The Role of Transformational Leadership in Fostering Employee Engagement and Retention: The Case of Assistor Oy Ab

Abstract

This study examines the effectiveness of transformational leadership as a strategy to foster employee engagement and retention. The study aims to demonstrate how transformational leadership practices contribute to maintaining a motivated and committed workforce. The study is anchored in leadership, employee engagement and retention theories, focusing on the relationship between leadership behaviours, employee engagement, and retention. A qualitative research design was employed to explore how employees and leaders perceive and experience leadership behaviours within the organisation. Data was collected through in-person interviews involving participants representing different levels of the organizational hierarchy. Collected data was analysed manually using thematic analysis to map out patterns and relationships across responses. Four major themes emerged from the data: supportive and participative leadership, motivational and rewarding work environment, sustainable work environment and strategic leadership approach. Collectively, these themes illustrate the leadership behaviour operational within the organisation while highlighting gaps in leadership practices that shape employee engagement and long-term commitment. The study revealed how transformational leadership serves as an effective strategy for enhancing both employee engagement and retention. Through idealised influence (modelling integrity and trust), inspirational motivation (articulating and communicating a compelling vision), intellectual stimulation (encouraging input and creativity), individualized consideration (coaching and supporting employee development), leaders can create a positive organisational climate that strengthens engagement and retention. The study concludes by proposing a three phase leadership development plan to embed the transformational leadership approach into the organisation’s leadership strategy.