EFFECTS OF TRANSFORMATIONAL LEADERSHIP ON ORGANIZATIONAL PERFORMANCE: THE CASE OF EQUITY BANK KENYA

Abstract

The study sought to establish effects of transformational leadership (idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration) on organizational performance in Equity Bank of Kenya with employee commitment mediating between variables. The sample of the study was 159 employees at the Bank’s headquarters in Upper hill, and the response rate was 71%.The study used stratified random sampling technique and regression analysis to find out the effects of transformational leadership on performance. The study found that individualized consideration had the most significant influence on the performance of Equity Bank, Kenya, followed by idealized influence, inspirational motivation, and intellectual stimulation was the least factor that influenced performance. In addition, the study found that leaders at Equity Bank of Kenya act as coaches and advisors to employees at the organization. The study found that transformational leadership predicted organizational performance, which counted for 56% variance of performance and that employee commitment partially mediated the role between transformational leadership and organizational performance in Equity Bank, Kenya.The study concluded that employees and leaders must be given the opportunity and support to improve organizational performance and ensure organizational objectives are met. This can be done by improving on training and development programs as well as that of rewards and compensation to enhance aspects of transformational leadership and employee commitment in Equity Bank, Kenya.