The Correlation of Leadership Style and Incentives

Effective leadership is essential for a business's success, but each organization has its own leadership culture, and each team leader has their own management style. The challenge for hospitality firms is to create incentives that work for both team leaders and team members.

An incentive plan involving sales contests was implemented at a financial services firm to allow observation of the interaction of incentives, leadership style, and company culture. The test manipulation involved who received the rewards - the employees only or both the manager and employees.

In general, the sales results depended on the leaders' styles. Incentives that included the manager had a greater effect on the employee outcomes for transactional managers (who offer employees specific rewards) than on managers who used a more general inspirational approach. With this knowledge in hand, hospitality firms can work toward identifying and employing managers who fit the firm's leadership culture.

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