Ethical Leadership and Employee Turnover Intention in Private Organizations in Kathmandu Valley: Mediating Role of Organization Culture and Work Stress

Abstract

Background: Ethical leadership has a significant influence on organizational performance and employee turnover, especially by minimizing work stress. In Nepal, ethical leadership is very much essential for improving work conditions and enhancing the culture of an organization.

Purpose: This study examines how ethical leadership influences turnover intention through work stress and organizational culture in Nepalese private organizations.

Design/methodology/approach: The research design is explanatory in nature, and the sample size is 399 private employees, selected through purposive and random sampling. The theoretical framework of this study is based on Herzberg's Two-Factor Theory. Data are analyzed using Structural Equation Modeling (SEM), along with descriptive and inferential statistics.

Findings: Ethical leadership decreases the intention of employee turnover and work stress significantly, thus creating a friendly work environment. The findings confirm that ethical leadership is negatively related to turnover intentions and stress while it positively shapes the organizational culture. A strong ethical leadership framework strengthens the retention of employees and their well-being in the workplace.

Conclusion: The study confirms that ethical leadership significantly reduces turnover intention by improving organizational culture and reducing work stress. While there is an increasing awareness of ethical leadership, its implementation still varies across sectors. Fairness and transparency in leadership are the major factors for improving employee retention. The study also provides practical recommendations for how to overcome challenges in the application of ethical leadership.

Keywords: Herzberg's two-factor theory, ethical leadership, employee turnover, structural equation modeling, Nepalese private organizations