The Effect of Leadership Styles on Employee Retention: A Case Study of Tsedey Bank
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Date
2025-09
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Addis Ababa University
Abstract
Employee retention is a critical issue for organizations, especially within the competitive banking sector in Ethiopia. This study aims to examine the effect of various leadership styles on employee retention at Tsedey Bank. The research focuses on five leadership styles: transformational, transactional, laissez-faire, democratic, and servant leadership, and their influence on employees' decisions to remain with the organization or not. A structured questionnaire was used to collect data from a total of 246 employees selected through proportionate stratified. The head office and the Addis Ababa District of Tsedey Bank were treated as a separate stratum to ensure fair representation. The collected data were analyzed using descriptive statistics, Pearson correlation, and multiple regression analysis through SPSS V26. The findings reveal that transformational, democratic, and servant leadership styles have a positive and significant effect on employee retention, while laissez-faire leadership has a negative effect. Transactional leadership showed no significant impact. Among the styles, servant leadership had the strongest positive influence on retention. The study concludes that adopting people-focused and participative leadership practices can play a vital role in retaining employees. Based on the results, recommendations are provided to improve leadership development and enhance employee retention at Tsedey Bank. This research adds valuable insights into the role of leadership in staff retention, contributing to both academic understanding and practical human resource strategies in Ethiopia’s banking sector
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Keywords
Servant, Laissez Faire, Democratic, Transformational, Transactional, Employee Retention