Every organization strives for lasting success which is highly dependent on the quality of its workforce. Workforce commitment is been considered as a major factor in determining the organizational performance and effectiveness. Among various determinants, leadership style of leader has been established as one of the most determinant of employees’ organizational commitment. It is therefore concluded that leadership styles (transformational and transactional) influence the development of employees’ organizational commitment in the organizational settings. So, organizations that are willing to have high employees’ organizational commitment should provide training that encourage leaders to exhibit behaviors like building trust, inspiring shared vision, encouraging creativity, emphasizing development and recognizing accomplishments.

1. Ganeshman Darpan, 5(1), 92‐97, 2012 (2069BS)
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Leadership Styles in Organizations
Sajeeb Kumar Shrestha
M.Phil., MBS, TU
Teaching Assistant
Shanker Dev Kathmandu, TU
Abstracts
Every organization strives for lasting success which is highly dependent on the quality
of its workforce. Workforce commitment is been considered as a major factor in
determining the organizational performance and effectiveness. Among various
determinants, leadership style of leader has been established as one of the most
determinant of employees’ organizational commitment. It is therefore concluded that
leadership styles (transformational and transactional) influence the development of
employees’ organizational commitment in the organizational settings. So,
organizations that are willing to have high employees’ organizational commitment
should provide training that encourage leaders to exhibit behaviors like building trust,
inspiring shared vision, encouraging creativity, emphasizing development and
recognizing accomplishments.
Keywords: Leadership styles, transformation leadership, transactional leadership,
organization.
1. Introduction
The most valuable and indispensable factor that organizations need to run
organizations smoothly, effectively and efficiently is human resource (Mosadeghrad,
2003). Well-qualified and capable personnel are indispensable for achieving
organizational goals and objectives of an organization. Success of any organization
depends on hard working, loyal and committed managers and employees. In this
modern era where world has become a global village, firms can distinguish
themselves on the basis of competence of their human resource. Handling employees
who are physically, psychologically, culturally and ethnically different from each
other is a difficult task in itself. But the quality of leadership that organizations have,
plays an important role in management of the employees (Albion & Gagliardi, 2007).

2. Ganeshman Darpan, 5(1), 92‐97, 2012 (2069BS)
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Swanepoel et al. (2000) also emphasized that the ability of an organization to
successfully implement business strategies and to gain a competitive advantage and
optimize human capital largely depends on the leadership styles that encourage
employee commitment.
Leadership in general is understood as the behavior of an individual when directing
the activities of a group toward a shared goal. Leadership is a bond that makes people
to work together. Stogdill (1974) defined leadership as a process of influencing the
activities of an organized group in efforts towards goal setting and goal achievement.
Lok and Crawford (2007) described leadership as a process that influences people to
get desired results. Gill et al. (2006) identified that leaders help to stimulate, motivate,
encourage, and recognize their followers in order to achieve key performance results.
A more contemporary definition is provided by Kotter (1988), where he defined
leadership as the process of moving a group (or groups) in the same direction through
mostly non-coercive means. He further suggests that effective leadership what moves
groups in the long term best interest of the group.
Organizations at present are more concerned about understanding, the nature and
development of their leadership. Transformational and Transactional leadership is a
modern approach towards leadership. Transformational leaders encourage
subordinates to adopt the organizational vision as their own through inspiration thus
adopting a long-term perspective and focus on future needs (Bass, 1990a).
Transformational leaders tend to have a holistic perspective of organizational factors.
Hall et al. (2008) defined transformational leadership as a system of changing and
influencing people. If leaders want to produce a positive influence on individuals,
groups and organizations, then leadership should be broadened from old rigid
autocratic style to friendly and contemporary style (Dess et al., 1998). Modern leaders
perfectly adopt an attitude that support employees, provide them a vision, cultivate
hope, encourage them to think innovatively, individualized consideration and broaden
the communication. All these factors are the main features of transformational
leadership style leading to boost up organizational strengths and increasing level of
job satisfaction and organizational commitment in workforce.
The term leadership is also defined as a position, a behavioral act, a style, a
relationship or a process. Stogdill (1974) defined leadership as the process of
influencing the activities of an organized group in efforts towards goal setting and

3. Ganeshman Darpan, 5(1), 92‐97, 2012 (2069BS)
3
goal achievement. Rowden (2000) also define leadership as the behavior of an
individual when the person is directing and coordinating the activities of a group
toward the accomplishment of a shared goal. Those who define leadership as an act
are Bennis and Goldsmith (1994), who define leadership as what leaders do, such as
acting with integrity and competence, interpreting reality, explaining the present and
painting a picture of the future.
Transactional leaders, on the other hand, identify and clarify job tasks for their
subordinates and communicate how successful execution of those tasks will lead to
receipt of desirable job rewards (Bass, 1990a). According to Avolio, Waldman and
Yammarino (1991), a transactional leader determines and defines goals for their
subordinates and suggests how to execute tasks. They provide feedback and rewards
on completed tasks. These leaders motivate subordinates to achieve expected levels of
performance by helping them to recognize task responsibilities, identify goals and
develop confidence about meeting desired performance levels (Bass, 1990a). They
make subordinates understand how their needs and the rewards they desire are linked
to goal achievement.
Ulrich (1998) stated that as modern organization operating in an environment
characterized by uncertainty and constant change, the commitment of employees to
the organization is a critical determinant in the success or failure of organizations in
their quest for competitive advantage. Nijhof et al. (1998) believed that the success of
the organization depends not only on how the organization exploits its human capital
and competencies, but also on how it stimulates commitment to the organisation.
Pfeffer (1998) states that committed employees who are highly motivated to
contribute their time and energy to the pursuit of organizational goals are increasingly
acknowledged to be the primary asset available to an organization. They provide the
intellectual capital that, for many organizations has become their most critical asset
(Stewart, 1997). Furthermore, employees who share a commitment to the organization
and their collective well-being are more apt to generate the social capital, found in
relationships characterized by high levels of trust and shared values that facilitate
organizational learning. According to Iverson and Buttigieg (1998), committed
employees accept organizational values easily while taking responsibility for their
actions. High levels of commitment to the organization are likely to reduce
absenteeism, staff turnover and increase levels of job satisfaction and motivated to

4. Ganeshman Darpan, 5(1), 92‐97, 2012 (2069BS)
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perform at advanced level. These positive benefits of committed employees are
recognized as important determinants of organizational effectiveness. Meyer and
Botha (2000) believe that organizations who institute formal and informal ways of
improving employee commitment are better equipped to deal with the challenges of
labour unrest and industrial action.
2. Review
In this study, two types of leadership style are thoroughly explained.
a. Transformational Leadership Style
Yukl (1989) defined transformational leadership as the process of influencing changes
in attitudes and assumptions of organizational members and building commitment for
the organizational mission and objectives. Hall et al. (2008) defined transformational
leadership as a system of changing and transforming people. Bass and Bass and
Avolio (1995) suggest that transformational leaders inspire followers with a vision of
what can be accomplished through extra personal effort, thus motivating followers to
achieve more than they thought they would achieve. Transformational leaders
encourage problem solving in followers rather than constantly providing solutions and
directions and a greater pool of knowledge (Buhler, 1995). Schepers et al. (2005)
claimed that transformational leaders allowed employees to think creatively, analyze
the problem from numerous angles and explored new and better solutions of the
problem by using technology. Bass and Avolio (1995) forwarded the work of Burns
and divided transformational leadership into four components.
i. Idealized Influence: Idealized influence attribute occur when followers identify
with and emulate those leaders who are trusted and seen as having an attainable
mission and vision. Similarly, idealized influence behavior refers to leader behavior
which results in followers identifying with leaders and wanting to emulate them.
ii. Inspirational Motivation: It implies that leaders behave in ways that motivate and
inspire those around them by providing meaning and challenge to their followers’
tasks. Such as past personal accomplishments, communication skills and the role
modeling of other leaders create the potential to inspire others.
iii. Intellectual Stimulation: It occurs when leaders encourage their followers to be
innovative and creative by questioning assumptions, reframing problems and

5. Ganeshman Darpan, 5(1), 92‐97, 2012 (2069BS)
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approaching old situations in new ways. Intellectual stimulation also occurs when the
leader prompts the followers to provide alternative solutions to the problems and
challenges.
iv. Individual Consideration: It occurs when leaders relate to followers on a one-to-
one basis in order to elevate goals and develop skills. Leaders who display individual
consideration treat each employee as an individual and are attentive to the unique
needs, capabilities and concerns of each individual (Bass & Avolio, 1995). They often
act as coach, mentor and counsel their subordinates.
b. Transactional Leadership Style
Transactional leadership is a type of leadership based on an exchange process
between leaders and followers (Burns, 1978). Major focus of transactional leaders is
follower role clarification and leaders have to know about the needs of employee
which require meeting the organizational goals. These leaders motivate subordinates
to achieve expected levels of performance by helping them to recognize task
responsibilities, identify goals and develop confidence about meeting desired
performance levels (Bass 1990a). According to Avolio et al. (2004); Bass (1990a);
and Hellriegel and Slocum (2004) transactional leaders employ three factors.
i. Contingent Reward: In contingent rewards, the leader provides followers with
material and psychological rewards contingent on the fulfillment of contractual
obligations.
ii. Management by Exception Active: This is one of the main characteristics of
transactional leadership which can happen when the leader has a system for actively
monitoring errors and gaps in performance and tasks; it is a corrective action (Bass
and Avolio, 1990b).
iii. Management by Exception Passive: Management by exception passive is not
that different. Passive leaders just wait until deviations occur before intervening. In
short, here the leader intervenes only when things go wrong (Burns 1978; Northouse
2001).
Conclusion
Employees’ knowledge, experience, skills, their ability to collectively innovate and
their decision making processes are key to the survival and determines the success of

6. Ganeshman Darpan, 5(1), 92‐97, 2012 (2069BS)
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organization. No organization in today's competitive world can perform at peak levels
unless each employee is committed to the organization’s objectives and works as an
effective team member. However, it has became a common complain that employees
are no more loyal as they used to be in the past. Nepalese banking sector are facing
problem of high employee turnover and losing their competent employees. Employees
leave their organizations simply for the better pay, benefits and due to low
organizational commitment. High turnover their competent employees result in
interruptions in normal operations, loss of efficiency, increased replacement and
recruitment cost, project delays, increased customer dissatisfaction, scheduling
difficulties ultimately leading to depletion of the organizations in Nepal.
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