The Impact of Toxic Leadership on Employee Turnover Intention: Exploring the Mediating Effects of Psychological Well-Being and Employee Engagement in Microfinance Banks in Sindh

Abstract

This research aims to identify toxic leaders in Pakistan's microfinance banks and their impact on turnover intention, employee engagement, and psychological well-being. The research is based on a quantitative approach. Three microfinance banks were selected by using a convenience sampling. A total of 208 respondents submitted the response by designed a five-point Likert scale questionnaire. Using smart PLS version 3.0 by Structural Equation Modeling (SEM) technique were applied. However, results show that turnover intention increases in the banking sector due to toxic leadership. The result analysis also showed a positive impact of toxic leaders on employee engagement and psychological well-being. In addition, the results also show that there is partial mediating effect among the variable of toxic leadership, turnover intention of employees, employee engagement and psychological well-being. Understanding leaders’ behavior towards their workers is important for banks that support them in holding workers by creating an environment that engages them in their work and increases their well-being. The HR managers must focus on seeing workers’ feedback about their managers through interviews or surveys, which help to identify managers with toxic personalities and ways to better manage workforce in the banks.