Organizational Effectiveness Impact on Individual Performance

Introduction

How a company’s processes are managed has an effect not only on its overall success but also on each employee’s performance. Out of the many elements that can improve organizational effectiveness, employee empowerment is rather important. With the help of empowering leadership, it is possible to reach a higher level of employee satisfaction, which leads to beneficial outcomes for the company. Empowering leaders allocate autonomy to their team members by emphasizing their trust and allowing employees to participate in decision making. As a result, the selected element of organizational effectiveness enhances employee performance greatly.

The Effect of Empowering Leadership on Employee Performance

It is a generally accepted notion that the more freedom workers have, the more likely they are to produce innovative ideas and feel dedicated to their job. Various types of leadership have different types of impact on employees. Empowering managers are the ones employing democratic leadership in their work relationships. Employee empowerment is defined as increased individual motivation at a workplace through the “delegation of responsibility and authority” to the employees at all levels, including the lowest (Amundsen & Martinsen, 2014). Research indicates that empowering leadership helps to arrange a positive atmosphere within the team and leads to better performance (Amundsen & Martinsen, 2014).

Human Resource Management (HRM), Organizational Effectiveness, and Individual Performance

In modern business relations, HRM has gained an important role as a means of influencing organizational effectiveness. In particular, HRM can have a profound effect on the level of employee commitment (Rubel, Rimi, & Walters, 2017). Research indicates that emerging HRM has a positive impact on such aspects of a company’s work as procedural justice, empowerment, employee participation, organizational communication, and employee development. What is more, HRM is reported to determine the level of employee commitment, which is one of the determinants of organizational effectiveness.

As Rubel et al. (2017) emphasize, companies’ management teams should cultivate a supportive HRM atmosphere which, in turn, will develop a high-quality and commitment-centered relationship.

However, Jiang and Liu (2015) note that the cooperation between HRM and employees is not sufficient to bring the most productive outcomes. Thus, scholars suggest that social capital should be taken into consideration when outlining the company’s organizational effectiveness strategies. In particular, Jiang and Liu (2015) highlight the significance of relationships between employees as a crucial element of success. Therefore, HRM is the primary element in defining the company’s strategies aimed at enhancing individual performance through organizational effectiveness.

Psychological Effects of Empowerment

There are two theories of workplace empowerment investigated in scholarly literature. The first one, structural, focuses on organizational prerequisites within the work environment that promote the successful accomplishment of work duties and concentrate on objective features of the job (Laschinger & Read, 2017). The second theory is psychological, and its focal point is individuals’ cognitive motivational responses to conditions which they experience at work. Psychological empowerment is the most crucial element of creating a positive work atmosphere, and this concept is multidimensional (Laschinger & Read, 2017). According to Thomas and Velthouse, there are four dimensions of psychological empowerment:

  1. meaning (the value which employees refer to their job);
  2. competence (self-efficacy judgment associated with work accomplishment);
  3. self-determination (autonomy and preferences for the ways of performing duties);
  4. impact (the level at which individuals can affect work decisions and results) (as cited in Laschinger & Read, 2017, p. 183).

Researchers note that employee empowerment programs have a positive effect on individuals’ psychological health. Degago (2014) remarks that the most common ways of improving performance are redesigning work processes and coming up with innovative solutions to correcting errors in the production process. Empowerment is considered as a crucial component in the modern era of globalization due to its ability to encourage a quick response to changes. Treating workers with respect and helping them in case of serious personal problems are some of the most effective methods of psychological empowerment (Degago, 2014).

Other productive measures include the development of employees’ competency, allowing them to make choices that are aimed at satisfying their needs and offering training options. Finally, a system of rewards and participation in decision making is rather crucial elements in the sphere of psychological empowerment. Employees whose leaders apply some or all of these measures tend to be more dedicated and demonstrate a high level of performance.

The psychological effects of empowerment are manifested through its ability to increase individuals’ resistance to stress. As Dhanabhakyam and Shetty (2016) note, it is possible to manage work-related stress with the help of correctly selected empowering approaches. Scholars conclude that in the contemporary competitive business environment, stress management at work is a highly significant matter irrespective of employees’ age, race, gender, religion, or any other characteristic.

One of the most crucial stress-provoking factors is competitiveness (Dhanabhakyam & Shetty, 2016). Empowering leadership plays an important role in mitigating the risk of such stress. Thus, individuals whose managers pay due respect to psychological empowerment tend to be less stressed and have a more positive disposition in comparison with those whose leaders do not care about their workers’ psychological health.

The four components of psychological empowerment – meaning, competence, self-determination, and impact – are closely associated with job performance and job satisfaction (Ölçer & Florescu, 2015). Research by Ölçer and Florescu (2015) indicates that meaning, impact, and self-determination have a positive effect on the level of job satisfaction. At the same time, scholars report that competence does not have any influence on job satisfaction. Another finding by Ölçer and Florescu (2015) suggests that competence, impact, and self-determination have a positive effect on workers’ job performance rates whereas meaning does not have a similar effect.

A more thorough analysis of psychological empowerment’s elements allows concluding that job satisfaction has a crucial impact on job performance. Moreover, job satisfaction is reported to mediate the connection between job performance and meaning. On the contrary, job satisfaction only partially mediates the association between job performance and competence, self-determination, and impact (Ölçer & Florescu, 2015). Therefore, psychological empowerment has a significant effect on job performance and satisfaction. Taking these data into consideration when deciding on the type of leadership in organizations can promote the creation of a beneficial work environment.

The Curvilinear Relationship Between Empowering Leadership and Individual Performance

Empowering leadership is largely considered as a highly effective method of reaching organizational effectiveness and increasing individual performance (Amundsen & Martinsen, 2014). However, some research results demonstrate that the relationship between empowerment and employee performance is not always linear (Humborstad, Nerstad, & Dysvik, 2014; Lee, Cheong, Kim, & Yun, 2017). Upon applying a leadership contingency perspective, Lee et al. (2017) have reported that the curvilinear relationship between empowering leadership and individual performance is governed by employee learning orientation.

Scholars agree that empowerment is an important tool that allows team members to participate in decision making and significantly increases their self-responsibility and autonomy. Additionally, Lee et al. (2017) note that empowerment has a positive effect on work-related outcomes. However, the authors also remark that more empowerment does not necessarily bring about a greater number of preferable achievements.

Other scholars also pay attention to the fact that empowerment does not always have a direct positive effect on individual performance. For instance, Humborstad et al. (2014) note that under some circumstances, empowering leadership may cause employees’ resistance or lead to task uncertainty. As a result, both individual and organizational performance can suffer.

According to Humborstad et al. (2014), some employees may find it unnecessary or even view it as a burden when the company’s managers introduce such programs as skill enhancement or job enrichment. Cheong, Spain, Yammarino, and Yun (2016) also note that leaders should distribute empowerment wisely to avoid employees’ dissatisfaction. Scholars agree that empowering leadership has an enabling power, but they also acknowledge the ability of this approach to increase job-induced tension. Therefore, to reach the most advantageous outcomes, leaders need to make sure that their attempts to grant freedom to their employees do not turn into a burden.

Reflection: The Relation of Employee Performance to My Work

I have work experience in the oil and gas industry and banking, and I must admit that empowerment plays a crucial role in various spheres. The most memorable occasion when I was able to observe the benefits and limitations of different leadership styles was two years ago when I was working in a bank.

There was a manager whose approach to leadership was autocratic. Although he did not communicate with the customers, he never listened to his subordinates’ suggestions on how their work could be made easier and better. Because that manager always punished employees without analyzing the cases, many diligent workers lost their enthusiasm, and some of them even quit. When the bank’s supervisor analyzed data covering six months, he found out that the level of turnover was very high and that people’s job satisfaction was extremely low.

The manager was then replaced by another person who started his work by calling a staff meeting where he asked us to express the negative aspects of work as well as our suggestions on their improvement. Needless to say, everyone became enthusiastic due to being empowered. Such meetings were held every fortnight, and every employee had an opportunity to discuss vital issues with the leader. We appreciated our new manager greatly, and everyone’s performance-enhanced to a great extent. It was then that I learned about the significance of empowerment and its effect on employees.

Conclusion

Employee empowerment is an element of organizational effectiveness that can have a significant positive impact on individual performance. By reaching a high level of employee performance and dedication, leaders can gain better outcomes for their companies. Managers selecting empowering approaches to allow more freedom to their workers and encourage them to take part in decision making. Out of the two theories of workplace empowerment, psychology has more weight regarding the present research. Such dimensions as meaning, competence, self-determination, and impact are considered as crucial in the analysis of employee performance.

Scholars note that these components are interrelated, and they can be mediated by job satisfaction. Some scholars note that empowering leadership may hurt individual performance due to putting too much pressure on employees. However, the majority of researchers agree that empowerment is a beneficial approach that helps to reduce stress and increase loyalty. Therefore, managers who desire to gain organizational effectiveness along with increased individual performance prefer empowering leadership.

References

Amundsen, S., & Martinsen, Ø. L. (2014). Empowering leadership: Construct clarification, conceptualization, and validation of a new scale. The Leadership Quarterly, 25(3), 487-511.

Cheong, M., Spain, S. M., Yammarino, F. J., & Yun, S. (2016). Two faces of empowering leadership: Enabling and burdening. The Leadership Quarterly, 27(4), 602-616.

Degago, E. (2014). A study on impact of psychological empowerment on employee performance in small and medium scale enterprise sectors. European Journal of Business and Management, 6(27), 60-71.

Dhanabhakyam, M., & Shetty, R. (2016). Managing employees work related stress through employee empowerment. International Journal of Applied Research, 2(3), 473-477.

Humborstad, S. I. W., Nerstad, C. G. L., & Dysvik, A. (2014). Empowering leadership, employee goal orientations and work performance: A competing hypothesis approach. Personnel Review, 43(2), 246-271.

Jiang, J. Y., & Liu, C.-W. (2015). High performance work systems and organizational effectiveness: The mediating role of social capital. Human Resource Management Review, 25, 126-137.

Laschinger, H. S., & Read, E. (2017). Workplace empowerment and employee health and wellbeing. In S. L. Cooper & M. P. Leiter (Eds.), The Routledge companion to wellbeing at work (pp. 182-196). New York, NY: Routledge.

Lee, S., Cheong, M., Kim, M., & Yun, S. (2017). Never too much? The curvilinear relationship between empowering leadership and task performance. Group & Organization Management, 42(1), 11-38.

Ölçer, F., & Florescu, M. S. (2015). Mediating effect of job satisfaction in the relationship between psychological empowerment and job performance. Business Excellence and Management, 5(1), 5-32.

Rubel, M. R. B., Rimi, N. N., & Walters, T. (2017). Roles of emerging HRM and employee commitment: Evidence from the banking industry of Bangladesh. Global Business Review, 18(4), 1-19.