The Impact of Leadership Styles on Employee Loyalty and Engagement



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Submitted Jun 18, 2023
Published Jul 26, 2023
10.24018/ejbmr.2023.8.4.2048

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The behavior and characteristics of a managerial leader play a crucial role in fostering employee loyalty and enhancing engagement. Effective people-centered communication boosts employees' confidence and facilitates their ongoing development, while trust in management encourages open and transparent communication. As a result, employees feel a sense of pride in the organization and are motivated to demonstrate unwavering dedication to their work. To investigate the impact of leadership styles on employee loyalty and engagement, a survey was conducted by randomly selecting participants from the employees of two insurance companies. The survey involved 153 employees, and the statistical analyses involved factor analysis, reliability analysis, correlation analysis, and structural equation models (SEMs). Based on the analysis results, it was observed that among the study participants, the transformational leadership style exhibited a strong and positive impact on both employee loyalty and engagement. Similarly, the transactional leadership style demonstrated a moderate yet positive influence on employee loyalty and engagement. Furthermore, a strong positive relationship was identified between employee loyalty and engagement, indicating that higher levels of loyalty contribute significantly to increased employee engagement.

Keywords: employee loyalty employee engagement transactional leadership style transformational leadership style

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