Understanding the effect of leadership styles on employee well-being through leader-member exchange

This study compared the direct relationships of transformational, ethical, empowering, and servant leadership with a multidimensional construct of employee well-being. Employee well-being is conceptualized as a higher-order construct composed of four lower-order constructs of job satisfaction (hedonic), job engagement (eudaimonic), job stress (negative), and sleep quality (physical). This study also examined the mediating role of leader-member exchange (LMX). Data was collected in a two-wave online survey from 560 middle-level managers working in private banking and insurance sector organizations. Structural equation modeling technique was employed to find out the direct and indirect association of leadership styles with employee well-being. Results validated the hierarchical structure of employee well-being and revealed that transformational, empowering, and servant leadership promotes employee well-being directly. Except for servant leadership, all other leadership styles were indirectly associated with employee well-being through LMX. Servant leadership only affected employee well-being directly. Findings highlight the theoretical and practical significance of leadership styles and LMX for employee well-being.