The Impact of Transformational Leadership on Employee Retention: The Role of Job Satisfaction and Communication

Abstract

The study focuses on exploring the influence of “transformational leadership” (TL) on “employee retention” (ER) in the “small and-medium sized enterprises” (SMEs) by taking Job Satisfaction (JS) as mediator and communication (CM) as moderating factors.  The target population is the Pakistani SME’s operating in the Islamabad/Rawalpindi region and no other regions due to time limitations. For collecting data, Convenience sampling technique is utilized. A 5-point Likert scale instrument has been developed for obtaining the desired statistics. Multiple Regression method is exploited for testing of hypothesis and “Process Model Macro” is applied to gauge the mediating and the moderating influence. Findings illustrate the positive impact of TL on ER in the Pakistani SMEs. The outcomes of the study endorsed TL influence on JS. Further analysis exposed partial mediation of JS in exploring the relationship between TL and ER. Moreover, communication positively moderates the TL– JS and JS–ER relationships. The findings provide a food for thought to the Pakistani SME leaders to adopt transformational style of leadership when it comes to retaining the talent. This study adds volume to both theory and practice. Meager number of studies have been done in discovering the mediating role of JS between TL and ER especially in the Pakistani SME environment. This study is very unique in ascertaining the moderating influence of Communication on TL– JS and JS–ER axis which has not done before. In future, the impact of the exit of transformation leadership on employee retentions can also be worthy of examining.

        Keywords: transformational leadership, communication, job satisfaction, employee retention.