Effect of Strategic Leadership on Employee Loyalty in Consulting Firms: A Case of H.P. Gauff Ingenieure GMBH & Co. KG – JBG

Abstract

The purpose of the study was to investigate the effect of strategic leadership on employee loyalty in consulting firms, with a focus on H.P. Gauff Ingenieure GmbH & Co. KG - JBG -. The study was guided by the following research questions: How does social capital affect employee loyalty in consulting firms? What is the effect of human capital on employee loyalty in consulting firms? How does sustainable organizational culture affect employee loyalty in consulting firms? What is the effect of leaders’ ethical practice on employee loyalty in consulting firms? The study adopted descriptive correlational research design. Stratified random sampling technique was used to select a sample size of 86 respondents from a population of 110 employees of H.P. Gauff Ingenieure GmbH & Co. KG - JBG -. Data was collected using questionnaires. Descriptive statistics was used to describe the various demographic variables. Correlation and Linear regression analyses techniques were used to determine the relationship and effect of social capital, human capital, sustainable organizational culture and leaders’ ethical practice on employee loyalty. The study used the Statistical Package for Social Studies (SPSS) version 24 as a data analysis tool. The findings and results were presented using tables and figures. The findings on the effect of social capital on employee loyalty indicated that employee loyalty increases with social capital at workplace(𝑀=3.79,𝑆𝐷=1.09). Correlation analysis showed that there was a statistically significant moderate and positive relationship between social capital and employee loyalty, r (70) = 0.505, p < .05. Linear regression analysis findings revealed that 25.5% of the variability in the employee loyalty was explained by the social capital, which statistically and significantly affected the employee loyalty (𝑅2=.255,𝛽=.435,𝑡(70)=4.86,𝑝 < .05). The findings on the effect of human capital on employee loyalty found that human capital increases employee loyalty at the workplace (𝑀=3.79,𝑆𝐷=1.06). Correlation analysis showed that there was no significant positive correlation between human capital and employee loyalty, r (70) = 0.143, p < .05. Linear regression analysis findings revealed that 2% of the variability in employees’ loyalty was explained by human capital which statistically and moderately affected employee loyalty (𝑅2=.021,𝛽=.152,𝑡 (70) =1.203,𝑝 < .05).Further, the findings on the effect of sustainable organizational culture on employee loyalty showed that most employees’ loyalty increases with increase of sustainable organizational culture at the place of work(𝑀=3.32,𝑆𝐷=1.10). Correlation analysis showed that significant positive relationship between organizational culture and employee loyalty, r (70) = 0.519, p < .05. Linear regression analysis findings revealed that 27% of the variability in the employee loyalty was explained by the sustainable organizational culture, which statistically and significantly affected the employee loyalty (𝑅2=.270,𝛽=.420,𝑡 (70)=5.049,𝑝 < .05). The findings on the effect of leaders’ ethical practices on employee loyalty questions indicated that most employees agreed that the company‘s work-unit members exhibit collective moral emotions and teams enabled to act collectively ethical,(𝑀=3.61,𝑆𝐷=0.90). Correlation analysis revealed that there was positive weak relationship between leaders’ ethical practises and employee loyalty, r (70) = .0.219, p < .05. Linear regression analysis findings showed that 5% of the variability in the employee loyalty was explained by leaders’ ethical practices which statistically and significantly affected the employee loyalty (𝑅2=.048,𝛽=.233,𝑡 (70)=1.865,𝑝 < .05). The study concluded that all the research factors affected employee loyalty with social capital having the most significant effect on employee loyalty at the workplace. Based on the findings, the study recommended that consulting firms, whose objective is to create loyal workforce, will need to develop social capital and create a more human environment at work by encouraging interactions, managerial ties, social networking and utilization of relational capital to achieve company objectives. On human capital, the study recommended that investment should be done to harness human resources and utilize it for attainment of competitive advantage. In addition, firms should learn from failure as much as they learn from success; ideally leaders should be involved in the process. Additionally, the study recommended that a sustainable culture should be created that is difficult to emulate, with clear set of values, goals and core beliefs. Finally, the study recommended ethical leaders should formulate a code of conduct to be followed by all. Strategic leaders should also model the behaviour they need the employee to emulate; a compass to guide and to be looked upon as an exemplar. For further studies, the recommendations was that the study should be carried out on a different industry, involvement of more tools of data collection such as interviews and observation.