Effect of ethical leadership and climate on effectiveness

Abstract

ORIENTATION: The increasing prevalence of theft, sabotage and other deviant behaviours in the workplace has disastrous effects for organisations, such as lowered effectiveness, escalated costs and the organisation’s declining reputation. RESEARCH PURPOSE: The purpose of the research was to design and investigate the relationships among perceived leader effectiveness, ethical climate and ethical leadership. A further objective of the investigation was to validate a conceptual model clarifying the structural associations among the latent constructs in the South African corporate domain. MOTIVATION FOR THE STUDY: A successful leader is both an ethical and an effective leader. An organisation’s leadership is seen as the most critical element in establishing and maintaining an ethical climate in organisations. RESEARCH DESIGN, APPROACH AND METHOD: A convenient and multi-cultural sample comprised of 224 employees from various organisations in South Africa. The structure and content of the variables were analysed through confirmatory factor analysis (CFA), beside item analysis. MAIN FINDINGS: Satisfactory reliability was found for all the measurement scales. The results of CFA demonstrated acceptable fit with the data for the refined measurement and structural models. The results of structural equation modelling (SEM) indicated positive relationships among ethical leadership, ethical climate and leader effectiveness. PRACTICAL IMPLICATIONS: Organisational leaders should take full responsibility for cultivating ethics through ethical leader behaviour and an ethical climate. By reinforcing these aspects, perceived leader effectiveness can be advanced, which will ultimately decrease corruption and other forms of counterproductive behaviour in South African organisations. CONTRIBUTION: The study provides further theoretical and empirical evidence that leadership effectiveness can be realised through instilling an ethical organisational climate in which ethical leadership is exhibited and encouraged.