The impact of ethical leadership and interpersonal trust on employee engagement in an investment banking environment in South Africa

Abstract

Academic studies have investigated the impact of transformational and authentic leadership on employee engagement. However, there have been limited studies undertaken to examine the influence of ethical leadership on employee engagement. A leader's ability to be effective in a corporate environment is related to the degree to which subordinates trust him or her. In this study, the researcher first examines whether ethical leadership influences employeesÕ attitudes and work behaviours, such as engagement and secondly, whether interpersonal trust in the immediate manager influences employee engagement. This study was conducted using a standard multiple regression statistical model based on survey data obtained from employees in the investment banking division of a large South African financial services company. Given the recent high profile corporate and banking scandals both in South Africa and globally, both ethical immediate managers and interpersonal trust in immediate managers are crucial to limit further scandals and ensure the sustainability of organisations.