Unlocking Potential: The Impact of Transformational Leadership on

Employee Performance

Pavethra R.

, Maheswari G. S.

and Chandramowleeswaran G.

Department of Commerce, Vels Institute of Science, Technology and Advanced Studies, Pallavaram, Chennai, Tamil Nadu,

India

Department of Business Administration, Vel Tech Rangarajan Dr. Sagunthala R&D Institute of Science and Technology,

Avadi, Chennai, Tamil Nadu, India

Keywords: Transformational Leadership, Inspirational Motivation, Intellectual Stimulation, Individualised

Consideration, Employee Performance.

Abstract: Transformational leadership is now emerging as one the antecedents of the performance of the employees as

the recent trends in corporate world. Based on the three-dimensional (3D) transformational leadership

approach serialized into transformational leadership attitude toward organic personality of employees at all

levels. For this study, 277 respondents were contacted and used EFA & SEM tests to validate the suggested

directions. The results indicate a positive and significant relationship of transformational leadership with job

performance and fit indices of tested models were acceptable. Findings may also help further influence writing

on laboratory or clinic leadership, training for laboratory leadership and performance assessment and

management.

1 INTRODUCTION

It speaks to the rearrangement of an allot of

managerial customs to frame a model that introduces

organizational aims, pathways for declaring and

attaining specified aims, and the rules that control

actions and mood of organizational level members.

One of the most efficacious leadership styles in

escalating performance culture, transformational

leadership has over the years been the subject of

increasing amounts of research literature. In fact,

bibliographic analysis of what is labelled as

transformational leadership has formed the basis of

several important aspects such as the importance of

passion, creativity with recognition of individual

needs of the employees, as being vital for improving

the performance of the employees in the

organizations.

While posited as an antithesis to command-and-

control leadership, transformational leadership

involves inspiring employee to perform beyond their

best. This leadership style hinges on three core

components: This work distinguishes four categories

of leader behaviour: Inspirational Motivation that

encompasses sharing of a clear vision of goals and

appealing values with the subordinates; Intellectual

Stimulation purposeful encouragement of

employees’ creativity and critical thinking; and

Individualised Consideration under which the leaders

encourage employees’ development and satisfy their

needs in the workplace.

In many of the modern and competitive

organizational structures, the type of leadership that

helps to the performance of their followers is

demanded more. Furthermore, managers focused on

motivating people, but on accepting change, and

promoting new ways of performing, while

contributing meaningful targets that are beneficial to

organizational goals. This paper explores the unique

organizational impact of transformational leadership

on employees, as well as cites research literature in

demonstrating its relevance.

2 LITERATURE REVIEW

In the kaleidoscopic hall of the systematic literature

review fixing on the categorized extent of the

transformational leadership impact on the types of

R., P., S., M. G. and G., C.

Unlocking Potential: The Impact of Transformational Leadership on Employee Performance.

DOI: 10.5220/0013913200004919

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 1st International Conference on Research and Development in Information, Communication, and Computing Technologies (ICRDICCT‘25 2025) - Volume 4, pages

365-371

ISBN: 978-989-758-777-1

365

organizational settings one interesting perspective

was the transformational leadership effect on the

shapes of the employee behaviour, performance, the

organizational effectiveness whatever the forages.

They, Liu et al. (2023), explored psychological

empowerment as a moderator on transformational

leadership employee creativity and innovation. The

investigation of this work provided a reinforcement to

the theory that those pioneers who promote the

degree of intellectual invigorate and self-organization

empower the employees to compute outside the

container and supply imaginative answers for the

issues perceived. It fosters productivity among

employees, ensures self-efficacy and self-initiated

work, leaders should drive the innovation of a

respective.

Expanding on transformational leadership, and

the ability of employees to withstand adversity during

organisational crises, the research by Nguyen et al.

(2022) a synchronously around the story of

transformational leadership's role in cultivating

employee resilience through the journey of an

organisational crisis. Inspirational motivation and

individual consideration became important strategies

that kept morale and ensured stable work in

emergencies from leaders. Such a study also

highlights how transformative leadership can

cultivate a supportive and adaptable climate

concerning the capability of employees’ risk

management attitude.

Smith and Taylor (2022) conducted in-depth

theoretical analysis examining the association of

transformational leadership and employee

engagement. Sierra and MacLean slowly realised

that inspirational motivation, which is also one of the

most central leadership styles, creates enthusiasm that

leads to committed productivity and goal congruence.

Employees who were highly engaged were more

likely to be proactive and more committed to the

organization. This reflect how crucial leadership is in

relation to boosting enchants and team/employee

spirits.

Using cross-sectional data, Choi et al., (2021)

studies transformational leadership and OCBs, with

trust and job satisfaction acting as moderators. Head

creates good relations and team cooperation is people

get a little more than a strict call of duty, obtain work

synergy.

In technology-driven work environments, García-

Morales et al., (2021) pointed out the importance of

stimulation on the performance of a team. By

challenging compliance with traditional routines and

embracing invention, fourteen decision-makers

promoted a novel work culture that was essential to

the development of new technology.

According to Brown and Peterson (2020), one

effective method of fighting turnover is providing

individual employee consideration. Management care

and supervision improve worker morale and

retention; they confirm transformational leadership’s

efficacy in talent recruitment and staff happiness.

In their study Huang and Wang (2019) reviewed the

literature on transformational leadership for

enhancing adaptive performance of workers in

dynamic work environments. Leaders applied ideas to

instruct employees to accept change and problems,

and apply creativity in handling them, which

enhanced flexibility of organizations.

The cross-sectional study by Sharma et al. (2019)

also found that transformational leadership decreases

job stress and improves the health of a worker.

Managers who follow the best practices in workplace

emotional support secure the management system

that demonstrates the relation of leadership activity to

employee psychological well-being.

Cross-cultural transformational leadership, the

introductory authors aimed to clarify the process to

support the positive effects of inspirational

motivation and individual consideration towards

commitment and organizational inclusiveness of

culturally assorted employees as recommended in

Kim and Lee (2018). Most of their research was

centered around transformational leadership in

international organisations.

In 2018, Mehmet and Dursun articulated that

perceived transformational leadership influenced

human capital as emotional intelligence towards job

performance. Furthermore, the study proved, that

leaders with an emotional sense enhance employee

motivation and also harmonize the workplace, which

in turn yield better performance.

Original reviews of such leadership theories

focused on transformational to deal with current

organizational problems were presented in Bass &

Riggio (2018)). In their paper they focused five basics

psychological needs, which is, idealized influence,

instrumental communication, inspirational

communication, individual consideration and end;

sustainability in leadership outcomes.

They hypothesized that transformational

leadership would have a mediating influence in the

positive relationship between creative climate and

intrinsic motivation, and tested this hypothesis

(Jaiswal & Dhar, 2018). As this research showed, the

more transformational the leader, the more the

employee was engaged in innovation activities, and

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more organizational creativity was taking place.

Kelloway et al. Kelloway et al. (2000) examined the

influence of transformational leadership on safety

performance.

Managers adopting safe behaviours and their

close adherence to agreed safety measures led to a

more positive safety culture and safer practice. Miao

et al. demonstrate the positive relationship of

transformational leadership with ethical behaviour

and LAP of organization reputation and

performance. In sum, the leadership position

reinforces the culture of ethics across the enterprise

through role modeling of ethical principles. Together

these works demonstrate the possibilities and

potential of the leadership role in guiding creativity,

tenacity, interest, and ethical practice in the service of

both innovation and the health and growth of people

and organizations.

2.1 Objective

This research aims to examine the relationship of

transformational leadership to employee performance

to find the relationship of its dimensional constructs

that are Inspirational Motivation, Intellectual

Stimulation and Individualized Consideration on job

performance as one of its constructs.

2.2 Hypothesis

H1: Transformational leadership has a significant

positive effect on job performance.

3 RESEARCH METHODOLOGY

A total of 277 employees of organizations completed

the structured questionnaire (h) Feddback (from

strong decline to strong accord) between the degree

of their supervisor’s consensus concerning

transformational leadership with the self and

mutual/evaluation in their job performance (on the

five-on the five-point Likert scale. Exploratory

Factor Analysis (EFA), which is used to confirm

transformational leadership factors with data until

October 2023, and Hypotheses developed in the

current study were tested using Structural Equation

Modelling (SEM) techniques. To further validate the

appropriateness of the variable pool for factor

analysis, a Princely fracture with Kaiser_Meyer Olkin

(KMO) test and Bartlett’s test of sphericity was

derived.

4 DATA ANALYSIS AND

RESULTS

4.1 Demographic Details of the

Respondents

Table 1 summarizes the respondents (N ＝ 277),

showing that 54.9% are male and 45.1% female.

Regarding age distribution, most of the respondents

were aged 30 years to 39 years (43.3%) and 20 years

to 29 years (30.7%). The 40–49 age group (19.9%) is

followed by those aged 50 years and above (6.1%).

48% with Bachelor degree and 35% Master degree.

Nine percent have a high school diploma, just 3.6%

a doctorate. The majority of the workers had

somewhere between 5–10 years of experience in their

field (37.9%), next most common were workers with

less than 5 years of experience (32.5%). 18.1%, and

11.6% respectively account for 11–15 years of

experience and 15+ years of experience.The majority

of respondents occupy mid-level positions (50.5%),

with 25.3% at entry-level and 24.2% in senior-level

roles. Industry-wise, the largest segment is from IT

(39.7%), followed by manufacturing (27.1%),

education (18%), and healthcare (15.2%). These

demographics suggest a diverse sample in terms of

professional experience, job roles, and industries,

providing a robust foundation for analyzing

transformational leadership and job performance

across various organizational contexts.

4.2 Factor Analysis for

Transformational Leadership

KMO measure (0.878 > 0.60) suggested that the

sample had excellent sampling adequacy, with

Bartlett’s test of sphericity being significant at 1%,

which indicated suitability for factor analysis. WFA

performed exploratory factor analysis with principal

component analysis and varimax rotation, which

yielded three components (Individualised

Consideration, Intellectual Stimulation, Inspirational

Motivation). These dimensions accounted for 76.26%

of the total variance, indicating an adequate one factor

structure. All constructs produced Cronbach’s alpha

>0.7, indicating high internal reliability and

consistency. In general, the construct’s validity and

coherence were confirmed by both data-driven and

theory-driven methods for subsequent statistical

analysis within the dataset.

Unlocking Potential: The Impact of Transformational Leadership on Employee Performance

367

Table 1: Detail of Sample (N=277).

Demographic Variable Category Frequency (n) Percentage (%)

Gende

Male 152 54.9%

Female 125 45.1%

Age 20

–

29 years 85 30.7%

–

39 years 120 43.3%

–

49 years 55 19.9%

ears and above 17 6.1%

Education Hi

h School 25 9.0%

Bachelor’s De

ree 145 52.3%

Master’s Degree 97 35.0%

Doctorate 10 3.6%

Work Ex

erience Less than 5

ears 90 32.5%

–

ears 105 37.9%

–

ears 50 18.1%

More than 15 years 32 11.6%

Job Level Entry-level 70 25.3%

-level 140 50.5%

Senio

-level 67 24.2%

Industr

IT 110 39.7%

Manufacturin

75 27.1%

Healthcare 42 15.2%

Education 50 18.0%

Table 2: Constructs Loadings and Descriptive.

Loadings Mean Standard deviations Cronbach’s alpha

Inspirational Motivation Q1 .867 3.67 1.038 0.825

Q2 .858 3.70 1.151

Q3 .831 3.80 1.043

Intellectual Stimulation Q4 .841 3.88 .962 0.852

Q5 .880 3.70 .993

Q6 .885 3.76 .952

Individualized Consideration Q7 .859 3.84 .982 0.845

Q8 .871 3.68 .973

Q9 .863 3.79 .977

Source: Primary survey

Hence all the three constructs; Inspirational

Motivation, Intellectual Stimulation & the

Individualized Consideration were included in the

main survey which had all the constructs with very

good reliability as Cronbach’s alpha> 0.7: for

Inspirational Motivation: 0.825, Intellectual

Stimulation: 0.852, Individualized Consideration:

0.845 which is shown in Table 2. In addition, all the

items loadings were above 0.8 telling us that all the

items have good measures of their corresponding

constructs. Inspirational Motivation had factor

loadings ranging from 0.831 to 0.867 and mean value

from 3.67 to 3.80 with standard deviations close to 1,

meaning that the participants really agreed with the

items in the related construct indicating moderate

dispersion. The highest factor loadings ranging from

0.841 to 0.885 with a mean ranging from 3.70 stated

by subjects obtained Intellectual Stimulation subscale

items which received a corresponding lower standard

deviation of below 1 positive perception. Similarly,

Individualized Consideration had strong item

loadings from 0.859 to 0.871 with means from 3.68

to 3.84 suggesting positive responses but more

variant than for Intellectual Stimulation.

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4.3 Hypothesis Testing Using Structure

Equation Modelling (SEM)

Direct effect of transformational leadership on

employees' job performance was tested using

Maximum Likelihood Estimation (MLE) based

Structural Equation Modelling (SEM). The reason for

this is that SEM is most relevant when the

associations between observed variables and Latent

variables are complex (Blunch, 2013).

P-values (1.96) were used to assess the

hypotheses. Hypothesis 1 is supported as:

transformation leadership significantly impact

positively on job performance of the employee as:

standardized coefficient (β) = 0.630, T-value 12.068,

p-value 0.000.

Figure 1: Structural Model.

Table 3: Hypothesis Result.

Hypothesis Path Standardized

coefficient

(β)

S.E. C.R./T P Decision

H1 Transformational

Leadership

Employee Job

Performance

0.630 .089 12.068 0.000 Supported

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369

Table 4: Model Fit Indices.

The determination of coefficient (R

) value is 0.403,

indicating 40% of variations in employee job

performance explained by transformational

leadership. Additionally, the model fit indices of

structure models are all as per threshold criteria as

mentioned in Table 3, 4 and Figure 1 Structural

model.

4.4 Discussion and Implications

The results of this study confirm the utmost

importance of transformational leadership on job

performance shown by the high path coefficient (β =

0.630). These results are consistent with current

literature highlighting the multidimensional

influence of transformational leadership. In

particular, Inspirational Motivation has been found to

develop and share a powerful vision that provides

energy to employees and results in greater

engagement and productivity. As an example, leaders

who establish clear objectives and motivate shared

commitment have a positive impact on organizational

performance (Alonderiene & Majauskaite, 2016).

Intellectual Stimulation encourages creativity by

challenging individuals to explore ideas beyond

traditional boundaries and find innovative solutions

to problems. Particularly vital in rapidly changing

contexts where innovation serves as a fundamental

enabler of success (Mittal & Dhar, 2015). Likewise,

the use of Individualized Consideration has been

related to job satisfaction and loyalty by paying

attention to the individual needs of employees and

providing them personalized support consistently

(Tse et al, 2018).

These findings add to the emerging evidence that

transformational leadership is a precursor to

increased individual and organizational performance.

It is time to embed Inspirational Motivation,

Intellectual Stimulation and Individualized

Consideration into how people lead the only way to

create a sustainable rise in performance.

4.5 Managerial Implications

• Leadership Training: Organizations need to

train the right programs to focus on obtaining

transformational leadership implementation.

These programs should contain modules about

how to inspire employees by providing vision

and setting context, present them with

intellectual challenges to create innovation,

and give personalized mentoring to employees

to develop them.

• Performance Metrics: Set up leadership

assessment frameworks that includes

transformative behaviours. Metrics that

measure a leader's capacity to communicate

objectives (Inspirational Motivation), inspire

innovative thought (Intellectual Stimulation),

and deliver place-specific support

(Individualized Consideration), for instance,

may ensure that these practices are entrenched

in the corporate ethos.

• Employee Development Programs:

Encourage leaders to participate actively in

employee development initiatives.

Transformational leaders should be equipped

to identify and nurture talent, promoting not

only task completion but also personal and

professional growth among employees.

5 CONCLUSION AND FUTURE

RESEARCH

The results reveal that transformational leadership,

(and indeed Inspirational Motivation, Intellectual

Stimulation and Individualised Consideration) prous

positively correlated with employee’s performance.

Additional studies could examine heterogeneity

across specific industries, or study these associations

in different countries or cultures. Moreover,

longitudinal approaches would be also better suited in

understanding nature of transformational leadership

at organisational level and the overtime evolution of

it, particularly in fast changing environment.

Indices Abbreviati

Observe

d values

Recommend

ed criteria

Normed chi

square

χ2/DF 1.664 1<χ2/df<3

Goodness-

of-fit index

GFI 0.947 >0.90

Normed fit

index

NFI 0.945 >0.90

Comparative

fit index

CFI 0.977 >0.90

Tucker-

Lewis index

TLI 0.972 0<TLI<1

Root mean

square error

approximati

RMESA 0.049 <0.05 good

fit

<0.08

acceptable fit

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