Leadership Styles and Employee Performance in Selected Commercial Banks in Nairobi City County, Kenya

Abstract

Effective leadership in an organization is very important for continued existence of commercial banks. The banking industry in Kenya has witnessed tremendous changes brought about by globalization, liberalization, intense competition among rivals, changing regulatory guidelines, technology, and more demanding customers. These changes and dynamic business environment requires leadership that can enable both the people and the organization to adapt and be successful. Therefore, this study aimed at investigating the influence of leadership styles on employee performance in selected commercial banks in Nairobi City County, Kenya. The specific objectives were to examine the influence of transactional leadership style, transformational leadership style, laissez-faire's leadership style and bureaucratic style of leadership on employee performance. Leadership contingency model theory, traits and behavioral theory and transactional theory were used to anchor the study. This study used descriptive survey research design. This study was carried out in selected commercial banks in Nairobi City County, Kenya that included Kenya Commercial Banks, Cooperative Bank, Equity Bank and Family Bank. The total population was 242 respondents comprising of managers and support staff from the selected commercial banks. The study used proportionate stratified sampling method and the respondents were selected using simple random sampling method. The sample size was 151 respondents. Primary data was collected using questionnaires. Quantitative data was analysed with the use of descriptive statistics such as mean and standard deviations and presented using tables, graphs, charts and figures. In addition, the study conducted a multiple regression analysis. The study established a positive significance influence between transactional leadership style, transformational leadership style, laissez-faire’s leadership style and bureaucratic style of leadership on employee performance. The study concluded that through transactional leadership employees are motivated to become more productive and efficient team members. Transformation leaders are particularly good at constructing a positive organizational culture, offering intellectual stimulation and modeling beneficial behaviors of employees, laissez-faire leadership style empower and boost employees’ general performance and also help the employees become more creative and enhance their morale. Bureaucratic leaders establish impersonal relationships to guarantee the best possible outcomes can be accomplished. The study recommends that bank managers should invite staff to engage in objective setting to discuss what the bank wants their staff to accomplish and offer them an chance to share their thoughts. Bank managers should develop a supportive atmosphere where accountability is shared. Bank managers should track employee team performance carefully, hire highly qualified employees. Bank positions should be organized in an hierarchical manner where smaller positions are accountable to and under the oversight of the level above and the qualification for bureaucratic leadership should normally be based on the technical skills needed to handle management duties efficiently and effectively.