LMX Is Positively Associated With Employee Engagement Management Essay

First and foremost, I would like to thank my guide, Dr. Emma Soane, for her unwavering guidance and mentorship. It would have been difficult to progress with the thesis without her support and much-needed help in resolving all the hassles that came up during the dissertation. She has been the perfect role model of an ideal scholar and a constant source of inspiration and intellectual stimulation. There are no words to express how grateful I am for being her student.

I would also like to thank all the people back home in India, including my Professors and friends who helped me and supported me throughout the dissertation.

And lastly, I would like to thank my parents who have been a constant source of support and inspiration for all of my achievements, academic or otherwise and also for being supportive of all my decisions, irrespective of the implications of the same. But above all, I would like to thank them for making my wish come true and providing me with the once in a lifetime opportunity to be here and work with the best of the minds in the world at London School of Economics. I hope I can make the most of this opportunity and make them even more proud someday.

Abstract

This paper examines the impact of Leader Member Exchange (LMX), Perceived Organizational Support (POS) and trust on Employee Engagement as well as role of trust as a mediating variable between LMX and engagement and POS and engagement. The data analysed in the study was a secondary set of data collected from a well-known international consultancy and construction company operating in UK with a sample of 405 respondents. Analysis pointed out that LMX, POS and trust were positively associated with engagement. Also, trust played the role of a partial mediator between LMX and engagement. However, the significantly high correlation between POS and trust showed that trust does not play any mediating role between POS and engagement. Implications for academicians and practitioners leading engagement initiatives are discussed as well as suggestions for future research are suggested.

Chapter 1. Introduction

Today, organizations face an arduous task of surviving in an increasingly competitive and dynamic business environment. Even the consumers change their needs and wants quickly (Aburdene, 2005; Rao, 2005). In this increasingly aggressive business background, downsizing has become a common practice (Luthans, Norman, Avolio & Avey, 2008; Bakker & Schaufeli, 2008). Moreover, employees are expected to sustain efficiency in these times of uncertainty. As a result, they are required to take more work and work for longer hours (Aburdene, 2005; Cartwright & Holmes, 2006). To provide a respite in these difficult times, new ideas and strategies have emerged to help organizations make optimum utilization of fewer resources (Bakker et al., 2008; Luthans, et al., 2008; Burke & Cooper, 2005). Organizations have realised that retaining intellectual capital is important as profitability of organizations depends to a large extent on employee qualities like competence and contribution (Crabtree, 2005; Ferrer, 2005; Echols, 2005). Therefore, the construct employee engagement has received considerable recognition from various human resource and management professionals as one of the most vital drivers for business success in current times (Bakker et al., 2008; Leiter, 2005; Richman, 2006). Motivating individuals to devote more psychic energy at the workplace is the most powerful lever organizations possess to enhance productivity (Erickson, 2005). As engaged employees are critical for survival and growth, organizational leaders strive to cultivate this state among employees. Despite significant consequences of employee engagement, scholarly research on the construct is scarce (Wefald & Downey, 2009); little is known about factors that lead to engagement (Karatepe & Olugbade, 2009).

The constructs whose impact I would be measuring on engagement are Leader-Member Exchange (LMX), Perceived Organizational Support (POS) and trust. My selection of constructs is based on the premise that supervisors and organization play an important role in an employee’s everyday life, capable of affecting his/her mental and physical health (engagement level) (Schaufeli & Bakker, 2004) and a crucial element affecting any relationship is trust (Bachmann & Zaheer, 2006; Berscheid, 1994). Therefore, along with trust, I shall focus on two social exchange processes: exchanges between the employee and his or her leader/supervisor referred to as LMX (Graen & Scandura, 1987) and exchanges between an employee and his/her organization called POS (Eisenberger, Huntington, Hutchison & Sowa, 1986) and their impact on engagement. As Whitener (1997) argued that employees can develop trust at two different levels in the organization: specific individuals (e.g. supervisors) and generalized representatives (e.g. organization), I shall also study the element of trust acting as a mediating variable between LMX and engagement and POS and engagement.

LMX suggests that the leader develops different types of exchange relationships with the subordinates. This phenomenon is called ‘LMX differentiation’ (Liden, Erdogan, Wayne, & Sparrowe, 2006). The quality of these relationships influences the subordinate and supervisor attitudes and behaviours (Bhal, Gulati & Ansari, 2009). LMX studies highlight the role of supervisors in shaping employees’ work attitudes and performance (Li, Sanders & Frenkel, 2012). LMX theory argues that positive actions of the leader can stimulate a sense of indebtedness in subordinates (Liden et al., 1997) leading to several positive effects on employee outcomes such as job satisfaction, job-performance, organizational citizenship behaviour (Gerstner & Day, 1997) and possibly engagement. Though LMX has been proposed as an antecedent of employee engagement, there has been very limited research to prove the same (Agarwal, Datta, Blake-Beard & Bhargava, 2008; Li et al., 2012; Bezuijen, Dam, Berg, Thierry, 2010). This study not only aims to validate the findings of the earlier studies measuring the impact of LMX on engagement but tries to provide an insight by testing a different mechanism through which leaders influence engagement i.e. via the mediating mechanism of trust based on the proposition of Macey & Schneider (2008) that trust mediates the relation between LMX and engagement.

POS can be defined as the general belief of employees that their organisation values their contribution and is concerned about their wellbeing (Eisenberger, et al. 1986). Earlier research has shown that (a) employees form generalized perceptions of the extent to which their organizations care about them (Eisenberger et al., 1986) and (b) these perceptions form the basis of determining the strength of their obligations to reciprocate (Eisenberger, Cummings, Armeli & Lynch, 1997). POS has been found to have a strong impact on employee’s in-role [1] and extra-role behaviour [2] (Rhoades & Eisenberger, 2002). POS can also have a strong impact on an employee’s organisational commitment, trust (Perryer & Jordan, 2005) and possibly employee engagement. As per Kowalski (2003), employees who are committed towards their organization, also show higher engagement levels. POS serves as an important source of socio-economic respect for employees in the form of tangible benefits including wages and health benefits (Rhoades et al., 2002) as well as intangible benefits like employee’s need for approval, appreciation and affiliation as well as an indication that his/her efforts will be noted and rewarded (Eisenberger et al., 1986). Though POS has been suggested as an antecedent for engagement (Saks, 2006), research on the topic is scarce (Pati & Kumar, 2010; Schneider, 1987) and yet again, no study has tried to measure the impact of trust that might be playing the role of mediator between POS and engagement.

For many years, trust has been discussed as one of the key factors for organizational effectiveness. Earlier research has found trust to be the key variable for supervisors to empower the employees (Mishra & Spreitzer, 1994). Trust plays an important facet in both types of social exchanges: LMX and POS. In LMX, leaders/ supervisors chose a ‘trusted cadre of assistants’ based on trust (Graen & Uhl Bien, 1995). Similarly, POS augments employees’ disposition to fulfil their obligations towards organization as it creates an atmosphere of trust (Eisenberger, Fasolo & Davis-LaMastro, 1990). The role of trust in employee engagement has been discussed by several researchers (Harter, Schmidt & Hayes, 2002; Macey et al., 2008; Bhatnagar, 2007). However, there has not been any empirical work to substantiate if trust in itself is an antecedent to employee engagement. With this study, I aim to examine the role of trust as an independent variable (I.V) on employee engagement in addition to, as mentioned above, the role of trust as a mediating variable between LMX and engagement and POS and engagement.

The structure of the paper is as follows: First, the literature on engagement, LMX, POS is reviewed. Second, trust is presented as an independent variable as well as a mediating variable between LMX and engagement and POS and engagement. Third, hypotheses are derived based on the literature. Third, the research design used to examine the hypotheses and results obtained are explained. Lastly, the academic as well as practical implications are discussed along with directions for future research work.

Chapter 2. Review of Literature

Employee Engagement

Supplemented with the realisation that employee engagement impacts the organization’s bottom line, the construct has gained momentum all the more, as it has been reported that employee engagement is on a decline and that the workforce is becoming increasingly disengaged (Bates, 2004; Richman, 2006). Moreover, disengaged employees bring an added set of problems like theft, sabotage, loss of productivity due to of disengagement on-the-job and employee turnover (Fheili, 2007). Therefore stressing the importance of engagement, Jack and Suzy Welch (2006) suggested “Employee Engagement first. It goes without saying that no company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it”. There have been numerous findings on the benefits that engaged employees bring to the organization by the practitioners as well as academicians. Demourouti, Bakker, Nachreiner & Schaufeli, (2001) found that work engagement is positively related to organisational commitment. Graen (2008) found engaged employees to be more likely to aid in effective implementation of organizational change. Also, they are more prone in taking initiative and pursuing learning goals at workplace (Sonnentag, 2003).

The term employee engagement was coined in the popular book, “First Break All the Rules” by the Gallup Research group in 1999 (Buckingham & Coffman, 1999). From the subsequent decade, employee engagement has become an instant sensation in the business consulting world due to its statistical linkage with productivity and profitability (Coffman & Gonzalez-Molina, 2002). Many consulting houses like Towers Perrin-ISR, Gallup, and Hewitt have developed their own approaches and framework of employee engagement (Shuck & Wollard, 2010). However, despite its popularity, employee engagement has also been a topic of criticism because of its different interpretations and similarities to other constructs like job satisfaction, organizational commitment or citizenship behaviour. As a result, certain school of academicians term the construct of engagement as a case of rebranding (‘Old Wine in a New Bottle’) or possibly a build-up of other established constructs (Maslach et al., 2001; Bakker etal., 2008; Schneider, Erhart, Mayer, Saltz, & Niles-Jolly, 2005; Schaufeli, Salanova, Gonzalez‐Roma, Bakker 2002; Macey et al., 2008). Therefore, the academicians, for the most part, have been speculating if the term ’employee engagement’ is just a modern management terminology (Saks, 2006; Shuck et al., 2010). So, contrasting the practitioner community, there is dearth on engagement literature in the academic world (Saks, 2006; Macey & Schneider, 2008).

Recently organizational behaviour has turned its attention towards positive psychology (Lopez & Snyder, 2009). Unlike the earlier trend which emphasized on negative concepts like burnout, withdrawal and job dissatisfaction, positive psychology emphasises on human strengths and positive experiences at work for occupational success and competitive advantage (Luthans, 2002; Schaufeli et al., 2002). Noteworthy among these positive psychology constructs being, employee engagement (Agarwal et al., 2012). Thus employee engagement has gained attention among the academicians recently (Luthans et al., 2008; Schaufeli, Bakker, Salanova, 2006; Schaufeli et al., 2004).

1.1 Definitions of Employee Engagement

Till date, the exact definition of the concept still remains elusive (Saks, 2006; Vance, 2006). Kahn (1990) was one of the first to theorize about employee engagement. He described three psychological conditions that need to be fulfilled in order for the employees to feel engaged: psychological safety, psychological meaningfulness and psychological availability. Psychological meaningfulness refers to the belief that the work carried out by the individual is meaningful and significant to fulfil the organizational goals. When employees believe that their work is significant and fits the goals of the organization, they bring their ‘self’ at work showing engagement (Czarnowsky, 2008; Fredrickson, 1998; Maslach et al., 2001). Psychological safety involves showing confidence in harnessing ‘self’ at work without the fear of negative consequences or repercussions to self-image or career. When the organization provides a reliable working environment, employees trust the organization and are likely to feel engaged. And lastly, psychological availability refers to the availability of the physical, emotional and psychological resources essential to carry out the work. The availability of necessary resources allows employees to focus on their work without worrying about the lack of resources (Shuck & Wollard, 2010). Therefore in summary, Kahn (1990) conceptualized engagement as being completely physically, cognitively and emotionally connected to their work roles.

Extending Kahn’s conceptualization of engagement, Macey, Schenider, Barbara & Young (2009) have described engagement as behaviour in order to narrate the level of precision and the reason why organizations and organizational leaders are paying attention towards the notion of discretionary effort:

Thinking and acting proactively

Engaged employees will take appropriate steps and work in alignment with organizational goals.

Don’t stick to job-descriptions

They are willing to go beyond the role requirements, their focus being accomplishment of the task that is required for the benefit of the organization.

Working on personal development

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They are active in finding ways that will help them develop their own skills required for the organization. They have self-interest in skill development.

Persistence

Engaged employees play a crucial role during time of crises. They don’t need to be reminded to get things done. Engaged employees sense the urgency of the situations and are self-motivated to work beyond the convenience of time or job-descriptions.

Adaptability

Since engaged employees are proactive, adaptability is inherent. Therefore, they are willing to embrace change if it is beneficial for the organization.

However, the most widely accepted definition being of Schaufeli et al., (2002, p.74) who defined engagement as “a positive, fulfilling, work-related state of mind that is characterized by vigor, dedication and absorption”. Vigor is characterized by high levels of energy at work. Dedication refers to being involved in one’s work with a sense enthusiasm and pride and absorption is characterized by being happily engrossed in one’s work. In this study, absorption, vigour, and dedication dimensions of engagement are combined into an aggregate measure of engagement.

This study adopts Schaufeli et al.’s (2002) definition for two reasons: Firstly, Kahn’s (1990) definition had provided a conceptual basis for engagement but did not provide an operational definition for the same (Kim et al., 2009; Schaufeli et al., 2001). Secondly, Schaufeli et al.’s (2002) definition and measure of engagement, Utrecht Work Engagement Scale (UWES) (Schaufeli & Bakker, 2003) are cited and used most often to measure engagement in the current engagement literature and research (Bakker et al., 2008; Koyuncu, Burke, & Fiksenbaum, 2006).

1.2 Essence of Engagement

As per Kahn’s (1992) conceptualization, engagement is not simply working hard but putting the real ‘self’ at work. Engaged employees inhabit their roles at work and hence are dedicated and absorbed in their work. Therefore, it is important that employees are well-versed with their roles so they can express themselves effectively through their roles (Tyler, 1999). It goes beyond simply turning up on time and doing what is told. As per the theory of psychological contract (Rousseau, 1989), it goes beyond the basic minimum contractual requirements. People become physically involved, cognitively attentive and empathically connected to others in service of the work that they are doing (Kahn, 1990). My premise being that leaders and organization play an important role in employees feeling engaged because engagement is an investment of effort and/or time (Macey et al., 2009) and employees need to trust their environment before deciding to invest (Albrecht, 2009).

LMX Theory

Several leadership theories including trait, behavioural, and contingency theories (Vroom & Yetton, 1973; Hersey & Blanchard, 1993; Blake & Mouton, 1964; Fiedler, 1967; Yukl, 1989), assume that the leader-member relations are consistent, with the leaders interacting with all subordinates homogenously. But, LMX theory asserts that leader-member relations are heterogeneous as leaders cannot distribute their limited resources and time to all the subordinates equally (Dansereau, Graen & Haga 1975). Hence the leader develops unique dyadic relations with each member over a series of exchanges i.e. Vertical Dyadic Linkage Approach (VDL) (Bhal & Ansari, 1996; Graen et al., 1987).

2.1 LMX Stages

The LMX relationship evolves in stages: role-taking, role-making, and role-routinization (Graen, 1976; Graen et al., 1987; Graen & Cashman, 1975; Liden, Sparrow & Wayne, 1997; Dienesch & Liden, 1986). In role-taking, the relation begins with the initial interactions between dyads (supervisor and subordinate) and through these series of exchanges, mutual trust and respect is built (Uhl-Bien, Graen, & Scandura, 2000).

In the next step (role-making), supervisor selects a few subordinates with whom he/she continues to develop their relationship. Hereby, the exchange between the two parties becomes more social and less economical (Graen et al., 1995). At this stage, the leader and the subordinate are willing to go beyond the formal employment contract as, at this stage, the feelings of trust, respect and gratitude have developed towards each other. As subordinates perform their task, supervisors offer resources like support, autonomy and more challenging work assignments (Graen et al., 1975). Therefore, role-making is developed on mutual expectations and contributions of valued resources.

In the last step (role-routinization), the exchanges between the supervisor and subordinate is maintained over a period of time through work together on different task but due to the limited resources of the leader, they develop and maintain high-quality exchanges with a select few subordinates (Dienesch et al., 1986; Graen, 1976).

LMX theory developed by Graen and his colleagues suggests that leaders cultivate qualitatively different types of relations with different employees (Dansereau et al., 1975). The theory dictates that effective leadership processes takes place when leaders and followers develop mature partnerships and thus gain access to the mutual benefits of this relationship (Graen & Uhl-Bien, 1991b). Henderson, Liden, Glibowski & Chaudhary (2009) defines LMX differentiation as a process by which the leader engages in different types of relationships, ranging from high -quality to low-quality, with the subordinates.

As leaders treat individual subordinates differently, two diverse groups of subordinates emerge: in-group and out-group (Graen et al., 1995). The in-group consists of a small number of subordinates who are trusted and favoured by the leader after a series of exchanges. The quality of this relationship is high as the leader and the in-group members go beyond the formal work contract because of mutual liking, trust, respect and loyalty (Liden, Wayne, & Stillwell, 1993; Uhl-Bien et al., 2000). The in-group gains the advantage of favourable support and resources from the relationship like autonomy in decision making, attention, greater job directions and more opportunities of social network (Dansereau et al., 1975; Liden & Maslyn, 1998; Liden et al., 1997).

On the other hand, the out-group consists of members towards whom the leader is apathetic. Here, exchanges between the leader and subordinates abide by the prescribed employment contract with more limited reciprocal trust and support than the in-group. Furthermore, the out-group receives fewer valued resources and opportunities for job benefits and career progression (Vecchio, 1997). They perform mundane tasks and have limited access to the leader. As a result, the out-group relation with the leader is characterized by low levels of mutual trust, interaction and support compared to the in-group (Maslyn & Uhl-Bien, 2001; Morrow, Suzuki, Crum, Ruben & Pautsch, 2005).

The association between LMX and employee engagement can be explained by SET or Social Exchange Theory (Thibault & Kelly, 1959). LMX theory states that the leader and the subordinate must provide something valuable to the other party, irrespective of whether the asset is tangible or intangible; both parties need to see the exchange as equitable (Wayne, Shore, & Linden, 1997). These exchanges between the leader and the subordinates can lead to obligations and create mutual interdependence (Gouldner, 1960). LMX impacts employee performance through a process of exchanges wherein the leader offers or eliminates tangible or intangible resources (Chen et al. 2007). Examples of intangible resources provided by the leader are loyalty, support, trust, respect and positive interpersonal exchanges (Erdogan & Enders, 2007; Liden et al., 1998). Whereas tangible resources include career progression, training opportunities, autonomy in decision making and challenging work assignments (Kozlowski & Doherty, 1989; Liden, Erdogan, Wayne & Sparrowe 2006; Erdogan et al., 2007). These positive actions of the leader can create a sense of obligation or indebtedness in the subordinates (Liden, Sparrowe & Wayne, 1997) making them repay the leader with higher levels of organizational commitment (Bhal, 2006), competency (Lee, 2007), trust (Bauer & Green, 1996) as well as engagement (Agarwal et al., 2012).

2.1 LMX and Employee Engagement

Engagement can be considered as reciprocation for what an employee receives. People essentially believe in reciprocation and hence they reciprocate (Macey et al., 2009). An explanation for this reciprocity can be found in the theory of psychological contract as well. It suggests that when employees feel that their supervisor is concerned about their personal as well as professional well-being, they feel the need to reciprocate with vigor, dedication and absorption (Saks, 2006), the three key features of employee engagement as per Schaufeli et al. (2002) definition.

Leader-controlled resources like feedback, opportunities for development, feeling of appreciation and contributing towards organizational goals, resources required to do the job play an important role in engagement (Batista-Taran, Shuck, Gutierrez, & Baralt, 2009; Shirey, 2006). Piersol (2007) has suggested that engagement is a symbiotic or a reciprocal bond with the entire enterprise wherein the management holds the prime responsibility rather than just an autonomous undertaking of the employee alone. As a result, the leader plays an important role as he/she acts as the lens or conduit through which the employee perceives the rest of the organization and subsequently plays an important role in employees feeling engaged (Erdogan et al., 2007; Robinson, Perryman & Hayday, 2004).

The occupational stress model called job demands-resources (JD-R) (Demerouti, Bakker, De Jonge et al., 2001) model also provides an important theoretical backdrop for engagement research (Demerouti et al., 2001; Schaufeli et al., 2004). This study has roots in the JD-R model, which assumes a relationship between LMX and employee engagement. The basic proposition of JD-R theory being the characteristics of work environment can be classified into two types: job demands and job resources. Job demands refer to physical, psychological, social, or organisational features of the job that require continued physical and/or psychological (cognitive and emotional) effort, and are linked with physiological and/or psychological costs. Examples of job demands being high work pressure, emotional demands, and role ambiguity. High job demands lead to emotional exhaustion (Bakker & Demerouti, 2007). Job resources on the other hand, refer to those physical, psychological, social, or organizational features of the job that are either/or:

Efficient in accomplishing work goals

Decreasing job demands and the associated physiological and psychological costs

Stimulating personal growth, learning, and development

Job resources can manifest at several levels at the workplace. At the organizational level, it can be salary or job security. At the task level, it can be skill variety or performance feedback and at the interpersonal level, it can be the co-workers or supervisor.

Numerous studies have indicated significant positive associations between employees who share good relations with their immediate supervisor and the level of commitment to the organization displayed by the employee (Robinson et al., 2004). As argued by Bhatnagar (2007), supervisors play a critical role in shaping employee attitudes and behaviours and that mentors increase employee engagement at workplace. In high-quality LMX relations, leaders assume the role of mentors for their subordinates (Scandura & Schriesheim, 1994). The leaders in these high quality relations can act as resources that help in employee development, stimulate innovation and may lead to employee engagement. Macey et al. (2009) have suggested that supervisors are an important resource that impacts employee engagement. Henderson et al., (2009) puts forward a proposition stating that LMX can be an antecedent to several individual level outcomes like psychological contract fulfilment, OCB, commitment and performance. All of these taken together can lead to a state of engagement. Despite the strong propositions suggesting, that high quality LMX can act as a resource for employee engagement, there is not much research linking the two constructs (except for the work of Li et al., 2012, Agarwal et al., 2012). Therefore, based on the proposition of Henderson et al., (2009) as well as the SET and JDR model,

Hypothesis 1: LMX is positively associated with employee engagement

Perceived Organizational Support (POS)

For several years, organizational theorists have indicated that employment is an exchange of employee’s labours and loyalty for the organization’s provision of socioeconomic benefits (Levinson, 1965; March & Simon, 1958). These accounts of the employee-employer relationship highlight organization’s accomplishment of the favourable outcomes through the generous treatment of employees (Aselage & Eisenberger, 2003). Therefore, employees who are treated well by their organization are likely to go beyond their job descriptions and respond adaptably to organizational problems and opportunities (George & Brief, 1992).

POS refers to a general belief on behalf of the employee that his/her organization values their contribution and cares about their well-being (Rhoades et al., 2002). Eisenberger and colleagues (1986) argued that employees develop these perceptions because people tend to attribute traits or qualities to organization via the process of “personification” (Levinson, 1965). The process of personification of the employer by the employee signifies the overall rewards and punishments that the employee has received from the powerful members of the organization. On the basis of personification, the employees view the favourable or unfavourable treatment meted out towards them by the organization as a sign of the organization favouring or disfavouring them. Additionally, POS is enhanced if the actions of the organization are discretionary rather than mandatory and the overall evaluation of the organization is positive (Eisenberger et al., 1986; Shore & Shore, 1995).

High POS meets the need for approval, esteem and social identity as well as produces the expectation that any extra-role behaviour carried out by the employee would be recognized and rewarded (Eisenberger, Cummings, Armelli &Lynch, 1997). Also, POS can induce a feeling of psychological safety for the employee, one of the three conditions for engagement (Kahn, 1990). As mentioned earlier, psychological safety entails a sense of being able to show and employ ‘self’ without fearing negative consequences. Kahn (1990) also found supportive and trusting interpersonal relations along with supportive management endorsed psychological safety at workplace. As per Saks (2006), key harbingers of this safety are the supervisors and the organization itself. Moreover, employees feel safe in work environments characterized by supportiveness and openness. In their empirical test of Kahn’s model, May, Gilson & Harter (2004) echoed the finding that supportive supervisor relations were positively related to psychological safety.

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Based on the JD-R model, social support is also a job resource that predicts engagement (Maslach et al., 2001; Schaufeli et al., 2004). Consequently, lack of social support has been found to be associated with burnout (Maslach et al., 2001).

3.1 POS and employee engagement

POS has been hypothesized to be associated with job satisfaction, job involvement, job performance as well as desire to remain with the organization (Rhoades & Eisenberger, 2002). The plausible reason for these positive outcomes can be via the state of engagement. Like LMX, the basic premise of POS can be found in SET which maintains that individuals enter into relationships in order to maximise their benefits (Blau, 1964; Homans, 1974). Resource exchanged between subordinates and supervisors can be impersonal like money or information (Foa & Foa, 1974) or they can be socio-emotional like caring or respect (Aselage et al., 2003). The norm of reciprocity dictates reciprocation of favour, serving as a starting mechanism for interpersonal relationships entailing that assistance will be provided to another individual with the expectation that it will be compensated with the desired resources by the receiver of the assistance (Gouldner, 1960). SET emphasizes the importance of understanding employee’s motivation in order to attain organizational goals. Fulfilling obligations towards their supervisor helps subordinates maintain the positive self-image of those who pay back debts, avoid the social stigma linked with the reciprocity norm’s violation, and acquire favourable treatment from the organization or supervisor. Consequently, employees are motivated to compensate favourable treatment meted towards them by the organization by acting in ways valued by the organization (Eisenberger et al., 1990). High levels of POS create feeling of obligation for employees to reciprocate not only by being committed towards the employer but also by engaging in behaviours that help accomplish organizational goals (Wayne et al., 2012).

Schneider (1987) have posited that individuals possessing the traits that orient them to display engagement are more likely to select environments that provide them the opportunity to do so thus demonstrating the importance of autonomy and conducive work environments in catalysing the conversion of such attributes to engagement. POS has been shown to have positive association with the expats’ adaptation to the new country and work environment (Kraimer, Wayne & Jaworski, 2001) thus promoting adaptive behaviour which is also a suggested feature of engagement (Macey et al., 2008). Based on the above propositions,

Hypothesis 2: POS is positively linked to employee engagement

Trust

Trust is considered as a critical aspect of all type of relationships, be it professional or personal. The literature from psychology, sociology and management concur on the importance of trust (Kramer & Tyler, 1996; Gambetta, 1988; Williamson, 1993; Berscheid, 1994; Bachmann & Zaheer, 2006). There are three underlying characteristics to the definitions of trust: benevolence, competence and risk (Gustafsson 1996; Ullmann-Margalit 2004; Gambetta, 1988; Offe, 1999). Benevolence refers to the faith that the trustor has in the trusted person regarding his/her intentions and the belief that the trusted person will not harm him/her in any way. Competence refers to the belief of the trustor that the trusted person has the required skills and knowledge worthy of being trusted. Risk arises from the vulnerability of the trustor at the hands of the trusted person. Mayer, Davis & Schoorman (1995, p.712) define trust as “The willingness of a party to be vulnerable to the actions of another party based on the expectation that the other party will perform a particular action important to the trustor irrespective of the ability to monitor or control that other party.” The vulnerability arises from the ambiguity or concern if the other party will refrain from acting in opportunistic ways.

In recent years, there has been renewed interest in trust in supervisors (Ayoko & Pekerti, 2008; Lapidot, Kark, & Shamir, 2007; Webber, 2008). Many authors on leadership regard trust as a crucial element (Wrightsman, 1990; Locke, 1991) as efficient organizational behaviour depends on the individual’s readiness to defer to organization’s authorities and disposition to obey the organization’s directives and protocols (Kramer, 1999). In order for the leader/supervisor to be effective, subordinates need to trust the leader (Bennis, 1999). Employee’s trust in their supervisors has been linked to various organizational outcomes like organizational commitment, turnover rates, performance, LMX as well as POS (Dirks & Ferrin, 2002). Trust in supervisor is especially important if the task at hand is complex and requires high levels of interdependence (Creed & Miles, 1996). Trust has also been recorded as an important element for acceptance of feedback from supervisors (Ilgen et al., 1979). Because of the increased attention towards the benefits of trust in the supervisors, the leaders are viewing cultivating a trustworthy environment as an important part of their profession (Fairholm, 1994).

4.1 Trust and Employee Engagement

Kahn (1990) argues that employees take the risk of being engaged to the extent that they feel psychologically safe. As explained earlier, engagement is an investment of effort and/or time and carries added importance when reputation and credibility is at stake (Albrecht, 2009) and trust is what enables the employees to make such an investment (Macey et al., 2009). Engaged employees invest their effort, time and personal resources trusting that the investment will be recognized and rewarded, intrinsically or extrinsically (Macey et al., 2008). The core reason for it being the norm of reciprocity mentioned in the SET earlier (Coyle-Shapiro & Conway, 2005). Therefore, trust (in the organization/ supervisor) becomes essential for increasing the probability of engagement. Trust becomes important for intrinsically motivated behaviour as well as this entails psychological safety, one of the conditions for engagement as per Kahn’s definition (Macey et al., 2008).

Empirical as well as prescriptive studies have suggested that trust is one of the critical predictors of employee engagement (Aryee, Budhwar & Chen, 2002; Mayer et al., 1995). The development of trust at the workplace is a chief responsibility of leadership (Andersson, 1996; Flade, 2003) as it has the potential to increase the closeness and proximity that individuals feel towards their work (Boverie & Kroth, 2001). Trust is believed to play a key role in the quality of relation between a subordinate and supervisor (Butler, 1991; Liden & Graen, 1980) as poor or ineffective leadership is found to erode trust leading to stress and mental health issues (Kelloway, Sivanathan, Francis & Barling 2005). Therefore, it’s important that the leaders of the organizations act as role-models by demonstrating alignment between their deeds and words (Konz & Ryan, 1999).

Trust in supervisor is found to have a positive impact on employee behaviours such as organizational commitment, task performance (Masterson, Lewis, Goldman, Taylor, 2000), citizenship behaviours (Skarlicki & Latham, 1996), job satisfaction (Aryee et al., 2002), employee turnover as well as customer satisfaction (Simons & Roberson, 2003). In a trustworthy environment, employees feel safe to take risks and feel assured that they won’t be manipulated by their supervisors (Albrecht, 2009). Hence,

Hypothesis 3: Trust in supervisors in positively related to employee engagement.

Role of Trust as a mediator between LMX and employee engagement and POS and employee engagement

Blau (1964) describes a social relationship (LMX/POS) as “the voluntary actions of individuals that are motivated by the returns they are expected to bring and typically do in fact bring from others.” (p. 91-92). It underlines the notion that one of the two parties involved (principal partner) does a favour to the other party which creates an obligation for the other party to return the favour. Since social exchange necessitates trusting others to return the favour, the initial task is to prove oneself trustworthy (Aryee et al., 2002).

LMX leading to trust

Research has shown that employees in high-quality LMX relationships receive more intellectually stimulating work assignments (Liden et al., 1997), are provided with more support (Kraimer et al., 2001), and advance more rapidly in their careers (Scandura et al.,1994) which can possibly lead to the state of employee engagement (Hypo. 1). However, trust is important for the subordinates to cooperate with their supervisors and commit to their vision (Bass, 1985).

Trust plays an important role in LMX as based on trust; the supervisor selects the ‘trusted cadre of assistants’ who receive more time, attention and resources of the leader as opposed to the low quality LMX members (Graen et al., 1995). The supervisors are more likely to foster high quality LMX relationship with those individuals who are viewed as trustworthy (Guohong, 2010). Therefore, the supervisor starts an LMX relation based on trust and since trust is infectious and reciprocal by nature (Serva, Fuller & Mayer, 2005); subordinates are more likely to trust the supervisor consequently viewing him/her as trustworthy (Guohong, 2010). Over time, these exchanges establish a global schema of history of support (Shore & Shore, 1995) reinforcing the trustworthiness of exchange partners involved.

4.2.2 POS leading to trust

Eisenberger, Fasolo & Davis-LaMastro (1990) found that POS enhances employees’ willingness to fulfil their obligation towards the organization by creating an atmosphere of trust. Perception of being valued and cared by the organization enhances employees’ trust towards the organization as it provides the valued assurance that the organization will provide the required assistance in stressful situations (George, Reed, Ballard, Colin & Fielding 1993). Whitener (2001) reported POS to be associated with trust in management. An organization’s concern about the welfare of an employee conveys information about the organization’s benevolence and goodwill leading to perceptions of its trustworthiness in the eyes of the employee (Chen, Aryee & Lee, 2005).

4.1.3 Trust leading to engagement

As Aryee et al., (2002) and Mayer et al., (1995) have suggested that trust is a one of the critical predictors of engagement at workplace. As mentioned earlier, engagement can be explained in terms of psychological contract wherein the employee goes beyond the basic minimum contractual requirements of the job. Trust is recognized to be an essential part of this psychological contract (Rousseau, 1995). As explained, engagement is an investment and trust is an important variable that enables this investment (Macey et al., 2009). Furthermore, there is empirical evidence linking trust to organizational commitment, intention to remain with the organization, and citizenship behaviour (Liou, 1995; Robinson, 1996). Trust has also been linked to altruism, courtesy, conscientiousness (Podsakoff, MacKenzie, Moorman & Fetter, 1990) and hence, possibly employee engagement (Hypo 2.)

As per Konovsky & Pugh (1994), trust is a manifestation of social exchange which in turn reinforces the expression of mutual loyalty and goodwill. Aryee et al., (2002) posits that employees reciprocate in terms of positive work attitudes (engagement). However, as mentioned earlier, the reciprocation is contingent upon the principal exchange partner (supervisor/organization) (Masterson et al., 2000). Hence,

Hypothesis 4: Trust mediates the relation between LMX and Employee Engagement

Hypothesis 5: Trust mediates the relation between POS and Employee Engagement

Figure 1. Hypothesized Model 1

Employee Engagement

H21

H11

POS

LMX

Figure 2. Hypothesized Model 2

Employee Engagement

LMS

Trust

H4

H4

H3

H5

H5

POS Chapter 3. Methodology

The data is a secondary set of data obtained from a well-renowned international consultancy and construction company operating in UK. It operates in 65 countries with 3,000 employees. The data consisted of responses from 405 respondents with an average age of 39 (SD=15.2) and an average tenure of 3 years (SD=3). Of the total respondents, (156) 38% were females and (244) 62.5% were males. The type of work ranged from professionals e.g. civil engineer, health, teaching, and lawyer (37%), associated professional and technical e.g. nurse, police (2.7%), administrative and secretarial (18%), manager or senior official (22.5%) ,personal services e.g. travel agent, care assistant (0.7%), retail and customer service e.g. customer care, sales assistant (3.7%), skilled trades e.g. electrician, plumber, chef etc. (0.05%), process and elementary occupations e.g. labourer, hospital porter, cleaners (1.5%). There were 8.4% temporary/fixed term contract employees while 99.3% permanent employees. In terms of ethnicity, the sample consisted of white population (80.7%), East European (4.9%), Mixed (2.2%), Asian or Asian British (3%), Black or Black British (3.2%), Chinese (1%) and other ethnic groups (4.2%).

Procedure

The questionnaires were made available online for the participants. The link was sent to the participants by the manager. The data was collected and secured on the research team’s secure server. Participants were given 3 weeks to respond and reminder mails were sent out intermittently. There is a phase-I of the study, the data for which was collected in 2010. All the scales, except for POS, were amended from their original scaling in order to observe consistency throughout. Therefore, UWES (originally ranging from 1=Never to 6=-Always), LMX scale (originally ranging from 1=Rarely/Not a Bit/None/Strongly Disagree/Extremely ineffective to 5=Very Often/A Great Deal/Fully/Very High/Strongly Agree/Extremely ineffective and trust (originally ranging from 1=Strongly Disagree to 5 =Strongly Agree) were changed to a 7-point scale.

Measure

3.2.1 Employee Engagement

Employee engagement was measured with the seventeen-item version of the Utrecht Work Engagement Scale (UWES) (Schaufeli et al., 2006). It comprised of 6 vigor items, 5 dedication items, and 6 absorption items. The three dimensions of engagement were combined to create an overall measure of engagement. High scores on all three dimensions indicate high employee engagement.

The scale was arranged from 1=Never to 7 =Always. The sample items for the three dimensions being:

Vigor: “At work, I feel full of energy” and “In my job I feel strong and vigorous”

Dedication: “I find the work that I do full of meaning and purpose” and “I am enthusiastic about my job”

Absorption: “Time flies when I’m working” and “My job inspires me”

3.2.2 LMX

LMX was assessed using Graen & Uhl-Bien (1995) seven-item scale on a seven-point Likert scale ranging from 1=Strongly Disagree to 7=Strongly Agree. The sample items for the same being “My leader understands my problems and needs” and “My leader recognises my potential”.

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3.2.3 Perceived Organizational Support (POS)

4 items from the Eisenberger et al., (1986) scale of POS were chosen. Items ranging from 1=Strongly Disagree to 7 =Strongly Agree. The sample items being: “My organisation cares about my opinions” and “My organisation really cares about my wellbeing”.

3.2.4 Trust

Trust was measured using Robinson & Rousseau (1994) 7 item scale ranging from 1= Strongly Agree to 7=Strongly Disagree. The sample items being: “I fully trust my organisation” and “My organisation is open and upfront with me”.

Internal consistencies of all the scales are mentioned in Table.1. Items for all scales used in the study are recorded in the Appendix.

Data Analysis

Table 1 represents the scale reliabilities, means and standard deviations for each scale, and inter-scale correlations for all study variables. The inter-scale correlations are all significant at the p< 0.01 level. Correlations coefficients above 0.70 may increase the probability of multicollinearity [3] in a regression (Tabachnick & Fidell 1996) and hence correlation between POS and trust need to be eliminated. To examine the hypotheses, multiple regression analyses were conducted.

Table 1. Means, standard deviations and inter-correlations among all variables

Variable

Internal consistencies

Mean

SD

Engagement

Trust

LMX

Engagement

.92

4.98

.85

 

 

 

Trust

.94

4.88

1.29

0.45*

 

 

LMX

.94

5.21

1.27

0.45*

0.54*

 

POS

.95

4.56

1.42

0.43*

0.85*

0.56*

Notes: N=405, *Correlation is significant at 0.01 level (2-tailed)

Test of hypotheses

Linear regressions were conducted to test hypotheses 1-3:

First hypothesis predicted a positive association between LMX and engagement. As shown in table 2, LMX was significantly related to engagement, shown in Table 2 (R2=.201, β=.30, p<.001). Therefore, the hypothesized association between LMX and engagement was supported.

Hypothesis 2 predicted that POS would be positively associated with engagement. The results of the regression, shown in Table 2, indicate that POS was significantly related to engagement (R2=.183, β = .29, p < .001).

Hypothesis 3 predicted a positive relation between trust and employee engagement. The results in Table 2 indicate that trust was significantly related to engagement (R2=.200, β = .32, p < .001).

Table 2. Linear Regressions with Engagement

 

Variable

Adjusted R2

F

β

t

LMX

.201

20.82

.30

4.56*

POS

.183

18.64

.29

4.31*

Trust

.200

20.80

.32

4.56*

*p < .001

Mediating effects of trust

According to Baron and Kenny (1986), three conditions must be satisfied to establish mediation. First, the independent variable(s) (LMX, POS) must be associated to the mediator (trust). Second, the mediator (trust) must be associated to the dependent variable(s) (engagement). Third, a significant relationship between the independent variable(s) (LMX, POS) and a dependent variable(s) (engagement) will be reduced (partial mediation) or no longer be significant (full mediation) when controlling for the mediator (trust).

Hypothesis 4 predicts trust to mediate the relation between LMX and employee engagement. Hence as per step 1 in Table 3, association between LMX and engagement was found to be significant with R2= .201, Beta=.297 and t= t=4.563 (p<0.001). Hence, moving to step 2, the regression between LMX and trust was carried out and found significant as well with R2=.301, Beta=.297 and t= 13.2 (p<0.001). Finally moving to step 3, regression between trust and engagement was carried out and found significant as well with R2=.200, Beta=.317 and t=4.56(p<0.001), thus indicating that trust does play a mediating variable between LMX and engagement. In order to find out if the mediation was full or partial, a step-by-step regression was carried out between LMX, trust and engagement, keeping LMX as constant. The results indicated that the impact of LMX on engagement has β=0.46 (p<.001) when trust is the mediator. The coefficient is decreasing by 2.88 rather than zero, in which case the mediation would have been full, showing partial mediation effect by trust between LMX and engagement.

Table 3. Mediation analysis of Trust between LMX and Engagement

Step 1 Regression between LMX and Engagement

 

Adjusted R2

F

Î’

t

 

0.201

20.82

0.297

4.56

Step 2 Regression between LMX and Trust

 

Adjusted R2

F

Î’

t

 

.301

174.76

.555

13.22

Step 3 Regression between Trust and Engagement

 

Adjusted R2

F

Î’

t

 

0.200

20.8

0.317

4.56

*p < .001

 

 

 

 

Contents of the table

Model

Unstandardized Coefficients

Standardized Coefficients

t

Sig.

B

Std. Error

Beta

(Constant)

3.444

.348

9.899

.000

LMX

.297

.065

.459

4.563

.000

(Constant)

3.049

.377

8.084

.000

LMX

.186

.079

.288

2.369

.020

Trust

.199

.084

.288

2.365

.021

a. Dependent Variable: Engagement

For hypothesis 5 (Trust mediates the relation between POS and Employee Engagement), regression was not carried out between POS and trust as correlation coefficient was found to be 0.85 (table 1), above the threshold of .70, which would increase the probability of multicollinearity as the two are highly associated (Tabachnick & Fidell, 1996).

4. Discussion

Executives have understood the importance of discretionary effort as they realise that all activity cannot be subject to management control. Organisations increasingly need employees who do not need nudging and are vigilant and enthusiastic enough about getting things done as and when the situation demands. They want energetic employees who are willing to go beyond job descriptions, employees who are engaged (Macey et al., 2009). Given its vital role, there is a striving need among practioners and academicians for better understanding of the concept of employee engagement. This study investigated the impact of LMX, POS and trust on employee engagement as well as testing the impact of trust as a mediator between LMX and engagement and POS and engagement. The results lead to five conclusions. First, quality of exchanges between employees and supervisors does influence engagement levels. Third, POS leads to a state of engagement. Third, trust in the supervisor also impacts employee engagement positively. Fourthly, trust plays a mediating role between LMX and engagement and lastly, trust does not play a mediating role between POS and engagement.

Support for 1st hypothesis (LMX is positively associated with employee engagement) suggests that the different quality relations that the leader develops with different subordinates impacts the employee attitudes and behaviours (Bhatnagar, 2007). Leaders who support and nurture their subordinates (professionally and emotionally) give them directions to help them unleash their hidden potential and encourage willingness among subordinates in committing efforts to accomplishing work goals (Meijman & Mulder, 1998). When high quality LMX members apprehend the fact that they are amongst the privileged few who are getting the support and nurturing of their supervisor, it enhances their self-efficacy and makes them obliged to reciprocate with psychological contract fulfilment, OCB, commitment, performance (Henderson et al., 2009) as well as engagement.

Support for 2nd hypothesis (POS is positively linked to employee engagement) can be understood in terms of SET. As per the norm of reciprocity that underlies the SET, employees are expected to reciprocate the favourable treatment they receive from their supervisor as well as their organization. Moreover, supervisory support is also indicative of organizational support (Rhoades et al., 2002). This leads to the feeling of obligation on part of the employees. As per Rhodes & Eisenberger (2002), employees may respond to this obligation with job satisfaction, organizational commitment as well as performance. This study shows that engagement can be yet another form of reciprocation. Therefore, when employees feel that their organization genuinely cares for them, they respond by attempting to fulfil their obligations by being more engaged.

Support for 3rd hypothesis (Trust in supervisors is positively related to employee engagement) suggests that trust in supervisor is an important antecedent for employee engagement. A supportive rather than controlling environment fosters perception of safety (Edmondson, 1999). Supervisors who provide supportive work environment enhance employee’s self-determination and interest in their work (May et al., 2004). Employees who are self-determined exhibit a choice of taking initiative and regulating one’s own actions’ (Deci et al., 1989). Such individuals are more likely to feel safer to engage themselves more fully, discuss their mistakes with their supervisors as well as learn from their mistakes (Edmondson, 1996, 1999). Thereby, trustworthy supervisory behaviours lead to feelings of psychological safety amongst employees and a willingness to invest themselves at work.

Support for 4th hypothesis (Trust mediates the relation between LMX and Employee Engagement) shows that LMX does not impact employee engagement by itself but it does indirectly via trust. Trust is the fundamental concept of LMX theory (Schriesheim et al., 1999). Supervisors select the high-quality members based on who they perceive as trustworthy and give them privileged treatment (Guohong, 2010). As an obligation, high-quality members reciprocate with altruism, courtesy, conscientiousness (Podsakoff, MacKenzie, Lee et al., 1990) and as this study has found, with engagement as well. Therefore, LMX leads to a start of a trusting relation between supervisor and subordinate, leading to a state of employee engagement.

No support was found for the 5th hypothesis (Trust mediates the relation between POS and Employee Engagement) as the relation between POS and trust was found to be highly significant suggesting that both are closely linked to one another. This study highlights an interesting fact that since POS and trust are highly correlated with one another and that both create an environment for engagement; one of the two possibilities can be predicted:

As Eisenberger et al., (1990) have found POS creates trust that the organization will fulfil its obligations towards them which in turn leads to a state of engagement.

Or

Trust in supervisor leads to the perception of managerial support (POS) (Leiter & Harvie, 1997) which in turn leads to engagement.

Whitener (2001) found POS to be associated with trust in management. Thus it can be implied that since both are highly inter-correlated, the presence of one indicates the presence of other, inevitably and as established, both are significant predictors of engagement.

Limitations of the Study

The results of the study are accompanied with its limitations. Similar to other studies in the area (Saks, 2006; Agarwal et al., 2012; Pati et al., 2012), this study used cross-sectional data. Hence it is difficult to determine the causality and it is possible, that the positive outcomes can either be an antecedent or an outcome of engagement. Longitudinal and experimental studies are required to offer more definitive inferences about the causal effects of employee engagement and the degree to which social exchange elucidates these relationships. In addition, the data was collected using self-reports suggesting that the reported relations could be ascribed to method variance as well as social desirability response bias (Podsakoff et al., 2003). While some researchers argue that self-reporting is the best method to measure participant’s state of mind (Spector, 1994; Howard, 1994; Wallbott & Scherer, 1989), the impact of same source variance cannot be ruled out completely.

Since the data is a secondary data, no direct observations could be made. Moreover, as the data was collected in 2011, one cannot rule out the possibility that it may have become out-dated in this dynamic work environment. Moreover, the authors relied on the managers for distributing the questionnaires and collection of data. Hence it needs to be acknowledged that this might have caused potential biases like selection bias or non-respondent bias, if the mangers did not distribute the questionnaires as per the author’s instructions (Blair & Zinkhan, 2006). Lastly, organizational culture or climate might also aid to elevate the occurrence of the studied variables. Unfortunately, there was no data on individuals’ personality or organizational culture/climate.

Theoretical Implications

The study has number of theoretical implications. Firstly, the study highlights the mechanism via which LMX contributes to engagement with trust paying the role of a mediator. The study showed that POS, LMX and trust are potential antecedents of engagement. Also, it reinforces the importance of trust, which not only plays an important role in making employees feel engaged but also affects the relation between the supervisors and subordinates. Furthermore, it showed that LMX leads to engagement for high-quality members. Conversely, future research can investigate whether, due to LMX, low-quality members suffer from disengagement. One of the interesting facts highlighted by the study being, the high inter-correlation between POS and trust, suggestive of the possibility that the presence of one indicates the presence of the other. As a result, future research work can chose one of the two variables rather than choosing both.

Practical Implications

The study highlights a number of practical implications as well. LMX was found to be an antecedent of engagement highlighting the importance of supervisors in nurturing engagement. Also, it has been noted that supervisors have a major impact relating to POS as they act as organizational agents. Therefore, employee’s receiving favourable treatment at the hands of the supervisor should contribute towards POS (Rhoades et al., 2002). Hence, firstly supervisors should take care in getting employees involved by introducing initiatives like profit sharing and showing consideration towards employees by introducing work-life balance initiatives (Coffman et al., 1999) and providing opportunities for their development. Also it is essential that they provide meaningful and challenging work to the subordinates while explaining the larger picture as to how the work handled by them is contributing towards accomplishing organizational goals. Secondly as trust was found as an antecedent of engagement as well as a mediating variable between LMX and engagement, it can be established that supervisor’s efforts towards cultivating trust of employees towards them can be used as an effective strategy for fostering engagement. Therefore, it is important that they act as ideals of performance and ethical standards that they set for others.

Conclusion


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