Journal of Applied Economics and Business Studies, Volume 1, Issue 1 (2017) 11-20 https://doi.org/10.34260/jaebs.112 9 Journal of Applied Economics and Business Studies (JAEBS) Journal homepage: https://jaebs.com ISSN (Print): 2523-2614 ISSN (Online): 2663-693X Effect of transformational leadership on employees’ job satisfaction in public sectors universities of Northern areas of Khyber Pakhtunkhwa Muhammad Khalil Ur Rehman1, Ghayyur Qadir2, Saqib Shahzad3*1 1 MS Scholar, Institute of Business Studies and Leadership, Abdul Wali Khan University, Mardan, Pakistan 2 Lecturer, Institute of Business Studies and Leadership, Abdul Wali Khan University, Mardan, Pakistan 3 Demonstrator, Institute of Business Studies and Leadership, Abdul Wali Khan University, Mardan, Pakistan ABSTRACT The aim of this study is to examine the impact of transformational leadership on employees’ job satisfaction. The study was conducted in the public sectors universities of northern areas of Khyber Pakhtunkhwa (KP), Pakistan. A sample size of 100 employees was selected using convenient sampling techniques. The data were collected from grade 16 and above employees’. A total of 130 questionnaires were distributed among these employees out of whom 100 filled questionnaires. Thus, the survey participation was 76.92%. These 100 properly filled questionnaires were used for data analysis. Data were analyzed through Descriptive statistics, correlation analysis, and regression analysis. The result of the study shows that there is a statistically significant positive relationship between the job satisfaction and the intellectual stimulation of the transformational leadership. Therefore, steps needs to be taken to convince and prepare leaders in universities that focuses on this aspect of the transformational leadership. A larger sample size with the inclusion of other universities is recommended to further validate or otherwise the results of this study. Keywords Transformational Leadership, Inspirational Motivation, Job Satisfaction. JEL Classification M12; M52 Copyright © 2017 SAEBR - All rights reserved 1. Introduction Organizations are a social system in which the most valuable assets for the efficiency and effectiveness are the availability of skilled human resources. Human resources play an important role in achieving organizational goals and objectives (Mosadragh, 2003). In the more competitive business climate due to globalization, organization are doing their try best to achieve competitive advantages regarding the competency of human resources. Selection of employees from different regions, cultures and backgrounds is a hard work 1*Correspondence Author: saqibshahzad@awkum.edu.pk Muhammad Khalil Ur Rehman, Ghayyur Qadir & Saqib Shahzad 10 and depends on the quality of the organization's leadership which they have (Albion & Gagliardi, 2007). The success of organizations depends upon the involvement, efforts and commitment of their labour or workforce. The major factors for organization's effectiveness are their manager’s leadership style. Organizations are usually more concerned about the development and further improvement of their leadership. Leadership is an activity which is mostly relevant with the people, it is the process of attracting people to achieve the goals of organizations (Skansi, 2000). The awareness that a leader encourages its subordinates to achieve and reach their potential. The transformational leadership also provide the resources which are required for devolvement and achieving the goals (Ansari & Arasto, 2008). In addition, transformational leadership is an advisor to his subordinates for training, mentoring, encouragement and individual development. The transformational leadership serves as role a model and provide and foster climate of good work for his subordinate employees (Hassan et. al, 2013). The transformational leadership has been divided into five categories which namely idealized influence (attributed), idealized influence (behaviour), inspirational motivation, individual consideration and intellectual stimulation (Bass & Avolio, 1998). The socialized personality of a leader and whether he or she is perceived as being confident and commitment of high order usually has an idealized influence (attributed). Similarly, compelling actions of the leader is based on the value, beliefs or ideals and that can be termed as an idealized influence (behaviour). Moreover, the perception of the leaders to his or her followers through mentoring, encouragement and maintaining followers to self-actualization is termed as individual consideration. Furthermore, when a leader inspires and appeals to his or her followers can be referred to as inspirational motivation. Finally, the extent to which a leader engages in a behaviour that causes its followers is called intellectual stimulation. Leadership style plays a vital role for the employee’s job satisfaction. The behaviour and attitude of employees towards their job and organization, their success in the organization is generally called employee's job satisfaction (Mohammad & Hossein 2006). Similarly, employee’s happiness leads to more productive and profitability for organization (Sarri & Judge, 2004). It has been argued that transformational leadership has an impact on employee’s job satisfaction. The aim of the study is to find out the impact transformational leadership on employee’s job satisfaction in the public sectors universities of the northern areas of KP, Pakistan. This study will examine the impact of idealized influence, individualized consideration, inspirational motivation, and intellectual stimulation on employees’ job satisfaction. Journal of Applied Economics and Business Studies, Volume 1, Issue 1 (2017) 11-20 https://doi.org/10.34260/jaebs.112 11 2. Literature review Review of the literature below presents a systematic overview definition of the leadership, its various types and how do they have impact on job satisfaction of the employees. The literature review is organized as follows: 2.1 Leadership The systematic study of leadership began in early 1930s with the study of the “great man” (House & Aditya, 1997). House & Aditya, (1997) described the various traits and quality of a leadership which can distinguish leaders from non-leaders. They found that only a few traits and quality of the leader were positively related to the leader appearance and leadership effectiveness. The word “leadership” in an organization generally means the approaches adopted by the leaders in the daily activities with the workers. It included many dimensions like standards, norms, items or issues observed in job conditions and effect on worker emotional performance, personality and behaviour (Lok & Crawford, 2004). Leadership is one of the most important topics that has been studied to examine its effcet on firms performance and jobs staifactions all over the world (Kuchler, 2008). Moreover, leadership is the process of convincing people of the accomplishment of the desired goals or outcomes (De Jong & Hartog, 2008). In addition, researchers stated that leadership performs a key role in determining the success or failure of an organization (Lok & Crawford, 2009). Gill (2010) argued that leaders help to motivate, stimulate, encourage and recognize their followers of the accomplishments and thus further efficiency is achieved. Furthermore, leaders guide his or her subordinates to do work as a team in order to complete the goals and objectives of the organizations in a timely and efficient manner (Weihrich, Cannice, & Koontz, 2010). It has been further demonstrated that even when the employees do not agree with their boss, they will still accept the influence of the boss because of their power or position they hold in the organization (Cialdini & Griskevicius, 2010). Effective leaders take his or her subordinates into confidence and groom them as an important part of the whole team work which affect the outcomes (Bennis & Nanus, 1985). Similarly, leadership not only provide vision and guidelines to the follower’s leaders but also provide support, cooperation, coordination and guiding the team efforts towards achieving the common purpose and goals (Morgan, 2012). Recently, the term transformational leadership has been popularized which has been explained along with its types in the following sections. 2.2 Transformational leadership The concept of transformational leadership was initially introduced in the study of (Burns, 1978). Burns (1978) focused initially on the value of the contemporary type of Muhammad Khalil Ur Rehman, Ghayyur Qadir & Saqib Shahzad 12 leadership and then related it to more people specific as world continuously and rapidly observed changes. According to him a leader is transformational when he/she supports, cooperates and encourages his or her subordinates to raise their moral and motivational levels, perceptions, beliefs and perception to the goals and objective of the organization (Burns, 1978). Furthermore, Burns leadership theory explained that the leader is one who motivates his subordinates to do more work than originally expected of him/her (Bass, 1985). Transformational leadership has four components which are an idealized influence, individualized consideration, intellectual stimulation and inspirational motivation (Avolio et al., 1995). Idealized influence is also known as charisma. In this type of leadership styles, leaders act as a strong role model for his or her followers due to their exceptional skills and high principled, ethical and moral standards (Avolio et al., 1995). Moreover, idealized influence has a very strong positive relationship with the efforts of the subordinates at work (Bycio, Hackett & Allen, 1995). In addition, idealized influence leaders are trained to take risks while maintaining ethics in their conduct and actions (Bass & Riggio, 2006). Under the individualized types of leaderships, leaders pay attention to each and every individual needs and to get best performance out of each individual (Bass & Avolio, 1990). Furthermore, researchers also demonstrated that in this type of leadership roles, leaders provide customized socio-emotional support to his or her subordinates to promoting and guide to get best outcomes from them as per their abilities. Intellectual stimulation type of leadership is related with the activities of the leaders to challenge creativity and innovation, the leaders motivates and encourages his or her followers to find new ways of doing things, provide opportunities to learn and explore solutions to difficult problems (Hater & Bass, 1988). Moreover, researcher stated that intellectual stimulation is the type of leadership where the leaders strongly encourages the followers to explore and go beyond their potential levels of their abilities (Bycio, Hackett & Allen, 1995). In inspirational motivation type of leadership, leaders motivate and attract his or her followers to achieve the goals and make himself a motivation as a high achiever (Bass, 1985). In addition, in this type of leadership, the leader inspires his or her subordinates by communicating his vision (Shibru & Darshan, 2011). 2.3 Employee’s job satisfaction and leadership style Job satisfaction has been discussed in several studies. Researchers have also discussed different types and determinants of job satisfaction. It involved different types of satisfactions relevant to pay, supervision, promotion, working conditions, organizational Journal of Applied Economics and Business Studies, Volume 1, Issue 1 (2017) 11-20 https://doi.org/10.34260/jaebs.112 13 practice and co-worker relationships (Misener, et al., 1996). Job stress is a combination of feelings or effective responses which are associated with the circumstances of performing jobs. Job satisfaction is how different human being feel about different dimensions of their jobs (Spector, 1997). Moreover, job satisfaction is extent of positive effective orientation towards job (Gurney, Mueller & Price, 1997). In addition, job satisfaction is the limit up to which an employee likes his or her job (Stamps, 1997). The evaluation of three different items of a human being which are, his own duty, the situation or an environment in which he or she is doing a job and the contents of the job he or she really performs (Mosadeghrad, 2003). Furthermore, job satisfaction is present inside in the psyche of a person where an employee will express the level of his or her job satisfaction (Stone & Petterson, 2005). In addition, when the workers are satisfied from their job, then they have positive and pleasant attitude towards his or her job. On the other hand, if the employees are dissatisfied from his or her job so they have negative and unpleasant situation towards his or her job (Armstrong, 2001). Job satisfaction is an attitude which is related with overall life attitude and service quality (Iles, Preece & Chuai, 2010). 2.4 Transformational leadership and employee’s job satisfaction The leadership research examines the significance of leadership in building differences in employee’s job satisfaction. In 1950s and 1960 several studies explored manager use of his or her leadership behaviours to increase the level of employee’s job satisfaction (Northouse, 2018). The leader's quality to cooperate and motivate his or her subordinates has great impact on employee’s job satisfaction and self-confidence (Chen and Spector 1991; Brockner 1988; De Cremer 2003). Leader who is cooperative and supportive to his or her subordinates enjoys high level of employee’s job satisfaction than those leaders who are unsupportive and uncooperative with subordinates. Leadership style is an important indicator of employee’s job satisfaction (Al-Ababneh, 2013). The behaviour of a leader is positively related with employee’s job satisfaction. Therefore, a leader needs to follow an effective leadership behaviour because of its significant impact on employee’s job satisfaction (Yousef, 2000). It has been shown that the followers have more interest in transformational leadership rather than transactional leadership (Druskat, & Kayes, 2000). Transformational leadership and organizational effectiveness have significant relationship in the South Africa cricket administration (Ristow et al., 1999). Some researchers also found that work withdrawal and transformational leadership has negative relationship (Gill et al., 2010). Muhammad Khalil Ur Rehman, Ghayyur Qadir & Saqib Shahzad 14 3. Research methods The conceptual model for this study is shown in figure 1. It has been demonstrated in the graph that the transformational leadership style that is composed of various types of the leadership styles have an impact on the employees jobs satisfactions. All the various leadership types are assumed to have significant and style relationship with the job satisfaction. Figure 1: Leadership style and job satisfaction This study was conducted in the public sectors universities of the Northern areas of KP, Pakistan. The employees from the University of Malakand, University of Swat, Shaheed Benazir Bhutto University Sheringal Upper Dir, Abdul Wali Khan University sub-campus Timergara and Abdul Wali Khan University Bacha khan campus Chitral cmprised the samle for this study. Transformational leadership questionnaires were adopted from the study of Avolio, Bass & Jung (1995) while job satisfaction questionnaires were taken from the study of Edward & Rothbard (1999) and Weiss, et al. (1967). The data were collected from Grade 16 and above employees. A self-administered questionnaire was used to collect the primary data. Originally, 130 questionnaires were distributed among these employees out of which 100 filled questionnaires were received forming percentage of 76.92%. These properly filled questionnaires were used for data analysis. Data were analyzed through SPSS version 16. Descriptive statistics correlation analysis, and regression analysis were used for analysis to find the relationship between transformational leadership and employees’ job satisfaction. 4. Results and discussion In this section, we discuss the descriptive statistics, correlation analysis and finally the multiple regression is used to looks at factors determining the employees job satisfaction. We first begin with the descriptive statistics which are given as follows: Transformational leadership Idealized influence Individualized consideration Inspirational motivation Intellectual stimulation Employees’ job satisfaction Journal of Applied Economics and Business Studies, Volume 1, Issue 1 (2017) 11-20 https://doi.org/10.34260/jaebs.112 15 4.1 Descriptive statistics This section discusses the basic characteristics of our respondents in the sample such as age, gender, qualification and experience. Further correlation analysis has been performed among the variables. Table 1 presents the age of the respondents. There were 11 of the respondents having age 21-25 years. While, 14 of the respondents having age 26-30 years and they comprised 14 % in the sample. Almost 50% of the employees belonged to the age group from 31-40 years. Only about 27% of the employees had an age of greater than 4o years. This indicates that major of the employees were quite young had an age of less than 40 years. This could be due to the fact that most of the universities that we collected the data were established recently and therefore had younger staff compared to more established older universities. Table 1: Age of the respondents Years Frequency Percent Valid percent Cumulative percent 21-25 11 11.0 11.0 11.0 26-30 14 14.0 14.0 25.0 31-35 21 21.0 21.0 46.0 36-40 27 27.0 27.0 73.0 41-45 7 7.0 7.0 80.0 46-50 7 7.0 7.0 87.0 51-55 5 5.0 5.0 92.0 56-60 3 3.0 3.0 95.0 Above 60 5 5.0 5.0 100.0 Total 100 100.0 100.0 Source: Survey data Table 2 presents the qualification of the respondents in our sample. The table shows that about 65% has the graduate and post graduate qualification. About 28% had a qualification of MS/PhD education. Again this indicates that a smaller portion had a PhD staff (9%). Again it can be stated that in these new universities and with small campus, they are going through developmental stages and therefore shall take time to develop a more qualified staff and faculty at their universities. Table 2: Qualification of the respondents Qualification Frequency Percent Valid percent Cumulative percent Intermediate 7 7.0 7.0 7.0 Graduate 22 22.0 22.0 29.0 Post graduate 43 43.0 43.0 72.0 MS- M Phil 19 19.0 19.0 91.0 PhD 9 9.0 9.0 100.0 Total 100 100.0 100.0 Source: Survey data Table 3 exhibits gender wise distribution of our respondents. It shows that about 87 of the employees were male while only 13 of the employees’ were female. Some of these Muhammad Khalil Ur Rehman, Ghayyur Qadir & Saqib Shahzad 16 universities are located in a very conservative regions of the Pakistan. The education level in these regions is generally low and women generally don't work or work in a very restricted fewer organizations. Similarly, these universities are located in much remote areas and therefore also struggles to attract female staff or faculty from big centres such as Peshawar, Islamabad or Lahore areas. Table 3: Gender of the respondents Gender Frequency Percent Valid percent Cumulative percent Male 87 87.0 87.0 87.0 Female 13 13.0 13.0 100.0 Total 100 100.0 100.0 Source: Survey data Table 4 shows the experience of the respondents in our sample. It can be that most of the universities in or sample had a staff with only a few years experience. About 97% staff has the experience less than 10 years. This is again natural as the universities in our sample are newer and they had the staff recently recruited so had less experience staff and faculty members. Table 4: Experience of the respondents Experience Frequency Percent Valid percent Cumulative percent Less than 1 years 19 19.0 19.0 19.0 1-2 year 25 25.0 25.0 44.0 3-5 years 35 35.0 35.0 79.0 6-10 years 18 18.0 18.0 97.0 Over 10 years 3 3.0 3.0 100.0 Total 100 100.0 100.0 Source: Survey data The given table 5 shows the correlation between job satisfaction and the various types of transformational leadership styles. It can be seen that the intellectual simulation has a positive and significant relationship with the job satisfaction. While the others leadership styles had a negative relationship with job satisfaction. These results need to be taken with care as they are not controlling for other variables. Table 5: Correlation analysis between job satisfaction and leadership styles Idealized influence Individualized consideration Inspirational motivation Intellectual stimulation job satisfaction Idealized influence 1 Individualized consideration .466** 1 Inspirational motivation -0.049** 0.225** 1 Intellectual stimulation -0.134** -0.116** .187** 1 job satisfaction -0.031** -0.262** -0.084** .301** 1 ** Correlation is significant at the 0.01 level (2-tailled). ** Correlation is significant at the 0.05 level (2-tailled). Source: Survey data Journal of Applied Economics and Business Studies, Volume 1, Issue 1 (2017) 11-20 https://doi.org/10.34260/jaebs.112 17 4.2 Econometrics estimation Table 6 shows the econometric estimation of the effect of the transformational leadership styles on the employee's job satisfaction for those employed at various universities located in the Northern Areas of Khyber Pakhtunkhwa, Pakistan. The coefficient value for idealized influence is 0.135 which shows that one unit increases in idealized influence causes increase in job satisfaction by 0.135 units. However, t value is 1.233, which shows that idealized influence does not have a statistically significant impact on job satisfaction. Similarly, individualized consideration is negatively related to the job satisfaction and it is also significant. Inspirational motivation is negatively related to the job satisfaction as well although it is not statistically significant and so is the case with the inspirational motivation as well. Intellectual stimulation is the only varaible that has the psotive and signicant realtionship with the job satisfaction. On average a one unit increase in intellectual stimulation increases the job satisfcation by 0.226 units. The above results although may look odd but in the case of universities it is intellectual stimulation that probably matters the most for the employees to be satisfied with their job. Universities are meant to be creating new knowledge and engage in intellectual work. Also, the production of the intellectual work and outcomes and goals therein achieved will motivate the staff and faculty and therefore more job satisfaction. Therefore, this not unexpected that the most that matters in universities is intellectual stimulation that leads to more job satisfaction. The model shows a coefficient determination of 0.16 which is not uncommon in cross sectional or survey data. The value of F is 4.655 and statistically significant indicating the all the variables in the model jointly determines the job satisfaction. Table 6: Effect of various factors on university's employees job satisfaction Variables Unstandardized coefficients Standardized coefficients t Sig. B Std. error Beta Constant 2.514 .401 6.271 .000 Idealized influence .135 .109 .133 1.233 .221 Individualized consideration -.309 .126 -.273 -2.455 .016 Inspirational motivation -.082 .113 -.072 -.723 .471 Intellectual stimulation .226 .073 .300 3.096 .003 R2 0.16 F 4.655 Source: Survey Data Muhammad Khalil Ur Rehman, Ghayyur Qadir & Saqib Shahzad 18 5. Conclusion This part of the study summaries the overall study. The aim of the study was to find the impact of transformational leadership on employees’ job satisfaction in the public sectors universities of the Northern area of the Khyber Pakhtunkhwa, Pakistan. The result of the study shows that there is a statistically significant positive relationship between the job satisfaction and the intellectual stimulation of the transformational leadership. Others dimension of the transformational leadership such idealized influence, individualized consideration, inspirational motivations were either negatively related or/and insignificant. This research shows that the most important for the universities was the intellectual stimulation. Therefore, steps needs to be taken to convince and prepare leaders in universities that focuses on this aspect of the transformational leadership. Further, this study was conducted in a few newer Northern Universities in KP, Pakistan with a small sample size and the results may not generalize to other areas. 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