Transformational Leadership and Employee Productivity: An Empirical Study in Service-Oriented Organizations

Abstract

Employee productivity is a key determinant of organizational performance in service-oriented organizations, but the processes that determine how leadership styles affect productivity remain less understood. This paper is intended to test the hypotheses regarding the influence of transformational leadership on employees in various areas, in this case being job satisfaction as the mediating variable. Further, adopting the quantitative research design, the data were sampled among [insert sample size, e.g., 220 employees] employees who work in the service-sector organizations such as [e.g., banking, IT, and healthcare]. To determine the measurement and structural relationships, the proposed research model was analyzed with the help of Partial Least Squares Structural Equation Modeling (PLS-SEM). The results indicate that employee productivity is strongly positively influenced by transformational leadership. Moreover, job satisfaction partly mediates this relationship meaning that those leaders who inspire, motivate, and support employees improve the one-to-one relationship by making employees feel more at ease and inspired to work harder. The model proves to be sufficiently reliable, valid, and predictively relevant, which proves the soundness of the proposed model. Practically, the study illustrates the significance of leadership development programs in service organizations with special focus on transformational leadership behaviors as a strategic tool to improve the productivity of workforce. Managers are also advised to create conducive and encouraging working conditions in order to optimize the performance outcomes of the employees.