Performance management and work engagement in a petrochemical industry : The role of authentic leadership

Abstract

The petrochemical industry is characterised by sophisticated technologies and processes into world-scale operating facilities. To stay competitive, the industry produces and markets a range of high-value product streams in 31 countries, creating superior value for its customers, shareholders and other stakeholders. Enhancing competitiveness is a key foundation of businesses through the retention of talent and highly skilled employees. The industry recognises that in order to deliver what it promised to its stakeholders, leadership is deemed a key driver in delivering the overall organisational strategy and performance. Leadership plays an important role towards driving the growth and success of any organisation in today’s world. Research has shown that leadership can affect performance of the organisation only if the leader is perceived to be responsible and inspirational; hence, many organisations are moving towards authentic leadership. Leaders’ authenticity has been receiving global attention over the past number of years as authentic leaders promote employees' trust, respect, and identification and, in turn, increase employees’ level of work engagement. Further, research has indicated a positive relationship between authentic leadership and positive job outcomes such as performance. Performance management has become increasingly complex, requiring many hours of manager and employee time, and costing organisations millions annually. With leaner organisations and pressure to do more with less, performance evaluation eventually evolved into more comprehensive performance management processes that included a fuller array of activities to drive performance, such as cascading goals, expectation setting, and interim feedback reviews. Therefore, in this study, performance management process (PMP) is used and preferred over performance management system, as the system is a component of the PMP. The PMP begins by setting goals and objectives for each employee, as employees perform more effectively when specific goals are set. Cascading goals are often used to link the organisation’s strategic goals to each employee with the idea that these linkages will help employees understand how their work aligns with the organisation’s strategy. Therefore, in this study the performance management process forms part of the role of organisational leaders driving the strategy. Thus, for an effective performance management process, authenticity is a key behaviour for leaders to exhibit in terms of driving high employee performance and work engagement. Therefore, the aim of the study was to investigate authentic leadership and its role in the performance management process and work engagement in a petrochemical industry. In manuscript 1 (Chapter 2), a validation of the psychometric properties of a new South African measuring instrument on performance management, developed by Maimela and Samuel (2016), was done. The constructs in Maimela and Samuel’s measuring instrument were linked and applied to the context of the petrochemical industry (Chapter 3: Article 2). Psychometric properties of validity and reliability of the instrument were considered. A confirmatory factor analysis was done to test whether measures of Maimela and Samuel’s performance management constructs were consistent with the researcher's understanding of the nature of that construct. No items were removed from the measuring instrument and it was suited to be utilised in a petrochemical context. A cross-sectional survey design was followed to gather data with a sample size of (N = 225) in the petrochemical industry. The measuring instruments used were the Biographical Questionnaire, Authentic Leadership Inventory, Performance Management System and the Work Engagement Scale. In this quantitative study, descriptive statistics were calculated using means, standard deviations, and Raykov’s rho reliability coefficients and correlation matrix. Structural equation modelling (SEM) was used to test the hypotheses, which involves two major steps, namely measurement model assessment and structural model assessment. Furthermore, to confirm the best-fit model, a competing measurement model was used in the study and through correlations and regression paths, analysis was also done to test for moderation in the study. The results of manuscript 2 showed that there was a positive relationship between authentic leadership and the performance management process with a statistical significance (p < 0.01) (large effect). The results also found a positive relationship between authentic leadership and work engagement (r = 0.15), although with a small effect of less than 0.3; and finally, no relationship and indirect path could be found between the PMP and work engagement; therefore, authentic leadership was found not to be a moderator in the study.