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Measuring and Differentiating Perceptions of Supervisor and Top Leader Ethics

Janet L. Kottke • Kathie L. Pelletier

Received: 4 October 2011 / Accepted: 26 March 2012 / Published online: 7 April 2012

� Springer Science+Business Media B.V. 2012

Abstract We report the results of two studies that eval-

uated the perceptions of supervisor and top leader ethics. In

our first study, we re-analyzed data from Pelletier and

Bligh (J Bus Ethics 67:359–374, 2006) and found that the

Perceptions of Ethical Leadership Scale from that study

could be used to differentiate perceptions of supervisor and

top leader ethics. In a second study with a different sample,

we examined the relationships between (1) individual

employees’ perceptions of top managers’ and immediate

supervisors’ ethical tendencies, and (2) organizational cli-

mate, confidence in top leadership direction, commitment,

and citizenship behavior. Results indicated that employee

perceptions of top managers’ and supervisors’ ethics were

significantly related to climate, top leadership direction,

organizational commitment and the OCB dimension, civic

virtue.

Keywords Immediate supervisor ethics � Top leader ethics � Organizational culture � Ethics measurement

The corporate scandals of Enron, Tyco, Bank of America,

WorldCom, and Merck during the past decade have led to

an outpouring of popular press articles elaborating on the

lack of regulatory oversight, complex and deceptive

accounting schemes, and greed of these organizations’ top

leaders (McLean and Elkind 2004; Patsuris 2002; Revell

and Burke 2003; Toffler and Reingold 2003). Under-

standing these scandals requires scrutinizing organizational

leaders, their ethical sensibilities and the climates they

fostered; in fact, the predominant focus of academic liter-

ature has been on top leaders’ characters, behaviors, and

formative experiences (e.g., Brown and Treviño 2006).

Without a doubt, top leaders are important for setting the

moral tone for an organization (cf., Sims and Brinkmann

2002; Viswesvaran et al. 1998; Zahra et al. 2007). As

media reports indicate (e.g., Revell and Burke 2003),

unethical top leaders can have tremendous impact on the

survival of a company, but small, seemingly insignificant

acts of dishonesty performed by immediate supervisors

may convey an even more insidious message to the orga-

nization’s employees. Supervisors who engage in dirty

practices confirm local norms encouraging unethical

behavior among immediate reports and most likely for

other supervisors of the same rank. Yet, little research has

assessed the possibility of differing effects of ethical

behavior displayed at top levels of an organization versus

that displayed by an immediate supervisor (Davis and

Rothstein 2006; Mize et al. 2000; Wiley 1998). We surmise

that ethical models at the lower ranks could be as important

as those of the top leadership. Indeed, the effects of

immediate supervisors on employees may very well be

more pronounced than top leadership behavior, as imme-

diate supervisors typically control an employee’s perfor-

mance evaluations, promotions, and pay. If that direct

supervisor is seen as ethical, we would anticipate favorable

employee attitudes toward that supervisor (Dirks and Ferrin

2002) and a greater likelihood that the supervisor could

influence the direct report’s ethical behavior.

J. L. Kottke (&) Department of Psychology, California State University, San

Bernardino, 5500 University Parkway, San Bernardino, CA

92407, USA

e-mail: jkottke@csusb.edu

K. L. Pelletier

Department of Management, California State University, San

Bernardino, 5500 University Parkway, San Bernardino, CA

92407, USA

e-mail: jkpelleti@csusb.edu

123

J Bus Ethics (2013) 113:415–428

DOI 10.1007/s10551-012-1312-8

Why Differentiate Top Leadership from Immediate

Supervision?

For the majority of organizational employees, their

immediate supervisor is the primary representation of the

organization, providing daily direction, feedback, evalua-

tion, and information about the job, work group and

organization (Greller and Herold 1975; Therkelsen and

Fiebich 2003). Further, research indicates that differences

emerge in satisfaction with, and trust in, immediate

supervision and top executives (Ellis and Shockley-Zala-

bak 2001). We might expect employees would differen-

tially evaluate their top leaders’ and supervisors’ ethical

tendencies. These differences may, in turn, be reflected in

organizationally relevant individual outcomes such as

organizational commitment and organizational citizenship.

Finally, these differentiated perceptions are likely to have

important implications for how ethical lapses may be pre-

vented. For example, Nyberg (2008) has suggested that at

the lower levels of the organization, ethical dilemmas are

particular to the situation and abstract, universal ethical

codes may, in actuality, impede good ethical decision-

making at this level. Quite possibly, the rank and file may

hold their top leaders to a universal code of ethics but

recognize that their own supervisors have unique, ambig-

uous situations with which to cope. By extension, the

training and education of ethical awareness, knowledge,

and decision-making may be different fundamentally for

lower level managers relative to top leadership.

Measuring the Perceptions of Ethics of Top Leaders

and Immediate Supervisors

There are a couple of notable scales that have been developed

to assess leadership ethics and integrity. Craig and Gustafson

(1998) developed the Perceived Leader Integrity Scale

(PLIS), a 40-item 1

survey that asks respondents to rate a

leader’s behaviors (e.g., ‘‘would lie to me’’). In a two-study

paper, Craig and Gustafson demonstrated that the PLIS was

psychometrically sound, unidimensional, and displayed

convergent and discriminant validity. Parry and Proctor-

Thomson (2001) found that ratings of transformational

leadership behaviors were moderately correlated (rs ranged

from 0.34 to 0.46) with the PLIS scores.

More recently, Brown et al. (2005) developed and val-

idated the Ethical Leadership Scale (ELS), using a social

learning framework. The authors proposed as a foundation

that ethical leaders influence followers to behave ethically,

which at its base means that followers must attend to,

accept, and role model leadership behavior. Brown et al.

constructed a 10-item scale that they validated in seven

interlocking studies. These studies indicated that the ELS

was unidimensional, correlated with aspects of leadership

influence, honesty, fairness, and was predictive of leader

effectiveness. In their discussion, Brown et al. asked if

‘‘distance from the leader would influence employees’

ratings of ethical leadership’’ (p. 131). That question is the

one we tackle in this article.

With two different samples, we will illustrate that per-

ceptions of immediate supervisor ethics can be differenti-

ated from perceptions of top leadership ethics, and that

such differentiation has implications for organizations. Our

focal instrument will be the Perceptions of Ethical Lead-

ership Scale (PELS) that was developed and used in a

previously published study (Pelletier and Bligh 2006) to

assess perceptions of both top leader and immediate

supervisor ethics. We will explain the PELS in more detail

as we describe the first study.

Purpose of This Article

We present data from two studies. Our goal with the first

data set was to provide preliminary evidence that PELS

could be differentiated into measurable perceptions of top

leadership ethics and perceptions of the ethics of the

immediate supervisor. The second study provides addi-

tional evidence for such a differentiation at the level of the

individual follower.

Study (Sample) 1

For this study, we re-analyze the data 2

of Pelletier and Bligh

(2006), and examine the two aspects of the PELS proposed

above, specifically top leadership and immediate supervisor

ethics. Because the focus of their study was on testing a model

of ethics program effectiveness rather than scale development

or differentiating the perceived ethics of immediate supervisor

and top leadership, the PELS was developed in situ to assess

employee perceptions in an agency that had suffered from

several public scandals (see Pelletier and Kottke 2009, for a

case analysis of the agency). Thus, no a priori definition was

provided for PELS. An examination of the PELS items

strongly suggests that the definition utilized to create the items

was based on a leader’s ability to foster an ethical culture by

articulating organizational values, facilitating the moral

1 A shorter, eight-item form is also available. See http://www.sbcraig.

com/plis/short.htm.

2 Data were provided by the first author, Dr. Kathie Pelletier,

‘Rebounding from Corruption: Perceptions of Ethics Program Effec-

tiveness in a Public Sector Organization’, Journal of Business Ethics 67(4), 359–374.

416 J. L. Kottke, K. L. Pelletier

123

development of followers through the implementation of

morally appropriate influence strategies and tactics, support-

ing employees when faced with ethical dilemmas, confronting

ethical misconduct in a timely manner, and making ethics a

top priority in the organization’s functions. Ethical leadership

was considered as a potential precondition for ethics program

effectiveness, since ethics programs are likely to be perceived

as effective when leaders encourage ethical dialog, create an

environment of trust, and provide organizational resources to

ensure ethical decisions are made. When an organization is

seeking to re-establish social legitimacy as a result of ethical

misconduct, the role of leadership is crucial for enhancing an

ethical culture. Within this context, Pelletier and Bligh (2006)

argued that ethical leadership is a critical complement to

ethics codes, decision-making processes, and organizational

resources in crafting an ethical organizational culture. As

measured in their study, ethical leadership was highly corre-

lated with those variables (i.e., ethical decision-making,

informal norms, perceived ethics program effectiveness).

Method

Participants

One thousand employees were randomly selected from a

total of 18,000 who worked for a southern California

county government agency. Of the 1,000 surveys distrib-

uted, 75 were returned as undeliverable as addressed or the

employee had left the agency. Of the 925 surveys deliv-

ered, 418 employees responded (45.2 % response rate).

This response rate is higher than average response rates of

20–30 % that have been reported in other survey studies

(cf., Griffis et al. 2003; Hays and Kearney 2001). The

majority of the respondents (62.2 %) were female. Partic-

ipants averaged 45 years of age (SD = 10.1) and had been

employed with the agency from less than 1 month to

40 years (M = 9.5 years, SD = 8.5).

Measures

For this article, we are primarily focused on the 10 items

that composed the PELS developed for the Pelletier and

Bligh (2006) study. The PELS includes a blend of items,

some addressing top leadership, others the immediate

supervisor. The 10 items constituting the PELS were con-

tained within a 37-item Perceptions of Ethical Climate

(PEC) survey constructed to assess employees’ perceptions

of the effectiveness of the agency’s ethics program as it

related to informal and formal norms, ethical decision-

making, and the employees’ awareness of existing ethical

codes. We reference the other scales presented in Pelletier

and Bligh, as we will conduct a re-analysis of those data,

ultimately separating the original PELS items into Top

Leadership and Immediate Supervisor subscales, and cor-

relating those subscale scores with the other variables

included in the original study. The other scales were the

Ethics Code Awareness Scale (6 items, a = 0.82), the Perceptions of Ethical Decision-Making Processes (2

items, a = 0.55), three subscales of the Perceptions of Ethical Resources Scale (time, 3 items, a = 0.65; organi- zational financial resources, 4 items, a = 0.90, and ethics information, 3 items, a = 0.83), Perceptions of Informal Ethical Norms (5 items, a = 0.82), and Perceptions of Ethics Program Effectiveness (4 items, a = 0.79). All items were presented on a 7-point Likert scale

(1 = strongly disagree, 7 = strongly agree) with higher

values representing higher levels of agreement.

Procedure

Using a random seed algorithm, the payroll department of

the agency generated a list of 1,000 names to whom the

online survey link or paper surveys were distributed.

Because not all employees had intranet access, about a

third of the employees received a paper copy of the survey

via interoffice mail and were instructed to mail the survey

back to the lead researcher via confidential interoffice

mail. 3

Results

Analytic Strategy

Our primary interest was whether the PELS could be

segregated meaningfully into two dimensions, so our first

analysis was a factor analysis of those items. If the scale

factored as expected, the next step was to determine if the

subscales would correlate differentially with other study

variables that represented concepts corresponding more

closely to the top leadership of the agency versus those that

were illustrative of immediate supervisor influence.

Data Cleaning

Prior to conducting the factor analysis, item data for the

PELS were screened for univariate and multivariate outli-

ers. No univariate outliers were found. Using a v2 critical

3 Of the 418 surveys returned, 119 were paper copies, 299 were

online responses. As there were two modes of survey administration,

t tests were conducted to determine if there was a significant difference between mode of survey administration for the PELS

subscale scores. There was a difference (t = 3.17, df = 407, p = 0.002) for the immediate supervisor subscale; those who had returned a paper survey had a lower score (M = 4.68, SD = 1.61) than those who had completed the survey online (M = 5.21, SD = 1.47).

Leader Ethics 417

123

value of 29.6 (p \ 0.001), six multivariate outliers were detected; these cases were excluded from the subsequent

factor and reliability analyses, resulting in n = 412. In

anticipation of the follow-up correlation analysis, the other

scales used in the Pelletier and Bligh study were also

examined for univariate outliers. One outlier that exceeded

the recommended 3.29 z (Tabachnick and Fidell 2001) was

found for the Perceptions of Decision-Making Processes

Scale and was excluded from subsequent analyses.

Factor Analysis

A principal axis factor analysis with an oblique (SPSS

oblimin) rotation was conducted. The items representing

top leadership and immediate supervisor factored neatly

into two factors with two distinct eigenvalues (EV) greater

than 1 (EV1 = 5.5 and EV2 = 1.8). Factor loadings ran-

ged from |0.67 to 0.88|. See Table 1 for the text of the

items, factor loadings, item means, and standard devia-

tions. In addition, reliability analyses were conducted on

the two factors. as for the top leadership and immediate supervisor ethics subscales were 0.93 and 0.88, respec-

tively. Table 1 also includes the item–total correlations for

the two subscales. These values range from 0.67 to 0.83.

Correlational Analysis of Subscales with Original

Perceptions of Ethical Climate Scales

Subscale scores were computed and correlated with the

seven scales originally used in Pelletier and Bligh. To

determine if the strength of the correlations was different

by level of leadership ethics, the correlations of top leader

and immediate supervisor ethics with the seven PEC

subscales were compared (Steiger 1980). These correla-

tions with statistically significant differences are shown in

Table 2. The information and financial subscales of the

ethical resources scale, informal ethical norms scale, and

ethics program effectiveness scale scores were all more

highly correlated with the perceptions of top leadership

ethics than with immediate supervisor ethics. The percep-

tions of ethical decision-making processes scale was more

highly correlated with the perceptions of immediate

supervisor ethics than with top leadership ethics.

Discussion

The items that constitute the PELS can be categorized

statistically and meaningfully into perceptions of the ethics

of top leadership and immediate supervisor. The follow-up

reliability analysis indicated that the two sets of items

exceeded a commonly cited minimum for a (0.70, Nun- nally and Bernstein 1994), suggesting that the PELS sub-

scales can be used to assess two levels of organizational

ethics.

The pattern of correlations with measures of the PEC

(Pelletier and Bligh 2006) was consistent with the mea-

surements of top leadership and immediate supervisor

ethics. Since it is the top leaders who typically embed

culture (Schein 1990), it is not surprising that employees

would associate the formal and informal norms and values

of an organization with the upper echelon. Although

immediate supervisors are likely to have an influence on

the subcultures of the organization, employees recognize

that it is the top leaders who create the ‘‘climate’’ and

determine ethics policies. With regard to informational

resources, immediate supervisors typically do not have the

Table 1 Means, standard deviations, factor loadings, and item–total correlations for data from Pelletier and Bligh (2006)

Item Loading Item–total

correlation

Mean SD

Top leadership

Moral concerns are given top priority by the organization’s top leaders 0.88 0.83 3.39 1.66

The organization’s top leadership routinely strives to make decisions that are ethical 0.88 0.80 3.92 1.53

Top leadership places equal value on productivity, quality, and ethical practice 0.81 0.78 3.64 1.76

Top leadership works quickly to resolve ethical issues 0.81 0.82 3.80 1.64

The top leadership of this organization is concerned with ethical practice 0.81 0.78 4.09 1.86

Top leadership provides employees with ethical guidance when it is needed 0.76 0.74 4.16 1.55

Immediate supervisor

My immediate supervisor sets a good example of ethical behavior 0.91 0.79 5.15 1.83

I feel comfortable consulting my immediate supervisor when I have to make a tough ethical decision 0.83 0.76 5.18 1.91

If I reported one of my fellow employees for an ethics violation, my immediate supervisor would

support me

0.75 0.74 4.81 1.70

My immediate supervisor looks the other way when employees make unethical decisions (reverse) -0.67 0.67 5.11 1.65

Seven-point Likert scale. (Reverse) indicates a reverse scored item. 67 % shared variance. as for top leader = 0.93; immediate supervi- sor = 0.88. Reversed item score used in reliability analysis and presented as item mean

418 J. L. Kottke, K. L. Pelletier

123

decision-making latitude to develop unit policies; they are

responsible for the enforcement of these policies. The

newly instituted ethics resource office was the entity that

provided information such as the ethics code, procedures

for filing an ethics complaint, ethics training calendar, and

other resources designed to aid an employee when faced

with an ethical dilemma. Since this office was instituted at

the direction of the governing board and top leaders of the

agency, rather than the middle management team,

employees who perceived the ethics program to be effec-

tive also had more favorable ratings of the top leaders.

The employees in this organization were also likely to

understand with whom financial decisions resided. In a

government agency, top leaders and government officials

determine how the money will be spent. Immediate

supervisors work within their respective budgets, but only

top leaders had access to the general fund; consequently,

the top leaders had control of discretionary funds. At the

time of the corruption scandal, unethical decisions based on

greed were made by the top leaders, and these decisions

were well publicized (Pelletier and Kottke 2009).

Employees were aware of the leaders who were implicated

in the scandal, and why they were being implicated. An

example of an item that assessed perceptions of financial

decision-making was ‘‘This organization is willing to do

the right thing even if it costs more money.’’ It makes sense

then that if employees felt the top leaders were willing to

sacrifice money to ensure ethical conduct, they would

perceive those leaders to be modeling the behavior they

espoused, and adhering to the values they embedded.

Conversely, when employees realized that decisions were

being made based on monetary and personal gain by the

top leadership, they were less likely to perceive the ethics

program as being effective.

Perceptions of sound decision-making processes were

related more to immediate supervision than to top leaders.

For example, the decision-making scale included an item

that addressed consultation with an immediate supervisor

(i.e., ‘‘When faced with making a decision that has an

ethical implication, I feel I can discuss the matter with my

immediate supervisor’’), which clearly could be expected

to relate to an employee’s perceptions of his or her

immediate supervisor’s ethical standards or the supervi-

sor’s positive influence on the work unit’s subculture. In

contrast, the four other scales within the PEC—informa-

tion, financial resources, informal norms, and ethics pro-

gram effectiveness—flowed from the top leadership of the

organization.

Study (Sample) 2

The re-analysis of the Pelletier and Bligh (2006) data

revealed that the PELS could be used to gauge employee

perceptions of their top leadership as well as their imme-

diate supervisor ethics. We employed a different sample of

employees in our second study, and sought additional

evidence that the perceptions of ethical behavior would be

differentiated for top leadership and immediate supervi-

sors. To that end, we identified several variables that we

hypothesized would be related differentially to PELS at the

top level of the organization, as well as, perceptions of an

immediate supervisor’s ethics.

Expected Corollaries of Ethical Leadership

Organizational Climate

Among the most extensively studied variables, employee

perceptions of work climates has been found to be related

to individual level work attitudes, motivation, and perfor-

mance (Parker et al. 2003). Considerable journal space has

been devoted to the proper definition of climate, with no

one agreed upon designation or label (e.g., psychological

Table 2 Correlations of Pelletier and Bligh perceptions of ethical climate scales with top leader and immediate supervisor PELS subscales

Variable Mean SD a Top leader Immed. super.

Ethics code awareness 4.80 1.21 0.82 0.41** 0.33**

Decision-making processes 5.21 1.32 0.55 0.39** a

0.76** a

Information 4.01 1.16 0.83 0.45** a

0.33** a

Time 4.80 1.21 0.65 0.27** 0.27**

Financial resources 3.56 1.37 0.90 0.81** a

0.37** a

Informal norms 3.71 1.27 0.82 0.82** a

0.57** a

Ethics program effectiveness 4.06 0.97 0.79 0.67** a

0.29** a

Top leader ethics 3.83 1.43 0.93

Immediate super ethics 5.07 1.52 0.88 0.49**

a Top leader and immediate supervisor ethics subscale correlations differ significantly, p \ 0.05

** p \ 0.01

Leader Ethics 419

123

climate, work climate, organizational climate), although

there has been coalescence around the climate concept

representing an individual’s subjective description of an

organization’s structure, procedures, and polices taken as

an aggregate impression (James et al. 1978). We propose

that this aggregate description reflects an individual’s

psychological appraisal of the organization as interpreted

through that individual’s needs and values (cf., Schein

1990). Among the organizational domains that are likely to

be interpreted through the lens of the individual are aspects

of its leadership (e.g., support, strategic direction; Jones

and James 1979). A meta-analysis (Parker et al. 2003)

indicated that leader behaviors were significantly related to

perceptions of organizational climate. Similarly, we would

expect that employees’ perceptions of top leaders’ integrity

could have a critical impact on the climate of the organi-

zation. Therefore, we anticipated a positive relationship

between organizational climate and perceptions of leader

ethics. Further, because climate is a variable defining the

organization, of which top leaders may be more strongly

associated, we expected the correlations between the per-

ceived ethics of top leaders to be more highly correlated

with climate than the perceived ethics of immediate

supervisors.

Top Leadership Direction

The top leadership of an organization sets the model for

employees. Follower confidence in top leadership has sig-

nificant implications for organizational success. Employees

who perceive that their top echelon is competently guiding

the organization are more likely to offer innovative ideas

(Clegg et al. 2002), be more committed to the organization

(Mathieu and Zajac 1990), and less likely to quit (Niehoff

et al. 1990). For our purpose, we would anticipate that

employee confidence in their leadership would be extre-

mely relevant to their perceptions of their top leadership’s

ethics. More directly, we hypothesized that perceptions of

top leadership ethics would correlate strongly with confi-

dence in top leadership. The relationship of immediate

supervisory ethics to confidence in top leadership, we

predict to be modest.

Organizational Commitment

Organizational commitment is related to a host of psy-

chological work variables. Relative to non-committed

employees, committed employees are more satisfied with

and involved in their jobs, are more motivated, and are less

likely to think of quitting or being absent from work

(Mathieu and Zajac 1990). When the ethical values of top

managers conflict with employees’ values, employee

commitment suffers and turnover intentions increase

(Schwepker 1999; Sims and Kroeck 1994). The presence of

ethical leaders would be expected to encourage an atmo-

sphere in which employees feel loyal to the organization.

Because organizational commitment is measured as an

attachment to the organization as a whole, we would

expect top leader ethics would have a stronger relationship

to organizational commitment than the perceived ethical

values of the immediate supervisor. We hypothesized that

employees who see their top leaders and immediate

supervisors as ethical would be more likely to identify with

and feel attached to their organizations. One could argue

that top leaders through their creation of organizational

culture, lay the foundation for employee commitment; yet,

from a social exchange perspective, the immediate super-

visor is likely to have a similar impact on an employee’s

attachment to the organization, as the supervisor typically

has considerable leverage on the employee’s immediate

work environment. Therefore, we do not predict a signifi-

cant difference in the relationships between commitment

and perceptions of top leader ethics versus perceptions of

immediate supervisory ethics.

Commitment can further be categorized into affective,

continuance, and normative (Meyer and Allen 1991).

Affective commitment encompasses the emotional attach-

ment and identification with the organization. Continuance

commitment is based on the recognition that leaving the

organization has costs. Normative continuance refers to a

sense of obligation or moral expectation to remain with the

organization. Affective and normative commitment have

similar antecedents, such as job challenge, role clarity and

management receptiveness. In contrast, continuance com-

mitment is most strongly related to organizational tenure

(Allen and Meyer 1990). Consequently, we expected

affective and normative commitment would relate posi-

tively to leader ethics, but continuance commitment would

not be affected by leader ethics. As before, we do not

expect different relationships by level (top leader versus

immediate supervisor).

Organizational Citizenship Behavior

Organ (1988) originally defined Organizational Citizenship

Behavior (OCB) as ‘‘individual behavior that is discre-

tionary, not directly or explicitly recognized by the formal

reward system and that in the aggregate promotes the

effective functioning of the organization’’ (p. 4). Since

Organ first introduced the concept, considerable debate has

ensued about the definitional nature of OCBs. In his later

work, Organ redefined the construct as activities that

contribute ‘‘to the maintenance and enhancement of the

social and psychological context that supports task per-

formance’’ (Organ 1997, p. 91). Though the dimensionality

of OCB has been debated over the past 20 years (cf.,

420 J. L. Kottke, K. L. Pelletier

123

LePine et al. 2002), the five categories that Organ origi-

nally proposed have endured. These five types of OCB are

altruism, conscientiousness, sportsmanship, courtesy, and

civic virtue. The first, altruism, represents behaviors that

have the effect of helping a specific other person with an

organizationally relevant task or problem. Conscientious-

ness involves employee behaviors that go beyond the

minimum role requirements of the organization, in the

areas of attendance, conserving resources, and obeying

rules and regulations. The third, sportsmanship, is the

willingness of the employee to tolerate less than ideal

circumstances without complaining. Courtesy includes

behaviors aimed at preventing work-related disputes.

Finally, civic virtue is characterized by behaviors by an

individual that indicates he or she participates in, is

involved in, or is concerned about the life of the company

(Podsakoff et al. 1990).

Aligned with the tenets of social exchange theory (Blau

1964), followers of ethical leaders would want to support

their leaders because of the expectation that they—the

followers—would be supported in turn. If employees per-

ceive top leaders, as well as immediate supervisors, as

being ethical, we would expect them to be willing to ‘‘step

up’’ to fill the ‘‘white space’’ of the organizational chart.

Because this aspect of social exchange would be more

salient at the local level (Ilies et al. 2007; Settoon et al.

1996), we would expect the immediate supervisors’ ethical

stance to have more impact than top leaders on those

behaviors. Therefore, we expected OCB and its subdi-

mensions would be moderately (and positively) correlated

with leader ethics, with the relationship stronger for

immediate supervisory ethics.

Method

Sample

Participants were recruited from a variety of organizations

including an advertising agency, a collections bureau, a

medical services corporation, mortgage companies, and

one mid-sized research institution. Some participants were

recruited through a ‘‘snowball’’ method that utilized stu-

dents from upper division psychology classes at a regional

university in southern California; students were asked to

distribute one or two paper surveys to working adults they

knew, who, in turn, would distribute a survey to a cow-

orker. 4

Two forms of the survey were administered: an

online version and a paper and pencil version. 5

A total of 371 surveys were returned to the researchers

or submitted online (online n = 170; paper n = 201). The

majority of participants were women (69 %). There was

considerable variation regarding participants’ tenure,

department and company size, and type of industry. The

modal values for length of employment were 1–3 years

with the organization (35 %), working for a company

smaller than 100 employees (22 %) and in a department of

10–24 employees (37 %). The distribution of participants’

tenure, department and company size, and type of industry

are shown in Table 3.

Because organizational climate was a key variable, and

we believed employees require a history with a given

organization to become fully cognizant of that climate,

only data from those who had been working in their

organizations for at least 1 year were used in the statistical

analyses. The sample contained 301 participants after this

criterion was applied.

Measures

Perceptions of Ethical Leadership

The focal measure for this study, the PELS, contains 10

items, six that address top leadership ethics and four that

compose the immediate supervisor ethics subscale.

Organizational Climate

The Organizational Climate Scale (Lawler et al. 1974) is a

15-item measure designed to capture organizational cli-

mate as perceived by those who work within the organi-

zation. Respondents were instructed to use their

organization (i.e., not work group or department) as the

frame of reference. Each item consists of two bipolar

adjectives anchoring a 7-point Likert scale. We selected

this measure as its format (modified semantic differential)

was expected to elicit a potent representation of the par-

ticipant’s affectation toward his or her organization’s

overall climate. a was 0.80 for this study.

Top Leadership Direction

Four items from the Top Leadership Direction Scale

(TLDS; Kottke et al. in press) were included. These items

assess follower confidence in the direction provided by top

leadership and perceived instrumentality of that direction.

An example item is ‘‘The leadership inspires confidence in

4 Because of the means of recruitment, response rate was not possible

to calculate. 5

For sample 2, v2 and Kruskal–Wallis tests revealed there were differences by survey administration method for several demographic

Footnote 5 continued

characteristics. Respondents to the paper survey were more likely to

be women, had shorter tenure, worked in smaller departments and

companies, and were more likely to be in wholesale/retail and service

industries than respondents from the web-based survey.

Leader Ethics 421

123

the future success of the organization.’’ a for the scale was 0.86.

Organizational Commitment

The Organization Commitment Scale (Meyer and Allen

1997) consists of 24 items with three subscales measuring

affective, continuance, and normative commitment. as for

this study were 0.83 for affective, 0.79 for continuance, and

0.84 for normative.

Organizational Citizenship Behavior Scale

The Podsakoff et al. (1990) OCB Scale is composed of 19

items. 6

The scale measures the degree to which employees

perform behaviors that contribute to the welfare of the

organization, but are not included in the duties and

responsibilities of their position. The five types of OCBs

articulated by Organ (1988) are measured. as for this study: altruism, 0.79, conscientiousness, 0.74, sportsmanship,

0.64, courtesy, 0.44, and civic virtue, 0.71.

Results

Analytic Strategy

First, the proposed two-factor structure of the PELS was

examined with a confirmatory factor analysis (CFA); this

structure was compared to a single factor structure, the

rationale being that the scale originally was used to create a

single scale score. Subsequently, subscale scores were

calculated and correlated with other measures to establish

convergent validity for the proposed differentiation of

perceptions of ethics by level of supervision.

Data Screening

Prior to conducting the factor analysis, item data for the

PELS were screened for univariate and multivariate outli-

ers. No univariate outliers were found. Using a v2 critical value of 29.6 (p \ 0.001), eight multivariate outliers were detected; these cases were excluded from the subsequent

factor and reliability analyses (resulting n = 293). In

addition, the scaled variables were also examined for uni-

variate outliers. Eight outliers were detected and excluded

from the follow-up correlational analyses.

Structure of the PELS

CFA was conducted using EQS (Bentler, 1995) to evaluate

the fit of the 10 items to a two-factor model. We examined

multiple indices of fit (Bollen 1989), the v2, the root mean square error of approximation (RMSEA), the comparative

fit index (CFI) and the non-normed fit index (NNFI).

Ultimately, two confirmatory factor analyses were per-

formed, first with the proposed two-factor structure, and

then with a single factor solution for comparison. In the

first solution, factors were permitted to covary based on the

Table 3 Participants’ tenure, department and company size, and type of industry

Org. tenure Percent

1–3 years 43.2

4–6 years 24.6

7–9 years 9.0

10–14 years 8.6

15–24 years 11.3

25 or more 3.3

Department size

Fewer than 5 48 15.9

5–9 60 19.9

10–24 84 27.9

25–49 30 10.0

50–99 27 9.0

100 and over 50 16.6

Company size Percent

\100 20.3 100–499 16.3

500–999 4.0

1,000–2,499 8.6

2,500–4,999 11.3

5,000–9,999 9.3

10,000–24,599 12.0

25,000 or more 16.6

Type of industry Percent

Education 28.5

Wholesale/retail trade 16.9

Service industry 14.3

Government 14.0

Health 7.3

Finance 5.0

Manufacturing 4.3

High-tech 3.0

Transportation 3.0

Insurance 1.0

Construction 0.7

Real estate 0.7

Utilities 0.3

6 This scale was originally used by peers to rate others. We revised

the scale for use as a self-report.

422 J. L. Kottke, K. L. Pelletier

123

rationale that there may be an underlying relationship

between the perceptions of the ethics of top leadership and

immediate supervisor. The fit of the items to their respec-

tive two factors was adequate when evaluated by the Sa-

torra-Bentler v2 ([34, N = 244) = 137.55, p \ 0.001], the CFI (0.93), and NNFI (0.90). The RMSEA statistic (0.10,

90 % CI 0.09–0.12) suggested less of a fit (\0.06 is rec- ommended. Hu and Bentler 1999; Chen et al. 2008, how-

ever, suggest that the 0.06 criterion may be too rigid). The

two-factor solution was superior to the one factor (Satorra-

Bentler v2 (35, N = 243) = 203.07, p \ 0.001, RMSEA = 0.13, 90 % CI 0.11–0.15, CFI = 0.88, and NNFI = 0.85.).

The v2 difference between the two models was statistically significant: v2(1) = 28.08, p \ 0.001.

Standardized factor loadings (See Table 4) for the two-

factor structure ranged from |0.61 to 0.85|. Because com-

posite subscale scores were to be used, coefficient as were also computed. Cronbach’s a for the two subscales, top leadership and immediate supervisor, were 0.93 and 0.88,

respectively. These as are well above the typically recom- mended minimum of 0.70 (Nunnally and Bernstein 1994).

Convergent Validity

Table 5 contains means, standard deviations, as, and corre- lations of the hypothesized correlates of leader ethics. As

predicted, organizational climate was highly correlated with

top leader ethics, 0.64, and immediate supervisor ethics,

0.47, with the relationship significantly greater for the top

leader ethics (difference in rs: z = 3.88, p \ 0.001). Ratings of top leadership direction were also differentially correlated

(z = 8.65, p \ 0.001) with top leadership (0.73) and immediate supervisor ethics (0.43). Correlations of affec-

tive, continuance, and normative organizational commit-

ment with top leader ethics were 0.55 (p \ 0.001), 0.02 (ns),

and 0.50 (p \ 0.001), respectively. For immediate supervi- sor ethics, the correlations were 0.46 (p \ 0.001) with affective, 0.04 (ns) with continuance, and 0.42 (p \ 0.001) with normative commitment. The direction of both sets of

correlations was supportive of our hypothesis that ethical

leadership would be related to organizational commitment;

the lack of differences in the correlation pairs demonstrate

that organizational commitment was not differently related

to top and immediate leader ethics. Subdimensions of OCB,

altruism, courtesy, sportsmanship, civic virtue, and consci-

entiousness, correlated with top leader ethics, 0.17

(p \ 0.01), 0.10 (ns), -0.14 (p \ 0.05), 0.27 (p \ 0.001), and 0.07 (ns), respectively; with immediate supervisory

ethics, the correlations were 0.18 (p \ 0.01), 0.04 (ns), - 0.12 (ns), 28 (p \ 0.001), and 0.11 (ns). With the exception of civic virtue, the OCB results were not supportive of the

hypothesis that OCB would be moderately related to leader

ethics, nor were there differences in the correlations by level

of leadership.

Comparison of PELS Subscales by Sample

Finally, because the context for the data collected for the first

study of this article included an organization that had faced

several public scandals, we compared the means of the top

leadership and immediate supervisor subscales for the two

samples. For both top leadership and immediate supervisor

measures, there were significant differences. Specifically, the

top leadership subscale mean was significantly lower in the

data set from sample 1 (M = 3.83, SD = 1.43) than from the

data in sample 2 (M = 4.56, SD = 1.48; t[699] = 6.57,

p \ 0.001). In contrast, the mean for supervisor ethics from sample 1 (5.07, SD = 1.52) was higher than the mean in

sample 2 (M = 4.58, SD = 0.96; t[699] = 4.86, p \ 0.001). These differences also suggest construct validity for the use of

Table 4 Means, standard deviations, factor loadings, and item–total correlations for sample 2

Item Loading Mean SD

Top leadership

Moral concerns are given top priority by the organization’s top leaders 0.85 4.21 1.84

The organization’s top leadership routinely strives to make decisions that are ethical 0.84 4.82 1.57

Top leadership places equal value on productivity, quality, and ethical practice 0.81 4.67 1.88

Top leadership works quickly to resolve ethical issues 0.79 4.41 1.80

The top leadership of this organization is concerned with ethical practice 0.80 4.47 1.92

Top leadership provides employees with ethical guidance when it is needed 0.77 4.84 1.56

Immediate supervisor

My immediate supervisor sets a good example of ethical behavior 0.80 4.91 1.93

I feel comfortable consulting my immediate supervisor when I have to make a tough ethical decision 0.73 5.29 1.74

If I reported one of my fellow employees for an ethics violation, my immediate supervisor would support me 0.74 5.22 1.49

My immediate supervisor looks the other way when employees make unethical decisions (reverse) -0.61 5.12 1.61

Seven-point Likert scale. (Reverse) indicates a reverse scored item. as for top leader = 0.91; immediate supervisor = 0.81

Leader Ethics 423

123

the two subscales, as well as convergent validity in that the

first sample consisted of employees whose agency had been

shaken by ethical scandals involving their top leaders. The

second sample was collected from a variety of organizations

whose employees most likely would have had a mix of ethical

and unethical top leaders and immediate supervisors.

Discussion

The purpose of this second study was to assess the rela-

tionship of several individual attitudes and behaviors that

could be expected to emanate from ethical leaders, both

distal and immediate. We also wished to assess the rela-

tionship of organizational climate to top leader and

immediate supervisor ethics. Finally, we hoped to evaluate

the differential importance of top and immediate leader

ethics.

Climate is a shared perception of the nature of the

organization, its policies, procedures and its ‘‘way of doing

things’’ (Vardi 2001, p. 327). Organizational climate and

ethics of leaders, at both levels, were clearly linked, pro-

viding some of the strongest correlations of the study. How

employees perceived their general organizational climate

had considerable overlap with their assessment of the

ethical perspectives of their top leaders and supervisors.

Our expectation that top leader ethics would be more

highly correlated with climate was confirmed, supporting

that top leader ethics are an important part of the overall

organizational fabric. The strength of the link between

supervisor ethics and climate was somewhat surprising as

climate is predominantly an organizational focus, which

logically would be more associated with leaders at the top

than an immediate supervisor. Perhaps the strength of the

correlation even at the supervisory level demonstrates the

potency or saliency of ethical issues regardless of the lea-

der being evaluated for ethical behavior.

The other variable that displayed a strong, differentiat-

ing correlation with top leader and immediate supervisor

ethics was the top leadership direction variable. Scores on

the TLDS represent confidence in top leadership. Those

who rated their top leaders as more ethical also expressed

more confidence in their ratings of the top leadership

direction. These results are consistent with other research

that finds that employees who rate their leaders as ethical

also rate those leaders as having more effective leadership

styles (Brown et al. 2005). These results support the

mounting evidence that ethical leadership is inexorably

bound to follower perceptions of good leadership (e.g.,

Bass and Steidlmeier 1999; Brown and Treviño 2006; Si-

mons 1999).

As expected, affective and normative commitment were

strongly related to perceptions of ethics for both top leaders

and immediate supervisors. Continuous commitment,

faithful to its construct meaning, was not related to PELS at

either level. Employees who evaluate their commitment in

terms of the behavior necessary to remain employed are not

likely to see the ethical attributes of either their top leaders

or immediate supervisor as necessarily relevant. In

Table 5 Scale item means, standard deviations, as and correlations

Variable Mean SD a Top leader Immed. super.

Organizational climate 4.34 0.85 0.81 0.64*** a

0.47*** a

Top leadership direction 4.57 1.47 0.86 0.73*** a

0.43*** a

Organizational commitment 3.99 0.99 0.85 0.47*** 0.41***

Affective 4.35 1.39 0.83 0.55*** 0.46***

Continuance 3.95 1.27 0.79 0.02 0.04

Normative 3.67 1.37 0.84 0.50*** 0.42***

Organizational citizenship behavior

Altruism 5.85 0.79 0.79 0.17** 0.18**

Courtesy 5.48 0.80 0.44 0.10 0.04

Sportsmanship b

2.77 1.01 0.64 -0.14* -0.12

Civic virtue 5.02 1.13 0.71 0.27*** 0.28***

Conscientiousness 5.77 0.90 0.74 0.07 0.11

Leadership ethics

Top leader 4.56 1.48 0.91

Immediate supervisor 4.58 0.96 0.81 0.57***

All measures used seven-point scales. N for correlations ranges from 260 to 283

* p \ 0.05, ** p \ 0.01, *** p \ 0.001 a

Top leader and immediate supervisor ethics correlations differ significantly, p \ 0.05 b

This subscale is reverse scored; a low score indicates greater sportsmanship

424 J. L. Kottke, K. L. Pelletier

123

contrast, the moderate to strong correlations of affective

and normative commitment with both subscales of leader

ethics indicate that the tone sounded by top management

and the immediate supervisor is relevant for employees’

sense of attachment and obligation to their organization.

Though their meta-analysis did not address ethical leader

behaviors, Mathieu and Zajac (1990) found that leader

behavior was a moderate predictor of organizational com-

mitment. Our results are also consistent with previous

research in which ethical leadership led to desirable indi-

vidual employee outcomes, especially affective attitudes

(Koh and Boo 2001; Vitell and Davis 1990).

The relationship of OCBs to leader ethics was small

with the exception of civic virtue, which correlated 0.27

and 0.28, respectively, with top leader and immediate

supervisor ethics. Employees who perceived their top

leaders and their immediate supervisors to be ethical were

also the ones most willing to support the organization

beyond their formal job requirements. Research by Vey

and Campbell (2004) has indicated that most attitudinal

items tapping OCBs are considered by independent

observers to represent in-role, as opposed to extra role,

behavior. Vey and Campbell found, however, that altruism

and civic virtue were seen as reliably extra role, with the

results for civic virtue strongly suggesting it to be the most

‘‘contextual’’ of the OCBs that have been studied inten-

sively. Its relationship here with ethics perceptions lends

credence to this notion.

General Discussion

The results of these two studies provide ample evidence

that the confidence that employees have in the integrity of

their top leaders and immediate supervisors leads to dif-

ferential, and important, individual outcomes. The integrity

of top leaders and of immediate supervisors can be con-

strued as part of the fabric of an ethical organizational

culture that engenders benefits for the organization and its

employees. At a minimum, one hopes the ethical organi-

zation is able to avoid the public backlash and subsequent

collapse that accompanied Enron and its ilk. At best, one

expects the organization will prosper because its employ-

ees and stakeholders can place trust in their leaders to ‘‘do

the right thing’’ with the corollary that employees who trust

their leaders’ probity can be expected to put forth more

effort, support management’s ideas, and be good organi-

zational citizens.

Taken together, these two studies demonstrated that

perceptions of ethics at the immediate supervisor level can

be differentiated meaningfully from perceptions of top

leadership ethics by employees. In both studies, percep-

tions of top leadership ethics correlated more strongly with

aspects of the organization associated with climate, lead-

ership direction, financial resources, informal norms, and

ethical culture—those organizational aspects are more

often within the control of top leadership. Ethical decision-

making processes were more related to immediate super-

visory ethics than to top leader ethics, suggesting that role

modeling by immediate supervisors is also quite important.

Brown and Treviño (2006), for example, have suggested

that ethical behavior develops more from close working

relationships than from observing distal models.

Though no mean difference was hypothesized, means

for the leader ethics subscales were compared between the

samples and were significantly different for both subscales.

For the employees of the agency that had endured public

scandal, the employees rated their top leaders as signifi-

cantly less ethical than the participants in the second

sample, which included employees from many different

organizations. Interestingly, employees of the scandal-rid-

den agency perceived their own supervisors as more ethical

than did the employees from the second sample. Whether

this difference is a result of a contrast effect with the

agency’s top leadership viewed as unethical, or simply an

indication that employees are more likely to trust their

immediate supervisor with whom they are likely to have a

close relationship, is not discernable from these data. The

implication of this mean difference, taken together with

Brown and Treviño’s (2006) review, is that impression

management on the part of top leaders is necessary but not

sufficient to convince organizational members that they are

ethical. Working with an immediate supervisor gives a

definitive assessment of his or her ethical behavior.

Although Pelletier and Bligh (2006) did not intend for

the PELS to be used solely as a measure of top and

immediate leader ethics, the subscales demonstrated

desirable psychometric properties: good reliabilities and

convergent validity with relevant organizational attitudes.

Of particular interest, these two subscales of the PELS

show promise for investigating employee perceptions of

top leader and immediate supervisor integrity, adding an

additional scale to the available measures (e.g., the PLIS,

Craig and Gustafson 1998, and ELS, Brown et al. 2005).

Directions for Future Research

Longitudinal studies of multiple organizations would be

very desirable to gauge recovery from scandal, or retro-

spectively, antecedents of ethical slips to determine if

immediate supervisors are the first line of defense against

ethical breaches. Though their sample of supervisors was

small (1.6 % of the total sample) and authoritative statis-

tical analyses could not be conducted, Velthouse and

Kandogan (2007) found that first line supervisors accorded

Leader Ethics 425

123

ethical issues less importance than did middle managers

and executives. Their results, taken together with ours

indicating that employees of a scandal-ridden agency rated

their immediate supervisors as more ethical, suggest a

potentially troubling disconnect in the ethical links within

organizations.

Other scales and constructs need to be included in future

research to investigate the nature of proximal and distal

leader ethics. Meta-analytic moderator analysis to extract

the effect of immediate supervisory ethics would be valu-

able, once sufficient data are available to make such

comparisons. In their meta-analysis, Davis and Rothstein

(2006) located only seven studies that provided enough

information to be categorized as being about the ethics of

top management or immediate bosses. The number of

studies was small—four studies of immediate bosses, three

about top management. The population correlations of

manager behavioral integrity with employee attitudes were

stronger for immediate bosses (0.50) than for top man-

agement (0.29). Despite the small number of samples, their

data support that level of leadership ethics moderates the

relationship between employee perceptions of leader ethics

and attitudes. Clearly, more research is needed in this area.

Limitations

The data collected for these studies cannot imply causation.

All data are cross-sectional and were analyzed using cor-

relational statistics. Hence, any interpretations must be

salted with caution. Further, other variables need to be

assessed to verify the meaning of these correlational

results. Other variables for future study include stage of

development of the firm, the tenure of the top management

team, the CEO in particular, the historical turnover of

leaders and the centralization of power within the top

management team. These variables cannot be assessed with

a survey; they require different methods.

Because all data were collected via survey, common

method variance could have inflated the correlations

(Podsakoff, MacKenzie, Lee, and Podsakoff, 2003). The

pattern of correlations in two separate samples, however,

mitigates against our results being solely the consequence

of method bias. In addition, Spector (1987, 2006) has

strongly argued that common, systematic method variance

is not as problematic as originally imagined in work atti-

tude research.

In Study 2, we used an affective, evaluative measure of

organization climate, which permitted us to assess general

organizational climate. We acknowledge that several

researchers (cf., Patterson et al. 2005) have suggested

multiple climates operate simultaneously within an orga-

nization, a possibility we could not detect with our

measure. Because our intent was to examine immediate

supervisor ethics and top leader ethics, the existence of

multiple climates, especially ethical climates (Victor and

Cullen 1988) is particularly relevant and should be exam-

ined in future research.

Conclusion

Using two samples, we examined and found meaningful

relationships between employee perceptions of the ethics

of top leaders and their immediate supervisors, with

important individual outcomes—perceptions of climate,

top leadership direction, organizational commitment, and

the OCB of civic virtue. Employees draw distinctions

between top leader and immediate supervisor ethics; in the

first sample, these distinctions were related to their per-

ceptions of ethics program effectiveness, organizational

norms, decision-making processes, and financial resources.

Having found differential effects of leader level, the impact

of overall leader ethics on employees is compelling. The

serious and public collapses revealed in the cases of Enron,

Adelphia, and Tyco may represent the final consequence of

leader ethics that had in fact been eroding employee per-

ceptions, attitudes, and behaviors for some time. Our

research suggests that long before such large-scale orga-

nizational consequences, leader ethics at both top and

immediate supervisor levels have an important impact on

employees.

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