Effect Of Leadership Style On Employees’ Commitment In Commercial Bank Of Ethiopia: The Case Of Nifas Silk District, Addis Ababa, Ethiopia

Abstract

Leadership style is the most important factor influencing employee’s attitudes, behaviors and organizational commitment in which employee’s commitment is very essential for the success of an organization and choosing a particular leadership style is very crucial. Thus, the study was carried out in the Nifas Silk district of Commercial Bank of Ethiopia aiming at investigating the effects of leadership styles on employee’s commitment. Quantitative research approach and descriptive as well as explanatory research design were used. Data related to the leadership styles and employee’s commitments were collected using 308 respondents through structured questionnaire. The collected data were analyzed using descriptive statistical tools such as percentages, mean and standard deviation and inferential statistical tools such as multiple regression analysis and ANOVA. Prior to the real data analysis testing the reliability and validity using Cronbach’s alpha as well as the multi collinearity and normality were performed. The results of the study showed that transformational leadership style had the highest mean score from the three-leadership styles followed by transactional leadership style. Laissez-faire leadership style had the least mean score hence; transformational leadership style was the most dominant leadership style in Commercial Bank of Ethiopia. The study also revealed that the respondents agreed they are personally attached to the organization and proud to tell others that they work in CBE. This implies that most of the employees have their own personal relation to the organization which might help the organization to implement the strategic plans of the business. Moreover, the results of multiple linear regression show that TRS (Beta=.921) with p=000), and TRS (Beta=.408) with p=003) makes the strongest contribution to explaining the dependent variable (employee commitment) in turn. More evidently, the results indicated that, a one-unit positive change in Transformational and Transactional leadership styles would lead to a 0.151, and 0.135 unit’s positive changes respectively, on the employees’ commitment in Commercial Bank of Ethiopia in Nifas Silk District. However, LFS (Beta=.007) with p= .0946) did not show significant impact on Employees ‘commitment in the study area. The results give clear picture of the role of transformational leadership style to raise employees committed that plays an important role in tapping employees committed potential in achieving improved organizational performance. Thus, the leaders of Commercial Bank of Ethiopia have to build organizational commitment by engaging in best management practices and also assure their subordinates that they make sincere effort to redress employee grievances.