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Chapter One

INTRODUCTION

1.1 Background to the Study

The term “transformational” refers to the fact that this type of leader essentially motivates subordinates by exchanging rewards for performance (Odumeru & Ogbonna, 2013). Transformational leadership emphasizes results, stays within the existing structure of an organization and measures success according to that organizations system of rewards and penalties (Bass, 2008). Transactional leaders hold the formal authority and positions of responsibility in an organization.

It is responsible for maintaining routine by rna1aging individual performance and facilitating group performance. Transformational, or managerial, leaders set the standards for workers and do performance reviews .are the most common way to judge employee performance (Aamodt, 2016), transactional leadership styles are more concerned with maintaining the normal flow of operations (Bass, 1985).

Transformational leaders use disciplinary power and an array of incentives to motivate employees to perform at their best. This style of leadership focuses on supervision, organization and performance (Hackman & Michael, 2009).

Organizational effectiveness was succinctly defined by paft (1983) as “the degree to which an organization realized its goals”. However, Mondy (l990), defined it aptly as “the degree to which an organization produce the intended output”. As Daft rightly argued.

Organizations pursue multiple goals, and such goals must be achieved in the face of competition, limited resources and disagreement among interest groups. Oguntimehin (2001) submitted that organizational effectiveness is the ability to produce desired results.

Effectiveness has been one of the most extremely researched issues since the early development of organizational theory (Rojs, 2000). Despite some consensus, there is still significant lack of agreement on the definition and operationalization of the concept (Cameron, 1986). It is evident that both transactional leadership and organizational effectiveness have possible correlation in terms of the motivational and both passive and active aspect of the management. Because when employee’s behaviours which is the aforementioned unit of analysis or variables are attended definitely there will be organizational effectiveness through efficiency and productivity on the part of the employees and eventually profitability at the organizational bound. The feasible. departure between these two variables could be centred on influences from external work environment which would impede policies on transformational leadership and extensively the effectiveness of the employees and the organization itself. What are the specific factors that really influenced the relationship and ‘discrepancies of transformational leadership and employee performance particularly in the financial sector? The answers to this question will definitely facilitate this study to generate the potential findings, conclusion and recommendations for the development of Rivers State and Nigeria economy in general.

1.2 Statement of the Problem

Management of organizations like those in the financial sector is invariably diligent in order to foster good leadership style for the achievement of the set objectives and goals. The financial sector is adequately a result-oriented sector because they indulge in the services for the consumption of the economic units and the growth and development of the economy itself. Based on the economic challenges in our society, employees are invariably, yearning for improvement in their reward system that the rational why often time there is invariably issues of industrial actions in some of the financial sectors. Some of them are also, placed on casual appointment which is not motivating. These are factors that impact negatively on the behaviour of an employment in the discharge of his or her duty. Preventing this occurrences, requires management to be effective in their transformational leadership styles whereby all the dimensions such as; contingent rewards, passive management by exception and achieve organizational effectiveness. Transformational leadership takes care of the, internal work environment alone due to the contractual relationship between the management and the employees.

Contemporary organizations, particularly, in the financial sector adopts diverse strategic plans to prevent threats at the external environment, because the rate of rival competitiveness is very high now, than before. Therefore, it is evident that most of the factors impeding the effectiveness of employees are external and not internal factors and of course management depending on transformational leadership alone in the financial sector invariably finds it difficult to achieve optimal productivity, profitability and efficiency. Because the standard of services is dynamic due, to innovation and technology which requires consistent training of the employees and in a context where the resources for training is limited, the employees will be somewhat in efficient and not productive which will in turn increase the rate of passive and active management by exception. Of course, this will pave way for management to deviate from their core course of strategic planning whereby plunging the financial company into lack of organization effectiveness. In this context there will be no effective time management which is an important component of all financial companies. However, the probability of achieving employee performance and subsequent profitability will be low.

Employee Performance

Transformational Leadership Style

1.3 Conceptual Framework

Fig 1.1: A conceptual framework of the study

Source: Ohunakin, F. & Adeniyi, A.A. (2016) Transformational Leadership Styles and Employee Job Satisfaction. Ota, Nigeria. Covenant University. Carto & Carto (2008). Modern Management. Texas, USA.

1.4 Objectives of the study

Predominantly, the objective of this study is to ascertain the relationship between transformational leadership Style and employee performance in the financial sector in Rivers State.

The specific objectives are;

To ascertain the relationship between contingent rewards and employee performance in First Bank Plc, Rivers State.
To ascertain the relationship between passive management by exception and employee performance in First Bank Plc, Rivers State.
To ascertain the relationship between active management by exception and employee performance in First Bank Plc, Rivers State.

1.5 Research Questions

The requisite questions of this study are:

What is the relationship between contingent rewards and employee performance in First Bank Plc, Rivers State.?
What is the relationship between passive management by exception and employee performance in First Bank Plc, Rivers State.?
What is the relationship between active management by exception and employee performance in First Bank Plc, Rivers State.?

1.6 Research Hypotheses

The requisite hypotheses of this study are:

Ho₁: There is no significant relationship between contingent rewards and employee performance in First Bank Plc, Rivers State..

Ho₂: There is no significant relationship between passive management by exception and employee performance in First Bank Plc, Rivers State..

Ho₃: There is no significant relationship between active management by exception and employee performance in First Bank Plc, Rivers State..

1.7 Significance of the Study

This study will be of great benefit to the financial sector in Rivers State and equally foster economic rebounds in Rivers State. Because in a context where the study will unveil strategies of engendering transformational leadership which has to do with contingent rewards, passive management exception and active management by exception definitely the possibility of achieving employee performance would be easily and of course when organizations are effective employees will be very productive and efficient and profitability will be achieved and sustained. The contemporary economic context of Rivers State really need a study of this nature that will generate findings that will enhance consolidated economic policies between the government and the financial sector and extensively a synergy that will foster strategic transformational leadership in the organizations. When the external work environment is conducive for operation definitely, the transformational leadership in the internal work environment will be smooth. Undoubtedly, this study will enhance good and cordial relationship between management and employees.

This study would be useful to student in the tertiary institutions, private and public organizations, policy makers, research institutions and other relevant agencies.

1.8 Scope of the Study

The scope is aggregately on transformational leadership style and employee performance in the sector in Rivers State.

Based on the availability of existence of several financial companies in Rivers State, the researcher confined the study on First Bank Plc. The scope is further splited into three dimensions which entails:

The content scope, geographical scope and unit of analysis.

Content Scope: In this fact the study emphasized on the proof and models that guaranteed the relationship between the two (2) variables that is; transformational leadership and employee performance. Also, all the abstract elements and the empirical elements that determined the relationship will equally be elucidated properly.

Geographical Scope: In this facet, the study bounds is tightly restricted to First Bank Plc which is located on the Rumuola Road. The environment is part of the Obio/Akpor Local Government Area in Port Harcourt, Rivers State. The office area is somewhat large and adequately conducive for banking operations.

Unit of Analysis: The unit of analysis will be centered on the respondents view to the assessment and evaluation of the respective questions in the research instrument containing the dimensions of the variable. The outcome of their views will further undergo rigorous analysis in commensurate with the conceptual perspective in order to stimulate a classical findings for the study.

1.9 Limitations of the Study

Financial Limitation

The researcher is expected to submit his or her work to the supervisor periodically for rigorous assessment, remarks and approval. In course of doing this, certain costs will be incurred for him or her to generate the content of the work in order to meet the requisite standard for approval. The costs incurred invariably generates financial constraint to the researcher.

Time Limitation

A study of variables invariably requires ample time for the researcher to acquire the requisite data and findings. But often times researchers were given limited time which of course impedes the realization of the Findings. Because in a context where a submitted work to some supervisors will consume more time than expected before the work is being released to the researcher is really shortening the time range.

Data Limitation

A study of variables invariably consumes data in order to achieve the objectives of the study. But it is evident that the sources of these data is invariably limited in supply whereby subjecting the researcher to make findings that are not comprehensive and consolidated. This is the rationale why there are invariably divergent views about variables of study. Because the limit in which researchers access data is variant. And the variant nature of the sources of data invariably posses challenges to researchers.

Environmental Limitation

In the course of making a study, the researcher is expected to be mobile in order to acquire the data, type set the processed data, and make presentation in the school. These involvements stimulate physical touch, safety and security of the environment. Some of the areas where the researcher carryout these responsibilities have prevalent insecurity context. Also, the COVID-19 PANDEMIC is posing threats to the researcher in terms of physical touch. These and other environmental factors threatened the safety of the researcher.

1.10 Operational Definition of Terms

Effectiveness: This is the degree to which managers attain organizational objectives; doing the right things.

Transformational Leadership: This is the part of one style of leadership that focuses on supervision, organization and performance. It is a leadership style in which leaders promot compliance by followers through both rewards and punishments It is an integral part of the Full Range Leadership Model.

Employee Performance: this refers to the ability of an employee to ensure that job assigned to him/her is done in congruent with the organization goals.

Contingent Reward: This is a motivation-based system that is used to reward those that meet their identified goals by providing positive reinforcement for a job well done.

Management by Exception (Passive): This is a style of management in which the manager intervenes and takes charge only if subordinates fail to meet work standards;

Management by Exception (Active): This is a situation where the leader is proactive in assisting with issues and actively participating and watching subordinates to prevent mistakes.

1.11 Organizational Profile of First Bank Plc.

First Bank of Nigeria Limited established in 1894, is the premier bank in West Africa, Nigeria’s number one-bank brand and the leading financial services solutions provider in Nigeria. The bank was founded by Sir, Alfred Jones, a shipping magnate from Livcrp6ol England with its head office originally in Liverpool, the bank commenced business on a modest scale in Lagos, Nigeria under the name, Bank of British West Africa which an employee (BBWA). 1912, the bank acquired its first competition, the bank of Nigeria (previously called Angle-African Bank) which was established in 1899 by the Royal Niger Company. (1957), the bank changed its name from Bank of British West Africa (BBWA) to bank of West Africa (BWA). In 1966, following its merger with standard Banks, UK, the bank adopted the name standard Bank of West Africa Limited and in 1969, it was incorporated locally as the Standard Bank of Nigeria Limited in line with the companies Decree of 1968.

Changes in the name of the bank also occurred in 1979 and 1991 to First bank of Nigeria Limited and First Bank of Nigeria Plc., respectively.

In 2012, the bank changed its name again to First Bank of Nigeria Limited as part of a restructuring resulting FI3N Holdings plc. (FBN Holdings), hating detached its commercial business from other business in the First Bank Group, in compliance with new ‘regulation by the Central Bank of Nigeria (CBN). First Bank had 1.5 Million shareholders globally, was quoted on the Nigerian Stock-Exchange (NSE), where it was one of the most capitalized companies and had an unlisted global depository Receipt (GDR) programme, all of which were transferred to its Holdings Company, FBN Holdings in December 2012.

As the global operating environment evolves, First Bank has kept pace, responding to the dynamic heeds of its customer, investors, regulators, host communities, employees and other stakeholders. Through a balanced approach to plan execution, First Bank has consolidated its industry leadership by maintaining trans-generational appeal.

Thus, the bank has continuously boosted its customer-base, which cuts across all segments in terms of size, structure and sectors.

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Full Project – Transformational leadership styles and employee performance in the financial sector

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