Rey Karl Cezar

WCC - MBA 209 : Effective Leadership and Ethics

The Impact of Ethical Leadership, Leadership

Effectiveness, Work Related Stress and Turnover
Intention on the Organizational Commitment
BY: Zain-Ul-Aabdeen* , Mula Nazar Khan, Hafiz Gohar Mehmood Khan, Hafiz Qamar Farooq,
Muhammad Salman, Muhammad Rizwan

1. Citation

International Journal of Economics and Business Administration Vol. 2, No. 2, 2016, pp. 7-14
http://www.aiscience.org/journal/ijeba ISSN: 2381-7356 (Print); ISSN: 2381-7364 (Online)

2. Abstract

The Purpose of the study was to investigate the nature of the relationship among organizational
commitment, ethical leadership, leadership effectiveness, work related stress and turnover intention
in the banking sector of Lahore and Renala Khurd (Punjab) Pakistan. The data was collected from the
200 managerial and non-managerial employees from the banking sector in the region of Lahore and
Renala khurd. The results show that the ethical leadership and leadership effectiveness positively
affect organizational commitment of the employees

3. Model

Literature Review

Ethical Leadership

According to Michael E Brown, Linda K Treviño, and David A Harrison (2005) Ethical Leadership is
defined as “The demonstration of normatively appropriate conduct through personal actions and
interpersonal relationships, and the promotion of such conduct to followers through two-way
communication, reinforcement, and decision-making” According to Yukl (2002) leadership is another
name of “influence”. Honesty of leaders have positive relation with ethical leadership, so it’s
important for leader’s honesty to give its fundamental contribution to legitimacy and attraction of
model and has as often as possible been connected with viable and ethical leadership (Treviño,
Brown, & Hartman, 2003). Last few decades demonstrate developing enthusiasm for the
advancement of ethical leadership and leadership effectiveness in associations. Ethical leadership is
thought to be particularly essential due to an effect which pioneers may have on the behavior of the
organization and at firm performance (Aronson, 2001; Michael E. Brown, Linda K. Treviño, & David A.
Harrison, 2005)

Ethical leadership hypothesis are developed upon two perspectives. According to first perspective
ethical leadership is normative; it is related with what should to be done rather than what not. The
second point of view is that the ethical leadership includes moral practice and a state of mind. And
conduct of the leader has attributes of giving "advantage" for the related people.
Elci, Sener, Aksoy, and Alpkan (2012), Have recognized ethical leadership as a "the showing of
normatively proper lead through individual activities and interpersonal connections, and the
advancement of such direct to adherents through two way correspondence, support and choice
making”. The three component of ethical leadership we recognize are like the measurements
specified by Brown and associates. Drawing on their meaning of ethical leadership and in line with
past exploration Michael E. Brown et al. (2005), describe, that leader is a person having the
characteristics of honesty, trustworthy, sensible, fairness and caring. The connection between
workers and ethical leader is solid which makes a pleasurable domain at work; this subsequently
causes an increase responsibility and cuts turnover intention (Mulki, Jaramillo, & Locander, 2008).

Leadership Effectiveness

Leadership is strongly connected to individuals' inside inspiration systems (Kark & Van Dijk, 2007). In
this manner, a leader's aptitude to develop a workplace that enlarges representative inspiration
proves critical (Marvel, Griffin, Hebda, & Vojak, 2007). Simultaneously, we observe that
communications are the necessary setting up of individual inspiration. Organizations and their
leaders commit little consideration regarding correspondence strategies and skills, in any case
(Argenti, Howell, & Beck, 2005) Authoritative leadership behaviors affect actions in the work
environment that empower change (Gilley, Gilley, & McMillan, 2009). In spite of the unquestionable
enthusiasm of researchers in figuring out which leaders are effective and which are not, there has
been no accord on the most fitting criteria of pioneer effectiveness among researchers. (Ghasabeh,
Soosay, & Reaiche, 2015); Lowe, Kroeck, and Sivasubramaniam (1996) have divided leader
effectiveness in two categories. First category included “quasi-institutional measures” having
connection to leader’s effectiveness. Measures included in this category are achievements of
organizational goals, financial performance of the organizational working units and administrative
firm performance. Second category included “subordinates measures of leader effectiveness” which
face highly criticism just because of its strong impact on end findings concerning leadership style
effectiveness correlation. Study of Mesterova, Prochazka, Vaculik, and Smutny (2015) concentrate
on three forms benchmarks of leader effectiveness. Group performance, leadership emergence and
perceived leader effectiveness

Work-Related Stress

Anything that represents a test or a risk to our prosperity is a stress (Nowrouzi et al., 2015). Some
stresses make them go and they are beneficial for you - with no stress at all numerous say our lives
would be arduous and would apparently feel senseless. Notwithstanding, when the stresses
undermine both our mental and physical health they are terrible. In this content we might be
concentrating on stress that is terrible for you (Bowden et al., 2015). The distinction between
"stress" and "a stressor" - a stressor is an operators or jolt that causes stress. Stress is the feeling we
have when underweight, while stressors are the things we react to in our surroundings, the more
stressors we encounter, the more stressed we feel (Sonnentag & Fritz, 2015). According to Lazarus
(1995); (Vioulac, Aubree, Massy, & Untas, 2016), Stress can be characterized as the inequality
between the individual’s apparent natural requests and their apparent capacity to adapt to these
requests. Blix, Cruise, Mitchell, and Blix (1994) expressed that the results of stress are undesirable
consequences of physical, behavioral and authoritative parts of the employees. The main cause of
the stress at work place is low efficiency, health problems, and mistakes. It can be increased the
turnover ratio in the organization. The anxiety turnover relationship has gotten extensive
consideration and has been experimentally boosted in distinctive connections, specialist sorts, and
societies (Duarte, 2015). The past experience shows the employee leave the organization due to the
work related stress (Firth, Mellor, Moore, & Loquet, 2007) According to the Alavi et al. (2013) Stress
is a negative or positive behaviour of the workers toward the organization as a whole not to definite
job in that organization. In the literature review of organizational commitment John P. Meyer and
Natalie J. Allen (1991) defined the commitment in three different perspectives. Commitment focuses
on the way by which people have an emotional relationship with the organization, Commitment as a
realized cost related with leaving the organization, and as responsibility to continue with the
organization. The research in moral administration connected to the accommodation industry will be
not common, and what does exist has a diverse centre contrasted with the flow study. While the
creators note past research that exhibits slight strands of cooperation with this study, the
friendliness writing audit will be introduced to enlighten the starting stages of moral research in
cordiality (Kim & Brymer, 2011).

Turnover Intention

Turnover intention is defined “as employee’s willingness or attempts to leave the current workplace
voluntarily” (Takase, 2010). Employees who feel themselves imperfect for a job they leave
organization and do not spend long life in that organization. However, workers who feel ethical
behavior by their organization have less intention to leave. So, Organizational climate have its
impact on turnover intention (Wong & Laschinger, 2015). Research study indicates that High control
on work and decision making associated with lower ratio of turnover intention. Whereas,
sovereignty protected to the negative effect of job stress on turnover intention in an organization
(Skagert, Dellve, & Ahlborg, 2012; Van Bogaert et al., 2014). Employee’s turnover create a very big
problem for an organization through loss of fully skilled personnel especially in that case when
demand for such employees is higher, such situation lead to an enduring loss of production.
Different studies have provided sufficient knowledge on employee’s turnover intention (Takase,
2010). According to Guan, Zhou, Ye, Jiang, and Zhou (2015) turnover intention leads to actual
turnover. As per some studies turnover intention play a role of mediator of actual turnover.
According to Chen, Brown, Bowers, and Chang (2015) turnover intention is a symbol of
organizational incompetence. In fact turnover intention is a measure of actual turnover.

There were a lot of research studies exploring previous circumstances of turnover intention, just few
studies have discovered consequences of turnover intention. According to these studies there is an
impact of turnover intention on the actual turnover and organizational commitment. For example,
strength of crucial turnover intention had positive correlation subsequent intention of turnover
which measured in 4 months (Brough & Frame, 2004) and after 2 years (Blau, Ward-Cook, & Edgar,
2006).

Organizational Commitment

“Organizational commitment refers to one's degree of identification and involvement in a particular

organization” (Miller, Allen, Casey, & Johnson, 2000). According to Wagner (2007) organizational
commitment is a most durable predictor for turnover as compare to job satisfaction. According to its
nature researchers have divided commitment into two forms, attitudinal commitment and
behavioral commitment. “Attitudinal commitment focuses on the process by which people come to
think about their relationship with the organization”. From numerous points of view it can be
considered as a mentality in which individuals consider the degree to which their own particular
qualities and objectives are harmonious with those of the organization. Whereas, Behavioral
commitment on other side, identifies with the procedure by which individuals get to be bolted into a
specific organization and how they manage this issue (John P Meyer & Natalie J Allen, 1991).
Study of John P Meyer and Natalie J Allen (1991) Contributes three conception about organizational
commitment, effective commitment, continuous commitment and normative commitment. The
first, which researcher has marked is affective commitment which reflects a desire to keep up
participation in the association that grows to a great extent as the consequence of work encounters
that make feelings of support and individual skill. The second, continues commitment, reflects a
need to remain, and comes about because of acknowledgment of the expenses (e.g., presence of
side bets, lack of choices) connected with taking off. The third, normative commitment, mirrors a
commitment to remain coming about because of disguise of an unwaveringness standard and/or the
receipt of favors that require reimbursement. It was contended that these topics speak to segments
of commitment and that every worker has a commitment profile mirroring his or her level of
longing, need and commitment to remain. At long last, despite the fact that the probability of
leaving the association diminishes as any of the three segments increments in quality, it was
contended that the impacts of the three segments on at work conduct may be entirely diverse.

This bit of exertion additionally gives the clarification the normal conduct of a representative i.e. the
workers having better level of organizational commitment perform more wonderfully and
representatives having great state of mind towards work are to a great degree fulfilled when
compared with representatives who are less disposed towards their work (Imran, Arif, Cheema, &
Azeem, 2014).

Hypothesis Development

For achieving the purpose of the study the following hypotheses are developed. These hypotheses
are used in this study.

H1: Organizational Commitment has relationship toward the Ethical Leadership.

H2: Organizational Commitment has relationship toward the Leadership Effectiveness.

H3: Organizational Commitment has relationship toward the Work-related stress.

H4: Organizational Commitment has relationship toward the Turnover Intention.

The literature provides the evidence about organizational commitment, effective leadership and
leader effectiveness which have positive relationship. Organizational commitment also has
relationship with the work-related stress and turnover intention (Elci et al., 2012).

Theoretical Framework Model

The general structure of study is clarified by an examination model. The system clarifies the
relationship between independent variables and dependent variables. On the premise of literature
review the connected proposed model has been produced.
 4. Results and Summary

Population and Sample Size

The objective of the study was to check the impact of ethical leadership, leadership effectiveness,
work related stress and turnover intention on organizational commitment in the region of Renala
Khurd and Lahore. The nature of the study is descriptive and exploratory. In which the researcher
wants to explore and want to check the relationship between dependent and independent variables.
Quantitative approach is applied as a major method. In particular, the study depends on the
questionnaire directly distributed to the employees i.e., managerial and non-managerial staff of the
public and private sector. Likert scale was adopted for all the questions in the survey, ranging from 1
is “strongly disagree” to 5 is “strongly agreed”. Sample of the study included from the population of
employees who are working in the banking sector in Renala Khurd and Lahore. The questions were
designed according to the mental ability and understandings of the respondents, so that they could
answer the questions promptly and easily. Wording used in instrument was easily understandable
and sweet so, respondents feel relax while filling questionnaire.

Data Collection

There are two methods of data collection, Primary and secondary source of data collection. Data
collection through newspaper, articles and any other published data is called the secondary source
of data. And collection through interviews, questionnaires and focus groups is called the primary
source of data (Bryman & Bell, 2011). Before actual data collection pilot testing was made in order to
check respondent’s behavior, time consumed for data collection and instrument reliability. For pilot
study data were collected from 30 respondents. The number of items included in questionnaire
were 20 and the overall cronbach’s alpha result through pilot testing was 0.856 which indicate to its
acceptability. The pilot study was conducted in the city of Renala Khurd district Okara province
Punjab, Pakistan. After conducting the pilot study, researcher modified items of the questionnaire
and develop a new questionnaire which consisted of 20 items. The targeted banks were United Bank
Limited (UBL), Habib Bank Limited (HBL), Muslim Commercial Bank (MCB) and Bank of Punjab (BOP).
The number of branches of the targeted banks were 20 in the region of Renala Khurd and Lahore. In
this study the number of total distributed questionnaires were 200 and the valid respondents were
177 and the rest were 23 which were invalid because of some discrepancies. There was a mixture of
male and female respondents. The frequency of male respondents was 149 and the frequency of
female respondents was 51. According to the qualification 37 respondents had bachelor qualification
117 respondents had Master degree, and frequency of respondents having other qualifications was
46. According to marital status of respondents in this study, 53 respondents were married and 143
respondents were un-married and the rest of the respondents were unable to describe their marital
status.

Our respondents consisted of managerial and non-managerial staff, in which there were 110 of the
respondents were performing as the designation of managers and the rest were non-managers.
Among total valid 177 respondents 133 belongs to private banks and 87 had their affiliation to public
banks. Cronbach Alpha highlights internal reliability or consistency of a test. So, results show
cronbach’s alpha 0.805 expressive of that there is high consistency among all items of scale used for
study. (Note that a reliability coefficient of. 70 or higher is viewed as "worthy" in most sociology
investigation circumstances.)

Data Analysis

After the data collection, data was analysed by using statistical package of social sciences (SPSS). For
testing the hypotheses researcher has used to correlation and multiple regression techniques. The
correlation test is used to check the relationship. Independent variables, ethical leadership,
leadership effectiveness, turnover intention, and work-related stress have their significant relation
with the dependent variable which is organizational commitment. This correlation analysis
contributes strength of association while unable to show the causal effect of one variable to another
variable (KH, K, & SG, 2003).

Data Analyses and Discussion

The results of the analysis of the study are provided in this section in full details and sequence.
Firstly, the researcher discuss the demographic variable of the study. The details of the respondents,
like gender, qualification, marital status and experience of the respondent is provided in the below
table. There are 149 male respondents included in this study which represents 74.5% of the total
respondents. On the other hand, female students are 51 which represent to 25.5% of the total
respondents.

Demographic Variables

Reliability of the Questionnaire

Reliability describe as the consistency and the stability of the assessment instrument. Whether the
used instrument for data collection is enable to produce stable and consistent results or not? The
Cronbach’s alpha must be greater than.70 (Chung, Pillsbury, Walters, & Hayward, 1998). The
Reliability of the questionnaire is shown in this table. The table showing overall reliability of the
items. No. of items 20 and the overall reliability is .805.
Pearson Correlation Analysis

After that the Pearson correlation analysis applied to check the relationship between variables. This
table shows the Pearson correlation analysis.

There is a highly significance relationship among ethical leadership, leadership effectiveness, work-
related stress and turnover intention. Leadership effectiveness has highly significance relation with
the work-related stress and the turnover intention at 1%. Level of significance and have the positive
relation with the organizational commitment. Organizational commitment have highly significant
relation with the work related stress at 1% level of significance.

Multiple Regression Analysis

“A statistical process to measure connection between dependent variable, and one or more
independent variables is known as regression analysis, Information about fluctuating value of
dependent variable with effect of independent variable is also provided by regression analysis, and it
is also used for the objective of forecasting and for assessment of relationship in middle of
independent and dependent variables”. Multiple regression analysis is applied in this study. The
results are presented in the table below. The models of this study is good fit.

Researchers have regressed organizational commitment a dependent variable on ethical leadership,

leadership effectiveness, work-related stress and turnover intention independent variables.
According to results all variables are significant. All four independent variables affect dependent
variable. As per outcomes one unit change in ethical leadership will bring .543 unit change in
organizational commitment a dependent variable in a positive direction. Results indicate that there
is high significant positive relationship between Leadership Effectiveness and organizational
commitment. There is negative relationship between work related stress and organizational
commitment. Turnover Intentions have high significant negative impact on the organizational
commitment.

Practical Implications

The fundamental focus of this study was to survey the impacts of some worker work related
recognitions and conduct on their turnover expectation which has for the most part destructive
results for associations. Administration is a critical variable to diminish the turnover rate, and anxiety
another element that expands it. Particularly in this study we focused on the impacts of moral
authority and pioneer adequacy impression of the workers on their level of anxiety and the turnover
proposition. Our discoveries affirm that moral initiative and pioneer viability contrarily impacts both
work related anxiety furthermore, turnover aim. This suggests that a sort of leadership which is both
moral and successful in the meantime makes a difference lessen both anxiety and turnover. These
discoveries and suggestions are basically in accordance with the current writing. The extent that as
far as anyone is concerned. Moral initiative set up a moral association. It spreads moral standards to
all the exercises of the association. Moral association acts with benefit driving force, as well as a
social authorization. Thus, moral initiative targets are likewise considered inside the focuses of the
vital authority. Treating reasonably to the general public, all the partners and even the contenders is
the standardized conduct of the moral association. Liberating the key pioneers altogether from the
qualities in their administrative choices is out of inquiry. Key evaluators imagine that by disregarding
the all-inclusive qualities like equity, fairness, genuineness, absence of bias, obligation, admiration,
love, popular government, resilience in their actuates they won't get to be effective. Under such
circumstances, they are in agreeability with the research discoveries. Findings also contributes that
ethical leadership and leadership effectiveness enhances employee’s organizational commitment on
one side, so now it is obligation for the administrations to implement results of this research study
to enhance organizational commitment. Whereas, on the other hand results contribute that if
employee’s feel stress at work place with the intention to leave the organization they contribute low
level organizational commitment.