The relationship between leadership style and employee motivation during post-acquisition intergration

Abstract

In today’s rapidly changing and challenging business environment, many organisations in various countries and across different industries choose to grow through mergers and acquisitions (M&A). The number of mergers and acquisitions deals has increased in recent times, despite a significant rate of failure. Among the key reasons for the failure of mergers and acquisitions is the human factor, especially during the phase of integration. This research is intended to focus on the context of post-acquisition integration and to understand the relationship between leadership styles and employee motivation in both acquiring and acquired organisations. Quantitative research was conducted into two organisations currently undergoing integration, collecting data via an online survey based on questions relating to employee motivation and two styles of leadership; transformational and transactional. The data collected from 285 responses was statistically analysed to enable a better understanding of the relationship between these constructs. An independent sample t-test was conducted to shed light on the difference in leadership styles and how these affect employee motivation, and multiple regression analyses were done to understand which leadership style may be considered a predictor of employee motivation. Factor analysis and validity and reliability tests were conducted prior to statistical analysis to ensure the validity and reliability of the data. Key among findings of this research, leadership style was found to be highly relevant to motivational factors, and moderately relevant to hygiene-related factors of employee motivation in both acquiring and acquired organisation. A transformational style of leadership was found to be a predictor of both motivational and hygiene-related factors of employee motivation, whereas a transactional style of leadership was found to be a predictor of hygiene-related factors and of one motivational factor. The findings of this research empirically validate the relationship between leadership style and factors of employee motivation, upon which future researchers may choose to build.