Effect of Leadership Styles on Employee Performance: The Case of Commercial Bank of Ethiopia (CBE)

Abstract

The study assessed the impact of leadership styles on employee performance at the Commercial Bank of Ethiopia. Studying the different leadership style practices (transformational, transactional, laissez-faire, and authoritative) and their effect on employee performance were the main objectives. Random sampling technique was used to select research participants. Around 149 structured questionnaires were distributed and 140 useable responses were collected. Multifactor leadership questionnaire (MLQ form 5X) was used to measure leadership style practices and customer satisfaction; team work and achieving organisational goal were used to measure employee performance. Descriptive statistics and scale analysis were used to analyse data using SPSS .23 and Microsoft Excel 2016. Pearson correlation analysis and regression analysis were used to predict the relationship between leadership styles and employee performance. The findings show that transactional leadership is the most practiced leadership style, followed by authoritative, transformational, and laissez-faire leadership styles, respectively. Transactional, transformational, and laissez-faire were found to be positively correlated with employee performance; on the other hand, authoritative leadership was found to be negatively correlated. The results recommend that leaders in CBE need to use a part of transactional, transformational, and laissez-faire leadership behaviours and not authoritative leadership behaviour.

Keywords: Transformational Leadership, Transactional Leadership, Authoritative Leadership, Laissez-Faire Leadership, Employee Performance

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