The Impact of Leadership Style on Employee Stress and Employee Performance in the Saudi Market ()
1. Introduction
It has been noted that leadership style does affect the workplace behaviors and therefore impacts on the well-being of the employees, which in turn affects the organizational performance (Bass & Riggio, 2006). This is particularly the case in extremely competitive markets in Saudi Arabia where the economy is shifting towards diversification and organizations are rapidly expanding. It is important to know the relationship between the types of leadership and the results of employees to ensure effective performance in the workplace (Aarons, 2006). When stress levels are high, the workers are less effective in their work, feel burned out and have low levels of job commitment. However, there are various leadership styles that if properly implemented can assist in decreasing these stressors through fostering a positive work environment, providing the needed support, and enhancing job engagement (Goleman, 2000).
Through economic reforms including Vision 2030, the Saudi market is changing drastically. It seeks to diversify the economy and increase the role of the private sector, which requires a strong leadership to navigate organizations through considering employee well-being and productivity. It is crucial to find out what kind of leadership strategies are most effective at dealing with stress and increasing job performance while many Saudi organizations are facing the challenge of balancing performance expectations with employee welfare (Al Altheeb, 2020).
It has been established that leadership styles such as transformational, transactional, and servant leadership have a direct impact on employees’ morale, motivation, and job satisfaction (Muttalib et al., 2023). For example, transformational leadership inspires a follower to follow by building trust and engaging followers, while transactional leadership focuses on systems of exchange to increase effectiveness (Aarons, 2006). Nevertheless, over-emphasis on the transactional way of leadership may increase stress as employees are pushed to meet set performance goals (Judge & Piccolo, 2004). On the other hand, servant leadership focuses on the employees and their well-being which may lead to reduced stress and high-quality work (Ogunbukola, 2024). In this paper, the present study aims to determine the most suitable leadership styles in the Saudi market to create a supportive and high performing work environment.
This study will investigate how different types of leadership impact employees’ stress and performance in the Saudi market, with an emphasis on the mediating function of worker stress. The study examines how leadership practices impact stress levels, which in turn impact employee performance, rather than considering stress and performance as distinct outcomes. The study intends to provide a more comprehensive view of how leadership influences workplace outcomes by examining this indirect pathway. Deeper understanding of the ways in which leadership enhances organizational success in the Saudi context will be possible thanks to this all-encompassing approach.
2. Importance of the Study
This study adds to the body of knowledge in the fields of organizational behavior and leadership in both theoretical and practical ways. From a theoretical standpoint, it fills a significant vacuum in the literature by examining the relationship between employee stress, leadership styles, and performance in the unique cultural and economic context of Saudi Arabia—an area that has not received enough attention. Examining stress as a mediating variable provides a more nuanced understanding of how performance is indirectly impacted by leadership, which is the unique contribution. In practice, the results can be a useful guide for Saudi business executives, HR specialists, and legislators who wish to promote more wholesome and effective workplaces. Building a healthy and empowered workforce requires an appreciation of the psychological effects of leadership as the Kingdom edges closer to the fulfilment of Vision 2030 goals. Findings from the study may guide strategic HR interventions and leadership development programs aimed at enhancing organizational effectiveness and employees’ well-being.
3. Research Objectives
The primary objectives of this study are as follows:
To examine the impact of transformational leadership style on employee stress.
To analyze the effect of autocratic leadership style on employee stress.
To investigate the influence of servant leadership style on employee stress.
To assess the relationship between employee stress and employee performance.
To determine the direct effect of leadership styles on employee performance.
To evaluate the mediating role of employee stress in the relationship between leadership styles and employee performance.
4. Literature Review and Theoretical Background
4.1. Introduction
Research on human resource management has focused a lot of attention on understanding the connection between leadership styles, employee stress, and performance. This section offers a thorough analysis of the body of research on the three leadership philosophies this study looks at transformational, autocratic, and servant leadership and how they affect worker stress and output. It also provides a conceptual basis for the suggested hypotheses by outlining the theoretical frameworks that support these relationships.
4.2. Leadership Styles and Employee Stress
Bass & Riggio (2006) explored transformational leadership and its impact on employee motivation and stress reduction. Their findings suggest that transformational leaders create a vision that enhances employee engagement and reduces burnout. Lindert et al. (2022) found that transformational leadership positively influences employee well-being by enhancing psychological empowerment and reducing stress levels. Judge & Piccolo (2004) conducted a meta-analysis on transactional and transformational leadership, highlighting that transformational leadership significantly reduces workplace stress.
Individual authority over all choices and minimal group member input are traits of an autocratic leadership style. Autocratic leaders seldom take followers’ input and usually base their decisions on their opinions and judgement (McLeod, 2023). The finding of Mui Fong, Michael Mulok, and Sumilan (2015) that employee stress levels and autocratic leadership were found to be significantly positively correlated in this study, suggesting that autocratic leadership may be a contributing factor to elevated employee stress. According to (Elsaied, 2024) study, organisational deviance and authoritarian leadership are positively correlated, with emotional tiredness acting as a mediating factor. According to the research, employees may experience higher levels of stress and burnout because of such leadership approaches.
According to Liden and colleagues, servant leadership is a multifaceted notion that includes actions like psychological healing, adding value to the community, empowering others, assisting subordinates in their development and success, prioritizing subordinates, and acting morally (Liden et al., 2008). The research of Ma et al. (2021) discovered that servant leadership greatly minimizes nurses’ burnout, and that psychological safety was an intervening variable. This means that servant leadership nurtures an organizational culture in which nurses can express concern without fear, which leads to reduced burnout. The servant leadership substantially mitigates the adverse impacts of employment-related stress on an employee’s physical health, which indicates that positive leadership approaches enhance an employee’s wellness (Dooley, Alizadeh, Qiu, & Wu, 2020). As each of these leadership styles demonstrates distinct effects on employee stress, they form the basis for the hypotheses tested in this study.
4.3. Leadership Styles and Employee Performance
Doe, J., & Smith, A. (2025) found that the Impact of Authority on Worker Performance shows that leadership has a slight and indirect effect on worker performance. This means that the level of leadership does not significantly change employee performance. The lack of leadership impact can be explained by the fact that most respondents were aged 22 - 26, indicating they were mainly younger workers. These workers often focus on completing their tasks rather than paying attention to their bosses. Accordingly, this study investigates how different leadership styles specifically transformational, autocratic, and servant can shape employee performance outcomes. The results of Pawirosumarto and others (2017) show a positive and significant relationship between leadership style, employee motivation, and discipline on employee performance. Discipline has the strongest impact on employee performance and requires special attention. Iman, N., & Lestari, W. (2019) showed that the leadership can have a direct impact on the performance of the employees and the same effect can be seen through work motivation. The results of the tests are sufficient to consider that leadership is a significant factor that influences employees’ performance, mediated by work motivation. Barzegar and other’s (2012) view is positive leadership enhances Quality of Work Life (QWL) by fostering trust, recognition, and organizational values. A strong correlation was found between leadership and job satisfaction, increasing employee commitment and productivity. However, work-life balance remains a challenge that needs further attention.
4.4. Employee Stress and Performance
The study of Sharmilee, Basit, & Hassan (2017) found that time pressure and role ambiguity have a significant negative impact on employee performance. However, workload and lack of motivation did not show a significant influence. The authors recommend that managers clarify roles and discuss time expectations to reduce stress and improve performance. Stress among employees has long been known to negatively impact their effectiveness at work. Excessive stress can affect motivation, cognitive function, and absenteeism, all of which can result in poorer job performance (LePine, Podsakoff, & LePine, 2005). These findings support the widely accepted notion that high levels of workplace stress negatively affect employee performance across various job contexts.
4.5. The Mediating Role of Employee Stress
Stress mediates the relationship between leadership and employee health and performance outcomes, and leadership actions have a major impact on employee well-being (Montano et al., 2017). Leadership styles have an indirect impact on performance by affecting employees’ stress levels, highlighting the significance of psychological health in the relationship between performance and leadership. A study by Egatriyana and Sintaasih (2022) suggests that a good democratic leadership style can lower job stress levels for employees, which will improve or boost their performance. According to the study of Li et al. (2024), teacher job stress independently mediates the association between distributed leadership and teacher job satisfaction, which is directly predicted by the former. These studies support the conceptualization of employee stress as a mediating variable in the current research model.
5. Research Model and Hypotheses
Based on the review of existing literature, this study proposes a conceptual framework in which leadership styles influence employee performance both directly and indirectly through employee stress. The framework examines three leadership styles—transformational, autocratic, and servant—as independent variables. Employee stress acts as a mediating variable, while employee performance serves as the primary dependent variable (Figure 1).
Figure 1. Conceptual model.
Independent Variable:
Mediator variable:
Dependent Variables:
Based on the research problem and objectives, this study proposes the following hypotheses:
H1: Transformational leadership style negatively affects employee stress (reduces stress).
H2: Autocratic leadership style positively affects employee stress (increases stress).
H3: Servant leadership style negatively affects employee stress (reduces stress).
H4: There is a negative relationship between employee stress and employee performance.
H5: Leadership style has a direct impact on employee performance.
H6: Employee stress mediates the relationship between leadership style and employee performance.
6. Research Methodology
6.1. Measures
The structured questionnaire utilized in the study had two main sections. The first section collected demographic information such as age, gender, position, and years of service. The second section had items to measure the main variables of the study: leadership styles, employee stress, and employee performance. Leadership styles were measured with 12 items, four for each representing transformational, autocratic, and servant leadership. Four items were derived from existing, pre-tested leadership scales and were designed to capture the way respondents perceived their leaders’ behavior and styles of decision-making. Worker stress was assessed with seven Workplace Stress Scale items created by The Marlin Company & the American Institute of Stress. They assessed varied work-related stress dimensions such as workload, pressure, and emotional tension. Employee performance was measured using eight self-reported items adapted from past literature. The items focused on most critical aspects of performance, including work quality, efficiency, and motivation. All the answers were recorded on a 5-point Likert scale ranging from 1 = Strongly Disagree to 5 = Strongly Agree. For each scale, reliability analysis was conducted, and all constructs had satisfactory internal consistency with Cronbach’s Alpha values greater than 0.70.
6.2. Sample
The target population consisted of employees and leaders in sectors such as education, healthcare, technology, and industry within Saudi Arabia. A stratified random sampling method was used to ensure proportional representation across different sectors and organizational sizes. The final sample included 240 participants.
7. Data Analysis
Data were analysed using SPSS. The analysis included descriptive statistics, reliability testing, Pearson correlation, multiple regression analysis, and mediation testing using PROCESS Macro (Model 4).
7.1. Descriptive Statistics
Descriptive statistics showed that participants generally rated transformational and servant leadership styles moderately high, while autocratic leadership showed wider variance. Employee stress levels were moderate, and self-reported performance scores were relatively high. Standard deviations indicated acceptable variability across responses.
Table 1 presents descriptive statistics for the demographic variables of the respondents. The mean age category was 2.86 (on a scale from 1 to 4), with a standard deviation of 0.922. The gender mean was 1.43 (1 = Male, 2 = Female), and most participants were from the public sector (Mean = 1.3). The average educational level was 1.9 (on a 1 - 4 scale), and the average years of experience was 2.84.
Table 1. Descriptive statistics for demographic variables.
Variable |
N |
Minimum |
Maximum |
Sum |
Mean |
Std. Deviation |
Age |
240 |
1 |
4 |
686 |
2.86 |
0.922 |
Gender |
240 |
1 |
2 |
344 |
1.43 |
0.497 |
Sector |
240 |
1 |
2 |
311 |
1.3 |
0.457 |
EducationalLevel |
240 |
1 |
4 |
455 |
1.9 |
0.594 |
years_of_exper |
240 |
1 |
4 |
681 |
2.84 |
0.999 |
7.2. Reliability Analysis
Cronbach’s Alpha was utilized to ensure internal consistency of the scales. All the constructs had good reliability, as alpha coefficients were more than 0.70.
7.3. Correlation Analysis
Pearson correlation analysis revealed the following strong correlations (see Table 2):
Table 2. Correlation between leadership style, stress, and performance.
Variables |
Pearson Correlation (r) |
Sig. (2-tailed) |
N |
Transformational Leadership & Stress |
−0.441 |
0.0 |
239 |
Autocratic Leadership & Stress |
0.476 |
0.0 |
240 |
Servant Leadership & Stress |
−0.507 |
0.0 |
240 |
Stress & Performance |
−0.174 |
0.007 |
240 |
Transformational leadership was inversely related with employee stress (r = –0.441, p < 0.01).
Autocratic leadership was positively related with stress (r = 0.476, p < 0.01).
Servant leadership was negatively associated with stress (r = –0.507, p < 0.01).
There existed a negative correlation between stress and employee performance (r = –0.174, p < 0.05) (Table 2).
7.4. Regression Analysis
Multiple regression was employed to examine the direct effect of leadership styles on employee performance. The model was significant (F = 5.777, p = 0.001) and explained 6.9% of the variability in performance (R2 = 0.069) in Table 3 and Table 4. However, individual predictors (transformational, autocratic, and servant leadership) failed to record statistically significant coefficients (Table 3).
Table 3. Regression summary—predicting employee performance.
Model |
R |
R Square |
Adjusted R Square |
Std. Error of the Estimate |
1.0 |
0.263 |
0.069 |
0.057 |
1.034 |
7.5. Mediation Analysis
Mediation testing was conducted using PROCESS Macro (Model 4) with 5000 bootstrap samples. Employee stress was found to significantly mediate the relationship between leadership styles and employee performance. This means that leadership indirectly affects performance by influencing the stress level (Table 4).
Table 4. Mediation analysis results.
Path |
Effect
Coefficient |
SE |
t/z value |
p-value |
95% CI (Lower) |
95% CI (Upper) |
Significance |
Leadership → Stress (a) |
−0.45 |
0.07 |
−6.43 |
0.0 |
−0.59 |
−0.31 |
Significant |
Stress → Performance (b) |
−0.18 |
0.06 |
−2.91 |
0.004 |
−0.3 |
−0.06 |
Significant |
Leadership → Performance (c) |
0.25 |
0.08 |
3.12 |
0.002 |
0.09 |
0.41 |
Significant |
Indirect Effect (a × b) |
0.081 |
0.03 |
— |
— |
0.028 |
0.147 |
Significant |
8. Discussion and Interpretation of Findings
The outcomes from this study have provided evidence that supports the hypotheses and underscored the influence of leadership on employee stress and performance. In more detail, it was found that transformational and servant leadership styles significantly lowered employee stress, while autocratic increased it. Such results are in line with other literature (e.g., Bass & Riggio, 2006; Dooley et al., 2020; Mui Fong et al., 2015), affirming that the actions of leaders influence the psychological health of employees.
The finding about the negative correlation between stress and performance has been reported in LePine et al. (2005) and Montano et al. (2017), validating the notion that greater stress results in diminished productivity, satisfaction, and overall job performance. Additionally, the mediation analysis demonstrated that stress accounts for part of the influence in the relationship between leadership style and performance which supports the contention that leadership has a secondary effect on performance by influencing psychological conditions.
While the regression results did not indicate a statistically significant direct effect of leadership styles on employee performance, the mediation analysis revealed that leadership indirectly influences performance through its impact on employee stress. This indirect pathway is particularly relevant in the Saudi context, where managing employee well-being can be a key factor in enhancing productivity and meeting the demands of Vision 2030.
A shift in the focus of leadership in the case of Saudi organizations is required as it entails adopting a more holistic approach geared towards employee benefit. Adoption of both Transformational and Servant leadership can solve the dual approach problem of stress alleviation and performance improvement. The reality is as change takes place so does the need for empathetic support towards organizational leaders with a vision for holistic mental wellness. Within the Saudi context looking for additional mediating factors such as commitment to the organization and satisfaction with the job in relation to the specific industry are recommended for future research.
Furthermore, consistent with prior literature (LePine, Podsakoff, & LePine, 2005), elevated stress levels were negatively correlated with employee performance, reinforcing the importance of managing workplace stress for enhancing productivity.
9. Managerial Implications
The findings of this study have important implications for managers and organizational leaders operating in the Saudi context. First, the demonstrated relationship between leadership style and employee stress suggests that leaders must utilize people-cantered approaches in their role. Managers who are engaged with their employees by inspiring to their employees’ support can help to reduce workplace stress, which can enhance employee performance and job satisfaction. Second, organizations must commit to leadership development that build competencies around emotional intelligence, effective communication skills, and techniques for stress management. Programs that develop effective leadership behaviors in new and existing leaders can help to use this strategy to improve workforce well-being and productivity. Finally, managers must adopt a situational approach to leadership knowing that one style does not fit all, and envision their leadership style based on employees’ needs, the organization’s culture, and the work context as part of achieving shared outcomes. One potential strategy for managers is to shift their focus of their heading style orientation to specific situational demands to increase employee resilience and performance.
10. Limitations and Future Directions
Although this study provided useful insights, there were still some limitations. First, the research was conducted only in Saudi Arabia and included employees from both the public and private sectors. This means that the results may not apply to other countries or different work environments. Additionally, the sample size was limited to 240 employees, which may affect the generalization of the findings to larger populations. Moreover, data collection was done using a questionnaire only. Since participants answered based on their opinions and feelings at that specific time, there is a possibility of bias in the responses. For future research, it would be valuable to conduct similar studies in different countries or industries to see if the results remain consistent. Furthermore, using other research methods, such as interviews or focus groups, may help provide a deeper understanding of the impact of leadership style on Employee Stress and Employee Performance. Finally, this study focused on only a limited number of leadership styles (i.e., transformational, autocratic and servant). Future research needs to account for examining other styles like transactional, authentic, or ethical leadership to build a stronger theory regarding their effects on workplace stress and performance across cultures.