Effects of Leadership Styles on Employee Performance Case in Economic Sectors of Oromia, Ethiopia

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Getu Hunduma
Mekonnen Bogale
Megersa Wodajo

Abstract

The main objective of this study was to identify the effect of leadership styles (transformational,
transactional, and laissez-faire) on employee performance in Economic Sectors of Oromia
National Regional State. To achieve the purpose, quantitative research approach was used in
which 186 closed ended questionnaires were distributed and 159 (86%) were collected. The
leadership styles were measured through the Multifactor Leadership Questionnaire developed by
Avolio and Bass (2004) and modified to fit the context of the study. Descriptive and inferential
statistical techniques were used for data analysis. The findings show that transformational
leadership style is the most exhibited style in Economic Sectors followed by the transactional and
laissez-faire leadership styles respectively. Scores in transformational and transactional
leadership styles were found to be strongly correlated with employee performance. However,
laissez-faire had a weak correlation with employee performance. The correlation between
overall leadership styles and employee performance was strong with a coefficient of r=0.673.
The regression analysis shows that the three leadership styles explain 48.8% of employee
performance. In relative terms, employee performance is predicted more by transformational
leadership style and followed by transactional leadership style. However, laissez-faire
leadership was found to be negatively accounted to predict employee performance. It has been
recommended that, for those economic sectors, leaders to encourage transformational
leadership specially the intellectual stimulation by motivating creativity and innovative,
individual considerations via paying special attention to each individual follower, to formulate
and implement effective reward and recognition systems and to avoid laissez-faire leadership
styles so as to improve organizational performance

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Author Biographies

Getu Hunduma, Jimma university

Jimma university, College of business and Economics, Department of management

Mekonnen Bogale, College of business and Economics, Jimma University

College of business and Economics

Megersa Wodajo, Department of Management, Jimma University

Department of management

The corresponding author can be reached using: nuwami90@gmail.com