This study examines how leader competencies contribute to organizational effectiveness through communication and trust, using employee satisfaction as a measurable organizational outcome. A cross-sectional survey was conducted among 62 employees of a large hotel group operating across Croatian and Central European markets. Five constructs were measured using a 20-item Likert-scale questionnaire. Data were analysed using Pearson correlation, multiple regression, and bootstrap mediation analysis, while reliability and validity diagnostics were also performed. The results indicate that democratic leadership is strongly associated with employee satisfaction; however, this relationship is primarily indirect. Communication and trust jointly mediated 78% of the total effect of democratic leadership on employee satisfaction, whereas the direct effect became non-significant after the mediators were included. In contrast, autocratic leadership showed no significant relationship with employee satisfaction. The study contributes to leadership research by highlighting leader competencies as organizational capabilities and identifying communication and trust as the key relational mechanisms through which democratic leadership creates organizational value in a knowledge-intensive hospitality context. The findings emphasize the importance of developing communication and trust-building competencies through leadership selection, assessment, and development programmes to strengthen employee satisfaction and organizational effectiveness.

Keywords

Leader competencies, Communication, Trust, Employee satisfaction, Hospitality.