The relationship between leadership, organisational commitment and turnover in the Saudi Arabian banking sector.

Abstract

The Saudi Arabian banking sector in 2004 comprised eleven banks serving the population. There were 1,216 branches and 4,104 automatic teller machines (ATMs) across the country. The employee number was 31,589 in 2005 (SAMA, 2016). The sector witnessed significant growth since the beginning of 2005, including more than fourteen new international and local banks, and it is still increasing. The number of commercial bank branches increased to reach 2,044, with more than 18,089 ATMs in 2017 (SAMA, 2017). The number of employees in the banking sector rose in 2016 to 49,335 employees (SAMA, 2016). The Kingdom’s regulatory agency, Saudi Arabian Monetary Authority (SAMA) has taken note of the dramatic growth in this sector and the accompanying high demand for more skilled banking employees. In 2008, it established several programmes to encourage new university graduates who would have improved skills for the sector. SAMA also developed programmes targeting women, especially to develop the required skills (SAMA, 2009). In 2012, the number of programmes reached a hundred and sixty, specifically designed to address a range of banking needs (SAMA, 2013). The concern emanating from the highest level in the sector shows the importance of retaining bank employees in order to continue its development. This is the main mission of leaders and human resource departments in any industry. The leaders in this sector endeavour to maintain and improve their employees’ skills and performance through different methods, such as increasing wages and enhancing employee commitment to their particular organisations. The thesis explores whether selected leadership behaviours (including idealised influence attributes, idealised influence behaviour, intellectual stimulation, inspirational motivation, individualised consideration, contingent reward, passive management by exception and active management by exception) affect specific organisational commitment factors (affective, continuance and normative commitment) and employee turnover, in the banking sector in Saudi Arabia. The thesis objective was to explore the relationships between leadership behaviours, organisational commitment, and employee intention to turnover in the Saudi Arabian banking sector. This thesis goes beyond earlier literature focusing on the effectiveness of transformational leadership, by directly addressing the relationship between leadership behaviour, organisational commitment and turnover. In addition, the moderating mechanisms of organisational commitment and demographic characteristics on the relationships between leadership behaviour and turnover, which have not yet been examined in the literature, are explored. The research data were collected in three phases: a pre-test, followed by a pilot study, and then the collection of data for the main study. After satisfying the validity and reliability of the survey (Cronbach's Alpha ranged between .86 to .63), it was distributed via an online link “http://www.qualtrics.com” to the population target. The Saudi Arabia Monetary Authority distributed the surveys using a systematic sampling design to all the Saudis banks. A total of 438 returned surveys were collected. Three major instruments were utilised to gather the survey data. They were the Multifactor Leadership Questionnaire (Bass & Avolio, 1997), the Organisational Commitment Questionnaire (Meyer & Allen, 1991, 1997), and the Global Measure of Job Embeddedness (Crossley et al., 2007, 2011). These instruments all employ self-reported measures. The data were obtained by means of a survey with responses from four hundred and thirty-eight respondents. The statistical package for social sciences (IBM SPSS Statistics 23) computer software program was used to conduct the data analysis, and statistical analyses were conducted using correlation, multiple regression analyses, and structural equation modelling. The findings from testing the hypotheses are presented, which include the direct and indirect relationships among the variables. The moderating effect of organisational commitment between leadership behaviour and turnover is also presented, as are the findings from the testing of the moderating effect of the demographic characteristics between leadership behaviour and turnover. The major finding here is that tenure and occupational category moderate the relationship between leadership behaviour and turnover in the Saudi Arabian banking sector. The relationship between leadership behaviours and intention to turnover were also investigated, and the two main hypotheses were tested to provide an answer to the first objective. Based on the findings, the study could not identify a significant relationship between leadership behaviour and organisational commitment in the banking sector. The research finding revealed that there is a significant relationship between transformational leadership behaviour and intention to turnover. The data supported the hypothesis that transactional behaviour affects intention to turnover significantly. In addition, the relationship between organisational commitment and intention to turnover was investigated in this thesis. The data show a positive significant relationship between organisational commitment and intention to turnover. The second objective of the research was to explore whether organisational commitment moderates the relationship between leadership behaviour and the intention to turnover in the Saudi Arabian banking sector. The data suggested that organisational commitment does moderate the relationship between transformational leadership behaviour and intention to turnover in the banking sector. In fact, there are complex factors which may play a major role in employee turnover. These factors need to be considered in the assessment of turnover in the banking sector, and other sectors, depending on their context and employee requirements. It seems that most of the recently-established banks in Saudi Arabia are international banks, and this situation could affect the retention of their employees. In addition, the size of the new banks are small compared to that of the existing banks. This thesis advances and extends the body of literature addressing leadership behaviour, organisational commitment and turnover. Its main contribution involves developing a better understanding of the leadership perspective. This was achieved through a comprehensive analysis of the relationships among the variables of each factor in leadership behaviour, organisational commitment and turnover intention. The findings suggest strategies for improving the skills of leaders, especially as they relate to how they direct, motivate, and improve the capacity of their workers to maximise their efforts in the organisation. This greater understanding of these relationships offers, in general, wide-ranging insights into several aspects of the leadership behaviours of Saudi Arabian employees in the banking sector. Such knowledge enhances the selective behaviour of leaders in many organisations, especially in understanding and adopting leadership behaviours that are appropriate for performing their roles as leaders. Furthermore, the findings may help to reduce turnover, because banking leaders will have an understanding of the mediating factors that impact upon the relationships between leadership behaviours and turnover. More broadly, the significant contribution of the thesis is explained in more detail within three perspectives: the practical perspective, the theoretical perspective, and methodological implications. Some recommendations for Human Resource Management professionals and leaders are included at the end of the thesis. The limitations on and implications for further research and practice of the findings are presented and discussed