Abstract:
The study expects to assess the effect of leadership styles on employee’
performance in banking industry. The main objective of the study is to
examine the effect of different leadership styles specially transformational and
transactional leadership styles on employee’ performance. A cross section
descriptive survey research strategy was implemented in which 80 usable
structured questionnaires were collected. The leadership styles were measured
through the Multi factor Leadership Questionnaire developed by Avolio and
Bass (1995), modified to fit the context of the study. Employees’ performance
was measured by the performance scale of Yousef (2000). Pearson’s
correlation and regression analysis were used to evaluate both relationships
and effects as per the hypotheses of the study. The findings illustrate that
transformational leadership style is the most exhibited style at the banks. Bank
employee performance is above average and overall, transformational
leadership style was found to be strongly correlated with employee
performance. The results suggest that supervisors in banks need to use a lot of
transformational leadership behaviors or rather embrace transactional
leadership style. From the results, transformational leadership could have
larger effects on employee productivity and quality of performance. It is
recommended therefore that Transformational leadership is the most effective
leadership style in improving employee performance.
