Employee-Centered Sustainability in the Banking Sector: Examining the Role of Spiritual Leadership in Enhancing Psychological Empowerment and Sustainable Employee Effectiveness

Abstract

Previous research has focused on various outcomes of spiritual leadership, while psychological empowerment and sustainable employee effectiveness remain underinvestigated areas with consequences for organizational sustainability performance. Based on restricted employee sustainability theory (REST), the present study investigated the relationship between spiritual leadership and sustainable employee effectiveness through psychological empowerment. For this purpose, we selected a sample of 282 employees working in domestic commercial banks. To minimize common method bias in cross-sectional data, a time-lag data-collection technique was used, in which respondents were approached through adapted self-administered research questionnaires across three different sittings for different variables. Structural equation modeling was applied for hypothesis testing in AMOS (v24). The sample includes 57% male and 43% female participants, with an average age of 38.5 years, and a majority (79%) holding 16 years or more of university education. Results indicated that spiritual leadership significantly fosters a psychological sense of empowerment among employees, ultimately leading to sustainable employee effectiveness, a highly desirable employee-related outcome in the contemporary banking sector. This study has provided empirical evidence on sustainability from an employee effectiveness perspective and extended the validation of the restricted employee sustainability theory (REST), thereby contributing to knowledge in the context of a developing country. Moreover, these results provide useful policy implications for the banking sector, prompting necessary actions to promote workplace spirituality and improve employee-centered sustainability. Detailed implications are discussed in the paper's final section.