Transformational Leadership and Employees' Psychological Wellbeing: A Longitudinal Study

Managers play a key role in realizing a humane organization of work. Transformational leadership aims to identify and examine leadership behaviors that strengthen employees' awareness of the importance and values of task outcomes by articulating a vision for the future, providing a realistic action plan, and giving individualized support. Previous studies have revealed associations between transformational leadership and the psychological wellbeing of employees in different settings, while others did not find such associations. As research based on longitudinal data remains rare, this study builds on longitudinal data from two employee surveys conducted in 2015 and 2018 in a medium-sized German company. In this study, transformational leadership_t0 and gender had a significant impact on transformational leadership_t1, while psychological wellbeing_∆, social capital_∆, and age did not. Psychological wellbeing_t0 and social capital_∆ had a significant impact on psychological wellbeing_t1, but transformational leadership_∆, age, and gender did not. Therefore, it is worthwhile for companies to invest in social capital and focus on gender aspects at work. As underlying mechanisms regarding employees' psychological wellbeing may differ between companies, it is worthwhile for each organization to conduct mental risk assessments to identify "red flags" and implement suitable measures.