Effect of leadership styles on successful implementation of a performance management system

Abstract

Although a well implemented performance management system (PMS) can have immense benefits, it has been reduced in many organisations to a mechanical, end of the year requirement for information. Consequently, in many organisations, PMSs are viewed with much trepidation and scepticism. It is therefore germane to understand factors that could cause PMS to be embraced and accepted by individuals in organisations. Effective leadership in the organisation could be critical in the successful implementation of performance management. However, empirical investigation of this relationship is lacking. The objectives of this study were: (1) To assess the effect of transactional and transformational leadership on the adoption of a performance management framework and (2) To assess the perceptions of various demographic groups in an organisation on the effects of leadership style on the implementation of a performance management system. The study was undertaken at Moi Teaching and Referral Hospital (MTRH), Kenya. An explanatory descriptive design was used. The target population for the study comprised all the 2,040 members of staff at the hospital. A stratified random sampling was used to select the 510 respondents. The study found that leadership style (transactional and transformational leadership) has a strong and positive influence on the implementation of performance management framework (B=0.677, SE = 0.027, p<0.0001; R² =0.72). Support for the relationship between leadership and PMS was found to be stronger amongst males, less educated and older employees. The study recommends that organisations should adopt more strategic leadership style if they are to successfully deliver the contiguous stages required in PMS.

Keywords: Transactional Leadership, Transformational Leadership, performance management system