Effects of leadership style on employee performance in Commercial Bank of Ethiopia Head Quarter, Addis Ababa, Ethiopia

Abstract

The purpose of this thesis is to determine the effect of leadership style on employee performance with the case of employees of Commercial bank of Ethiopia headquarters. Adequate review of past literature on the topic has been done to establish conceptual framework. Accordingly Transformative, Transactional, Laisses-faire, Democratic, Charismatic, Servant leadership, Autocratic, & bureaucratic leadership style were the independent variables and employee performance is the dependent variable. The research design was Descriptive as it employs a regression model to describe how each leadership style influences employee performance. A quantitative research approach was used to quantitatively assess whether there exists a relationship between leadership style and employee performance. A structured questionnaire has been adopted from valid past research and has been used to capture data from randomly selected 370 respondents who are employees of Commercial bank of Ethiopia Head Quarter. 336 have successfully completed the questionnaires giving a response ratio of 91%. Data was encoded to SPSS 25 and was analyzed using a multiple regression analysis. Assumption tests for a multiple regression model were done and it was found that the model met all the assumptions of normality, linearity, multicollinearity and Homosdacity. Histogram of a residual, q-q plot, VIF test and Scatter plot of residuals were used respectively to test all the mentioned assumptions. All assumption tests were duly met. The regression model had r-square of 0.494 entailing that it explains 49.4% of the variance in the dependent variable. It was found that Transformational leadership style, transactional leadership style and Democratic leadership styles had a higher effect on employee performance with a regression coefficient of 0.406,0.239 and 0.107 respectively. Accordingly, it was recommended that Commercial Bank of Ethiopia shall encourage Transformative, Transactional and Democratic leadership styles as they have significant positive impact on employee performance and shall not encourage other leadership styles as they had insignificant effect on employee performance.