The Effect of Authentic Leadership on Employee Trust and Employee Engagement

Article excerpt

Today's global environment continuously undergoes rapid changes, enterprises experience ethical meltdowns, and organizations face a multitude of challenging and turbulent problems. It is therefore increasingly evident that enterprises need a new kind of business leader in this, the 21st century (George, Sims, McLean, & Mayer, 2007). Specifically, organizations need leaders who lead with purpose, have strong values and integrity, who are able to create enduring organizations, and who motivate their employees to provide better customer service (George, 2003). In both Eastern and Western societies, integrity and authenticity are considered as two of the most important societal values (George et al., 2007; Wang, 2010). Kouzes and Posner (2002) found that the most important component of effective leadership is that leaders treat their employees authentically. This is because it promotes a humane enterprise and achieves enduring outcomes in organizations. In recent years, the focus on the topic of authentic leadership has gradually increased in both practical (George, 2003) and academic fields (e.g., Avolio, Gardner, Walumbwa, Luthans, & May, 2004; Walumbwa, Avolio, Gardner, Wernsing, & Peterson, 2008). A reason for this is that authentic leadership is acknowledged as a root construct of all positive forms of leadership; it plays a vital role in addressing organizational and societal problems (George, 2003).

In recent studies it has been suggested that authentic leadership may positively affect employee attitudes and behavior, as well as work outcomes (e.g., job satisfaction), job commitment, creativity, engagement, and organizational citizenship behavior (OCB; Rego, Sousa, Marques, & Cunha, 2012; Walumbwa et al., 2008; Walumbwa, Wang, Wang, Schaubroeck, & Avolio, 2010). Employee engagement is the individual's involvement in, satisfaction with, and enthusiasm for work (Harter, Schmidt, & Hayes, 2002). When employees perceive that they are supported and treated sincerely, they increase their engagement at work.

Winning employees' trust is a vital element of being an effective leader. Trust has long been recognized as being fundamental to cooperative relationships (Blau, 1964). In particular, employee trust is a critical part of the relationship between individuals and organizations. However, the main issue has previously been "trust in whom?" (Perry & Mankin, 2004). Hunt and Aldrich (1998) suggested that direct supervisors have a stronger influence than CEOs. In turn, trust in leaders has been tied to desirable outcomes such as job satisfaction, commitment, and OCB (Dirks & Ferrin, 2002). Overall, trust in supervisors can be said to be one of the important elements of employee engagement.

Good leaders do not have to be born with specific characteristics or traits. Leadership emerges from one's life story, experiences, and so forth, which can facilitate authentic morality and integrity (George et al., 2007). Our purpose in this study was to test the relationships among authentic leadership, employee trust, and employee engagement. Through the research findings, we aimed to show that via employee trust, authentic leaders facilitate closer relationships with their employees, increase employee work engagement, and contribute to the sustainability of the organization.

Literature Review

Authentic Leadership, Employee Trust, and Employee Engagement

Authentic leadership means leader behavior that draws upon and promotes positive psychological capacities and a positive ethical climate that nourishes self-awareness, an internalized moral perspective, balanced processing of information, and relational transparency for how leaders work with employees, fostering positive self-development (Walumbwa et al., 2008). Additionally, trust is a person's confidence in, and willingness to act on the basis of, the words, actions, and decisions of another (McAllister, 1995). …