Transformational Leadership Influence on Employee Commitment and Retention in the Business Process Outsourcing Industry

This study examined the impact of transformational leadership on employee commitment and retention in two business process outsourcing (BPO) companies in Lagos, Nigeria. Grounded in transformational leadership theory and the three-component organizational commitment model, it analyzed leadership practices and their relationship with employee commitment and retention. Using a descriptive-correlational research design and purposive sampling, the study collected data from 259 employees out of a population of 785. The findings revealed that transformational leadership practices, particularly individualized consideration and inspirational motivation, were highly observed among leaders. Employees reported high levels of normative, affective, and continuance commitment, while indicators such as training and job security were key contributors to perceived retention. Despite the strong presence of transformational leadership, its direct correlation with employee commitment was statistically significant but negative and low (r = -0.378), while its relationship with employee retention was negligible (r = -0.092). However, employee commitment showed a low but positive relationship with retention (r = 0.205). Regression and mediation analyses further indicated that while transformational leadership negatively predicted retention, its effect was partially mediated by employee commitment, suggesting that commitment may serve as a mechanism for translating leadership influence into sustainable retention outcomes. Exploratory factor analysis confirmed the construct validity of the three main variables, with all items loading distinctly on their respective factors and reliability measures indicating strong internal consistency. These findings suggest that while transformational leadership is recognized in the BPO sector, its influence on retention is not straightforward and may depend heavily on employees’ psychological commitment, with implications for sustainable workforce development.