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Psychological Capital Relational Processes

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Which Leadership Styles Affect Employee Satisfaction Positively?

How Do Different Leadership Styles Affect Employee Turnover Positively?




Leadership has acquired drastic recognition as a niche topic in business management research and the outcomes of previous research studies imply the fact that distinct leadership styles have the capability to promote employee satisfaction and reduce employee turnover. However,Aydin, Sarier & Uysal said that, there has been a clear lack of understanding pertaining to the interrelation between leadership and organizational outcomes such as employee satisfaction and turnover (Aydin, Sarier & Uysal, 2013). Previous research studies and literature pertaining to the same have indicated efforts of researchers to illustrate the relation between specific leadership style and employee satisfaction or between employee satisfaction and turnover intentions separately. Therefore a lack of empirical research studies discussing on the three aspects concurrently could be assumed as a pitfall in identifying the extent to which leadership styles influence employee satisfaction (Bouckenooghe,Zafar & Raja, 2015).The observation of the implications of leadership styles in a complex organization could be realized effectively through application of leadership theories in order to examine diverse range of leadership styles. The following report aims to draw inferences from secondary data and analysis in order to address the research aims and present viable recommendations for future research (Carter & Greer, 2013).

Project context:

The rapid progress in the contemporary working environment suggests indications for formal evidence that direct towards the impact of leadership styles on employee satisfaction and organizational outcomes such as turnover intention. On the contrary, research studies in this context have suggested major pitfalls through implementation of research on analysis of specific relationships such as leadership style and employee satisfaction (Choudhary, Akhtar & Zaheer, 2013). However, the research studies fail to present a coherent impression of the extent to which the impact of leadership styles on employee satisfaction is observed. As per Clarke, the consideration of the variable of employee turnover for this research activity could help in illustrating the extent to which leadership styles impact employee satisfaction which could be observed from the turnover rates of an organization (Clarke, 2013).The examples of gaps identified in research literature in context of Australian Higher Education Sector which is intended to expound the interrelations between employee satisfaction, leadership styles and employee turnover (Dul & Ceylan, 2014).Therefore, the following report has the aim of describing the way in which different leadership styles have an effect on employee satisfaction as well as employee turnover. The following proposed research intends to reflect coherently on the different leadership styles and the varying impacts that are rendered by them for organizational outcomes and levels of employee satisfaction through references to the use of Full Range of Leadership Theory (Hinojosa et al., 2014).


Project proposal:

The focus of the research activity would be primarily based on three variables i.e. leadership style, employee satisfaction and employee turnover. The following research is vested in the background of multiple factors that influence employee satisfaction which comprise of references to supervisors or leaders (Kara et al., 2013). The variable of leadership styles that is utilized for the research activity comprises of references to the full range leadership theory comprising of transactional, transformational and laissez faire leadership styles. Employee satisfaction variable utilized in the research reflects on the three distinct factors which include job evaluation, emotional experience and job belief (Kroll & Vogel, 2014). The extensive range of definitions available for job satisfaction indicates the need for emphasizing on the effective components pertaining to employee satisfaction such as salary, benefits and job security.

Employee turnover can be defined as an organizational outcome which is indicated by the level of employee satisfaction (Liden et al., 2014). The dynamic nature of the contemporary workplace environment has created substantial challenges for organizations in terms of restructuring. Therefore Men & Stackssaid that employee satisfaction is subject to dilemma in such cases due to the lack of competence among leaders to address the concerns such as work turbulence. It has to be imperatively noted that the opportunities for growth and support from peers are favourable factors for promoting employee satisfaction while considering the higher significance of leadership influence on job satisfaction(Men & Stacks, 2013). The understanding of the interrelationship between leadership style, employee satisfaction and organizational outcomes such as employee turnover could be applicable in organizational contexts in order to anticipate the drivers for employee satisfaction and the precedents of human capital management and leadership (Mittal & Dhar, 2015).

Aims and objectives:

The primary aim of the research is to identify the impact of leadership styles on the satisfaction of employees and its relationship with organizational outcomes such as employee turnover. The impact of leadership styles on organizational outcomes would be determined on the variable of employee turnover since it is a generic descriptor of the satisfaction of employees with an organization (McDermott et al., 2013).

Literature review:

Leadership is assumed as a significant contributor to the implementation of an effective environment that would be accountable for provision of services as well as accomplishing strategic objectives within an organization. The volatility and complicacies associated with the modern business environment have invoked the implications for discussions and investigations among researchers in the field of effective leadership. The changing roles of leaders in context of business management have become difficult for analysis due to the wide range of political, social, economic and technological changes (Northouse, 2015).

As per Sahin, Çubuk & Uslu, the observation of existing climate of business environment in Australian Higher education sector by researchers suggest that the use of ‘command and control’ leadership styles are profoundly observed in educational institutions. The primary rationale for the leadership approach is identified in the objective for seeking profits that are corporate as well as commercial in nature (Sahin, Çubuk & Uslu, 2014). Large business organizations are increasingly feeling the requirement to develop strategic objectives and align their efforts in accomplishing the strategic as well as financial objectives of the enterprise.

The complexity and competitiveness of the work environment observed in the domain of business has created the necessity for appropriate leadership to accomplish the strategic objectives of the enterprise. The understanding of leadership in an organizational setting could be a significant issue albeit being associated with complicacies due to other relevant factors that may impact the organization (Strom, Sears & Kelly, 2014). The factors comprise of references to organizational structure, leadership culture, demographic characteristics of employees and depicting the differences between management, administration and leadership. The prominent evolution noticed in the leadership approaches adopted in context of business management suggests the relationship between common characteristics of new leadership approaches and leadership theories such as FLRT (Tost, Gino & Larrick, 2013).

The full range of leadership theory reflects on the three classifications of leadership behaviour and provides a comprehensive theoretical impression of three distinct leadership styles referring to transformational, transactional and laissez-faire leadership style.


Leadership styles:

The survey conducted on Australian Business Leadership accounted as a major source for obtaining information regarding the effectiveness of individual leadership styles. As per Wong & Laschinger, transformational approach in leadership could be defined as the empowering of employees to induce transformation or address the concerns of change in an organization (Wong & Laschinger, 2013).

The origin of transformational leadership style is vested in the traditional attributes of a charismatic leader and is directed towards the basic objective of acquiring feasible completion of tasks from employeeswhich are not included in their competences. It is also interesting to observe the illustration of distinct approaches through which transformational leadership could be implemented for motivating employees to accomplish organizational objectives. From a critical perspective, the approaches utilized by leaders in transformational leadership can be associated with the improvement of one of the aspects of employee satisfaction i.e. emotional experience associated with the job.

The individual approaches noted in context of realizing transformational leadership in a workplace environment are idealization of attributes and behaviours, inspirational motivation, intellectual stimulation and individualized consideration (Wang et al., 2014). The idealization of attributes is applicable by leaders through leading the employees with charisma and enabling the employees to trust in the leader thereby perceiving job security. Idealization of behaviours could be implemented by the leaders in the form of establishing new precedents for encouraging employees to share common goals and vision of the enterprise. The example set by the leaders in idealized behaviour can be assumed as a source for employees to derive emotional experience (Zhang et al., 2015).

The inspirational motivation aspects create the need for developing the expectations of workers through aligning the mission and objectives through appealing to the emotions of the workers. One of the limitations that can be perceived in context of inspirational motivation is to ensure that the employee expectations are restricted to attainable limits which would alternatively contribute to improvement of employee satisfaction. Intellectual stimulation is accountable for improving the engagement of employees in decision making and problem solving initiatives of an organization thereby contributing to the sense of satisfaction acquired by employees from the improvement in their intellectual competences.

As per Wong & Laschinger, the individualised consideration approach in transformational leadership could be accounted as a viable approach for addressing employee satisfaction alongside the organizational objectives since it implies the emphasis on a single individual for provision of growth opportunities in the professional domain such as mentoring and coaching facilities for employees (Wong & Laschinger, 2013). The interaction between the leaders and employees in an individualized consideration approach can be accounted as a major prerequisite for employee satisfaction.

Transactional leadership style is reflective of the use of conventional business framework to address the requirements of employees and business. The implications of the transactions could be observed in communication, agreements and interaction between leaders and staff. Transactional leadership is primarily classified into three dimensions which include contingent rewards and active as well as passive management by exception (Sahin, Çubuk & Uslu, 2014). The contingent reward aspect refers to the provision of rewards upon recognition of successful completion of tasks and on the other hand, it also specifies the particular disciplining approaches required in case of non-compliance with the task objectives.

Critical reflection on research study literature in context of leadership styles suggests that transactional leadership is inclined towards the rationale that changes would not be incurred in the future (Men & Stacks, 2013). Therefore, transactional leaders are more likely to depend on the anticipation of employee needs in order to fulfil the needs for positive organizational performance alongside addressing the concerns of employee satisfaction. However, it is imperative to note the limitation referring largely to the privileges of leaders to act in transactional leadership (Hinojosa et al., 2014). The capability of leaders to decision making and problem solving are limited to a large extent by the perception of leaders by their followers. The dimension of active management by exception could be anticipated in the corrective measures taken by leaders to address the deviations made by employees from precedents of organizational performance. The passive management by exception approach is dependent on the timing of action taken by the leader and is reflective of the implementation of remedial action by leaders when strategic objectives are not met.

According to Dul & Ceylan, the laissez faire leadership style is also accounted as a major leadership style that could provide the basis for contemporary leadership approaches. However, the laissez faire leadership style is generally referred to as self-destructing leadership style from the findings from research study literature pertaining to leadership (Dul & Ceylan, 2014). Leaders that adopt a laissez faire leadership style are more inclined towards a laid back approach wherein they are dependent on the flow of things rather than taking action. The leadership style does not involve communication with employees or ensure any sort of action to improve employee involvement in accomplishing strategic objectives of the organization. Therefore, the characteristic features of laissez faire leadership style suggest that it will not be applicable for improving the levels of employee satisfaction (Choudhary, Akhtar & Zaheer, 2013).


Consequence of different leadership styles:

The impact of leadership in the outcomes in context of employee satisfaction and employee turnover has been documented profoundly in major research study literature. One of the examples could be identified in the research carried out through meta-analysis of leadership styles adopted by school principals in Turkey as well as the impact of the leadership style on the overall satisfaction of employees with the job (McDermott et al., 2013).

The study reflected explicitly on the efficiency of transformational leadership on the satisfaction of employees while critically emphasizing on the role of employee commitment that is derived as an organizational outcome from the implementation of transformational leadership style. The outcomes obtained from the Management Research Series Publication of survey on Australian Business leadership provide an impression of the contemporary trends of leadership in the Australian business environment (Strom, Sears & Kelly, 2014). The mean score evaluation of the different leadership factors associated with transactional, transformational and laissez faire leadership styles reflects explicitly to the prominence of individualized consideration and inspirational motivation with mean scores between 3 and 3.5. The approaches for leadership followed in transformational leadership have a mean score of 3 and above while in case of transactional leadership the survey outcomes suggest that leaders prefer contingent rewards as the most flexible approach (Tost, Gino & Larrick, 2013). Therefore, the survey primarily suggested that leadership in the Australian business environment is largely directed towards developing individual competences through training, mentoring and coaching alongside eliciting effective performance with the objectives of rewards. Earlier research activities such as those implemented by Podsakoff refer to the study among 1200 managers and 1539 employees suggest the positive impacts of transformational leadership style on the satisfaction of employees (Wong & Laschinger, 2013). The research findings from a study conducted among employees of a call centre in China also reflect on the impact rendered by leadership styles on employee turnover. The findings reflected on the fact that transformational leadership facilitates the platform for initiating social exchanges within the workplace environment that are induced either by the organization or by supervisors.

Project Plan:

The project plan would comprise of specific references to the selection sample and data collection methods in order to realize the research findings and analysis section of this research activity. The project plan would also outline the timeline for completion of the research process. The sample selected for this research activity is vested in a group of employees and managers in the business management sector of Australia (Wang et al., 2014).


The methodology of the research activity could be ascertained through outlining the methods implemented for data collection, sampling approach and data analysis approaches utilized for the research. The implications of a methodology are identified for every research activity distinctly in order to facilitate guidance for the researcher to conduct individual processes of the research. The sampling approach would involve random sampling method that implies the selection of secondary information in the form of academic journals and research studies. The data collection would be based on secondary data collection prominently for ascertaining the interplay between leadership styles and employee satisfaction and employee turnover. The review of the research study literature facilitates the opportunity for reflecting on the theoretical aspects pertaining to individual research variables identified in context of this research activity. The particular methods implemented for data analysis would involve references to the comparison of the outcomes observed in different research studies to determine the effectiveness of individual leadership styles in promotion of employee satisfaction. The data analysis framework would refer to the use of analytical statistics in order to obtain findings.   

Data collection:

The data collection would be conducted with the help of access to different published sources of research studies and theoretical principles pertaining to leadership styles, employee satisfaction and employee turnover. The secondary information facilitated insights into the research outcomes which are derived using primary data collection pertaining to leadership style effectiveness in promoting employee satisfaction. The inclusion criteria established in the case of data collection process could be observed in the research journals which refer to the distinct impacts of leadership styles on employee turnover and employee satisfaction.

The data collection comprised of acquiring different research papers within the time frame from 2000 to 2015 and primary data could be obtained from the integration of secondary research in the report. The prominent references to the use of questionnaire surveys as major data collection approaches in the individual research papers facilitate the impression of notable leadership styles which have proved successful in the existing scenarios. The list of three prominent leadership styles such as transformational, transactional and laissez faire leadership was considered in this case and their impact on distinct organizational dimensions such as employee commitment and employee motivation was included in the scope of the report. It is also imperative to observe the annual reports of large scale organizations in different industries such as Apple Inc, McDonald’s etc. could facilitate adequate insights for data collection.     


The sampling for the research activity could be identified as random sampling which implies the probability of including research study literature that can reflect on the variables assumed in context of this research report. The sampling size is not specifically estimated in this report owing to the availability of secondary sources of information. 

Data analysis and research findings:

The use of combined methods of qualitative and quantitative analysis in the case of information acquired from critical reflection on literature pertaining to effectiveness of different leadership styles as well as the information obtained through primary data collection approaches followed in the form of questionnaire survey findings. The survey of leaders in the research activity was directed towards estimating the personal perception of leaders regarding their leadership style (Zhang et al., 2015).

The outcomes of the leadership survey suggested that the preference for leadership style could not be considered mutually exclusive and therefore leaders are more likely to depict different types of leadership styles or an assortment of the same. However, the survey findings reflected on the prominence of transformational and charismatic leadership style preferences with a major emphasis on combination of the above two styles with situational leadership (Wong & Laschinger, 2013).

Combined leadership preferences could enable leaders to have diverse alternatives and perspectives for addressing a particular scenario especially pertaining to the strategic direction of an organization. Furthermore, the findings from secondary information in terms of the Australian business leadership survey suggest that outcome measures which could be observed in context of different leadership styles reflected on the three prominent outcomes of extra effort, satisfaction and effectiveness. The means scores of outcomes obtained from the implementation of leadership styles were high for employee satisfaction and effectiveness i.e. above a score of 3 (Strom, Sears & Kelly, 2014).

The ratings provided by executives in surveys to the different factors is reflective of the fact that the personal satisfaction of employees as well as satisfaction in an employment context is a formidable outcome of leadership as communicated by leaders and workers. The critical reflection on the outcomes rendered by different leadership styles in context of other influential factors such as size of the company, gender differences, seniority, age and tenure in the organization are also considered as major attributes for tailoring the effect of leadership styles.

The application of the structural equation model for analysis of research data pertaining to the implications of leadership style on job satisfaction could be derived after estimating a model for measurement and confirmatory factor analysis. The analysis of structural model findings as observed in the secondary source (  5.1.3) reflects on the coefficient and t-value of individual relationship between leadership styles and job satisfaction. The empirical findings suggested that transformational leadership had the highest regression coefficient at 0.83 as compared to 0.57 of transactional leadership and 0.21 noticed in relationship-oriented leadership. The finding in context of transformational leadership also emphasizes on the greater value i.e. 3.83 than critical value of the t-statistic at 95% level of confidence i.e. 1.96. (findings using statistic tests)

The empirical findings also reflect on the observation of comparatively lower regression coefficients in the case of transactional and relationship oriented leadership (Sahin, Çubuk & Uslu, 2014). This leads to the impression that while transactional and relationship oriented or situational leadership could be considered effective contributors to the improvement of employee satisfaction, their capabilities are limited as compared to that of transformational leadership. Therefore it can be aptly concluded from the data analysis that transformational leadership and combinational preferences in leadership styles have the potential to invoke and improve employee satisfaction alongside reducing the concerns of employee turnover.

Research gap:

The primary gap in the research could be derived from a comprehensive overview of the literature review. The research gap is vested in the lack of references to other organizational outcomes caused due to different leadership styles that are also responsible for influencing employee satisfaction. Some of the factors include the role of colleagues or peers, impact of organizational restructuring on leadership and employee performance and the significance of organizational culture in context of leadership and job satisfaction of employees.



The outcomes of the research reflect clearly on the effectiveness of leadership styles in improving employee satisfaction and considered the cases of three distinct leadership styles i.e. transformational, transactional and relationship based leadership. The future recommendations that could be included in this report would be to ensure the execution of primary data collection process in order to have a practical involvement in the research activity rather than relying on secondary sources of information (McDermott et al., 2013).

The limitations for research in terms of physical and financial resources should be addressed in future research activities. Furthermore, future research activities should also emphasize on inclusion of more variables and case instances from research study literature in order to widen the scope of the outcomes and their relevance for the research issue (McDermott et al., 2013).

Milestones and schedule:

The project schedule and milestones could be illustrated in the form of a Gantt chart as follows:


Week 1

Week 2

Week 3

Week 4

Week 5

Selection of research topic






Establish research aims and objectives






Secondary data collection






Primary Data collection






Data analysis






Findings and recommendations






Final formatting and submission







The outcomes of data analysis in the research report illustrated above were indicative of the prolific impact rendered by transformational leadership style on satisfaction of employees. The concurrent trends in the domain of business management in Australia alongside the changing perceptions of leadership behaviour could be addressed effectively through the adoption of transformational leadership that is helpful for addressing employee satisfaction and employee turnover issues.



Aydin, A., Sarier, Y., & Uysal, S. (2013). The Effect of School Principals' Leadership Styles on Teachers' Organizational Commitment and Job Satisfaction. Educational sciences: Theory and practice, 13(2), 806-811.

Bouckenooghe, D., Zafar, A., & Raja, U. (2015). How ethical leadership shapes employees’ job performance: The mediating roles of goal congruence and psychological capital. Journal of Business Ethics, 129(2), 251-264.

Carter, S. M., & Greer, C. R. (2013). Strategic leadership: Values, styles, and organizational performance. Journal of Leadership & Organizational Studies, 20(4), 375-393.

Choudhary, A. I., Akhtar, S. A., & Zaheer, A. (2013). Impact of transformational and servant leadership on organizational performance: A comparative analysis. Journal of Business Ethics, 116(2), 433-440.

Clarke, S. (2013). Safety leadership: A meta?analytic review of transformational and transactional leadership styles as antecedents of safety behaviours. Journal of Occupational and Organizational Psychology, 86(1), 22-49.

Dul, J., & Ceylan, C. (2014). The Impact of a Creativity?supporting Work Environment on a Firm's Product Innovation Performance. Journal of Product Innovation Management, 31(6), 1254-1267.

Hinojosa, A. S., McCauley, K. D., Randolph-Seng, B., & Gardner, W. L. (2014). Leader and follower attachment styles: Implications for authentic leader–follower relationships. The Leadership Quarterly, 25(3), 595-610.

Kara, D., Uysal, M., Sirgy, M. J., & Lee, G. (2013). The effects of leadership style on employee well-being in hospitality. International Journal of Hospitality Management, 34, 9-18.

Kroll, A., & Vogel, D. (2014). The PSM–leadership fit: A model of performance information use. Public Administration, 92(4), 974-991.

Liden, R. C., Wayne, S. J., Liao, C., & Meuser, J. D. (2014). Servant leadership and serving culture: Influence on individual and unit performance. Academy of Management Journal, 57(5), 1434-1452.

Men,L. R., & Stacks, D. W. (2013). The impact of leadership style and employee empowerment on perceived organizational reputation. Journal of Communication Management, 17(2), 171-192.

Mittal, S., & Dhar, R. L. (2015). Transformational leadership and employee creativity: mediating role of creative self-efficacy and moderating role of knowledge sharing. Management Decision, 53(5), 894-910.

McDermott, A. M., Conway, E., Rousseau, D. M., & Flood, P. C. (2013). Promoting effective psychological contracts through leadership: The missing link between HR strategy and performance. Human Resource Management, 52(2), 289-310.

Northouse, P. G. (2015). Leadership: Theory and practice. Sage publications.

Sahin, D. R., Çubuk, D., & Uslu, T. (2014). The effect of organizational support, transformational leadership, personnel empowerment, work engagement, performance and demographical variables on the factors of psychological capital. Emerging Markets Journal, 3(3), 1.

Strom, D. L., Sears, K. L., & Kelly, K. M. (2014). Work engagement: The roles of organizational justice and leadership style in predicting engagement among employees. Journal of Leadership & Organizational Studies, 21(1), 71-82.

Tost, L. P., Gino, F., & Larrick, R. P. (2013). When power makes others speechless: The negative impact of leader power on team performance. Academy of Management Journal, 56(5), 1465-1486.

Wong, C. A., & Laschinger, H. K. (2013). Authentic leadership, performance, and job satisfaction: the mediating role of empowerment. Journal of advanced nursing, 69(4), 947-959.

Wang, H., Sui, Y., Luthans, F., Wang, D., & Wu, Y. (2014). Impact of authentic leadership on performance: Role of followers' positive psychological capital and relational processes. Journal of Organizational Behavior, 35(1), 5-21.

Zhang, J., Ahammad, M. F., Tarba, S., Cooper, C. L., Glaister, K. W., & Wang, J. (2015). The effect of leadership style on talent retention during merger and acquisition integration: Evidence from China. The International Journal of Human Resource Management, 26(7), 1021-1050.


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