The relationship between transformational leadership and leadership effectiveness in Kenyan indigenous banks

Abstract

Orientation: Effective leadership is critical to the survival and growth of organisations. For such leadership to be realised, organisational leaders need to be competent in transformational leadership, which is described as a situation in which the leader and followers empower and shape each other’s behaviour to attain a desired goal. Research purpose: The purpose of this study is to empirically test the relationship between transformational leadership competency and leadership effectiveness in Kenyan indigenous banks. Motivation for this study: In spite of the fact that indigenous banks have been performing better recently, their overall poor performance is cause for concern. This study was motivated by a desire to establish the extent to which the recent improvement is attributable to transformational leadership competency and effectiveness. It is also anticipated that this investigation can highlight aspects of leadership which require more attention in order to sustain improved performance. Research design, approach and method: The study utilised a survey method to collect both quantitative and qualitative data while probability and non-probability techniques were used to sample target population. With 494 respondents targeted in the study, 257 responses were received and analysed. Data analysis was performed using structural equation modelling with Cronbach’s alpha, confirmatory factor analysis and goodness-of-fit indices for analysis and for testing relationships. Main findings: The overall findings confirm that a strong relationship exists between transformational leadership competencies and leadership effectiveness among the leaders of the indigenous banks in Kenya. Practical/managerial implication: Based on the findings of this study, Kenyan indigenous banks are able to identify specific and essential transformational leadership competencies and leadership effectiveness attributes. Contribution: The study has identified that transformational leadership abilities of inspirational motivation, intellectual stimulation, individualised consideration and idealised influence, together with the leadership effectiveness indicators of cross-cultural competency, influence, follow commitment, versatility and group organisation are essential for the effectiveness of Kenyan banks.

Keywords

• transformational leadership
• leadership effectiveness
• structural equation model