Leadership style and employee retention in the Nigerian banking sector: an empirical analysis

Abstract

Employee retention remains a pressing challenge in the Nigerian banking sector due to high turnover, intense competition for skilled labor, and the pressure of regulatory reforms that create workforce instability. Despite significant investments in compensation and training, many banks struggle to sustain employee loyalty over the long term. This study investigates the relationship between leadership styles and employee retention in Nigerian banks, with a focus on the theories of transformational and transactional leadership. Using a quantitative survey approach, data were collected from 250 employees across Lagos, Abuja, and Port Harcourt through structured questionnaires adapted from the Multifactor Leadership Questionnaire (MLQ-5X) and a validated employee retention intention scale. Data were analyzed using the Statistical Package for the Social Sciences (SPSS) version 26. Descriptive statistics were applied to profile respondents‘ demographics. Pearson correlation analysis was used to examine the relationships between leadership styles and retention outcomes. In contrast, multiple regression analysis was employed to assess the predictive value of leadership styles on employee retention. Results revealed that transformational leadership has a strong positive correlation with employee retention (r = 0.65, p < 0.01), whereas transactional leadership showed a weaker but still significant influence depending on organizational context. Regression analysis further demonstrated that leadership styles collectively explained approximately 47% of the variance in employee retention. The findings underscore that leadership practices have a significant influence on retention, extending beyond compensation and organizational policies. The study concludes that Nigerian banks seeking sustainable workforce stability must prioritize leadership development initiatives that cultivate transformational leadership competencies. Practical implications include the need for training, mentoring, and cultural strategies that reinforce employee commitment.