The relationship between leadership style and organisational performance: the role of employee satisfaction

Organizational performance is intricately linked to profitability, encompassing both short and long-term growth and profits. Business investors and leaders are driven to ensure the effective functioning of their organizations to maximize profits, achieve rapid growth, and gain a competitive advantage within the industry. Nevertheless, the achievement of these objectives is contingent upon the performance of the organization's leaders and employees, as they play a pivotal role in determining the overall success and prosperity of the organization. This study aimed to explore the relationship between leadership style and organizational performance from the perspective of employee performance. The research was structured into five chapters, comprising a general introduction, a literature review, the research methodology, presentation of results and discussions, and the conclusions and recommendations. Three objectives were set for the study: assessing the impact of transformational, transitional, and transactional leadership styles on employee satisfaction; identifying the effect of employee satisfaction on organizational performance; and assessing the mediating role of employee satisfaction in the relationship between leadership style and organizational performance. A purposive and snowball sampling technique were employed for the study, and a survey questionnaire using a quantitative method was used to collect data from professionals in community pharmacy companies in Kumasi and Accra. The analysis involved using the One Sample T-test, Relative Importance Index (RII), Mean Score Ranking, and Standard Deviations. The Statistical Package for Social Sciences (SPSS) version 25 and Microsoft Excel 2019 were used for data analysis, and the results were presented in charts and tables. A total of 61 responses were obtained, representing 61% of the targeted 100 responses, and were considered for data analysis. The findings revealed that transformational, transitional, and 4 transactional leadership styles had a significant impact on employee satisfaction, with specific factors such as building employees' confidence, establishing an attractive vision, emphasizing team spirit, providing attention to employees, and providing instruction and monitoring being identified. Regarding the effect of employee satisfaction on organizational performance, the study found that it positively influenced various aspects of organizational success, including overall performance, productivity, growth, development, and innovation. Furthermore, the research identified crucial variables for the mediating role of employee satisfaction, which included achieving organizational goals, enhancing overall performance, retaining skillful employees, and ensuring effective communication. This study has enriched the existing body of knowledge regarding leadership styles, employee satisfaction, and organizational performance, providing valuable insights for organizations in selecting leaders and guiding them to enhance team performance and achieve organizational goals. Additionally, the study recommends further research to explore the impact of leaders' soft skills on employee performance in organizational success. In conclusion, organizations should focus on building employees' confidence, establishing attractive visions, and promoting team spirit and shared values to foster a positive work environment and drive organizational success.

Source: KNUST