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Mediating
Dimensions of transformational effect of job
leadership and organizational satisfaction

performance: the mediating effect

of job satisfaction 1
Sam Kris Hilton Received 21 February 2021
Revised 24 June 2021
Research Department, Kricet Insight, London, UK 21 August 2021
28 October 2021
Wonder Madilo Accepted 16 November 2021

School of Graduate Studies, University of Professional Studies, Accra, Ghana, and

Fred Awaah and Helen Arkorful
Department of Business Administration, University of Professional Studies,
Accra, Ghana

Abstract
Purpose – Poor corporate governance was reported to significantly contribute to the 2017/2018 financial
crisis in Ghana. As leadership is a vital concept in the corporate governance system, this study aims to
examine the effect of transformational leadership on organizational performance and hypothesizes that job
satisfaction mediates such a relationship.
Design/methodology/approach – This study adopted a quantitative research approach where a cross-
sectional survey design was used to collect the data from 300 purposively sampled employees of five selected
commercial banks. The data was analysed using PROCESS version 3.4.1.
Findings – The results show that individualized consideration is the dominant transformational leadership
dimension being practiced by supervisors and managers in the selected commercial banks. Again, the four
dimensions of transformational leadership have a positive effect on organizational performance, and such
effect is significantly mediated by job satisfaction.
Practical implications – The findings suggest that the dimensions of transformational leadership should
be continuously improved alongside strategically motivating employees to increase their satisfaction level to
enhance organizational performance.
Originality/value – This study provides evidence that bank managers need to be cognizant that job
satisfaction is vital in the industry and must be a focal point of corporate governance practices. The mere
initiating of transformational leadership behaviours without a clear link to employee satisfaction may result
in employee disengagement, consequently affecting the banks’ performance and survival.
Keywords Idealized influence, Intellectual stimulation, Inspirational motivation,
Individualized consideration, Job satisfaction, Organizational performance, Leadership
Paper type Research paper

1. Introduction
Effective leadership styles, job satisfaction and employee performance are factors that have
been regarded as fundamental for organizational success. A capable leader provides Management Research Review
direction for the organization and leads followers to achieve desired goals. In a similar vein, Vol. 46 No. 1, 2023
pp. 1-19
employees with high job satisfaction are likely to exert more effort in their assigned tasks © Emerald Publishing Limited
2040-8269
and pursue organizational interests. An organization that fosters high employee job DOI 10.1108/MRR-02-2021-0152
MRR satisfaction can also retain and attract employees with the skills that it needs (Mosadegh-
46,1 Rad and Yarmohammadian, 2014). Likewise, different kinds of leadership styles may be
adopted by managers to trigger organizational performance (Hilton et al., 2021). However,
most leadership researchers concentrated on transformational and transactional leadership
and contended that they are more relevant in promoting organizational performance
because irrespective of the organization type, the style chosen is based on the leader’s
2 ability, preference and experience (Egan et al., 1995; Paracha et al., 2012). Arenas et al. (2018)
also assert that transformational leaders go beyond simple exchanges and agreements with
subordinates by exhibiting more leadership behaviours. Thus, this study investigates the
mediating effect of job satisfaction on the relationship between transformational leadership
and organizational performance.
Several studies have established that transformational leadership has significant
effects on job satisfaction and organizational performance (Judge and Piccolo, 2004; Lok
and Crawford, 2011, 2014; Mosadegh-Rad and Yarmohammadian, 2014). Research also
shows that high job satisfaction enhances employees’ psychological and physical well-
being (Ilardi et al., 2013) and positively affects performance (Vroom, 1964; Porac et al.,
2013). In the views of Mosadegh-Rad and Yarmohammadian (2014), job satisfaction is
influenced by many organizational contextual factors, ranging from salaries, job
autonomy, job security and workplace flexibility to leadership. In particular, leaders
within organizations can adopt appropriate leadership styles to affect employee job
satisfaction.
Although the relationship between transformational leadership and organizational
performance has been well researched over the years, there are no conclusive findings.
Previous studies have examined the relationship between transformational leadership and
organizational performance, as well as job satisfaction in various settings such as
healthcare, military, education and business organizations (Bass, 2000; Cook et al., 2014;
Chen and Silverthorne, 2015; Puni et al., 2018). These studies generally indicate that
transformational leadership has a positive effect on both job satisfaction and organizational
performance. However, these studies have not considered the possible mediating effect of
job satisfaction on the relationship between transformational leadership and organizational
performance to establish the indirect effect on organizational performance. For instance,
extant literature demonstrates that transformational leadership influences job satisfaction
(Wan Omar and Hussin, 2013; Puni et al., 2018) and job satisfaction, in turn, influences
organizational performance (Scroggins, 2008; Pitts, 2014), thereby satisfying the strict
condition for a potential mediating effect of job satisfaction on the relationship between
transformational leadership and organizational performance. Nevertheless, transforma-
tional leadership has not been examined relative to organizational performance and job
satisfaction in a single study. Thus, it would remain an unevaluated assumption if an
empirical study of this nature is not carried out to provide a theoretical contribution to
existing leadership and organizational literature.
In the wake of the 2017/2018 financial crisis in Ghana, poor corporate governance was
reported to contribute to the crisis significantly. Corporate governance relates to how
organizations are directed, managed and controlled. As leadership styles are a collection of
traits, skills and behaviours exhibited by the manager in managing organizations (Ohemeng
et al., 2018), we argue that effective leadership may play a significant role in the performance
and survival of the banks. Again, we are of the view that the satisfaction level of employees
may also influence their performance and whether they will stick to the core mandate of the
banks. However, the available relevant literature on leadership styles in the banking
industry of Ghana by Puni et al. (2018) focused on the effect of transformational leadership
on job satisfaction using contingent reward as moderating variable. Beakana (2017) also Mediating
focused on the relationship between transformational leadership and the performance of effect of job
banks. As performance can guarantee organizational success and survival, this study aims
to assess the dimensions of transformational leadership and organization performance using
satisfaction
job satisfaction as mediating variable. It is, therefore, anticipated that the indirect effect of
transformational leadership on organizational performance through job satisfaction might
be greater than the direct effect of transformational leadership on organizational
performance. As there is no empirical evidence to support the above argument, this study is 3
necessary to augment existing leadership and organizational literature. This study would
also be helpful to managers and supervisors in the banking industry in implementing the
appropriate strategies that will stimulate organizational performance by focusing on the
leadership style and employee satisfaction.

2. Literature review and hypotheses development

2.1 Full-range leadership theory
Leadership is defined as “a process by which a person influences others to accomplish an
objective and directs the organization in a way that makes it more cohesive and coherent”
(Kumar, 2014: 441). Leadership has constantly been redefined, with a number of leadership
theories having been proposed based on different theoretical perspectives and grouped
accordingly (Avolio et al., 2009). Effective leadership is widely recognized as necessary in
setting strategic goals, policy development and organizational practices. Several theoretical
approaches were used to assess leadership styles, but the most renowned framework is the
full-range leadership theory (FRLT) (also known as the full-range leadership model). The
FRLT contained three leadership constructs, namely, transformational leadership,
transactional leadership and laissez-faire leadership which is usually measured by applying
a valid measurement tool such as the multifactor leadership questionnaire (MLQ, 5X)
developed by Avolio and Bass (2004). As the focus of this study is on transformational
leadership, the FRLT is reviewed.
The FRLT was initially propounded by Burns (1978) and was later expanded by Bass
(1985) and further extended by Bass and Avolio (1995, 1997). This theory was premised on
the assumption of the ideals of leaders that triggers organizational outcomes. It has since
been widely applied in leadership studies (Antonakis and House, 2013). According to Burns
(1978), leadership was either transactional or transformational, in that transactional leaders
lead through social exchanges, whereas transformational leaders develop their followers
and motivate or inspire them to achieve extraordinary levels of success. Though the theory
initially consisted of only transformational and transactional leadership constructs, Bass
(1985) added laissez-faire leadership constructs, arguing that it is probable to have an absent
leader [a leader who allows followers to do as they want without giving instructions,
monitoring or evaluating their actions].
Transactional leadership is premised on the exchange of rewards contingent on
performance (Avolio et al., 2009; Hilton et al., 2021). Transactional leadership refers to many
leadership models that emphasize the exchanges between leaders and their followers (Burns,
1978; Northouse, 2016). Kuhnert (1994) asserts that transactional leaders exchange things of
value with members to achieve group (both leader and member) interests. This compels
members to do things in favour of the leader to be rewarded. The transactional leadership
constructs consist of two dimensions, namely, contingent reward and management-by-
exception (active and passive) (Burns, 1978; Bass, 1985). The contingent reward is a
constructive transaction between leaders and members because the leader sets expectations
for members that describe what needs to be accomplished to meet expected performance
MRR standards and uses rewards to reinforce positive performance (Bass, 1985; Hilton et al.,
46,1 2021). On the other hand, management-by-exception is a corrective transaction between
leaders and members, which may be active (i.e. leaders actively monitor members for
deviations from standards in the form of mistakes and take corrective action as necessary)
and passive (i.e. leaders passively take corrective action only when they feel they must get
involved, which is usually too late) (Bass, 1985; Hilton et al., 2021).
4 Laissez-faire leadership construct is the non-leadership factor or represents the absence
of leadership (Northouse, 2016). Thus, the laissez-faire leadership construct describes leaders
who abdicate responsibility, delay decisions, provide no feedback and lack interest in
satisfying followers’ needs; there is no exchange with followers to help them develop
(Northouse, 2016). A laissez-faire leader does not care if his followers uphold standards, let
alone achieve any performance objectives because he does not engage with followers and
shuns deciding on any organizational issues; and so he frequently absents himself from
work meetings and other related responsibilities (Arenas et al., 2018).

2.2 Transformational leadership construct

Transformational leadership construct describes the leadership style that relates to
influencing subordinates to perform beyond expectation. Transformational leadership is
concerned about the leader’s ability to transform others rather than focusing on personal
characteristics and member relations (Achua and Lussier, 2013). Transformational
leadership incorporates charismatic and visionary leadership. It is characterized by an
exceptional level of influence that leads the members to perform credibly beyond what is
typically expected of them. The underlying principle of transformational leadership is that
subordinates will follow a leader who inspires and motivates them (Puni et al., 2018).
Burns (1978, p. 141) defines a transformational leader as “one who raises the followers’
level of consciousness about the importance and value of desired outcomes and the methods
of reaching those outcomes.” Transformational leaders seek to motivate their subordinates
to achieve more than they initially intended and realize their fullest potential (Northouse,
2016). This is accomplished by creating challenging expectations and allowing followers to
achieve higher standards of performance (Arenas et al., 2018). Transformational leaders
focus on producing an innovative change in institutions by getting followers to willingly
commit to the organization’s vision and long-term goals (Sullivan and Decker, 2001).
Transformational leadership relates to the behaviour of the leader that transforms and
inspires members to perform above expectations while sacrificing personal interest for the
good of the organization (Avolio et al., 2009). However, transformational leaders go beyond
simple exchanges and agreements with followers by using one or more of the behaviours or
dimensions identified in the transformational leadership concept (Arenas et al., 2018).
Burns (1978) conceptualizes the transformational leadership constructs as one of two
leadership styles represented as a dichotomy: transformational and transactional leadership.
Afterwards, Bass (1985) modifies the original transformational leadership construct; and
over time, four dimensions of transformational leadership emerged. These dimensions
consist of idealized influence, intellectual stimulation, inspirational motivation and
individualized consideration. A transformational leader exhibits each of these four
dimensions to varying degrees to bring about desired organizational outcomes through their
followers (Bass, 1985, 1990; 2000; Bass and Riggio, 2006; McCleskey, 2014). These
dimensions are briefly explained below.

Idealized influence: This dimension is also called charisma and it is the emotional
dimension of leadership (Antonakis, 2012). It deals with the formulation and
articulation of vision and challenging goals and motivating followers to work
 beyond their self-interest to achieve common goals (Dionne et al., 2014). In this Mediating
dimension, leaders act as role models who are highly admired, respected and trusted effect of job
by their followers (Bass and Riggio, 2014). In the words of Bass and Riggio (2014),
leaders with great idealized influence are willing to take risks and are consistent
satisfaction
rather than arbitrary by demonstrating high standards of ethical and moral
conduct.

Intellectual stimulation: Intellectual stimulation is concerned with the role of leaders 5
in stimulating innovation and creativity in their followers by questioning
assumptions and approaching old situations in new ways (Bass and Riggio, 2014).
They always encourage their followers to try new approaches or methods to solve
the old problems.

Inspirational motivation: This dimension refers to the way leaders motivate and
inspire their followers to commit to the vision of the organization. Leaders with
inspirational motivation foster strong team spirit as a way for leading team
members towards achieving desired goals (Antonakis et al., 2013; Bass and Riggio,
2014).

Individualized consideration: Individualized consideration refers to leaders paying
special attention to each individual follower’s need for achievement and growth by
acting as a coach or mentor. The leader is able to achieve, by enthusiastically
listening and accommodating members’ personal needs for growth, learning and
recognition (Puni et al., 2020). This process also provides continuous feedback to the
member and links the member’s current needs to the organization’s mission (Bass
and Avolio, 1990; Puni et al., 2020).

2.3 Job satisfaction

Job satisfaction is a positive or pleasing emotional state from the appraisal of one’s job or
experience (Locke, 1976). This definition suggests that employees form their attitude
towards their jobs by taking into account their feelings, beliefs and behaviours (Akehurst
et al., 2014; Robbins, 2015). Spector (2015) found that if the employees find their job fulfilling
and rewarding, they tend to be more satisfied with their jobs. In the views of Misener et al.
(1996), job satisfaction refers to how content employees are with their job in a firm and
includes specific aspects of satisfaction regarding pay, benefits, promotion, work conditions,
supervision, organizational practices and relationships with a fellow employee. Thus, job
satisfaction can be described as employee feelings about a variety of both intrinsic and
extrinsic job elements (Puni et al., 2018).
Kalleberg (1977) proposes that job satisfaction consists of two components namely,
intrinsic (referring to the work itself) and extrinsic (representing facets of the job external to
the task itself). Intrinsic job satisfaction refers to how people feel about the nature of the job
tasks themselves (Hirschfield, 2010), whereas extrinsic job satisfaction refers to how people
feel about aspects of the work situation that are external to the job tasks or work itself (Shim
et al., 2012). These dimensions can also be described as working conditions (extrinsic) and
work assignments (intrinsic). Working condition is the job environment, which encompasses
the relationship with management function, mentoring system and others. Poor working
conditions, inefficient work organization, inadequate staffing and managerial practices
affect staff turnover and perceptions of the organization and work (Eaton, 2010; Cohen-
Mansfield, 2014; Harrington, 2016). Therefore, good working condition is a key factor for
workers to develop value, improve job performance and increase staff retention in the
MRR organization. On the other hand, work assignment refers to the duty or job that is given to
46,1 employees so that they can implement their job with commitment and productivity. In this
study, the two dimensions (working condition – extrinsic and working assignment –
intrinsic) of job satisfaction were combined as a single construct for simplicity purposes.

2.4 Organizational performance

6 The concept of organizational performance describes the ability of an organization to
achieve such objectives as high profit, quality product, large market share, good financial
results and survival at a pre-determined time using a relevant strategy for action (Koontz
and Donnell, 1993). Prasetya and Kato (2011) define performance as the attained outcomes of
actions with employees’ skills who perform in some situations. Organizational performance
deals with how an organization is performing in terms of the level of profit, market share
and product quality of other organizations in the same or different industries (Obiwuru et al.,
2011; Hilton et al., 2021). According to Khajeh (2018), organizational performance refers to
the results of an organization or the actual outputs of an organization, which can be assessed
against expected outputs, goals and objectives. Organizational performance is categorized
into three components, namely: financial performance (return on investments, profits, etc.),
shareholder return (economic value-added, total shareholder, etc.) and the product/service
market performance (market share, sales, etc.) (Gavrea et al., 2011). It follows that
organizational performance is the evidence of the output of employees of an organization
measured in terms of revenue, profit, growth, development and expansion of the
organization (Hilton et al., 2021).

2.5 Transformational leadership and organizational performance

Substantial literature exists in both developed and developing countries that show a
relationship between transformational leadership and organizational performance. For
instance, Khajeh (2018) reveals that transformational leadership among other leadership styles
has a stronger positive association with organizational performance. Muterera (2012) also
indicates that transformational leadership is positively correlated with organizational
performance. Again, Rejas et al. (2006) observe that transformational leadership style has a
positive influence on organizational performance. Ojokuku et al. (2012) similarly establish that
transformational leadership style has a positive relationship with organizational performance.
Obiwuru et al. (2011) equally discover that transformational leadership style has a positive
effect on performance. Furthermore, Manzoor et al. (2019) present that transformational
leadership has a positive predictive effect on job performance but CSR significantly mediates
the effect of transformational leadership on job performance. In addition, Ocak and Ozturk
(2018) indicate that the transformational leadership behaviours of managers have an effect on
the performance of organizations. Judge and Piccolo (2004) also confirm a positive correlation
between transformational leadership and organizational performance. Last but not least,
Beakana (2017) establishes that there is a direct relationship between transformational
leadership style and the performance of banks. Hence, it is hypothesized that:

H1. Transformational leadership behaviours are positively related to organizational

performance.

2.6 Transformational leadership and job satisfaction

There are many factors that influence employee job satisfaction and one of the factors is
leadership style (Puni et al., 2018). Bass and Avolio (1993) posit that leadership styles have
an effect on work-related outcomes such as job satisfaction. However, there are mixed Mediating
empirical findings on the relationship between transformational leadership and job effect of job
satisfaction. While some researchers found a positive relationship, others found a negative
relationship. For example, Wan Omar and Hussin (2013) and Hanaysha et al. (2012) found a
satisfaction
positive relationship between transformational leadership and job satisfaction. On the other
hand, Thamrin’s (2012) study shows a negative relationship between transformational
leadership and job satisfaction. Bass (2015) proposes that transformational leadership might
intrinsically foster more job satisfaction, given its ability to impart a sense of mission and 7
intellectual stimulation. Transformational leaders tend to encourage and motivate their
followers to take on more responsibility and autonomy (Emery and Barker, 2007), thereby
enhancing employees’ sense of accomplishment and satisfaction with their job. A relevant
study in Ghana by Puni et al. (2018) indicates that transformational leadership and job
satisfaction are positively related. Hence, it is hypothesized that:

H2. Transformational leadership behaviours are related to job satisfaction.

2.7 Job satisfaction and organizational performance

Employees’ satisfaction is generally regarded as an important ingredient for organizational
performance and success. Successful organizations normally have satisfied employees while
poor job satisfaction can cripple an organization (Galup et al., 2008). Lee and Ahmad (2014)
reveal that job satisfaction affects levels of job dissatisfaction, absenteeism, grievance
expression, tardiness, low morale, high turnover, quality improvement and participation in
decision-making. These, in turn, affect the overall performance of the organization
(Hesselink et al., 2008; Page and Vella-Brodrick, 2008; Riketta, 2008; Scroggins, 2008; Pitts,
2014). It follows that job satisfaction has a relationship with organizational performance.
Hence, it is hypothesized that:

H3. Job satisfaction is positively related to organizational performance.

2.8 Transformational leadership, job satisfaction and organizational performance

Based on the above reviews, it is clear that transformational leadership has an influence on
job satisfaction (Hanaysha et al., 2012; Wan Omar and Hussin, 2013; Puni et al., 2018) and
job satisfaction, in turn, has an influence on organizational performance (Riketta, 2008;
Scroggins, 2008; Pitts, 2014), thus satisfying the strict condition for the possible mediating
effect of job satisfaction on the relationship between the dimensions of transformational
leadership and organizational performance. Through transformational leadership also has
an influence on organizational performance (Beakana, 2017; Khajeh, 2018; Ocak and Ozturk,
2018), the former has not been examined relative to the latter and job satisfaction in a single
study. It will, therefore, remain an unevaluated assumption if an empirical study of this kind
is not carried out to provide a theoretical contribution to existing leadership and
organizational literature. To address this theoretical gap, we hypothesized that:

H4. Job satisfaction will mediate the relationship between transformational leadership
behaviours and organizational performance.
Given the hypotheses above, a research model is designed in Figure 1 to illustrate the direct
and indirect relationships between transformational leadership behaviours and
organizational performance through job satisfaction as the mediating variable. The model
further indicates that transformational leadership behaviours are related to job satisfaction
MRR and job satisfaction, in turn, is related to organizational performance. At the same time,
46,1 there is a direct effect of transformational leadership behaviours on organizational
performance.

3. Methodology
3.1 Research design
8 Explanatory and cross-sectional survey designs were adopted for this study and a
quantitative approach was used to collect numeric data (Dawson, 2009), for a statistical test
of the relationship between transformational leadership dimensions and organizational
performance alongside the mediating effect of job satisfaction (Saunders et al., 2016).

3.2 Study setting, population and sampling

The study was conducted in the banking industry of Ghana. The industry consists of
commercial banks and specialized deposits taking institutions (savings and loans and
microfinance institutions). It is regulated by the Central Bank of Ghana (BoG). Commercial
banks dominate the industry, with 23 banks. During the 2017/2018 financial crisis, customers
of commercial banks were most affected as 8 commercial banks with a large customer base
collapsed. During that period, poor corporate governance, non-performing loans, liquidity
and asset-turnover problems and poor performance characterized the banking industry. As
part of measures to address the crisis, the BoG recapitalized the minimum capital
requirement from GH¢120m to GH¢400m. Some banks have merged to meet the new
minimum capital requirement. As the dominant force in the industry, whose activities could
affect a wide range of stakeholders, it is imperative to assess their leadership style viz-viz
their performance to provide evidence to improve their corporate governance practices.
Employees of commercial banks within the Accra Metropolis constituted the population
of the study. Generally, the Accra metropolis is Ghana’s business hub, the capital city and
all the commercial banks have their head offices and branches in this metropolis. Therefore,
using this metropolis makes it a fair representation of the commercial banking employees in
Ghana. Other regions were not considered because every commercial bank implements one
operational policy across the branches, therefore selecting a branch in Accra may be as
representative as selecting a branch in other regions. Besides, none of the commercial banks
autonomously operate in other regions. Additionally, due to budget constraints, the

Job Satisfaction

H2 H3

Transformational leadership

• Idealized Influence Organizational

• Intellectual Stimulation Performance
• Inspirational Motivation H1
• Individualized
Consideration
Figure 1.
Research model
Source: Authors’ own model (2021)
researchers limited themselves to the Accra metropolis. Nevertheless, the target population Mediating
was the operational level employees, as the study focused on assessing leadership style. We effect of job
believe that the operational level employees are in a better position to assess the
transformational leadership style of their supervisors or managers.
satisfaction
The purposive sampling technique was adopted to select five commercial banks that
gave their consent. This technique helped the researchers select the commercial banks
performing well and appeared to have a competitive edge in the industry. The researcher
also considered the profit ratio, market shares and employee turnover rate of commercial 9
banks. Saunders et al. (2016) indicated that purposive sampling allows the research to select
respondents with rich information. Therefore, the use of this sampling technique is most
appropriate.
Furthermore, convenient sampling was used to select the respondents from the various
selected commercial banks. This sampling method enabled the researchers to select willing,
available and able participants in the survey. Applying the sample size determination
criteria of Patton (2002) as endorsed by Saunders et al. (2009, 2016) and widely adopted in
non-probability studies (Puni and Hilton, 2020; Hilton and Arkorful, 2021; Arkorful and
Hilton, 2021; Hilton et al., 2021), 300 respondents were chosen to constitute the sample size
for the study. The total sample size was divided equally among the selected banks, where 60
respondents were chosen from each selected bank. The 60 respondents per bank were
chosen from head offices and branch offices. Thus, the questionnaires were sent to
respondents at the selected head offices and branch offices. However, the questionnaires
were issued more than 60 per bank to validate the exact sample size.
Procedural strategies were used to address common method bias, as recommended by
Podsakoff et al. (2003, 2012). Firstly, the research purpose and instructions were given to the
respondents to increase the probability of response accuracy (Hair et al., 2015). In the views
of Podsakoff et al. (2003, 2012), response accuracy increases if respondents know how the
information will be used or how it will benefit them or the organization, in addition to
promising feedback, keeping the survey short and minimizing redundant measures and
overlap. Secondly, words with multiple meanings were specified to keep items concise
and straightforward. Finally, there was a clear separation between the independent and
dependent variables and instructions were given under each section on how respondents
should respond to the questions.

3.3 Data collection, instrumentation and analysis

Cross-sectional data were collected using a questionnaire. The questionnaire contained
adapted items from MLQ 5X short (Avolio and Bass (2004) for the transformational
leadership dimensions; Yousef (2000) for job satisfaction and Gunday et al. (2011) for
organizational performance. The adaption, in most cases, was just the modification of the
subject of the sentences. For instance, “I,” as used in the items, was changed to “my
supervisor.” A five-point Likert scale ranging from strongly disagree (1) to strongly agree (5)
was provided for the items. The first section of the instrument collected demographic data
from respondents (i.e. gender, age, marital status, educational level and the number of years
working with their respective banks). The second section of the instrument collected data on
the dimensions of transformational leadership (idealized influence, inspirational motivation,
intellectual stimulation and individualized consideration). Sample items adapted include the
following: idealized influence (e.g. “my supervisor consider followers’ needs over his or her
own needs”), inspirational motivation (e.g. “my supervisor arouses individual and team
spirit”), intellectual stimulation (e.g. “my supervisor approaches old situations in new
ways”) and individual consideration (e.g. “my supervisor pays attention to individual needs
MRR for achievement and growth”). The third section of the instrument collected data on job
46,1 satisfaction (e.g. “I am satisfied with the working conditions”). The fourth section collected
data on organizational performance, which replicates components of “profit growth,”
“market share,” “turnover growth,” “repeat business,” “level of customer satisfaction,” “new
clients” and “overall reputation.” Even though the organizational performance scale was
initially administered to general managers by Gunday et al. (2011), Hilton et al. (2021)
10 postulate that operational level employees are equally in a better position to provide data on
performance because they carry out daily operational activities and report same to their
superiors (e.g. general managers); as a result, operational level employees have firsthand
information about the organization. Thus, once the study aims to investigate the leadership
style of managers and the performance of the organization, it is appropriate to administer
the questionnaire to operational-level employees (Hilton et al., 2021).
Despite the confirmation of the validity and reliability of the adapted items in the extant
literature, we also carried out predictive validity and reliability tests to affirm the internal
consistency of the measuring items. This was done by running an inter-construct correlation
test for predictive validity and Cronbach’s alpha test for reliability. The inter-construct
correlation result in Table 1 shows that the items are predictively valid. Similarly, the
Cronbach’s alpha coefficients in Table 1 are above the recommended 0.70 (Field, 2015),
indicating that the items are strongly reliable for the study.
The Statistics Package for Social Science (SPSS) version 23 was adopted to analyse the
data. Specifically, analysis of descriptive statistics (i.e. mean, standard deviation, skewness
and kurtosis) was conducted. Pearson correlation analysis was also carried out. Finally,
regression analysis was carried out using Process version 3.4.1 to test the mediating effect of
job satisfaction on the relationship between transformational leadership dimensions and
organizational performance.

4. Results and discussion

Table 2 shows the result on the demographic characteristics of the respondents. It can be
observed that more men (representing 58.67%) participated in the survey than women
(representing 41.33%). In regard to the age of respondents, 20.40% of them fall within the
age group (20–30); 45.48% of them are between 31 and 40 years old; 28.76% of them are
within the age group (41–50) and 5.35% of them are between 51 and 60 years old. In terms of
marital status, the majority of the respondents are married (representing 65.33%). In
descending order, 30% of the respondents hold a first degree, 20.33% of them hold a
postgraduate degree, 18.67% of them hold a diploma/higher national diploma (HND),
16.67% of them hold other qualifications and 14.33% of them hold a professional certificate.
Finally, in ascending order, 9.33% of the respondent has been working with their banks for

Variables CA 1 2 3 4 5 6

1. Idealized influence 0.82 1

2. Intellectual stimulation 0.88 0.68** 1
3. Inspirational motivation 0.78 0.54** 0.70** 1
4. Individualized consideration 0.91 0.68** 0.70** 0.64** 1
5. Job satisfaction 0.90 0.39** 0.34** 0.31** 0.39** 1
Table 1.
6. Organizational performance 0.91 0.38** 0.35** 0.41** 0.45** 0.48** 1
Cronbach’s alpha and
inter-construct Note: **p < 0.01
correlation Source: Survey data (2021)
Variables Frequency (n = 300) Percent
Mediating
effect of job
Gender satisfaction
Male 176 58.67
Female 124 41.33
Age
21–30 61 20.3
31–40 136 45.3
11
41–50 86 28.7
51–60 16 5.3
Marital status
Single 81 23
Married 196 65.3
Divorced 23 7.7
Educational level
HND/diploma 56 18.7
First degree 90 30
Masters 51 20.3
Professional certificate 43 14.3
Others 50 16.7
Number of years working
Less than a year 28 9.3
1–4 years 90 30
5–9 years 132 44
Table 2.
Above 10 years 50 16.7 Demographic
characteristics of
Source: Survey data (2021) respondents

less than a year, 16.67% have been working for more than 10 years, 30% have been working
for one to four years and 44% have been working between five and nine years.
Table 3 presents the mean, standard deviation, skewness and kurtosis. Applying the rule
of thumb by Field (2015) on a normality test, it can be concluded that the data is normally
distributed, as the skewness and kurtosis for all the constructs are within þ1 and –1. Thus,
parametric statistical tests could be carried out. The mean scores for the four dimensions of
transformational leadership indicate that they are being practiced by managers in the
banking industry, with individualized consideration being the dominant dimension.
Individualized consideration is the dominant dimension because supervisors and managers

Variables Minimum Maximum Mean SD Skewness Kurtosis

Idealized influence 1.00 5.00 3.78 0.87 0.53 0.44

Intellectual stimulation 1.00 5.00 3.69 0.89 0.56 0.15
Inspirational motivation 1.00 5.00 3.81 0.83 0.53 0.19
Individualized consideration 1.00 5.00 4.09 0.84 0.19 0.29
Job satisfaction 1.00 5.00 3.54 0.74 0.34 0.64
Organizational performance 1.00 5.00 4.08 0.66 0.89 0.81 Table 3.
Descriptive statistics
Source: Survey data (2021) for study variables
MRR listen and accommodate employees’ personal growth, learning and recognition needs. They
46,1 may also provide continuous feedback to the employees on their performance. This finding
is consistent with prior literature, which suggested that individualized consideration is the
most widely exhibited dimension of transformational leadership style across different
industries (Bass, 1985; Avolio and Bass (2004); Avolio et al., 2009; Yukl, 2011; Northouse,
2016; Arenas et al., 2018). In addition, mean scores of 3.54 and 4.09 were recorded for job
12 satisfaction and organizational performance, respectively. This implies that job satisfaction
in the banking industry is above average, thus confirming the study of Puni et al. (2018),
which establishes similar findings in the banking industry of Ghana. The mean score for
organizational performance shows that organizational performance in the selected
commercial banks was above average. Meanwhile, the standard deviations show that there
are fewer variations in the responses obtained.
The result of the regression analysis is reported in Table 4. Transformational leadership
dimensions were entered as independent variables (denoted as X), job satisfaction was
entered as mediating variable (denoted as M) and organizational performance was entered
as a dependent variable (denoted as Y). The table contained four blocks where each block
relates to the dimensions of transformational leadership. Each block further contained
five steps where Step 1 relates to the effect of individual dimensions of transformational
leadership on job satisfaction, Step 2 relates to the effect of job satisfaction on organizatio-
nal performance, Step 3 relates to the direct effect of individual dimensions of
transformational leadership on organizational performance, Step 4 relates to the total effect
of individual dimensions of transformational leadership on organizational performance and
Step 5 relates to the indirect effect of individual dimensions of transformational leadership
on organizational performance. The four blocks’ R, R-square and F-statistics have a p-value
of 0.000, indicating that both independent variables and mediator contribute significantly to
explain variations in the dependent variable.
The coefficients in Step 1 for the four blocks are significant, illustrating that the
dimensions of transformational leadership have a significant positive effect on job
satisfaction. Hence, H2 is supported. Comparing the coefficients of the effects of the
dimensions of transformational leadership, it can be noticed that individualized
consideration has the highest effect on job satisfaction (0.340 coefficient), whereas
inspirational motivation has the least effect on job satisfaction (0.274 coefficient). It follows
that if transformational leadership dimensions are improved by a unit, there will be a
corresponding improvement in job satisfaction by the magnitude of the coefficients of the
dimensions. This finding is consistent with the study of Puni et al. (2018) in the banking
industry of Ghana, which established a positive relationship between the dimensions of
transformational leadership and job satisfaction. However, whereas Puni et al. (2018)
moderated such a relationship with contingent rewards, this study used job satisfaction to
mediate the relationship between transformational leadership and organizational
performance to establish the indirect effects. The present finding also confirms the findings
of Wan Omar and Hussin (2013) and Hanaysha et al. (2012) that a positive relationship exists
between transformational leadership and job satisfaction. Conversely, the present finding
shows a clear departure from the study of Thamrin (2012), which reported a negative
relationship between transformational leadership and job satisfaction.
Under Step 2, the coefficients for the four blocks are significant; indicating that job
satisfaction (i.e. the mediator) has a positive significant effect on organizational
performance. In other words, there is a positive relationship between the two variables.
Thus, H3 is supported. This finding is consistent with prior literature which revealed a
positive relationship between job satisfaction and organizational performance (Galup et al.,
Block Step Predictors Coefficient t-value R R2 F P
Mediating
effect of job
1 1 Idealized influence (X 0.337 7.39** 0.394 0.155 54.66 0.000 satisfaction
on M)
2 Job satisfaction (M on Y) 0.350 7.30** 0.526 0.277 56.97 0.000
3 Idealized influence (DE_X 0.176 4.28** 0.526 0.277 56.97 0.000
on Y)
4 Idealized influence (TE_X 0.294 7.18** 0.384 0.148 51.59 0.000 13
on Y)
**
5 Job satisfaction (IE_ X 0.118 4.54
on Y)
2 1 Intellectual Stimulation (X 0.280 6.19** 0.305 0.093 38.30 0.000
on M)
**
2 Job satisfaction (M on Y) 0.367 7.81 0.523 0.273 55.76 0.000
3 Intellectual Stimulation 0.158 4.06** 0.523 0.273 55.76 0.000
(DE_X on Y)
4 Intellectual Stimulation 0.261 6.49** 0.352 0.124 42.10 0.000
(TE_X on Y)
5 Job satisfaction (IE_ X 0.103 3.81**
on Y)
3 1 Inspirational motivation 0.274 5.22** 0.304 0.093 30.50 0.000
(X on M)
2 Job satisfaction (M on Y) 0.352 7.78** 0.556 0.309 66.26 0.000
3 Inspirational motivation 0.232 5.71** 0.556 0.309 66.26 0.000
(DE_X on Y)
4 Inspirational motivation 0.329 7.75** 0.409 0.168 59.99 0.000
(TE_X on Y)
5 Job satisfaction (IE_ X on 0.096 3.56**
Y)
4 1 Individualized 0.340 7.25** 0.387 0.150 52.62 0.000
Consideration (X on M)
2 Job satisfaction (M on Y) 0.325 6.97** 0.559 0.312 67.40 0.000
3 Individualized 5.86** 0.559 0.312 67.40 0.000
Consideration (DE_X on
Y)0.240
4 Individualized 0.351 8.62** 0.447 0.200 74.37 0.000
Consideration (TE_X on
Y)
5 Job satisfaction (IE_ X on 0.111 4.44**
Table 4.
Y)
Summary of
Notes: **p < 0.01; X = independent variables, Y = dependent variable, M = mediator, DE = direct effect, regression results for
IE = indirect effect, TE = total effect mediation analysis

2008; Hesselink et al., 2008; Page and Vella-Brodrick, 2008; Riketta, 2008; Scroggins, 2008;
Pitts, 2014).
Regarding Step 3, the significance of the coefficients under the four blocks suggests that
the dimensions of transformational leadership have a direct positive effect on organizational
performance. This suggests that transformational leadership and organizational
performance are positively related. Thus, H1 is supported. It is important to note that
individualized consideration has the highest direct effect on organizational performance
(0.240 coefficient) while intellectual stimulation has the least direct effect on organizational
performance (0.150 coefficient). These findings imply that an improvement in the
transformational leadership dimensions will lead to a resultant positive change in
MRR organizational performance by the magnitude of the coefficients of the dimensions. These
46,1 findings support earlier literature on the positive relationship between transformational
leadership and organizational performance (Judge and Piccolo, 2004; Beakana, 2017; Ocak
and Ozturk, 2018; Manzoor et al., 2019). Compared with existing literature, this study further
establishes that job satisfaction can mediate the relationship between transformational
leadership and organizational performance, which prior studies overlooked.
14 Under Step 5, the indirect effect coefficients for the four blocks are significant, meaning
that job satisfaction significantly mediates the causal effect of transformational leadership
dimensions on organizational performance. Matching the coefficients of the direct effects to
indirect effects, it can be observed that each dimension of transformational leadership has a
more direct effect on organizational performance than when it is mediated by job
satisfaction. However, it is worth noting that the total effects under Step 4 depict an increase
in the direct effect of the dimensions of transformational leadership on organizational
performance due to the introduction of job satisfaction as a mediating variable. This means
that the predictive effect of transformational leadership on organizational performance can
be significantly enhanced with job satisfaction. Thus, the magnitude of consequential
change that will occur in organizational performance by the coefficients of the dimensions of
transformational leadership will increase through the intervening effect of job satisfaction.
This finding is without clear precedent, and therefore makes an excellent theoretical
contribution to the extant literature by demonstrating that indeed transformational
leadership could influence job satisfaction (Bass and Avolio, 1993; Bass, 2015) and job
satisfaction, in turn, could influence organizational performance (Galup et al., 2008), thereby
meeting the strict condition for using it as a mediator rather than an outcome variable in
existing studies (Wan Omar and Hussin, 2013; Hanaysha et al., 2012; Thamrin, 2012; Puni
et al., 2018).

5. Practical implications
In light of the findings, the following implications need to be highlighted. Firstly, it was
ascertained that the four dimensions of transformational leadership are being practiced by
managers in the bank industry, with individualized consideration being dominant. These
dimensions were also found to have a significant positive effect on organizational
performance. Therefore, there should be continuous improvement in these dimensions to
influence organizational performance effectively. The improvement could be in the form of
constant leadership training or workshops. Secondly, the findings established that job
satisfaction and organizational performance are above average in the selected commercial
banks. There is still room for improvement. Hence, bank managers and supervisors should
strategically motivate employees to increase their satisfaction level, which will consequently
enhance their performance. Furthermore, the relationship between transformational
leadership dimensions and organizational performance is significantly mediated by job
satisfaction. This provides evidence that bank managers need to be cognizant that job
satisfaction is vital in the industry and must be a focal point of corporate governance
practices. The mere initiating of transformational leadership behaviours without a clear link
to employee satisfaction may result in employee disengagement, consequently affecting the
banks’ performance and survival. Finally, leadership is pervasive and transformational
leadership is proven to be the most widely practiced leadership style. As highlighted in this
study, the transformational leadership dimensions can be helpful in other industries.
Managers and supervisors must blend their technical skills with these dimensions to induce
employee satisfaction and performance effectively.
6. Conclusion Mediating
In the quest of assessing the effectiveness of the so-called transformational leadership in effect of job
solving governance issues in the financial sector, the present study examined the mediating
effect of job satisfaction on the relationship between transformational leadership dimensions
satisfaction
and organizational performance. The results indicated that the four dimensions of
transformational leadership are exhibited by supervisors and managers in the selected
commercial banks, with individualized consideration being the dominant dimension. This
shows that transformational leadership remains the predominant leadership style in the 15
banking industry, with supervisors and managers usually paying attention to the needs of
employees, listening and accommodating them and providing constant feedback on their
performance. This further explains why job satisfaction and organizational performance
were found to be above average. Again, the four dimensions of transformational leadership
have a significant positive effect on organizational performance, which is significantly
mediated by job satisfaction. However, the direct effect is greater than the indirect effect. It
is, therefore, clear that transformational leadership would have a more significant impact on
organizational performance so long as there is deliberate effort to improve employee job
satisfaction. It is also important to point out that the individualized consideration dimension
has the highest effect on organizational performance, with intellectual stimulation having
the least effect.

7. Limitations and suggestions for future research

Despite the exciting findings of this study, it has the following limitations. Firstly, other
leadership styles such as transactional and laissez-faire were not investigated in this study.
It is, therefore, difficult to compare the current findings with other leadership styles.
Similarly, job satisfaction factors such as job autonomy, job security, workplace flexibility
were not distinctly examined. Thus, this study did not test other factors that may control the
relationship between transformational leadership and organizational performance.
Secondly, as this study focused on the banking industry in the financial sector, the findings
are likely not to apply to other industries where transformational leadership style is not
dominant. Therefore, future research should address the above limitations by testing
different leadership styles and other organizational factors in the same industry or different
industries.

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Corresponding author
Fred Awaah can be contacted at: akaphari@yahoo.com

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