Aveneu Park, Starling, Australia

ABSTRACT This study is based on articles of business

 

ABSTRACT

The study examines the
comparison of leadership style and employee satisfaction in digital and
traditional companies. This study is based on articles of business magazines
like Mckinsey & company as well as including information from websites
holding databases of company reviews like glassdoor.com. In this research work we are going to have a
comparative study on leadership style and employee satisfaction in both digital
and traditional companies. Also we are in general going to discuss about
various leadership styles and its effects in employee satisfaction.

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1.     
INTRODUCTION

Telling anyone that
leadership drives performance now a days is like telling someone oxygen is
necessary to breathe. Leadership is “the behavior of an individual when
he/she is directing the activities of a group towards a shared goal” (Coons, 1957). Leadership defines what the future should look
like, aligns people with that vision, and inspires them to make it happen
despite the obstacles. A leader is one who sets a path and influences people to
be in line with those preset paths. A leadership is a term defined in action
rather than a position.  A study by
Mckinsy and Company shows more than 
ninety percent of CEOs are planning to increase investments in
leadership development because it is an important issue their organizations
face (Rebecca L, 2012). A lot of leadership styles are there.
It is adopted on the basis of organization structure, type etc.

Leadership
style and employee satisfaction are very much important in today’s corporate
world. This is due to recognition that these two are major determinants for
organizational performance and effectiveness. It is a general trend that
dissatisfaction at work may make employees less committed to work. (Basheer
Alamatrooshi, 2016) This showcases the importance for job
satisfaction or simply employee satisfaction. In each organization the
leadership style adopted are some way correlated   so as to
ensure employee satisfaction

While
coming to digital and traditional companies, we can witness a lot of changes in
organization structure and leadership styles adopted. In this paper we are
going to have a comparative study on leadership style and employee satisfaction
on digital and traditional companies. 
Digital companies are those which uses digital platforms for its
operations like Amazon, Google, Microsoft etc.  A big unsolved issue that the sort of
leadership style companies should employ. A more clarity for above statement is
required. To be honest, it is business situation which determines the
leadership style.

 

 

 

 

 

2.     
LEADERSHIP STYLE AND EMPLOYEE SATISFACTION

 

2.1 Leadership Styles

Leadership
style is the leader’s style adopted in giving direction to people, implementing
plans and motivating people towards effectiveness of an organization.  There are different types of leadership
styles, each depending on type structure and situation of organization and
having advantages and disadvantages. The culture and goal of an organization
determines which leadership style suits it’s in best. Different types of leadership
styles are explained below.

2.1.1 Autocratic
Leadership Style

Here
in this type of leadership style, a leader determines everything well before.
He detects each steps to be followed. No other people are having any influence
in the plans by leader. It is characterized by individual control over all
decisions and in this case the leader rarely accepts advice from his followers.
This leadership style is having both advantages and disadvantages as like any
other leadership styles. This is highly beneficial in case of emergency
situations where the decision has to be taken at the earliest, may be during
time of a crisis. This is really helpful for fast and quickly decisions. The
chances of complex decisions can be eliminated using this style of leadership.
It is good for manufacturing or construction organizations to follow autocratic
leadership style. Autocratic leadership style is something like a controlling
leadership style which may lead to create a sort of dislike from the fellow
workers. There are also chances in which the autocratic power may be misused or
the decision can sometimes results in failure. There is also a lack of creative
solutions to problems which may affect the performance of the group. (Johnson,
n.d.)

2.1.2 Democratic
Leadership Style

It is
also called as participatory leadership style. Here the leader values the input
of team members and peers, yet the responsibility for final decisions lies with
leader only. This leadership style is welcoming for lot of creative ideas. This
type of leadership style is more appropriate for making changes with an
organization. This is considered as one of the most important leadership style,
but in emergency situations like crisis adopting this is time consuming and at
the same time leading to confusing decisions. (Johnson, n.d.)

 

2.1.3 Transactional
Leadership Style

Here
in this leadership style leaders promote using rewards and punishments. They
set some predetermined goals and work together for that. Employees agree to
follow the direction and goal set by leaders or managers. The manager possesses
power to review results and train or correct employees when team members fail
to meet goals (Johnson, n.d.)

2.1.4 Transformational
Leadership

Here
in this type leaders motivate employees and enhance productivity and efficiency
through communication and high visibility. This style of leadership requires
the involvement of management to meet goals. Leaders focuses on the big picture
within an organization and delegate smaller tasks to the team to accomplish
goals (Johnson, n.d.)

2.1.5 Laissez-Faire
Leadership Style

This
leadership style ensures complete freedom for the group or individuals to
decide what to do. Usually this style is adopted in case without much
involvement by leader. The leader is only willing to supply information when
asked and  commented very infrequently
about performance. This may lead to poor production, lack of control and
increasing costs. In usual cases this style is adopted for works of inferior
quality. (Johnson, n.d.)

2.2 Factors Affecting
Leadership Style

Every
leaders performs in its own ways. No two performs in the same way. A number of
factors may affects the style a leader uses. Major factor affecting leadership
style is the type and nature of organization. The organization structure they
use may lead to different leadership styles. Also importance and emergency
level of work may decide the appropriate leadership styles. It is all depending
on the nature of organization, because some organization emphasis on
contribution and ideas from their members like an open style of leadership
while some may not. A leader’s level of experience is also having an impact of
leadership style adopted. Those who new to leadership are likely more inclined
to go with books to avoid potential mistakes. And a more experienced leader
feel confident in following his own rules, interpretations and decisions. Some leader’s
likes to maintain all aspects of day to day decision making processes while
others are not. So the level of control by leaders is also a factor affecting
or influencing leadership style the personality of leader is also a matter. The
style of communication is greatly influenced by leader’s personality. However
after discussing the factors influencing leadership styles, we can conclude
that a leadership style adopted heavily depends on type and structure of
organization. (Joseph, 2017)

 

2.3 Employee Satisfaction

Employee
Satisfaction is of great importance as is depending on the performance of an
organization. Employee satisfaction can be briefly defined as the extent to
which employees are content with their jobs. People develop attitudes towards
their jobs by considering their feelings, behaviors and beliefs. High
satisfaction levels lead to positive feelings while low satisfaction levels
lead to negative feelings. Employee’s moods and emotions are core building
blocks that form the affective element of job satisfaction. Job satisfied
employees show higher levels of commitment to their jobs and organization. This
could result in increased efficiency levels and low turnover with an overall
positive effect on the success of the organization. (Mester, 2003) (R., 2005)

Many studies shows that the role of leaders
has direct influence on employee satisfaction. Leadership is meant to provide
good path oriented working conditions. Always good working conditions may lead
to increased employee satisfactions. Effective leaders influence positive
aspirations in people that result in high levels of satisfaction. We will
explain in detail on following comparison section about leadership style and
employee satisfaction. (Peter Lok, 2003)

2.4 Factors
Influencing Employee Satisfaction

It would be great to discuss the factors
affecting employee satisfaction. As discussed earlier employee attitude affects
moral of the company. Happy employee is needed for a happy company. Giving
employees more control will create a place they enjoy working in rather than
being 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 activities
and 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 the
welfare of employee can also contribute towards employee satisfaction. Health
of employee, environment of work and safety standards in plant will also
influence employee satisfaction. The motivation and support employee gets from
his organization also contribute towards this. (Hill)

Jobs are at the same time an income as well
as an opportunity to learn. The growth of his/her carrier and the growth
atmosphere provided will also play a major role in employee satisfaction level.
Relationship with supervisor, rewards, workload and respect from co-workers
also greatly influences satisfaction level of employee. (Hill)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.     
COMPARATIVE
STUDY OF DIGITAL AND TRADITIONAL COMPANIES

 

3.1 Digital and Traditional Companies-An
Overview

By the word digital companies we mean the
companies those using digital platforms for their business. Google, Facebook
etc. are digital giants in the world. While in other hand traditional companies
are those who involve in manufacturing or any other type of businesses. The
organization structure differs greatly in digital and traditional companies and
so as the leadership styles.  If we look at the first hundred most valued
firms, a major chunk would be from the software sector. This contrast is seen
because the value of a company, be it a digital or traditional, depends
more on the number of people that find its products useful and the value for
money that it offers. In general traditional companies uses real world resources
and for them the organization structure is more complex maybe.  As already said organization structure
differs greatly and we will see the structure of organization, leadership style
followed and job satisfaction levels in both digital and traditional companies
in the following sections.

3.2 Organization
structure and leadership style followed in Digital Companies

Digital Companies also follows almost same
pattern on level of management compared to traditional companies. They are
categorized as top level, middle level and entry level managers. Analysis shows
that most of the digital companies emphasis on projects and sets a leader on
basis of requirement for the project. For a digital company projects changes
during the courses of time and employee can expect working with different
project teams as per requirements of the firm. But while coming to top digital
companies, the above said is not that much affected as the company is heavily
goal oriented. (Prifling)

The leadership style adopted by digital
company varies on different stages of company. We need to analyze this case
separately with different category of employees. By going through websites like
glassdoor.com, we can come up with the conclusion that in case of entry level
employees the digital companies follows mostly autocratic style of leadership
or transactional leadership style. While on the other hand in case of high
level employees they approach with almost delegate style of leadership.
Employees can think and do from their side. On further examination, it is
understood that most of digital platform companies are not likely to follow
democratic   style of leadership as such,
but likes to follow a mix of democratic and delegate style of leadership as it
is more productive for their business. This case can also be analyzed with view
of type of works, for small not very much important projects they tempt to
follow autocratic style of leadership as is less time consuming on the other
hand for a complex research project they tempt to follow a mix of autocratic as
well as democratic styles of leadership. 
So as a whole we could say that digital companies would like to follow a
mix of autocratic, democratic transactional as well as delegate styles of
leadership. (Johnson, n.d.)

3.3 Employee
satisfaction -Digital Companies

We can only give an overview for the term
employee satisfaction in this study. For obtaining information we used websites
holding databases of company reviews like glassdoor.com. As already discussed
job satisfaction or employee satisfaction is very much important for productive
performance of a firm. It has been found that many leisure activities are been
provided by digital companies for the wellbeing of the employees. But important
thing to look is regarding the job satisfaction levels. Following an autocratic
style of leadership will make employees loss interest in the job they doing. A
digital company job is like sitting 8 hours continuously with computer. An autocratic
leadership style if followed will make employee hectic in these situations.
Studies shows a digital company job is more stressful for the employees and
also affects heath of employees due to lack of physical works in the job.
Though we cannot measure the level of employee satisfaction, however we could
say that leadership styles influences employee satisfaction heavily in digital
companies. (Martin Dewhurst, 2009 November) (Peter Lok,
2003)

3.4 Organization
structure and leadership style followed in Traditional Companies

As already said, traditional companies follow
an organization structure involving top level, middle level and entry level
management. Same as of digital companies the leadership style varies at
different levels of management. Traditional companies follows a strong pattern
of organizational structure. We could see that in traditional companies they
follow democratic style of leadership in top management. In the top management
level, they discuss and comes with a solution. Autocratic style of leadership
is rare to witness in the case of top management levels. But also we can see
delegate style of leadership here.  While
coming to middle management level, we could still say democratic style of
leadership is dominated. But still we can witness a mixture of autocratic as
well as delegate style of leadership. In case of entry level autocratic style
of leadership is common however there are slots for democratic,
transformational and delegate styles of leaderships depending on situation and
job. (Emmanuel Ogbonna, 2000)

The other important characteristics in
determining leadership style is the business situation.  For example for a manufacturing or a
constructing company autocratic style of leadership suits best. But for a
research oriented business other styles of leaderships are most welcomed.  Usually in traditional companies under
emergency situations autocratic style of leaderships are employed. This is to
reduce the time consumed in making a decision. In traditional companies experience
of a leader also plays a vital role in determining leadership style. So there
are a lot of factors contributing towards determining leadership style in
traditional companies. (Emmanuel Ogbonna, 2000)

3.5 Employee
satisfaction -Traditional Companies

As already mentioned in the case of digital
companies, we cannot accurately measure the level of employee satisfaction in
traditional companies also. However we could give an overview of employee
satisfaction and can look for how leadership styles influences employee satisfaction
in traditional companies. (Peter Lok, 2003) (Emmanuel
Ogbonna, 2000)

In case of traditional companies the
company’s relation with public is very much important. So happy employees are vital
because they are representing the company to public. Same as above if following
an autocratic style of leadership, then there are high chances for employee to
feel dissatisfied. This is also a concern for companies as employee attitude
affects the morale of companies. Giving employees more control is very much
important. It is because of this fact many companies are following transformational
as well as delegate styles of leadership. A positive employee attitude is
directly proportional to productivity of the company. Leaders mostly try to
keep a good relation with employees in traditional companies and this is really
important for the company success. As like every company traditional companies
also provide leisure and beneficial activities for the welfare of their
employees. But in all cases participative style of leadership is not worthy.
There can be chances of deviation from desired results in some cases. But at
same time employee satisfaction is also very much important. So we could say leadership
styles of course influences the employee satisfaction levels. (Peter Lok,
2003) (Emmanuel
Ogbonna, 2000)

 

3.6 A General
Comparison of Digital and Traditional Companies

 

We had discussed the leadership styles and
employee satisfaction in both digital and traditional companies. Now it’s time
to compare both. Digital and traditional companies differs in various aspects.
Their structure, mode of operation, customers, likewise most of important
factors are different. As said above the leadership style they adopted may vary
due to organization structure and also due to the business situation. In
traditional companies there is a better relation with employees on compared to
digital companies. The leadership style adopted in digital companies may be
adopted for a particular period of time for a particular project, but usually
in case of traditional companies the case is not like this.   We cannot compare the stress level of work
in both as the level and type of stress employees undergo differs in all
aspects. As discussed earlier it is business situation or structure of
organization which determining leadership style mostly. However we could say
small digital companies like startups focus on democratic style of leadership
while in case of large digital firms there are more chances for going with
autocratic or transactional style of leadership. In the other hand traditional
companies would like to follow a delegate or democratic style of leadership in
cases of research or new implications, still at entry level they are likely to
go forward with autocratic style of leadership. Still we need to say that these
all things changes depending on the personality of leader, business situation or
may be due to management’s decisions. So we cannot define a particular
universal leadership style for digital or traditional companies.

Money cannot ensure employee satisfaction
always. But still it can. Comparatively digital company employ are having high
pay considered with traditional company employ. But still not always. We can
hope more wages in digital companies is an aid contributing towards employee
satisfaction there. But there are a lot of other factors to be considered.
Everything lies in the fact that people need to find job interesting and
leadership style can contribute a lot for that.

Digital and traditional companies are
actually like two ends of a tie. But still we cannot distinguish them with a
particular leadership style. However as discussed earlier leadership style
contribute a lot towards employee satisfaction in both of these.

 

 

4.     
CONCLUSION

 

The
study has gone through the effects of leadership styles on employee
satisfaction. The study focused on reviews in glassdoor.com, articles by
Mckinsey & Company and some general articles and previous studies. We can
come to a conclusion that leadership style greatly influences employee
satisfaction. While looking through aspects of digital and traditional
companies, as already said we cannot universally state a particular leadership
style for them. However we could say that their mode of operation and leadership
style are different. Even though we can clearly state that for both of these organizations,
leadership styles are dependent on corresponding business situation. So
business situations plays a vital role in determining the leadership style to
be followed.

Also
we examined leadership styles and employee satisfaction in these two types of
companies.  We could see factors that
suggest to the argument that leadership styles contribute towards levels of
employee satisfaction in both these types of companies. Employee satisfaction
is related with the attitude of employee and leadership styles can make changes
in the attitude of employee towards the job. 
Employee attitude reflects in the morale of the country. So digital or
traditional every company tries to ensure employee satisfaction.

The
leadership style should be in such a manner that it should create a positive
attitude in employees towards the company and work, otherwise it will affect
the productivity and performance of the company whether digital or traditional
not a matter. In a study by Mackinsey & Company (The State of human capital
2012, False Sumit, Mckinsy and Company) it is stated that over 90 percentage of
CEO’s are planning to invest more on leadership. This is due to the realization
that leadership styles affects the performance of company greatly

 

 

 

 

 

 

BIBLIOGRAPHY

 

Basheer Alamatrooshi, S. K. (2016). Determinants of
organizational performance: a proposed framework. International Journal of
Productivity and Performance Management, 844-859.

Coons, H. (1957). Leadership Definition.

Emmanuel Ogbonna, L. C. (2000). Leadership style,
organizational culture and performance: empirical evidence from UK companies. The
International Journal of Human Resource Management, 766-788.

Hill, B. (n.d.). What Are the Factors Affecting Job
Satisfaction. Retrieved from smallbusiness.chron.com:
http://smallbusiness.chron.com/factors-affecting-job-satisfaction-20114.html

Johnson, R. (n.d.). Leadership Styles.
Retrieved from smallbusiness.chron.com:
http://smallbusiness.chron.com/5-different-types-leadership-styles-17584.html

Joseph, C. (2017). Factors Influencing Leadership
Styles. Retrieved from bizfluent.com:
https://bizfluent.com/info-8145993-factors-influencing-leadership-styles.html

Martin Dewhurst, M. G. (2009 November). Motivating
people: Getting beyond money. McKinsey Quarterly. Mckinsey &
Company.

Mester, C. V. (2003). Leadership style and its
relation to employee attitudes and behavior. SA Journal of Industrial
Psychology, 29(2):72-82. .

Peter Lok, J. C. (2003). The effect of
organisational culture and leadership style on job satisfaction and
organisational commitment A cross-national comparison. Sydney.

Prifling, M. (n.d.). Exploring Leadership Styles in
Software Development Projects. Franfurt: E-Finance Lab, House of Finance,
Goethe University Frankfurt, Germany.

R., P. (2005). Job satisfaction at IT SME’s in
Durban. Durban: MBA.: Commercial Administration, Durban University of Technology.

Rebecca L, C. M. (2012). Why Human Capital Function still has
far to go. The State of Human Capital False Sumit . Mckincy &
Company, Conference Board.

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