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270 The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013
Leadership Style &Organizational Effectiveness in Indian IT & Banking Industry
The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013 271
Sunil Budhiraja & Meenakshi Malhotra
in an apparent return to the one best way planning, and by providing resources
of leadership, recent studies on leader- such as tools, materials, and techni-
ship have contrasted transactional lead- cal knowledge.
ership with transformational leadership.
Transactional leaders are said to be in- Small (2002) has taken four leader-
strument and frequently focus on ex- ship perspectives as suggested by
change and relationship with their sub- Bolman & Deal (1984, 1991a, 1991b)
ordinates. In contrast, transformational who synthesized theories of leadership
leaders are argued to be visionary and within organizations into four traditions
enthusiastic, with an inherent ability to and labeled them as frames. The four
frames defined by Bolman & Deal in-
motivate subordinates (Bycio et al, 1995;
clude the structural frame, the human
Howel & Avolio, 1991).
resource frame, the political frame and
the symbolic frame.
Four dimensions of leadership have
emerged after reviewing the literature,
Venkatapathy (1991) has attempted
which seem to comprise the basic struc-
to study the perception of leadership
ture of what one may term leadership:
styles and the climate created by prac-
ticing such styles. The three leadership
1. Supportive - Behavior that enhances
styles viz., benevolent, optical and devel-
someone elses feeling of personal
opmental show considerable promise
worth and importance. The leader
from the application point of view among
ensures that the team members are
different organizations. The private and
provided with ample amount of re-
public sector executives differ on their
sources and opportunities to achieve
leadership styles and, therefore, the cli-
common goals. Personal welfare of
mate created through such styles is also
the team members is taken care of.
different in various organizations.
2. Participative - Behavior that encour-
ages members of the group to de- The measure of perceived leadership
velop close, mutually satisfying rela- style of House (197la,b) and House &
tionships. Feedback and consultation Dessler (1974), which in turn was princi-
are the foundation stone of this kind pally based on the earlier work of
of leadership style. Fleishman (1957) and Stogdill (1963), was
presented as reliable and valid by a num-
3. Goal emphasis - Behavior that stimu- ber of respected authors and texts. Indeed,
lates an enthusiasm for meeting the this measure of leadership style has been
groups goal or achieving excellent widely used in a variety of literatures and
performance. This is much similar to is generally accepted as a good measure
the task oriented leadership style. of perceptions of leadership style. This
4. Work facilitation - Behavior that helps measure categorizes the leadership style
achieve goal attainment by such ac- in three parts namely instrumental, sup-
tivities as scheduling, coordinating, portive and participative leadership style.
272 The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013
Leadership Style &Organizational Effectiveness in Indian IT & Banking Industry
The instrumental style is quite simi- wide variety of criteria being used to
lar to transactional style which makes an measure organizational effectiveness.
assumption that they operate with some These criteria can be divided into five
objectives and agendas. Participative major effectiveness categories: atten-
leadership style assumes that the leader dance, productivity, attitudes, strategy,
consults his team members before mak- and management.
ing important decisions and takes their
feedback on various assignments. The The Human Relations model is con-
third kind of leadership style which is cerned with maximizing the return on in-
supportive ensures that the leaders take vestment in human resources. This model
a step further to help the subordinates incorporates the values of an internal fo-
and positively seek for their welfare. cus and a flexible structure. According to
this model, organizations that strive for
Organizational Effectiveness effectiveness are interested in providing
employees with motivating work experi-
Organizational outcomes such as ences, promoting cooperation among work
profitability, productivity, quality, innova- units, and usually have quite advanced
tion, return on investment, efficiency, and training and development systems. In the
competitiveness are often quoted when- human relations model, employee devel-
ever we discuss about organizational ef- opment and satisfaction are more impor-
fectiveness. However, some authors tant than environmental demands.
have adopted a broader definition which
blends financial and economic data with Cameron (1986) looked at 20 recent
measures such as employee involvement empirical studies from 1967 to 1978 from
and satisfaction, labor turnover and rates the point of view of the criteria utilized
of sickness and absenteeism. by researchers to measure organizational
effectiveness. Of the 43 criteria studied,
The effectiveness of organizations in only 9 overlapped. He then conducted
achieving goals at the organizational level two studies looking at effectiveness in
is called organizational effectiveness higher education. The first study was to
(Cameron & Whetten, 1983; Quinn & develop two instruments, and the second
Rohrbaugh, 1983). The organizational was to test them. As a result of these
effectiveness is also defined as the ex- studies, effectiveness criteria were
tent to which an organization fulfills the grouped into nine dimensions of organi-
objectives (Thibodeaus & Favilla, 1995). zational effectiveness.
The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013 273
Sunil Budhiraja & Meenakshi Malhotra
274 The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013
Leadership Style &Organizational Effectiveness in Indian IT & Banking Industry
Out of the seventeen models men- land and representing 31 different nation-
tioned in Table 1, the model suggested alities participated in this study. Interna-
by Mott (1972) has been taken for the tional leader characteristics and organi-
current study which includes quantity of zational culture are found to determine
the product, quality of the product, effi- an appropriate multicultural management
ciency, adaptability, and flexibility. One style. Executive motivation is strongly
of the major reasons of selecting this for influenced by this multicultural manage-
the study is that the generalizability of ment style. Different dimensions of or-
this model has been tested in all kinds of ganizational effectiveness, including re-
industry and the ease of administering this turn on assets, most admired, job satis-
model in Indian service sector context. faction and personal satisfaction are re-
The other reason of taking the model is lated to specific aspects of leader char-
that the variable adaptability and flexibil- acteristics, organizational culture and
ity have been taken by majority of the multicultural management style.
researchers. Although the questionnaire
has been customized and a couple of Carmeli & Sheaffer (2009) have in-
statements have been added to increase vestigated the correlation between lead-
the validity of the instrument for the tar- ership style and organizational decline
geted audience. Moreover what is used and downsizing. Data collected from 85
here is a type of normative model which firms indicate that both leadership risk-
makes an attempt of suggesting the things aversion and self-centeredness are sig-
what organizations should do to be suc- nificantly related to organizational de-
cessful. Several studies have been done cline. This results in intensified organi-
on Mott Model of organizational effec- zational downsizing.
tiveness, but in Indian service sector the
model has not been tested before.
Both leadership risk-aversion and
self-centeredness are significantly
Flexibility is conceptually different
related to organizational decline.
from adaptability because the organiza-
tional changes that result from meeting
emergencies are usually temporary, and A study by Fey&Denison (2003) ex-
the organization returns to its pre-emer- amines the role of culture on organiza-
gency structure (Mott, 1972: 20). tional effectiveness for foreign-owned
firms operating in Russia. The authors
Leadership Style & Organizational argue that effectiveness in Russia relies
Effectiveness more on adaptability and flexibility than
it does in the United States. The authors
A study by Rodsutti et al (2002) iden- have explored their ideas using survey
tified the key relationships of organiza- data on 179 foreign-owned firms operat-
tional effectiveness and leadership in ing in Russia and compare the results to
Southeast Asia. Managers from 1,065 those obtained for firms in the United
multinational companies based in Thai- States.
The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013 275
Sunil Budhiraja & Meenakshi Malhotra
276 The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013
Leadership Style &Organizational Effectiveness in Indian IT & Banking Industry
The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013 277
Sunil Budhiraja & Meenakshi Malhotra
V a r io u s D e m og ra ph i c T y pe o f In du st r y
F ac t or s
F a cto r 1
F a ct o r 1
F ac to r 2
Le a d e r sh ip O rg a n iza t io n a l
F a c tor 2 St y le E f fe c tiv e n e ss
F a cto r 3
F a c to r 3
F ac to r n
F ac to r n
On the basis of the construct, the jority of the respondents are below the
following null hypotheses have been for- age of 45 and are post graduate.
mulated:
Table 2 Descriptive Statistics
278 The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013
Leadership Style &Organizational Effectiveness in Indian IT & Banking Industry
Component method and rotation of fac- three factors is more than 50 percent. A
tors has been done using Varimax method. total of three factors are extracted with
The total variance explained by these Eigen Value of above 1.
Table 3 Rotated Component Matrix (Leadership Dimensions)
The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013 279
Sunil Budhiraja & Meenakshi Malhotra
sulting the team members are a part of The KMO value calculated was 0.7
this style. This style can be referred to and the total cumulative % is 60 which
as consultative or participative leader- means that total 60 % of the variance in
ship style. organizational effectiveness can be ex-
plained by these 3 factors. All the values
Supportive Leadership Style The extracted had Eigne value more than 1.
third factor which has been extracted in-
cludes statements (S11-S13) like doing In Fig. 2, the big oval shape figure is
personal welfare for the employees, mak- containing the Latent variable or con-
ing their tasks more pleasant are included struct (which is symbolised by ), straight
under this factor. Henceforth this factor arrows from latent variable to square
has been named as Supportive Leader- boxes containing the factor loadings
ship Style. (which is symbolized y x), squared
boxes comprise measured/observed or
Factor of Organizational manifest variables (which is symbolized
Effectiveness by X), then small circles on the extreme
left side represent the errors (which is
Similar type of factor analysis 2 symbolized by ).
(Table 4) was performed on the 8 vari-
ables under organizational effectiveness. The next step is to test the fitness of
Three factors of organizational effective- the measurement model in order to check
ness were extracted from the factor the variance between the estimated co-
analyses which are similar to the Motts variance matrix. The researcher has as-
Extraction (1992) and can be named as sessed the overall model fit following
Productivity, Adaptability, Quality and Bollens (1989) recommendation to ex-
Flexibility. amine multiple indices, since it is possible
2
Factor Analysis was not shown in detail as it was not a part of the objectives.
280 The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013
Leadership Style &Organizational Effectiveness in Indian IT & Banking Industry
Fig. 2
for a model to be adequate on one fit the root mean squared error of approxi-
index but inadequate on many others. mation (RMSEA) (Jreskog & Srbom,
The use of comparative fit analysis 2004) have been made to confirm the
(CFI), goodness of fit index (GFI), and model fit.
The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013 281
Sunil Budhiraja & Meenakshi Malhotra
282 The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013
Leadership Style &Organizational Effectiveness in Indian IT & Banking Industry
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The Indian Journal of Industrial Relations, Vol. 49, No. 2, October 2013 285