The relationship between perceived leadership styles and employee engagement: the moderating role of employee characteristics

Employee engagement has long been regarded as important to business performance. Numerous consultants and some academic researchers report a strong link between employee engagement and organizational performance, while other studies have suggested that up to 80 percent of workers are 'not engaged' or 'disengaged' at their workplace. Gallup estimated that disengaged workers cost US business $270-343 billion per year because of low productivity, making the topic of how to increase employee engagement of great interest to leaders and human resource practitioners. Yet, despite the practical importance of understanding employee engagement better, relatively little research has been conducted into this field by academic researchers. -- To gain insight into how to enhance employee engagement levels, this study investigated the relationship between employee engagement and four perceived leadership styles - classical, transactional, visionary (transformational or charismatic), and organic (distributed). Much of the literature emphasizes that follower characteristics also influence the leader-follower relationship and, in this thesis, the roles of three employee characteristics were examined: employees' need for achievement, equity sensitivity, and need for clarity. -- A sample of 439 sales assistants in Sydney, Australia, completed a questionnaire survey. Multiple item scales measured leadership styles, employee engagement, and the three moderator variables of employee characteristics. Structural Equation Modeling was used for factor, path, and multi-group analyses. -- Overall, the results suggest that employee engagement is associated with an employee's perception of leadership style in his/her direct supervisor - negatively when classical or transactional leadership styles are perceived, and positively in the case of visionary or organic leadership. Moreover, the three employee characteristics moderate the relationship between perceived leadership styles and employee engagement in different ways. Regarding need for achievement, the higher employees' score on this variable is, the weaker the negative association is between employee engagement and classical or transactional leadership, and the stronger the positive association is between perceived visionary or organic leadership styles and employee engagement. By contrast, the higher equity sensitivity is, the stronger is the negative association between perceived classical or transactional leadership styles and employee engagement, and the weaker is the positive association between visionary or organic leadership and employee engagement. Finally, the higher employees' need for clarity is, the weaker is the negative association found between perceptions of classical or transactional leadership and employee engagement, whereas where employees' need for clarity is high, the positive association between visionary or organic leadership styles and employee engagement is weakened. The above results show that, as defined, the moderating variable has a strong contingent effect on the original relationship between the independent and dependent variables. -- This thesis makes three main contributions to knowledge. The first is in introducing a new scale verifying that the behavioral-outcome factors in the employee engagement construct consist of say, stay, and strive. The second contribution is the finding that perceived leadership styles are associated in varying ways with employee engagement. The third contribution is to theory by providing empirical support for leadership and followership theories that emphasize the role of the follower; specifically, this thesis demonstrates that employee characteristics moderate the relationship between perceived leadership styles and employee engagement. -- The findings have three major practical applications. (1) During the recruitment process, organizations should aim to appoint employees who exhibit characteristics predicting potentially high employee engagement. (2) Direct supervisors should adopt leadership styles that drive engagement in their employees. (3) Employee characteristics should be considered when adopting leadership styles for enhancing employee engagement.