Since employees are a valuable asset of a company, it is vital for the management team to keep them motivated by identifying the factors that are considered to be of importance to them and that will boost their morale to enhance their performance. According to Hetland et al. (2011), both leadership and motivation of an employee are key elements for enhancing the contribution level of each individual. In order to provide appropriate guidance to the new corporations of today’s world, many researchers have studied the role of leadership and motivational theories in increasing the motivation level of employees (Eyal & Ruth, 2011; Kakkos & Trivellas, 2011).

Leadership is defined as the ability of enlisting, mobilising and motivating others to utilize and employ their intellectual abilities and resources for a particular cause or goal (Yukl, 2006). This concept is the basic foundation of transformational or charismatic leadership as the leaders have to develop their personalities in ways that will motivate their subordinates to make worthwhile contribution in the organisation’s level of productivity (Jandaghi et al, 2009). Many researchers have compared various leadership styles and theories in service sector and found that transformational leadership is preferred by leaders rather than transactional leadership style (Anderfuhren-Biget et al., 2010; Kark & Van Dijk, 2007).

Leadership theories and styles

Since leadership is one of the important areas of concern for most of the organisations, various studies have been conducted to understand the part of leadership styles and theories in creating a motivated workforce. As a result of these studies, the main leadership theories that have been built in the field of management are broadly classified as traits theories, behavioural theories, great man theories, situational theories, participative theories, management theories and relationship theories (Dull, 2009). However, each of these theories has been developed to incorporate various leadership styles that provide details about the personality traits of the leader.

The most popular leadership styles are transformational leadership, transactional leadership, laissez-faire leadership, situational leadership, autocratic leadership, participative leadership, task-oriented leadership, charismatic leadership and bureaucratic leadership (Yulk, 2006). The transformational and charismatic leadership styles have been explored by researchers as both of these styles have proven to be beneficial for an organisation’s long-term success (Den Hartog, De Hoogh & Keegan , 2007); they are similar in various aspects and that is why most of the companies are using a perfect blend of their features to create a positive and motivating work environment (Khatir, Templer & Budhwar, 2012; ).

There are five key features of transformational and charismatic leadership styles that give them a distinctive place in the leadership theories i.e. the leader’s attitude and behaviour is idealized by the subordinates which make him/her more respectable and trustworthy; the leader motivates the subordinates to work well and assist them in achieving the desired goals; the subordinate’s beliefs and values are identified and helps him/her in developing the required intellectual capabilities; every individual is given special attention and provided various learning opportunities; and finally, charismatic personality which means that the leader shares the vision with the subordinates and give them the autonomy of making final decisions (Khatir, Templer & Budhwar, 2012).

The only drawbacks of these leaderships styles is that employees tend to misuse the power given to them by focussing their activities only on personal benefits, employees need to be given right working environment for boosting their motivation level and leader has to demonstrate ethical and professional attitude so that the subordinates get the right message (Eyal & Ruth, 2011).

Leadership and service sector

In the service sector, charismatic leadership is found to be the most effective option as it assists the leaders in boosting the morale of their subordinates that induces them to enhance their contribution level. The banking and hospitality industries have reported that when manager demonstrate their trust in their subordinates and give them leverage of making final decisions there is high probability that the employees’ motivation level is enhanced. Since ethics is vital for banks, the leaders have to show this aspect by following an ethical and professional code of conduct by ensuring integrity, fairness and honesty in all of the business transactions (Jandaghi et al., 2007; Liu, 2007).

A charismatic leader can motivate employees to a greater extent in the service sector as he/she has complete understanding about the factors that will make positive impact on their employees. In most of the service organisations such as restaurants, hotels, travel agencies and insurance companies even in public sector, the vision of the business is shared with them and they are provided appropriate tools and materials to make worthwhile additions in the performance of the business operations (Den Hartog, De Hoogh & Keegan , 2007; Taylor, 2008).

Motivation

Motivation is described as the factors that induce an individual to complete the task in an extraordinary way. One of the key components of enhanced performance of an organisation is a highly motivated and efficient workforce. When employees are motivated, only then they are willing to make valuable additions in the business. In order to enhance the motivation level of employees, it is vital for business entities to offer them rewards which will show that their efforts are highly appreciated by the company’s management team (Anderfuhren-Biget et al., 2010).

Motivational theories

Since every individual has different set of needs when working on a job, there are various factors that can influence the person to do exceptional work. In order to boost the motivation level of employees, many researchers developed various theories to provide guidance to the organisations in incorporating necessary elements within the business premises for motivating them and enhancing their working as well (Hetland et al., 2011). Almost all of the motivational theories have been developed after years of studies but they have one thing in common that the organisations need to identify the individual’s motivating factors and then provide them to the person so that he/she performs at an extraordinary higher level.

The well-known motivational theories are Taylor’s theory, Maslow’s hierarchy of needs, McClelland theory of accomplishment, McGregor Theory X and Theory Y, Herzberg’s Two-factor theory, Vroom’s expectancy theory and many more (Yulk, 2006). Among all the aforementioned theories, McGregor Theory X and Theory Y and Vroom’s expectancy theory have received huge amount of appreciation by the experts of the field especially in the service sector (Kark & Van Dijk, 2007).

Motivation and service sector

According to McGregor Theory X and Theory Y and Vroom’s expectancy theory, the manager has to identify the motivating factors of each employee and then provide them those rewards after their accomplishment so that their morale gets boosted (Kakkos & Trivellas, 2011). It is highlighted in both theories that when employees will believe that they will be rewarded for their exceptional work, they will be motivated to go an extra mile to achieve their goal and enjoy the sensation of being a winner. The leaders have to include these factors in the work environment so that it is demonstrated in the work culture (Dull, 2009).

In the service sector, rewards at the end of accomplishment of tasks are highly important. For instance, the employees in a bank are motivated by the commission that is given to them for exceeding their target level or they are given share of profit when sales level are more than expected or the manager appreciates the employee by praising him/her in front of the entire workforce. Hence, there are various ways in which leaders can motivate them; they have to just look into the key elements that can motivate their subordinates for long duration (Anderfuhren-Biget et al., 2010; Taylor, 2008).

Conclusion

Employee motivation is composed of various factors and leadership is one integral part of it. Although charismatic leadership is important in service organisations but varying aspects of motivational theories need to be implemented as well to create an efficient and highly conducive working environment. In order to motivate the employees, the right motivating factors should be in place and they should be employed effectively within the work environment.

When the employees will realize that their leaders are true to their words and motivate them in highly effective manner, they will be willing to put extra efforts within their functioning. Therefore, in service sector, both charismatic leadership and motivational theories play an important role in creating a highly motivated and competent workforce.