1.1 Background to the Study
Leadership is thought to be of a significant element that has an indisputable impact on employee performance in any kind of organization (Ogbonna and Harris, 2000). However how employees perform under various type of leadership has been a bone of contention amongst researchers and scholar alike (Gadot, 2006). Studies have revealed that employee performance increases under an extraverted leadership when employees are passive, and if employees are proactive result will be contrary (Grant et al., 2011). Wang et al. (2005) mentioned that leadership has an enormous impact on the performance of employees.
Much far better improvement of employee performance is a clarion call for companies in the midst of continuous rising obstacles as a result of scandals and unethical habits. According to Alam et al. (2010), public leadership should guide decisions and actions for sustainable quality services from public organizations. Dorasamy (2010) insisted that the reliability of public organizations can quickly get eroded because of lack of leadership sticking to appropriate standards. Judge and Piccolo (2004) attested such disregard occurs since many leaders do not subject their duties to ethical justification. Limited studies have been carried out on the effects of ethical and unethical leadership on employee performance (Kalshoven et al., 2011) however some researchers (Brown et al., 2005) have tried to check out the idea of ethical leadership and its effect on employee conduct. Typically, empirical studies in management mostly disregard ethical leadership but employee performance is significantly affected by either the ethical or unethical habits of those that lead them.
Aside from situations of unethical practices in developed countries, evidences have also shown in developing nations. For example, Nigeria, among the developing nations in the sub-Sahara Africa has experienced increase in the rate of corporate failures. There were reported situations of corporate failure in Nigeria which were credited to unethical practices of corporate leaders. The Nigerian financial sector was at the halt of collapse in 1997, twenty-six commercial banks failed because of financial abnormalities. In 2006, Cadbury Nigeria Plc, among the prominent Food and Beverages companies in Nigeria was affected by financial scandal. Cadbury Nigeria plc financial declaration and accounts was falsified at the detriment of all stakeholders. Likewise in August 2011, three Nigerian financial institutions specifically, Afribank Plc, Spring Bank Plc and Bank PHB failed as a result of financial irregularities of their corporate managers. These financial institutions were amongst the eight banks put under Central Bank of Nigeria (CBN) management in August 2009 following the clean-up of the banking industry.
Ethical behavior consists of essential concepts such as sincerity, integrity, fairness, and concern for others. This is a scenario where by leaders engage in behavior that benefits others and refrains from behavior that can trigger harm to others (Toor & Ofori, 2009). Usually, corporate leaders see their work as separate from their lives. Ethics should certainly start at the top. Leaders cannot shrink from their responsibilities to set a moral example for their followers; formal ethical codes and ethic training have little chance of success unless the ethical activities and behavior of top management are constant with what they teach. Leaders are the key to determine the outcome of organisational goals and to set the tone for employee behavior which might consist of promotion, appraisal and techniques (Brown & Mitchell, 2010). Organisational leaders ought to motivate employees by leading by examples; they have the obligation to define organizational standards and values, live up to expectations and motivate their followers to adopt same.
Negative instances of immoral behavior by corporate executives are like a cancer on ethical behavior within organisations (Fisher & Lovell, 2003). If leaders are regarded to be callous and inconsiderate in their business transactions with others, employees are most likely to get the message as well (Crane & Matten, 2004). Employees wish to be connected with managers that are truthful, credible, considerate, and reasonable (Kouzes & Posner, 2007 pointed out in Collins,2010). Organisations can accomplish better employee attraction and retention when employees have the chance to work for truly responsible and ethical employers (Bower, 2003 pointed out in Upadhyay & Singh, 2010; Collins, 2011). Failing to be an excellent leader can bring about increased employee turnover and reduce the possibility of attracting new employees. This can likewise increase the costs associated with employee turnover, enhance employee supervision, reduces job satisfaction and reduce the degree of employee efficiency.
Certainly, corporate organisations are characterized by bribery, corruption, facilitation payments and discrimination concerns to name a few. These types of unethical practices if not manage properly will most likely have spillover result on the efficiency of employees. It is therefore, requires an urgent attention to manage ethical issues around the world. This study examined ethical leadership and employee performance of commercial banks in Rivers State.
1.2 Statement of the Study
In the present-day business setting, characterized by a faster communication system, leaders of a company cannot afford to take part in unethical practices due to its detrimental effect it can have on a company but also the negative picture that it will paint and the consequent effect on the value of the company. A crucial issue in lots of companies is practicing ethical leadership from the top management is not on its impact on the firm's value however also on its employees since unethical leadership may have an unfavorable impact on employee job satisfaction and performance. For that reason, an association's authority is considered as a main factor that has an unquestionable effect on representative implementation in any kind of association (Ogbonna and Harris, 2000). All the same, how representatives perform under different kinds of authority has been a state of dispute amongst researchers and scholars alike (Gadot, 2006). Studies on have revealed that representative execution increments under an extraverted administration when employees are uninvolved and if representatives are proactive result will be inverse (Grant et al., 2011).
1.3 Objectives of the Study
The main objective of this study is to examine the ethical leadership and employee performance of commercial banks in Rivers State. However, the specific objectives are:
i) To establish the relationship between fairness and employee performance in commercial banks in Rivers State.
ii) To understand the impact of power-sharing on employee performance in commercial banks in Rivers State.
iii) To examine the effect of role classification on employee performance in commercial banks in Rivers State.
1.4 Research Questions
The following statements shall be considered to be the research questions for this study:
i) What is the relationship between fairness and employee performance in commercial banks in Rivers State?
ii) Does power-sharing have any impact on employee performance in commercial banks in Rivers State?
iii) What is the effect of role classification on employee performance in commercial banks in Rivers State?
1.5 Research Hypotheses
The following statements are the research hypotheses for this study:
i) There is a significant relationship between fairness and employee performance in commercial banks in Rivers State
ii) There is a significant correlation between power-sharing and employee performance in commercial banks in Rivers State
iii) There is no significant effect of role classification on employee performance in commercial banks in Rivers State
1.6 Significance of the Study
The study hopes to be of significance to the leadership and management of financial institutions in Nigeria as the recommendations from the study if adopted will be useful in promoting ethical leadership in enhancing employee performance. The study will also be of significance to leadership and management of financial institutions in Nigeria as it will inform them for the knowledge and understanding of ethical leadership.
Also, it will be of significance to members to corporate organisations as the study will contribute to the promotion of organisational performance by adopting ethical practice in the organisation. The study will be of importance to retirees as recommendations of the study if adopted will lead to increased performance and thus increased benefits for beneficiaries and stakeholders.
Lastly, the study hopes to be of significance to scholars and researchers as it will contribute to the body of knowledge on ethical leadership and its influence of employee performance. The study will also be of significance to future researchers as it will suggest areas of further research on ethical leadership in Nigerian organisations.
1.7 Scope of the Study
The study focuses on ethical leadership and employee performance of commercial banks in Rivers State. The total population is 100 staff members of eight commercial banks in Port Harcourt, Rivers State, Nigeria. The banks include; Access Bank Plc, Fidelity Bank Plc, First City Monument Bank Limited, First Bank of Nigeria Limited, Guaranty Trust Holding Company Plc, Union Bank of Nigeria Plc, United Bank for Africa Plc, and Zenith Bank Plc. The study seeks to gather information on the perceptions on ethical leadership in the organisations.