Abstract:
Leadership plays a pivotal role in driving organizational success and sustainability. It serves as a
critical factor influencing employee motivation, engagement, and retention across industries.
Effective leadership extends beyond task management, fostering an organizational culture that
promotes innovation, productivity, and commitment among employees (Bass & Riggio, 2006).
Employee retention, in particular, is vital for organizations, as high turnover rates result in
increased recruitment and training costs, reduced productivity, and loss of institutional
knowledge (Hom et al., 2017).
Leadership styles significantly shape employee motivation and retention. Transformational
leadership, characterized by its ability to inspire, provide intellectual stimulation, and offer
individualized support, has been extensively recognized for its positive influence on employee
engagement and retention (Bass, 1985). Conversely, transactional leadership, which emphasizes
structure, rewards, and performance-based outcomes, can be effective in achieving short-term
objectives but often falls short in fostering long-term employee loyalty (Burns, 1978).
In the context of Sri Lanka, employee retention is particularly challenging due to unique cultural,
economic, and organizational factors. Industries such as retail, which rely heavily on human
capital, face high turnover rates attributed to factors such as inadequate leadership, limited career
growth opportunities, and economic instability (Gunasekara & Fernando, 2020). Despite the
global acknowledgment of the role of leadership in influencing employee outcomes, there is
limited empirical evidence specific to Sri Lanka that examines how leadership styles impact
motivation and retention in its cultural and economic setting.
This study focuses on analyzing the impact of different leadership styles transformational,
transactional, laissez-faire, and autocratic on employee motivation and retention, with a
particular focus on the Sri Lankan retail sector. By doing so, it addresses the need for context
specific insights into how organizations can leverage leadership to foster a motivated and stable
workforce.
