Title:
The Influence of Transformational Leadership on Employee Engagement: The Mediating Role of Psychological Empowerment (A Study of Bank BNI Employees in Yogyakarta Region)

Authors:
Muhammad Hatta Fitriadi, Indonesia

Abstract:

The current study investigates the effect of transformational leadership on employee engagement through the mediating role of psychological empowerment in Bank BNI employees in the Yogyakarta region. It is based on the Constructive/Developmental Personality Theory and contributes to organizations' critical need to engage employees in today's competitive service industry (Spector et al., 2001). This study was a quantitative survey with data collected from 300 employees of Bank BNI located in Yogyakarta through an online survey using standardized questionnaires. The relationships between variables were examined using Structural Equation Modeling (SEM) with SmartPLS. The results suggested that transformational leadership had a significant and positive influence on both psychological empowerment (β = 0.583, p < 0.001) and engagement (β = 0.899, p < 0.001). Psychological empowerment also significantly impacted engagement (β = 0.213, p < 0.002). The study's findings also indicated that psychological empowerment partially mediated the relationship between transformational leadership and employee engagement (β = 0.124, p < 0.007). The findings indicate that transformational leaders can enhance employee engagement, directly and indirectly, through psychological empowerment. This study contributes to the human resource management literature by illustrating the valuable nature of empowering or strengthening leadership practices in organizations in the banking sector. Practical implications emphasize the importance of organizations developing competencies in transformational leadership and creating empowering work environments, which benefits organizations through improved employee engagement and organizational performance.

DOI: https://doi.org/10.51505/IJEBMR.2025.91015