The Impact of Leadership Style on Growth and Productivity of an Organization

1.1 Introduction

Leadership is the process through which an individual influences and guides others toward the achievement of shared goals within an organization. It involves setting direction, motivating employees, coordinating activities, and ensuring that organizational resources are effectively utilized to achieve desired outcomes (Northouse, 2022). In organizational settings, leadership goes beyond authority and position; it reflects the leader's ability to inspire commitment, shape behavior, and create an environment that supports performance and continuous improvement. The particular approach a leader adopts in carrying out these responsibilities is commonly referred to as leadership style.

Leadership style describes the pattern of behavior, attitudes, and strategies a leader uses to influence subordinates and manage organizational activities. Common leadership styles include autocratic, democratic, transformational, transactional, and laissez-faire leadership, each of which reflects different assumptions about power, control, motivation, and employee participation (Yukl, 2020).

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the aim and objectives of the study. Others are significance of the study, scope of work, research hypothesis and questions, limitation of the study and definition of terms.

1.2 Background of Study

Leadership has long been regarded as a fundamental element in the success and sustainability of organizations. According to Northouse (2022), leadership involves influencing individuals and groups toward the achievement of common organizational goals through direction, motivation, and guidance. In organizational contexts, leadership shapes vision, drives strategy implementation, and determines how human and material resources are coordinated to achieve growth and productivity. As organizations increasingly operate in competitive and uncertain environments, the role of leadership style in determining organizational outcomes has become more critical.

Leadership style reflects the consistent patterns of behavior leaders exhibit when interacting with subordinates and making decisions. Yukl (2020) reported that leadership style influences how authority is exercised, how communication flows within the organization, and how employees respond to organizational goals. Different leadership styles such as autocratic, democratic, transformational, transactional, and laissez-faire have been associated with varying levels of employee commitment, efficiency, and performance. The suitability of a particular leadership style often depends on organizational structure, culture, and the nature of tasks being performed.

Organizational growth and productivity are key measures of organizational performance. Daft (2021) asserted that organizational growth is reflected in expansion, increased market share, improved profitability, and long-term sustainability, while productivity relates to the efficiency with which inputs are converted into outputs. Leaders play a central role in influencing these outcomes by setting performance standards, motivating employees, and creating an enabling work environment. Where leadership is effective, employees are more likely to be engaged, innovative, and committed to achieving organizational objectives.

Empirical studies have consistently linked leadership style to organizational performance outcomes. Avolio and Bass (2018) stated that transformational leadership, which emphasizes inspiration, intellectual stimulation, and individualized consideration, is positively associated with higher levels of productivity and organizational growth. Such leaders encourage creativity and align employee goals with organizational vision, thereby enhancing overall performance. In contrast, rigid or authoritarian leadership styles have often been associated with low morale, resistance to change, and reduced productivity, especially in knowledge-driven organizations.

However, the relationship between leadership style and organizational performance is not always straightforward. Mullins (2019) affirmed that leadership effectiveness depends not only on the leader's style but also on situational factors such as organizational culture, employee competence, and external environmental pressures. In some contexts, a directive leadership style may enhance short-term productivity, while in others it may hinder long-term growth. Furthermore, scholars contend that many organizations, particularly in developing economies, continue to experience slow growth and declining productivity due to leadership challenges such as poor communication, limited employee participation, and weak strategic direction (Armstrong, 2020). Despite growing awareness of modern leadership approaches, traditional leadership practices still dominate many organizations, limiting innovation and adaptability. This study is set against the backdrop of the growing concern about how leadership style affects the growth and productivity of organizations in an increasingly complex and competitive environment.

1.3 Statement of Problems

Investigation revealed that organizations operate in highly competitive and dynamic environments that demand adaptive, inclusive, and results-oriented leadership styles. However, evidence from organizational practice indicates that leadership approaches adopted in many institutions remain rigid, authoritarian, or poorly aligned with employee needs and organizational goals. Such leadership styles often result in poor communication, limited employee participation in decision-making, and inadequate motivation, which negatively affect productivity and long-term growth. When employees feel excluded or undervalued, their commitment and performance decline, ultimately affecting organizational outcomes (Northouse, 2022).

On the other hand, some organizations adopt democratic, transformational, or participative leadership styles, yet still struggle with inefficiency and underperformance. The lack of clarity regarding how specific leadership styles influence growth indicators such as profitability, market expansion, innovation, and productivity levels remains a significant problem in organizational studies (Yukl, 2020).

Furthermore, many empirical studies on leadership and organizational performance focus on developed economies, with limited contextual evidence from developing countries where organizational structures, labor relations, and socio-economic conditions differ significantly. As a result, organizations continue to implement leadership practices without sufficient empirical guidance on their actual impact on growth and productivity within their specific context (Avolio & Bass, 2018). It is against this backdrop that this study seeks to examine the impact of leadership style on the growth and productivity of an organization.

1.4 Aim and Objectives of Study

The aim of the study is to investigate the impact of leadership style on the growth and productivity of organizations. In achieving this aim, the following specific objectives were laid out as follows:

1. To evaluate the relationship between leadership style and employee productivity in organizations.
2. To assess the influence of leadership style on organizational growth and performance.
3. To identify the challenges associated with the implementation of different leadership styles.
4. To recommend effective leadership strategies that enhance growth and productivity.

1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• How does leadership style affect employee productivity in organizations?
• What is the impact of leadership style on organizational growth and overall performance?
• What challenges do organizations face in implementing various leadership styles?
• Which leadership strategies are most effective in enhancing organizational growth and productivity?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

• H₀1: There is no significant relationship between leadership style and organizational growth and productivity.
• H₀2: Leadership style has a significant impact on employee productivity in organizations.
• H₀3: Leadership style significantly influences organizational growth and overall performance.
• H₀4: The challenges in implementing leadership styles affect the effectiveness of organizational productivity.

1.7 Significance of Study

It is believed that at the completion of the study, the findings will help managers and leaders adopt effective leadership strategies, improve employee engagement, and foster innovation. Also, the study will contribute to the academic knowledge of leadership theory and practice, especially within the Nigerian organizational context.

Furthermore, the study will inform policymakers and human resource practitioners on leadership development programs that align with organizational goals. In addition, the study will provide guidance on leadership approaches that optimize employee performance and organizational growth.

Lastly, the outcome of this research will support leadership training and development programs for current and future managers.

1.8 Scope of Study

The scope of the research is focused on the impact of leadership style on organizational growth and productivity, with specific reference to Zenith Bank Plc in Lagos State, Nigeria. The study is limited to management and staff of Zenith Bank Plc and does not extend to other financial institutions, although findings may have broader implications for similar organizations.

1.9 Limitations of the Study

During the course of this study, there were some problems encountered which stood as limitations to the research work. Some of the limitations include:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
3. Initial Cooperation Delay from Respondents: A particular limitation of this work came as a result of the respondent refusal to offer their cooperation at the initial time they were contacted. This contributed in making the success of this research study difficult.

1.10 Definition of Terms

Leadership Style: Refers to the approach and behavior adopted by leaders to influence, motivate, and guide employees toward achieving organizational goals (Northouse, 2022).

Organizational Growth: The expansion and improvement of an organization's operational capacity, market share, and profitability over time (Daft, 2021).

Productivity: The efficiency with which an organization converts input resources, such as labor and capital, into outputs like goods and services (Yukl, 2020).

Transformational Leadership: A leadership approach that inspires and motivates employees to exceed expectations through vision, encouragement, and personal development (Avolio & Bass, 2018).

Transactional Leadership: A leadership approach that focuses on supervision, structured tasks, and performance-based rewards or penalties (Avolio & Bass, 2018).

Employee Engagement: The level of commitment, enthusiasm, and involvement an employee shows toward their work and the organization (Armstrong, 2020).