ABSTRACTThe study examines thecomparison of leadership style and employee satisfaction in digital andtraditional companies. This study is based on articles of business magazineslike Mckinsey & company as well as including information from websitesholding databases of company reviews like glassdoor.com. In this research work we are going to have acomparative study on leadership style and employee satisfaction in both digitaland traditional companies. Also we are in general going to discuss aboutvarious leadership styles and its effects in employee satisfaction. 1. INTRODUCTIONTelling anyone thatleadership drives performance now a days is like telling someone oxygen isnecessary to breathe.
Leadership is “the behavior of an individual whenhe/she is directing the activities of a group towards a shared goal” (Coons, 1957). Leadership defines what the future should looklike, aligns people with that vision, and inspires them to make it happendespite the obstacles. A leader is one who sets a path and influences people tobe in line with those preset paths.
A leadership is a term defined in actionrather than a position. A study byMckinsy and Company shows more than ninety percent of CEOs are planning to increase investments inleadership development because it is an important issue their organizationsface (Rebecca L, 2012). A lot of leadership styles are there.It is adopted on the basis of organization structure, type etc.Leadershipstyle and employee satisfaction are very much important in today’s corporateworld. This is due to recognition that these two are major determinants fororganizational performance and effectiveness. It is a general trend thatdissatisfaction at work may make employees less committed to work.
(Basheer Alamatrooshi, 2016) This showcases the importance for jobsatisfaction or simply employee satisfaction. In each organization theleadership style adopted are some way correlated so as toensure employee satisfactionWhilecoming to digital and traditional companies, we can witness a lot of changes inorganization structure and leadership styles adopted. In this paper we aregoing to have a comparative study on leadership style and employee satisfactionon digital and traditional companies. Digital companies are those which uses digital platforms for itsoperations like Amazon, Google, Microsoft etc. A big unsolved issue that the sort ofleadership style companies should employ. A more clarity for above statement isrequired. To be honest, it is business situation which determines theleadership style.
2. LEADERSHIP STYLE AND EMPLOYEE SATISFACTION 2.1 Leadership StylesLeadershipstyle is the leader’s style adopted in giving direction to people, implementingplans and motivating people towards effectiveness of an organization. There are different types of leadershipstyles, each depending on type structure and situation of organization andhaving advantages and disadvantages. The culture and goal of an organizationdetermines which leadership style suits it’s in best. Different types of leadershipstyles are explained below.2.
1.1 AutocraticLeadership StyleHerein this type of leadership style, a leader determines everything well before.He detects each steps to be followed. No other people are having any influencein the plans by leader. It is characterized by individual control over alldecisions and in this case the leader rarely accepts advice from his followers.
This leadership style is having both advantages and disadvantages as like anyother leadership styles. This is highly beneficial in case of emergencysituations where the decision has to be taken at the earliest, may be duringtime of a crisis. This is really helpful for fast and quickly decisions. Thechances of complex decisions can be eliminated using this style of leadership.It is good for manufacturing or construction organizations to follow autocraticleadership style. Autocratic leadership style is something like a controllingleadership style which may lead to create a sort of dislike from the fellowworkers. There are also chances in which the autocratic power may be misused orthe decision can sometimes results in failure.
There is also a lack of creativesolutions to problems which may affect the performance of the group. (Johnson, n.d.
)2.1.2 DemocraticLeadership StyleIt isalso called as participatory leadership style. Here the leader values the inputof team members and peers, yet the responsibility for final decisions lies withleader only. This leadership style is welcoming for lot of creative ideas. Thistype of leadership style is more appropriate for making changes with anorganization. This is considered as one of the most important leadership style,but in emergency situations like crisis adopting this is time consuming and atthe same time leading to confusing decisions. (Johnson, n.
d.) 2.1.3 TransactionalLeadership StyleHerein this leadership style leaders promote using rewards and punishments. Theyset some predetermined goals and work together for that. Employees agree tofollow the direction and goal set by leaders or managers. The manager possessespower to review results and train or correct employees when team members failto meet goals (Johnson, n.d.
)2.1.4 TransformationalLeadershipHerein this type leaders motivate employees and enhance productivity and efficiencythrough communication and high visibility.
This style of leadership requiresthe involvement of management to meet goals. Leaders focuses on the big picturewithin an organization and delegate smaller tasks to the team to accomplishgoals (Johnson, n.d.)2.1.5 Laissez-FaireLeadership StyleThisleadership style ensures complete freedom for the group or individuals todecide what to do.
Usually this style is adopted in case without muchinvolvement by leader. The leader is only willing to supply information whenasked and commented very infrequentlyabout performance. This may lead to poor production, lack of control andincreasing costs. In usual cases this style is adopted for works of inferiorquality. (Johnson, n.d.
)2.2 Factors AffectingLeadership StyleEveryleaders performs in its own ways. No two performs in the same way. A number offactors may affects the style a leader uses.
Major factor affecting leadershipstyle is the type and nature of organization. The organization structure theyuse may lead to different leadership styles. Also importance and emergencylevel of work may decide the appropriate leadership styles.
It is all dependingon the nature of organization, because some organization emphasis oncontribution and ideas from their members like an open style of leadershipwhile some may not. A leader’s level of experience is also having an impact ofleadership style adopted. Those who new to leadership are likely more inclinedto go with books to avoid potential mistakes. And a more experienced leaderfeel confident in following his own rules, interpretations and decisions. Some leader’slikes to maintain all aspects of day to day decision making processes whileothers are not. So the level of control by leaders is also a factor affectingor influencing leadership style the personality of leader is also a matter. Thestyle of communication is greatly influenced by leader’s personality.
Howeverafter discussing the factors influencing leadership styles, we can concludethat a leadership style adopted heavily depends on type and structure oforganization. (Joseph, 2017) 2.3 Employee SatisfactionEmployeeSatisfaction is of great importance as is depending on the performance of anorganization. Employee satisfaction can be briefly defined as the extent towhich employees are content with their jobs. People develop attitudes towardstheir jobs by considering their feelings, behaviors and beliefs. Highsatisfaction levels lead to positive feelings while low satisfaction levelslead to negative feelings.
Employee’s moods and emotions are core buildingblocks that form the affective element of job satisfaction. Job satisfiedemployees show higher levels of commitment to their jobs and organization. Thiscould result in increased efficiency levels and low turnover with an overallpositive effect on the success of the organization.
(Mester, 2003) (R., 2005)Many studies shows that the role of leadershas direct influence on employee satisfaction. Leadership is meant to providegood path oriented working conditions. Always good working conditions may leadto increased employee satisfactions. Effective leaders influence positiveaspirations in people that result in high levels of satisfaction.
We willexplain in detail on following comparison section about leadership style andemployee satisfaction. (Peter Lok, 2003)2.4 FactorsInfluencing Employee SatisfactionIt would be great to discuss the factorsaffecting employee satisfaction. As discussed earlier employee attitude affectsmoral of the company.
Happy employee is needed for a happy company. Givingemployees more control will create a place they enjoy working in rather thanbeing stuck in a bland office cubicle. (Hill)The other factor to be discussed is stress.Work load may generate stress for employees. By providing leisure activitiesand also effective leadership skills can enable employees feel stress free.Social connections within employees will act as a barrier for these stresses.
Because socialization act as a key to attain happiness. (Hill)Beneficial activities done by company for thewelfare of employee can also contribute towards employee satisfaction. Healthof employee, environment of work and safety standards in plant will alsoinfluence employee satisfaction. The motivation and support employee gets fromhis organization also contribute towards this. (Hill)Jobs are at the same time an income as wellas an opportunity to learn. The growth of his/her carrier and the growthatmosphere provided will also play a major role in employee satisfaction level.Relationship with supervisor, rewards, workload and respect from co-workersalso greatly influences satisfaction level of employee. (Hill) 3.
COMPARATIVESTUDY OF DIGITAL AND TRADITIONAL COMPANIES 3.1 Digital and Traditional Companies-AnOverviewBy the word digital companies we mean thecompanies those using digital platforms for their business. Google, Facebooketc. are digital giants in the world. While in other hand traditional companiesare those who involve in manufacturing or any other type of businesses. Theorganization structure differs greatly in digital and traditional companies andso as the leadership styles.
If we look at the first hundred most valuedfirms, a major chunk would be from the software sector. This contrast is seenbecause the value of a company, be it a digital or traditional, dependsmore on the number of people that find its products useful and the value formoney that it offers. In general traditional companies uses real world resourcesand for them the organization structure is more complex maybe. As already said organization structurediffers greatly and we will see the structure of organization, leadership stylefollowed and job satisfaction levels in both digital and traditional companiesin the following sections.3.2 Organizationstructure and leadership style followed in Digital CompaniesDigital Companies also follows almost samepattern on level of management compared to traditional companies. They arecategorized as top level, middle level and entry level managers.
Analysis showsthat most of the digital companies emphasis on projects and sets a leader onbasis of requirement for the project. For a digital company projects changesduring the courses of time and employee can expect working with differentproject teams as per requirements of the firm. But while coming to top digitalcompanies, the above said is not that much affected as the company is heavilygoal oriented. (Prifling)The leadership style adopted by digitalcompany varies on different stages of company. We need to analyze this caseseparately with different category of employees. By going through websites likeglassdoor.com, we can come up with the conclusion that in case of entry levelemployees the digital companies follows mostly autocratic style of leadershipor transactional leadership style. While on the other hand in case of highlevel employees they approach with almost delegate style of leadership.
Employees can think and do from their side. On further examination, it isunderstood that most of digital platform companies are not likely to followdemocratic style of leadership as such,but likes to follow a mix of democratic and delegate style of leadership as itis more productive for their business. This case can also be analyzed with viewof type of works, for small not very much important projects they tempt tofollow autocratic style of leadership as is less time consuming on the otherhand for a complex research project they tempt to follow a mix of autocratic aswell as democratic styles of leadership. So as a whole we could say that digital companies would like to follow amix of autocratic, democratic transactional as well as delegate styles ofleadership. (Johnson, n.d.)3.
3 Employeesatisfaction -Digital CompaniesWe can only give an overview for the termemployee satisfaction in this study. For obtaining information we used websitesholding databases of company reviews like glassdoor.com. As already discussedjob satisfaction or employee satisfaction is very much important for productiveperformance of a firm.
It has been found that many leisure activities are beenprovided by digital companies for the wellbeing of the employees. But importantthing to look is regarding the job satisfaction levels. Following an autocraticstyle of leadership will make employees loss interest in the job they doing. Adigital company job is like sitting 8 hours continuously with computer. An autocraticleadership style if followed will make employee hectic in these situations.Studies shows a digital company job is more stressful for the employees andalso affects heath of employees due to lack of physical works in the job.Though we cannot measure the level of employee satisfaction, however we couldsay that leadership styles influences employee satisfaction heavily in digitalcompanies.
(Martin Dewhurst, 2009 November) (Peter Lok, 2003)3.4 Organizationstructure and leadership style followed in Traditional CompaniesAs already said, traditional companies followan organization structure involving top level, middle level and entry levelmanagement. Same as of digital companies the leadership style varies atdifferent levels of management. Traditional companies follows a strong patternof organizational structure. We could see that in traditional companies theyfollow democratic style of leadership in top management. In the top managementlevel, they discuss and comes with a solution. Autocratic style of leadershipis rare to witness in the case of top management levels.
But also we can seedelegate style of leadership here. Whilecoming to middle management level, we could still say democratic style ofleadership is dominated. But still we can witness a mixture of autocratic aswell as delegate style of leadership. In case of entry level autocratic styleof leadership is common however there are slots for democratic,transformational and delegate styles of leaderships depending on situation andjob. (Emmanuel Ogbonna, 2000)The other important characteristics indetermining leadership style is the business situation. For example for a manufacturing or aconstructing company autocratic style of leadership suits best.
But for aresearch oriented business other styles of leaderships are most welcomed. Usually in traditional companies underemergency situations autocratic style of leaderships are employed. This is toreduce the time consumed in making a decision.
In traditional companies experienceof a leader also plays a vital role in determining leadership style. So thereare a lot of factors contributing towards determining leadership style intraditional companies. (Emmanuel Ogbonna, 2000)3.
5 Employeesatisfaction -Traditional CompaniesAs already mentioned in the case of digitalcompanies, we cannot accurately measure the level of employee satisfaction intraditional companies also. However we could give an overview of employeesatisfaction and can look for how leadership styles influences employee satisfactionin traditional companies. (Peter Lok, 2003) (Emmanuel Ogbonna, 2000)In case of traditional companies thecompany’s relation with public is very much important.
So happy employees are vitalbecause they are representing the company to public. Same as above if followingan autocratic style of leadership, then there are high chances for employee tofeel dissatisfied. This is also a concern for companies as employee attitudeaffects the morale of companies. Giving employees more control is very muchimportant. It is because of this fact many companies are following transformationalas well as delegate styles of leadership. A positive employee attitude isdirectly proportional to productivity of the company. Leaders mostly try tokeep a good relation with employees in traditional companies and this is reallyimportant for the company success. As like every company traditional companiesalso provide leisure and beneficial activities for the welfare of theiremployees.
But in all cases participative style of leadership is not worthy.There can be chances of deviation from desired results in some cases. But atsame time employee satisfaction is also very much important. So we could say leadershipstyles of course influences the employee satisfaction levels. (Peter Lok, 2003) (Emmanuel Ogbonna, 2000) 3.
6 A GeneralComparison of Digital and Traditional Companies We had discussed the leadership styles andemployee satisfaction in both digital and traditional companies. Now it’s timeto compare both. Digital and traditional companies differs in various aspects.Their structure, mode of operation, customers, likewise most of importantfactors are different. As said above the leadership style they adopted may varydue to organization structure and also due to the business situation. Intraditional companies there is a better relation with employees on compared todigital companies. The leadership style adopted in digital companies may beadopted for a particular period of time for a particular project, but usuallyin case of traditional companies the case is not like this. We cannot compare the stress level of workin both as the level and type of stress employees undergo differs in allaspects.
As discussed earlier it is business situation or structure oforganization which determining leadership style mostly. However we could saysmall digital companies like startups focus on democratic style of leadershipwhile in case of large digital firms there are more chances for going withautocratic or transactional style of leadership. In the other hand traditionalcompanies would like to follow a delegate or democratic style of leadership incases of research or new implications, still at entry level they are likely togo forward with autocratic style of leadership. Still we need to say that theseall things changes depending on the personality of leader, business situation ormay be due to management’s decisions. So we cannot define a particularuniversal leadership style for digital or traditional companies.
Money cannot ensure employee satisfactionalways. But still it can. Comparatively digital company employ are having highpay considered with traditional company employ. But still not always. We canhope more wages in digital companies is an aid contributing towards employeesatisfaction there. But there are a lot of other factors to be considered.Everything lies in the fact that people need to find job interesting andleadership style can contribute a lot for that.
Digital and traditional companies areactually like two ends of a tie. But still we cannot distinguish them with aparticular leadership style. However as discussed earlier leadership stylecontribute a lot towards employee satisfaction in both of these. 4. CONCLUSION Thestudy has gone through the effects of leadership styles on employeesatisfaction. The study focused on reviews in glassdoor.
com, articles byMckinsey & Company and some general articles and previous studies. We cancome to a conclusion that leadership style greatly influences employeesatisfaction. While looking through aspects of digital and traditionalcompanies, as already said we cannot universally state a particular leadershipstyle for them.
However we could say that their mode of operation and leadershipstyle are different. Even though we can clearly state that for both of these organizations,leadership styles are dependent on corresponding business situation. Sobusiness situations plays a vital role in determining the leadership style tobe followed. Alsowe examined leadership styles and employee satisfaction in these two types ofcompanies. We could see factors thatsuggest to the argument that leadership styles contribute towards levels ofemployee satisfaction in both these types of companies.
Employee satisfactionis related with the attitude of employee and leadership styles can make changesin the attitude of employee towards the job. Employee attitude reflects in the morale of the country. So digital ortraditional every company tries to ensure employee satisfaction. Theleadership style should be in such a manner that it should create a positiveattitude in employees towards the company and work, otherwise it will affectthe productivity and performance of the company whether digital or traditionalnot a matter. In a study by Mackinsey & Company (The State of human capital2012, False Sumit, Mckinsy and Company) it is stated that over 90 percentage ofCEO’s are planning to invest more on leadership. This is due to the realizationthat leadership styles affects the performance of company greatly BIBLIOGRAPHY Basheer Alamatrooshi, S.
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