THE EFFECT OF LEADERSHIP STYLE ON EMPLOYEES’ ORGANIZATIONAL COMMITMENT IN COMMERCIAL BANK OF ETHIOPIA

Abstract

The purpose of this study was to investigate the Effects of Leadership Styles on Employee organizational Commitment in Commercial Bank of Ethiopia. The study was guided by the following key research questions focusing on the three styles of leadership. What is the leadership style adopted at CBE as perceived by employees of the BanK? What is the level of employees’ organizational commitment at CBE? To what extent the perceived leadership style affects the commitment of employees’ to CBE? The researcher collected sample data from 40 branches of CBE working in Addis Ababa area at branch level and eastern A.A. district selected on simple random sampling. Systematic random sampling were used to select 345 respondents from 2,467 district sample branch employees which were considered population of the study and questionnaires were distributed to all. Out of the total distributed questionnaire 322 were returned and 13 of the returned were rejected due to missing data while the remaining 309 responses were used for data analysis. Data was analyzed using the Statistical Package for Social Sciences (SPSS). The study employed explanatory research design Correlation and linear regression were used to analyze the relationship and its effect between leadership Style and organization commitment. The regression results showed that both transformational leadership Style r (309) =.847, p>.05; and transactional leadership Style r (309) =>0. 918, p<.05. have significant contribution for organizational commitment. The study showed that both transactional and transformational leadership styles are the leadership styles usually implemented in the bank. Similarly transformational and transactional leadership style had a positive and strong correlation with employee’s organizational commitment. At last, the result conformed that leadership Style has effect on organizational commitment Generally, managers need to improve their behavior to the highest level to improve the organizational commitment. The researcher recommended that the bank should invest on making the organization a better place to work, for all employees. By doing so the bank could have sustained competitive advantages as the human aspect of an organization is not easily imitated by the competitors. Secondly, it recommended to offer employees competitive remuneration package.