PROJECT REPORT

FIEDLER MODEL OF LEADERSHIP IN PRIVATE BANKING SECTOR OF NEPAL

Submitted by:

Swastika Acharya (217003)

Mansi Baral (217014)

Bibhuti Bhatta(217022)

Shritika Gauchan (217037)

Tenzing Yangdon Sherpa (217092)

Section: C

Kathmandu University School of Management (KUSOM)

Pinchhe Tole, Gwarko, Kathmandu

Submitted to:

Mrs. Rachana Negi Rana

Faculty of Organizational Behavior

Bachelor of Business Administration (BBA)

March 5, 2023
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Acknowledgement

We express our sincere gratitude to our respected teacher Mrs. Rachana Negi Rana for
the opportunity to work on this project as well as his valuable insights and guidelines which
made this report successful. This project helped us understand the research process, analyze
the data found through the research and connect the Fiedler model of leadership to
organizations in Nepal.

Similarly, we would also like to thank the respondents of our questionnaire for
cooperating with us in the data collection process and providing necessary information which
helped us in the completion of this report.
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Table of Contents

1. Introduction 2
1.1 Background of the study 3
1.2 Objectives of the study 3
1.3 Problem Statement 3

2. Research Methodology 4

3. Literature Review 4

4. Findings and Analysis 5

4.1 Findings 5
4.2 Analysis 6

5. Conclusion 9
5.1 Summary 9
5.2 Limitations 9
5.3 Recommendations 10
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1. Introduction

1.1 Background of the study

Different theories have been propounded to study leadership in organizational

settings. One of those theories in Fiedler’s model. It is a contingency theory that implies that
a leader's effectiveness is dependent on how well their style fits the situation or context, it is
known as contingent leadership. This strategy informs us that a leader or a leader's style of
leadership differs depending on the environment. As Fred Fiedler is the author who has
expanded on the theory of contingency in the most detail and is the most well-known and
respected figure in the world, he will be the one to do so.
The purpose of this study is to identify the leadership styles that are displayed by
leaders in various private commercial banks in Nepal and to identify the situations that are
most suitable for their leadership styles. The Fiedler Contingency Model's LPC questionnaire
was used to conduct interviews with ten Nepalese bank managers to accomplish this. The
purpose of the study is to assist in determining areas in which they can improve.
The private banking sector was selected to conduct this study as all group members of
this study are enthusiastic about pursuing a banking career in the future. Also, the private
banking sector of Nepal shows great promise.

1.2 Objectives of the study

This report is prepared on the basis of the following objectives :

- To understand and apply the concept of Fiedler’s Contingency Theory in a practical setting.
- To analyze the different leadership behaviors and determine their situational favourableness
in the banking sector of Nepal.
- To explore the relationships between leadership effectiveness and organizational
performance

1.3 Problem Statement

This report was prepared in an attempt to solve the problem of lack of research and
documentation on leadership styles of managers of different commercial banks existing in
Nepal.
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2. Research Methodology

In order to satisfy the objectives of the study, we implemented both primary sources
and secondary sources of research methodology.

Primary source: This research implements the primary source of information collection. We
used the Fiedler’s LPC questionnaire to collect information from ten different respondents
from ten different banks of Nepal. The respondents were asked to think of the person with
whom they had the most difficulty in getting a job done and circle the appropriate number as
mentioned in the LPC questionnaire.

Secondary Source: In order to gather precise information for this study, secondary sources
were used. We looked through several websites and consulted various books, articles, and
webpages. We also went through the videos available on YouTube for a better understanding.
Furthermore, we reviewed the presentation slides that our faculty had provided and made
references to theories that related to our subject.

3. Literature Review

Fred Fiedler changed the direction of leadership research by developing the first
comprehensive contingency model for leadership. The Fielder contingency model proposes
that effective performance depends on the proper match between the leader's style and the
degree to which the situation gives the leader control. The model looks at both the leader, as
an individual, and the context in which the leader deals.
For the identification of an individual's leadership orientation, he created the least
preferred co-worker (LPC) questionnaire to determine leadership style as either relationship-
oriented or task-oriented. The latest version of the scale consists of eighteen bipolar adjective
pairs describing the leader's least preferred coworker. The respondent has to think of his/her
least preferred co-worker and rate them on those eighteen adjectives.
We match the leader with the situation after using the LPC questionnaire to determine
a person's fundamental leadership style. Three situational or contingency dimensions have
been identified by Fiedler:
1. Leader-member relationship:
It is the degree of trust, confidence and respect between the leader and the subordinates.
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2. Task structure:
It is the degree to which the task is clear and structured.
3. Position power:
It is the degree of influence the leader has to other power variables like payroll, promotion,
hiring firing etc.
Combining these three situational dimensions, eight situations are obtained. Task
oriented and relationship oriented leaders are good at leading different types of situations that
these dimensions create. Thus, leaders should be matched with a situation that suits them.

4. Findings and Analysis

4.1 Findings

As per our questionnaire, we found the following leadership types among our respondents
according to their LPC (Least Preferred Co-worker) score. The organizations they’re
involved with and their designation within their respective organization is given below:

S.N. Name Designation Bank LPC Leadership type

score

1. Sandeepa Branch Manager, Machhapuchchhre 79 Relationship-oriented

Rimal Naya Thimi Bank Limited leader
branch

2. Roshan Branch Manager, Siddhartha Bank 53 Task-oriented leader

Parajuli Gatthaghar Branch Limited

3. Apachh Information Sunrise Bank 61 Independent leader

Kumar Officer, Pepsi Limited
Yadav Cola branch

4. Shree Prasad Branch manager, Nepal SBI Bank 43 Task-oriented leader

Gelal Sinamangal

5. Shruti Hada Branch Manager, Global IME Bank 69 Relationship-oriented

Shrestha Dillibazar Limited leader
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6. Bishnu Ram Branch Manager, Lumbini Bikas 77 Relationship-oriented

Chalise Dillibazar Bank Limited leader

7. Vandana Branch Manager, Everest Bank 66 Relationship-oriented

Khetan New Baneshwor Limited. leader

8. Niraj Branch Manager, Nabil Bank Limited 65 Relationship-oriented

Rajbhandary Gwarko leader

9. Sujita Branch Manager, Kumari Bank 62 Independent leader

Bajracharya Gwarko Limited

10. Usha Deputy Manager, NIMB Bank 65 Task-oriented leader

Shrestha Durbarmarg

4.2 Analysis

Through our questionnaire and the respective LPC scores, we found relationship
oriented leaders, task oriented leaders and independent leaders. The score above 64 indicates
a relationship oriented leader. The LPC scale assumes that people whose leadership style is
relationship-oriented tend to describe their least preferred coworkers in a more positive
manner. This indicates that they listen to their team members and other stakeholders. They
treat people well and see them as equals. They provide support to team members. They are
found being generally supportive, friendly, and [Link] emphasize the welfare of the
subordinates. They build trust and a good team climate. They display empathy and a genuine
wish to understand the capabilities of each co-worker.
The LPC score of 57 and below 57 indicates task oriented leader. The LPC scale
assumes that people whose leadership style is task-oriented tend to describe their least
preferred coworkers in a more negative manner. This indicates that they set clear
expectations. They provide constructive criticism enabling improvement and setting
standards of performance and production. They create and maintain processes, policies, and
procedures. They prefer setting job descriptions and establishing the division of work. They
focus on systematic coordination of work and emphasize on meeting milestones and
performance targets. They monitor and control operations and performance.
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The leaders whose LPC score is between 58 and 63 are independent managers who
fall outside of the theory’s predictions. This is one of the shortcomings of this model; for
those who fall in the middle range, it can’t be defined whether they’re task oriented or
relationship oriented from this model alone. If leaders are matched with situations only using
this model, independent leaders don’t match with any situation.
Out of the ten leaders, Sandipa Rimal, Bishnu Ram Chalise, Vandana Khetan, Niraj
Rajbhandary, Shruti Hada Shrestha are high LPC leaders i.e relationship oriented leaders.
Roshan Parajuli, Shree Prasad Gelal, Usha Shrestha are low LPC leaders i.e task-oriented
leaders. Apachh Kumar Yadav and Sujita Brajacharya are middle LPC leaders i.e
independent leaders. From our survey, we found that there are more relationship oriented
leaders than task oriented leaders in the banking sector of Nepal. This idea can be generalized
to a conclusion that in the banking sector of the global business landscape, mostly
relationship oriented leaders are found.
Leadership type determines the kind of situation that is best suited for a particular
leader.

Source: (Fiedler's Contingency Model, [Link])

According to the given graph, task oriented leaders are good at leading highly
favorable and highly unfavorable situations while relationship oriented leaders are good at
leading moderate situations. Situation I, II and III are highly favorable situations, situation
IV, V and VI are moderate situations and situation VII and VIII are highly unfavorable
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situations. The qualities of each situation is given in the table based on the three situational
dimensions. Hence, Sandipa Rimal, Bishnu Ram Chalise, Vandana Khetan, Niraj
Rajbhandary, Shruti Hada Shrestha should lead moderate situations whereas Roshan Parajuli,
Shree Prasad Gelal, Usha Shrestha should lead highly favorable and highly unfavorable
situations.
Highly favorable situation consists of having good leader-member relations. The
combination for task structure and position power can be high and strong or high and weak or
low whereas a highly unfavorable situation consists of poor leader-member relations. The
combination for task structure and position power can be low and strong or low and weak.
The application of the type of leadership for various combination of above mentioned
situational dimensions are discussed below:
Scenario 1:
Taking an example, let’s assume all these ten people work in the same organization.
At the end of a fiscal year, bankers have to close the books of the bank. Suppose one of our
respondents has to lead it. A group is formed for this purpose where leader member relations
are good, task structure is high but position power is weak as there’s another person up in the
hierarchy that has the final say over everything. This is a highly favorable situation which
requires a task oriented leader. In this case, the leadership of the group should be given to
Roshan Parajuli, Shree Prasad Gelal or Usha Shrestha who are task-oriented leaders as
Fiedler’s model assumes leadership style doesn’t change in a person and leaders should lead
situations that match their leadership style.
Scenario 2:
Suppose there’s another group in the organization whose job is to internally audit the
books of the bank and another one of our respondents has to lead it. In this group, leader
member relations are poor, task structure is high and position power is strong as the leader
has been given complete autonomy. This is a moderate situation which requires a relation
oriented leader. This group should be led by Sandipa Rimal, Bishnu Ram Chalise, Vandana
Khetan, Niraj Rajbhandary or Shruti Hada Shrestha who are relationship oriented leaders.
To conclude, if a leader with a low LPC score is leading a group that already has good
relationships and is working on unstructured tasks, and the leader has a weak position within
the group (which falls into the fourth situation in the Fiedler Contingency Model), then the
recommended course of action according to the model is to replace the leader with a high-
LPC leader, rather than trying to make the low-LPC leader change their leadership style.
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5. Conclusion

5.1 Summary

A survey was conducted using the Least Preferred Coworker (LPC) scale to assess
leadership styles of ten leaders in the banking sector of Nepal. Based on the LPC scores, the
leaders were categorized into relationship oriented, task oriented, and independent leaders.
Relationship oriented leaders were found to be more common in the banking sector of Nepal.
These leaders emphasize on the welfare of subordinates and build trust and team climate. On
the other hand, task-oriented leaders set clear expectations and focus on meeting performance
targets. The independent leaders fall between these two categories.
Based on the leadership styles to be followed in highly favorable, highly unfavorable
and moderate situations and exploring two different scenarios, it was concluded that Sandipa
Rimal, Bishnu Ram Chalise, Vandana Khetan, Niraj Rajbhandary, and Shruti Hada Shrestha
were suitable to lead moderate situations, while Roshan Parajuli, Shree Prasad Gelal, and
Usha Shrestha are better suited for highly favorable and highly unfavorable situations. The
model suggests replacing a low-LPC leader with a high-LPC leader in situations where the
low-LPC leader cannot change their leadership style. Overall, this report analyzes the
leadership style of bank managers of commercial banks of Nepal and categorizes them as
task-oriented, relationship-oriented and independent leaders.

5.2 Limitations

There are few limitations of our research project work and they are listed below:
1) Our result was based on a small sample size of 10 managers from different
commercial banks based in Nepal. However, this result cannot be generalized to the
entire existing business organizations in the global business landscape.
2) As the respondents i.e. the Managers had a tight schedule during their office hours,
we may not have obtained accurate results from our survey through questionnaires
due to their inability to commit time for filling the questionnaire.
3) The respondents’ result/s while filling the questionnaire might have been influenced
by their interpersonal biases to each other.
4) As our survey was conducted only once and at a single point of time, we could not
measure the change in the responses which might make the result unreliable.
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5) Questionnaires are self assessment tools and usually are considered to be unreliable.
As our research survey tool was a questionnaire itself, the results might be inaccurate.

5.3 Recommendations

Based on the survey and analysis on the Fielder Model based on the LPC
questionnaire, we have derived the conclusion that although there can be different styles of
leadership that can be distinctively different, it does not mean that one style is preferred over
the other, or that one style is superior or more effective than the other. Nor relationship-
oriented and task-oriented leadership styles correlate positively with group productivity, goal
attainment, and subordinates performance. Hence, the combination of both types of
leadership, according to the need of the situation, will work the best for any corporate
organization including commercial business. We, therefore, recommend the managers to
implement both types of leadership as per the need to enhance the productivity of the
subordinates and organization as a whole. Additionally, it will help the respondents a lot in
their professional career if they apply our feedback in their daily life. Besides, we also
recommend that the people who will be using this report as a reference in the future take
every single detail about their respondents into account. It would be better if one prepared
questions in other languages as well, just in case of the occurrence of a linguistic barrier or
difficulties. We recommend the respondents as well to take the LPC questionnaire seriously
because it was reported that during the development of this report, some of the respondents
neglected the test and drew it randomly.

5.4 Learning Outcomes

The process of making this report was insightful to all the group members. We learnt
how the theories of leadership are applicable in real life situations and the general trend of
relationship-oriented v/s task-oriented leaders in the context of commercial banks in Nepal.
Moreover, as the LPC questionnaire was our major source of data collection, we got to know
how to explain the questionnaire to our respondents as well as to interpret the results that we
received from them. In the process of interpretation, we also felt the limitations of the
questionnaire as the leadership style of the leaders who fall in the middle range was unclear.
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Additionally, the report served as a valuable lesson for us for our possible future
managerial roles as we got to know what leadership styles we should follow in case of highly
favorable, unfavorable and moderate situations. Besides, we got to know the process to
approach the managers for tasks like this and how they respond to it. Overall, working on this
report gave us an in-depth understanding of leadership theories, mostly focusing on the
Fiedler model giving us a worthy lesson to be applied in our practical lives.

6. References
Robbins, Stephen P. (1998). Organization Behavior, Concepts, Controversies, Application,
seventh edition, Englewood Cliffs.

7. Annexure