Effect of Transformational Leadership Style on Organisational Performance of State Corporations in Kenya

Abstract

Performance of many State Corporations in Kenya has been below expected levels. The government spends billions to service loans defaulted by State Corporations annually. The Annual Public Debt Report 2011/2012, indicates that of the Kshs. 961.3 million payments made by the Government on Guaranteed Debt in 2011/12, 95.6% was on debt accruing to two State Corporations, pointing to significant defaults in payments. As at June 2013, the status of publicly guaranteed debt for state corporations stood at Ksh 47,168.60 million. This study sought to find out the effect of transformational leadership style on organisational performance of state corporations in Kenya. Specifically, the study sought to find out which transformational leadership style is required for improved organisational performance of State Corporation in Kenya. The specific objectives of this study analysed the effect of charisma, inspirational motivation, intellectual stimulation and individualised consideration on performance of State corporations in Kenya. In order to meet the objectives of this study, relevant leadership theories and various leadership styles were reviewed thoroughly. Literature relating to each of the four independent variables was reviewed, as well as literature relating to the dependent variable. The study adopted a descriptive research design where the use of measures of central tendency such as mean and standard deviation was common. This study used primary data obtained from the original sources using a structured and semi-structured questionnaire and captured through a 5-point type Likert scale. The questionnaires were self-administered using the drop and pick method. A pilot study was undertaken on the sample population. The questionnaire was subjected to overall reliability analysis of internal consistency. The study used construct validity employing both convergent and discriminant validity dimensions. After quantitative data was obtained through questionnaires, it was prepared in readiness for analysis by editing, handling blank responses, coding, categorizing and then keyed into Statistical Package for Social Sciences (SPSS) version 24 for analysis. The specific descriptive statistics included percentages and frequencies while the inferential statistics included a multiple linear regression model. The results were presented in form of figures and tables. From a population of 5,140 leaders, data was collected from a sample of 165 respondents randomly selected, from 8 randomly selected state corporations in Kenya. More data on the performance of these 8 State corporations was collected from the division of performance contracting of the Ministry of Devolution and Planning. The study found that there was a significant relationship between charismatic leadership style and organisational performance, inspirational motivation and organisational performance, intellectual stimulation and organisational performance, individualized consideration and organisational performance of state corporations in Kenya. The study concludes that a leadership that is charismatic, individually considerate, motivationally inspiring and intellectually stimulating exerts a positive and significant influence on the performance of state corporations in Kenya. The study recommends that Cabinet Secretaries who are the majority involved in appointing leaders of State corporations should take note of the critical role of transformational leadership in state corporations. Appointments, particularly of chairpersons of state corporations, should seriously consider the transformative configuration of the holder of this office. Political considerations should, therefore, be surrogate to transformational leadership considerations.