Research on the Impact of Leadership Styles Based on Organizational Climate on Employees' Work Performance

Xu Ran, Rozaini Binti Rosli*, Dhakir Abbas Ali

Lincoln University College, Wisma Lincoln, No. 12-18, Jalan SS 6/12, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia

*Corresponding Author’s Email: rozaini@lincoln.edu.my

ABSTRACT

Introduction: In the landscape of human resource management's evolution and amidst the significance of leadership, understanding how leadership styles influence employees' work performance is crucial. This research delves into the impacts of autocratic, democratic, and laissez-faire leadership styles on tasks and contextual performance, considering the mediating role of the organisational climate. Methods: A questionnaire-based survey was conducted from March to May 2024, targeting 16 enterprises in Beijing. Out of the responses, 204 valid questionnaires were collected, with an effective response rate of 87.18%. Scales from previous studies were used to measure leadership styles, organisational climates, and workplace performance. SPSS 22.0 was employed for reliability, validity, correlation, and regression analyses. Results: Autocratic leadership negatively impacts work performance, democratic leadership has a positive effect, and laissez-faire leadership shows no significant correlation with work performance. Organisational climate partially mediates the relationship between autocratic and democratic leadership and work performance, with different mediating degrees in task and contextual performance. However, it does not mediate the relationship between laissez-faire leadership and work performance. Autocratic leadership may limit employees' autonomy, reducing work enthusiasm. Democratic leadership encourages participation and enhances performance. The lack of significant impact of laissez-faire leadership might be due to insufficient guidance. Organisational climate plays a crucial role in the leadership-performance relationship, and different leadership styles interact with it variably. Conclusion: Leadership styles have distinct effects on work performance. Organisational climate mediates the relationship between autocratic and democratic leadership and work performance, but not for laissez-faire leadership. This research enriches theoretical understanding and provides practical guidance for enterprise managers. However, it has limitations, and future research should expand samples and variables for more comprehensive insights.

Keywords: Leadership Styles; Organizational Climate; Work Performance

INTRODUCTION

Among the six modules of human resource management, performance management, as an independent module, is of great significance to employees, managers and enterprises. In recent decades, the methods of evaluating employees' job performance have become increasingly mature and diverse. The development and continuous improvement of assessment tools such as the key performance indicator (KPI) evaluation method, the Management by Objectives (MBO) performance evaluation method, the balanced scorecard, and the 360-degree performance evaluation show that enterprises are paying more and more attention to employees' job performance. With the rapid development of human resource management, enterprises are transforming from the traditional management model to the new three-pillar management model: the shared service centre, the centre of excellence, and the human resource business partner. The ultimate goal is to achieve higher job performance targets for both enterprises and employees. In addition, job performance is also a research hotspot in organisational management psychology. Researches on related theories such as the two-factor theory, motivation theory and equity theory have always been the focus of researchers. It can be seen that job performance has become a research direction of significant concern in the fields of management and psychology.

In the context of rapid globalisation and technological progress, organisations are increasingly focused on enhancing their effectiveness and sustainability. Leadership, as a pivotal element in both academic studies and practical management, plays a crucial role in shaping employee behaviour, motivation, and overall performance. Recent studies, including those by Owotemu, Bernardi & Nwosu (2024), Khan et al. (2024), and Rachmat, Indratjahyo & Subagja (2023), highlight how different leadership styles affect employee performance and organisational effectiveness. Understanding this relationship is vital for ensuring an organisation's growth and resilience, so studying leadership behaviour is an ongoing priority in management research.

Research indicates that different leadership styles can have diverse effects on employee attitudes and behaviours (Maqbali & Khudari, 2024). These effects play a significant role in key areas, such as performance, innovation, and teamwork, all of which are important for organisational success. As organisations face the complexities of modern business environments, exploring various leadership styles has become increasingly important. Leaders who adapt their styles to suit the specific needs of their teams and the context they operate in tend to create higher levels of employee engagement and productivity.

Organisational climate refers to the environmental attributes that employees can perceive and that influence their work attitudes and behaviours (Paek & Lee, 2025). In 1926, Tolman first put forward the concept of "cognitive map," that is, individuals can perceive the surrounding environment and form corresponding cognitive maps in their minds to understand the external environment. The proposal of this concept laid the foundation for the theory of organisational climate, attracted widespread attention from numerous scholars, and triggered a new trend in the research on organisational climate. Some scholars' studies have shown that an organisational climate can play a positive role in promoting employee performance through work engagement. Employees' own characteristics and their working environment influence their work engagement status. In a good organisational climate, employees' emotions are easily influenced, which, to some extent, affects their work attitudes and then influences their work efficiency. Therefore, to some extent, the organisational climate affects employee performance. In view of this, when this article studies the impact of different types of leadership styles on employees' work performance, it will explore the role played by the mediating effects of organisational climate.

Theoretical Frameworks

Leadership Styles

American scholar Lewin believes that leadership styles can be divided into democratic, autocratic and laissez-faire types. Among them, under autocratic leadership in the process of enterprise operation, employees can only be forced to obey the arrangements of the leader and seldom have their own ideas. Democratic leaders actively involve subordinates in the process of the company's decision-making and operation, listen widely to corresponding suggestions, and create a democratic and equal atmosphere in the organisation. Laissez-faire leadership means that the leader adopts a "hands-off" attitude towards the behaviours of subordinates, allowing them to complete the work on their own and only providing help when necessary. This article adopts Lewin's research and divides leadership styles into the above three categories.

Theories Related to Employee Performance

Blau's social exchange theory, which serves as a cornerstone in the study of employee performance, suggests that interactions between employees and organisations are rooted in a reciprocal exchange of resources and benefits. This theory emphasises that exchanges can encompass both material rewards (such as salaries and promotions) and nonmaterial rewards (such as emotional support, recognition, and opportunities for professional development). The evaluative nature of this exchange leads employees to assess the balance between their inputs—such as effort and commitment—and the outputs they receive, which informs their decisions regarding continued engagement with the organisation.

Research indicates that when employees perceive a favourable exchange relationship—where the rewards received significantly outweigh the costs incurred—they are more likely to exhibit heightened job engagement and performance. This proactive response is often characterised by a willingness to contribute beyond basic job requirements, ultimately leading to improved organisational outcomes. The implications of social exchange theory in the workplace are profound, as they suggest that cultivating positive employee-employer relationships can significantly impact motivation, retention, and overall job satisfaction.

Theories Related to Organizational Climate

1. Sense-Making Theory

Sense-making theory explores how employees construct meaning from their work environments to understand and adapt to organisational challenges. When faced with uncertainty, individuals rely on social information, environmental cues, and interactions with colleagues to interpret their experiences. This interpretive process is largely social; employees engage in discussions that shape collective attitudes and behaviours, facilitating a shared understanding of their organisational context.

Research in this area highlights that, through sensemaking, employees can form a common perception of organisational fairness, support, and trust. Such shared interpretations not only influence individual behaviours but also contribute to the development of a coherent organisational climate. For instance, Malla and Malla (2023) and Shikuku & Mosoti (2024) found that when team members engage in open dialogues about their experiences, they gradually create a culture of transparency and collaboration that enhances overall performance and job satisfaction.

Emergence theory extends the understanding of how individual experiences and perceptions within an organisation can coalesce into team or organisational-level phenomena. This theory posits that as individual employees communicate and interact, their distinct cognitive, emotional, and behavioural characteristics can converge, leading to the development of shared group attributes. These emergent characteristics can significantly influence team dynamics, decision-making processes, and overall organisational performance.

For example, individual perceptions of fairness and support within a team can collectively form a prevailing climate of equity, impacting how team members collaborate and engage with one another. Marzec (2023) illustrates that this process of emergence is crucial in shaping the organisational climate and, consequently, employee performance. Similarly, Banhos (2024) provides evidence that a shared

organisational climate fosters greater cohesion by enhancing collaboration and productivity among team members.

Hypotheses

When exploring how leadership styles affect employee performance, understanding the mediating role of organisational climates is crucial. Based on this, the following hypotheses are proposed:

H1: Autocratic leadership negatively affects work performance. H2: Democratic leadership positively affects work performance. H3: Laissez-faire leadership negatively affects work performance.

H4: Organizational climate mediates the relationship between autocratic leadership and employees' work performance, specifically:

H4a: It mediates between autocratic leadership and task performance.

H4b: It mediates between autocratic leadership and contextual performance.

H5: Organizational climate acts as a mediator between democratic leadership and employees' work performance, with sub - hypotheses:

H5a: It mediates the link between democratic leadership and task performance.

H5b: It mediates the connection between democratic leadership and contextual performance.

The research employed a questionnaire-based survey conducted between March and May 2024, targeting 16 enterprises in Beijing. Out of the total responses, 204 questionnaires were deemed valid, yielding an effective response rate of 87.18%.

The survey sample's composition is as follows: In terms of gender, male employees make up 41.7%, while female employees account for 58.3%. In terms of age, 25.0% belong to the 18-24 age group, 28.0% to the 25-27 age group, and 47.0% to the 28-30 age group. For educational background, 2.4% have junior college degrees or below, 58.0% hold bachelor's degrees, 39.1% have master's degrees, and 0.5% possess doctor's degrees; in terms of job levels, ordinary employees account for 78.4%, grassroots supervisors account for 13.7%, middle-level managers account for 5.9%, and senior managers account for 2.0%. In terms of working hours, those working for less than 1 year account for 30.3%, those working for 1-3 years account for 45.1%,

those working for 3-5 years account for 17.2%, those working for 5-8 years account for 6.4%, and those working for more than 8 years account for 1.0%; in terms of the number of job changes, employees who have never changed jobs account for 58.3%, those who have changed jobs once account for 18.6%, those who have changed jobs twice account for 14.2%, and those who have changed jobs three times or more account for 8.9%.

Variable Measurement

Prior to the formal survey, this research chose 60 employees for a preliminary survey. Subsequently, based on the respondents' opinions, the questionnaire was revised. Regarding the measurement of leadership styles, the scale compiled by Kune et al. (1990) was adopted, and it has been verified to have extremely high internal consistency and validity. There are a total of 16 items, with items 1 to 6 being about autocratic leadership style, items 7 to 11 being about democratic leadership style, and items 12 to 16 being about laissez-faire leadership style. All items are rated using a five-point Likert scale. The three leadership styles are independent variables. Regarding the measurement of organisational climate, the organisational climate measurement scale of Zhang, Zhang and Wang (2024) was referred to. Based on this questionnaire, a total of 12 items were set for this research. Organisational climate is the mediating variable and dependent variable.

When measuring work performance, this research adopted the self-report scale developed by Amjad et al. (2021), which has been verified by Wang, Kang and Choi (2021) to have good reliability and validity. The scale divides work performance into contextual performance and task performance. The three types of performance are dependent variables.

Statistical Methods

In this research, SPSS 22.00 is employed to analyse the sample data. Specifically, reliability and validity tests, correlation analysis, and hierarchical regression analysis are carried out successively for statistical analysis. This sequential approach ensures a comprehensive and systematic exploration of the data, enabling more accurate and reliable research results.

Results

Descriptive Statistics and Correlation Analysis

In this research, descriptive statistics and correlation analysis are performed on the main variables (as shown in Table 1). Results indicate that autocratic leadership is significantly negatively correlated with work performance, thus verifying Hypothesis H1. Conversely, democratic leadership shows a significant positive correlation with work performance, validating Hypothesis H2. However, there is no significant

correlation between laissez-faire leadership and work performance, meaning Hypothesis H3 remains unverified.

Table 1: Mean, Standard Deviation and Correlation Coefficients of Main

Note: ** indicates significant at the 0.01 level, * indicates significant at the 0.05 level, and the same below. X1: Autocratic Leadership; X2: Democratic Leadership; X3: Laissez-faire Leadership; Z: Organisational Climate; Y: Work Performance; Y1: Task Performance; Y2: Contextual Performance

Regression Analysis of Autocratic Leadership, Organisational Climate and Work Performance

As presented in Table 2, autocratic leadership significantly and negatively impacts both the organisational climate (M1, r = -0.123, p < 0.01) and work performance (M2, r = -0.141, p<0.05), further validating Hypothesis H1. Once the organisational climate variable is introduced, autocratic leadership still significantly influences work performance, yet the impact weakens (M3, r = -0.088, p < 0.05). Simultaneously, organisational climate has a significant positive impact on work performance (M3, r = 0.432, p < 0.01). This indicates that organisational climate plays a partial mediating role between autocratic leadership and employees' work performance, thus partially verifying Hypothesis H4. When analysing the mediating effect of organisational climate, it is discovered that after autocratic leadership incorporates this factor (M5), its impact on task performance remains significant but is weakened, while organisational climate has a significant positive impact on task performance (M5, r = 0.281, p < 0.05). Therefore, the organisational climate mediates between autocratic leadership and task performance, partially verifying Hypothesis H4a. Similarly, when autocratic leadership incorporates the mediating variable of organisational climate (M7), its impact on contextual performance becomes insignificant, while organisational climate has a significant positive impact on contextual performance (M7, r = 0.583, p < 0.01). Suggesting that organisational climate mediates between autocratic leadership and contextual performance, Hypothesis H4b is verified.

Table 2: Hierarchical Regression Analysis of Autocratic Leadership, Work Performance and Organisational Climate

Regression Analysis of Democratic Leadership, Organisational Climate and Work Performance
Table 3 shows that democratic leadership significantly and positively impacts both organisational climate (M8, r = 0.386, p < 0.01) and work performance (M9, r = 0.335, p < 0.01), thereby verifying Hypothesis H2. Once organisational climate is added, the influence of democratic leadership on work performance remains significant but weakens (M10, r = 0.201, p < 0.01). Meanwhile, organisational climate has a significant positive impact on work performance (M10, r = 0.347, p < 0.01), indicating that it plays a partial mediating role between democratic leadership and work performance, thus partially verifying Hypothesis H5. When analysing the mediating effect of organisational climate, it is found that after introducing this factor (M12), democratic leadership still significantly affects task performance, yet the impact is weakened. At the same time, organisational climate has a significant positive impact on task performance (M12, r = 0.187, p < 0.01). Thus, it can be concluded that organisational climate plays a partial mediating role between democratic leadership and task performance, partially verifying Hypothesis H5a. Similarly, after adding organisational climate (M14), democratic leadership still has a significant but weakened impact on contextual performance, while organisational climate significantly and positively affects contextual performance (M14, r = 0.507, p < 0.01). This shows that organisational climate plays a partial mediating role between democratic leadership and contextual performance, partially verifying Hypothesis H5b.

Table 3: Hierarchical Regression Analysis of Democratic Leadership, Work Performance and Organisational Climate

Regression Analysis of Laissez-faire Leadership, Organisational Climate and Work Performance

Regression analysis was conducted on laissez-faire leadership, organisational climate and work performance (see Table 4). In Table 4, X3: Laissez-faire leadership is the independent variable, and the rest are model statistics. The impacts of laissez-faire leadership on them are not significant, and Hypotheses H3, H6, H6a and H6b have not been verified.

Table 4: Regression of Laissez-faire Leadership, Work Performance and Organisational Climate

Discussion

The findings reveal a significant negative correlation between autocratic leadership and work performance, suggesting that this leadership style may hinder employees' ability to perform effectively. This may be because this leadership style restricts employees' autonomy and creativity, leading to a decline in their work enthusiasm and thus affecting work performance (Jia, Hu & Li, 2022). Research by Zahari, Akbar & Situmorang (2024) indicates that democratic leadership has a notably positive correlation with work performance. Democratic leadership can inspire employees work enthusiasm and initiative, encouraging their participation in decision-making and the work process, which in turn enhances work performance. In contrast, laissez-faire leadership shows no significant correlation with work performance. This might be due to the fact that laissez-faire leadership offers less work guidance and supervision to employees. As a result, employees' work performance is more influenced by other factors, like their own abilities and the working environment.

After introducing the variable of organisational climate, the impact of autocratic leadership on work performance is weakened, and organisational climate has a significant positive impact on work performance. This shows that organisational climate plays a partial mediating role between autocratic leadership and employees' work performance. Specifically, in terms of task performance and contextual performance, organisational climate plays a mediating role between autocratic leadership and task performance and also plays a mediating effect between autocratic leadership and contextual performance. This means that autocratic leadership not only directly affects work performance but also indirectly affects it by influencing organisational climate. In particular, the impact on contextual performance is completely achieved through organisational climate. This suggests to enterprise managers that autocratic leadership may undermine the organisational climate and then have a negative impact on employees' work performance, so this leadership style should be adopted with caution (Ghrairi, 2024) Organisational climate plays a partial mediating role between democratic leadership and work performance. In terms of task performance and contextual performance, organisational climate also plays a partial mediating role between democratic leadership and them. This indicates that democratic leadership can create a good organisational climate and then improve employees' work performance, including task performance and contextual performance. Enterprises should advocate the democratic leadership style and encourage employee participation to enhance the organisational climate and work performance (Hermanto, Srimulyani & Pitoyo, 2024; Zahari, Akbar & Situmorang, 2024; Alghizzawi et al., 2024). The impacts of laissez-faire leadership on organisational climate, work performance, task performance and contextual performance are not significant, and the hypotheses have not been verified. This may imply that laissez-faire leadership has a relatively small impact on organisational climate and work performance in the context of this research, or its impact mechanism is rather complex and requires further in-depth research.

Limitation

This research may have some limitations. Firstly, although the sample has a certain degree of diversity, it may still not be able to fully represent the situations of all enterprises and industries. This research has limitations. The sample might influence the generalisability of the results. The self-report scale for work performance has subjective biases due to factors like self-awareness and work attitude. Only the organisational climate was considered as a mediating variable; there could be others. Future research should address these to improve conclusion reliability. In future research, it is advisable to broaden the range of mediating and moderating variables. This will enable a more comprehensive exploration of the link between leadership styles and work performance, thus enhancing our understanding of how different leadership approaches impact employees' job performance.

In the future, research can be extended and delved deeper in multiple ways. Initially, broaden the sample scope by including a wider variety of enterprises and industries, thereby enhancing the generalisability of the research outcomes. Second, adopt a combination of multiple measurement methods to evaluate work performance, such as combining evaluations from superiors and colleagues, to reduce subjective biases. Third, further explore other possible mediating variables and moderating variables, such as employees' personality traits and organisational culture, to construct a more complete theoretical model. Fourth, longitudinal studies can be conducted to track the changes in leadership styles and work performance of the same group of employees in different time periods, to better reveal the causal relationship and dynamic change process between variables.

Conclusion

The study concludes that leadership styles exert varying effects on work performance. Specifically, autocratic leadership negatively impacts performance, democratic leadership enhances it, and laissez-faire leadership shows no significant influence. The mediating effects of organisational commitment vary across different leadership styles. Specifically, organisational commitment partially mediates the relationship between autocratic leadership and task performance, while it fully mediates the link between autocratic leadership and contextual performance. This indicates that organisational commitment partially influences how autocratic leadership affects the overall work performance of the new generation of employees. Similarly, organisational commitment also partially mediates the relationship between democratic leadership and both task and contextual performance, suggesting that it plays a partial role in shaping the impact of democratic leadership on employee work performance. However, organisational commitment does not exhibit any mediating effect between laissez-faire leadership and work performance.

Practical Significances

This research not only enriches the theoretical exploration of the link between leadership styles and work performance but also delves into the mediating effect of organisational climate within this connection. Specifically, it presents a fresh perspective and theoretical groundwork for comprehending how leadership styles impact employees' work performance. Furthermore, the study on the associations between distinct leadership styles, including autocratic, democratic, and laissez-faire, and multiple aspects of work performance, like task performance and contextual performance, refines and extends the theoretical knowledge in relevant areas. As a result, enterprise managers should be cognisant of the substantial influence that leadership styles exert on both employees' work performance and organisational climate.

Enterprise managers should recognise that leadership styles greatly impact both employees' work performance and the organisational climate. This awareness can help them make better decisions for optimising individual and collective results within the organisation. They should try to avoid adopting the autocratic leadership style and instead adopt the democratic leadership style more often to create a positive organisational climate and improve employees' work performance. In addition, enterprises can help managers improve their leadership abilities and optimise their leadership styles through training and guidance, thus promoting the development of enterprises and the growth of employees. Meanwhile, although this research has not found significant impacts of the laissez-faire leadership style, enterprises still need to pay attention to the potential problems that this leadership style may bring, such as employees' lack of a sense of direction and cohesion and make appropriate adjustments and management according to the actual situation.

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