Free «Management in the Banking Sector» UK Essay Sample

Management in the Banking Sector


The role of a leader in the banking sector is to develop the skills and potential in workers and motivate them to release those capabilities towards an attainment of common goals. A bank manager is a leader of an organization; he/ she is responsible for organizing productive banking services, such as financial products, loans and credits to the satisfaction of customers. A leader is responsible for ensuring that employees recognize and use these human characteristics for themselves in order to provide efficient customer service. 

The main objective of this paper is to ascertain the relationship between adopted leadership styles and behavior of bank managers, which influence productivity of bank employees, and scope for their productiveness enhancement, applicable in the banking sector of the United States. Another objective is to examine the leadership style of bank managers and their potential in controlling functions and effectiveness in assigning responsibilities.  Besides, this paper also examines negotiation styles of bank managers and their leadership in maintaining the quality of customer service by examining different styles of leadership and behavior.

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1. Provide a detailed description of the factors that will influence the choice of leadership styles or behaviors in workplace situations.

In answering this question, it is important to mention some significant factors that influence transactional and transformational styles of leadership in the banking industry. The two-decade research conducted by Grunig, Grunig, and Dozier (2002) demonstrated that internal characteristics, such as organic structures, a participative organizational culture, symmetrical communication, motivation, employee’s empowerment, gender equality, and teamwork are critical determinants, which influence transactional and transformational styles of leadership in the banking industry. These antecedent elements provide a hospitable culture for excellent customer service, as well as promote internal communication with bank staff, which, in turn, enhances employees’ attitudes towards work and influences their behavioral outcomes.

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Organizational culture plays an important factor in enhancing performance and generating commitments and, in-turn, influencing leadership. In absence of strong leadership culture, bank employees are not satisfied at work; they are less committed and search for other opportunities. If opportunities are far reaching or unavailable, they will distant themselves from an organization. Consequently, this aspect will impact organizational commitment of potential leaders, as well. Organizational culture acts as a mediator towards organizational commitment.

Organizational culture, which employees accept full heartedly, helps leaders in achieving superior performances and accomplishment of goals over the long run. Brewer and Clippard (2002) in their research about the influence of organizational culture found that bureaucratic leadership in a culture always creates a negative relationship with workers’ commitment. Further, bureaucratic culture in the bank can impede an individual’s job effectiveness. Thus, a productive outcome will appear when the culture is encouraging, which ultimately results in involvement of employees and increased commitment towards jobs assigned. Furthermore, the authors also found that employees who worked in a supportive environment created by leaders can increase the level of commitment.

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Different scholars have concluded that if employees are not empowered, it creates frustration among employees and loss of productive business in the banking industry.  Although there is no sufficient literature on empowerment in a banking sector, the concept is not a new in financial sector, which needs further investigation (Grunig, Grunig, & Dozier, 2002).

2. Explain why these leadership styles or behaviors are likely to have a positive or negative effect on individual and group behavior. Ensure your answer includes examples.

Current leadership theories demonstrate that leadership styles can be classified into two prominent styles, such as transactional and transformational leadership.

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Transformational leadershipis the most significant leadership style practiced in the highly successful banks. Transformational leaders are influential. Therefore, they motivate employees and encourage their moral values and ideas by creating and inspiring a vision of the future. This style of leadership encompasses the establishment of an emotional attachment between employees and leaders. Transformational leaders are always concerned about the well-being of their team members. Jin (2010) also supported the fact that transformational leadership incorporates and builds the elements of “compassion, sensitivity, empathy, innovation, and relationship building” (p. 175). It nurtures a climate of trust, develops workers’ confidence, and promotes their individual behavioral development. Besides, transformational leadership demonstrates the characteristics of sharing power and participative decision making (Jin, 2010).

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Transactional leadership usually exists in top management of the banking sector. It motivates employees by evaluating their personal desires on the basis of previous economic transactions. These leaders adopt bureaucracy, power, authority and policy to maintain control over employees; such a leadership behavior is referred to as authoritative, which can render negative impact on employees’ behavior and productivity. Previous management scholars have observed contingent reward policy that involves leaders identifying roles and job expectations, as well as offering contingent rewards on accomplishment of tasks and obligations; the above mentioned actions represent transactional leadership because it shows the exchange notion is an essential element in transactional leadership behavior. The exchanges or transactions included in the reward can be tangible; for example, pay hike or intangible, such as recognition and praise.

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Transformational and transactional leadership have been widely practiced in the banking sector. Effective leaders are capable of switching between a transactional and transformational leadership, according to the circumstances and increase their influence by applying both leadership styles. For example, in Citi Banks, leaders are the role models to follow. Top management expects leaders to manage, organize and work with team members and motivate team members by rewarding benefits and out of turn promotion. Therefore, leaders assume the responsibility of enhancing team performance. This practice is usually carried either through coaching procedures or training support, in order to evaluate each team’s member’s competences, which can be utilized in line with the organization’s expectations (Judge & Piccolo, 2004).

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