Leadership Style and Retail Store Performance.docx - Chapter 2 Literature Review Leadership Practices Leadership is very important in any organisation

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Chapter 2: Literature Review Leadership Practices Leadership is very important in any organisation because it acts as the determinant whether an organisation will realise its objectives and fulfill the needs of the followers. A previous study investigated several leadership practices and included leadership styles of the managers (Minja 2010). The findings of this research study revealed that good leadership is both people and task-oriented and that an effective leader must aim at striking a balance between people and tasks within the organisation. Leadership has been recognised as one of the key components of all retail organisations. However, functions of leadership are becoming more and more complicated due to globalisation and increased competition. Leadership Style and Retail Store Performance In their study, Mekraz and Gundala (2016) investigated the ways in which leadership styles impact on the performance of retail stores. The researchers investigated the organisational leadership style and how it impacts on employees’ performance of Discount Retail Store. The retail store is one of the Fortunes 1000 and is located in the Midwest of the United States. The researchers measured the performance of the store using four indicators, including customer service scores, employee turnover, net profit margin, and inventory shrinkage percentage. The findings showed that a negative relationship exists between the turnover rate and transformational leadership. However, other findings indicated that the relationship existing between the turnover rate and transactional leadership is negative. The researchers observed that during the training of managers in the retail industry, the main focus is usually on training and development while little emphasis and attention is given to building and using leadership skills.
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Due to poor training they receive and failure to be focused in these areas, leaders of retail organisations are faced with numerous challenges in running a successful organisation, including reducing inventory shrinkage, managing the high employee turnover rate, increasing profit margin, and delivering quality customer service. Management of human resource has become one of the most important areas associated with achieving and maintaining a competitive advantage. Service quality determines the performance of a retail store because customers usually make comparison between the service provided to them and the process of delivering the service. Therefore, Mekraz and Gundala (2016) indicated that the managers of the retail stores should place much emphasis on their human resource and service quality to ensure that their stores perform well and remain competitive. One of the main focus areas of the retails stores that wish to remain competitive is employee motivation.
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