performance in the organization can be provided
by a suitable leader.

Copeland (2016) examined a multivariate model for predicting leader effectiveness that
Included both the assessment of the contribution of effective leadership in predicting the
Effectiveness of a leader, as well as the effect of related variables that may moderate the
Relationship between leaders‟ style and leader effectiveness. The study concluded that
leaders who are transforming leader is more effective, and this behavior can
incrementally contribute to explaining and predicting the effectiveness of a leader.
Furthermore, in this study additional Research is encouraged that assists academics and
practitioners in determining how ethical leadership quality may be further developed in
leaders to add to their overall effectiveness.
Li, Y., et al. (2015) conducted in two semiconductor companies in China, examined the
moral emotions (empathy and gratitude) as the leadership‟ antecedents and hypothesized
that leaders‟ Moral emotions (empathy and gratitude) should predict ethical leadership
behaviors. The Study concluded that the leaders‟ moral emotions (empathy and gratitude)
both have direct and Positive effect on ethical leadership. They concluded that provided
evidence that supports that Ethical leader behaviors significantly help explain perceived
organizational performance.
However, some studies discussed that for the success of an organization the leadership
role is very important, on the other hand others studies mentioned that poor leadership
practices in Business contributes the failure of the firm (Ihua, 2009). Valdiserri and
Wilson (2015) observed the empirical evidences of success or failure of the business
organization, and concluded that Most of the reasons of business organization‟ failure
can be recognized to internal factors, which mostly are poor leadership and lack of
manager’s skills.
Matzler, K., et al (2009) in their study they examined of 200 bankrupt firms‟ failure
reasons, and exposed that poor management and lack of their knowledge are the main
reason causes the failure of firms. The mainstays of these firms eventually didn’t have

3
necessary talent and skills to excel in business. They suggested that, for organizations to
be productive, innovative and competitive, they require to have mainstays with right
leadership behavior composed with sufficient support and training. Significantly, for
those organizations to stay in business world for long-term, the leader of firm should have
the ability to adjust to the changing business world. These elements are very significant to
maintain a successful economy as well.
Research conducted by (Ihua, 2009) in a comparative study to evaluate the factors of
business organization failure in the Nigeria and United Kingdom, exposed that poor
leadership and lack of management are the most important factors that affect business
organization failure in the United Kingdom on the other side, organizational insufficiency
and poor economic are the most important factors in Nigeria.
According to Morris (2005) the practice of the leadership behavior forms by leaders has
suggestions for all level of managers in an organization (Zhu, 2008) postulated that in
organization the performance of the organization can be positively influenced by the
leadership behavior of top management. While nowadays the business becomes
internationally competitive, therefore, business organizations need a new sight and set of
leading to assist them to sustain in the competitive business world and become more
competitive. Thus, the leadership behavior of the owner of CEO of the organization plays
an important role in guaranteeing right leading and directions and also a clear sight to be
shared with followers and employees.

A study conducted by Hayat and M. T. Riaz (2014) explored the effects of leadership
style of leaders of business organization. They mentioned that in order to changing
rapidly in the business world and increases the strengths of business, the effective leaders
are needed. For that reason, it is very important for organizations‟ leaders to understand
the fast changing of business environment and to provide the suitable leadership to
improve organization performance. To understand the effects of leadership on
organizational performance is also important because leadership is observed by some
researchers (e.g. (Zhu, 2008) stated that one of the key to improving a firm’s
performance. On the other hand, effective leadership is Observed as an effective source
of management development and sustained competitive Advantage for organizational

3
performance improvement (Rowe, 2007, Uchenwamgbe, 2013) Stated that stressed that
an understanding of leadership is important to enterprises.
Effective leadership provides the building block for organizational performance and it is
Absolutely essential to the survival and growth of every organization Morris (2005).
When examining the factors that lead to organizational success, researchers have argued
that effective Leadership is a key predictor of organizational success or failure (Matzler,
et.al, 2009) and effective leadership can facilitate performance development (Valdiserri.
and Wilson, 2010). In addition, to understand the effects of leadership on performance, it
is important that leadership play a key role in developing the performance of the
organization (Li, Y., et al., 2008).
Besides, Gul, et al (2012) argued that effective leadership is important and does impact
on Organization’s outcomes. As well as (Amagoh, 2009) stated that effective leadership
can result in enhanced organizational outcomes, particularly improved organizational
profitability and Growth.
The research study done by Ahmad Fadhly Arham and Muenjohn had attempted to
identify the impact of leadership style on the organizational performance in case of
Malaysian Small and Medium Scale Enterprise (SMSE). In the study, the organizational
performance was measured in terms of growth and profitability after collected by self-
developed data collecting instruments. The study tested a casual modeling, examining the
various relationships among leadership behaviors organizational performance and based
on the test, the result of the study revealed that the behavior that associated with
transactional leadership seem to have more impact on organizational performance than
transformational leadership.
The transactional leadership, which focuses on providing direction and motivates
employees in the way of instituting goals by clarifying and task requirements, has seen a
significant Leadership behavior to promote organizational growth in the study. According
to the authors, the relatively small firm size could be the main reason for the result as it
demands a close Follow up monitoring style of leadership (Management-by-exception
Active) and a focus on the exchange of rewards for efforts (Contingent reward).
In the same way, Obiwuru Timothy C. and others have investigated the effect of
leadership styles on organizational performance in the cases of small-scale enterprises in

3
Ikosi-Ketu Council Development Area of Lagos State, Nigeria 2011.
The study investigated Transformational and transactional leadership styles effect on the
organizational performance. The organizational performance is expressed in terms in
terms of effectiveness, extra effort and satisfaction in case of transformational leadership
style and in terms of productivity and Loyalty/commitment in terms of transactional
leadership style. The study followed a survey design, and employed evaluative
quantitative analysis method. OLS multiple regression Models were specified, estimated
and evaluated.
The result showed that while transactional Leadership style had significant positive effect
on performance, transformational leadership style had positive but insignificant effect on
performance. The study concluded the Appropriateness of transactional leadership style
to induce performance in case of small-scale Enterprise over transformational leadership
style.
Chung-Wen Yang (2005) examines the impact of leadership style along with the
entrepreneur ship orientation on small and medium business performance in Taiwan. The
study considered Growth and financial performance as the performance measurement of
the business. The study Found that in a comparison of three different leadership styles
(N=406), the mean for Transformational leadership (M=3.00) is higher than the mean for
transactional leadership (M=2.68) and for passive-avoidant leadership (M=1.37). Thus,
according to the study, Transformational leadership is significantly more correlated to the
business performance than transactional leadership and passive-avoidant leadership.
A test of Transformational and Transactional Leadership Styles on Employees‟
Satisfaction and Performance in the UAE Banking Sector is done by Raed Awamleht et
al, (2005). The Paper has examined the effects of both transformational and transactional
leadership styles of Bank managers/supervisors on employees‟ satisfaction and self-
perceived performance by collecting data from employees working in national and
international banks operating in the UAE. After running a multiple regression, the study
found out that transformational Leadership style is related to job satisfaction and to self-
perceived performance. Thus, the Results confirmed that in order to elicit higher levels of
satisfaction and performance among Bank employees, managers/supervisors need to
demonstrate transformational leadership attributes.

3
The other study, on the leadership styles impact on employee commitment in Ethiopian
context is done by Teshome, 2011.The study had investigated the relationship between
Leadership styles (transactional, transformational, and laissez-faire) and employee
Commitments (affective, continuance, and normative commitment) in PHEIs at AAC.
Teshome included a total 115 participants in the research including 95 academic staff and
20 Leaders. He used two separate instruments, namely multifactor Leadership
questionnaire (MLQ) and organizational commitment questionnaire (OCQ), to measure
leadership styles and employees‟ organizational commitment respectively.

The findings of the study revealed that transformational leadership style has significant
and positive correlations with affective and continuance employee commitments while
transactional leadership style has significant and positive correlation with only normative
commitment.

2.8 Conceptual Framework of the Study

The conceptual framework model formulated to show the cause and impact of the
independent and dependent variables. The following conceptual model is formulated to
show the impact of leadership on the organizational performance. In this study
organizational performance is considered a dependent variable and leadership
(transformational, transactional and laissez- faire) styles are taken as independent
variables. The below figure depicted the conceptual framework of the study.
Independent Variables Dependent Variable

Transformational leadership
Organizational
performance
Transactional leadership

Laissez-faire leadership
Figure 2.1: Conceptual Framework of the Study
Source: Extracted from literature review

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 CHAPTER THREE
3. RESEARCH METHODOLOGY
3.1 Introduction
This chapter discusses the relevant methodological procedures that was used in data
collection and analysis. It contains research design, target population, sample size and
sampling procedure, research instruments, validity, reliability, methods of data collection,
and the methods of data analysis.
3.2 Research Design
The study was used descriptive and explanatory research design. Explanatory design
analyzes causes and relationships and attempt to identify patterns related to the subject
studied. In descriptive research a subject is described and documented. One may
concentrate on observing the physical setting, the key participants and their activities
(Saunders et al.,2006).
The research purpose is descriptive due to the fact that the authors describe both existing
theory testing and the empirical data collected. Finally, the research purpose can also be
recognized to be explanatory because the researcher was drawing some conclusions
regarding causes and patterns by answering the research hypothesis.

3.3 Research approach

For this study, the research approach which is used to assess the impact of leadership
style on organization performance in case of ambo district branches was quantitative in
nature. The data were collected by using structured questionnaires by simple random
sampling to collect data from non-managerial employees and convenience sampling
techniques to collect data from leaders (managerial employees) so both type of sampling
methods known as probability and non-probability sampling were used in the study.

3
3.4 Sources of Data and Data Collection Techniques
The main sources of the data were from both primary and secondary. The primary
sources of data were gathered through questionnaire and from selected respondents of the
bank under study.
To strengthen the primary data, secondary sources was collected through extensive
review of published and unpublished documents. About the subject under study was used.
Other key documents such as national policies and management journal and different
articles from Google scholar article, journal related to the study objectives was be
reviewed to strengthen the quality of findings of the study.
The questionnaires contained Likert five scale point ratings (Frequently, if not always =5,
fairly often=4, Sometimes =3, Once a while =2 and Not at all=1). Close ended
questionnaires were administrated to 110 respondents to catch the impact of leadership
style on organization performance. The reason for the selection of questionnaire is that it
helps in procuring extensive data at reasonable cost. It can be used economically to
collect data form a large number of persons; and, it is best to get response in a relatively
short time.

3.4 Target Population

It’s a decision has to be taken concerning a sampling unit before selecting sample.
Sampling unit may be a geographical, social or individual. The entire whole of things
targeted for the study and then target population is employee of commercial bank of
Ethiopia in selected branches located under Ambo district.
The target population was drawn from branches under ambo district. Those branches
were selected in the study are Woliso branch, Afrenwoliso branch, Burka branch, Asgori
branch, Tullu bolo and Geresu branch.

3.6 Sampling Techniques

The researcher was used both probability and non-probability sampling strategy.
Researcher applied one of non-probability sampling techniques known as the
convenience sampling techniques to select district and branches. Because this sampling
method is cheap, efficient and simple to implement. The population of the study is from

3
CBE branches available under ambo district. On the basis of branch differences, the
researcher uses each branch as strata geographically. Stratified sampling is the most
widely used techniques which enable to get more representative sample from all branches
proportionally. Stratification leads to reduced sampling error because it can ensure that all
relevant portions of the population are included in the sample. Stratification is easy to do,
and it should be used whenever possible for optimal coverage purposes.
According to Field (2005), whenever it is impossible to access the entire population, it is
possible to collect data from sample and use the behavior within the sample to infer
things about the behavior of the population. Field also states that the bigger the sample
size, the likely it reflects the whole population. From each stratum proportionally
respondents were selected by the use simple random sampling techniques because in this
sampling method, each member of the population has an exactly equal chance of being
selected. This method is the most straightforward of all the probability sampling methods,
since it only involves a single random selection and requires little advance knowledge
about the population. Because it uses randomization, any research performed on this
sample should have high internal and external validity.

3.7 Sample Size Determination

A sample is a part of the population selected to represent the population as a whole.
Ideally, the sample should be representative and allow the researcher to make accurate
estimates of the characteristic and behavior of the larger population. A number of factors
determine the appropriate sample size that sufficiently represents the population. Some of
these factors are: homogeneity of the population, analytical methods to employed and
available resource such as time, finance and management (Alan, 2004). If sample size is
too small, the objectives of our analysis may not be addressed precisely. So that
appropriate sample size has to be applied in order to get good representative data. The
total population of the study is 152 Employees. For this study the researcher was adopted
Yamane (1967) formula with 95% level of confidence and 5% acceptable error to
determine sample size as shown below.
n= N
1+N(e)2
Where N=is the total population

3
n= is the sample from the population
e= is the error term, which is 5% (i.e., at 95% confidence interval)
Using the above formula, the simple size of the study was determined as

n= 152 =110.
2
1+152(0.05)
Therefore, based on the above formula, the sample size was taken from each stratum.
Table 3.1 Number of respondents select from each branch

Branches Number Number of Number of Ss=n X

of all non- manageria N strata/ N (for
non-managerial)
employee manageria l
s l employees
employees
Woliso branch 41 37 4 37*93/135=25
Afrenwoliso 18 16 2 16*93/135=11
Burka branch 29 26 3 26*93/135=18
Tullobulo 24 21 3 21*93/135=15
branch
Asgori branch 14 12 2 12*93/135=8
Geresu branch 26 23 3 23*93/135=16
Total 152 135 17 93

The above table shows that from the selected sample size, at each branches all
managerial position (branch manager, branch business manager, branch operation
manager and branch internal control) employees are considered. The total sample of
110 employees (17 managerial + 93 non managerial employees) are used in this
study.

3.8 Methods of Data Analysis

Both descriptive and inferential statistics was used in analyzing data. The primary data
was collected through questionnaire by English language. It was analyzed using
descriptive statistics. Descriptive statistics was employed by using mean, percentage,
standard deviations and frequency to assess the impact of leadership style on
organizational performance in the study area using descriptive narrations through
concurrent triangulation strategy.
4
In addition to this, Inferential statistics infer from the data through analysis, the
relationship between two or more variables and how selected independent variables might
explain the variance in a dependent variable through using appropriate statistical tools
like Pearsons correlation and multiple regression analysis was used to test for the research
hypotheses. SPSS was used to perform the analysis of quantitative data.

3.9 Validity of instrument

Validity is the degree by which the sample of the test elements is representative of the
content that the research was intended to establish (Borg and Gall, 1989). Validity of data
collection instruments was established before engaging them in the actual process of data
collection. A sample structured questionnaires was re-developed from previous study and
handed over to the experts i.e. advisor to check on their suitability. This procedure was
followed to correct and make adjustment measures on the data collection instruments to
ensure the validity required.

3.10. Reliability of Research Instrument

In order to measure internal consistency of the study the researchers used Cronbach’s
Alpha method. Reliability can be equated with the stability, consistency, or dependability
of a measuring tool. Different authors accept different values of this test in order to
achieve internal reliability, but the most commonly accepted value is 0.70 as it should be
equal to or higher than to reach internal reliability (Hair et al., 2003).
Table 3.3 Reliability value of the Scale
Reliability Statistics
Cronbach's N of
Variables Alpha Items
Transformational leadership style .729 29
Transactional leadership style .652 13
Laissez-faire leadership style .874 4

Organizational performance .761 11

Source: survey data, 2023

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3.11 Model Specifications
Model of specification is indicating the direction of arrows connecting the variables in the
model. Based on these the study was modeled by this linear regression equation: The
objective of this analysis is to make a prediction about the dependent variable based on its
covariance with all concerned independent variables. The equation of multiple
regressions on this study is generally built around two sets of variables, namely
dependent variables (organizational performance) and independent variables (leadership
styles). The basic objective of using regression equation on this study was to make the
researcher more effective by describing, understanding, predicting, and controlling on the
state variables. Organizational performance= f (leadership styles).
Predicted Organizational performance(Y) = β0 + β1TranfoL + β2TransaL + β3Laise + ε.
β0: represents Constant

β1, β2, β3 represents Regression coefficients of independent variables.

TranfoL= stands for Transformational Leadership
TransaL=stands for Transactional Leadership
Laise=stands for Laissez-faire leadership
ε =stands for Error of Margin

3.12 Ethical Consideration

Since my paper aimed for only academic purpose or to get MBA, any information
gathered from questionnaires strictly use for academic use only without disclosing to the
third party. The respondent identity has not disclosed in the process of questionnaires.
The researcher also properly cited in the reference part of the paper those literatures,
documents and studies which are contributed by any means to the research.

4
 CHAPTER FOUR
4. PRESENTATION, ANALYSIS AND DISCUSSION OF RESULTS
This chapter presents the analysis and discussion results that gathered from primary
source and secondary to achieve the general objective of the study. The chapter contains
findings of the study and their interpretations using SPSS as data analysis tool. The
chapter is guided by research objectives and research questions. The general objective
was to assess the effect of leadership style on organizational performance in case of
Commercial Bank of Ethiopia, Ambo district. The points dealt with in the chapter are the
general characteristics of the sample population, means and standard deviations, the
computed t-test for leadership styles of employees and leaders in Commercial Bank of
Ethiopia, Ambo district. Moreover, it includes correlational analysis between leadership
style (transformational, transactional and laisses faire) and dependent variables
(organizational dimensions), analysis of variance (ANOVA) and multiple linear
regression analysis for leadership styles and organizational performance in the study
conducted organization.
4.1. Response Rate
Out of 110 questionnaires distributed to the respondents, 104 questionnaires were
returned and six (6) of the questionnaires were not returned. Thus, only the 104 complete
responses are employed in the analysis, which represents the response rate of 94.5
percent. This response rate is excellent and conforms to Mugenda and Mugenda (1999)
as cited Singh and Biniam (2016) stipulation that a response rate of 50% is adequate for
analysis and reporting; a rate of 60% is good and a response rate of 70% and above is
excellent. Therefore, in this study the response rate is 94.5 present and the response rate
is excellent for the analysis and reporting of the findings.

4.2. Descriptive Analysis

The descriptive analysis presents descriptive statistics of demographic data collected
from the respondents of the commercial bank of Ethiopia, Ambo district selected
branches. The characteristics include Gender of the respondent, age, education level and
work experience of the respondents. The descriptive analysis of the respondents is
presented as follows;

4
4.2.1 Demographic Characteristics of Respondents
The demographic characteristics of the respondents presents here under below. The
personal profiles of the respondents were analyzed as per of gender in a group, age in
category, educational background, total years of experiences, total years of experience in
the current position and organizational job position in commercial bank Ethiopia.

4.2.2. Gender and Ages of the respondents

Table 4.1: Gender and Age of respondents
Frequency Percent Cumulative Percent
Male 87 83.7 83.7
Gender Female 17 16.3 100.0
Total 104 100.0
18-28 9 8.7 8.7
29-38 61 58.7 67.3
Age 39-48 30 28.8 96.2
49 and above 4 3.8 100.0
Total 104 100.0
Source: Own Survey Data, 2023
The above table 4.1 shows the gender in group of respondents. Accordingly, 87(83,7%)
were male and 17(16,3%) were female employees of commercial bank of Ethiopia, Ambo
district selected branches. Based on the above data, female’s participation rate is low; it
indicated that further enormous effort would expect to increase female employees’
participation in commercial bank of Ethiopia, particularly in commercial bank of
Ethiopia Ambo district.
Figure 4.1 depicts the demographic information of participants (age category), majority’s
age group was between the age interval of 29-39 years and they covered 61(58.1%)
followed by the age interval between 39-48 years old and they covered 30(28.8%),
9(8.7%) of them found under 28 years and the remaining 4(3.8%) of respondents found
49 and above years. This data showed that most of respondents were found at productive
age group in the study conducted branch of commercial bank of Ethiopia.
4.2.3. Educational Level
Figure 4.2: Educational Background Level

4
 Cumulative
Educational level Frequency Percent Percent
College Diploma 2 1.9 1.9
BA/BSC 64 61.5 63.5
Educationa

MA/MSC 34 32.7 96.2

Other 4 3.8 100.0
l level

Total 104 100.0

Source: Own Survey data, 2023

Observing the educational qualifications of the respondents who participated in the study,
61.5% of the respondents were BA/BSC holder followed by 32.7% were MA/MSC
holders. Hence, based on the educational qualifications, majority of the respondents
believed to have sufficient knowledge regarding organizational performance.
Generally, from the above data it can be concluded that most of respondents understand
the effect leadership styles on the organizational performance in commercial bank of
Ethiopia Ambo district because they have good educational background and it infers that
they have good understanding on the full range of leadership styles and its effect on the
organizational performance.
4.2.4. Work Experience of the respondents
Table 4.3: Year of Work Experience
Cumulative
Frequency Percent Percent
1-3 years 14 13.5 13.5
Work experience

4-8 years 42 40.4 53.8

9-12 years 34 32.7 86.5
13 and above years 14 13.5 100.0
Total 104 100.0
Source: Own Survey Data, 2023

As depicted in table 4.3 above the demographic information of participants (total year of
experience in the organization majority of the respondents served in the commercial bank
of Ethiopia between 4-8 years and they covered 42(40.4%), followed by those who

4
served the organization 9-12 years and covered 34(32.7%), 14(13.5%) of them served in
the organization between 1-3 and 13 and above years of work experience. Therefore, it
can be concluded that majority of them well understand the effect of full range leadership
styles in the organizational performance in commercial bank of Ethiopia ambo district.

4.2.5. Job Position of Respondents

Table 4.4: Job Position of Respondents
Current job position
Frequency Percent
Branch internal control manager 2 1.92
Bank trainee 11 10.58
Junior officer 17 16.35
Current job position

Branch banking officer 38 36.54

Internal control officer 9 8.65
Senior branch banking officer 14 13.46
Customer relation officer 1 0.96
Branch manager 6 5.77
Branch business manager 4 3.85
Branch operation manager 2 1.92
Total 104 100.0
Source: Own computation and survey data, 2023

The above table indicated that position of respondents, 38(36.54%) of them were Branch
banking officer, 17(16.35%) of them were junior officers, 14(13.46%) of respondents
were Senior branch banking officers, 11(10.38%) of them were bank trainee, 9(8.65%) of
them were internal control officers, 6(5.77%) of them were branch managers, 4(3.85%)
of respondents were branch business manager, 2(1.92%) of them were branch internal
control and operation managers, 1(0.96%) was customer relation officers, respectively.

4
Table 4.6: Job Position of Respondents
Variables Entered/Removeda
Variables
Model Variables Entered Removed Method
Transformational leadership style, Transactional Enter
1 leadership style, Laissez-faire leadership style -
a. Dependent Variable: Performance
b. All requested variables entered.

Source: Survey result (2022)

4.4. Descriptive Analysis
This section presents the descriptive analysis of both the independent and dependent
variables.
The independent variables are leadership (transformational, transactional and laissez-
faire) style from the perspectives of both employees and leaders and the dependent
variable is organizational performance.
4.4.1. Organizational Performance
Under this section the study presents respondents opinion towards their organizational
performance concerning to the productivity of this organization increases from time to
time, the quality of product and service, employees use different tools and machine,
operational safety, lateness and absenteeism of employees is very less in this
organization, employees skills are apply in the organization, the motivation of
employees, employees job satisfaction, employee work efficiency and profitability in the
organization.
The responses from sampled employees were presented here under table below. The
responses from sampled employees were presented here under table below. Different
scholars have been used different interval scale to interpret the mean of the findings. For
the purpose of this study the researcher used the following interval scales. 1.00-1.49
strongly disagree, 1.50-2.49 Disagree, 2.5-3.49 Neutral, 3.5-4.49 Agree and 4.5-5.00
strongly agree. The mean indicates that to what level of agreement the response of all
respondents is approached. Standard deviation, however measures the mean difference

4
between responses. In other words, it measures variation of responses with respect to the
mean. It shows us whether respondents are highly deviated one another in their
responses. Thus, the means and standard deviations of variables are described as request
as the analysis.
The following table shows respondents agreement level.
Table 4.7: Employees Opinion towards Organizational performance
Std.
Mean Deviation
The productivity of this organization increases from time to time 2.92 0.434
Quality of product and service are high in this organization 2.44 0.786
Quality of output is high in this organization 2.78 0.638
There is good customer relationship management in your organization 2.80 0.729
Lateness and absenteeism of employees is very less in this 3.27 1.176
organization
Employee skills are used very well in this organization 2.84 0.712
Employee are very motivated in this organization 3.22 1.165
Employee job satisfaction is high 3.42 1.290
Employee work efficiency is high 2.90 0.430
Profitability of organization is high 2.46 0.800
The overall organizational performance 2.892
Source: Survey Data, 2023
The above table shows the study participants level of agreement to the statement of the
organizational performance. Concerning to respondents asked their level of agreement on
the productivity of their organization increases from time to time, respondents scored the
mean value of 2.92 with standard deviation of .434. As a result of the above data, we can
consider that productivity of the organization increases from time to time. A statement
requiring respondents’ level of agreement regarding to the statement of the quality of
product and service are high in this organization, respondents’ agreement level scored the
mean value of 2.44 with standard deviation value of 0.786. Considering with the above
data, we can say that quality of product and service in commercial bank of Ethiopia,
Ambo district found between low and moderate level. Therefore, the Ambo district

4
should improve to increase the organizational performance.
As shown in the same table above the study participants have been asked to rate their
level of agreement on the statement of the quality of output is high in the study conducted
organization respondents’ agreement level scored the mean value and standard deviation
of 2.78 and 0.638, respectively. Based on the above data, we can say that quality of
output is more than a moderate level and it needs further improvement for sustainability
of the organizational performance.
Item 4 presents respondents’ level agreement to the statement of there is good customer
relationship management in the organization; respondents scored the mean value of 2.80
with the standard deviation of 0.929. Based on the above data, the researcher concludes
that there is a little good customer relationship management in commercial bank of
Ethiopia ambo district which needs more improvement.
Respondents’ level agreement to the statement of lateness and absenteeism of employees
is very less in this organization respondents’ agreement level scored the mean value of
3.27 and standard deviation 1.176. As a result, we can consider that there is lateness and
absenteeism of employees in the organization, therefore, leaders in the region would try
their effort to reduce employees’ lateness.
Item 6 shows respondents level agreement to the statement of employee used their skills
very well in this organization, most of respondents agreed to this statement and scored
the mean value of 2.84 and standard deviation of 0.712. As result we can say that more or
less employees used their skill in very well manner in this organization, it indicates that
employees are committed for the organizational performance of their organization.
Item 7 asked to rate their level of agreement to the statement of employee are very
motivated in this organization in this organization most of respondents agreed to this
statement and scored the 3.22 with the standard deviation 1.165. We can say that
employees are moderately motivated in the organization. It indicates that
transformational leadership styles enhanced make enthusiasm and increased their
confidence to increase their performance as well for the organizational performance.
Respondents have also been asked their agreement to the statement of employee job
satisfaction is high; respondent’s agreement level to this statement and their agreed mean
value is 3.42 with standard deviation 1.290. Based on the above data we can say that
employees’ job satisfaction found at high level, it referred that job satisfaction of
4
employees in the ambo district plays vital role for the productivity employees as well as
for the organizational performance.
Item 9 asked to rate their level of agreement to the statement of employee work
efficiency is high, respondents agreed level to this statement and scored the mean value
of 2.90 with the standard deviation 0.430. We can say that work efficiency of employees
in ambo district approached to high level. It indicates that the moderate work efficiency
of the employees leads to moderately increase the productivity and organizational
performance.
Item 10 asked to rate their level of agreement to the statement of the profitability of
organization is high, respondents agreed level to this statement and scored the mean
value of 2.46 with the standard deviation 0.800. We can say that profitability of
commercial bank of Ethiopia ambo district increased moderately due to the effort of
leaders in the organization.
Final item have also been asked their agreement to the statement of the overall
organizational performance and their mean value is 2.89 with standard deviation 0.631.
Based on the above data we can say that the overall organizational performance at ambo
district found at the high level, as a result of commercial bank of Ethiopia provided
varieties of products and services to its customer in line with their qualities, good
customer relationship practiced, the highly motivated employees and good work
efficiency of employees.
In general, the grand mean value of employees’ opinion toward organizational
performance was 2.89, which indicates that majority of the respondents were neutral with
issue related with organization performance.
4.4.2. Descriptive Statistics for Leadership Styles
The descriptive statistics was used as a way to examine the mean, standard deviation and
other information which are not apparent in the raw data. It was needed to determine the
employee’s perception to leadership. The descriptive data contains mean and standard
deviations for the five transformational leadership subscales, three transactional
leadership subscales, and one laissez-faire subscale, indicated by both employees and
leaders’ respondents. In all cases, the distribution of scores for the sample contained
reasonable variance and normality for use in subsequent analyses.

5
4.4.2.2. Leaders Perception to Leadership Styles
This section presents leaders perception towards the current organization’s leadership
(transformational, transactional and laissez- faire) styles. Transformational leadership
divided in to five idealized influence (attributed), idealized influence (behavior),
intellectual stimulation, inspirational motivation and individual consideration. The
transactional leadership divided into three (contingent reward, management-by-exception
active and management by exception passive) and laissez-faire leadership styles.
Table 4.9: Descriptive Statistics for Leadership Styles as Perceived by commercial
bank of Ethiopia, Ambo district leaders
Mean Std. Deviation
Transformational 2.506 0.557
INTE_STIM 3.143 0.939
IDEA_INF 2.196 0.482
INSPIR 1.786 0.587
IDEA_INF_ATTR 2.629 0.292
IND_CONS 2.778 0.483
Transactional leadership 3.762 0.382
CONT_REWARD 3.804 0.429
MGMT_EXP_A 3.838 0.411
MGMT_EXP_P 3.643 0.306
LAISSEZ_F 2.964 0.390

Source: Survey data and own computation,2023

Table 4.9 presents leaders perception on the leadership styles in commercial bank of
Ethiopia, Ambo district. Accordingly, the mean score of transactional leadership style
3.762 was the highest mean score in comparison to other leadership styles and this
indicates that most of the leaders perceived the transactional leadership style. According
to the data in above table the next leadership style which was perceived by the ambo
district leaders was laizzes faire leadership style which scored mean score of 2.964 and it
was the second perceived leadership style next to transactional leadership style.
Accordingly, from the five leadership style subscales, management by exception (active)
score the highest mean value of 3.838 with the standard deviation of 0.411 followed by

5
contingent reward score the mean value of 3.804 with the standard deviation of 0.429.
The aforementioned patterns of scores for this study suggest that leaders perceived that
they exhibited management by exception (active) sub scale of transactional leadership.
Therefore, leaders from their perspective they observe subordinates closely for mistakes
and deviances from criteria in their Jobs, and takes corrective measures as required.
4.4.2.3. Comparisons between Leader and Employee Responses on
Leadership Styles
The Comparisons descriptive statistics results between Leader and Employee Responses
on Leadership Styles for employees and leaders’ responses are presented in the below
table used to compare the means of two samples (independent). In this case, the
significant differences, between the two samples on the dimensions of the questionnaires
are determined. The test considers two critical assumptions regarding data distribution:
the values in the data set are independent (measured on randomly selected units from the
study area) and the data to be normally distributed, but are not sensitive to violations of
the normality assumption unless the data is extremely non-normal. And also, the standard
deviations the two samples (employees and leaders) are compared to determine whether
their perception is similar or different to leadership styles based on the dimensions of the
questionnaires.
Table 4.10: Comparison for the MLQ (Leaders and employees) Responses
Variables Respondents Mean Std. deviation
Transformational Employees 2.874 0.699
leadership Leaders 2.506 0.557
Transactional Employees 2.846 0.517
leadership Leaders 3.762 0.382
Laisser-faire Employees 2.642 0.702
leadership Leaders 2.964 0.390
Source: Own computation and survey data, 2023

According to the results shown in the table 4.10 the average mean score for employees’
responses on each of the transformational leadership subscales is 2.874 with the average
standard deviation of 0.699 whereas for those of ambo district leaders has average mean

5
scores of 2.506 and average standard deviation of 0.557.

On the other hand, the mean and standard deviation scores for each of transactional
leadership subscales has average mean and standard deviation 2.846 and 0.517 for
employees, and responses of 3.762 and 0.382 for leaders respectively. When taken as a
whole, the Commercial bank of Ethiopia Ambo district leaders’ responses on three of
them, transformational, transactional &laissez-faire leadership scale presents higher mean
with higher standard deviation of transactional to that of employees’ response.
The variations in both cases can be triggered to different reasons. In particular, the
difference in mean values may be due to the difference in the size of the two samples or
due to the considerable difference between perception of both groups about leadership
styles or college leaders are considering themselves as practically exercising what is
required in theoretical leadership behaviors without convincing their followers. Likewise,
the differences in the values of the standard deviations show that there is more difference
in variability for the scores of employees’ responses than to those of the leaders. This is
an indication of major differences between leadership behaviors which are being
practiced and behaviors which are being perceived by the employees.
4.4.3. Descriptive Summary
The descriptive statistics is used in this paper to measure respondents’ perception towards
leadership (transformational, transactional and laissez- faire) styles and organizational
performance. Table 4.11 below provides a summary of the descriptive statistics of the
independent) variables with a total of 110 respondents. The dependent variable
organizational performance of Commercial bank of Ethiopia, ambo district. The table
includes the mean, standard deviation and number of respondents from the independent
and dependent variables used in this research. An important issue to note from the below
table is that all variables in the study have equal number of total respondents.

5
Table 4.11: Summary of Descriptive Analysis
N Mean Std. Deviation
Transform 104 2.8736 .39931
LAIZZER_F 104 2.6418 .70174
Transact 104 2.8462 .38020
ORG_PERF 104 2.6600 .50640
Source: Own computation and Survey data, 2023

Based on the table above, transformational leadership style has the highest mean value
corresponding to 2.8736 and standard deviation value of 0.39931 indicating that
transformational leadership style is highly correlated with organizational performance.
Transactional leadership style scores the second highest mean value corresponding to
2.8462 and standard deviation value of 0.38020 indicating that transactional leadership
style is fairly correlated with organizational performance. Laissez- faire leadership style
has the lowest mean value corresponding to 2.6418 and standard deviation value of
0.70174 indicating that laissez-faire leadership style is poorly correlated with
organizational performance in ambo district, Commercial bank of Ethiopia. The overall
organizational performance mean value scored 2.6600 with the standard deviation of
.50640.
Moreover, the aggregate score (Mean = 2.66 this indicates the response of respondents
were neutral on organizational performance as currently practiced in the organization.
Therefore, based on the results of the finding one cannot confirm that the overall
performance of commercial bank of Ethiopia Ambo district were improved.
4.5. Results of Inferential Statistics
Unlike to the above sections, the following sections showed the inferential statistics
employed in this study. In the inferential statistics, the study used Pearson Correlation
coefficients, multiple linear regressions and ANOVA test to conduct the study here under
below, the finding results from Pearson correlation coefficient discuss in briefly.
4.5.1. Correlation Analysis
This part analysis through the Pearson’s Product Moment Correlation Coefficient (r) the
degree of association between the independent variables (transformational, transactional
and laissez- faire leadership styles) and organizational performance (productivity, quality
5
products/service, employees’ commitment, job satisfaction and profitability) and the
dependent variable (organizational performance) were computed to determine the
strength, direction and statistical significance of the relationships as shown in table
below. Correlation analysis is useful way of exploiting relation (association) among
variables. The value of the coefficient (r) ranges from -1 up to +1. The value of
coefficient of correlation (r) indicates both the strength and direction of the relationship.
If r = -1 there is perfectly negative correlation between the variable. If r = 0 there is no
relationship between the variable and if r = +1 there is perfectly positive relationship
between the variables. For values of r between + and 0 or between 0and -1, different
scholars have proposed different interpretation with slight difference. For this study
diction rule given by Cohn et.al (2005) was used to describe the strength of association
among the variables as follows.
Table 4.12: Correlation between Leadership Styles and Organizational performance
Correlations
Transform LAIZZER_F Transact ORG_PERF
Transform Pearson Correlation 1 .169 .789** .335**
Sig. (2-tailed) .086 .000 .001
N 104 104 104 104
LAIZZER_F Pearson Correlation .169 1 -.033 .966**
Sig. (2-tailed) .086 .743 .000
N 104 104 104 104
Transact Pearson Correlation .789** -.033 1 .152
Sig. (2-tailed) .000 .743 .122
N 104 104 104 104
ORG_PERF Pearson Correlation .335** .966** .152 1
Sig. (2-tailed) .001 .000 .122
N 104 104 104 104
**. Correlation is significant at the 0.01 level (2-tailed).
Source: Own computation and Survey data, 2023

Table 4.12 presents the results of bivariate correlation based on Pearson correlation
statistics. As it indicated that the relationship between the leadership; namely;

5
transformational, transactional and laissez-faire styles, and organizational performance.
Accordingly on the above table, three leadership styles have both positive and negative
relationship with organizational performance from the range of very low to strong
relationship.

4.5.2. Relationship between transformational leadership and

performance
Table 4.12 indicated that transformational leadership style has strong and positive
correlation with organizational performance. Regarding with transformational leadership
related to organizational performance (r=.355*, p<.000) has strong positive relationship
in Commercial bank of Ethiopia, ambo district.
This means that increase in transformational leadership style like idealized influence,
inspirational motivation, intellectual stimulation and individualized consideration activities in the
organization was results an increase in the employee’s productivity because the employee was
inspired, motivated to work hard. They also demonstrated that effective human resources
management arbitrates the relationship between leadership and performance through
increased commitment, higher motivation and intellectual motivation. The study revealed
that transformational leadership is stronger analyst for the performance, satisfaction and
commitment within organizations by building commitment, empowerment and
demanding a higher degree of respect and trust for the leader. Intellectual stimulation and
inspirational motivation were found to improve the organizational performance. As a
result, the hypothesis was accepted.
4.5.3. Relationship between transactional leadership and performance
The results in table 4.12 indicated that transactional leadership has the correlation value
of (r=.152, p>.000). It showed that transactional leadership exist insignificant positive
relationship with organizational performance in Commercial bank of Ethiopia, ambo
district. This means that contingent rewards, management by exception (active) and management
by exception (passive) have insignificant effect on the organizational performance in ambo
district. The study indicates that the reward in exchange for the extra effort, recognition of
the work are common in Commercial bank of Ethiopia: bonus, promotion, salary
increment takes place when Commercial bank of Ethiopia get profit that employee are

5
committed and perform well to be rewarded.
4.5.4. Relationship between Laissez-faire leadership and performance
Laissez-faire leadership related to organizational performance has the correlation value
(r=0.966 P< 0.000). It showed that laissez-faire leadership has very high and positive
relationship with organizational performance in CBE Ambo district.
The finding of the study showed that transformational and laizzes faire leadership styles
have strong and positive relationship with organizational performance. As a result,
laissez-faire leaders in Commercial bank of Ethiopia, ambo district would allow freedom
on how employees do their work and employees perform with no leadership barriers.
Therefore, employee’ performance is better as employees enjoy working with less
authority from leaders for better organizational performance of the Commercial bank of
Ethiopia Ambo district. As a result, the hypothesis was accepted.
4.5.2. Effects of Leadership styles on Organizational Performance
4.5.2.1. Multi collinearity Test
The assumption assumes that independent variables are not highly correlated with each
other. The assumption is tested by Variance Inflation Factor (VIF) statics. In a multiple
regression model two and above predictor variables are analyzed against independent
variable to see their statistical implication of various values. The test of multi collinearity
is detected by Tolerance and Variance inflation VIF) factor result. From multicollinearity
point of view, tolerance is an indicator of how much of the variability of the specified
independent variable is not explained by the other independent variables in the model. It
is calculated using the formula1– R squared for each variable. If this value is very small
that it is greater than 0.10, then multiple correlations with other variables is high,
suggesting the existence of multicollinearity.VIF values above 10 implies the existence
of multicollinearity between variables. In summary, there is no multicollinearity problem
when the tolerance values of all independent variables and the VIF are above 0.1 and
below 10 respectively which can be taken as a greenlight for the researcher to precede the
task of multiple regression analysis.

5
Table 4.13: Multicollinearity Test
Collinearity Statistics
Model Tolerance VIF
(Constant)

Collinearit

Statistics
Transform .340 2.945
LAIZZER_F .898 1.113
y
Transact .349 2.864
a. Dependent Variable: ORG_PERF

As per of table 4.13 shows, the tolerance values of all independent variables are above
0.1 and the VIF values are below 10 which the two values together confirm none
existence of multicollinearity problem in the regression analysis under consideration, as
per of this concept all of the three independent variables tolerance value greater than 0.1
or VIF is less than 5. It can be concluded that three independent variables have no strong
correlation, therefore, in multiple regression analysis; it can to identify the unique
contribution of each variable in predicting the dependent variable because they are less
correlated variables. Therefore, we can say that no evidence of serious multicollinearity is
found between the independent variables.

4.5.2. Normality Test

The following figure shows the frequency distribution of the standardized residual
compared to normal distribution. As can be seen from the figure, the data points are close
to the diagonal line confirming that there is normality.
Figure 4.1 Normality Test

5
4.4.2.2. Multiple Regression Analysis
Upon the completion of the correlation analysis, linear and multiple regression analyses
were run to find any association between the independent variables (leadership styles:
transformational leadership, transactional leadership and laissez- faire leadership) styles
and the dependent variable (organizational performance). The coefficient of
determination explains the proportion of variability between organizational performance
and the independent variables of leadership styles, using the least squares method to
eliminate errors. The highest beta represents the strongest unique contribution explaining
the dependent variable.
The study presents the causal effect relationship to determine the effect of leadership
styles namely; transformational, transactional and laissez faire on the organizational
performance. To show the effect the study established multiple linear regression model to
show the strength of the indie The study used correlation analysis to measure the
direction and strength of the independent variables (Leadership styles) on dependent
variable (organizational performance).
The following table shows the effect of independent variables on dependent variable. The
Multiple linear regression model of the study is the following:
OP= = β0 + β1TranfoL + β2TransaL + β3Laise + ε.
Where the dependent variable is organizational performance which is an element of
leadership styles dependent variables β0 are the constant β1, β2 and β3 are the regression
coefficient on leadership styles dimension which are independent variables that included

5
the independent variables transformational, transactional and laissez- faire leadership.
The test of the overall model for the study was given in table below:
Table 4.14: Test of Model for Leadership styles and Organizational Performance
Model Summaryb
Adjusted R Std. Error of Durbin-
Model R R Square Square the Estimate Watson
1 .984a .969 .968 .09077 2.357
a. Predictors: (Constant), Transact, LAIZZER_F, Transform
b. Dependent Variable: ORG_PERF
Source: Own computation and Survey data, 2023
The multiple regression analysis was carried out to estimate the effect of leadership styles
(independent variables) on organizational performance (dependent variable). The above
table shows that the (R2) was .969 which means that 96.6% of the variations in the
organizational performance to leadership styles dimension can be explained in the
organizational performance. The results indicate that independent variables
(transformational, transactional and laissez-faire leadership) styles are significant in
affecting the organizational performance in the ambo district, Commercial bank of
Ethiopia.
Table 4.15: ANOVA Test
ANOVAa
Sum of Mean
Model Squares Df Square F Sig.
1 Regression 25.589 3 8.530 1035.248 .000b
Residual .824 100 .008
Total 26.413 103
a. Dependent Variable: ORG_PERF
b. Predictors: (Constant), Transact, LAIZZER_F, Transform
Source: Survey data, 2023

Table 4.15 presents the analysis of variance (ANOVA) results. It is also known as model
fit results. The results show that the F-statistics is 1035.248 (p < .000). The F test was
significant at 5% level of significance with a p-value of <0.05. This is an implication that

6
generally, leadership styles dimension significantly explains the changes in
organizational performance.

4.5.3 Regression Coefficients of Leadership Styles and Organizational

Performance
This section presents the regression coefficients of leadership styles and organizational
performance coefficients of the independent variables were tested using to test to
determine whether they are significant at 5%.

Table 4.16: The Regression Coefficients

Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta T Sig.
(Constant) .090 .077 1.171 .244
Transform .093 .038 .073 2.417 .017
LAIZZER_F .691 .013 .958 51.389 .000
Transact .168 .040 .126 4.212 .000
a. Dependent Variable: ORG_PERF
Source: Survey data, 2023
According to the above regression result, organizational performance of commercial bank
of Ethiopia ambo district can be accurately predicted from leadership style
(transformational, transactional and laizzer faire).The coefficients from the above table
4.16 reveals that the independent constructs contribute significantly to the model at p
value is 0.05 level of significance. The researcher was proposed one regression equations

6
 to see the effect of each on the three independent variables model using unstandardized
coefficient.
Predicted Organizational performance(Y) = β0 + β1TranfoL + β2TransaL + β3Laise + ε.
β0: represents Constant

β1, β2, β3 represents Regression coefficients of independent variables.

TranfoL= stands for Transformational Leadership
TransaL=stands for Transactional Leadership
Laise=stands for Laissez-faire leadership
ε =stands for Error of Margin
OP= .090+.093tranfol+.168transal+.691laise+ ε.
The results show that, all mentioned variables have statistically significant effect on
organization performance on CBE Ambo district.
Moreover, the result of regression analysis presented in above table 4.16 shows the
relative importance of each predictor variable using beta weights.

 A 1% improvement in transformational leadership style results in an increase of

organizational performance by 9.3%.
 A 1% improvement in transactional leadership style results in an increase of
organizational performance by 16.8%.
 A 1% improvement in laizzer faire leadership style results in an increase of
organizational performance by 69.1%.
Table revealed the regression coefficients using standardized coefficients are the
estimates resulting from an analysis performed on variables that have been standardized
so that they have variances of 1. As per of the above table, according to table 4.16,
standardized coefficients indicate the average change in the independent variable
associated with a one unit change in the dependent variable, statistically controlling for
the other independent variable, thus the unstandardized coefficients was used in this
study.

6
 CHAPTER FIVE
5. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
This chapter outlines the summary of major findings of the study from the descriptive
and inferential analysis. It also incorporates assertions and inferences obtained from the
results. The researcher also made relevant recommendations and suggestions for further
studies regarding impact of leadership style on organizational performance of commercial
bank of Ethiopia ambo district.
5.1. Summary of Major Findings Results
The main objective of the study was to assess the impact of leadership styles on the
organizational performance in the case of Commercial bank of Ethiopia, ambo district.
The quality of the Leadership styles are the very important aspects for the performance
and success of every organization. The performance of the organization is highly
dependent on the quality of its staff members.
This study confirmed that there is strong positive and significant relationship between
independent variables (leadership style: transformational and laizzes faire) and dependent
variable (organizational performance). According to both descriptive and inferential
analysis, the finding revealed that all independent variables are the major determinant of
organizational performance.
From this discussion, the researcher concluded that transformational and laizzes faire
plays irreplaceable role in boosting the organizational performance commercial bank of
Ethiopia ambo district. Thus, the researcher used the appropriate predictor to evaluate the
organizational performance.
Transformational leadership style is the most determinant leadership style in Commercial
bank of Ethiopia, ambo district. The finding stated that transformational leadership scales
taken as a whole for both groups; employees’ group mean and standard deviation is 2.874
and 0.699respectivelywhereas ambo district leaders’ group has 2.506 and 0.577
respectively.
According to the finding laissez- faire leadership is lowest dominant leadership style that
existed in the ambo district. As per of employees’ response the mean scored value
is2.642 with the standard deviation value of .702, while leaders response scored the mean
value of 2.964 with the standard deviation value of 0.390.

6
Regarding impact of transformational leadership style, the results show that
transformational leadership (r=.335*, and p < .000). It indicated that transformational
leadership has insignificant impact on organizational performance in Commercial bank of
Ethiopia, ambo district. It inferred that transformational leader in ambo district
demonstrated an ineffective human resources management for the establishing a value
system along with providing the employees an opportunity to develop their skills and
abilities and poor decision-making skills of the employees.
Generally, transformational leadership style, in which employees are allowed to have
sense of belonging, believed higher responsibility can be carried out with little
supervision, and leaders help followers achieve their visions and needs, enhance
organizational efficiency.
Laissez-faire leadership is found to have positive statistical impact on the organizational
performance of Commercial bank of Ethiopia, ambo district. As a result, laissez-faire
leaders in Commercial bank of Ethiopia, ambo district allow freedom on how employees
do their work and employees perform with no leadership barriers. Therefore,
organizational performance is better as employees enjoy working with less authority from
leaders for better organizational performance of the Commercial bank of Ethiopia Ambo
district.
5.2 Conclusions
Generally based on the finding of the study the following conclusions were drawn.
Taking the data analysis and the findings in to account the following conclusions was
reached. The study assessed the impact of leadership (transformational, transactional and
laissez faire) on the organizational performance. According the study the following
conclusions reached regarding transformational, transactional and laissez-faire leadership
on the organizational performance, Commercial bank of Ethiopia ambo district.
Based on the results, transformational leadership style has a significant positive impact
on the organizational performance. This indicates that when transform approach is
applied; performance of the organization would increase. Therefore, Commercial bank of
Ethiopia, ambo district leaders is encouraged to adopt transformational leadership style
and involve team members in the decision-making process since it is confirmed that
performance of employees is the best under this style of leadership.

6
 The finding stated that transformational leadership has positive statistically significant
impact on the organizational performance in the Commercial bank of Ethiopia, ambo
district.
The finding results stated that transactional leadership style has negative significant
impact on the organizational performance of Commercial bank of Ethiopia, ambo district.
Generally, the study concluded that the ideal leadership style at ambo district,
commercial bank of Ethiopia should be a mix of transformational and laizzer faire
managerial abilities with a proper use of transformational abilities. This would help
achieve minimize employees turn over and higher performance standard within the
organization for achieved organizational performance.
5.3 Recommendations
On the basis of the major findings of the study, the following recommendations have
been drawn with the view of what has been concluded by the data collected and analyzed
aboutleadership style and the performance of ambo district, commercial bank of Ethiopia.
The following recommendations are forwarded in order to the strengthen the positive
aspects of leadership style they exercised and to minimize the drawbacks exhibited.
 The leadership styles to be followed in the organization determined by the values and
culture of the organization. The leaders in organization under study need to give more
emphasis on transformational leadership to increase performance of ambo district,
commercial bank of Ethiopia’s performance.
 The leadership style has a significant impact on the organizational performance.
Therefore, ambo district should design action plan for training and development program
for leaders.
 There should be continuous performance review program, evaluation and reward strategy
to create the sense of competition among the leaders. The focus should be on small
behavioral changes and the implementation of those changes that can be sustained over
time.
 The leaders should enroll themselves individually in leadership programs to enhance their
knowledge about leadership styles. This would help them understand how their leading
style influences their employees. They should select the style best suited to the
organizational goals and employees’ needs and desired. To ensure higher employee

6
 performance and retention, they should act as ethical, behavioral and working role
models for the sustainable organizational growth of Commercial bank of Ethiopia, ambo
district.
 Commercial bank of Ethiopia leaders would try making their effort to improve the
laissez-faire leadership style application in the organization. Laissez-faire leadership style
is considered as moderate leadership style. This technique is being suited when
employees understand their responsibilities well and possess strong analytical skills. This
approach can be used when leaders are very much confident on team members and in any
condition should not blame each other for mistakes for better achievement of the
commercial bank of Ethiopia, Ambo district.
 The study recommended that full range leadership styles is best leadership styles for
better achievement of the organizational performance. Finally, the study recommended
that good leadership is capability that supports further improve the performance of the
organization. Therefore, serious attention should be given to make leadership a higher
priority by the leaders of Ambo district, Commercial bank of Ethiopia.
5.4. Future research Direction
The following areas are suggested for further studies from the results of this study.
1. This study attempted to determine the impact of leadership styles on organizational
performance the case of Ambo district, commercial bank of Ethiopia. However, this
study is delimited to branches under Ambo district. Thus, future research may make an
in-depth study in this regard by considering other districts to clearly identify factors
influencing organization performance.
2. Carry out the same study using similar predicators and dependent variable in other
context so as to check the reliability of the finding by employing additional research
design

6
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7
APPENDICIES

Appendix Questionnaire 1

AMBO UNIVERSITY
SCHOOL OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT
MBA PROGRAM
Section 1: Introduction

Questionnaire prepared for leaders (branch manager and line managers)

of Ambo district, for selected CBE branches
Dear respondent,
This research is being conducted by student of MBA in Management at Ambo
University. It is intended to assist the researcher, in partial fulfillment of the award of a
Master of business administration. This Thesis is titled “The impact of leadership style
on organizational performance (the case of commercial bank of Ethiopia under
ambo district branches)”. The purpose of this questionnaire is to collect relevant data
for the study. The objective of this research is to attempt to understand the results of
effects of leadership style and organizational performance. The outcome of the study was
used in order to suggest possible solutions for problems identified while conducting the
study.

Finally, I confirm you that the information that you share for me will be kept confidential
and only used for the academic purpose.
Thank you in advance for your kind cooperation and devoting your time.

Sincerely yours,

Tesfaye Shure

For further information, please contact Tesfaye Shure by the following address:
Tel.: +251925413650
Email: tesfayeshuregmail.com

7
 Section 2: Demographic profile of respondents Instructions
❖ No need of writing your name
❖ For multiple choice questions indicate your
answers with a check mark (√) in the appropriate
box.
1. Sex A. Male B. Female

2. Ages of respondents A.18-28 B.29-38

C.39-48 D.49 above

3. Educational levels A. College Diploma B.BA /

BSC C.MA/MSC D. If any, please specify ………….

4. What is/are your total service Years of in CBE?

A.1-3 years B. 4-8 years

C. 9-12 years D. 13 & Above years

5. What is your current position in your branch?

A. Branch manager B. Manager of branch operation

C. Manager of branch business D. Manager of branch controller

73
Section 3: Leadership Style Description Questionnaires
The descriptions leadership styles that may affect the performance of CBE are listed
below. Please indicate the degree to which these leadership styles are affecting the
performance of your branch. After you read each of the factors, evaluate them in relation
to your branch performance and select your appropriate answer and then /circle/ under
the choices prepared by likert response categorized below.

Where,1= Not at all 2=Once a while3=Sometimes 4=Fairly often 5=Frequently, if

Not always
Part 1. Respondent’s perception on level of their branch performance, how do you
evaluate the level of leadership style of your branch by taking into consideration the
following 5 problem indicators?
Independent variable

Frequently, if
Once a while

Fairly often
Some times

not always
No Description of your leadership styles Not at all
.

1 2 3 4 5
Intellectual Stimulation
1 Leaders critical examine the assumptions to question
whether they are appropriate
2 Leaders seek differing perspectives when solving
Problems
3 Leaders others to look at problems from many
different angles
4 I suggest new ways of looking at how to
complete assignments
5 Leaders are effective in meeting others‟ job-related
needs

6 Leaders use methods of leadership that are satisfying

7 Leaders work with others in a satisfactory way

Idealized influence, behavior

7
1 Leaders talk about my most important values and
Beliefs
2 Leaders specify the importance of having a strong
sense of purpose
3 Leaders consider the moral and ethical consequences
of decisions
4. leaders emphasize the importance of having a
collective sense of mission
Inspirational motivation
1 Leaders talk optimistically about the future
2 Leaders talk enthusiastically about what needs to be
Accomplished
3. leaders articulate a compelling vision of the future
4 Leaders express confidence that goals will be
Achieved
Idealized influence, attributed
1 Leaders instill pride in others for being associated
with me
2 leaders go beyond self-interest for the good of the
group
3 Leaders act in ways that build others‟ respect for me
4 Leaders display a sense of power and confidence
5 Leaders effective in representing others to higher
Authority
Individual consideration
1 Leaders spend time teaching and coaching
2 Leaders treat others as individuals rather than just as
a member of a group
3 Leaders consider and individual as having different
needs, abilities, and aspirations from others
4 Leaders help others to develop their strengths
5. Leaders get others to do more than they expected to
Do

7
6. Leaders work with others in a satisfactory way
7. Leaders lighten others‟ desire to succeed
8. leaders increase others‟ willingness to try harder
leaders lead a group that is effective
Contingent Reward
1 leaders provide others with assistance in exchange
for
their effort
2 Leaders discuss in specific terms who is responsible
for achieving performance targets
3 Leaders make clear what one can expect to receive
when performance goal are achieved
4 I express satisfaction when others meet expectations
Management expectation active
1 Leaders focus attention on irregularities, mistakes,
exceptions, and deviations from standards
2 Leaders concentrate my full attention on dealing
with mistakes, complaints, and failures

3 leaders keep track of all mistakes

4 Leaders direct their attention toward failures to meet
Standards
5 Leaders are effective in meeting organizational
Requirements
Management expectation Passive
1 Leaders fail to interfere until problems become
Serious
2 Leaders wait for things to go wrong before taking
Action
3 Leaders show that they are a firm believer in “if it
Ain’t broke, don’t fix it
4 Leaders demonstrate that problems must become
chronic before I take action
Laissez- faire

7
1 leaders avoid getting involved when important
issues arise

2 Leaders are absent when needed

3 Leaders avoid making decisions

4 Leader’s delay responding to urgent questions

7
Part 2. Questionnaire concerning to Organizational performance. How do you evaluate
the impact leadership on the organization performance by thinking about the
effectiveness of leadership style in your branch current or last years, so how much do you
agree or disagree that the following statements? Please indicate the extent to which you
agree or disagree with each statement and tick (√) in a box given below.

Assume Very low =1, Low =2, Moderate =3, High =4, Very high = 5
Dependent variables

S/N Organization performance

Moderat
Very

High

Very
high
Low
low

e
1 2 3 4 5
1 The productivity of this organization
increases from time to time
2 Quality of product and service are high in this
Organization
3 Quality of output is high in this organization
4 There is good customer relationship management
in your organization
5 Lateness and absenteeism of employees is very
less in this organization
6 Employee skills are used very well in this
Organization
7 Employee are very motivated in this organization
8 Employee job satisfaction is high
9 Employee work efficiency is high
10 Profitability of organization is high
11 The overall organizational performance

Thank you very much for your time and patience.

Tesfaye Shure

AFTER COMPLETION, PLEASE RETURN PAPER TO THE RESEARCHER

7
APPENDICIES

Appendix Questionnaire 2
AMBO UNIVERSITY
SCHOOL OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT
MBA PROGRAM
Section 1: Introduction

Questionnaire prepared for CBE Employees of Ambo district, for selected

CBE branches
Dear respondent,
This research is being conducted by student of MBA in Management at Ambo
University. It is intended to assist the researcher, in partial fulfillment of the award of a
Master of business administration. This Thesis is titled “The impact of leadership style
on organizational performance (the case of commercial bank of Ethiopia under
ambo district branches)”. The purpose of this questionnaire is to collect relevant data
for the study. The objective of this research is to attempt to understand the results of
effects of leadership style and organizational performance. The outcome of the study will
be used in order to suggest possible solutions for problems identified while conducting
the study.

Finally, I confirm you that the information that you share for me will be kept confidential
and only used for the academic purpose.
Thank you in advance for your kind cooperation and devoting your time.

Sincerely yours,

Tesfaye Shure

For further information, please contact Tesfaye Shure by the following

address: Tel.: +251925413650Email:tesfayeshuregmail.com

7
Section 2: Demographic profile of respondents

Instructions
❖ No need of writing your name
❖ For multiple choice questions indicate your answers with a check mark (√)
in the appropriate box.

3. Sex A. Male B. Female

4. Ages of respondents A. 18-28 B.29-38

C.39-48 D.49 above

3. Educational levels A. College Diploma B.BA /

BSC C.MA/MSC D. If any, please specify ………….

4. What is/are your total service Years of in CBE?

A.1-3 years B. 4-8 years

C. 9-12 years D. 13 & Above years

5. What is your currentposition in your branch?

A. senior branch banking Officer B. Branch banking officer

C. bank trainee D. internal controller officer

E. junior officer F. customer relation manager

80
Section 3: Leadership Style Description Questionnaires
The descriptions leadership styles that may affect the performance of CBE are listed
below. Please indicate the degree to which these leadership styles are affecting the
performance of your branch. After you read each of the factors, evaluate them in relation
to your branch performance and select your appropriate answer and then /circle/ under
the choices prepared by likert response categorized below.

Where,1= Not at all 2=Once a while3=Sometimes 4=Fairly often 5=Frequently, if

Not always
Part 1. Respondent’s perception on level of their branch performance, how do you
evaluate the level of leadership style of your branch by taking into consideration the
following 5 problem indicators?

Frequently, if
Once a while

Fairly often
Some times

not always
Not at all
No. Description of your leadership styles

0 1 2 3 4
Intellectual Stimulation
1 Leaders critical examine the assumptions to question
whether they are appropriate
2 Leaders seek differing perspectives when
solving Problems
3 Leaders others to look at problems from many
different angles
4 I suggest new ways of looking at how to complete
assignments
5 Leaders are effective in meeting others‟ job-related
needs

6 Leaders use methods of leadership that are satisfying

7 Leaders work with others in a satisfactory way

Idealized influence, behavior

8
1 Leaders talk about my most important values and
Beliefs
2 Leaders specify the importance of having a strong
sense of purpose
3 Leaders consider the moral and ethical consequences
of decisions
4. leaders emphasize the importance of having a
collective sense of mission
Inspirational motivation
1 Leaders talk optimistically about the future
2 Leaders talk enthusiastically about what needs to be
Accomplished
3. leaders articulate a compelling vision of the future
4 Leaders express confidence that goals will be
Achieved
Idealized influence, attributed
1 Leaders instill pride in others for being associated
with me
2 leaders go beyond self-interest for the good of the
group
3 Leaders act in ways that build others‟ respect for me
4 Leaders display a sense of power and confidence
5 Leaders effective in representing others to higher
Authority
Individual consideration
1 Leaders spend time teaching and coaching
2 Leaders treat others as individuals rather than just as
a member of a group
3 Leaders consider and individual as having different
needs, abilities, and aspirations from others
4 Leaders help others to develop their strengths
5. Leaders get others to do more than they expected to
Do

8
6. Leaders work with others in a satisfactory way
7. Leaders heighten others‟ desire to succeed
8. leaders increase others‟ willingness to try harder
9 leaders lead a group that is effective

Contingent Reward
1 leaders provide others with assistance in exchange for
their effort
2 Leaders discuss in specific terms who is responsible
for achieving performance targets
3 Leaders make clear what one can expect to receive
when performance goal are achieved
4 I express satisfaction when others meet expectations
Management expectation active
1 Leaders focus attention on irregularities, mistakes,
exceptions, and deviations from standards
2 Leaders concentrate my full attention on dealing with
mistakes, complaints, and failures
3 leaders keep track of all mistakes
4 Leaders direct their attention toward failures to meet
Standards
5 Leaders are effective in meeting organizational
Requirements
Management expectation Passive
1 Leaders fail to interfere until problems become
Serious
2 Leaders wait for things to go wrong before taking
Action
3 Leaders show that they are a firm believer in “if it
ain‟t broke, don’t fix it
4 Leaders demonstrate that problems must become
chronic before I take action
Laissez- faire
1 leaders avoid getting involved when important issues
arise
2 Leaders are absent when needed
3 Leaders avoid making decisions
4 Leaders delay responding to urgent questions

8
Part 2. Questionnaire concerning to Organizational performance. How do you evaluate
the impact leadership on the organization performance by thinking about the
effectiveness of leadership style in your branch current or last years , so how much do
you agree or disagree that the following statements ? Please indicate the extent to which
you agree or disagree with each statement and tick (√) in a box given below.

Assume Very low =1, Low =2, Moderate =3, High =4, Very high = 5
Dependent variables

S/N Organization performance

Moderat
Very

High
Very
high
Low
low

e
1 2 3 4 5
1 The productivity of this organization increases
from time to time
2 Quality of product and service are high in this
Organization
3 Quality of output is high in this organization
4 There is good customer relationship management
in your organization
5 Lateness and absenteeism of employees is very
less in this organization
6 Employee skills are used very well in this
Organization
7 Employee are very motivated in this organization
8 Employee job satisfaction is high
9 Employee work efficiency is high
10 Profitability of organization is high
11 The overall organizational performance

Thank you very much for your time and

patience. Tesfaye Shure

AFTER COMPLETION, PLEASE RETURN PAPER TO THE RESEARCHE