Impact of Transformational and Transactional Leadership on Employee Job Satisfaction in the Banking Sector

Abstract

This paper discusses the role of transformational and transactional leadership styles in employee job satisfaction in the banking sector and this is with focus on the head office employees, who are key in making strategic decisions, developing their policies, and leading this company. With the current banking market being very competitive and heavily regulated, leadership within the organization has come in as a very important element in influencing employee attitudes, motivation and level of job satisfaction. Such aspects, in their turn, have a great influence on the performance, the quality of the provided services, and retention of employees within the organization. Even though many studies have been conducted to establish the relationship between leadership and job satisfaction, empirical studies have not been conducted to simultaneously examine transformational and transactional leadership styles in banking head offices and particularly in developing economies. It is proposed that the given gap is filled in the current study that will examine the impact of these two leadership styles separately and in comparison, with the vision to finalize which of the two leadership styles is more effective and takes its toll on promoting a positive working environment at the strategic centre of banking institutions. The study is based on a quantitative type of research based on an integrated leadership and motivation framework. The structured questionnaire will be used to gather the data by conducting the interview to a set of employees in the head offices of the chosen banks. The analysis of the data will be based on the highly developed statistical methods to determine the power, direction, and significance of relationships among the leadership styles and the job satisfaction among the employees. The transformational leadership is rated based on the following dimensions such as idealized influence, inspirational motivation, intellectual stimulation and individualized consideration. In comparison, the transactional leadership is evaluated in terms of contingent rewarding systems and management-by- exception practices. Job satisfaction is assessed on several dimensions among the employees, including working conditions, recognition, management practices and career advancement opportunities and organizational support. The research has assumed that transformational leadership will exhibit greater and more advantageous impact of job satisfaction on employees compared to transactional leadership. This is because it focuses on vision, empowerment, building trust and personal development, which are essential in improving the well-being and interest of employees in banking institutions.