Perceptions of an employee about his/her work environment play a predictive role in determining his/her level of job satisfaction. Similarly, managerial leadership that is based on leader-member trust and non-formal methods of communication also increases meaningfulness of job interpretation. This in turn leads to improved individual performance which, when summated, leads to overall improvement in organizational effectiveness. The paper attempts to study influence of psychological climate and transformational leadership on job satisfaction which in turn leads to better levels of employee performance. Furthermore, it is postulated that in such a general climate of enhanced employee performance, there shall be an increase in organizational effectiveness. Data for the present study were collected from manufacturing as well as service sector organizations all over India. The results and their theoretical and practical implications are discussed in detail.
Psychological climate, transformational leadership, job satisfaction, employee performance, organizational effectiveness
