A case study examining the relationship of the path-goal theory leadership styles to profits in El Paso, Texas, Rent-A-Center stores
Table of Contents Acknowledgments iv List of Tables x List of Figures xi CHAPTER 1. INTRODUCTION 1 Introduction to the Study 1 Background of the Study 2 Statement of the Problem 4 Purpose of the Study 4 Rationale for the Research 5 Research Questions 5 Management Dilemma 5 Management Questions 6 Research Question 6 Hypothesis 6 Nature of the Study 6 Significance of the Study 7 Definition of Terms 8 Assumptions and Limitations 8 Organization of the Remainder of the Study 9
CHAPTER 2. LITERATURE REVIEW 10 Introduction 10 Theoretical Framework 11 The Path-Goal Theory 11 Historical Maturity 11 Path-Goal Theory Strengths and Criticisms 17 Path-Goal Theory Leadership Styles 18 Directive Leadership 18 Supportive Leadership 22 Participative Leadership 23 Achievement-Oriented Leadership 24 Leadership Importance 26 Leadership Assessment and the Path-Goal Theory 27 Channel Leadership and the Path-Goal Theory 28 Leadership’s Influence on Productivity 31 Path-Goal to Effective Leadership 32 Factors of Leadership 33 Literature Review Summary 35 CHAPTER 3. METHODOLOGY 36 Research Design 36 Framework 38 Data Collection 39
Data Instrument 39 Instrument’s Validity and Reliability 39 Measured Variables 41 Procedures 41 Population 44 Sample 45 Data Analysis 46 Instrument Scoring 47 Ethical Considerations 49 Time Lines 52 CHAPTER 4. DATA COLLECTION AND ANALYSIS 53 Introduction 53 Data Collection Methods 53 Background and Related Findings 54 Respondent Demographics 54 Data Categories 54 Data Collection: The Path-Goal Leadership Questionnaire 54 Data Analysis 56 Survey 56 End-of-Year Profit Statements 56 Management Questions 58 Research Question 59
Hypothesis 59 Summary 60 Conclusion 60 CHAPTER 5. RESULTS, CONCLUSIONS, AND RECOMMENDATIONS 62 Summary 62 Discussion of Results 64 Conclusion 65 Recommendations 66 REFERENCES 68 APPENDIX A. THE PATH-GOAL LEADERSHIP STYLE QUESTIONNAIRE
(Manager’s Version) 75
APPENDIX B. THE PATH-GOAL LEADERSHIP STYLE QUESTIONNAIRE (Employee’s Version) 76
List of Tables Table 1. Channel Leadership 29
Table 2. Drawing Conclusions 55
Table 3. Verifying Conclusions (Dominant Leadership Style) 55
Table 4. Verifying Conclusions (Least Dominant Leadership Style) 55
List of Figures Figure 1. Conceptual framework 38
Figure 2. Rent-A-Center’s organizational chart 45
Figure 3. Data analysis diagram 47
Figure 4. Profits versus leadership style chart 57
CHAPTER 1. INTRODUCTION Introduction to the Study “Beginning with eight stores in 1986 and rapidly expanding over the next 16 years, Rent-A-Center (RAC) now owns and operates more than 2,800 stores in 50 states, Washington, D.C., and Puerto Rico” (Rent-A-Center Manual, 2003, p. 4). Rent-A- Center’s corporate headquarters is located in Plano, Texas. RAC’s customer s may choose from a variety of top name-brand merchandise such as Philips, Mitsubishi, Dell, JVC , Sony, England, Ashley, Simmons, and Whirlpool. RAC provides an easy and affordable way for customers to get the things they want for their home without incurring a
continuing obligation or having to use their credit. “RAC has annual revenue of over $4,000,000,000, with 25% of its revenue going to investors” (RAC Manual 2003, p. 2). For the past few years, however, RAC
has experienced decreasing profits in some of its stores. Therefore, RAC’s management is currently seeking new ways to improve their leadership training in order to increase their overall performance level and their bottom line. This may be accomplished through RAC’s proactive involvement in the efficient
management of its human resources and a slight adjustment of its managers’ leade rship style practice (Wright, 1984; Bass, 1985; Baruch, 1989; Price, 1991; Weiss, 1998; Avolio, Bass, & Jung, 1999; Dess & Picken, 2000; Boal & Hooijberg, 2001; Welch, 2005). House’s (1971) examination of the Path-Goal Theory identifies the leader as an organizational tool to increase performance by removing any hindrances that ma y lead to a decrease in productivity. These hindrances are based on leadership behavior in
which leaders modify their leadership style in order to increase the organizati on’s performance level. Ever since the theory’s development, it has been the subjec t of both praise and criticism. While some researchers support the notion that the theory provides enough framework to understand how leadership styles affect productivity (House & Dessler, 1974; Schriesheim, C. & Schriesheim, 1980; Wright, 1984; Greene, 1986; Gebert & Steinkamp, 1991; Weiss, 1998; Dess & Picken, 2000; Welch, 2005; Galea, 2006), others believe that the theory does not provide a sufficient basis to understand or predict how leadership alone affect profits (House, 1971; House, 1977; Yukl, 1994b; House, 1996; Northouse, 2004). This is due, in part, to empirical studies that have demonstrated the unpredictability of human behavior (House, 1977;Yukl, 1994b; House, 1996). Nevertheless, Galea’s (2006) study demonstrated that leadership styl es do affect profits, leaving the field of leadership and profits open for further e xploration. Background of the Study In a study conducted by The Ken Blanchard Companies , more than 1,400 leaders were surveyed on the most common error managers make. Results of the study revealed that failing to use the appropriate leadership style could affect a n organization’s profits (Galea, 2006, p. 13). Thus, suggesting that “good leadership is critical to an organization’s success.” Yet, “most organizations don’t reali ze that there is a link between leadership and profits,” Blanchard says (Galea, 2006, p. 13). Northouse supported Blanchard’s statement in his research (2004) that showed the theory does provide enough framework to explore how leadership styles affect productivity. Leadership styles’ theorized relationship to profits was further strengt hened by Gebert
and Steinkamp’s (1991) study which revealed the production-oriented leadership sty les (e.g., directive and achievement oriented) had a greater relationship to profits than the employee-oriented leadership styles (e.g., supportive and participative). Th e study was conducted at 21 Nigerian and 24 Taiwanese small and medium-size manufacturing companies. Economic success was measured using surveys filled out by entrepr eneurs, official records, and recollected information. The sample entrepreneurs w ere asked to fill out a survey asking how many staff they employed, their rate of turnove r, and their before-tax profits for the past seven years. If the entrepreneurs were he sitant to give out this information “then they were requested to take the base year (1979 or 1980) as 100% and to indicate changes in the following years on a percentage basis” (Gebert & Steinkamp, 1991, p. 161). If the entrepreneurs were still unwilling to participate, they
were asked to rank the last seven years using a 1 to 7 scale (1 being the best a nd 7 the worst). Leadership behavior was measured taking into consideration that “there is no one style of leadership which is equally effective in all situations,” (Gebert & Steinkamp, 1991, p. 162). For instance, a leadership style that might be economically effective in t he Middle East, might not be as equally profitable in the West, due to many variable s, such as resources, that affect leadership as a whole; consequently, proving that “ there is no perfect method of leadership” (Wright, 1984, p. 20). In closing, numerous studies have linked leadership styles to productivity (Downey, Sheridan, & Slocum, 1975; Wright, 1984; Bass, 1985; Weiss, 1998; Avolio et al., 1999; Dess & Picken, 2000; Boal & Hooijberg, 2001; Welch, 2005), but only a few
studies have linked economic success and/or profits to leadership styles (Gebert & Steinkamp, 1991; Reardon, Reardon, & Rowe, 1998; Welch; 2005; Galea, 2006), and none of these studies has focused on the four leadership styles mentioned in the Path- Goal Leadership Style Theory. Statement of the Problem The focus of this study was to explore any possible correlation between the Path-Goal Leadership Styles and RAC’s store profits. This study addres ses market number 67, located in El Paso, Texas, and RAC’s profit declined as it may relate to t he use of its store managers’ leadership styles. This study also addresses R AC’s loss and/or increase in profits as that may relate to the ability of its store manage rs to use appropriate leadership styles (Galea, 2006). Furthermore, the study also stres ses proper use of leadership styles as an important tool to an organization’s success (Wrig ht, 1984; Bass, 1985; Baruch, 1989; Gebert & Steinkamp, 1991; Price, 1991; Reardon et al., 1998; Weiss, 1998; Avolio et al., 1999; Dess & Picken, 2000; Boal & Hooijberg, 2001; Welch, 2005; Galea, 2006). Currently, what is unknown is the relationship between managers’ leadership style and profitability in this type of retail servic e organization. Purpose of the Study The purpose of the research was to examine the possible correlation between profits and the Path-Goal Leadership Styles in order to examine the potential l ink between leadership styles and profits. RAC’s store managers’ leadership sty les were evaluated to further solidify what is currently known about the relationship that may exist between leadership styles and profits, to contribute to the body of knowle dge
within the leadership field, and to use any positive findings to help RAC’s managers develop better leadership styles. Rationale for the Research The overall scope of this research was to address the possible link between the Path-Goal Leadership Styles and RAC’s profit loss and/or gains. Over the y ears organizations have faced the joy of profits and the agony of losses, but so far no research study has managed to prove that a particular leadership style may be a significant factor in an organization’s bottom line (Baruch, 1989; Bass, 1985; Dess &
Picken, 2000; Boal & Hooijberg, 2001; Welch, 2005; Galea, 2006). While many researchers agree that leadership does affect profits and/or productivity ( Gebert & Steinkamp, 1991; Weiss, 1998; Dess & Picken, 2000; Welch, 2005; Galea, 2006); others have argued that it is impossible to tie leadership styles to productivity, because human behavior is too complicated and unpredictable (House, 1977; Podsakoff, Todor, & Skov, 1982; Hambrick & Manson, 1984;Yukl, 1994b; House, 1996). Research Questions Management Dilemma
For the past year RAC has experienced a decline in profits. There has been a considerable amount of discussion among RAC’s management about what has caused this declined. While some of RAC’s management attributes its smaller revenues to a market decline, others attribute this problem to a lack of good store leadership. This
researcher has taken the opportunity to find out if there is a correlation between R AC’s
shrinking bottom line and the leadership styles exhibited by their store managers b y measuring the managers’ leadership styles through the use of The Path-Goal The ory. Management Questions
1. Does the store of a manager who uses a particular Path-Goal Leadership Style generate higher profits than those who use another style of leadership? 2. What can RAC do to improve profits in the El Paso, Texas, area?
Research Question What is the relationship between a management’s leadership style and profits?
Hypothesis Ho: There is no relationship between the management’s leadership style and a stor e’s profitability.
H A : There is a relationship between the management’s leadership style and a store ’s profitability. Nature of the Study The scope of this study was intended to identify any correlation, should one be found, between the Path-Goal Leadership Styles and RAC’s diminishing bottom line . A quantitative methodology approach was used to find the possible correlation between the Path-Goal Leadership Styles and RAC’s store profits (Campbell, 1955; Kousse r, 1980; Winter, 2000; Joppe, 2000; Onwuegbuzie & Leech, 2005). The research’s intent was to find which Path-Goal Leadership Style was most profitable at RAC. This was
accomplished using RAC 2004 to 2006 store records of gains and losses and the Path- Goal Leadership Style Questionnaire. A quantitative approach was used to illust rate the study’s methodology and results through the use of charts, diagrams, and frameworks
(Campbell, 1955; Kousser, 1980; Joppe, 2000; Winter, 2000; Onwuegbuzie & Leech, 2005). Significance of the Study The aim of this study was to increase knowledge of the possible correlation between the Path-Goal Leadership Styles effects on profits in the rent-to -own industry. Throughout the years, there have been many studies that focused on increasing productivity and performance as a whole (House, 1971; House & Mitchell, 1974; Latham & Steele, 1983; Wright, 1984; McColl-Kennedy & Anderson, 2002), but few of these studies have focused on profits as a measure of productivity and their possibl e correlation to the four Path-Goal Leadership Styles (Gebert & Steinkamp, 1991; Reardon et al., 1998; Welch; 2005; Galea, 2006). The outcome of this study could impact RAC’s profits by providing information on the most profitable leadership style and/or the least profitable leadership s tyle in the El Paso, Texas, area. Furthermore, knowledge gained from this study could be used to develop future research on how leadership styles affect profits in the rent-to -own industry. As an implied task the information discovered during this study could further
solidify all criticism the Path-Goal Leadership Theory has receiv ed over the years (Evans, 1970; House, 1971; House, 1977; Yukl, 1994b; House, 1996; Northouse, 2004). More importantly, these findings could serve RAC as a tool to train its managers towards a certain leadership style as a way to improve their operations and ther efore increase profits.
Definition of Terms In order to fully understand the nature of this study, several key terms were defined. Productivity is the amount of goods and services generated from a certain amount of organizational input or resources. Productivity can be used to see how well an organization is doing. In this study the output is profits and the input/resources are the managers’ leadership styles. Profit is referred to the amount of return on a given investment (Weissbrod, 1998). In this study profit is referred to as the amount of money generated by five, individual Rent-A-Center stores for a period of one year. Assumptions and Limitations Assumptions Due to the fact, that RAC frequently moves its store managers from store to stor e; this study assumed that some of RAC store managers may have managed more than one store within the El Paso area and have at least one year’s managing exper ience in their current store. This created room to further explore and compare how well managers’ styles transfer from store to store and whether profits increase or decre ase with the managers’ movements, which can be shown by comparing the store manager’s curr ent profit to the profits generated at his or her previous store (i.e., assuming that the m anager has managed at least two stores in market number 67). In addition, since store profi ts were used as a measurement to evaluate the productiveness of managers’ leaders hip styles, some managers might be hesitant to participate in the study. It can be assumed that
willing participants honestly answered all the survey questions, and furthermor e, an interpreter’s view was taken by the researcher due to the fact that that s ubjective interpretations were time and situation dependent (Chatman, 1987; Miles & Huberman, 1994). Limitations RAC’s store managers and store employees were given the Path-Goal Lea dership Style Questionnaire in order to find out what leadership styles the store manager s use most. Seven stores were surveyed, with an average of four to six employees each. Th e research dimensions were limited to market number 67 located in El Paso, Texas. St ore profits were used as a measure of productivity. No other variables were used as a measure of productivity in this study. Organization of the Remainder of the Study Chapter 2 of this study discusses literature related to the Path-Goal Theor y and the applications of its various leadership styles. It also addresses previous P ath-Goal Leadership studies. Chapter 3 discusses the research methodology selected to anal yze and evaluate the problem. Chapter 4 presents the data collection and analysis of the data
collected. Finally, the research concludes with chapter 5, which summarizes the results, conclusions, and future research recommendations of the data presented in previous chapters.
CHAPTER 2. LITERATURE REVIEW Introduction The Path-Goal Theory was created with the purpose of enhancing productivity through leadership behavior. At its core is the assumption that leaders can adjust their leadership styles to meet situational demands (House, 1971; House & Mitchell, 1974; Wright, 1984; Greene, 1979; Yukl, 1994b). Throughout the years, empirical tests and analyses of the theory have uncovered additional factors that could hinder its leadershi p effectiveness and performance (C. Schriesheim & Schriesheim, 1980; Gebert & Steinkamp, 1991; House, 1996; Weiss, 1998; Dess & Picken, 2000; Northouse, 2004; Welch, 2005). While some of these factors, such as worker motivation, could easily be identified, others require additional analysis to be effectively evaluated. Fo r these reasons, the Path-Goal Theory leaves room for criticism and many questions about just how an individual’s leadership style can directly affect subordinates’ motiva tion to perform their jobs or to increase productivity (House, 1971; House, 1977; Yukl, 1994b; House, 1996; Boal & Hooijberg, 2001; Northouse, 2004) The intent of the literature review is to provide theoretical background on the Path-Goal Leadership Theory. The theory’s origin, ideologies, and historica l maturity are analyzed and discussed. Path-Goal Leadership Theory’s strengths and cri tiques are used as a guide to rationalize the research’s intent (House, 1971; House & Mitchell , 1974; Wright, 1984 House, 1996; Northouse, 2004). Recent studies that used profits as a measure of productivity in order to study leadership styles and organizational gr owth were analyzed, intertwined, and rationalized to justify the possible link betwee n profits
and leadership styles (Gebert & Steinkamp, 1991; Boal & Hooijberg, 2001; Galea, 2006). Theoretical Framework The Path-Goal Theory Ever since its creation, the Path-Goal Theory (Evans, 1970; House, 1971; House & Mitchell, 1974) has “generated a tremendous amount of interest” (Price, 1991, p. 341). Its basic elements are composed of the goals and the tasks. The goals are the end result the leader wants to achieve. The paths are the tasks taken to achieve those goals . Simply put, “when appropriate tasks are performed, the goals are achieved” (Price , 1991, p. 341). Filley, House, and Kerr (1976) referred to the role of the leader in the Path-Goal The ory as necessary (a) to ensure that the path to the goal is clearly defined and underst ood, (b) to reduce physical and/or administrative barriers that might impede subordinate s from reaching the expected goal, and (c) to reward subordinates for a job well done ( Price, 1991). Nevertheless, the end result of all these Path-Goal Theory’s defining fact ors is to increase productivity and profits (Al-Gattan, 1983, 1985). Historical Maturity In 1971, Martin Evans and Robert House developed the Path-Goal Theory of Leadership. Its roots were based on the Expectancy Theory of Motivation in which t he leader clears the path for subordinates to meet set goals (Behling & Star ke, 1973). These goals set the stage for organizational success by assuming that leaders ar e able to adjust or engage in different types of leadership behaviors to meet subordinates’ needs (Evans, 1970; House, 1971; House & Dessler, 1974). Evans’ (1970) findings suggest that
leadership is dependent on environmental factors that have different effects unde r the same leadership behavior. Evans (1970) also emphasized that leaders should show that they value subordinates’ behaviors through positive reinforcement of rewards. House’s (1971) original version of the theory focused on clearing the pathway while simultaneously clarifying expectations to increase personal sat isfaction, and therefore living up to the notion that leaders’ behaviors affect organizational outc omes when they clear their subordinates’ path to better accomplish organizational goals and increase productivity. House and Mitchell’s (1974) Path-Goal Theory version stated that (p.84): 1. Leader behavior is acceptable and satisfying to subordinates to the extent tha t the subordinates see such behavior as either an immediate source of satisfact ion or instrumental to future satisfaction.
2. Leader behavior is motivational (i.e., increases effort) to the extent that ( a)such behavior makes satisfaction of subordinates’ needs contingent on effective performance and (b) such behavior complements the environment of subordinates by providing the coaching, guidance support, and rewards necessary for effective performance.
House and Mitchell (1974) suggested that the leader’s function is to support resources and link the environment to subordinates’ needs. These needs are the driving force that makes leaders “instrumental to the performance and satisfac tion of subordinates” (House, 1996, p. 326). In 1977, the Path-Goal Theory led to the formulation of the Charismatic Leadership Theory (House, 1996). Unfortunately, this discovery was made at the expense of previous empirical tests and lessons learned (House, 1996). Price (1991) suggested that the theory’s inconsistencies may be due to the lack of proper measurement procedures rather
than a “flaw in the logic of the theory” (p. 343). Furthermore, since its development in 1971, researchers have come to realize that approximate construct of the theory should not be used to test its validity and that there was still much to learn about this theory . Besides, there are so many empirical test findings of the theory it would be i mpossible to assert its validity (House, 1996). Since the theory was developed using the Expecta ncy Theory, researchers have come to believe that individuals are not as cognitively predictable as the expectancy theory makes it seem (House, 1996). Later on, Yukl (1994b) suggested that in the past, inappropriate testing methods have been used to test the theory resulting from House’s (1971) previously established methods. Hence, some empirical tests have supported the theory while others have not. While some studies show support for leader and subordinate task relationships (Gebert & Steinkamp, 1991; Price, 1991), others found only one and/or no leader subordinate task relationship (Greene, 1979; C. Schriesheim & Schriesheim, 1980; Wright, 1984). According to House (1996) most empirical research of the Path-Goal Theory tested the theory of observable leader behavior based on satisfaction and performanc e. None of these tests took the precaution of controlling intervening variables that als o affect satisfaction and performance, as the original theory suggested (Eva ns, 1970; House, 1971; House & Dessler, 1974; House & Mitchell, 1974). For this reason House (1996) suggested that when testing performance there should be controlling varia bles to adequately test the theory. Controlling the variables to better test the theor y brings a whole new set of challenges such as the unpredictability of human beings. This te chnique
would, in turn, shorten the theory’s potential and accuracy in testing performance (C . Schriesheim & Schriesheim, 1980; Al-Gattan, 1983; Price, 1991). House (1996) concluded that the Path-Goal Theory shows how “superiors affect the motivation and satisfaction of subordinates” (p. 325). It does not express how superiors affect work units and/or groups. This suggests that the theory needs to be subjected to further empirical studies in order to improve it and further solidify its
foundation. Paul Tarplett, Director of National and Local Services in the UK, wrote, “ Unless we understand how current ideas have developed, we lack an important tool in evaluating them” (Tarplett, 2004, p. 2). The Path-Goal Theory of Leadership sees leaders as important tools to effectively accomplish the mission. Yet, if leaders themse lves cannot understand how the theory works, they would not be able to comprehend how to adjust their leadership style in order to raise their subordinates’ motivation/perform ance levels and effectively accomplish the task. House's (1971) Path-Goal Theory examination stated that the leader’s main function is to facilitate subordinate and group performance by removing obstacl es that might hinder the desired outcome, the accomplishment of the task. For instance, if subordinates show confusion or lack of direction, the leader must show them the way with the leadership style that best fits the situation. In addition to providing dire ction, the leader must continually re-assess the situation for any arising needs tha t might hinder the accomplishment of the mission. In House's (1996) Path-Goal Theory of Leadershi p assessment, he reformulates work from his theory of charismatic leadership and his
original work from the 1971 Path-Goal Theory. The new formulation of his theory identifies eight classes of leadership behavior that “enhances subordinate empowerment and satisfaction and work unit and subordinate effectiveness” (House, 1996, p. 323). These eight classes of leadership behaviors are: 1. Path-goal clarifying behaviors .
In this behavior the leader clarifies the subordinates’ goals and expectations by explaining ways in which subordinates can better perform the task, performance standards/goals, expectations, and rewards. Furthermore, in this behavior the leader clears the path for subordinates to better perform their jobs, including any administrative or physical obstacle that precludes the subordinates from performing the tasks to the maximum potential. 2. Achievement-oriented leader behavior . In this behavior the leader seeks improvement by setting high performance standards of goal attainment whil e showing confidence in his or her subordinates’ capabilities. 3. Work facilitation . Things such as proper planning, support, mentoring, guidance, and feedback are essential in preparing subordinates for success.
4. Supportive leader behavior . Supportive leadership involves showing concern for employees’ welfare and needs by creating a healthy worker-friendl y environment. 5. Interaction facilitation . This type of leadership behavior involves resolving disputes, having open communication channels, and creating a teamwork-based culture.
6. Group oriented decision process . In this behavior the leader must take an active role in making sure decisions are democratically reached. No one in the group gets left out in the making of the decision, but no particular individual dominates the discussion. The group leader holds the decision power, but decisions are reached using the majority’s vote. 7 . Representation and networking . This part of the job involves the leader in politics. As head of the team, the leader has to be able to communicate the team’s needs in order to get the resources needed to effectively accompli sh the work. 8. Value based leader behavior . This behavior requires the leader to arouse a
group’s vision of a better future, showing self-sacrifice for the betterment of the organization, communicating the rewards for hard work, etc. This type of leader behavior is a combination of the seven leadership behaviors discussed above. Finally, while current analysis of the Path-Goal Leadership Theory might seem complicated, the bottom line is that leaders must be able to understand how the theory works, what the needs of the subordinates are and how the task is to be performed before they are able to adjust their leadership style, and apply the theory according ly. It is not easy
and requires the commitment of the leader to effectively apply the above concepts . According to House and Mitchell (1974) the Path-Goal Theory is composed of two basic propositions: (a) the leader’s role and (b) the dynamics of the situa tion. The leader’s role is based on the perceptions subordinates have on the leader’s behavior. For
instance, while some subordinates might immediately perceive the leader’ s behavior as an immediate source of satisfaction; others might find themselves complete ly dissatisfied. The dynamic of the situation is determined by the circumstances in which the leader functions. There are two factors that influence the behavior of the leader. T hese two factors are (Al-Gattan, 1983): [1.] Subordinates’ characteristics. The theory asserts that leader behavior will be acceptable and satisfying to subordinates to the extent that he is perceived as exhibiting behavior that is either an immediate source of satisfaction or is instrumental to future satisfaction. Subordinates’ characteristics, such as l ocus control, needs and motives, and ability are hypothesized to partially determine the perception of subordinates (p. 23).
[2.] Characteristics of the work environment. The subordinates’ environment consists of some factors that, although not within the subordinate’s control, are important to satisfying their needs or are necessary to their abili ty to perform effectively. The assertion is that the effects of the behavior of the leader on the psychological states of subordinates are contingent on other parts of the subordinates’ environment which are also relevant to subordinate motivation and productivity level (Boulgarides & Cohen, 2001; Boal & Hooijberg, 2001). They include the subordinates’ tasks, the primary work group, and organizational factors such as [a] rules, procedures, and policies, [b] pressure and stress, and [c] uncertainty (p. 25).