LITERATURE REVIEW

1.1 Introduction
This chapter presents the literature review on the study. It is concentrated on the

definition of employees performance. An attempt was made to discuss the impacts of

leadership, motivation and work environment on employees performance.

1.2 Employee Performance

Noel (2009) defined performance as a process where the manager is responsible

towards ensuring that activity and productivity of the employees are parallel with the

organisations goals. Thomas and Surjit (2000) found that organisational

performance can be enhanced through the increase of workforce productivity, and

that the productivity of the workforce can be improved through human resource

developments that are geared toward providing learning opportunities to increase

employees ability and motivation.

According to Dessler (2000), job performance refers to how individuals take action

and contribute to behaviour that is consistent with the objectives of the organisation

to which the performance of the work also refers to the responsibilities and duties to

be performed by a person as an individual task. Performance can also be defined as a

major multi-dimensional construct aimed to achieve results and has a strong link to

strategic goals of an organization (Mwita, 2000).

Workforce is one of the most important factors in an organisation or company. They

have a regular role to play which comprises of achieving the goals and objectives of

an organisation. Employee performance is crucial because the success or failure of an

organisation depends on the performance of an employee (Noel, 2009). Many

business personnel directors assess their employees performance on an annual or

 quarterly basis in order for them to identify the suggested areas for improvement. The

firm that gets the advantage over other competitors through their talented can take the

lead in the market. The performance of employees on different jobs in close

coordination is needed for success of the unit. Employee performance is a crucial

building block of an organisation. Therefore, the factors which lay the foundation for

high performance of employees must be meticulously analysed by the organisations.

One particular organisation cannot progress by depending on one or two individual

effort. Instead, it depends on the collective effort of all the members of the

organisation. Performance is a major multidimensional construct aimed to achieve

results and has a strong link to strategic goals of an organisation (Mwita, 2000).

Employee performance is determined by several variables. Three of the variables that

would be further discussed in this chapter are; (i) leadership, (ii) motivation, and (iii)

work environment. These variables could be classified as general determinants of

employee performance.

1.3 Leadership

Leadership signifies a combination of behaviours exhibited by one who occupies an

elected, appointed, or designated position of influence in a social system (Northouse,

2007). Leadership power is therefore officially authorised either formally or

informally, and the leader is looked to for guidance and direction by those who

recognise in his or her power.

According to Adair (2002), leadership is the ability to persuade others to seek

defined objectives enthusiastically. He also mentioned that leadership is the human

factor which binds a group together and to improve their performance and to direct
them towards goals. Kourdi (1999) defined leadership as the act of coping and

dealing with change, emphasising on the long-term and the big picture, not always

doing it to save himself but to take risks and concentrate on people and their values,

not just the bottom line.

Sashkin and Sashkin (2003) stated that leadership is a capacity, which suggests that

the capacity of a leader is to listen and observe, and to use their capability as a

starting point to encourage dialogue between all levels of decision-making, to

establish processes and transparency in decision making, and to express their own

values and visions clearly but not to impose them. In other words, leadership has been

described as a process of persuasion where the leader (or team of leaders) act as a role

model for a group in order to motivate and induce the group to pursue the objectives

of the organisation (Travis, 2007).

Leaders are accountable for the performance of their organisation and its success,

which is closely dependent on employees performance. The role of leaders in

management is fundamentally determined by organisational culture of the company.

It has been argued that leaders beliefs, values and assumptions are critically

important to the overall style of leadership they adopt (Travis, 2007).

An effective leader influences the followers in a desired manner to achieve designated

goals. As mentioned by Nahavandi (2002), different leadership styles may affect

organisational effectiveness and employees performance. Lewin et al. (1939)

identified three leadership styles which are autocratic, democratic and lassie-faire.

Autocratic leadership style involves the leader as decision-maker who wields the

absolute power, assigns tasks to the subordinates and maintains a master-servant

relationship with members of the group. Meanwhile, democratic leadership style

revolves around the use of consultative approach. The leader who practices
democratic leadership encourages group participation in decision-making, therefore

decisions are made within the teams with each member having equal inputs

(Omolayo, 2007). On the other hand, the lassie-faire leadership style involves non-

interference policy which allows complete freedom to all workers and has no

particular way of attaining goals (Lewin et al., 1939).

On the other hand, Daniel (2002) suggested three leadership styles that show the

degree of authority used by the leaders which are autocratic style, democratic style

and participative leadership style. According to Daniel (2002), participative

leadership style involves all members of the group in identifying essential targets and

developing procedures or strategies in reaching those targets. From this perspective,

participative leadership can be seen as a leadership style that relies heavily on the

leaders role as a facilitator rather than simply giving orders or giving assignments to

the employees.

However, there is no one best style of leadership. As mentioned by Kourdi (1999),

even though each individual may have their own preferred leadership style, the most

effective leaders will adopt a style which is appropriate for their respective situations.

In the competitive world with technological changes within the business environment,

it is vital that organisations employ leadership styles that enable organisations to

survive in a dynamic environment (Bass, 1994).

In order for an organisation to success and accomplish its target, the leader should

have the capacity to optimise human resources. An excellent leader should be aware

of the importance of employees in achieving the goals and targets set by the

organisation. In other words, effective organisations require effective leadership (Wall

et al., 1996). Therefore, effective leadership enable greater participation of the entire

workforce and consequently influence both employee and organisational performance

(Mullins, 2006). Effective leader with effective leadership behaviour will facilitate

the attainment of the followers desires, which will then result in their effective

performance (Amos et al., 2004).

According to Cummings and Schwab (1973), leadership is probably the most

thoroughly investigated variable that has a potential impact on employees

performance. They also mentioned that a good leader will understand what motivates

the employees and how their strengths and weaknesses influence their decisions,

actions and relationships. Cummings and Schwab (1973) strengthened on the

connection between leadership behaviours and employees performance.

According to Cole (1997), the participative style of leadership has a greater positive

effect on employees performance. This is because, the employees feel more

confident in doing their jobs as their voices are heard in making decisions in the

organisation. Cole (1997) argued that autocratic style leaders take so much control in

decision-making, thus their employees feel inferior in doing their job and making

decisions. On the other hand, the employees under democratic leadership have

discretionary power in conducting their work. Therefore, these employees show

significantly better performance than the employees under autocratic leadership style.

Milgron and Holmstrom (1991) stated that autocratic leadership style clearly defines

the division between leaders and workers, and these leaders make decision with little

or no involvement from their fellow employees. These leaders are more assertive in

making decisions and planning organisational strategies. He argued that these leaders

make better decisions for the organisation. Dawson (2002) mentioned that autocratic

leadership style may show great results in a short time period, but excessive use of

authority will distort the productivity of organisation and employees in the long term.

This is because, the employees will tend to get bored and dissatisfied towards the
leadership. The organisation will fall into a malaise of hum-drum repetitive tasks

without creativity and innovation. In short, the employees will become demotivated

and unproductive as their ideas are hindered by the system.

According to Heneman and Gresham (1999), all decision-making powers under

autocratic leaders are too centralised as these leaders do not welcome any

suggestions and initiatives from the followers side. Such behaviour will eventually

create a displeasure and demotivation among the employees. Ittner and Larcker

(2002) argued that autocratic leadership style promotes one-sided conversation that

leads to restricted creativity among the employees, besides limiting communication

and socialisation at the workplace. As these leaders have more authority, there is a

high chance of exploitation and distortion of the employees. Kouzes and Posner

(2007) stated that adverse attitude within the autocratic leadership system usually

result in high labour turnover, absenteeism which reduce employee performance thus

reduce productivity.

Ittner and Larcker (2002) also stated that democratic leadership style is considered as

the most beneficial leadership for most companies and organisations. This type of

leadership emphasises on the management which provides guidance and help to the

employees besides accepting inputs from individuals regardless of their positions or

ranks. Heneman and Gresham (1999) pointed out that democratic leadership style

promotes the sharing of responsibilities and practices continual consultation. Under

democratic leadership, the leaders will make suggestions and recommendations on

major issues, then they will delegate tasks to the employees. Employees will have full

control and responsibility towards the task they are assigned to. This will encourage

the employees to give full commitment towards their organisations besides

motivating them to maximise their work performance. Debashis and Senge (2000)
 concluded that democratic leadership style indirectly trains the employees with

leadership roles and organisational tasks. This results in boosting their confidence

level to work, encouraging them to meet deadlines and goals, and providing them

with efficient team inputs. As the employees put maximum efforts for the

organisation, they will consequently perform better in their work and tasks.

Waggoner (1999) argued that participative leadership is an effective option of

leadership style to be used by employers and organisation managers. As compared to

other leadership styles, leaders who practice participative leadership rarely make

decisions. Instead, they delegate the responsibilities to the employees and become

facilitators who provide guidance. On the bright side, these employees will be able to

work independently and quickly learn how to perform their tasks. A participative

leadership may seem unproductive in the short term but for a longer period, this

leadership behaviour is more productive for an organisation (Graver and Austin,

1995). This productivity arises among the employees due to the feeling of

empowerment and more commitment towards their job and organisational targets.

1.4 Motivation

Motivation is one of the most well-known topics that is very widely discussed in

programs either in education or management sectors. This is because, motivation

gives huge impact on humans positive and negative behaviours. An individual is said

to have high motivation if he or she shows excellent job performance. In contrary, an

individual who portrays terrible job performance is always said to have poor

motivation. There are various definitions of motivation. Robbins (2001) defined

motivation as the willingness to exert high levels of effort toward organisational

goals, conditioned by the efforts ability to satisfy some individual need. According

to Robbins (2001), a need is an internal state that makes certain outcomes appears
attractive and an unsatisfied need creates tension that stimulates drives within an

individual.

Kreitner and Kinicki (1998) and Ramlall (2004) stated that motivation is derived

from the latin word movere which means to move. According to Butkus and Green

(1999), motivation is derived from the word motivate which also means to move,

persuade or push to satisfy a need.

In another account, Baron (1983, in Mol, 1992) defined motivation as a set of

processes concerned with a kind of force that energises behaviour and directs it

towards achieving specific goals. It further explains that not only motivation can

influence performance, but that performance can also influence motivation, if

followed by rewards. Carraher et al. (2006) suggested that there should be an

effective reward system to retain the high-performing employees and reward should

be related to their productivity.

According to Ramlall (2004) motivation gives inspiration for employees to work;

individually or in groups in such a way as to produce excellent results. If further

states that motivation is a general term applied to the entire class of drives, desires,

needs, wishes and similar forces. Ramlall (2004) noted that to say that managers

motivate their subordinates is to say that they do those things which they hope will

satisfy those drives and desires and induce the subordinates to act in a desired

manner.

Robbins (2005) stated that motivation is the readiness of an individual to put the

outmost effort towards achieving the organisations objectives and targets. As an

employee has higher motivation, he or she will be more determined to work harder to

achieve specific targets set by the organisation.

Work motivation can be further segregated into two types which are intrinsic and

extrinsic motivation. According to McCullagh (2005), intrinsic motivation can be

defined as an individuals need to feel competency and pride in something while

extrinsic motivation is defined as the performance of an activity in order to attain

some separate outcome and noted that, people can be both intrinsically and

extrinsically motivated. The employees with high intrinsic motivation will have

strong will to succeed in things they venture. On the other hand, extrinsic motivation

originates from the employees outer surroundings. In the context of workers,

employees require rewards out of their hard work in the organisation. As stated by

Reio and Callahon (2004), both intrinsic and extrinsic rewards motivate the employee

therefore result in higher productivity.

In other words, intrinsic motivation is the motivation that comes from within the

employees themselves. It originates from the personal enjoyment and achievement

derived from doing one particular thing. As mentioned by Ryan and Edward (2012),

intrinsically motivated behaviours in turn feed the psychological needs of a person,

such as competency or self-worth. At a personal level, intrinsic motivation makes the

employees work fulfilling and becomes the major reason for them to strive harder on

the job. Extrinsic motivation is motivation that comes from factors that are outside of

the individuals. Extrinsic motivation such as rewards and communication of

interpersonal influence is an important factor that determines an individuals

behaviours in the learning process (Ryan & Deci, 2000).

Mangkunegara (2005) argued that the positive behaviour of an employee towards his

work is actually the key to increase their job performance. Besides that, Hasibuan
(2008) stated that intrinsic motivation can further encourage employees to cooperate

with their colleagues and consecutively help to achieve the organisations targets.

There are many theories that have been proposed to examine the impacts of

motivation towards employees work performance. As mentioned by McCullagh

(2005), if properly applied, having better motivated employees may ultimately lead to

increased productivity of work in particular organisations.

One of the theories of motivation is the Fredrick Herzbergs Two-Factor Theory

(Herzberg et al., 1959). These two factors are motivators and hygiene factors. In

1959, Herzberg published his analysis of feelings of 200 engineers and accountants

from over nine companies in the United States. These professionals were asked to

describe job experiences where they felt either extremely bad or exceptionally good

about their jobs and rated their feelings on these experiences. Responses about good

feelings are generally related to job content (motivators), and responses about bad

feelings are associated with job context (hygiene factor). Motivators came about with

factors built into the job itself, such as achievement, recognition, responsibility and

advancement. Hygiene factors were related to feelings of dissatisfaction within the

employees and were extrinsic to the job, such as interpersonal relations, salary,

supervision and company policy (Herzberg, 1966). According to Riley (2005), the

basic premise of the Herzbergs Two-Factor Theory is that if the employers are trying

to increase job satisfaction and employee performance, they need to address the

factors that affect ones job satisfaction.

The viewpoint that motivation brings impact to employee performance originates

from human relations theory (Filley et al., 1976). The relationship between

motivation and employees performance has been studied for a long period. However,

earlier research could not succeed in establishing a direct relationship between the
two (Vroom, 1964). Yet it seems that that the factors do influence each other. Petty et

al. (1984) reviewed the 15 studies Vroom (1964) used in his research and added

another 20 more recent studies; they concluded that employee motivation and

performance are indeed related. The results of their research indicate that the

relationship between individual, overall job satisfaction and individual job

performance is more consistent than reported in previous researches (e.g. Vroom,

1964). The term satisfaction is also used by Herzberg (1959); he argues that when

intrinsic factors (motivators) are present at the job, satisfaction is likely to occur as

well as an increase in employee motivation. Amabile (1993) states that work

performances are dependent upon the individuals level of motivation; the

individuals level of motivation can be intrinsically and/or extrinsically based. It is

also argued that certain job characteristics are necessary in establishing the

relationship between employee motivation and performance.

A recent study was done by Shahzadi et al. (2014) to examine the extent to how

motivation affects the employee performance. The outcomes of this study showed

that a significant and positive relationship exists between employee motivation and

their performance. The study also concluded that intrinsic rewards bring significant

positive impacts towards employees job performance.

In a Malaysian context, a research done by Rohani Ali (2003) studied the relationship

between motivation and job performance of air traffic controllers in Subang

Department of Civil Aviation. The results of that research showed that the controllers

have very high job performance and commitment towards their job, and the most

contributing factor to that result is their intrinsic and extrinsic motivation (Rohani Ali,

2003). According to the research, the intrinsic motivation came from their awareness

to appreciate lives better and becoming more responsible towards their job.

Meanwhile their extrinsic motivation came from support and good relationship
 among supervisors and colleagues, as well as promotion and recognition from the

department.

1.5 Work Environment

Chandrasekar (2011) argued that an organisation needs to pay attention to create a

work environment that enhances the ability of employees to become more productive

in order to increase profits for organisation. He also argued that human to human

interactions and relations are playing more dominant role in the overall job

satisfaction rather than money whereas management skills, time and energy, all are

needed for improving the overall performance of the organization in current era.

According to Boles et al. (2004), proper work environment helps in reducing the

absenteeism among employees thus consequently increase their work performance.

The workplace environment comprises of various factors that are imperative

determinants of employee performance (Lambert et al., 2001). These factors may

positively or negatively contribute to achieving maximum employee performance.

Workplace environment can be divided into two components namely physical and

psychosocial components (Stallworth dan Kleiner, 1996).

Ajala (2012) argued that the conditions of physical workplace environment influence

the employees functions and it will determine the well-being of organisations. The

physical work environment includes the internal and external office layout,

temperature, comfort zone and also the work setting or arrangement. According to

Vischer (2008), the physical workplace environment factors also include lighting

(both artificial and natural), noise, furniture and spatial layouts in workplaces. The

physical workplace environment includes comfort level, ventilation and heating,

lighting. These features assist on functional and aesthetic side, the dcor and design
of the workplace environment that ultimately help improve the employees experience

and necessitate better performance.

(Al- Anzi, 2009) stated that spatial layouts in the workplace contribute a lot towards

how the employees perform their tasks. Closed office floor plan, which may consist

of each employee having a separate office of their own or a few people in each office,

allows employees a greater amount of privacy than open plan office layout. It allows

employees to work in peace and quiet, keeping them focused on their tasks without a

lot of distraction. It also offers employees a thinking frame and creativity without

much distraction.

According to McCoy and Evans (2005) the elements of physical work environment

need to be proper so that the employees would not be stressed while doing their job.

Physical elements play an important role in developing the network and relationships

at work. All in all, the physical work environment should support the desired

performance. Vischer (2008) also highlighted that conducive workplace environment

should be prioritised as it provides support to the employees in carrying out their jobs.

It should be conducive enough to enable performance of tasks by employees.

Sarode and Shirsath (2014) stated that the quality and quantity of work generated by

employees are influenced by the work environment while poor environmental

conditions can cause inefficient worker productivity as well as reducing their job

satisfaction. In their research, Sarode and Shirsath (2014) found that there are some

elements of the work environment that can impact on employee performance such as

lighting, noise, colour, air quality, furniture and equipment in the office. Among all,

four factors of the work environment which it has largest impact on employee

performance are: lighting, noise, colour, and air quality. All of these factors cannot be

treated separately, as they are closely related to one another. The work environment
plays a crucial role in maintaining the productivity of an organisation as well as the

employees (Sarode and Shirsath, 2014).

According to Abdul Raziq and Maulabakhsh (2015), work environment involves

working hours, job safety, job security, relationship among employees, esteem needs

of employees and the influence of top management on the work of employees. In

their research, Abdul Raziq and Maulabakhsh (2015) highlighted that work

environment has a positive impact towards job satisfaction of the employees, whereas

bad working conditions restrict employees from portraying their capabilities and

attain full potential. They strongly agree that good work environment is crucial to

maximise the employees potential and increase their performance.

A research was done by Srivastava (2008) to examine the effect of two constituents of

work environment (i.e. physical and psychosocial) on employees job satisfaction and

performance. The research significantly showed that the employees who perceived

their work environment as adequate and favourable have higher job satisfaction and

performance. The research also found that physical and psychosocial environment

had caused significant variance in the employees job behaviour. The result of this

research also specified that psychosocial work environment at the workplace exert

more impact on employees job performance than the physical work environment.

Malik et al. (2011) conducted a study to investigate the work environment and

employee performance in Pakistan. The study focused on examining the relationship

between five dimensions of work environment and their impacts on the performance

of employees. Those five dimensions are social support, physical working conditions,

job characteristics, training and development, and communication practices. The

result of this research showed that all these five dimensions of work environment

have strong and significant relationship with employee performance. The work
 environment has an impact on an individuals ability to work safely, competently and

in compliance with operational performance targets. It is necessary to train the

employees to efficiently and effectively handle the work overload. Malik et al. (2015)

agreed that improvement in the working conditions leads to better employees

performance, and it could result into improved performance of the organisation due to

retention of employees and the retained employees try their best to perform well at

their work places.

Nina Munira, & Mohammad Sadegi. (2013) conducted a study to investigate the

effect of workplace environments factors towards employees performance. The

research proved that job aid and physical workplace environment have significant

relationship towards the employees performance. Employees performance level is

depending on the quality of the employees factors workplace environment which are

the job aid, supervisor support and also the physical workplace environment. These

three factors determine on how the employees get engaged or attached to the

organisation.

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