Employee work performance during the COVID-19 pandemic : Effects of transformational leadership and employee work environment

Abstract: This thesis explores the effect of transformational leadership, employee work environment, job satisfaction, and work-life balance on employee work performance. It begins by looking at existing literature on the effectiveness of transformational leadership as one of the relevant leadership styles in situations that require urgent business system transformation and adaptation as witnessed in the COVID-19 pandemic. One of the consequences of the pandemic is the definition of what a work environment is. Working from home, although not new, has become popular due to the pandemic and there are several publications around this subject under the “New Ways of Working” (NWW) theme. The implementation of working from home for employees within an organization as well as its success and support available to employees depend to some extent on the leadership style practised by persons in senior management positions of such organizations. Two research questions are investigated: (1) What are the effects of transformational leadership style on employee job satisfaction and consequently on work performance? (2) What are the effects of the employee work environment on work-life balance as well as employee satisfaction and consequently on work performance? To answer these questions, structural equation modelling (SEM) is applied to data from a survey questionnaires with 224 respondents. Since the overall aim of the thesis is to assess the effect of transformational leadership style and employee work environment on work performance, the survey measures two intermediate outcomes (employee job satisfaction, and employee work-life balance).  It has been demonstrated through other works that transformational leadership and employee work environment play an important role in overall work performance. Good transformational leadership promotes employee satisfaction. A suitable employee work environment promotes a positive work-life balance as well as high employee satisfaction.  Our findings regarding the effect of transformational leadership on employee work performance are in line with findings of previous work. The results of the SEM analysis demonstrate that transformational leadership positively affects employee job satisfaction which in turn positively affects employee work performance. Interestingly, despite several works suggesting that work environment positively affects work-life balance, our results did not show any statistically significant relationship either with work performance directly or with the mediating variables work-life balance and job satisfaction, to substantiate this link. We discuss our results and make suggestions for policy, practice, and future work implications.