The Effect of Leadership Style on Organizational Performance: The Case of Addis Ketema SubCity City

Abstract

The main objective of the study was to examine the effects of leadership style on organizational performance at Addis Ketema Sub City Administration. The focus was on three major leadership styles Autocratic, Democratic and Laissez-faire leadership style. The research design was descriptive and explanatory; the research used quantitative approach. A stratified random sampling was used to select sample of 244 respondents out of the total population. Questionnaire was used as primary data collection tool. The descriptive statistics result shows that the practice of leadership style at the Addis Ketema Sub City Administration is democratic leadership. The correlation result shows that there is positive and significant relationship between the two leadership styles (democratic leadership and laisser-faire leadership) and organizational performance of Addis Ketema Sub City Administration. However, Autocratic leadership was negatively correlated to organizational performance. The regression result shows that the three independent variables: autocratic leadership, democratic leadership, and laisser-faire leadership that were studied explain 33.9% of variation organizational performance of Addis Ketema Sub City Administration as represented by the R² value. Regarding individual effect, only democratic leadership is significant in predicting the organizational performance, while the other two leadership styles (autocratic leadership and laisser-faire leadership) are not significant in predicting organizational performance. The study recommended Addis Ketema Sub City Administration management should provide various training programs to its leaders in order to create a higher level of organizational performance. Particularly, the managers/leaders of Addis Ketema Sub City Administration should influence democratic leadership practice as a way of improving the organizational performance.