Examining the Effect of Leadership Styles on Employee Engagement with Special Reference to Banking Industry

Abstract

Leadership style has often been considered as one of the vital factors that can enhance employees’ engagement and it is seen as the live wire for the attainment of organisational goals. The purpose of the study is to examine the effect of leadership styles (transformational, transactional and Laissez-faire leadership) on employee engagement in the banking industry. Data for this cross-sectional survey study were collected from 472 employees who were working on a full-time basis in the banking sector. Multi-stage cluster sampling and a self-administrative questionnaire are used to collect data from these employees. Our study utilised SPSS 21.0 for analysing the frequencies, summary statistics, correlations of observed variables and coefficient alpha. The partial least squares structural equation modelling (PLS-SEM) technique was used for data analysis and hypothesis testing. The findings indicate a transformational and transactional leadership styles significantly effects employee engagement while there was an insignificant effect of Laissez-faire leadership on employee engagement. The results also revealed that transformational and transactional leadership is a significant predictor of employee engagement in contrast to the Laissez-faire leadership style. Our findings represent a theoretical contribution to social exchange theory and provide useful managerial implications for banking organisations to improve work engagement among employees.

Keywords: Employee Engagement, Transformational Leadership, Transactional Leadership, Laissez-Faire Leadership, Banking Sector

View PDF