Effects of transformational leadership on employee performance in the Kenyan banking industry: a case of ABSA bank Nairobi, Kenya

Abstract

This study investigated the effects of transformational leadership in the banking industry in Kenya. Absa Bank being the focus. The study had four specific objectives which are: Effects of Idealized influence, intellectual stimulation, inspirational motivation, and individualized consideration on employee performance at Absa Bank Nairobi, Kenya. Three theories in support of the study were the Transformational/Relationship leadership theory (anchoring theory), Management/Transactional leadership theory and the Leader Member Exchange theory. The target population was the employees in the 37 Nairobi branches of Absa Bank Kenya. The research design was descriptive research design. Sample size was 209 from the target population of 454. This was determined via sample calculator using 95% confidence levels and 5% margin of error. Sampling method was stratified random sampling because the respondents are in different levels of job groups. Data collection instrument was self-administered multifactor leadership questionnaire that was distributed electronically. The research instrument was subjected to Cronbach alpha formulae which is a measure of internal consistency and it passed the validity test. This was piloted for validity and reliability at Machakos and Limuru branches before administering to the target population. Ethical consideration was observed, and permission sought from the relevant authorities before collection of data commenced. Collected data was screened, coded, and analyzed through the mean and standard deviations. Pearson correlation and regression analysis were used and there after results presented in descriptive and inferential statistics. Diagnostics for normality tests were done using the Kolmogorov-Smirnov and Shapiro tests. Multicollinearity tests were also included. According to the report, Absa Bank Kenya executives exhibited empathy, lead with hope for a great outcome from workers, and believe that rewarding people is an effective way to increase performance. As a result, executives in various roles at Absa Bank Kenya PLC employed intellectual stimulation metrics such as challenging assumptions, innovations, and staff engagement in decision making. It was discovered that leaders coached, mentored, and provided specialized training to their personnel. These findings led the researcher to the conclusion that Absa Bank Kenya PLC leaders are transformational leaders who see ethics as a critical component in dealing with their personnel in a dignified manner. It was also determined that the organization's vision was clearly communicated to its personnel. Leadership styles that showed a high positive correlation with organizational success should be implemented. Managers should therefore assist others in developing themselves, guiding them to be rewarded for their work; be satisfied when others meet agreed-upon standards; provide recognition or rewards; inform others of the standards they must know to carry out their work; and ask no more of others than is absolutely necessary. Further research still needs to be done to establish how a transformational leader needs to behave to truly influence positive change in an organization.