The Impact of Leadership Style on Employees’ Productivity (a Case Study of Cadbury Nigeria Plc, Lagos State)

The Impact of Leadership Style on Employees’ Productivity (a Case Study of Cadbury Nigeria Plc, Lagos State)

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Abstract on The Impact of Leadership Style on Employees’ Productivity (a Case Study of Cadbury Nigeria Plc, Lagos State)

The study examined the impact of leadership style on employees’ productivity among the employees of Cadbury Nigeria Plc, Lagos State. The study employed the survey design and the purposive sampling technique to select 450 staff across management, senior and junior level. A well-constructed questionnaire, which was adjudged valid and reliable, was used for collection of data from the respondents. The data obtained through the administration of the questionnaires was analyzed using the Pearson correlation analysis.

The results of the correlation analysis showed that there is positive and significant relationship between autocratic leadership style and employee work quality (r=0.772; p<0.05)., Also, a positive and significant relationship exists between democratic leadership style and employee efficiency (r=.896; p<0.05)., Furthermore, a positive and significant relationship exists between Laissez-faire leadership style and employee effectiveness (r=.896; p<0.05). Lastly, a positive and significant relationship exists between Bureaucratic leadership style and employee motivation (r=0.772; p<0.05).

The results were found to be consistent with empirical findings of past studies in literature.

It is therefore concluded that leadership style has a significant effect on employees’ productivity in Cadbury Nigeria Plc, Lagos State. The study suggest tdat; Understandable leadership style should be employed by the top management of every Cadbury Nigeria Plc, Lagos State, to ensure the employees can communicate the type of leadership that’s used in the organization; Employees’ productivity should be the priority of Cadbury Nigeria Plc, Lagos State, and the top management should establish a suitable leadership style that will increase employee productivity;  Cadbury Nigeria Plc should consider a leadership style that considers adequately remunerated through attractive compensation packages; Standard leadership style should be formulated and maintained.

Chapter One of  The Impact of Leadership Style on Employees’ Productivity (a Case Study of Cadbury Nigeria Plc, Lagos State)

Introduction

This chapter identifies and explains the basic information on which the entire research work is based. It identifies the background to the study, statement of research problems, the research questions, objectives, hypothesis, significance of the study, scope of the study, operationalization of research variables, historical perspectives of the study and definition of terms used in the body of the research work.

Background to the Study

The magnitude and importance of leadership in different organizations has long been unnoticed and unobserved from a long period of time. But now its importance has been realized and has become a burning issue all over the world. Effective leadership enhances the productivity of employees in all the sectors of the economy in a country. Leadership is a special type of influential activity. It may be seen in effect in all kinds of social situations, and it is especially apparent. Leadership is conceived as a process where one or more persons influence a group of person to move in a certain direction. The word leadership has been used in various aspects of human endeavour such as politics, business, academics and social works. Messick and Krammer (2004) argue that the degree to which the individual exhibits leadership traits depends not only on his characteristics and personal abilities, but also on the characteristics of the situation and environment in which he finds himself. Therefore, an individual will support the organization if he believes that through it his personal objective and goals could be met, if not, the person’s interest will decline.

Good leadership makes business and not-for-profit organizations successful. Without leadership, organizations move too slowly, stagnate, and lose their way (Northhouse, 2007). Much of the literature about organizations stresses decision-making and implies that if decision-making is timely, complete and correct, then things will go well. Yet a decision by itself changes nothing. After a decision is made, an organization faces the problem of implementation – how to get things done in a timely and effective way. The problems of implementation are really issues about how leaders influence behaviour, change the course of events, and overcome resistance. Thus, effective leadership is crucial in implementing decisions successfully and hence, it is a major ingredient of effective management and for the delivery of good health services in medical institutions as well as other organizations in Nigeria.

Different styles of leadership exist to match different situations in an organization and each of these styles works best only if the leader has a vision of what can be achieved and then communicates this to others and evolve strategies for realizing the vision (Reddins, 1990). Most leaders motivate people and are able to negotiate for resources and other support to achieve their goals. These leaders ensure that the available resources are well organized and applied to produce the best results. Given limited resource and difficult operating environments of many low to middle profile hospitals in Nigeria, the medical director, who is the overall leader is nonetheless expected to achieve optimum results. Thus, it may not be out of place to draw at this point in time that probably this instance marks where most scholars in the area of leadership research concluded that leading is a complex process. But it is common knowledge today that most organizational leaders succeed whenever they successfully influences others (followers) in achieving organizational goals.

In Organizations, leadership is a managerial activity the purpose of which is to direct the employees in one immediate chain of command toward the accomplishment of work goals. Leadership represents a combination of behaviors exhibited by one who occupies an elected, appointed, or designated position of influence in a social system. Leadership behaviour is therefore officially sanctioned either formally or informally and the leader is looked to for guidance and direction by those who recognize in his or her power.

According to Graen (2013) leadership impacts productivity in the following ways; it improves employee morale, it‘s a source of motivation, forms basis for cooperation, divides work as per capability, gives necessary guidance and creates effective communication. Leadership is very important to the survival and effectiveness of organization‘s performance. As organizations grow and expectations about their performances increase, demand for good leadership tends to multiply. From every indication, there seems to be a strong link between leadership style and performance of employees in an organization (Eze, 2011).

Among the objectives of any organization are profit making and attainment of maturity and liquidity status. In the pursuit of these objectives, organizations allocate scarce resources to competing ends. In the process they provide employment, provide goods and services, purchase goods and services and, thus contribute to the growth of the society and economy at large. Unamaka (1995) observes that, the effectiveness of this process is greatly determined by the availability of and access to personnel, finance, machinery, raw material and possibility of making their goods and services available to their customers.

The extent to which members of the organization contribute in harnessing the resources of an organization equally depends on how well the managers or leaders of the organization understand and adopt appropriate leadership style in performing their roles as managers and leaders. Thus efficiency in resource mobilization, allocation, utilization and enhancement of organizational productivity depends, to a large extent, on leadership styles among other factors. Chuang (2005) explains that the excellent leader not only inspires subordinates’ potential to enhance efficiency, but also meets their requirements in the process of achieving the common target of the organization. Fry (2003) states that leadership as a use of leading strategy to offer inspiring motive and to enhance the staff’s potential for growth and development in the organization. Burn’s (1978) approach is that leadership influences subordinates to exert greater effort in the pursuit of higher-order needs; support a greater vision for their work group or organization and in the course perform beyond expectations.

Stoner (2000) defines leadership as a process of directing and influencing the task of related activities of group members. It can also be seen as the process of influencing other people to achieve organizational objectives. Bass (1985) defines leadership as an interaction between members of a group. Leaders are agents of change, persons whose act affect other people more than other people’s act affect them.

Leadership occurs when one group member modifies the motivation or competence of others in the group. In addition, Nongo (2009), states that leadership entails an unequal distribution of power between leaders and group members. Group members have power, but leaders usually have more powers. According to Rachin (2001) leadership is directly connected to the practice to which people are dedicated. The most substantial of leaders is their influential personality that has positive relation with the follower, job satisfaction and the performance (Joseph, 2011). Leadership style is the manner and approach of providing direction, implementing plans and motivating people. Having acquired the human resources, there is the need to maintain and keep them together, it should be noted that every individual has his personal expectation for working in an organization. To this effect, the leader must employ the various ways of making sure that the employees stay at work, feel contented, ready to put in their best and that their expectations are met without neglecting the overall corporate objective(s) of the organization.

There are numerous styles of leadership but for this study, the autocratic leadership, democratic leadership, laissez-faire leadership and bureaucratic leadership style is considered. The autocratic leadership style is dogmatic and positive and leads by the ability to withhold or give rewards and punishment (Fubara, 1985). They do not entertain any suggestions or initiatives from subordinates. Democratic leadership involves the leader including one or more employees in the decision making process (Skouzes and Posner, 1987). To Robbins (1993), democratic leadership style tends to favour mainly, decision-making by the group members. The laissez-faire style is an absolutely passive leadership. Laissez – Faire Leadership, also known as “free-rein leader” does not lead, but leaves the group entirely to itself (Mintzberg, 1983) while bureaucratic leadership style is based upon fixed official duties under a hierarchy of authority, applying a system of rules for management and decision making.

Employee productivity (sometimes referred to as workforce productivity) is an assessment of the efficiency of a worker or group of workers. Productivity may be evaluated in terms of the output of an employee in a specific period of time. According to Mathias and John (2007) productivity is a measure of the quantity and quality of work done, considering the cost of the resources used. The more productive an organization, the better its competitive advantage, because the costs to produce its goods and services are lower. Better productivity does not necessarily mean more is produced; perhaps fewer people (or less money or time) was used to produce the same amount. McNamara (2009) further states that, results are usually the final and specific outputs desired from the employee. Results are often expressed as products or services for an internal or external customer, but not always. They may be in terms of financial accomplishments, impact on a community; and so whose results are expressed in terms of cost, quality, quantity or time. Measuring productivity involves determining the length of time that an average worker needs to generate a given level of production. One can also observe the amount of time that a group of employees spends on certain activities such as production, travel, or idle time spent waiting for materials or replacing broken equipment. The method can determine whether the employees are spending too much time away from production on other aspects of the job that can be controlled by the business. Employee productivity may be hard to measure, but it has a direct bearing on a company’s profits. An employer fills his staff with productivity in mind and can get a handle on a worker’s capabilities during the initial job interview. However, there are several factors on the job that help maximize what an employee does on the job (Lake, 2000).

Tierney (2009) state that, perhaps none of the resources used for productivity in organizations are so closely scrutinized as the human resources. Many of the activities undertaken in a human resource system are designed to affect employee or organizational productivity. Pay, appraisal systems, training, selection, job design and compensation are human resource activities directly concerned with productivity. Voon (2011) continues to state that controlling labour costs and increasing productivity through the establishment of clearer linkages between pay and performance are considered to be key human resource management component of competitive advantage. In addition, increased concerns over productivity and meeting customer requirements have prompted renewed interest in methods designed to motivate employees to be more focused on meeting (or exceeding) customer requirements and increasing productivity.

Statement of Research Problems

In the recent past years, leadership has engaged as a new effective approach for managing the employees and organization at large. The traditional concept of personnel administration has gradually replaced with the human resource management. This give importance to the strategic integration of new leadership styles into effective management of employees and to improve the employee productivity (Gong, 2009).

Leaders are accountable for the performance of their organization or the success of the government, which is dependent on employee‘s productivity. Leadership is an indispensable requisite for the success of any organization (Lewis, 2013). Since an organization requires a leader to shape the behavior of employees and lead them to the desired direction. Research into leadership and employee productivity is becoming more important because some researchers have examined the relationship between them and also the relationship between leadership, motivation and productivity (Koopman, 2005). There is however, still some debate over leadership on whether it facilitates in employee productivity that further leads to organizational performance.

Cadbury Nigeria Plc considers employees as the most effective asset in achieving organizational objectives and goals. Employees in the organization have the tendency to enhance the organization productivity by utilizing the organizational capital efficiently and effectively. In order to advantageously utilize this asset, good leadership is considered being the most important determinant that increases employee productivity. In this case, Cadbury Nigeria Plc is chosen since there has been employees’ high productivity which could be attributed to the exercise of desirable leadership. A research into the influence of leadership style on employee performance may be necessary in finding the type of leadership the organization applies and how it affects the employees, under the following leadership style;

Autocratic Leadership Style: is task centered and his/her focus is to get a certain task done quickly. Autocratic leader makes all the decisions and assigns tasks to members of the group. However autocratic leadership style has many disadvantages and it is considered as a destructive leadership behavior. This leadership style can distance team members from the leader which can cause low level of job satisfaction and trust in the organization

Democratic Leadership Style: is also called the participative style as it encourages employees to be part of the decision making (Gastil, 2012). Democratic leadership should not be used when there is no enough time to get everyone’s input; it’s easier and more cost-effective for the manager to make the decision, the manager feels threatened by this type of leadership and when employee safety is a critical concern. However, to be able to achieve a better result, leader or manager should be able to get everyone involved.

Laissez-Faire: also known as delegative leadership. One deficiency of laissez-faire leadership style is that, is not ideal in situations where group members lack the knowledge or experience they need to complete tasks and make decisions (Egri, 2011). Some people are not good at setting their own deadlines, managing their own projects and solving problems on their own. In such situations, projects can go off-track and deadlines can be missed when team members do not get enough guidance or feedback from leaders. However, this study will seek to investigate the how laissez-faire leadership style can influence employee productivity in Cadbury Nigeria Plc, Lagos State.

Bureaucratic Leadership Style: is where the manager manages “by the book” everything must be done according to procedure or policy. If it isn’t covered by the book, the manager refers to the next level above him or her (Blanchard, 2008). This style is found to be ineffective when employees form work habits that are hard to break, if especially the managers are no longer useful, employees lose their interest in their jobs and in their fellow workers and when employees do only what is expected of them and no more (Gastil, 2012).

In this case, Cadbury Nigeria Plc is chosen since there has been employees’ high productivity which could be attributed to the exercise of desirable leadership. A research into the impact of leadership style on employees’ productivity may be necessary in finding the type of leadership style the organization applies and how it affects the employees’ productivity. A good leadership style is expected to direct workers behaviours toward achieving organizational predetermined goals. Therefore, this study investigate how different leadership styles (e.g. autocratic, democratic, liaises faire and bureaucratic) affect employees’ productivity in Cadbury Nigeria Plc, Lagos State. The novelty and contribution of the study to existing knowledge hinge on the fact that no work of this nature has been conducted using Cadbury Nigeria Plc, Lagos State as a case study.

Objectives of the Study

The main objective of the study is to establish the impact of leadership style on employees’ productivity among the employees of Cadbury Nigeria Plc, Lagos State. However, to achieve this main objective, the following sub-objectives will be considered;

1. To assess the impact of autocratic leadership style on employee work quality in Cadbury Nigeria Plc, Lagos State.
2. To investigate the impact of democratic leadership style on employee efficiency in Cadbury Nigeria Plc, Lagos State.
3. To explore the impact of laissez-faire leadership style on employee effectiveness in Cadbury Nigeria Plc, Lagos State.
4. To evaluate the impact of bureaucratic leadership style on employee motivation in Cadbury Nigeria Plc, Lagos State.

Research Questions

The questions of interest in the study are:

1. To what extent has autocratic leadership style impacted on the employee work quality in Cadbury Nigeria Plc, Lagos State?
2. What is the impact of democratic leadership style on employee efficiency in Cadbury Nigeria Plc, Lagos State?
3. What is the impact of laissez-faire leadership style on employee effectiveness in Cadbury Nigeria Plc, Lagos State?
4. How has bureaucratic leadership style impacted on employee motivation in Cadbury Nigeria Plc, Lagos State?

Research Hypotheses

Based on the objectives, the following hypotheses were developed in order to make valid conclusions on the subject matter. The hypotheses are expressed in their null form:

1. There is no significant effect of autocratic leadership style on employee work quality in Cadbury Nigeria Plc, Lagos State.
2. There is no significant impact of democratic leadership style on employee efficiency in Cadbury Nigeria Plc, Lagos State.
3. Laissez-faire leadership style has no significant impact on employee effectiveness in Cadbury Nigeria Plc, Lagos State.
4. Bureaucratic leadership style has no significant impact on employee motivation in Cadbury Nigeria Plc, Lagos State.

Operationalization of the Variables

The dependent variable is employees’ productivity, represented by Employee Work Quality (EWQ), Employee Efficiency (EE), Employee Effectiveness (EEN) and Employee Motivation (EM). On the other hand, leadership style, being the independent variable, is proxied by Autocratic Leadership Style (ALS), Democratic Leadership Style (DLS), Laissez-Faire Leadership Style (LFLS), and Bureaucratic Leadership Style (BLS).

Where Y= Dependent variable

             X= Independent variable

Y= f(X)

X= Leadership Style

X = f(x_1, x_2, x_3, x₄)

x₁= Autocratic Leadership Style (ALS)

x₂= Democratic Leadership Style (DLS)

x₃= Laissez-Faire Leadership Style (LFLS)

x₄= Bureaucratic Leadership Style (BLS)

Y= Employees’ Productivity

Y= f(y_1, y_2, y_3, y₄)

y₁ = Employee Work Quality (EWQ)

y₂ = Employee Efficiency (EF)

y₃ = Employee Effectiveness (EFN)

y₄ = Employee Motivation (EM)

The four specific objectives are operationally expressed as:

To determine the effect of autocratic leadership style on employee work quality in Cadbury Nigeria Plc, Lagos State.

Y₁ = f (x1)

Y₁ = b0 + b1x1 + u

To investigate how democratic leadership style can impact employee efficiency in Cadbury Nigeria Plc, Lagos State.

Y₂ = f (x2)

Y₂ = b0 + b1x2 + u

To examine the impact of laissez-faire leadership style on employee effectiveness in Cadbury Nigeria Plc, Lagos State.

Y₃ = f (x3)

Y₃ = b0 + b1x3 + u

To find out the effect of bureaucratic leadership style on employee motivation in Cadbury Nigeria Plc, Lagos State.

Y₄ = f (x4)

Y₄ = b0 + b1x4 + u

Scope of the Study

The study is limited to the impact of leadership style on employee productivity in Cadbury Nigeria Plc. The study is streamlined to employees’ productivity variables such as employee work quality, employee efficiency, employee effectiveness, employee motivation, and leadership style variables namely autocratic leadership style, democratic leadership style, laissez-faire leadership style and bureaucratic leadership style. The study is to be carried out in Cadbury Nigeria Plc in Lagos State. The unit of analysis of the study is the employees of Cadbury Nigeria Plc, Lagos State at Junior, Middle level, Senior and Management level positions. In addition, the population of the study comprised 3,150 employees of Cadbury Nigeria Plc, Lagos State.

 Significance of the Study

The study findings benefit businesses in the manufacturing industry in appreciating the critical role played by sound Leadership and Governance structures in improving organization‘s employee productivity both at national and international fronts. Lately the manufacturing sector has been experiencing some turbulence emanating from leadership and Governance gaps and this study assist management of Cadbury Nigeria Plc to evaluate how employees and regulator perception of top leadership impacts employee productivity of the organization. It will help to enlighten the management of the organization on the need and importance of having effective leaders in the organization.

It will enlighten the employees on their roles and obligations to the leadership in the organization and other related matters. It will identify the reason why employees react positively to a particular leadership style of a manager and also aim at discovering what makes workers to be motivated and satisfied with their job

The finding from the study is important because they have the capacity of being used to formulate policy guidelines which are relevant and sensitive to the forces that influence the manufacturing sector productivity in Lagos and Nigeria as a whole.

This study benefit Manufacturers Association of Nigeria (MAN) as the regulator, and Ministry of Finance formulate leadership and governance models whose overall objectives are to restore trust in the manufacturing sector, accelerate rate of growth, build productive and profitable institutions.

To the academicians the study contributes to the existing literature in the field of Leadership and Governance. It should also act as a stimulus for further research to refine and extend the present study especially in Lagos State. Finding of the study is useful to the researcher and scholars as it contributes to the body of knowledge in the area of Leadership and Governance. It also assists other researchers to further their studies on areas of interest not yet exploited.

Historical perspectives of the Study Area

Cadbury Nigeria commenced operations in the 1950’s as an enterprise established to source cocoa beans whilst simultaneously prospecting for opportunities to serve local consumer markets with their famous Cadbury products. An initial packing operation established in the early 1960’s grew rapidly into a full-fledged manufacturing operation. The Company was incorporated as a limited liability company in January 1965, when the Company’s current 42-hectare factory was also opened. Its shares were listed on The Exchange on 26 November 1976.

Business Overview

The core business of the Company is in two categories, namely confectionery and food drinks, which are manufactured in a dedicated facility within the factory site in Lagos.

The Company has grown to become one of the leaders in the confectionery and food drinks markets within Nigeria, with a portfolio of branded offers that are targeted to meet real needs of consumers. The Company’s quality brands are enjoyed throughout Nigeria as well as in the Company’s export markets in West Africa. This rich heritage has been carefully nurtured over the years.

The Company’s lead brand in the food drinks business is BOURNVITA, which holds a strong market share in the Nigerian market. In addition, the brand offers nutritional benefits that help to supplement the dietary intake of consumers. The main brands in the Company’s confectionery business include TOM TOM and BUTTERMINT, for sale in Nigeria, and HACKS and AHOMKA GINGER, which are exported to neighbouring countries. Each brand has grown to become a household name and each holds a strong market share in their respective segments.

Cadbury Nigeria has a 93% shareholding in SCPCL, a company located in Ondo State which processes cocoa beans into cocoa butter and liquor aimed at international markets, as well as cocoa powder for domestic consumption. The Company’s entire cocoa powder requirement is sourced from SCPCL.

Future Plans

Following a major strategic review in 2008, the Company has commenced an extensive restructuring exercise to restore its path to profitable growth. The Company has also identified significant growth potentials from its core brands, BOURNVITA and TOMTOM, as they appeal to a very wide spectrum of Nigerian consumers having been available in the market place for almost 40 years. A review of the Company’s route to market commenced in 2008, with a thorough reappraisal of its existing distributor partnerships and operational procedures. This has resulted in a strong and rejuvenated distribution channel with additional partners, a new key account structure and a growing retail sales team building distribution and display.

Research on Nigerian consumers consistently endorses the popularity of the Company’s famous brands. In this regard, the Company is committed to a programme of continuous improvement and modernization that has already seen a number of popular innovations over the last year. This commitment to innovation and renovation will also be maintained in the future.

The strategy review also focused on opportunities to improve efficiency and quality of products through a disciplined approach to international benchmarking and investing in infrastructure projects. This approach is expected to yield both productivity benefits as well as provide opportunities to streamline production processes and align the factory for future growth.

Definition of Terms

Leader: A leader is an appointed individual with the ability to organize other subordinates.

Performance: The accomplishment of a given task measured against preset known standard of accuracy, completeness, cost and speed.

Leadership: This is the act of persuading/inspiring subordinates to perform and engage in achieving a goal.

Leadership Style: It refers to a kind of relationship that someone uses his rights and method s to make many people work together for a common task.

Employee Productivity: is an assessment of the efficiency of a worker or group of workers.

Employee Effectiveness: refers to the degree as which set objectives are accomplished and policies achieve what they were designed to achieve. Employee Effectiveness means ‘doing the right things or occupying oneself with the right things.

Employee Motivation: is a set of energetic forces, including internal factors of each individual as well as external factors, for example, job characteristics, individual differences and organizational practices

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