The Influence of Transformational Leadership on Employee Retention: The Mediating Role of Coaching, Employee Engagement, and Organizational Commitment in The Indonesian Banking Industry During Digital Transformation

In the digital era, banks need to improve skills and optimize human resources to address customer challenges and offer the best financial services. High employee turnover rates in banking highlight the need for employee retention strategies. Research shows that transformational leadership is key to retention, influenced by factors such as coaching, employee engagement, and organizational commitment. This study aims to explore the combined effect of these factors on employee retention in the banking sector, which significantly contributes to the Indonesian economy. Quantitative methods were used in this study. This study used Structural Equation Modeling (SEM) Partial Least Squares (PLS) data analysis. The results showed that This study investigated the effect of transformational leadership on employee retention, coaching, employee engagement, and organizational commitment in a corporate environment. Using a hypothesis testing approach, this study tested ten different hypotheses, each focusing on different aspects of the impact of transformational leadership. Statistical analysis showed significant findings, with p-values consistently below the 0.05 threshold for Hypotheses 1 to 4, confirming that transformational leadership significantly influences employee retention, coaching, employee engagement, and organizational commitment. However, Hypothesis 5 showed no significant relationship between employee retention and coaching (p = 0.053). Specifically, Hypotheses 6 and 7 showed that employee engagement and organizational commitment positively influence employee retention, with p-values of 0.000 and 0.003, respectively. Furthermore, the mediation effect was assessed, revealing that employee engagement successfully mediated the relationship between transformational leadership and employee retention (p = 0.000), while organizational commitment also served as a mediator (p = 0.008). In contrast, training did not mediate this relationship (p = 0.060). These findings underscore the important role of transformational leadership in fostering a supportive work environment that enhances employee retention through engagement and commitment. This research is highly relevant for organizations.