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The Impact of Path-Goal Leadership Styles on Work Group Effectiveness and Turnover Intention

Marva L. Dixon Director, Army Community Services

U.S. Army Garrison, Vicenza

Laura Kozloski Hart Associate Professor of International Business and Strategy

Barry University

Globalization and the demand for a skilled, educated, and expeditious workforce pressure organizations to leverage their diverse workforces to gain competitive advantage (Harris, 1996). Throughout the next decade, the U.S. workforce is forecasted to become even more diverse, with 75 percent of the immigrant population arriving in the United States from Asia and Latin America, with only five percent coming from Canada and Europe. Women and minorities were projected to represent 70 percent of the U.S.’s 2008 workforce (Lockwood, 2005).

To maintain financial competitiveness in this diverse landscape, organizational leaders must embrace the leadership styles that are most effective in motivating the diverse groups in which many employees work. Diversity in work groups can generate significant benefits for organizations, including enhanced innovation, creativity, and productivity (Valentine, 2001). Capturing these benefits takes the right type of leadership style and skills (Jung and Sosik, 2002; Silverthorne, 2001; Waldman et al., 2001; Kim and Organ, 1986; House, 1971; Fiedler, 1967). Despite recognition that an appropriate leader can enhance a work group’s performance, increase group members’ job satisfaction, and reduce turnover intentions, there is scant research assessing the impact of specific leadership styles on diverse work group effectiveness and turnover intention (Duemer et al., 2004). To help fill this gap, we analyze the relationships among three Path-Goal leadership styles, diversity, work group effectiveness and work group members’ turnover intention.

The following section discusses the important literature about diverse work

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groups, work group effectiveness, turnover intention, and Path-Goal leadership styles. Then, the methods and results of our data collection and analysis are presented. Finally, the conclusions and implications of this study’s findings for organizational leaders and the fields of leadership and management are explained.

REVIEW OF THE LITERATURE

Work Groups and Work Group Diversity

Work groups are comprised of individuals who are interdependent and/ or interact with each other to complete tasks and projects that contribute to organizational productivity, innovation, and creativity. The exchange of information and know-how among work group members as they achieve common goals generates social bonds that enhance productivity and organizations’ financial performance (Gil et al., 2005; Blanchard and Miller, 2001; Beck et al., 1999; Anakwe and Greenhaus, 1999; Nonaka and Takeuchi, 1995).

Diverse work groups exist when members’ individual attributes differ (Mannix and Neale, 2005; Hobman et al., 2004, 2003). Researchers often focus on two dimensions of group member diversity. The first is “visible dissimilarity,” which includes explicit characteristics such as age, race/ethnicity, and gender, and the second is “value/informational dissimilarity,” which includes relative characteristics such as functional background, educational background, and seniority (Hobman et al., 2004, 2003; Chattopadhyay, 2003; Chatman and Flynn, 2001; Williams and O’Reilly, 1998).

When individuals interact with people whom they perceive as different, they tend to classify themselves and those people into social categories (Cox and Nkomo, 1990). Research has found that, early in the life of a work group, members focus on the visible aspects of diversity such as gender, race/ethnicity, and age. As group members interact, they redirect their attention to other members’ non-visible features such as personality, education, expertise, values, and communication styles (Cunningham and Sagas, 2004; Hobman et al., 2004, 2003; Salomon and Schork, 2003; Richard et al., 2002; Caudron, 1994). Employees with more perceived value/informational dissimilarity with their leaders tend to be less satisfied with them and have weaker organizational attachment that those with high perceived similarity (Lankau et al., 2007).

Diverse work groups present their leaders with challenges and benefits. Among the challenges are potentially unfavorable interpersonal relationships, impeded intra-group communication, low group cohesiveness, and high employee turnover (Joplin and Daus, 1997; Schneider, 1987; Pfeffer, 1983). If not managed correctly, diversity can negatively affect work group members’ retention, organizational commitment, and productivity, harming the group’s overall effectiveness (Chemers et al., 1995). Thomas (1999) confirmed that

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homogeneous groups experienced better work performance that heterogeneous ones.

Researchers have also identified potential benefits of diverse work (Miura and Hida, 2004; Caudron, 1994). Work group resources (including knowledge creation) reside in all work group members and are embedded in their social networks (Anakwe and Greenhaus, 1999; Nahapiet and Ghoshal, 1998). Social- emotional theorists assert that the common work activities and goals shared by group members may satisfy members’ need to belong regardless of a group’s diversity (Dion, 2000; Beck et al., 1999; Caudron, 1994). When diverse group members’ resources are properly channeled, groups utilize their differences as sources of learning, growth, and adaptability, positively impacting organizational performance (Schneider, 1987).

Work Group Effectiveness

Organizations often rely on work groups for product development, service improvement, and operations. For work groups to be effective, group members must feel that teamwork, care, and trust are core group values (Campbell and Swift, 2006; Gil et al., 2005; Kochan et al., 2003; Harrison et al., 1998). Organizations with successful work group leaders who are able to promote such values find themselves with high levels of work group effectiveness which contribute to their organization’s competitiveness (Cohen and Bailey, 1997).

Mirvis and Kanter (1991) and Foldy (2004) found that, under certain circumstances, members can feel social reassurance in their work groups despite differences with other group members. When leaders communicate positively about work group diversity, emphasizing the group’s common work goals, and members take constructive, introspective views about their beliefs about diversity, work group effectiveness is enhanced, positively impacting organizational competitiveness (Thatcher et al., 2003; Hostager and DeMeuse, 2002).

It is important for group leaders to acknowledge and celebrate diversity so that it is viewed as a generator of innovation and creativity for the organization (Hobman et al., 2003; Chattopadhyay, 2003; Ely and Thomas, 2001; Cohen and Bailey, 1997). Diverse work group effectiveness tends to decline when members become dissatisfied with leadership styles that do not meet their expectations. As a result, diverse work groups need leaders who motivate members to embrace their diversity (Sousa-Poza and Henneberger, 2004; Peterson, 2004; Kuo, 2004; Khatri et al., 2001; Aquino et al., 1997; House and Dessler, 1974). Such leaders motivate high levels of work group performance and foster job satisfaction (Kim and Organ, 1986). Conflict generated by work group diversity that is not properly addressed by leaders can be a barrier to work group effectiveness and may result in decreased member retention (Boyar et al., 2003; Jehn et al., 1999).

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Research about diversity and work group effectiveness led to the first hypothesis:

H1. There is a statistically significant negative relationship between work group diversity and work group effectiveness.

Path-Goal Leadership Theory

Leadership literature is replete with theories that confirm the important relationship between positive leadership and group or organizational effectiveness. Good leaders develop sound strategies and structures that support employees, reward their commitment, and minimize their turnover (Sheard and Kakabadse, 2002, 2004; Waldman et al., 2001; Fiedler, 1967). They also provide visions that empower, motivate, and encourage high levels of individual and work group performance (Ahn et al., 2004; Ogbonna and Harris, 2000; Joplin and Daus, 1997).

Path-Goal leadership theory provides a framework that explains the success of leaders who are flexible and able to generate high levels of work group effectiveness by increasing members’ motivation through clarification, direction, structure, and rewards (Hsu et al., 2003; Silverthorne, 2001; House and Mitchell, 1974; House, 1971). Leaders with Path-Goal leadership styles clarify and provide direction for followers, help remove obstacles, and provide encouragement and rewards for goal achievement. These leaders achieve results because of their influential posture, ability to work effectively with others, and success in generating worker satisfaction (Youngjin, 2006; House and Mitchell, 1974).

Path-Goal Leadership Theory and Work Group Effectiveness

The Path-Goal leadership theory assigns responsibility for a work group’s effectiveness to its leaders based on the premise that leaders’ behaviors impact their work groups. Individuals adopting Path-Goal leadership styles tend to be successful in enhancing work group effectiveness because these styles enable leaders to assess needs and clarify goals in many work group situations (Ogbonna and Harris, 2000). The flexibility of Path-Goal leadership styles may also enhance diverse work group members’ satisfaction with their working conditions, thereby raising their retention rates (Duemer et al., 2004). Based on these findings, the second hypothesis for this study is:

H2. There is a statistically significant positive relationship between Path- Goal leadership styles and work group effectiveness.

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Turnover Intention

Research has also found that employee dissatisfaction with work group experiences, including leaders’ styles and work group diversity, directly contributes to their turnover intentions (Brannon et al., 2007; Hwang and Kuo, 2006; Samad, 2006; Loi et al., 2006; Bigliardi et al., 2005; Chen and Silverthorne, 2005; Peterson, 2004; Abraham, 1999; Sims and Kroeck, 1994). Because work group diversity may enhance conflict among work group members, turnover intentions among affected work group members may rise (Brannon et al., 2007). Thus, this study’s third hypothesis is:

H3. There is a statistically significant positive relationship between work group diversity and turnover intention.

Turnover intention has been found to be highly correlated with and a precursor to resignations. Resignations disrupt overall organizational effectiveness and increase expenses (Rao and Argote, 2006; Sousa-Poza and Henneberger, 2004; Taplini et al., 2003).

Porter and Steers’ (1973) met-expectation theory proposed that employees’ expectations are tied to satisfaction with their work groups. Empirical studies have confirmed this theory, finding that positive work group experiences and effectiveness can enhance employees’ satisfaction and minimize turnover intentions (Cohen and Bailey, 1997; Hom et al., 1984). Work group leaders are charged with enhancing the effectiveness, including minimization of member turnover, of their work groups (Chatman and Flynn, 2001; Pelled et al., 1999; Andre, 1995). When work group leaders appreciate their members and highlight their individual value and contribution to performance, work group cohesiveness improves, effectiveness increases, organizational commitment is enhanced, and turnover intention declines (Brannon et al., 2007; Loi et al., 2006; Valentine, 2001). This leads to this study’s fourth hypothesis:

H4. There is a statistically significant negative relationship between Path- Goal leadership styles and turnover intention.

Review of the literature about diversity work group effectiveness, turnover intention, and Path-Goal leadership styles reveals gaps in analysis of how these topics may be related. Thus, the final two hypotheses for this study are:

H5. There is a statistically significant positive relationship among Path-Goal leadership styles, diversity, and work group effectiveness.

H6. Path-Goal leadership styles, diversity and work group effectiveness significantly impact work group members’ turnover intention.

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METHODOLOGY

Research Question and Hypotheses

When designing this study, the main interest was in determining the

interrelationships among Path-Goal leadership styles, diversity in work groups,

work group effectiveness and work group members’ turnover intentions. Figure

I shows the combination of variables in this study.

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Population and Sampling Plan

Surveys were distributed to all 260, full-time, white collar and blue- collar workers at a southeastern U.S. multinational manufacturing firm. All participants worked in one of 20 work groups in production/manufacturing, distribution/ logistics, technology, cleaning/painting, or recycling, ranging in size from five to 25 employees. All participants completed surveys anonymously during working hours, and the study’s data was collected during a one-week period in fall 2007, yielding 242 usable surveys (a 92% response rate).

Instrumentation and Data Analysis

The survey had four parts with 48 total questions, leveraging proven instruments developed and tested in prior research. Part One used the Perceived Dissimilarity Scale (Hobman et al., 2004) to measure “visible dissimilarity” (information about participants’ age, gender, race, ethnicity, educational level, occupational level, and job tenure) and “value/ informational dissimilarity,” (data about participants’ values, work principles, and functional experience). Part Two measured participants’ perceptions of their work group leaders’ styles using the Perceived Leadership Behavior Scale (PLBS) (House and Dessler, 1974). Part Three measured participants’ perceptions of their work groups’ effectiveness using Part IV (The Perceived Work Group Effectiveness Scale) of the Defense Equal Opportunity Management Institute’s Occupational Climate Survey (DEOCS). Part Four measured employees’ turnover intention, using The Turnover Intention Scale (Camman et al., 1983).

To analyze study data, descriptive statistics, factor analyses, and multiple regression analyses were applied. Adopted scales were retested for internal consistency and reliability.

RESULTS

Internal Consistency and Reliability of Survey Subscales

Factor analysis of all subscales yielded one-factor solutions for each of the following variables: visible dissimilarity, value/informational dissimilarity, instrumental leadership, supportive leadership, participative leadership, and turnover intention scales. Factor analyses revealed a two-factor solution for the DEOCS Work Group Effectiveness Scale. Cronbach’s alphas were calculated to determine the levels of internal consistency and reliability for all subscales, revealing alphas above .79 for each.

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Research Findings

Analysis of the descriptive statistics of the sample showed that participants’ demographics were representative of employees working in heavy manufacturing in southeastern U.S. Demographic information for the sample is separated into visible and value/informational dissimilarity categories and is detailed in Table 1.

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Hypothesis 1. Results of a multiple regression analysis revealed that visible dissimilarity (p = .193) did not have a significant negative correlation with work group effectiveness and that value/informational dissimilarity (p = .053) displayed a negative trend effect relationship with work group effectiveness. The adjusted R2 shows that work group diversity explained only 5% of the variability in work group effectiveness. Results of this analysis did not confirm prior research that found that diversity impeded work group effectiveness (Joplin and Daus, 1997; Chemers et al., 1995; Schneider, 1987; Pfeffer, 1983). Thus, the first hypothesis was not supported.

Hypothesis 2. This hypothesis was designed to confirm the results of prior research into the effectiveness of Path-Goal leadership styles (Hsu et al., 2003; Silverthorne, 2001; Ogbonna and Harris, 2000; House and Mitchell, 1974; House, 1971). Multiple regression analysis revealed that all three Path-Goal leadership styles had statistically significant, positive relationships with work group effectiveness, supporting the second hypothesis and confirming the findings of prior research. The Instrumental leadership style was most strongly correlated with work group effectiveness at p = .005, Participative leadership was correlated at p = .013, and Supportive leadership was correlated at p = .026. Combined, the Path-Goal leadership styles explained 34% of the variability in work group effectiveness.

Hypothesis 3. The third hypothesis was developed to confirm research that found that diverse work groups would experience high levels of turnover intention (Joplin and Daus, 1997; Schneider, 1987; Pfeffer, 1983). A multiple regression analysis indicated that value/informational dissimilarity had a statistically significant positive correlation (p = .019) with turnover intention. Visible dissimilarity in work groups did not demonstrate a statistically significant relationship with turnover intention (p = .656). This supports the literature which suggests that, over time, members focus more on co-workers’ non-visible aspects of diversity. However, the adjusted R2 for this analysis shows that work group diversity only explained 2% of the variance in turnover intention. Given the low adjusted R2 of this analysis Hypothesis 3 was not supported.

Hypothesis 4. Foundational research for this hypothesis were studies by Gil et al. (2005) and Hsu et al. (2003), which found that Path-Goal leadership styles were effective in reducing employee turnover intention. A regression analysis revealed that both Instrumental leadership (p = .365) and Participative leadership (p = .127) styles were negatively correlated with turnover intention, although not at statistically significant levels. The Supportive leadership style, however, did have a statistically significant negative relationship with turnover intention (p = .002.) Path-Goal leadership styles explained 22% of the variability in turnover intention. Thus, the fourth hypothesis was only partially supported.

Hypothesis 5. Multiple regression analysis revealed positive, statistically significant relationships between Instrumental and Participative leadership

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styles and work group effectiveness, confirming earlier research (Hsu et al., 2003; Silverthorne, 2001; Ogbonna and Harris, 2000). However, neither visible nor value/informational dissimilarity was significantly correlated with work group effectiveness. As a group, the three Path-Goal leadership styles and diversity explained 37% of the variability in work group effectiveness. Thus, this hypothesis is only partially supported. Table 2 contains the results of the analysis.

Hypothesis 6. Regression analysis revealed that Path-Goal leadership styles, diversity, and work group effectiveness explained 23% of the variability of turnover intention. Value/informational dissimilarity (p = .045) had a significant positive relationship with turnover intention, suggesting that work group members’ turnover intentions increased with increasing levels of value/ informational dissimilarity. The Supportive leadership style (p = .006) also had a statistically significant relationship with turnover intention, showing that leaders of diverse work groups demonstrating the Supportive leadership style lowered members’ turnover intentions. It is interesting to note that at a .10 level of significance, the Participative leadership style is significantly correlated with turnover intention. Finally, although prior studies have found that group members’ perceptions of work group effectiveness positively impact turnover intentions (Brannon et al., 2007; Cohen and Bailey, 1997; Kim and Organ, 1986), this analysis did not confirm this relationship (p = .858). Thus, Hypothesis 6 is only partially supported. Details of this analysis are in Table 3.

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DISCUSSION

Employees are often organized into work groups in order to increase

organizational productivity and competitiveness. Work group leaders are tasked

with creating and nurturing environments that motivate members’ contribution

to the achievement of common work goals. In the U.S., many work groups are

diverse, reflecting the country’s demographic make-up.

This research found that Path-Goal leadership styles had statistically

significant, positive relationships with diverse work group effectiveness, with

Instrumental leadership demonstrating the strongest correlation. An interesting

finding was that Supportive leadership (offering camaraderie, friendliness, and concern for achievement and group members’ well-being) was the Path-Goal

leadership style most highly correlated with reduced work group members’

turnover intention. This study confirmed some existing research about

diversity and work group effectiveness and disconfirmed other findings by

demonstrating that visible dissimilarity among members does not significantly

impact effectiveness, and that members’ dissimilarity in values, principles, and

functional experience only has a negative trend effect on effectiveness. The

practical implication of this finding is that organizations emphasizing common

values and conducting appropriate diversity training may be able to improve

employee satisfaction and diverse work group performance. This study was

unable to confirm, however, the negative relationship between work group

effectiveness and turnover intention that was found in previous research.

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Limitations and Research Recommendations

Because all data used in this study comes from one source using a self-

report survey, it has the potential for common method variance, limiting the

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generalizability of the study’s findings. Additionally, because quantitative data rather than qualitative data were gathered, the study does not follow up with participants about their specific work situations. Finally, this study only included Path-Goal leadership styles, excluding other types of leadership styles that may have been more characteristic of this organization’s work group leaders, which may have yielded additional insight for leadership experts.

To mitigate these limitations, it is recommended that future research study larger groups of employees in other industries and geographies. It is also recommended that qualitative data be collected to be able to delve deeper into perceptions of leadership styles and work group effectiveness as potential reasons for turnover intention. Finally, a longitudinal study is recommended to assess work group effectiveness and turnover intention before and after work group leaders are trained in Path-Goal leadership styles and diversity tolerance.

Conclusion

In summary, this research supports existing empirical work that studied different parts of the equation that includes leadership style, work group effectiveness, diversity, and turnover intention. Additionally, it fills a literature gap by combining all four variables into its analysis. Because this study includes all variables, it sheds new light on the impact of Path-Goal leadership styles on diverse work group effectiveness and turnover intention and provides new insight about how leaders of diverse work groups can improve their effectiveness and encourage work group member retention. Because both work group effectiveness and employee retention positively contribute to bottom- line performance, organizational leaders and researchers benefit from the findings.

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