Abstract
Purpose Most studies focusing on the transformational leadership style present the conclusion that compared with other leadership styles tends to be associated with a lower level of workplace stress experienced by employees. Yet, the literature is by no means extensive enough to put the issue of the relationship between this style of leadership and employee stress to rest. Given that this is the case, the purpose of this paper is to assess the relationship between the transformational leadership style and the work stress (WS) of employees in the banking industry. The extent to which this relationship leads to employee burnout and the extent to which WS correlates with multiple factors, such as demographic characteristics (gender, work experience and marital status), are examined in this context. Design/methodology/approach In total, 600 questionnaires were distributed to employees of government and non-government banks in Jeddah, Saudi Arabia, in late 2017. The final sample comprised 250 complete sets, which were used in the analysis. The questionnaire consisted of four sections: transformational dimensions, WS, burnout and demographic profile. Before the authors proceeded to test the hypotheses developed in this study, the authors performed an exploratory factor analysis on the items designed to measure transformational dimensions, WS and burnout. Next, the authors performed confirmatory factor analysis and structural equation modeling. Findings The results indicate that bank managers who use the transformational leadership style significantly increased the job-related stress of employees, indicating that bank managers who use a transformational leadership style increase the job-related stress of subordinate employees. However, the results in regard to the transformational leadership style show a significant though small positive effect on employee burnout, indicating that this type of leadership decreases employee burnout. Furthermore, job-related stress has a significant mediating effect in relation to the transformational leadership style and subordinate employees' burnout. Finally, the results indicate that married status and a high level of work experience are each associated with lower job stress compared with unmarried status and a low level of work experience. Originality/value This research paper contributes to the literature by investigating transformational leadership in the banking industry - an industry of fundamental economic importance in Saudi Arabia and globally. The research results, unlike those reported in most other studies to date, strongly suggest that the transformational leadership style can be associated with a high level of workplace stress, thereby pointing to new conclusions about this style and its effects on the health and well-being of the majority of employees. The results of this paper should be carried forward in this research direction, as doing so has the potential to challenge and even override what have become assumptions about the positive effects of the transformational leadership style. The insights derived from this research paper, therefore, should benefit academics and practitioners who can reference the outcomes in designing programs to support the recruitment, selection and development of effective leaders in the banking sector - especially given the broader ramifications both for overall firm performance and for the well-being of the majority of the country's employees.