See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/343614934

Effect of Leadership Style on Employees Performance in Ethiopia: The Case of

Omo Kuraz I Sugar Factory

Research · August 2020

DOI: 10.13140/RG.2.2.18964.12168

CITATIONS READS

0 4,690

1 author:

Biqila Hirpa Bedasa

Includovate
1 PUBLICATION   0 CITATIONS   

SEE PROFILE

All content following this page was uploaded by Biqila Hirpa Bedasa on 12 August 2020.

The user has requested enhancement of the downloaded file.

 Effect of Leadership Style on Employees Performance in Ethiopia: The
Case of Omo Kuraz I Sugar Factory

Biqila Hirpa Bedasa

Lecturer at Department of Business Management, Admas University, Ethiopia
E-mail: [email protected]

Abstract
Leadership style pursued by managers/supervisors is among underlying factor determining the
productivity of employee in public and private organizations in Ethiopia. Using a cross section
of data from 265 permanent employees during 2019, this study tried to attest the relationship and
effect of democratic, laissez-faire and autocratic leadership styles on the performance of
employees at Omo Kuraz I Sugar Factory after controlling for other confounders. Descriptive
analysis shows democratic style as the most frequently exhibited leadership style (Mean=3.72;
SD=1.09) followed by laissez-faire (Mean=3.62; SD=0.82) and autocratic style (Mean=3.29;
SD=1.03). The correlation analysis revealed significant positive correlation of democratic and
laissez-faire leadership styles with employee performance while autocratic style were negatively
correlated with performance. The result from multiple linear regressions showed democratic and
laissez-faire styles have significant positive effect while autocratic style affected employee
performance score more adversely. In order to enhance the productivity of their employees more
significantly, the study finally recommend the company to execute democratic style. Moreover,
longitudinal studies attempted to capture the impact on employee performance due to the
changing leadership practice should be left for further research.

Key Words: Democratic styles, autocratic styles, laissez-faire Style, employee performance
INTRODUCTION

The concept of leadership has got wider attention by academician and policy makers since recent
times for its importance to the organizations in determining the productivity and hence their
competitiveness of in a global economy. Leadership represents the most dynamic effects which
by enhancing the knowledge, skill and attitude of employees for the attainment some
predetermined goal (Behn, 1995). Effective leader not only inspires subordinates’ potential to
enhance efficiency but also meets their requirements in the process of achieving a certain
predefined objectives (Lee and Chuang, 2009). In addition, leadership have a paramount
importance for it has a strong power to create a level playing field for all employees in an
organizations there by promoting merit based development path for all its staff members
(Alghazo & Al-Anazi, 2016; Hurduzue , 2015 cited in Basit, et al.,2017) .

Omo Kuraz I Sugar Development Project is one of Ethiopia’s mega project launched during the
first phase of Growth and Transformation Plan (GTP) with the aim of fulfilling the ever
increasing demand of sugar products for local market and abroad there by saving enormous
amount of foreign currency spent on sugar import. In order to full fill this ambition, the
government have allocated significant amount of budget to restructure the existing sugar
industries by strengthening its human resources and leadership at different levels. To this end,
the a massive reform program were undertaken which among other things include narrowing the
existing gap in human resource and transforming the capacity of its management structure in line
with the new change management.

However, in spite of such persistent effort made by Omo Kuraz I Sugar Factory1, the extent to
which it has succeeded in establishing an effective leadership and increased employee
productivity has been questioned by many others. For instance, employees in Omo Kuraz I
blame their immediate supervisors on account of inappropriate treatment. In addition, employees

1
Launched on Sep, 2013, Omo Kuraz I Sugar I is one among the four projects done by Omo Kuraz Sugar
Development, Omo Kuraz I, Omo Kuraz II , Omo Kuraz III and Omo Kuraz IV.
also question the process of getting promotions and career development as it lacks clarity and
fairness which according to them disregards ones performance. Most leaders in Ethiopian public
organizations were also blamed for their ignorance, high involvement in decision making, and
poor communication due to communication barrier emanating from geographic proximity. On
the other hand, the management at different levels blames their employees for their poor
productivity, lack of skill, incentive and motivation. Despite the growing confrontations between
employees and their leadership, no empirical evidence ever revealed the existence of leadership
gap in Omo Kuraz I Sugar Factory, nor does the gap in employee performance. The existing
literatures in Ethiopian context were largely on banking sector with no cases studies on
manufacturing sectors in general and sugar factories in particular. This fact leads the researcher
to investigate the extent to which employee performance problem exists in Omo Kuraz I sugar
factory and whether such problem has any relation with the leadership style practiced at different
level.

Objectives of the Study

 To investigate the extent of employee performance and leadership styles perused by the
managers/supervisors of Omo Kuraz I Sugar Factory at different levels.

 To assess the relationship and effect of the 3 leadership styles (democratic, autocratic and
laissez-faire) on the performance of employees in Omo Kuraz I Sugar Factory.

 To assess the effect of other extraneous factors (marital status, gender of supervisor, total
years of experience in the company, experience with current supervisor, level of
education, managerial level) on employee perceived performance score.
LITERATURE REVIEW
Leadership Defined
According to Levin (2000), leadership is the process of influencing others to work willingly
toward an organizational goal with confidence. Leadership for Koontz, et al. (1985) is the art of
influencing people so that they will strive willingly towards the achievement of group goals. For
Veronica (2011), leadership is the incremental influence that a person has beyond his or her
formal authority. Generally, leadership can be conceptualized as a process of influencing others
towards the achievement of some common goal (North house, 2013).

The concept of leadership is an evolving science and most widely studied topics due to its ever
changing influence on the productivity and hence profitability of companies. Thus, different
theories and approaches have been emerged ranging from the very classic trait theory to the most
recent ones, transformational and transaction theories. For instance, the work by Avolio (1993)
and Babatunde (2012) advocated the relative importance of transactional leadership style in
influencing workers for a better performance while Bass & Avolio (1994) and Kotter (1988)
stand in sharp contrast with the above authors dictating transformational leadership style will
lead employees and their organization to a better performance. However, this research papers
emphasized only on the three styles of leadership described in Levin: democratic, autocratic and
laissez-faire leadership style and their respective relationship and effect on employees perceived
performance (Billig, 2015).

Kumar (2005) defined laissez-faire as a leadership style where employees independently decide
their own matters as the leader gives maximum freedom to their subordinates. For Gastil
(1994), laissez-faire leader make low involvement in the activities and decisions making
process by leaving matters to their followers. According to Kerns (2004), laissez-faire
leadership style is helpful in bridging the gap between the employer and employee by creating a
positive work environment and spirit of family hood. Armstrong (1999) on the other hand
opposed the above argument stating employees led by laissez fare leaders do not feel
responsibility, misuse rules and have no initiatives to perform better.
Autocratic leadership is a style whereby the boss only has decision making rights with no shared
vision, little motivation, commitment, creativity and innovation (Khan, et al., 2015). In addition,
(DuBrin, 2006) described autocratic leaders as task-oriented, not employee oriented which solely
centered on getting tasks accomplished. In fact, most followers of autocratic leaders can be
described as biding their time, waiting for the inevitable failure (Michael, 2010). Moreover,
Nwankwo (2001) and Enoch (1999) described autocratic style as a leadership style where leaders
exclusively emphasized on making things done at the expense of any human consideration (cited
in Akor, 2014). However, autocratic leader were also favored by some organizations as a suitable
leadership style to meet the desired goal. Jooste (2009) for instance showed the importance of
autocratic leadership during crisis times and urgent decision is needed.

According to Gastil (1994), democratic leaders, unlike other leaders believe in group
participation and majority rule in the decision making while Daft (2008) describes a democratic
leader as one who delegates authority to others, encourages participation, relies on subordinates’
knowledge for completion of tasks, and depends on subordinate respect for influence. For
Kuczmarski (1995) cited in Ray & Ray (2012), democratic leader is influential, knowledgeable, a
good listener, encouraging, respecting and situation centered. Moreover, democratic leadership
according to (Jooste, 2009) influences people in a manner consistent with the basic democratic
principles and thus leads to increased productivity and job satisfaction.

Performance is considered as an important activity that provides both goals and methods to
achieve the organizational objectives and also provide the achievement level in term of output
(Ibrahim, 2004). Performance according to Prasetya and Kato (2011) is the attained outcomes
of actions with skills of employees who perform in some situation. In addition, performance is
any collaborated effort made by employees which by increasing the productivity and
profitability leads to success of an organization (cited in Basit, et al., 2017). According to
Pattanayak (2005), employee performance is any effort made by an individual towards the
achievement of some goal which can be observed and evaluated.
Empirical Studies
Despite the clear view on the role of effective leadership in enhancing employee performance,
there is no universal consensus on the effect that different leadership styles have on employees
performance as empirical studies reveal contrasting figure (Chan, 2010; Howell and Avolio,
1993). Empirical evidence shows the suitability of a given leadership style to the success of
employees and organizations varies across countries and sectors of business (Basit, et al.,
2017). This study thus summarized the result from previous empirical literatures on the related
issues from global to regional and Ethiopia.

The study by Raja (2015) was an important contribution to the existing empirical studies in
investigating the effect of leadership styles on employee performance in public and private
sector of India. The analysis result was generated from the sample 199 respondents: 43 middle
level managers and 156 subordinates. Using 95 percent confidence interval, the study
established negative relationship between laissez-faire style and employee performance. He
added, employees supervised by laissez fare leader underperform and their organizations were
unable to meet their intended objectives.

Another study was conducted in hotel industry by Ipas (2012) entitled ‘The Influence of
Leadership Styles on Performance of Employees.’ The analysis result showed, autocratic style
is the most frequently used style by managers and have positive effect on employee
performance. The study added, autocratic style greatly helped employees to achieve the
expected outcome and thus employees were in favor of this leadership style. Moreover, the
study recommended managers to practice autocratic style in order to boost the performance of
their employees and meet the standard required by the organizations.

The study by Sakiru, et al. (2013) tried to analyze the relationship between employee
performance, leadership styles and emotional intelligence in Malaysia from the sample of 180
respondents. The study used instruments like Multifactor Leadership Questionnaire, ECP and
parastatal performance evaluation process. After checking consistency of questionnaires using
Cronbach’s alpha coefficient, the result from multiple linear regression analysis concluded
employee performance to significantly associate with emotional intelligent and leadership style.
Among of the empirical studies made in the region were the study by Ojokuku et al.(2012)
which tried to analyze the impact of leadership style on organizational performance using
sample of 60 employees collected from 20 randomly selected banks in Ibadan, Nigeria. The
study highlighted the importance of leadership styles as he had shown in the regression analysis
to explain around 23 percent of the variation in employee performance. He recommends for the
management of banks to utilize both transformational and democratic leadership styles in order
to win the existing competitive battle in the banking industry.

Nuhu (2010) in his study made in Kampala District Council in Uganda showed transactional,
laissez-faire and autocratic style to be among the frequently used leadership style. According to
this study, autocratic styles negatively affected the performance of employees while laissez-
faire style was positively affected employee performance though to a lesser extent. Thus, the
finding highlighted the relative importance of using transactional style in order to enhance the
desired performance of employees used to accomplish the intended objectives of the companies
in the District council.

The study made by Gimuguni, et al. (2014) in Mbale local government of Uganda indicated
autocratic, laissez-faire and democratic were positively correlated with employee performance.
The finding also revealed autocratic styles of leadership have influenced employees to perform
their duties while Laissez-faire leadership caused employees delay in meeting deadlines.
Despite the domination of autocratic and laissez faire style, the study recommended local
government to integrate and use the 3 leadership style.

In Ethiopia, empirical studies on the effect of leadership style on employee performance are not
only scarce but also emphasize largely on banking sector. For instance, the study by Tsigu and
Rao (2015) on banking sector found transformational leadership style explains the larger
variation in performance than transactional leadership style and thus recommend leaders to
emphasize more on the dimensions of transformational leadership style. Rao (2005) on the other
hand highlighted the better role of transactional style on employee performance. He added,
employees with laissez-faire leader were unable to meet the desired output and poorly perform.
Finally, he recommended the management to use transactional style than other style which
enables their employees to meet the desired outputs.

Research Gaps
Despite the bulky empirical studies on the effect of leadership styles on employee performance,
most of which were concentrated in industries in developed countries and sometimes with
contrasting outcomes. For instance, the study by Gimuguni, et al. (2014) established positive
correlation of laissez-faire style with employee performance score while Aboushaqah, et al.
(2015) and some others have reported negative relationship. In addition, the literature on the
effect of leadership styles on employee performance in Ethiopia relays largely on the banking
sector with low focus on manufacturing sectors (Tsigu and Rao, 2005). Moreover, effect of
leadership styles on employee performance could not be complete unless other confounding
variables are controlled, which many previous studies fail to do. This study tried to fill such gaps
and thus contribute to the empirical evidence from Ethiopian manufacturing sector.

This research paper as in many studies, tried to investigate the effect of democratic, autocratic
and laissez-faire leadership style (independent variables) on the performance of employees
(dependent variable) in Omo Kuraz I Sugar Factory (Howell and Avolio,1993; Sakiru, et
al.,2013; Jooste, 2009); Kerns, 2004; Ojokuku, et al.,2012). In the process of analyzing the
effect of leadership style on employee performance, this study tried to control for the effect of
other confounding variables like gender of supervisor, years of experience with current
supervisor, level of management, employee salary and promotion. Below figure portrays the
conceptual framework of the study.

Figure.1: Conceptual framework of the study

Source: Adopted from Cole (1997) with minor modification

Statement of Hypothesis
Null hypotheisi-1: Democratic leadership style has no significant correlation with and effect on
the performance of employee at Omo Kuraz I sugar factory.

Null hypotheisi-2: Autocratic leadership style has no significant correlation with and effect on
the performance of employees at Omo Kuraz I sugar factory.

Null hypotheisi-3: Laissez-faire leadership style has no significant correlation with and effect
on the performance of employees at Omo kuraz I sugar factory.

Research Design and Methodology

Research Design and Approach

To investigate the effect that different leadership styles have on the performance of employees in
the study area, the study employed a cross sectional design using the primary data collected from
employees of Omo Kuraz I Sugar Factory during 2019. This study design has been chosen due to
its ease and inexpensiveness nature. The quantitative data analysis approach then used in order to
analyze the variation in employee performance observed across different leadership style using
descriptive and inferential data analysis tools.
Sample Size and Distribution

Among the many alternatives used to compute the number of sample from the finite and known
population, this study used the formula by Kothari, C.R. (2004). Thus, from the total 1086
permanent employees of Omo Kuraz I Sugar Factory and assuming 5 percent margin of error and
95% confidence level, the sample size is calculated as follows.
𝑁
𝑛=
1 + 𝑁(𝑒)2

1086
𝑛=
1 + 1086(0.05)2

From the total of 292 questionnaires sent to employees of Omo Kuraz I Factory using the
convenience sampling techniques (non-probability sampling), only 265 have correctly responded
correctly to the questionnaires accounting for 91.7 % response rate. The remaining 27(9.3 %)
employees failed to response to the questioner due to many other reasons.

Accessibility and Ethical Issues

The initial task before any contact with respondent is to come into a consensual agreement with
the management and the HR department of Omo Kuraz I Sugar factory in order to avoid any
complication. After ensuring the confidentiality of all their personal data they provide,
respondents filled the consent form showing their willingness to provide the information without
any external pressure. Finally, in order to reduce the non-response rate, appropriate time, break
time were chosen to distribute the questionnaires to the respondents.

Variables and Measurement Procedures

The measurement of variables used in this study was based on a standard format used by
previous empirical studies. The measurement for leadership styles used the Multi factor
Leadership Questionnaire (MLQ) developed by Avolio and Bass (1995), modified to fit the
context of the study. For employee performance, the study scale was adapted from Cole (1997
with some modification (cited in Mwombeki, 2017). Thus, democratic, autocratic and laissez-
faire leadership styles (each with 6 items) and employee performance (5 items) were used with
likert scale rating from 1 to 5 (1=strongly disagree; 2= Disagree; 3=Neutral; 4=Agree; and
5=strongly agree). In addition, the score for employee performance was made up of 5 item with
liker rating ranging from 1 to 5 (1=Very low; 2= Low; 3=Average; 4=High; and 5=Very
high).The detail for measuring leadership and employee performance were found in figure 1.

Data Analysis Techniques

The analysis on the association and effect on employee performance of leadership styles and
other extraneous factors were made using both descriptive and inferential data analysis
techniques using SPSS software version 21. Then, descriptive data analysis techniques like
percentage, mean, and standard deviation, were used in an attempt to describe the distribution of
our samples. Beside, analysis of variance (ANOVA), Pearson correlation and simple linear
regression were finally used in order to asses association and effect of leadership style on
employee performance.

Validity & Reliability of the Instrument

To produce reliable and unbiased parameter estimate, the consistencies of our questionnaires
used for each sub scale had to be checked using the value of Cronbach alpha. Thus, the overall
value of Cronbach alpha for this study were all higher than the conventional level of 0.7,
suggesting each subscale had acceptable internal consistency and hence reliable in measuring
what they were designed to measure (cited in Celestine Onyango, 2015).

Table 1: Reliability Statistics

Variable Cronbach Alpha Value Items

Democratic Leadership Style 0.911 6

Autocratic Leadership Style 0.866 6
Laissez-faire Leadership Style 0.766 6
Employee Performance 0.874 5
Overall 0.742 23
Source: Survey Data, 2019
 The value of Crombach Alpha from table 1 shows, the questionnaires used to measure
democratic leadership style has higher reliability (0.911) in measuring the desired attributes
followed by employee performance (0.874) and autocratic style (0.866). Besides, the Crombach
Alpha value for laissez-faire style were relatively lower (0.766) indicating the lower reliability
of the data in internal consistency.

Results and Discussion

Demographic Analysis
The result on gender distribution shows an increased domination by male employees (61.5%)
with women accounting 38.5 percent. Such variation in the proportion between male and female
ratio is a common phenomenon in most private and public institutions of Ethiopia. Besides, the
result revealed male plays a more leadership role as compared to females as 64.5 percent of
employees were supervised by male. Nearly half of the respondents have bachelor degree while
20.8 and 29.8 percent of them have master’s degree and college diploma respectively.

Table 2: Demographic Analysis

Variable Category N (%) Mean Std. Deviation F2

Gender Male 163(61.5) 3.72 0.95

Female 102(38.5) 3.39 1.01 7.37*
Gender of Supervisor Male 171(64.5) 3.68 0.95
Female 94(35.5) 3.45 1.04 3.35
Educational Level High school (TVET) 79(29.8) 2.77 0.97
Diploma / degree 131(49.4) 3.90 0.79
Masters and above 55(20.8) 4.05 0.67 56.4*
Educational Level of High school (TVET) 51(19.2) 3.23 1.07
Supervisor Diploma / degree 151(56.9) 3.59 0.97
Masters and above 63(23.9) 3.90 0.85 6.90*
Salary Less than 4000 40(15) 3.21 1.15
4001-7000 72(27.2) 3.36 1.02 8.30*
7001-10,000 76(28.8) 3.60 0.88
Above 10,000 77(29) 4.01 0.81

2
Using value of F statistics and Pearson correlation indicated in table 2, the reader can further check for the
variation in the mean performance score of employees in Omo Kuraz I Sugar Factory for different categories of
respondent’s demographic factor.
 Operational staff 162(61.1) 3.27 0.96
Management Level Supervisor 68(25.7) 3.89 0.85 36.05*
Middle level 35(13.2) 4.57 0.32
Pearson
Variable (n=265) Mean Std. Deviation Correlation
Age of Employee 33.989 7.25 -.022
Total years of experience 6.047 4.84 .200*
Experience with current supervisor 2.44 1.56 .213*

Source: Field Data,2019 * for p< 0.01 level (2-tailed).

The result in table 2 shows the majority of employee respondents from where we have collected the
data were working as operational staff (61.1%) followed by low level supervisors (25.7%) while the
other 13.2 percent were middle level manager. In addition, 29 percent of employee earns more than
10,000 Birr per month while 55.9 percent of them earn between 4000 and 10,000 Birr.
Majority of employees in Omo Kuraz I Sugar Factory were adult with the mean age of nearly 34
years. This is also the case with the age composition of Ethiopian population in general and Omo
Kuraz, this is a great opportunity for rising production and productivity of the company.
Moreover, respondents have spent on average for 6 years in the company and 2 and half years
with their current immediate supervisors. This also shows that employees have got enough time
to judge the leadership style of their immediate supervisors.

Descriptive Analysis
The description for both leadership style and performance score were made from mean score
calculated from each sub item of the respective variable. Accordingly, democratic leadership is
the most dominant leadership style used by the management of Omo Kuraz I Sugar factory
(mean=3.72; SD=1.09) followed by laissez -faire leadership style (mean=3.62; SD=0.82) and
autocratic leadership style (mean=3.29; SD=1.03). This result concedes with the study by Basit,
et al. (2017) where he found democratic style as the dominant style of leadership (mean=3.78)
followed by laissez-faire (3.146) and autocratic style (3.40) in his study made on private
organizations in Malaysia. Many Organizations used varied measurements tools to gauge the
performance of their employees ranging from the objective evaluation using key performance
indicator to the subjective measurement by immediate supervisor. This study used a subjective
measurement using employee own rating of their performance. Accordingly, the result for
employee performance shows a moderate figure (Mean=3.6; SD=0.99).

Table 3: Descriptive Statistics for Leadership Styles and others with Employee Performance
Variable Mean Standard Pearson
Deviation Correlation(n=265)
Democratic Leadership Style 3.72 1.09 .531*
Autocratic Leadership Style 3.29 1.03 -.460*
Laissez-faire Leadership Style 3.62 .82 .370*
Overall Performance 3.60 .99 1
Source: Survey data, 2019 *Correlation is significant for p<0.01 level (2-tailed).
This result is an indication for the lower the performance of employees though most employees
have perceived to perform more than average. Despite the absence of any objective
measurement, this figure implies the fairness of self-evaluation made by employees at Omo
Kuraz I Sugar Factory fairness on their level of performance.

Correlation Analysis
The correlation analysis shows democratic leadership style had significant positive correlation
with employee performance (p<0.01) providing a strong evidence for an increased participation
of employees into the decision making process as a correlate for enhanced performance. Pearson
correlation coefficient shows a strong association calling the managers of Omo Kuraz I Factory
to pursue democratic style in order to boost performance of their employees more significantly.
The findings by Celestine Onyango, (2015); Basit, et al. (2017) and Iqbal, et al. (2015) are also
in support of this result. Therefore, the null hypothesis which dictated no significant correlation
between democratic leadership style and employee performance had been rejected.

For autocratic leadership style, significant negative correlation were observed with employee
performance score (r= -0.46; p<0.01). This is because the increased involvement of managers in
decision making process is adversely associated with employee performance through draining
employee self-confidence and belongingness. Even though such style is used by the management
of Omo Kuraz I Factory to a lesser extent, the strength of association for autocratic style
manifests the danger of using such leadership style on the performance employees. The result of
this study is also consistent with the finding by Mwombeki, (2017). Thus, the null hypothesis
depicting insignificant relationship between autocratic leadership styles with employee
performance were rejected.

Laissez -faire leadership style on the other hand have significant positive correlation with
employees perceived performance (r=0.37; p<0.01). As managers in the study area ensures the
increased involvement of their employees on the decision making process, their motivation,
belongingness and hence performance significantly increases. Except the study by Gimuguni, et
al. (2014), which is in support of this finding, many of the empirical finding from Ethiopia and
others shows either negative or no significant association of laissez-faire style with employee
performance. For instance, Rao (2005) found negative correlation while the study by Mohamed
Esse (2016) shows no significant correlation. Therefore, the null hypothesis which dictated no
significant relationship between laissez-faire leadership styles and employee performance had
been rejected.

Regression Analysis
The subsequent steps after correlation analysis were to investigate whether the three leadership
styles have on employee performance. Therefore a stepwise multiple linear regressions were
made in order to show the distinct effect on performance of the three leadership style. In the first
step, all extraneous variables were entered into the regression model while in second step; the
three leadership styles were added to check the improvement in the model fitness. To this end,
the value of adjusted R square has shown a steady improvement from step 1 to step 2 by nearly
15 percent (from 40.3 % to 55.1 %). Generally, the leadership styles and other extraneous factors
together explain around 55.1 percent of the variation in employee performance (see table 4).
Besides, the analysis of variance using F statistics shows the fitness of our model in correctly
predicting employee performance. Out of the 13 independent variables entered into the model in
2 steps, only 6 of them have significantly predicted employee performance in Omo Kuraz I
Sugar Factory.

Controlling the effect of other factors, democratic leadership style had significantly predicted
employee performance at Omo Kuraz I Sugar Factory (p<0.001). As managers or supervisors
increase the practice of democratic leadership style, the performance of their employees will
improve by 22.8 percent. The result of this study and the findings by Iqbal et al. (2015) enables
us to reject the null hypothesis which stated insignificant effect of democratic leadership style
employee performance.

Autocratic leadership style had an adverse effect on employees perceived performance score
indicating increased involvement of supervisors in the decision making process as a significant
threat to employees performance (p<0.01).That is, the more centralized is the decision making
process by managers, the more marginalized and the less motivated would be their subordinate.
Therefore, we reject the null hypothesis which depicts no significant effect of autocratic
leadership on employee performance in Omo Kuraz I Factory.

Table 4: Multiple Linear Regression Result

Variable Unstandardized Standardized 95.0% Confidence
Coefficients Coefficients Interval for B
B Std. Beta t- value Lower Upper
Error Bound Bound
(Constant) 1.466 .499 -1.35 .484 2.45
Age -.009 .007 -.068 -1.32 -.023 .004
Gender -.119 .090 -.059 -.174 -.297 .058
Marital Status -.015 .088 -.008 -.878 -.190 .159
Gender of Supervisor -.076 .087 -.037 .697 -.248 .095
Total Years of Experience .008 .011 .039 2.19 -.014 .030
Experience with current Supervisor .069 .031 .109** 6.64 .007 .131
Managerial Level .399 .060 .291** -1.59 .281 .518
Salary -.080 .050 -.085 5.704 -.180 .019
Employee Level of Education .424 .074 .304** -.177 .277 .570
Educational Level of Supervisor -.012 .068 -.008 -.035 -.146 .122
Incentive/promotion -.002 .051 -.001 4.08 -.102 .099
Democratic Leadership Style .206 .050 .228** -3.44 .107 .305
Autocratic Leadership Style -.178 .052 -.187** 3.78 -.280 -.076
Laissez-faire Leadership Style .209 .055 .173** 2.94 .100 .318

N = 265
F = 24.1(increased from 17.2 in step 1)
Adjusted R Square = 55.1% (increased from 40.3 % in step 1)
VIF = 1.41
Source: Survey data, 2019 ** Coefficient is significant for p< 0.05 level

Laissez-faire leadership style were observed to positively predict employee performance

showing the importance of loose control by the manager of Omo Kuraz I Sugar Factory in
boosting employee self-esteem, own initiative and hence productivity. Despite the studies by
Aboushqa, et al.(2015) and Nuhu(2004) which dictate the negative association between laissez-
faire style and employee performance, the finding is consistent with our hypothesis and the
findings by many other studies (Gimuguni et al.,2014 and Chaudhry and Javid, 2012).

Several other variables other than leadership were also observed to have significant effect on the
employees performance score. For instance, employees shift to the higher level of management
have also significantly predicted their performance score because with the shift in higher
management level, employee motivation and interest and productivity will also changes more
significantly. Levels of education have also significant effect on employee performance score
because education enables them to boost knowledge, skills and attitude which enhance them to
accomplish their duties more efficiently. The longer stay with supervisor have positive impact on
the performance of employees in Omo Kuraz I Factory because longer stay improves the
communication between employees and their immediate supervisors there by facilitating the
transfer of knowledge and skill to be used for better performance.

Discussion
The finding by this and many other studies reveals the positive effect of laissez-faire leadership
style on the performance of employees. The descriptive analysis also shows the majority of
employees in Omo Kuraz I Sugar Factory were young and professional which do not like close
involvement or strict supervision. In support of this argument, Basit, et al. (2017) indicated
laissez-faire style can best suit for employees which have higher analytical skills and can easily
discharge their responsibilities without any interference. Sougui, et al. (2016) also stands in favor
of laissez-faire leader stating employees with laissez-faire leader have no leadership barrier and
can execute their job with freedom. Gimuguni, et al. (2014) on the other hand indicated
employees supervised by laissez-faire leader were unable to meet the deadline in accomplishing
their duties. In addition, the study by Raja (2015) employees under laissez-faire leader usually
fails to meet their intended objectives because their employees were unable to perform better.

The result from multiple linear regressions shows an increased use of autocratic leadership style
had negatively contributed for the performance of employees in Omo Kuraz I Sugar Factory.
Despite the limited use of this style by the management of the factory, the consequence were
observed to be severe in terms of lowering employee motivation, self-confidence and hence their
performance. According to Basit, et al. (2017), employees working in such a globalized world
are getting more knowledgeable, independent and competent enough so that any attempt to
practice autocratic leadership by Malaysian leaders would end up in further deteriorating their
performance. Beside, Jayasingam and Cheng (2009) highlighted increased interference of
autocratic leaders resulted in decreased innovativeness, creativity and hence performance.
However, the findings by Babatunde (2009) and Ipas (2012) were in sharp contrast with this
result dictating the positive effect of autocratic leadership styles on employees’ performance.

Unlike the case with other leadership styles, the effect of democratic leadership style is more or
less consistent with significant positive effect on performance. The standardized coefficient of
beta indicates the more sensitivity democratic style to employee performance as compared to
other styles of leadership (β=22.8%). This is because employees interaction with their peers and
supervisors paves the ways for the transfer of skill and knowledge to the larger extent which
resulted in increased performance. The result from this and many other studies supports the
positive effect of democratic style on employee performance (Iqbal, et al., 2015; Bhatti, et al.,
2012). In addition, as in the finding by Ojokuku, et al. (2012) showed the increased practice of
democratic style have the power to build strong synergy between employees and their
management and thus recommend banks to use democratic leadership style in order to boost their
performance.

CONCLUSSION AND RECCOMENDATION

The finding from this study reveals democratic style have significant positive effect on the
performance of employees in Omo Kuraz Sugar Factory manifesting the effect on employee
productivity of creating a strong synergy among employees by involving them in the decision
making process. Besides, the platform created by a democratic leader paves a greater ways for
learning, collaboration and team spirit which enhance performance. In addition, though to a
lesser extent, the positive effect of laissez-faire style on employee performance in Omo Kuraz
Sugar factory indicates the more freedom a supervisor gives to the employees under his
supervision, the more will be their self-confidence, esteem and thus, the higher is their work
performance.

The significant negative effect of autocratic leadership style on employee performance shows the
ineffectiveness of this leadership style on the productivity of employees. Employees in Omo
Kuraz Sugar factory were mostly young professionals and have clear view of their right and
responsibilities and thus less likely cooperate with autocratic leader. Thus, any attempt to
execute this leadership style will end up in lowering the motivation, belongingness and hence
performance of employees in the study area.
In order to enhance the performance of their employees, the management of Omo Kuraz I Sugar
factory at different level should execute more of the democratic style and avoid using autocratic
style. Besides, the study also highlights the importance of using laissez -faire leadership style
whenever appropriate. In addition, they should also refrain from exercising autocratic style and
rather incorporate the views and perspectives of their subordinates and ensure their maximal
input. Management should also work hard to build positive attitude among employees under their
supervision in line with the very objectives and motives of their organization.

LIMITATION AND THE WAY FORWARD

This research paper tried to overcome the problem of low sample and limited use of variables
which is prevalent in most previous studies. However, this study fails short of using many other
extraneous factors explaining employee’s performance score. For instance, the effect of
organizational culture, training and employee’s personality issue performance is missing in this
study. Thus, future studies should bridge such gap through the holistic use of all other
confounding variables in an attempt to explain the larger variation in employee performance.

Across the passage of time, some push and pull factors might enforce managers to adjust the
leadership style they pursue with their subordinates. For instance, exposure to higher level of
education, training and the new change process that organizations might undergo are among
those factors which pushes them to adjust their existing leadership style. Thus, longitudinal
studies aimed at examining the extent to which employee performance responds to such changes
in such leadership style should be the area that needs to be emphasized by future studies.
REFERENCES
Aboshaiqah (2015). Professional accountability for effective leadership on nursing practice.
South Africa: Kwela books Publishers.

Akor, P. U., (2014). Influence of Autocratic Leadership Style on the Job Performance of
Academic Librarians in Benue State. Journal of Educational and Social Research,
4(7), pp. 148-152.

Avolio (1994). Leadership development in balance. London: Amazon press.

Babatunde (2012). Effects of globalization on bank operations and management. Nigeria:

Oxford University Press.

Basit, A; Sebastian.V and Hassan.Z (2017). Impact of Leadership Style on Employee

Performance: Case Study on Private Organization in Malaysia; International Journal
of Accounting & Business Management, Vol. 5 (No.2), November, 2017.

Bass, B. M. & Avolio, B. J. (1990). The implications of transactional and transformational

leadership for individual, team, and organizational development. New York: DHS
Press Ltd.

Behn (1995). Leadership counts. South Africa: Indingo Press Ltd.

Billig, M.,(2015). Kurt Lewin's leadership studies and his legacy to social psychology: is there
nothing as practical as a good theory? Journal for the Theory of Social Behavior,
45(4), pp. 440- 460.

Celestine Onyango, (2015).Effect of Leadership Styles on Employee Performance at BOA Kenya

Limited: a Dissertation Submitted in Partial Fulfillment of the Requirement for the
Degree of Masters of Human Resource Management of Open University of Tanzania.

Chaudhry, A. Q. & Javed, H., (2012). Impact of Transactional and Laissez Faire Leadership
Style on Motivation. International Journal of Business and Social Science, 3(7).

Daft, R. (2008). Leadership: 5th Edition. United States of America: South-Western Engage
Learning.
DuBrin, A. (2006) . Essentials of Management,7th Edition. United States of America: Thomson-
South-Western.

Ejere, E. I., & Abasilim, U. D. (2013). Impact of transactional and transformational leadership
styles on organizational performance: empirical evidence from Nigeria. The Journal of
Commerce, 5(1).

Gastil, J., (1994). Definition and Illustration of Democratic Leadership. Human Relations, 47(8).

Gimuguni, L., Nandutu, J., & Magolo, A. (2014). Effect of leadership styles on performance of
local governments in Uganda. A case of Mbale District.

Ibrahim, N. M., (2004). Organizational climate and its relation to job performance, survey study
on Security forces officers in Riyadh, Naief Arabian University of Security Sciences,
Faculty of High Studies, Department of Administrative Sciences, pp.: 8.

Iqbal, N., Anwar, S. & Haider, N., (2015). Effect of Leadership Style on Employee Performance.
Arabian Journal of Business and Management Review, 5(5), pp. 1-6.

Ispas, A., & Babaita, C. (2012). The effects of leadership style on the Employees’ Job
satisfaction and Organizational commitment from the Hotel Industry. Approaches in
Organizational Management, 15(16), 254-262.

Jooste, K. (2009). Leadership in Health. Cape Town: Juta & Co.

Khan, M. S. et al., (2015). The Styles of Leadership: A Critical Review. International Institute
for Science, Technology and Education (IISTE), 5(3), pp. 87-93.

Kerns, C. D. (2004). Strengthening values centered leadership. Graziadio Business Report, 7(2).
Retrieved July 20, 2015, from http://gbr.pepperdine.edu/042/leadership.html.

Kothari, C.R. (2004). Research methods: methods and techniques. 2nd revised edition. New
Delhi: New Age International (P) Limited.

Kotter (1988).The essence of leadership. South Africa: Unique Press Ltd.

 Kumar, R. (2005). Research methodology: a step-by-step guide for beginners. New Delhi: Sage
Publications Limited.

Levine, M. F., (2000). The Importance of Leadership: An Investigation of Presidential Style at

Fifty National University. Denton : University of North Texas.

Mwombeki.J (2017). Influence of Leadership Style on Employee Performance In Tanzania: The

Case of University of Dare Salam, Tanzania SM Computing Center.

Northouse, P. G. (2013). Leadership: Theory and practice. California: Sage Publications Inc.

Nuhu, K. (2010). Effect of leadership styles on employee performance in Kampala district

council. Kampala: Kampala Press.

Ojokuku, R., Odetayo, T. & Sajuyigbe, A., (2012). Impact of Leadership Style on Organizational
Performance: A Case Study of Nigerian Banks. American Journal of Business and
Management, 1(4), pp. 202-207.

Pattanayak, (2005). Leadership skills. India: Hit Press of India.

Prasetya (2011). Human resource practices. Indonesia: University of Indonesia Press.

Puni, A., Ofei, S. B. & Okoe, A., (2014). The Effect of Leadership Styles on Firm Performance
in Ghana. International Journal of Marketing Studies, 6(1), pp. 177-185.

Raja (2015).The essence of leadership” Notions press in India.

Rao (2005). Human Resource Management. Indonesia: Yale University Press.

Ray, S. & Ray, I. A., (2012). Understanding Democratic Leadership: Some Key Issues and
Perception With Reference To India’s Freedom Movement. Afro Asian Journal of
Social Sciences, 3(1), pp. 1-26.

Tsigu, G. T., & Rao, D. P.(2015). Leadership styles: their impact on job outcomes in Ethiopian
banking industry. Zenith International Journal of Business Economics & Management
Research, 5(2).

View publication stats