Transactional Leadership in the Banking Sector
Transactional leadership is that style of leadership where the focus of the leaders are mainly on the outcomes, follows the already existing structure of the organizations as well as measures success as per the organization’s system of rewards or punishments. If the subordinates does what is required then he/she will be rewarded whereas, if they are not going as per the leaders wishes then they will be punished. Transactional leaders are mainly found to have formal authority as well as positions of responsibility in the company. Transactional leaders are mainly responsible for preserving routine by managing employee’s performance and encourage group performance (McCleskey 2014). This type of leaders already set the criteria for their employees according to formerly defined requirements. This type of leaderships works best with those employees who understand their tasks and are influenced by the reward-penalty system. Therefore, transactional leadership mainly includes motivating and directing their followers predominantly through attracting to their own self-interest. This style of leadership is also known as ‘telling style’. Transactional leaders overstress detail and short-term goals as well as set rules and procedures. They do not make any effort to intensify followers’ creativity as well as initiation of new ideas. This kind of leadership styles can be implemented in those organizations where the issues are simple and are defined clearly. Transactional leaders are also found in banking sectors and several research findings suggest that it enhances staff satisfaction through contingent reward and dynamic management (Odumeru and Ogbonna 2013).
On the other hand, Transformational leadership is the one that is found in all the levels of the organization be it teams, departments, divisions or in the organization as a whole. Transformational leaders are mainly visionary, encouraging, daring, risk-takers as well as thoughtful thinkers. Moreover, these types of leaders have a charismatic appeal but this is inadequate for modifying the way an organization runs. Transformational leadership motivates staffs to attain unexpected or extraordinary results. This type of leadership gives employees autonomy over particular jobs and authority to take decisions once they are trained. Some of the fundamental attributes of transformational leadership are inspirational, in which the leaders can encourage their employees to find improved ways of attaining a goal (Odumeru and Ogbonna 2013). Another attribute is mobilization because leadership can prepare employees into groups who can get the tasks done and lastly morale in which the transformational leaders elevate the well-being and level of motivation of a group through exceptional rapport. Moreover, they are also good at resolving conflict. Transformational leadership is suitable for those organizations where modification is needed because it is not appropriate for new organizations with no structure. Transformational leadership is eminent at communicating fresh ideas. They are also good at assessing short-term visions with long-term goals. Moreover, it is also effecting for building powerful coalitions and initiating mutual trust. Finally, transformational leadership has honesty as well as high emotional intelligence when dealing with other employees. Transformational leaders are also seen in the banking sectors of Nigeria for creating a vision of a suitable future state. They are also capable of modifying the organizational culture and leading new cultures and value systems (Sadeghi and Pihie 2012).
Transformational Leadership in the Banking Sector
Leadership styles of the managers in the banks at different levels impart a solid background to the banking sector. Leadership styles and employee’s performances are even more effective for banking as well as financial institutions where the output will be an outcome of a real time procedure implemented by the employee themselves. Leadership style in banks not only averts inefficiency but also receive maximum outputs. Therefore, the reason behind choosing this topic is to find out the importance of transactional and transformational leadership styles in the banking sector.
The leadership styles that are observed in the Nigerian banking sectors are mainly transformational and transactional style, laissez-Faire, authoritarian, democratic, coaching and pace setting leadership styles. Among all of these leadership styles, previous researches have observed that transaction leadership styles has a positive as well as significant impact of the bank employees of Nigeria which enhances their job satisfaction and in turn increases their performance in the organization (Ojokuku, Odetayo and Sajuyigbe 2012). As per various research studies there has been a positive association between the leadership styles of transformational and transactional with that of job satisfaction in the banks. However, in the history of finance it has been observed that the banks, which are successful, are mainly associated with a single leader. Leaders in banking sectors are important because they have a clear strategic vision, which will be the zeal of success for the entire workforce. A strong leader is one who guides the employees and assists them to reach their goal quickly. Moreover, leadership is important for banks not only for making it successful but also to motivate their staffs to complete their assigned tasks willingly as well as efficiently. Good Leadership further make the employees feel that they are a part of the banks and thus, this makes them give their best for the success of the organization. Moreover, in banking sectors transformational as well as transactional leadership very essential to elicit high level of satisfaction as well as performance among the bank employees. Transactional leaders in the bank mainly pay attention on the role of guidance, organization as well as group performance and help the team or employees with the daily progress towards goals. On the other hand, transformational leaders mainly work so that they can increase the motivation level as well engagement of the team members by guiding their behavior towards a shared goal (Fasola, Adeyemi and Olowe 2013).
Leadership Styles and Employee Performance in Nigerian Banks
The various leadership styles that are found to be equally effective for the leaders to successfully perform their role is important because for the long end people should recognize which style of leadership is suitable for them and how that might have an impact on others. Thus, research on leadership styles are needed so that it can helps people build knowledge as well as acts as efficient learning for students, academics and the professionals. By gaining proper knowledge on leadership, people can easily decrease any obstacle to become a successful leader. Research on leadership styles can further provide a medium to perceive the different issues related to leadership. Moreover, researches have benefits for businesses as well as service sectors. Thus, there are many organizations, which are found to invest in research and development. Researches on leadership styles can help the leaders to become effective which in turn will help the organizations getting successful (Klenke 2016). Most importantly, researches help leaders to rear their potential and attain their goal via different opportunities. Research on leadership style will contributes to the leaders’ ability to take life-changing decisions. Moreover, it will further motivate self-growth, participation in valuable cases and live productively.
Leadership is important for survival of any organization and so the various styles of leadership do have an impact on the performance of the organization as well as employees. The leadership styles adopted by the leaders are regarded by the researchers to be particular in attaining the goals of the organization and in eliciting performance among the subordinates. However, there is a strong connection between the behavior of leaders and performance of its team members because the leaders motivate the employees, encourages them so that they can give their best performance (Wong and Laschinger 2013). The unique description of leadership believe affecting a group of people towards attaining organizational goals. Therefore, the leadership style that one chooses will have an impact on the performance of the employees as well as the ways in which the tasks are completed. The job performance of the employees can emerge from many factors among which leadership styles are just one factor. Leaders set clear goals for their employees, which helps in enhancing the staff performance. Effective leadership is thus, important for enhancing the employee’s performance as well as job satisfaction and making employees engage so that they can give their maximum effort (Lam and O’Higgins 2012).
The aim of this research is to find out the effects of transactional and transformational leadership styles to the staff performance in Zenith Bank of Nigeria.
The objectives of this study are as follows-
- To evaluate the impact of leadership through transactional and transformational styles to the staff performance
- To find out the factors on which the transactional and transformational leadership styles depend
- To recommend the most suitable leadership style among transactional and transformational styles to the staff performance in Nigerian banks
Conclusion
To conclude this research introduction it can be said that the aim of this study is to find out the effects of transactional and transformational leadership styles to the staff performance in the bank of Nigeria. This topic has been chosen for the research because leadership styles of the managers have a powerful impact on the banking sectors. Moreover, leaderships in banks not only prevent inefficiency but also emphasizes on maximum output. Various leadership styles are found to be effective in the Nigerian banking sectors among which transactional and transformational leadership’s effect will be highlighted in this study.
References
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Fasola, O.S., Adeyemi, M.A. and Olowe, F.T., 2013. Exploring the relationship between transformational, transactional leadership style and organizational commitment among Nigerian banks employees. International Journal of Academic Research in Economics and Management Sciences, 2(6), p.96.
Klenke, K. ed., 2016. Qualitative research in the study of leadership. Emerald Group Publishing Limited.
Lam, C.S. and O’Higgins, E.R., 2012. Enhancing employee outcomes: The interrelated influences of managers’ emotional intelligence and leadership style. Leadership and Organization Development Journal, 33(2), pp.149-174.
McCleskey, J.A., 2014. Situational, transformational, and transactional leadership and leadership development. Journal of Business Studies Quarterly, 5(4), p.117.
Odumeru, J.A. and Ogbonna, I.G., 2013. Transformational vs. transactional leadership theories: Evidence in literature. International Review of Management and Business Research, 2(2), p.355.
Ojokuku, R.M., Odetayo, T.A. and Sajuyigbe, A.S., 2012. Impact of leadership style on organizational performance: a case study of Nigerian banks. American Journal of Business and Management, 1(4), pp.202-207.
Sadeghi, A. and Pihie, Z.A.L., 2012. Transformational leadership and its predictive effects on leadership effectiveness. International Journal of Business and Social Science, 3(7).
Wong, C.A. and Laschinger, H.K., 2013. Authentic leadership, performance, and job satisfaction: the mediating role of empowerment. Journal of advanced nursing, 69(4), pp.947-959.
Y?ld?z, S., Ba?türk, F. and Boz, ?.T., 2014. The effect of leadership and innovativeness on business performance. Procedia-Social and Behavioral Sciences, 150, pp.785-793.
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