Relationship between leadership styles and staff satisfaction:

Empirical study in automobile industry of Malaysia

1. Introduction

1-1. Context of the Study

Organizations are social systems where human resources are the most important

(Stewart, 1994)factors for effectiveness and efficiency; they need effective

managers and employees to achieve their objectives(Davis.R.C, 1951). The success

or failure of an organization is decided by human beings, thus management is

concerned with this human resources issue. In other words, a company’s human

resources can be the differentiating factor between success and failure. It is for this

reason that millions of dollars are spent annually on performance improvement

initiatives focused on enhancing the skills, of managers. Therefore, in recent

years, leadership style has become an important topic of study in the management

field; a good leader guides subordinates to work effectively toward organizational

goals(Davis.R.C, 1951).

Leadership is, at its essence, a complex interaction between the designated

leader and the social and organizational environment (Fiedler, 1996).

In the past several decades, management experts have undergone a

revolution in how they define leadership and their attitudes toward it. They have

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gone from a very classical autocratic approach to a very creative and participative

approach. Ideas about management and leadership have changed considerably in

recent years. People today are better-educated and more articulate. They can no

longer be commanded in the same way as before. There needs to be much more

involvement and participation at work (Stewart, 1994).

Organizational success in obtaining its goals and objectives depends on

managers and their leadership style. By using appropriate leadership styles,

managers can affect employee job satisfaction, commitment and productivity.

Leadership style can be viewed as a series of managerial attitudes, behaviors,

characteristics and skills based on individual and organizational values, leadership

interests and reliability of employees in different situations (Mosadeghrad, 2003).

The subject of leadership is interesting for many researchers. The continued

search for good leaders has resulted in the development of many leadership

theories. Studies have been carried out to determine how leadership behaviors can

be used to influence employees for improved organizational outcomes (Kreitner,

1995).

There are several styles of leadership such as: autocratic, bureaucratic,

laissez-faire, charismatic, democratic, participative, situational, transactional, and

transformational leadership. Not everyone agrees that a particular style of

leadership will result in the most effective form of organizational behavior.

Different styles were needed for different situations and each leader needed to

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know when to exhibit a particular approach. No one leadership style is ideal for

every situation, since a leader may have knowledge and skills to act effectively in

one situation but may not emerge as effectively in a different situation

(Mosadeghrad 2003).

Transformational, transactional, and laissez-faire styles are known as the new

leadership theories and are used by most academics who study organization leaders

(Bogler, 2001, 2002; Heller, 1993; Mckee, 1991; Timothy and Ronald, 2004).

These three are the main leadership styles used in this research.

The relationship between a manager’s leadership and subordinate employee’s

job satisfaction had been well documented in the literature (Chen & Silverthorne,

2005)(Chen & Silverthorne, 2005; Glassman & McAfee, 1992; Jago, 1982).

Job satisfaction is related to the feeling of employees and can be influenced

by factors such as the quality of their relationship with their supervisor or

employer, the quality of the physical environment in which they work, or the

degree of fulfillment in their work. Job satisfaction is not the same as job

motivation; rather, job satisfaction affords an indication of an employee’s well-

being induced by the job (Michaelowa, 2002).

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Job satisfaction has been the subject of many studies in the field of

management. There has been confusion over whether the determinants of job

satisfaction lie solely in the job itself (intrinsic), whether they exist in the employee’s

mind (subjective), or whether job satisfaction is the consequence of an interaction between

the employee and his/her work environment (Locke, 1969). Some researches focused on the

climate of the company that is influenced by some outcome variables such as job

satisfaction (Kozlowski& Hults, 1987; Jackofsky & Slocum, 1988). Jackofsky and Slocum

(1988) obtained significant correlation between individual perceptions of seven climate

dimensions (supervisory style, task characteristics, co-worker relationships, work

motivation, employee competence, participation in decision making, and performance

rewards) and positive and negative leader reward behavior in a sample of hotel employees.

Nowadays, in companies, it is an urgent need for managers in a competitive

society to have the highest quality produced in the most efficient manner.

Employee affective response or satisfaction with work is a multifaceted

construct which, according to Wright, Horn and Sanders (1997), may be

conceptualized as including the following factors:

intrinsic factors; satisfaction inherent in the work itself and extrinsic factors;

ambiguity/role clarity; co-worker/interpersonal relationships; supervision; and

organizational factors such as climate, structure, and policy.

Workers at every level form impressions regarding whether they are valued and

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respected from important cues that emanate from their environment, especially

those that come from the leaders directly above them (Altman, 2002; Roberts,

2001; Evans, 1999; Gmelch & Miskin, 1993; Fryer & Lovas, 1991).

These impressions are translated into feelings, either positive or negative, that

become the principal component of a worker’s morale. Morale is a key factor in

determining an employee’s commitment to work and the degree of job satisfaction

to which he or she professes (Roberts, 2001; Fryer& Lovas, 1991).

Robbins (2003) claimed that “leaders in the twenty-first century are required to

challenge the status-quo, to create vision for the future of the company, and to

inspire and coach the organization member to achieve extraordinary results” (p.

314).

.

1-2. Statement of the problem

Many researchers consider leadership style as an important variable in

influencing an organization’s functions. Leadership style can influence followers’

job performance and job satisfaction , leadership styles are identified as one of the

three leadership types: transformational, transactional, and laissez-faire (Robbins,

2001).

Robbins (2003) indicates the management function of leadership is mainly aimed

to manage employee behavior and by explaining and predicting employee

productivity, resign rate and job satisfaction in an effort to reach the ultimate goals

for employees’ aggressive job involvement and the commitment to companies.

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From developing the models of causality variables to affect job satisfaction,

Seashore and Taber (1975) proposes that the entire internal organization

environment includes organizational climate, leadership types and personnel

relationship can affect the job satisfaction of employee.

There have been numerous scholars who have investigated the behaviors

of the managers in organization under theoretic contents and operation models, but

there are still few papers investigating the possible impacts on the job satisfaction

of employee under the operation of the behaviors of managers in Organization.

Furthermore, most papers are merely concentrated on individual case studies or a

single industry field (Buckler, 1998). This lack is in mines industry of Iran and

Gole gohar iron mines complex as well. Therefore, within this research, we will

make an effort to investigate the relationship among leadership style and job

satisfaction of employee. Moreover, we can further investigate the impacts on job

satisfaction of employee.

Besides according to Schriesheim and Kerr (1994), although job satisfaction is

an old area of research in the management field, it is new with regard to

industries, especially in the aspect of cross-cultural testing of management

theories. For theories of organizational behavior to be applicable in all types of

organizations of different countries, that must be developed and tested in all

different types of organization.

1-3. Objectives of the study

The most important evidence that indicated the worsening conditions of an

organization is the low rate of job satisfaction(Bennis, 1989). Thus, job satisfaction

is the key to establishing a healthy organizational environment in an organization.

Nonetheless, factors related to job satisfaction are relevant in the prevention of

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employee frustration and low job satisfaction because employees would work

harder and perform better if they are satisfied with their jobs.

With regards to the problem, this study aims to discover new insight into the

important issues of job satisfaction in Gole gohar mines complex an integral part of

ergonomics investigation.

The primary objective of this research is to analyze the relationship

between the transactional, transformational and laissez-faire leadership styles with

job satisfaction in Gole gohar mines complex.This is due to the fact that mines

industry are considered as one of the biggest contributor in fourth developing

Iranian economic growth(planing and management organization of Iran 2006).

The secondary purpose of this study is to help to this matter which leadership

styles have the most positive effect on subordinate job satisfaction levels within the

mines industries and the results of this research will allow a better understanding of

the relationship between leadership styles and employee job satisfaction. It is

anticipated that a better understanding of these issues and their relationships can

aid further research, pinpoint better strategies for recruiting, promotion, and

training of future companies’ managers and employees, particularly in Iran perhaps

in other societies as well.

1-4.Area of the study

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The focus of this study is the relationship between employee satisfactions

with leadership styles in the Gole gohar Iron mines complex.

1-5. Assumptions of the study

Leedy and Ormrod (2001) posited, “Assumptions are so basic that, without

them, the research problem itself could not exist” (p. 62). A major assumption of

this study is that understanding the type, and strength, of the relationship between

leadership style and job satisfaction, will help leaders, or managers, to use more

effective pattern of behavior and style to create condition focused on

accomplishing organizational goals and to motivate workers to reach extraordinary

performance, the other assumptions of this study are:

1. Leaders will be influenced in employee job satisfaction.

2. Leadership style is related to employee job satisfaction.

3. Leaders' styles will be resulted in an increase in employee productivity.

4. Job satisfaction of staff will be desirable, both for the individual and the

organization.

5. Satisfied employees are motivated and productive.

6. Satisfied employees will be more likely to remain with the organization.

1-6.Scope of the study

The focus of this study is the relationship between employee

satisfactions with leadership style in the Gole gohar iron mines complex of Iran

Specifically this study will be researched the relationship between these

variables: leadership styles (Transformational, Transactional, and laissez-faire)

and employee’s satisfaction.

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The scope of this study show how leadership style will be influenced

employee satisfaction in a specific industry. This study can be expanded to a

variety of industries.

1-7.Significant of study

The purpose of this study is to investigate the possible relationships between the

leaders’ leadership styles and employees’ job satisfaction in Gole gohar iron mines

complex. Scholarly research has established theories to explain factors that

influence job satisfaction, but little research has been done on the relationship

between leadership and job satisfaction of Mines industry of Iran.

Employees’ satisfaction and retention have always been important issues for all

kinds of organizations and businesses. After all, high levels of absenteeism and

employee turnover can affect recruitment and retraining. However, very few

organizations have made job satisfaction a top priority, perhaps because they have

failed to understand that satisfied employees tend to be more productive, creative,

and committed to their employers.

The results of this study might help company leaders understand more clearly what

employees need and whether their job satisfaction is related to the company

leaders’ leadership style.

Furthermore because of changes in the leadership style(Bogler, 2002), research which has been moved by the new development in technology and communication, this area should be also tested in Mines industry of iran. Every new avenue of leadership should be examined in order to determine the most effective leadership style which creates highest employee satisfaction. No study had been taken place in this field in the Iran mines industry. Therefore, this research will be opend a new direction for Iranian managers to insure greater employee job satisfaction and productivity. The results of this study might help company leaders understand more clearly what employees need and whether their job satisfaction is related to the company leaders’ leadership style.

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1-8. Research questions

This study examined the relationship between perceived leadership

styles and employee satisfaction in the Gole gohar iron mines complex. It seeks to

find which leadership style brings more satisfaction in employees. The leadership

styles used in this study are, transformational, transactional, and laissez-faire.

Therefore the research questions are:

1. Is there a significant and positive relationship between transformational

leadership style and overall job satisfaction?

2. Is there a significant and positive relationship between transactional leadership

style and overall job satisfaction?

3. Is there a significant and positive relationship between laissez-faire leadership

style and overall job satisfaction?

4. Is there differences of significant in job satisfaction among demographic

variables?

5. How do employees in mines complex describe their leadership styles and job

satisfaction?

The three leadership styles used in this study are transformational, transactional,

and laissez-faire. Demographic variables are age, gender, number of years of

working in the company, and level of education.

Six facets of job satisfaction are examined include: People on Your Present Job,

Job in General, work on Present Job, Pay, Promotion, and Supervision.

1-9.Definition of terms

For the purpose of this study the terms are defined as follows:

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Leadership According to Robbins (2003), leadership is “the ability to influence a group toward the achievement of goals” (p. 314).

Transformational Leadership

Burns (1978) described transformational leadership as a process that motivates followers by appealing to higher ideals and moral values. Hater and Bass (1988) said, the dynamics of transformational leadership involve strong personal identification with the leader, joining in a shared vision of future, or going beyond the self-exchange of rewards for compliance. Transformational leadership is a key in organizations’ continuing success because of the importance of team cohesion, organizational commitment, and higher levels ofjob satisfaction (Avolio & Bass, 1999).

Transformational leaders motivate subordinates to do more than originally expected by instilling pride, communicating personal respect, facilitating creative thinking, and providing inspiration (Bass, 1985).

Transactional Leadership A transactional leader clarifies the performance criteria or articulates what is expected from the employee and what employees will receive in return. Field and Herold (1997) described transactional leadership as a reward-driven behavior in which the follower behaves in such a manner as to elicit rewards or support from the leader.Transactional leadership is often contrasted to transformational leadership (Hartog & Van Muijen, 1997).

Transactional leaders enhance followers’ willingness to pertbrm at expected levels by rewarding acceptable performance with desired outcomes and by clarifying role expectations when followers do not meet performance standards (Bass, 1985).

Laissez-faire Leadership Laissez-faire leadership is extremely passive as compared to transformational and transactional leadership (Bass, 1999; Flood, et al., 2000). Laissez-faire leaders avoid decision-making and supervisory responsibility. Such leaders are not sufficiently motivated or adequately skilled to perform supervisory duties (Bass. 1998; Ilartog & Van Muijen, 1997).

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Laissez-faire emerged as a non leadership factor or as an indicator of when

leadership was absent. Laissez-faire leadership is neither transformational nor

transactional (Bass, 1985).

JobSatisfaction

Job Satisfaction is the feeling a worker has about his or her job experiences in

relation to previous experiences, current expectations, or available alternatives

(Lin, 2004).

Job satisfaction is defined as employees like or dislike their jobs in general (Weiss,

Dawis, England, & Lofquist, 1967).

1-10.Malaysia industrialization

Since independence in 1957, Malaysia has attained significant

industrialization and economic development. Preliminary data shows that, in 2005,

per capita GDP reached$4,930 and the ratio of manufactured goods in total export

was 84%. Among them, electrical and electronics (E&E) products occupied 64%

of total export.

Malaysia, with the population of 26 million, has successfully graduated

from the status of a primary commodity-based economy into an upper middle-

income industrialized country. As industrialization proceeded and external

circumstances changed, policy orientation also evolved in stages.

Initially, from 1957 to 1969, the import substitution of consumer goods

was attempted under the strong performance of primary commodity exports

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(petroleum, tin, rubber, timber, palm oil, etc). The economic environment was

largely liberal and without forced measures such as import bans.

However, the gap between the ethnic Chinese, who were rich and urban, and the

ethnic Malays, who were poor and rural, continued to grow, which erupted in the

racial riot of May 1969.

In the 1970s, a clear policy affirmative action’s to ease social tension and

secure national unity. The New shift was made from laissez-faire to ethnicity-

based Economic Policy (NEP) imposed comprehensive rules in allocating public

positions, business management, workforce, and other incentives in favor of

Bumiputra (indigenous Malays). With the coming of power of Dr. Mahathir in

1981, and under recessionary pressure of the early 1980s, aggressive industrial

policy was introduced. Look East Policy and heavy industrialization, including

automobiles, were initiated. With the help of the yen appreciation starting in 1985,

Malaysia succeeded greatly in absorbing manufacturing FDI and turning itself into

the world’s major electronics exporter. However, heavy industrialization was less

successful.

Since 1986, policy emphasis shifted back partly from social equity to

wealth creation. There was a gradual easing of Bumiputra policy, and more pro-

market, outward- oriented measures were adopted. Industrial Master Plan 1

(IMP1, 1986-95) laid the foundation of manufacturing industries and promoted

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the processing of natural resources instead of exporting them in raw form.

Industrial Master Plan 2 (IMP2, 1996-2005) tried to broaden manufacturing

capability through the strategies of cluster-based industrial development and

manufacturing plus plus. Industrial Master Plan 3 (IMP3, 2006-2020), which is

currently being prepared, is likely to further broaden the scope by including

services and featuring functional targets such as technology, logistics, marketing,

and so on. IMP2 and IMP3.

Many interviewees agreed that Malaysia was a lucky country enjoying

political stability, strong leadership, no prolonged war of independence, a rich

endowment of natural resources relative to the population size, administrative

mechanisms inherited from the colonial era, high transparency and low corruption,

and so forth, which enabled the country to rise to the current level. Business

environment in Malaysia is ranked as one of the best in the world2. The timing of

large FDI inflows (late 1980s) and the

unique response to the Asian crisis (1997-98) may also be counted as fortunate

occurrences. The prominent feature of Malaysia is multi-ethnicity, which must be

handled with care to maintain economic growth and social stability. At present, the

three major ethnic groups (Malays 51%, Chinese 24%, Indians 7%) seem to live in

harmony and mutual respect.

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1-11.The recipe for national auto industrialization

The auto industry has been considered the “industry of industries” of the

twentieth century due to its scale and spin-off effects (Dicken 1998:316). It was

perceived as a core component of national economic development strategies in the

North until the first oil crisis in the 1970s and in the South until recently. The

strategy to form a national auto industry in developing countries had to follow

more or less a particular sequence of national auto industrial development

(Dicken1998):

• Stage 1: Import of completely built-up (CBU) vehicles by local distributors.

• Stage 2: Assembly of semi- or completely knocked-down (CKD) vehicles by

subsidiaries or licensed or franchised domestic companies, importing parts and

components from the brand corporation.

• Stage 3: Assembly of CKD vehicles but with increasing local content.

• Stage 4: Full-scale manufacture of automobiles, at first for a protected domestic

market, secondly for the export market and thirdly for transplants in these export

markets, meaning that the sequence is repeated by Southern auto transnational

corporations.

The evolution of the Malaysian auto industry did in fact follow this

sequence, which again related to the industrialization policies of import

substitution regarding transport vehicles from the 1960s and heavy and chemical

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industrialization from the1980s.

The Malaysian automobile industry

Induced by Malaysian import substitution incentives major Western and

Japanese automobile transnational corporations (TNCs) relocated auto assembly

production to Malaysia from 1967 to 1977. At first the TNC auto manufacturers

relied on TNC trading and/or assembling companies which were well established

in the regional car market (e.g. Singapore Chinese controlled Cycle & Carriage,

UK agency house Borneo Motors/Inchcape, Australian trading company Wearne

Brothers). This implied that domestic companies obtained licenses to sell and/or

assemble TNC makes and models, and local sales companies and assemblers

formed capital alliances in order to do so (e.g. Champion Motors/Assembly

Services, Associated Motor Industries, Cycle & Carriage Bintang, Tan Chong

Motor Assemblers) (Torii 1991). A few European TNC auto manufacturers

(Peugeot, Volvo) set up joined ventures with capital invested by their parent

company. Capital Motor (later Oriental Assemblers), in possession of the licenses

from Honda and Opel, was the only case where a domestic assembly company was

set up without capital affiliation to car traders or TNC auto manufacturers, and

General Motors took over the company as a fully owned subsidiary for the period

1971 to 1980.

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In the 1970s Japanese cars ousted Western cars in the Malaysian market,

and the Malaysian car assembly companies began a restructuring process, which

continued into the 1980s. Being an industry controlled by Western manufacturing

and trading companies at the outset, the Japanese auto manufacturers had captured

the market in alliance with domestic owned ethnic Chinese companies in the early

1980s.

Nissan initiated this transformation as early as the mid-1970s, when it

transferred the license from Swedish Motor Assemblies (Volvo) to Tan Chong

Motor Holdings, controlled by the ethnic Chinese Tan family; Tan Chong provided

Nissan with a minority share, and later on Tan Chong restructured the Tan Chong

Motor Assemblies to include Bumi equity participation. General Motors sold its

subsidiary assembler to Oriental Holdings, which formed an alliance with Honda

to assemble Honda, General Motors and Isuzu vehicles. Lacking Bumi capital

Inchcape Holdings lost the Toyota franchise to ethnic Chinese controlled UMW in

1981, which again formed an alliance with Toyota as a minority shareholder. In

1984 Wearne Brothers sold AMI and the franchise of Ford to Ford Motor

Company (Malaysia)(renamed AMIM), a joint venture of a Bumi majority owned

company (Pernas Sime Darby, PSD) and Ford Motor Company (USA). PSD took

control when Ford (USA) sold 29% of Ford Motor Company Malaysia to PSD

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in1986. In 1987, Pernas-Sime Darby restructured their auto companies into

Tractors, owning AMIM with Ford as minority shareholder (30%).

In the early 1980s, a hybrid of Japanese TNCs and ethnic Chinese family

businesses evolved in the Malaysian corporate auto sector, controlling assembling,

spare parts production, marketing and distribution, but it was a sub-system of the

TNCs global reach.

Thereby the Malaysian auto industry was subordinated the global and

regional strategies of the auto TNCs and especially the largest Japanese auto

TNCs(Toyota, Nissan and Honda). This situation was to be changed by the

Malaysian government under Prime Minister Mahathir Mohamad, embarking on a

heavy industrialization strategy in the early 1980s and spearheaded by the state-

owned holding company, HICOM. The state-led Malaysian car project, Proton, a

joint venture between HICOM and Japanese Mitsubishi, succeeded in becoming

the dominant market player in 1987 in the wake of the economic crisis 1985-86,

the collapse of the car market, and the return to operational managerial control by

the Japanese (Wad 1999). Tariffs and taxation provided Proton with a subsidized

monopoly position in the domestic market.

The 1987-95 period signaled a transition period, based on an alliance

between the Malaysian state and selected foreign TNCs (Mitsubishi, Toyota and

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Citroen). The ethnic Chinese UMW-Toyota alliance changed to a Bumi PNB-

Toyota alliance, when the Bumi-controlled trust fund, PNB, bought out UMW,

which had financial troubles due to the economic crisis. In 1992 the UMW formed

a joint venture (Perodua) with other companies and notably the Japanese

technology supplier, the Daihatsu Motor Company (affiliated to Toyota), which

thereby became the second Malaysian car project, manufacturing the Kancil.

Meanwhile, Proton upgraded from the assembling of imported key components

and parts to increased local manufacturing of components, introduced mechanical

assembling lines and team work and aimed for just-in-time delivery from a

network of local subcontractors comprising a rising share of Bumi small and

medium sized companies. However, the more advanced technology and

organizational design did not operate smoothly, the production system was not

based on team production, and the production technology did not in practice

include design and development of critical systems, meaning that Proton remained

as a hybrid combining its own brand with original equipment manufactured by the

application of Mitsubishi technology and design (Far Eastern Economic Review

1996.05.02, Rasiah 1996). Both national car producers were companies within

state-controlled diversified business groups, controlling car manufacturing

vertically and horizontally, relating to other sectors: Proton via HICOM to steel,

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cement etc; Perodua via UMW to agricultural and construction machinery,

property, trade and financing.

History of Proton:

Malaysia’s national car project was carried out as an industrial policy. In

1981, the Malaysian government proposed a joint venture with Mitsubishi, a

Japanese automaker, to build a Malaysian car. The cabinet approved the National

Car Project in 1982, and Heavy Industries Corporation of Malaysia (HICOM)

signed an agreement with Mitsubishi. Proton, a national car company, was

established on May 7, 1983. Its factory was established in the HICOM compound.

Its first car, named Proton Saga, was launched in 1985, and in 1986 began to be

exported to Bangladesh. Production reached 50,000 cars in 1987 and 500,000 cars

in 1993, and in 1996 the Proton was being exported to 31 countries. The national

car project is a so-called industrial policy, or selective government intervention

policy to nurture national firms. The policy succeeded in allowing Proton to export

its products. However, Proton cancelled its agreement with Mitsubishi in 2002.

Proton’s share of sales in the Malaysian market reached about 90% at the highest

but fell to 24% in2005.

In 2006, Proton reduced its car prices in Malaysia along with several other

car manufacturers as part of a move by the government to lower car prices. Thus,

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in2007, Proton found itself facing the difficulty of management without an alliance

with a foreign firm.

In 1996, Proton City was established as a base for agglomeration by its

related suppliers. The Malaysian government established barriers to investments by

foreign firms in order to protect national cars, including Proton. The policy may

have had some negative effects on the attraction of foreign investors into

Malaysia or on promoting the agglomeration of foreign firms.

History of Perodua:

Perodua, a national project, means “second national car” in Malay

language. Japanese firms also contributed to the capitalization of Perodua in the

following ratios.

The Malaysian government and Japanese firms invested 73% and 27%,

respectively, of the total capital, when POBS of Perodua was establishment in

November 2001. The POBS invested 100% of the capital in both PSSB (Perodua’s

marketing company) and its vehicle manufacturing company. The capital structure

changed in December2001, with the Japanese firm acquiring 51% of capital in the

vehicle manufacturing company. The shares of the Malaysian government and the

Japanese in POBS remained at 73% and 27%, but POBS and the Japanese

company now owned49% and 51% of the capital of PCSB, respectively. POBS

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still owned 100% of the capital of PSSB, the marketing company. POBS and

PCSB owned 49% and 51% of the capital of the vehicle manufacturing company.

In summary, the Japanese company owned 47.04% of the total capital of the

marketing company and the vehicle manufacturing company, but 51% of the total

capital of Perodua.

The production processes consist of mainly pressing, painting and

assembling.. Production of Perodua cars grew steadily to 102 thousand in 2004,

recorded 116 thousand in 2005 and was expected to be 134 thousand in 2006. The

production of Protons was 141 thousand in 2004 and 139 thousand in 2005, but fell

to 102 thousand in 2006. The market share of Perodua grew from 25% in 2004 to

30% in 2006, while that of Proton, which was more than 80% at one point,

gradually reduced to about20% in 2006.

The local contents ratio of Kancil and Myvi, both produced by Perodua is

about 80%, while that of Perodua’s Rusa and Kembara models are about 50%.

There are 145 domestic suppliers. There are 59 local suppliers, with a share of

40%. The 19 Japanese suppliers have a share of 13.1%.

1-12.Scope and Limitations of the study

The focus of this study is the relationship between employee

satisfactions with leadership style in the Gole gohar iron mines complex.

Specifically this study researched the relationship between these variables:

22

leadership styles (Transformational, Transactional, and laissez-faire) and

employee’s satisfaction.

The scope of this study show how leadership style influenced employee

satisfaction in a specific industry. This study could be expanded to a variety of

industries.

Limitations of this study are:

1. It is conducted in Gole gohar irom mines complex only, and only the top and

middle managers of these mines complex participated in this study.

2. The directors’ leadership style is measured indirectly by their employees'

perceptions.

3. The operation management’s response to the research instruments will used to

assess job satisfaction and perceived managers' leadership behavior.

4. Only the production sector of this mines complex will be chosen for the test. The

service sections of companies such as finance, commercial, administration are not

included in this research.

5. The extent of agent job satisfaction will be measured as personal perceptions.

Accuracy of perceptions is a limited factor (Kerlinger, 1986; Krug, 1989).

6. Responses to the questionnaires may be influenced by the individual’s mood and

by the environmental conditions in the setting at the time the questionnaires are

completed.

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7. Responses to the questionnaires may be influenced by the individual’s

theoretical knowledge base about job satisfaction and leadership styles.

Definition of terms

For the purpose of this study the terms are defined as follows:

Leadership :

Leadership prevalently exists within people and organizations. Simply

speaking, leadership has the capability to affect others (Bethel, 1990). Bohn and

Graffith (2002) presume that leadership means the way to create a clear vision,

filling their subordinates with self-confidence, created through coordination and

communication to detail.

Leadership has been defined in a number of ways, such as the ability to

guide followers toward shared goals (Bryman, 1992), as a form of influence

(Hersey, 1984), and as simply something a leader does (Fleishman, 1973). Specific

to the current study, Pfeffer and Salancik (1975) indicated that leaders exhibit task-

and relational-oriented behaviors. Additionally, Castaneda and Nahavandi (1991)

indicated that employees are most satisfied when they perceive their supervisors as

exhibiting both relational-and task-oriented behaviors.

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Leadership style is a two factor construct composed of consideration and

structure. An individual's leadership style is the mix of consideration and structure

that is exhibited in the leader/manager role (Fleishman, 1969).

Heilbrun (1994) divides the leadership theories into three stages for

discussion. The first stage is to define leaders (The theory of leader features). The

second stage is to research leader behaviors (The theory of leader behaviors). The

third stage is to focus on the interaction with personnel, and concerns eventual and

material matters between leaders and subordinates (The theory of contingency

leadership).

In the latest publicized leadership theories, we can divide them into

transactional leadership and transformational leadership (Burns, 1978; Bass, 1997).

Pounder (2001) and Kim and Shim (2003) suppose the transactional leadership is

oriented by demands, with focal emphasis on basic and external satisfaction

against demands. It is featured with a reasonable standard process for controlling,

and it means a process of benefit exchange with the purpose to keep organizational

stability.

Robbins (2003) contends that transactional leadership creates the goal

orientations through role clarification and task request, and it can also lead and

encourage subordinates through these activities. Namely, leaders will affirm and

reward subordinates’ effort, and satisfy their relevant demands to reach esteem and

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support from these activities. Whenever subordinates commit any improper

behavior, immediate corrective punishment should be given promptly (Bass,

1997).

The transformational leadership means the way to improve the higher level

for task request of employee so that it is available to inspire the potential capability

of employee and it shall allow subordinates with larger responsibility to become an

employee with self orientation and self enhancement capability. Thus, inspired

employees can reach organizational goals and personal materialization

achievement(Burns, 1978; Fry, 2003).

Transformational Leadership:

The theory and studies of transformational leadership were started

initially by Burns(1978). Burns’ idea was based on the premise that transforming

leadership raises both leaders’ and subordinates’ level of motivation and morale.

When transformational leadership causes more active behavior of every

participants due to inner motivation,

A person with this leadership style is a true leader who inspires his or her

team constantly with a shared vision of the future. Transformational leaders are

highly visible, and spend a lot of time communicating. They don’t necessarily lead

from the front, as they tend to delegate responsibility amongst their team. While

26

their enthusiasm is often infectious, they generally need to be supported by “details

people”.

 

In many organizations, both transactional and transformational

leadership are needed. The transactional leaders (or managers) ensure that routine

work is done reliably, while the transformational leaders look after initiatives that

add value.

Transactional Leadership:

This style of leadership starts with the idea that team members agree to

obey their leader totally when they take on a job: the “transaction” is (usually) that

the organization pays the team members in return for their effort and compliance.

You have a right to “punish” the team members if their work doesn’t meet the

predetermined standard.

Team members can do little to improve their job satisfaction under

transactional leadership. The leader could give team members some control of their

income/reward by using incentives that encourage even higher standards or greater

productivity. Alternatively a transactional leader could practice “management by

exception”, whereby, rather than rewarding better work, he or she would take

corrective action if the required standards were not met.

Transactional leadership is really just a way of managing rather a true

leadership style as the focus is on short-term tasks. It has serious limitations for

knowledge-based or creative work, but remains a common style in many

organizations.

27

The transactional leaders try to motivate subordinates by rewarding or

punishing them(Burns, 1978).

Laissez-Faire:

This French phrase means “leave it be” and is used to describe a leader

who leaves his or her colleagues to get on with their work. It can be effective if the

leader monitors what is being achieved and communicates this back to his or her

team regularly. Most often, laissez-faire leadership works for teams in which the

individuals are very experienced and skilled self-starters. Unfortunately, it can also

refer to situations where managers are not exerting sufficient control.

The laissez-faire style is to minimize the leader's involvement in

decision-making, and hence allowing people to make their own decisions,

although they may still be responsible for the outcome.

Laissez-faire works best when people are capable and motivated in

making their own decisions, and where there is no requirement for a central

coordination, for example in sharing resources across a range of different people

and groups.

The laissez-faire leadership style is also known as the “hands-off¨ style. It

is one in which the manager provides little or no direction and gives employees as

much freedom as possible. All authority or power is given to the employees and

they must determine goals, make decisions, and resolve problems on their own.

This is an effective style to use when:

--Employees are highly skilled, experienced, and educated.

--Employees have pride in their work and the drive to do it successfully on their

own.

28

--Outside experts, such as staff specialists or consultants are being used

--Employees are trustworthy and experienced.

This style should not be used when:

--It makes employees feel insecure at the unavailability of a manager.

--The manager cannot provide regular feedback to let employees know how well

they are doing.

--Managers are unable to thank employees for their good work.

--The manager doesn’t understand his or her responsibilities and is hoping the

employees can cover for him or her.

Job Satisfaction:

Early work by Taylor (1911) suggested that worker satisfaction may be

attributed to the highest possible earnings with the least amount of fatigue, whereas

Locke (1976) defined job satisfaction from an employee's standpoint as a

pleasurable or positive emotional state from the appraisal of one's job or

experiences. Taylor's classical theory prompted a number of studies that revealed

differing factors behind job satisfaction.

The most common factors leading to worker stress and dissatisfaction are

those emanating from the nature of the job itself, within which interpersonal

relationships between employees and supervisors take place (Barnett & Brennan,

1989; Rodwell, Kienzle, & Shadur, 1998). According to Korte and Wynne (1996),

29

a deterioration of relationships in organizational settings resulting from reduced

interpersonal communication between workers and supervisors negatively

influences job satisfaction and sometimes leads to employees leaving their jobs.

Overview of the Study

Chapter one provides the context of this study and includes a

statement of the problem, objective of the study, area of the

study, assumptions, scope of study, significance of the study,

research questions, definition of terms. Chapter two will be

include a review of pertinent literature to explore prior studies in

leadership and leadership styles, job satisfaction .Chapter three

will be provide a description of the following: the methodology

that will be used in this study and the hypotheses being

postulated, as well as the research will design, participants,

sampling, instrument, data collection procedure, reliability and

validity, and data analysis. Chapter four will provide the results of

the data analysis, and includes the following: response rate and

data cleaning, tests of validity and reliability, descriptive analysis,

and inferential analysis. Chapter five is comprised of the

conclusions, future research needs, and recommendations to the

leaders of Malaysian companies operating in automobile industry.

2. Literature review

2.1. Introduction and Theoretical Framework

30

The history of leadership studies has produced many diverse ways of

conceptualizing and measuring it. The great-man theories, although not scholarly

in nature, served as the backdrop for the leadership research that followed, which

were the trait theories. Trait theories helped to move the examination of leadership

to another level by attempting to identify desired traits of great leaders. While this

effort did not lead to an in-depth understanding of leadership; it did, however,

suggest that intrinsic qualities of leaders were critical to understanding leadership.

As a result, scholars began examining various aspects of leadership and developing

theories in order to create a frame of reference for understanding and discussing it.

Theories and models which began to emerge at this time can be put into several

categories. Behavioral leadership theories rooted in cognitive psychology emerged

from Ohio State and Michigan research groups who developed instruments for

measuring leadership characteristics. Participatory leadership theory later emerged

and introduced a democratic style of leadership, which was different than the

popular autocratic leadership thought to be superior at the time. Contingency

theory, which believed that fixed personality traits determined leadership abilities,

was the first to consider how environmental factors affected leadership outcomes.

Situational leadership theory, which believed that personality traits were not fixed,

examined the leadership within the context of certain situations to determine

leadership styles. Transactional leadership theory such as the leader-member

exchange theory examined the special relationships formed between leaders and

followers within the context of job expectations and performance. In contrast,

transformational leadership theory proposed that although personality types may

vary among leaders, certain identified qualities, which can be learned, define a

transformational leader which may result in successful leadership. In order to

better understand the current study examining leadership style and its relationship

to subordinate employee job satisfaction; it is necessary to first understand the

31

nature of leadership from a historical perspective within the scholarly literature.

Therefore, the above mentioned leadership theories were examined in more detail

in this section. This also provided a positional perspective of this study within the

literature and its contribution to the current body of knowledge. In addition, the

topic of job satisfaction was explored, as well.

2-2. Leadership :

Scholars and researchers have been interested in leadership for thousands

of years(Cantu, 1997). Leadership has been widely discussed, written about, and

practiced for thousands of years and still remains an active area of inquiry

(Goleman, Boyatzis & McKee, 2002; Kouzes & Posner 2002, Yukl 2002; Kotter,

1990; Bass, 1997; Bass, 1990; Bennis, 1989).

“Leadership is one of the most observed and least understood phenomena

on earth” (Burns, 1978, p. 2). Leadership is identified by researchers in the manner

that fits their perspectives of leadership and contains the factors of interest to the

researcher(Yukl, 2002).

Beginning with the leadership studies of Lewin and Lippitt in 1939, there

have been numerous studies of leadership and numerous leadership theories

developed.

Major theories posited include Trait Theory, Situational Theory,

Contingency Theory, Power and Influence Theory and Transactional and

Transformational leadership.

An approach to leadership developed in the early 1900’s is Trait Theory

(Bass, 1990; Yukl, 2002).

A dynamic relationship based on mutual influence and common purpose

between leaders and collaborators in which both are moved to higher levels or

32

motivation and moral development as they affect real, intended change

(Nahavandi, 2003).

Leadership is defined as: influencing the activities of followers through

the communication process toward an attainment of some goal or goals

(Fleishman, 1973). This or other similar definitions of leadership are founded on

the concept of influence, where influence itself concerns the aspect of power. To

influence is to cause some behavior in another person. Power is the ability to

influence in such a way as to cause a particular behavior (Tansik, Chase, &

Aquilano, 1980).

The second element is the importance of the communication process.

The clarity and accuracy of communication affect the behavior of the

subordinates. The last element of the definition focuses on the accomplishment of

goals. The effective leader may have to deal with individual, group, and

organizational goals. Leader effectiveness is typically considered in terms of

degree of accomplishment of one or a combination of these goals.

A leader is someone who exercises influence over other people. Leaders

in organizations may carry out functions such as: establishing basic values,

clarifying and solving problems for others, administering rewards and punishment;

providing information, advice and expertise; and providing social and emotional

support (Huczynski & Buchanan, 1991). Hersey and Blanchard (1977) define the

leadership process as a function of the leader. The follower and other situational

variables.

2-3. Job satisfaction

33

Hoppock (1935) indicates that job satisfaction means the mental,

physical and environmental satisfaction of employee and the extent of job

satisfaction can be known by inquiring employees about the job satisfaction

extents. The academic definitions of job satisfaction can be divided into three

types. Namely:

(1) Integral definition: This definition emphasizes workers’ job attitude toward

environment with focal attention on the mental change for individual job

satisfaction of employee (Locke, 1976; Fogarty, 1994).

(2) Differential definition: It emphasizes job satisfaction and the difference

between the actually deserved reward and the expected reward from employees;

the larger difference means the lower satisfaction (Smith ,1969; Hodson, 1991).

(3) Reference structure theory: It emphasizes the fact that the objective

characteristics of organizations or jobs are the important factors to influence

employees’ working attitude and behaviors but the subjective sensibility and

explanation of working employees about these objective characteristics; the

said sensibility and explanation are also affected by self reference structures of

individual employee (Morse, 1953; Homans, 1961).

Skaret and Bruning (1988) did research on attitude concerning the work

group and task structure in conjunction with the relationships between leader

behavior dimensions and job satisfaction facets. Results indicated that attitude

34

about the work group was an important added moderator of leader behavior.

Another study examined the effects of group cohesion and leader behavior on

subordinate satisfaction in a military organization (Dobbins & Zaccaro, 1986). A

total of 203 cadets completed measures of group.

Cohesiveness, leader initiating structure, leader consideration and

several satisfaction scales. Analyses indicated that (1) subordinates were more

satisfied with leaders who exhibited high levels of initiating structure and

consideration; (2) subordinates in high-cohesiveness groups were more satisfied

than subordinates.

Job satisfaction has been a source of interest and concern for decades

(Altman, 2002; Roberts, 2001, Tobias, 1999; Evans, 1999, Spector, 1997,

Hardman, 1996; McKee, 1991 & Profitt, 1990). Job satisfaction is the emotional

satisfaction resulting from one’s job experience (Locke, 1976). Job satisfaction

literature reveals connections between job satisfaction and various other

influencing factors(Hardman, 1996). Job satisfaction is generally viewed as the

attitude of the worker toward the job (Roberts, 2001, Tobias, 1999; Evans, 1999,

Spector, 1997, Hardman, 1996; Lawler, 1994; McKee, 1991; & Profitt, 1990).

Job satisfaction results when there is a correspondence between the

reinforce system of the work environment and the individual's needs, provided that

the individual's abilities correspond with the abilities requirement of the work

situation. The evaluation is subjective as people have varying needs and

expectations regarding the work situation (Cronin-Stubbs, 1984; Longest, 1974).

3. Methodology

35

This section describes the procedures that will be used in conducting the

study. The procedures are described in the following manner: (a) research design,

(b) population, (c) instrumentation, (d) data collection, and (e) data analysis.

This study will examine the relationship between the leader behaviors as

perceived by employees and job satisfaction reported by these employees. A

correlation design is used.

3-1.Research Design:

A survey is an appropriate method of collecting data for descriptive or

exploratory studies (Pettit, 1993). It can be used in studies in which individuals are

the unit of analysis, and it is also considered best suited for measuring attitudes and

obtaining personal and social facts, as well as beliefs (Rossie & Freeman, 1993,

Babbie, 1989, Kerlinger, 1986).

This type of study, which yields a “snap-shot” of data from a population at

a specific point in time, was used in an attempt to validate a set of predictor

variables and offer clues towards inferences regarding presumed causal outcomes

of the leadership construct.

Thompson, McNamara and Hoyle (1997) identified three groups of

theoretical frameworks of job satisfaction. These three groups include content

theories, process or discrepancy theories and situational theories.

This study selected the situational model of job satisfaction. Situational models of

job satisfaction effort to explain how categories of variables such as task

characteristics, organizational characteristics and individual characteristics connect

to relate to job satisfaction (Hoy and Miskel, 1991). It posits that an individual's

job satisfaction is related to the combination of three categories of variables or

characteristics found in an individual's work context. The first category of

36

variables constitutes the "characteristics of the job task" and includes autonomy,

salary and benefits; level of challenge; variety of challenge;. The second category

of variables describes the "characteristics of the organization" and includes

leadership, supervision, feedback, organizational culture and type of organization.

The final category of variables describes the "characteristics of the employee" and

includes level of education, gender, age, motivation.

3-2.Population:

The subjects for this research are middle - level supervisors in gole gohar

iron complex. These elocutions are chosen because they have many employees and

they will be interested in participation in this research. They will be identified on

the basis of these characteristics: they are full time employees who had worked at

least three months with their current managers; they are middle-level supervisors

who reported to upper management in each of the mines. Most are educated and

have at least a secondary school; in addition, they are able to participate in the

study without interrupting production within the mines. Each of mines are local

and those are under the direction of government.

3-3.Instrumentations and data collection:

The following instruments will be used for data collection:

-Documentation: This involved collecting information and data from existing

reports and documents on Gole gohar iron mines complex.

-Structured Questionnaires: This will used so as to generate information and data,

which subsequently will use for both qualitative and quantitative analysis.

Two questionnaires will be used for data collection and will send out in two

packages (questionnaire and cover letter).

37

The cover letter briefly explained the purpose of the study and the

mechanisms to maintain confidentiality. A demographic questionnaire is intended

to furnish the researcher with the respondents’ biographical, educational

information and working experience in the Gole gohar Iron mines complex.

Two major survey instruments are used for this study. The Leader Behavior

Description Questionnaire Form XII (LBDQ- Form XII) is used to measure

leadership style. The LBDQ originally was developed by the Ohio State University

study. It asks for descriptions of a supervisor by the person he/she supervises. It

describes the leadership style of the managers in the organization.

LBDQ-Xll consists of two forms: (1) LBDQ Self with which leaders

evaluate their own behavior, and (2) LBDQ Subordinate with which subordinates

evaluate their supervisors. For this research the LBDQ Subordinate is used to

evaluate supervisors’ consideration behavior.

The second instrument which is used for this study is the Job Descriptive

Index (JDI). This index originated in the Cornell studies of job satisfaction. The

normative data, the relatively low required reading level, and the fact that it

assesses satisfaction with 5 basic aspects of a person’s job (work, promotion, pay,

supervision, and co-workers). In addition, it contains a global rating of job

satisfaction called satisfaction with the job in general (JIG). The JDI was first

published by Smith Kendall and Hulin (1969) and has consistently demonstrated a

high reliability and validity.

3-4.Research variables:

This study tested hypotheses concerning the relationship between job

satisfaction and leadership style in the Gole gohar iron mines compl. An

independent variable is “any variable, regardless of type, that is assumed to

38

produce an effect

on, or be related to, a behavior of interest” (Linton & Gallo, 1975, p. 8). As a

result, the independent variables included three leadership styles:

transformational, transactional, and laissez faire leadership. The dependent

variables are employee satisfaction with (1) job in general, (2) present pay, (3)

opportunities for promotion, and (4) supervision.

Data will collected from the supervisors of the production sector of Gole

gohar iron mines complex.

Each mines has a productive sector that is directly involved in the

production and assembling of a car, and a service sector which gives services such

as commercial, finance, sales, and marketing. The upper level managers who report

to Ministry of Trade and Industry (MTI) are responsible for managing divisions

within the factory, e.g., paint shop, the assembling line, upholstery, etc. The

supervisors who reported directly to upper level managers are the respondents who

assessed their managers’ leadership style and describe their leader.

In this study, the different facets of employees’ job will describe

characteristics of the job task, manager’s leadership style will describe

characteristics of the organization, perception of the job and demographic variables

will describe characteristics of the employee.

39

The theoretical model used in this research is presented in Figure below.

40

INDEPENDENT VARIABLES DEPENDENT VARIABLE

Leadership styles:

Transformational style

Transactional style

Laissez-Faire style

Demographic Variables:

Age

Marital Status Job satisfaction

Salary

Length of Employment

Intention to quit employees

Perception of Job satisfaction.

3-5.Data analysis:

The overall data analysis strategy for this research includes multiple

regression technique. First the means, standard deviations are calculated from the

scores on the LBDQ- XII and JDI for the total of the mines.

The prediction of mines dependent variable (satisfaction with job in general, with

present pay, with opportunities for promotions, and with supervision) from the

combination of the independent variables will be determined using step wise

multiple regression. Four separate regression analysis are performed for each

41

company together.

. Correlation matrices are calculated to evaluate the simple correlation of each

independent variable to each dependent variable separate from the use of

independent variable into the multiple regression analysis.

42

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