Effect of Leadership Style on Employee performance: A case of Dashen bank, Addis Ababa, Ethiopia

Abstract

Leadership style is widely regarded as a decisive factor shaping employee performance in the banking sector, yet comparative empirical evidence on multiple leadership styles within a single Ethiopian bank remains limited. This study aimed to examine the effect of four leadership styles Autocratic, Democratic, Laissez-faire, and Transformational on employee performance at Dashen Bank, Addis Ababa. Both descriptive and explanatory designs were employed, utilizing a combination of quantitative and qualitative methods. From the total population of 1,851 employees, 329 respondents were selected through a combination of stratified and simple random sampling. Data came from structured questionnaires and were supported by a review of relevant literature. Multiple regression analysis produced a strong overall model (R = 0.989, R\u00b2 = 0.978), indicating that the four leadership styles jointly explained 97.8% of the variance in employee performance. The results showed that the democratic, transformational, and laissez-faire leadership styles are positively and significantly correlated with employee performance, but there was no significant effect for the autocratic leadership style. This implies that participative and inspirational leadership styles are more effective in increasing employee motivation, productivity, and engagement, while strict autocratic approaches do not have a significant impact on performance. Based on these findings, it is recommended that Dashen Bank's management strengthen leadership development programs for branch leaders in Addis Ababa, with emphasis on democratic and transformational leadership competencies, so as to sustain measurable improvements in employee performance across all branches.