California State University, Northridge

CALIFORNIA STATE UNIVERSITY, NORTHRIDGE

The Influence of Leadership Styles on Employees’ Motivation in Public Sector

Organization

A graduate project submitted in partial fulfillment of the requirements

For the degree of Master of Public Administration

Public Sector Management and Leadership

Mandy Li

August 2018

The graduate project of Mandy Li is approved:

______Dr. James D Ballard Date

______Dr. James Larson Date

______Dr. Henrik Palasani-Minassians, Chair Date

California State University, Northridge

Table of Contents

Signature Page …………………………………………………………………………. ii

Abstract ………………………………………………………………………………….iv

Section 1: Introduction ………………………………………………………………….1

Section 2: Literature Review………………………………………………………...... 3

Theories of employee motivation…………………….………………………….3

Conceptual framework of leadership styles…………………………………...... 6

Transactional leadership and its components……………………………………8

Transformational leadership and its components…………………………...... 10

Laissez-Faire Leadership…….………………………………………………….12

Motivation and its relationship with leadership styles in public sector…………13

Section 3: Research Design...……………………………………………………………17

Section 4: Ethical Consideration……………………………………………………...... 18

Summary...………………………………………………………………………………19

References……………………………………………………………………………….20

iii

Abstract

The Influence of Leadership Styles on Employees’ Motivation in Public Sector

Organization

Mandy Li

Master of Public Administration, Public Sector Management and Leadership

Leadership style has huge influence on employees to motivate them in achieving

organizational goals. This study is to explore different leadership styles and their

potential impact on employees’ motivation in public sector organization. The objective is

to review past literatures to understand the relationship between leadership style and

employee motivation. The study first provides a better understanding of different

motivational theories. Then, the study briefly discusses the conceptual framework of

Bass’s Full Range Leadership Model which includes transactional leadership,

transformational leadership, and laissez-faire leadership.

The research method is a quantitative study design by using Bass & Avolio’s closed-end Multifactor Leadership Questionnaire (MLQ), based on quantitative Likert scale, as a survey instrument for data collection. This research paper summarizes the

iv main findings of leadership style and its impact on employee’s motivation based on the comprehensive literatures reviews.

Introduction

Organizational Leadership styles have immense impact on employees to perform,

grow and lead to positive attitude towards achieving desired goals (Johnson & Klee,

2007). Mohiuddin (2017) indicates that a leader has a very significant role on the success

of an organization. In simple terms, leadership is a process by which a capable leader

provides direction and motivates followers toward achieving organizational goals (Voon

et al., 2011). Employees are considered the most important asset in an organization.

Hence, increasing employee motivation is one of the ways to achieve desired goals

because employees have the tendency to utilize the organizational capital efficiently and

increase the productivity and profitability of the organization (Fiaz et al., 2017).

According to a research from Mosadegh Rad and Yamohammadian (2006), employee

motivation is influenced by many organizational contextual factors such as salaries,

health benefits, job security, workplace flexibility, and leadership. Leadership style has a

significant impact on employee motivation in various businesses setting such as for-profit

or non-profit organization.

This research paper intends to examine the relationship between leadership styles

and their impact on employees’ motivation in a public-sector organization. The specific

objective of the study is to review past literatures to understand that how these three types

of leadership styles such as transactional, transformational, and laissez-faire styles

influence workers’ motivation. The benefit of this researching topic is to help public

sector leaders identify and recognize the best leadership styles to motivate their followers to fulfill organizational goals. First, this research paper provides literature reviews on

employee motivation theories. Second, the study reviews the theoretical and conceptual

1 framework of leadership styles. Third, the paper evaluates motivation and its relationship with three different leadership styles. Fourth, the study introduces the research design.

Lastly, this research paper summarizes the main findings of leadership style and its impact on employees’ motivation based on the comprehensive literatures reviews.

Consistent with this, the research question of the present study is: How do leadership styles affect employees’ motivation in public sector?

Literature Review

Theories of employee motivation

The term motivation comes from the Latin word “movere” which means to move.

Motivation is what moves people from boredom to interest (Islam & Ismail, 2008).

According to Robbins (1993), motivation is defined as the willingness to exert high levels of effort toward organizational goals, conditioned by the effort’s ability to satisfy some individual need. Sunil Ramlall in his article, “A Review of Employee Motivation

Theories and their Implications for Employee Retention within Organizations” describes relevant employee motivation theories and explains how motivation affects employee retention and other behaviors within organizations. The author demonstrates the importance of employee retention and its challenges as well as the costly effects of employee turnover (Ramlall, 2004). Analyzing and critiquing the motivation theories is critical because there are significant investments in employee retention efforts within organizations. Therefore, in Ramlall’s study, the theories that were analyzed: (1)

Maslow’s Need Hierarchy Theory (2) Equity Theory, (3) Vroom’s Expectancy Theory, and (4) Herzberg’s Motivator-Hygiene Theory were selected based on their emphasis and reported significance on employee retention. The various theories on motivation all demonstrate that motivation requires a desire to act, having ability to act, and having an objective. Motivation has a powerful impact on employee commitment in an organization. It is contingent upon five methods of explaining behavior-needs, reinforcement, cognition, job characteristics, and emotions.

Maslow’s Needs Theory focus on how needs motivate and drive human behavior through a hierarchical pyramid of needs which includes five basic levels: physiological,

safety-security, belongingness, esteem, and self-actualization (Bassous, 2015). Johnson and Klee (2007) assess the Maslow’s needs theory and they believe that the Needs

Theory is also relevant to work-related motivation. For example, in an organization, wages and working conditions are considered physiological needs, whereas job security and benefits are safety, teamwork and relationship are social belongingness, development opportunities and autonomy are esteem, and creative and challenging tasks are self- actualization (Johnson & Klee,2007). Ramlall (2004) points out that employees are motivated to reach and maintain the elements for each need level. In addition, Bassous

(2015) argues that a person will not be motivated to the next level of needs until he or she fulfills the basic needs at the current level.

Robbins’ Equity Theory identifies that employees are concerned not only with the amount of rewards they receive for their efforts, but also with the relationship of this amount to what others receive (Bassous, 2015). Robbins explains that employees strive for what they perceive as fair and when there is an imbalance in their outcome input ratio in comparison to others around them, tension is created. The inputs are defined as previous work experience, education, effort on the job, and training. While outcomes are those factors that result from the exchange of effort, such as supervisory treatment and special job assignments that require creativity (Bassous, 2015). Islam and Ismail (2008) point out when employees believe that they are not receiving equitable treatment in comparison to others, relative to the exchange they think others are making, they will be motivated to perform poorly as they see fit. Ramlall (2004) argues that with the Equity

Theory, the challenge is to develop reward systems that are perceived to be fair and

equitable and distributing the reward in accordance with employee beliefs about their

own value to the organization.

On the other hand, Vroom’s Expectancy Theory further describes human

behavior towards performance (Bassous, 2015). Ramlall (2004) reviews Vroom’s

Expectancy Theory and concludes that motivation is a combined function of the individual’s perception that effort will lead to performance and of the perceived desirability of outcomes that may result from the performance. To explain human behavior and attitudes, Ramlall (2004) presents Vroom’s three perception components:

(1) Valence, the emotional orientation people hold regarding outcomes, (2)

Instrumentality, the linking of one outcome (performance level) to other outcomes, (3)

Expectancy, the degree to which the individual believes that performing at a level will lead to the attainment of a desired outcome. Bassous (2015) agrees that Vroom’s

Expectancy Theory is based on the higher the expected reward, the harder an individual works, and the higher the performance and work satisfaction.

Among these theories of motivation, Amabile (1993) states that Herzberg’s

Motivator-Hygiene Theory has been one of the most influential in recent decades.

Essentially, the theory divides motivating factors into two categories: “motivators”

factors and “hygiene” factors. In Herzberg’s motivation theory, “motivators” factors refer

to something has to do with the work itself which includes things as responsible work,

autonomy in doing the work, and satisfaction from accomplishment of challenging

assignment. In contrast, “hygiene” factors refer to something has to do with the

surrounding context which includes pay, security, and general working conditions

(Bassous, 2015). Amablile (1993) argues that worker’s motivation is related to both

factors. If hygiene factors are insufficient, workers become de-motivated; if motivator

factors are rich in workers’ jobs, workers become most satisfied and most productive.

Bassous (2015) assess that Herzberg’s motivation theory highlights the work-related motivational implication for organizational leaders who seek to improve the hygiene factors and motivate workers through satisfaction factors.

In addition, Park and Rainey (2008) categorize Herzberg’s motivation theory into intrinsic motivation and extrinsic motivation. Intrinsic motivation refers to behaviors for which there is no apparent reward except the activity itself. Extrinsic motivation refers to behaviors in which an external controlling variable (such as explicit reward, incentive, or threat) can be readily identified (Park & Rainey, 2008). Buble et al. (2014) conclude that the most talented and innovative employees are rarely motivated solely by money and other benefits, but also by self-actualization and the work they do. The importance of motivation, especially intrinsic, can influence employees’ behaviors that are reflected in high performance of the organization (Buble et al., 2014).

Conceptual framework of leadership styles

Yahaya and Ebrahim (2016) argue that without effective leadership, it is difficult for organization to sustain productivity, profitability, and a competitive advantage.

Leadership issue is vital for organizational success. (Yahaya & Ebrahim, 2016). In recent years, leadership styles have become one of the most important studied topics in management and industrial psychology (Fiaz et al., 2017). Many researchers consider leadership styles as an important variable of and organization function and an important predictor of an organization performance (Yahaya & Ebrahim, 2016). In one of the leadership styles research, Buble et al. (2014) indicate that leadership styles derive from

6 the style of a leader. According to Buble et al. (2014), leadership style is defined as an individual uses his or her right and method to influence followers to work together in achieving organizational targets. They believe that the style of an individual is being established and is based on his or her belief, value, preference, and organizational culture.

They also find that leadership style means a method and capability aimed at achieving organizational goals and further affects all organizational activities (Buble et al., 2014).

In another research, Pufi et al. (2014) conclude that leadership can help organizations become more productive and profitable, but the extent of success depends on the style of the leader, because the style of the leader can control interpersonal, reward and punishment that shapes employee behavior, motivation and attitude which impacts on organizational performance. Also, Fiaz et al. (2017) argues that leadership styles can influence employees either positively or negatively among organizational outcomes such employee turnover, absenteeism, customer satisfaction and organizational effectiveness.

In an attempt to interpret leadership styles, Yahaya and Ebrahim (2016) review

Bass’s Full Range Leadership Model and identify three preferred leadership styles: transactional leadership, transformational leadership, and laissez-faire leadership. Bass’s original theory includes two types of transactional behavior (contingent reward and passive management by exception) and three types of transformational behavior

(idealized influence, intellectual stimulation, and individualized consideration). A revision of the theory has added another transactional behavior called active management by exception and another transformational behavior called inspirational motivation to the theory (Yahaya & Ebrahim, 2016). The laissez-faire leadership is described as a lack of

7 leadership because feedback, rewards, and leader involvement are totally absent in this type of leadership (Yahaya & Ebrahim, 2016).

Trottier et al. (2008) conclude that Bass’s full range theory of leadership is a cumulative model that works in a somewhat similar way to the Maslow and Herzberg motivational theories. Ideally and theoretically, they categorize laissez-faire and transactional leadership as the lower level factors which constitutes the basics of the leadership function, while transformational leadership is considered as the higher-level factors which constitutes high-performing leadership (Trottier et al., 2008).

Transactional leadership and its components

A political scientist Burns develops the initial concept of transactional leadership.

He defines transactional leadership is a style based on bureaucratic authority and legitimacy within the organization. He believes that transactional leaders tend to focus on work standards, assignments, and task-oriented goals (Emery & Barker, 2007). Burns indicates that transactional leadership occurs when one party connects with others for the purpose of an exchange process involving valued things that could be economic or political or psychological in nature. Burns also points out that even though both parties have the related purposes, the relationship between both parties does not go beyond the exchange of valued benefits (Erhart & Nauman, 2004). Consequently, Bass extends the work of Burns and develops transactional leadership theory. Under Bass’s perspective, transactional leadership is characterized by the transaction or exchange that occurs between leaders and followers. The exchange is based on the agreement of the rewards that the followers will receive if they satisfy leaders’ requirements. Thus, transactional

leaders exchange things of value with followers to advance both parties requirements in

order to meet the specific aims or goals (Ivey & Kline, 2010).

Transactional leadership consists of three components, namely, contingent reward,

active management by exception, and passive management by exception. Contingent

reward means leaders clarify what needs to be done and use psychic and material rewards

in exchange for good performance. Active management by exception means leaders actively monitor followers’ work performance and take corrective action when problems occur. Passive management by exception means leaders only intervene when standards are not met. (Voon et al., 2011).

In transactional leadership, contingent reward is based on the agreement between leaders and followers on the performance objectives and standards to be accomplished

(Ivey & Kline, 2010). Yahaya and Ebrhim (2016) show that transactional leaders usually

set the promise to provide motivating rewards if followers achieve their assigned tasks,

and employees will be rewarded for their achievement but will receive punishment for

lack of goal achievement. In addition, Boerner et al. (2007) describe that both active and

passive management by exception leaders usually act as monitors and intervene only in

exceptional circumstances. Yahaya and Ebrhim (2016) describe that active management

by exception involves leaders who take initiative to observe employees’ behaviors and systematically monitor employee performance. At the same time, Leaders actively search for employees’ problems and correct errors as they are detected. Comparatively, Boerner et al. (2007) emphasize that, in passive management by exception leadership, leaders do not react to problems systematically. They suggest leaders need to let the employees do

their jobs, and interfere only when mistakes or problems occur in the work of the

employees.

Transformational leadership and its components

Burns is one of the first to set the foundation for transformational leadership. He

characterized transformational leadership as a style that motivates followers to a higher

level of personal expectation and individual commitment. Transformational leader can

articulate organization’s vison and inspire employees to perform beyond expectations

(Emery & Barker, 2007). Bass further develops the theory of transformational leadership.

According to Bass, transformational leaders motivate followers to do more than the expected and transform their followers by raising their awareness of the importance of organizational outcomes thereby activating their higher-level needs and inducing them to transcend their own self-interest for the sake of the organization (Yahaya & Ebrhim,

2016).

Furthermore, as Green and Roberts (2012) note, the theory of transformational

leadership speaks to the higher needs of employees and focus on long-term benefits of the

organization. Emery and Barker (2007) believe that transformational leader emphasis on

followers’ the individual needs and personal development. For example, leaders usually

appreciate and value subordinators by using transformational leadership to develop

shared values and empower others. As a result, followers feel trust, admiration, loyalty,

and respect toward transformational leader (Voon et al., 2011). Additionally, Yahaya and

Ebrhim (2016) indicate that transformational leaders not only concern more about

progress and development of employees, but also focus more on transforming employees

10 by using intrinsic motivation to build commitment and empower employees to achieve organizational goals.

Initially, transformational leadership is considered to include charisma, intellectual stimulation, and individualized consideration. Subsequently, Avolio, Bass, and Jung proposed that transformational leadership is a behavior process consists of four components. They are individualized consideration, idealized influence, intellectual stimulation, and inspirational motivation. As a result, inspirational motivation and idealized influence are identified as two additional dimensions of transformational leadership (Voon et al., 2011). Charisma is defined as how followers perceive and act toward to the leader with respect. Followers always form strong emotional ties to the leaders. They trust and support their charismatic leaders’ judgment, value, and mission

(Emery & Barker, 2007).

Individualized consideration refers to leaders pay special attention to diagnose and elevate the needs of each follower for achievement and growth. Meanwhile, individualized consideration allows leaders to build a strong relationship with each follower (Voon et al., 2011). Yahaya and Ebrhim (2016) believe that leaders with individualized consideration have great concern for the follower’s individual need and personal development. Such leaders usually act as coaches or mentors to the followers and provide them with constructive feedback in order to develop followers into becoming leaders.

Voon et al. (2011) suggest that idealized influence refers to leaders act as role models and motivating followers to work beyond their self-interest in order to achieve common goals. At the same time, leaders become a source of admiration by followers by

11 enhancing follower pride, loyalty, and confidence. Idealized influence leaders consider followers’ needs over the leader’s needs. Such leaders have the ability to persuade others and to connect with followers. Thus, followers admire and want to share and commit to the vison set by the leader (Yahaya & Ebrhim, 2016).

Intellectual stimulation is concerned with the role of leaders in stimulating followers to view the world from new perspectives and questioning old assumptions

(Trottier et al., 2008). Intellectual stimulation relates to a leader’s ability to intellectually challenge followers to go the extra mile, to be innovative and creative in problem solving and decision making (Yahaya & Ebrhim, 2016). Voon et al. (2011) agree that such leaders always encourage their followers to develop new ideas and methods to solve old problems.

Trottier et al. (2008) believe that inspirational motivation refers to the role of a leader is to provide meaning and a sense of purpose in what needs to be done in appealing vision. Inspirational leadership inspires followers to work hard and be committed to achieve organizational goals. Such leaders motivate the followers by communicating a clear vision, aligning organizational goals and personal goals, and treating problems as opportunity to learn (Yahaya & Ebrhim, 2016).

Laissez-Faire Leadership

Laissez-faire leadership is a style which refers to the absence of leadership

(Harms & Crede, 2010). The main emphasis of laissez-faire style is neither on people nor performance; the philosophical assumption is that human beings are naturally unpredictable and uncontrollable, and it is a waste of time and energy to understand people (Fiaz et al., 2017). Thus, this style of leaders tries to maintain a low profile within

the organization, try not to create waves of disturbance, and rely on only few available

loyalists to get the job done (Chaudhry & Javed, 2012). Harland et al. (2005) assess the

behaviors of laissez-faire leaders, and they agree that this kind of leaders focus on

avoiding making decisions or getting involved, hesitating to take action, delaying

responding to urgent questions, and being absent when needed. At the same time, Fiaz et

al. (2017) conclude that laissez-faire leaders tend to avoid communication and only establish goals and objectives when necessary and required. Such leaders can work and live with whatever structure put in place without any criticisms. On the other hand, adoption of laissez-faire style can lead to positive outcomes on employees. As noted by

Chaudhry and Javed (2012), laissez-faire style has a significant positive relationship with employees’ motivational level because this particular style let the employees to realize their potential without undue meddling of management.

Motivation and its relationship with leadership styles in public sector

Employees’ motivation is dependent upon leadership styles to quite an extent, though is varies from organization to organization (Fliaz, 2017). Trottier et al. (2008) argue that workers in the private sector are usually motivated by financial incentives. In contrast, in non-profit sector or public sector, workers are motivated by the vision of their organization rather than monetary incentives. Some researchers suggest that employee motivation in the public sector is very important as the performance of governments and their administrations affect our society much more than any other private sector organization (Asrar-ul-Haq & Kuchinke, 2016). Meanwhile, Park and Word (2012) show that public managers and supervisors set the example and play the role of leader when it comes to employee motivation. They believe that once a manager or supervisor is

motivated to do a good job, their behaviors tend to transfer over to the subordinators they

manage.

In public sector, one of the big questions of human resource management is how

to enhance employees’ motivation to increase job and organizational performance and

effectiveness (Trottier et al., 2008). From a managerial standpoint, Park and Word (2012) believe that employee’s motivation becomes one of the determining factors of organizational success. That is, motivation is directly connected to an employee’s perceptions and behaviors, which in turn reflects how well the leader or manager oversees employees in an organization.

Fiaz (2017) argues that motivation is a key component in leadership, because motivating leaders can cast the vision and motivate workers to achieve organizational

goals. He also believes that different leadership styles influence workers’ motivation

differently (Fiaz et al., 2017). In transactional leadership style, leaders are more concerned with the accomplishment of the desired goal. Therefore, transactional leaders

motivate employees to produce desired outcomes or results by explaining employees how to achieve the target, providing feedback on job performance, and rewarding employees once the target is met (Yahaya & Ebrhim, 2016).

However, Johnson and Klee (2007) argue that transactional leaders do not address employee’s needs and personal development. Such leaders tend to use corrective criticism, negative feedback, and negative reinforcement actively and passively on task completion and employee compliance. According to Emery and Barker (2007), transactional leaders rely heavily on organizational rewards and punishments to influence

14 employee performance. Therefore, transactional leaders usually work well with employees in term of improving productivity (Emery & Barker, 2007).

In Contrast, transformational leaders demonstrate concern for the individual needs and personal development of followers. According to McMurray et al. (2010), transformational leaders motivate followers by increasing follower self- efficacy, facilitating followers’ social identification with their organization, and linking the organization’s work values to follower values.

Moreover, unlike transactional leadership, Green and Roberts (2012) agree that transformational leadership relies on employee intrinsic motivation to stimulate high performance without the carrot of reward or reprimand. Such leaders treat followers on a one-to-one basis by encouraging followers to perform at maximum levels; that is, transformational leaders not only identify individual needs, but also motivate followers to higher levels of personal expectation and commitment (Emery & Barker, 2007). For instance, as Park and Word (2012) examine, public-sector employees are less likely to be interested in extrinsic rewards and more likely to value intrinsic rewards than private sector employees. Park and Rainey (2008) also find that public and private sector employees pursue different values in their jobs. They indicate that public sector employees are motivated to commit to the organization’s culture and values over their self-interest.

Laissez-faire is considered as the absence of effective leadership. Laissez-faire leaders give their followers complete freedom and offer little guidance. Under such leadership style, their followers become confused and disorganized at work. Furthermore, their followers work less efficient and have poor quality of work. Therefore, laissez-faire

15 has demonstrated itself to be the most inactive, least effective, and most frustrating leadership style (Barbuto, 2005).

Research Design

The research method is a quantitative correlational study. According to the research framework, independent variables are leadership styles (transactional leadership, transformational leadership, and laissez-faire leadership) and the dependent variable is employees’ motivation. The study population is composed of all level of workers in one of the largest public-sector organizations in Los Angeles County which is Department of

Public Social Service (DPSS). Specifically, stratified sampling techniques will be used to collect data from one of the District Offices – GAIN (Greater Avenues for Independence-

Welfare to Work Program) Region IV in DPSS. This study assesses independent variables using Bass and Avolio’s closed-end Multifactor Leadership Questionnaire

(MLQ), based on quantitative Likert scale, as a survey instrument for data collection. For this research, the MLQ focus on identifying three characteristics of leaders which are transactional, transformational, and laissez-faire leadership styles. Workers need to answered questions related to three different types of supervisor or manager who are identified as either transactional leader, transformational leader or laissez-faire leader.

Based on workers’ responses through surveys, their motivation level will be analyzed.

Ethical Considerations

Due to limited resources and time constraints, the design of this research proposal will not be able to be implemented for the purpose of protecting confidential personal participants’ data. Thus, this study focuses on reviewing past literatures to examine the relationship between leadership styles and their impact on employees’ motivation in a public-sector organization. However, if this research was to implement the surveys, it would have to be making sure all surveys from candidates are voluntary and all results of the surveys will be anonymous. Therefore, the uncomfortable situations between subjects and supervisors will be avoided.

Summary

This study explores the literatures on leadership styles and employee motivation

in public sector organization. This review briefly discusses different motivational theories

and the conceptual framework of Bass’s Full Range Leadership Model, which include

transactional leadership, transformational leadership, and laissez-faire leadership. The

observations of the study indicate that all three leadership styles have their own

importance with regard to enhancing employee’s motivation and performance. Literatures

reviews show if leaders practice transformational leadership rather than transactional or laissez-fair styles, they can motivate employees and it would be more beneficial for the

organization. The study can be helpful for leaders or managers to understand that which

kind of leadership styles is most appropriate in terms of its outcomes and motivations,

and how they can modify their leadership styles to make it further result oriented.

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