LEADERS’ STYLE AND EMPLOYEES’ PERFORMANCE: IS ORGANIZATIONAL CRONYISM A MISSING LINK?

Abstract

Favoritism and nepotism has negative impact on productivity of employees. It creates cynical behavior among employees. In organizational context nepotism and favoritism is called organizational cronyism. The aim of the current study is to investigate the indirect and intervening effect of organizational cronyism on leaders’ style and employees’ performance. As this study is quantitative in nature therefore survey approach was used. Survey helps the researchers to collect the big amount of data in short time and cost effective way. Population of the study was all banking employees in D.I.Khan district of KP province Pakistan. In order to choose the sample size non-probability convenience sampling technique was used. Yamane formula was used to collect the sample size. Total 356 questionnaires were distributed among respondents and total 298 questionnaires were received. 12 questionnaires were not completely filled that’s why there were discarded and total 286 completed questionnaires were used in the analyses. Thus theresponse rate was 80.337%. SPSS was used to analyze the data. Reliability and validity was checked by Cronbach alpha and exploratory factor analysis (EFA). Hypotheses were tested through correlation and hierarchical multiple regression. It was revealed by the findings that scales used in this study are found reliable and valid while organizational cronyism does not indirectly mediate transactional and laissez fair style but significantly play mediating role between transformational leadership style and employees’ performance.This Implies that organizational cronyism reduced productivity of employees if a transformational leader gives undue favor to their favorite employees. Organizational cronyism not only affects employees’ performance but overall organizational performance, effectiveness and efficiency is also compromised. Therefore leaders have to deal equally with all employees. Distribution of resources must be on merit and decision on any organizational matter especially performance appraisal must be free from any nepotism andfavoritism.