Impact of organizational culture and leadership styles on employee performance: a research study on the banking industry

Abstract

Purpose- The aim of this study is to assess the influence of organizational culture on leadership styles and investigate how employee performance is affected by the relation between these two factors. Methodology-This study follows a quantitative research methodology. A survey data has been yielded from the employees of a private bank’s head office and analyzed using SPSS 24. The questionnaire in this study comprises four parts. The first part of the questionnaire contains questions on demographic information, the second part is the Multifactor Leadership Questionnaire (MLP), In the third part, the Organizational Culture Assessment Instrument was used in order to determine employee perceptions and the final part of the questionnaire is the individual performance assessment tool. The research attempts to find an answer to the question, “Is employee performance influenced by organizational culture and leadership style?” Findings- The correlation analysis results show that there is a positive correlation between transactional leadership and market culture but a negative correlation both hierarchy and clan-adhocracy culture. Between transactional-transformational leadership style and all culture types there is positive correlation. Between all culture types and individual performance there is positive correlation. Finally, according to the correlation analysis between leadership styles and individual performance; there is a positive correlation between transactional-transformational leadership and individual performance whereas there is a negative correlation between transactional leadership and individual performance. The effect of all cultures types on transformational leadership style is statistically significant. The effect of hierarchy culture and transformational leadership on individual performance is statistically significant. Conclusion- Organizational culture is a factor that plays important roles on both leadership styles and employee performance. The leadership styles demonstrated in an organization also exert a major impact on the performance of employees. The results of this research suggest that the market type and the hierarchy type of organizational culture increase employee performance. This finding implies that employees perform relatively better when tasks are defined in line with rules, procedures, and policies, goals are openly shared with them, they are encouraged to compete over performance criteria, and are rewarded based on their performance. The clan-adhocracy culture is also observed to have a positive influence on employee performance.