Employees’ turnover intention has largely affected many companies in spite of their production, place, or size. Based on the literature and the studies conducted by many researchers, there have been a negative link between employees' or workers turnover intention and the firm’s leadership styles. Ali (2010, p. 242) associates staff or employee turnover with increased incidences of direct and indirect costs. Employee turnover is the main problem that is affecting many firms in the world. In a firm, the workforce is referred as an important or essential asset that helps the firm to achieve its goals. The reputation, goodwill and customer loyalty associated with the organization is more likely to reduce and may bring forth detrimental monetary effects in the long term (Ali 2010, p. 243). The 21st century market is primarily marked by high levels of competition which is influenced by various factors, i.e., the highly globalized and internationalized market atmosphere which may ultimately influence employee retention.
Leadership largely impacts the employee’s turnover. Leaders who force their employees to work in non-conducive areas and areas that have high risks on the workers reduce the organizational output. Thus, the employees feel discontented and feel insecure making them have low morale on their job tasks. An excellent leader within any organization is one who is able to provide a specific direction to their followers and as a result he/she leads them towards attaining their desired goal. Leaders tend to draw people together towards attaining their goals and in the process maximize the results of a specific organization(Bauman 2013, p. 418). Work performance and the productivity of other employee is also affected, hindered or hit low when an individual who the organization relies on leaves the organization in the process creating a huge gap and leaving the subordinate member without any form of guidance (Hameed, Abdul 2011, p. 227). Key employees within the organization are normally equipped with adequate knowledge on specific issues and are also in charge of managing the subordinates. According to Kapoor & Meachem (2012, p. 18) organizations which continuously lose their expert employees note a decline in the competitive sustainability and productivity of their workforce which may ultimately affect its operations.
There are many definitions used to define the term leadership although there has not been a real consensus on its actual definition by various scholars (Kort 2008, p. 412). Others consider leadership as the relationship developed by an individual and which influences the behaviour of others (Kort 2008, p. 415). The term leadership has also been confused with the term management on a day to day basis and management and as a result, the two terms have been erroneously used in different circumstances (Algahtani 2014, p. 71). Nonetheless, leadership and management are considered as two different issues. Whereas management place more emphasis on developing, controlling and planning of the organizational resources, leadership focuses on aligning people to the expected outcome which is in line with organizational vision (Popovici 2012, p. 136). Other scholars define leadership as the process of encouraging and helping other people of their own volition and not due to fear or consequences of non-compliance (Algahtani 2014, p. 76). In such a context, leadership is then considered as the process of encouraging and assisting other individuals to work so as to attain the targets set forth by an organization. It is also considered as a human aspect that combines together a cluster of individuals and induces them towards transforming their ambitions into reality (Bauman 2013, p. 415).
Statement of Research
The concept of workers’ turnover intention has been in discussion for many years. Many people believe that the leaders in an organization have an effect on the workers turnover. Managers and leaders in a firm have recognized the importance of better leadership skills in ensuring that the employees feel like part of the company. In the recent days, job security, employees recognition, workers involvement in the organizational decisions, and better payment have been named as one of the factors that ensure employees stay in their place of work. Leaders who have better leadership skills largely affect the firm’s productivity in a positive way. There is the need to conduct this study so as to come up with the precise idea of the extent by which leadership impacts the employees or workers turnover.
Research Objectives
1. To investigate the extent to which leadership impacts the employee turnover
2. To examine predictors of worker’s turnover
3. To examine predictors of worker’s turnover and their association with organizational leadership.
4. To investigate the effect of transactional and transformational leader to employee turnover across different organizations.
Research Questions
1. To what extent does leadership impact on employee turnover?
2. What are the predictors of employee turnover and how are they associated with organizational leadership?
3. What is the link between transactional leadership and employee turnover?
4. What is the link between transformational leadership and employee turnover?
Justification/ Rationale
Transactional and transformational leadership remain two of the common leadership styles applied across a number of different organizations. Both styles have been linked to specific predictors of employee turnover and retention. However, less information is currently available on the effect or the leadership impact (transactional and transformational leadership) on employee turnover. The paper seeks to collect information on the existing gap by looking through the secondary sources of information related to the study.
Significance of the Study
At the helm of any organization, are the leaders who apply different various leadership styles in managing employees. Transactional and transformational leadership methods remain the common leadership styles utilized by many leaders. Transformational leadership largely serves to deal with the extrinsic and intrinsic needs of the employees with specific emphasis on motivating employees and creating a better environment (McCleskey 2014, p. 117). Transactional leadership deal largely focuses on the task completion and remains the most commonly used approach by managers (Odumeru & Feanyi 2013, p. 2307). Its reward system differs from transformational leadership as it is merit-based. Various leadership aspects are directly associated with employee turnover. Kossivi et al. (2016, p. 267) indicates other different factors which may affect employee engagement in organizations, including work and life balance, training and development opportunities, compensation, management, and leadership, as well as autonomy. Transactional and transformational leadership has been indicated to have positive relations with employee retention(Davis 2013, p. 27; Das & Baruah 2013, p. 10). The two forms of leadership have also shown an optimistic relation amid organizational dedication and job contentment. Investigating the effect of different leadership positions will provide organizations with the necessary information on their impact on employee turnover.
Literature Review
Leadership and Employee Turnover
Most organisations (both profit-making and non-profit making) are faced with the challenge of maintaining a stable employee turnover. Based on the analysis carried on various literature and studies, most authors identified a link between the leadership methodology and the employee turnover in different industries. Sellgren, Ekvall, and Tomson, (2007, p. 171) explained leadership as the capability to inspire people towards achieving a fixed objective, meaning that the primary purpose of administration is to help organisations achieve their goals.
For such success, an organisation would need a constant employee turnover that will ensure that various tasks are completed within the stipulated time. Welty, Burton and Wells (2014, p 474) defined managers as one or more individuals who choose, train, influence and equip one or more juniors who have different skills, abilities, and focus in respect to the business’s mission and goals, making the juniors willing to expand their expressive and energy in a synchronised determination to realise the purpose and goals of the business. In both the definitions, one standard feature that is common is the fact that leadership influences various aspects of the organisation, and essential elements of any organisation are the employees.
Leadership and Management
Abraham Zelznik (a professor of business in Harvard) published an article in 1977 titled “Managers and Leaders; Are they Different?” The report informed a distinction between managerial skills and leadership skills. According to Zelznik (1977) leaders are people who are supposed to provide clear vision, inspiration and mutual goals to their followers. Contrary managers are the people who are supposed to implement the ideas of a leader. However, in the real life situation, it is very challenging to be an active manager without having strong leadership qualities. Moreover, the most successful managers have individual leadership skills. Management includes employing workers, promoting and demoting, planning, budgeting and ensuring that everyone knows their duties and performs it accurately to complete the standard goal. The most significant difference between supervisors and leaders is the manner they inspire their juniors to work and adhere to rules. Some people can actively play the role of a leader and a manager; such people know that for one be a successful manager, they also must be an effective leader to realise their targets. Leadership and management are different ideologies yet intertwined together, especially in a corporate environment. As much this paper is not about differentiating leadership and management, it will, however, briefly distinguish these two phrases, to forge an improved consideration of the association between administration and employee turnout. Managers are people on a workstation who have subordinates and a post best owed to them by the company. These juniors work for the manager, follow commands, and carry out instructions, because of the reward their manager promised to give them which in this case is a salary. Conversely, leaders do not keep subordinate when working in a company. Various leaders who are in organisations have subordinates because they are playing managerial roles. Therefore, a manager who can play both positionsas a manager and a leader has the advantage of efficiently managing their respective departments and companies. However not every leadership quality will motivate employees.
Leadership Styles
Managers can use various styles of leadership; some managers use a variety of leadership styles while others stick to one type of command when handling their daily activities. Despite the method (s) used by leaders, what matters is how the behaviours’ of these leaders contribute to the performance of the organisation, the performance of the employee and the overall satisfaction of everyone working within the company. When choosing a leadership style, managers should importantly shift their focus from giving the taskthepriority and instead pursue a methodology that would focus on their employees. The current business is very challenging, and for any organisation to succeed, it needs to be more flexible and adopt a dynamic type of leadership that would adapt to the changing nature of the business environment. Various leadership styles would be analysed in the subsequent sections to establish a clear picture of dynamic leadership that would help in motivating employees.
Transformational Leadership
Hom, Lee, Shaw,and Hausknecht (2017, p. 530) stated that there two classes of leadership methods; these are transformational and transactional frameworks. The primary difference between transformational and transactional framework was made by Anderson and Sun (2017, p. 76), who stated that transactional leaders use a tangible reward scheme to advance the loyalty of employees, while transformation leaders focus on the extrinsic need of their followers to achieve a common goal and outcome. There are two main reasons why transformational leadership has various gained popularity recently. First, is due to the massive global economic climate and the globalfinancial stability experienced after the Second World War that allowed most companies to explore global markets and recruit employees from different ethnic, social and religious backgrounds. Additional other factors such competition, changes in demographic patterns, which created a new environment that companies had to adopt with, this changed included downsizing employees, the remaining staff had to be efficient and reliable. Furthermore, the leadership schemes that were common in the 1970s, such as tracks, behaviours, and positions did not justify the qualities of some leaders.
Qiu, Haobin Ye, Hung, and York (2015, p. 55) stipulate that transitional leaders are those who can inspire and transform their employees to strive harder and achieve the desired outcome. According to Samad (2015, p. 445), this type of style can encourage other people to believe in themselves and in their potential to grow while working for the organisation. Transformational managers are projected to be capable of giving a vibrant visualisation and mission, motivate and gain the trust of his colleague’s by appeal. Qiu, Haobin Ye, Hung, and York (2015, p. 57) added that this type of leadership inspires employees to work past their self-interest for the advantage of the team, which eventually benefits the organisation at large.
Transformational leaders inspire people to focus on the high level needs, as per hierarchy of needs framework developed by Maslow. Transformational leaders motivate employees to exceed their interest in the collective worth of business. These leaders engage with their followers as equals rather than as employees or subordinates.
Practical Use of Transformational Leadership
No precise steps exist for supervisors to trail, as transformational leadership are broad subjects with various aspects. Developing the qualities a transformational leader is a progression, which means that continuous work and determination must be done to embrace transformational framework. Leaders who seek to apply this type of style ought to comprehend the fundamental transformational leadership features of this framework. Babalola, Stouten,and Euwema (2016, p. 315) identified these characteristics as the ability to compel employees to do their best for the establishment by setting a robust role model with essential principles for the organisation. Secondly, give thoughtfulness to the perspectives of staffs that generate and improve a teamwork spirit. Inspire change by setting the pattern on how to apply the new changes and lastly to assist the business by helping the employees to contribute to the establishment.
Transactional Leadership
Transactional leadership is based on leader-follower exchanges, in that the employees are projected to carry out their duties according to the guidelines of the company. These employees also expect a positive compensation concerning the outcome they generated. The framework also includes adverse arrangements, such as a punitive and penalties if the employees do not perform as expected. Rewards include praise, recognition, and complimentary comments when they have successfully complied with leader’s instruction.
Glens are, Anku-Tsede, Sanda, and Okpoti (2016, p. 245) argued that transactional leadership was founded on cost-benefit exchange with employees. In such a case, the psychological and material needs of the employee are satisfied as well as the work progress in return to financial expectation. Clearly or tacitly, leaders approve that employees’ behaviours will be rewarded or punished depending on the effects it brings to the company. These recompenses could comprise of an increase in income, benefits, and career elevations, while the punishments include pay cuts, suspensions and even in dire situations, an employee could face termination for the workstation. Most scholars have criticised the transactional leadership model as being unsuitable and unsatisfactory in most cases. Exchanging the welfares between leaders and employees does not motivate the staffs to maximise their potential and capability in the business. In turn, such a situation will let them only work to the levels required to gain the promised reward, which in most cases are salaries, wages, and bonuses and avoid penalties. DeConinck, (2015, p. 1088) stipulated that transactional leadership has two fundamental categories, and these are “contingent reward and management by exception.”
Contingent Reward
Typically, employees appreciate substantial and perceptible payments for their recital efforts. Therefore, transactional leaders base on this fact to comply with the needs and desires if people. Sometimes, managers who apply the contingent reward system are likely to demonstrate the work directly to help the employees do their work. It implies that contingent reward is presenting a progressive association between employees and leaders who interchange expertise and ideas to assist both the organisational objectives and the necessities of employees (Demirtas and Akdogan 2015, p. 63). On the contrary, the negative side of this methodology is that some managers insist on performance and view human labourregarding monetary valuation. They also could disregard constructing a sturdyorganisational culture among workers and establishing a friendly rapport between managers, which in the long-run would be beneficial concerning balancing the employee performance and maximising profit making. In short, the primary gages of the contingent reward methodology comprise of purpose setting for a particular work given by the company, measurable recompenses for the employee enactment and trade-off.
Management by Expectation
Transactional leaders who practice administration by expectation display trust in their employees to complete various tasks with the desired quality and expectations. Most of these managers do not strive to inspire employees to work past their expectations; as long as the objective is achieved and the organisation is in the anticipated condition, both the employees and their managers are happy. Managing by expectation includes maintaining the status quo, trusting employees and could sometimes be characterised by poor communication between the manager and the employees.
A Brief Comparison of Transactional Leadership and Transformational Leadership
Both these leaders are essential for any organisation, and therefore, some managers have chosen their preferred method of leadership, while others have resorted to coming up with a methodology that borrows from both frameworks. Transactional leadership helps to encourage a stagnated organisation and allows people to attain the organisation performance and objectives. Contrarily, transformational leadership supports the business to adjust and meet the challenges in this era of rapid changes.
Leadership and Employee Turnover
Studies carried out by Sun, Gergen, Avila,and Green (2016, p. 268) and Mittal and Dhar (2015, p. 895)revealed that the behaviours of leaders influence the overall turnover of employees and their overall satisfaction intensely and consistently. Popli and Rizvi,(2016, p. 965) added that leadership has a direct effect on the employee satisfaction of any organisation. Maslow (1954, p. 987), contemplated that any business that gives its employees what they desire and needs will rip the fruits of employee satisfaction among other positive factors that would lead to the overall success of the organisation. Various researchers have also embarked on studying the association between leadership methods and employee turnover via overall career satisfaction, as discussed in the subsequent sections.
Zhang, Ahammad, Tarba, Cooper, Glaister, and Wang (2015, p. 1030) conducted a research to study the connection between leadership classes and job satisfaction among employees who worked in the apparel business in China. The study had 800 respondents, all who were the employees of the company. However, the study mentioned that the employee satisfaction did not improve the efficacy of the business. In examining the relationship between leadership behaviour strategies, job satisfaction and employee turnover, Zhang, Ahammad, Tarba, Cooper, Glaister, and Wang (2015, p. 1022) researched on these variables among the American steel industry workers. The researcher concluded that there are three significant outcomes. First, there is an inversely direct association between leadership strategies, worker turnover, and career satisfaction among other outcomes from human labour. Secondly, there is a positive correspondence between job satisfaction and employee turnover, and lastly, the outcomes revealed that job contentment determines the relationship between employee turnover and management strategies. Sethuraman and Suresh (2014, p. 165) also inspected the effect of leadership styles and manager communication capability on the employment and communication contentment of employees. The study included 200 respondents who worked in the different multinational corporation as full-time staffs. The researcher found a strong relationship between the style of leadership and employment and communicator satisfaction. Stogdill (2017) researched on the impact of organisational culture on leadership behaviour on corporate commitment and job satisfaction. The researchers collected their data from 200 employees working in different airline companies across the world. The results revealed that there was an important link among organisational commitment and leadership behaviour and the prevailing culture had an important role in determining this relationship. Rubenstein, Eberly, Lee, and Mitchell (2018, p. 55) summarised the connection between leadership styles, staff turnover, and general satisfaction, as shown in figure 1 and figure 2.
Figure 1: Transformational leadership and facets of job satisfaction.
Figure 2:
Transformational and transactional frameworks and employees turnover and employee satisfaction
Rubenstein et al. (2018, p. 55) purported that transformational leadership can positively influence different aspects of employee satisfaction, especially employee turnover; the researchers established this conclusion after researching the mining industry in South Africa. According to the researchers, transformational leadership has an influence infringe and pay benefits. However, the study did not find any association between management style of management and employment promotions satisfaction dimensions. Moreover, there is no correlation found between transformational management, the nature of work, employees, and contingent rewards. In another study carried out among civil servants in the United Kingdom, the outcomes presented that there was a strong connection between transactional management styles and employee turnout among these workers; however, most respondents were more concerned by their job satisfaction as compared to their overall turnover. The general conclusion of these studies was that transformational leadership inspires employee turnover a lot and moderately inspires employee satisfaction (Azanza, Moriano, Molero, and Lévy Mangin 2015, p. 963).
Wong, Wong, and Wong (2015, p. 317) explored the connection between transformational and transactional styles in relations with employee commitment in China. The researchers collected their data from 400 junior staffs and their respective supervisors. The outcome revealed that that employee satisfaction and engagement is strongly influenced by transformational leadership behaviours than in the transactional framework in most sectors. However, various areas/ industries reacted differently tospecific elements of transactional and transformational leadership. Especially in the six aspects of transformational behaviours, high job expectation and providing a suitable work environment had significant influences on employees working in the service industry. While other elements, such as giving support, individual support and employee collaboration had a moresubstantialimpact on employees working in the manufacturing sector as compared to those working in the service industry. Moreover, the contingent reward framework in the transactional leadership had a constructive influence on employees working in the service sector. The positive impact included employee commitment and job satisfaction.
Sellgren, Ekvall, and Tomson, (2007, p. 173) also studied the link between transformational styles and general contentment of employees in different hospitals. The study gave a fundamentalrelationship between these variables. The researchers investigated the role of the head nurse and the impact they had on the outcome of junior nurses. Among the 120 nurses interviewed, they all admitted that the leadership style deployed by their direct supervisors affected their overall turnout and job satisfaction. Mulki, Caemmerer, and Heggde (2015, p. 4) also studied the impact of these two leadership styles on employee absenteeism. The researchers concluded that there was a correlation between employee fulfilment and absenteeism. Most satisfied employees tend to attend to work regularly, as compared to those employees who had negative resentments on the work environment. The study included 80 employees working in a mail delivery entity. These respondents were requested to fill a questionnaire with relevant questions; the data showed that transformational leadership could decrease illegitimate worker absenteeism, whereas a passive management framework would lead to increased absence. Harhara, Singh, and Hussain (2015, p. 501) analysed the correlation between transformational management method among managers and unit heads and the employee satisfaction. The study discovered that there was a positive link between both variables.
Methodology
Research Approach
The research approach will focus on collecting secondary data from a number of databases and utilizing the information in making an informed decision which can be able to answer the three research questions in the best manner possible. Qualitative and quantitative approaches are commonly used in the collection of relevant data secondary data for analysis. When the information is collected qualitatively and within a defined systematic manner, it is commonly referred to as a systematic literature review. The information collected is normally specific and seeks to answer specific questions based on previous research papers. Essentially, what happens is that information is sourced from different sources using prescribed criteria. The selected articles are then analyzed based on the research question of interest before a final prediction is made concerning the study questions.
Quantitative Articles
For the case of quantitative articles, the information is collected from a number of different sources and the statistical section of the articles collected together to provide the relationship between specific variables under consideration. When statistical analysis is utilized, the research is then regarded as a meta-analysis. In the case below, the variables under consideration to be utilized is largely qualitative, and therefore, the same approach commonly utilized in the selection process will be used above in defining the nature of the research questions.
Research Tools
Secondary data examination was utilized in the collection of data from a number of different databases, including EBSCO host and Google Scholar. Information was collected threefold covering the three different research questions. The first aspect covered collection of information related to employee turnover. The second aspect covered information related to transactional leadership and employee turnover while the third aspect covered information related to transformational leadership and employee turnover. A specific inclusion and exclusion criteria was applied in the collection of information across the two databases. The search term for the research question was ‘predictor of employee retention’. The other search strategy terms which were utilized included ‘employee turnover and transactional leadership’ and ‘employee turnover and transformational leadership’. Boolean terms which may indicate similar results were also used in the search criteria. For example, predictors of employee retention in the organization, as well as its effect on both transformational and transactional leadership, were also searched. The term employee retention was utilized in the second search since it is the direct opposite of employee turnover. Based on the literature provided in the initial section, employee turnover was more likely to have a negative correlation with transformational and transactional leadership. A positive relationship is indicated between employee retention and both forms of leadership and will also provide information on the research question. Also included in the search strategy were terms which directly or indirectly implied employee turnover like staff turnover. The use of similar searches is encouraged as it ensures that all possible sources of information related to the subject under investigation have been fully carried out.
Inclusion and Exclusion Criteria
The inclusion criteria also specified specific research designs which were to be included in the study. For the above study, the research study, information was primarily collected from both qualitative and quantitative sources. Information from the systematic reviews, case studies were also included in the study. Data from editorials, reviews, and personalized articles or opinion letters were excluded from the study. The aforementioned data sources are not utilized since they primarily provide opinionated information which may not be critical. The data might also be biased since it is based on an individual approach in dealing with specific issues. Data from journal sources are held in high regard as the information provided has been reviewed by other peers. Its methodological rigor, validity, and reliability of the results have also been carried out and found to be within the prescribed levels of standardized research approaches. Therefore, data collected from articles is considered as the best alternative to conducting primary research.
The inclusion criteria restricted the study to business-related aspects alone. In essence, information from other fields, including nursing and its related studies were left out since nursing and business settings are defined by different variables. Since the paper provides relevant details related to business aspects it excludes other subjects which may contain confounding variables which may have an overall effect on the data collected. The presence of confounding variables in research indirectly link different variables with the independent and dependent variable and may affect the validity and reliability of the method used as well as the results obtained. Matching or stratification is indicated as the most viable approach used in reducing the effects of confounding variables. In the above cases, instead of investigating the issue across a broad section of the subjects
