This study contributes to our knowledge about the effectiveness of different leadership behaviors in building interpersonal trust within public organizations. It employs survey data on U.S. federal employees to investigate the relationship between employee perceptions of transactional and transformational leadership behaviors and employee perceptions of trust in leaders. Findings from OLS multivariate regression analysis indicate that both transactional and transformational leadership behaviors are positively related to employee trust in leaders. On average, transformational leadership behaviors were found to build higher levels of interpersonal trust. Thus, given the fundamental differences between private and public organizations, this study suggests that public sector leaders need to emphasize transformational leadership behaviors to build higher levels of interpersonal trust within their organizations. Since doing so is crucial for motivating employees and thus for increasing organizational performance, in their leadership development programs, public agencies-particularly those managed by transactional leaders-need to invest more in improving the transformational leadership competencies of their executives, managers, and supervisors.

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ABSTRACT

Keywords: transactional leadership; transformational leadership; trust; federal employees; United States

INTRODUCTION

Interpersonal trust is fundamental for ensuring effectiveness within organizations (Cook & Wall, 1980). Although some scholars dispute the extent to which employee trust in leaders affects employee performance (see, Bachmann & Akbar, 2006, for discussion), it can be said that trust in leaders is an essential factor that motivates employees to spend more time on required tasks and to perform beyond standards (Knovsky & Pugh, 1994; Von Krogh, Ichizo, & Nonaka, 2000). This is important because when employees believe they cannot trust in their leaders, they will spend more time "covering their backs" which in turn can affect their performance (Mayer & Gavin, 2005). In fact, the existing empirical evidence suggests there is a positive link between employee trust in leaders and employee motivation and performance (Dirks & Ferrin, 2002; Konovsky & Pugh, 1994; Gillespie & Mann, 2004).

Leaders can be said to play a key role in developing and sustaining trust within organizations (Shaw, 1997). Scholars have already found a positive relationship between different leadership behaviors and employee trust in leaders in private organizations (Gillespie & Mann, 2004; Bradberry & Tatum, 2002; Greenberg, 2003; Jung & Avolio, 2000; Kirkpatrick & Locke, 1996; Podsakoff, McKenzie, Moorman, & Fetter, 1990; Pillai, Schriesheim, & Williams, 1999). Although leadership is considered to be an important factor in public organizations (Fernandez, 2005; Moynihan & Ingraham, 2004; Van Wart, 2005), in recent years-with the exception of Park's (2012) work-very few empirical studies on the relationship between leadership and trust have been reported in the public administration literature (Park, 2012).

In an effort to address this gap in the literature, this study utilizes data from the 2010 Federal Employee Viewpoint Survey conducted by the U.S. Office of Personnel Management to answer the following research question: what is the relationship between employee perceptions of transactional and transformational leadership behaviors and employee perceptions of trust in leaders within public organizations? Answering this question is important for a few reasons.

First, to the authors' knowledge, as mentioned above, this is one of the few recent empirical studies to investigate the relationship between leadership and trust within government agencies. Since researchers have already found a positive relationship between different leadership behaviors and trust in private sector settings, it is important to validate these findings within public organizations.

Second, there is a need for empirical evidence, especially from large-scale studies, on the effectiveness of different leadership behaviors in building interpersonal trust within public agencies. This is particularly important since the fundamental differences between private and public organizations (see, Perry & Rainey, 1988; Rainey & Bozeman, 2000, for reviews) require that public sector leaders emphasize certain leadership behaviors over others (Hansen & Villadsen, 2010) within their organizations. After all, there is already evidence to suggest that public leaders need to focus more on certain leadership competencies to drive results within their organizations (Hansen & Villadsen, 2010; Thach & Thompson, 2007).

Third, federal employees' trust in their supervisors (OPM, 2012) and in higher-level leaders has declined in recent years (MSPB, 2009). This is a reason for concern since interpersonal trust is a key factor that affects performance within organizations (Dirks, 1999). Thus, to the extent that leaders play a significant role in developing and sustaining trust, it is important to understand what leadership behaviors are more effective in doing so within federal agencies.

The following section reviews the relevant literature on the relationship between transactional and transformational leadership and employee trust in leaders. Next, a description of the data and method is provided. The results of the statistical analyses are then presented. The paper concludes by discussing the implications of the findings, acknowledging the limitations of the study, and making suggestions for future research.

LITERATURE REVIEW AND HYPOTHESES

Trust in Leaders

Trust in leaders is a multidimensional construct (Rousseau, Sitkin, Burt, & Camerer, 1998). It has been widely defined as "a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another" (Rousseau et al., 1998, 395). Trust has to do with the level of confidence one has in others to behave in a fair and predictable manner (Luhmann, 1982).

In this study, Cook and Wall's (1980) definition of trust is adopted. Thus, trust in leaders is said to be: (1) faith in the intentions and (2) confidence in the actions of leaders. Cook and Wall argue that both of these dimensions of trust yield ascriptions of capability and reliability.

Transactional Leadership and Trust

Transactional leadership is a process of exchange between leaders and subordinates. Leaders recognize subordinate's needs and then provide financial incentives and organizational recognition to motivate employees (Bass, 1990, 1998) and obtain from them desired behaviors (Daft, 2002), such as improved performance (Bass & Avolio, 1990). In this way, both employees' needs and leaders' expectations are met (Bass, 1985). Transactional leaders focus on task completion and rely on rewards and punishments to secure employee compliance (Tracey & Hinkin, 1998).

The two dimensions of transactional leadership are contingent reward and management by exception (Bass, 1985; Bass & Avolio, 1990). Leaders engage in contingent reward when they reward subordinates for acceptable behavior, such as improved performance (Bass & Avolio, 1990), and penalize them for unacceptable behavior (Bass, 1998). Leaders who engage in management by exception only take corrective action when there is a problem or when standards are not met (Bass, 1985). Further, depending on their level of involvement, leaders engage in active or passive management by exception (Hater & Bass, 1988). Active management by exception involves actively monitoring followers' performance to anticipate deviations from standards and taking corrective action (Hater & Bass, 1988). Passive management by exception involves taking corrective action only when problems arise (Avolio, Bass, & Jung, 1999).

It can be argued that when leaders engage in transactional leadership behaviors, employees will develop trust in them-i.e., they will develop faith in their leaders' intentions and confidence in their actions. In other words, when leaders consistently reward employees for their performance-i.e., contingent reward-and take corrective actions when problems arise-i.e., management by exception-both high and low performing employees will feel confident that their leaders will continue to consistently reward improved performance and punish underperformance. The empirical evidence supports these claims as several researchers find that leaders who exhibit transactional leadership behaviors when managing organizations are likely to be more trusted among followers (Greenberg, 2003; Pillai et al., 1999; Bradberry & Tatum, 2002).

Hypothesis 1: Employee perceptions of transactional leadership behaviors are positively related to employee perceptions of trust in leaders within public organizations.

Transformational Leadership and Trust

Transformational leadership "occurs when leaders broaden and elevate the interests of their employees, when they generate awareness and acceptance of the purposes and mission of the group and when they stir their employees to look beyond their own self-interest for the good of the group" (Bass, 1990, p. 21). Transformational leaders promote organizational commitment by aligning followers' values, beliefs, and motives with those of the group, the leader, and the organization's vision and goals (Bass, 1985; Bass, 1998; Bass & Avolio, 1990; Howell & Avolio, 1993; Barling, Weber, & Kelloway, 1996; Yammarino & Bass, 1990). Transformational leaders build commitment among followers to achieve organizational goals by making them aware of the importance of task outcomes, orienting them toward performing beyond standards, activating higher-order intrinsic needs, and focusing on their empowerment rather than in their dependence (Bass, 1985; Judge & Piccolo, 2004). The four dimensions of transformational leadership are: idealized influence (charisma), inspirational motivation (vision), intellectual stimulation, and individualized consideration (Avolio, Waldman, & Yammarino, 1991; Judge & Piccolo, 2004).

It can be said that when leaders display transformational leadership behaviors, employees will develop trust in them. A few reasons can be given to explain this relationship. When leaders role model ethical behavior-i.e., idealized influence-, they show they can be trusted by employees (Gillespie & Mann, 2004). When they communicate attainable goals-i.e., inspirational motivation-, leaders motivate employees to attain such goals, which in turn can facilitate the development of trust (Bennis & Nanus, 1985). Leaders who encourage employees to view issues from new perspectives-i.e., intellectual stimulation-, coach their employees, and by doing so, they show that they are committed to their development which in turn builds trust (Gillespie & Mann, 2004). When leaders show concern for their employees' needs and welfare-i.e., individualized consideration-, they show they care about their employees, and thus, that they can be trusted (Bass, 1985; Jung & Avolio, 2000). The existing empirical evidence validates these claims as several researchers find that leaders who engage in transformational leadership behaviors are likely to build greater trust among subordinates (Bradberry & Tatum, 2002; Greenberg, 2003; Gillespie & Mann, 2004; Jung & Avolio, 2000; Kirkpatrick & Locke, 1996; Podsakoff et al., 1990; Pillai et al., 1999).

Hypothesis 2: Employee perceptions of transformational leadership behaviors are positively related to employee perceptions of trust in leaders within public organizations.

Transactional vs. Transformational Leadership and Trust

While the literature reviewed thus far suggests that leaders who engage in both transactional and transformational leadership behaviors build interpersonal trust in the workplace, the magnitude of the effects needs to be evaluated (Dirks & Ferrin, 2002). This, since some scholars argue that compared to transformational leadership, transactional leadership does not require a high level of trust between leaders and employees (Bass, 1985; Jung & Avolio, 2000). In addition, some researchers argue that transactional leadership behaviors do not build the level of trust needed to unleash a workforce's full potential (Jung & Avolio, 2000). To do so, transformational leadership behaviors are needed (Gillespie & Mann, 2004).

Further, given the fundamental differences between private and public organizations (see, Perry & Rainey, 1988; Rainey & Bozeman, 2000, for reviews), it can be said that leaders' transformational leadership behaviors are more important (and potentially more effective) in building interpersonal trust in the public sector. While scholars agree that certain leadership competencies are appropriate across the private and public sectors (Thach & Thompson, 2007), being inspirational, which is a competency displayed by transformational leaders, has been found to be more important for public sector leaders (Thach & Thompson, 2007). Conversely, engaging in employee performance management-a behavior displayed by transactional leaders-has been found to be less important for public managers (Thach & Thompson, 2007).

Hypothesis 3: Compared to employee perceptions of transactional leadership behaviors, employee perceptions of transformational leadership behaviors have a higher positive impact on employee perceptions of trust in leaders within public organizations.

DATA AND METHOD

Data

To answer the research question and test the hypotheses in this study, analyses of recent survey data on U.S. federal employees were conducted. The data come from the 2010 Federal Employee Viewpoint Survey (hereafter: FedView Survey) conducted by the U.S. Office of Personnel Management (hereafter: OPM). These data are available to the public through OPM's website.

The FedView Survey measures employee perceptions "of whether, and to what extent, conditions that characterize successful organizations are present in their agencies" (OPM, 2010, p. 23). It contains questions on topics, such as: organizational performance, leadership, employee satisfaction, compensation and benefits, and family-friendly flexibilities, among others. Demographic questions were also asked of survey participants, including the agency that they worked for, their supervisory status, ethnicity, gender, and age. The survey included 89 individual questions, many of which were used to measure the variables in this study.

OPM distributed the survey electronically to a probability sample of full-time, permanent employees in federal agencies between February and March of 2010. OPM invited all small and independent agencies to participate and 53 of them chose to do so (OPM, 2010). Per their request, the survey was also administered to 13 Departments/large agencies (OPM, 2010). The participating agencies comprise approximately 97 percent of the federal workforce (OPM, 2010).

OPM used the lists of employees in participating agencies as the sampling frame. In some cases, agencies requested the survey to be administered as a census. "Employees were grouped into 1066 sample subgroups corresponding to agency, subagency, and supervisory status reporting requirements" (OPM, 2010, p. 23). In total, 504,609 employees in 82 agencies within the executive branch of the U.S. federal government were sent the survey (OPM, 2010). 263,475 employees returned the survey, resulting in a 52% response rate (OPM, 2010).

Participation in the FedView Survey was completely voluntary. Participants were informed that their answers would be confidential and only reported to their agencies as aggregate data (OPM, 2010). They were given an identification and password to log in to the survey website. Accommodations were also made for those who preferred a paper version of the survey, as well as for employees with disabilities.

OPM weighted the data collected from survey respondents. "The weights ... take into account the variable probabilities of selection across the sample domains, nonresponse, and known demographic characteristics of the survey population" (OPM, 2010, p. 24). In the end, "the final data set reflects the agency composition and demographic makeup of the Federal workforce within plus or minus 1 percentage point" (OPM, 2010, p. 24).

Of these 263,475 respondents, 27,338 (10.4%) were managers/executives, 43,872 (16.7%) were supervisors, 179,462 (68.1%) were non-supervisors/team leaders, and the rest did not respond. Also, 118,378 respondents (44.9%) were females and 131,629 (50%) were males; 81,188 (30.8%) belonged to a minority group and 163,684 (62.1%) did not; and 126,210 (47.9%) were 50 years or older, 109,811 (41.7%) were 30 to 49 years, and 12,057 (4.6%) were under 29 years.

Measures

Dependent variable. To measure employee trust in leaders the following item was used: "I have trust and confidence in my supervisor". Although Cook and Wall (1980) measure two dimensions of trust in leadership: (1) faith in the intentions and (2) confidence in the actions (of leaders), the FedView Survey only contains one item similar to the six they used to measure their construct. Responses to the item were coded from 1 = strongly disagree to 5 = strongly agree.

Independent Variables. This study measured the following transactional leadership behaviors: (1) contingent reward and (2) active management by exception. It also measured the following transformational leadership behaviors: (1) idealized influence (charisma), (2) inspirational motivation (vision), (3) intellectual stimulation, and (4) individualized consideration. To measure these leadership behaviors, a similar procedure employed by Trottier, Van Wart, and Wang (2008) was followed. The leadership literature also provided the basis for item selection. Appendix 1 provides the list of items used to measure these leadership behaviors.

Although some studies (e.g., Avolio et al., 1999; Trottier et al., 2008) include individualized consideration as one of the elements of transactional leadership, in this study, Bass' (1985) original conceptualization of transformational leadership was employed. Thus, individualized consideration is considered to be an element of transformational leadership.

Originally, additive indices were developed to measure the above transactional and transformational leadership behaviors. All the survey items used to measure these leadership behaviors were entered into a factor analysis. The varimax rotation method was employed, and the analysis extracted three factors (see Appendix 1).

Specifically, these were the factors extracted. (1) Idealized influence, inspirational motivation, and intellectual stimulation loaded on the same factor-labeled transformational leadership-, explaining 22.88% of the variance (eigenvalue = 4.35; Cronbach's alpha = .91). (2) Contingent reward and active management by exception loaded on the same factor-labeled transactional leadership-, explaining 24.84% of the variance (eigenvalue = 4.72; Cronbach's alpha = .92). These results are consistent with previous findings in the literature suggesting that: contingent reward and management by exception (Tepper & Percy, 1994) and idealized influence, inspirational motivation, and intellectual stimulation (Avolio et al., 1999; Wright & Pandey, 2010) may be best characterized as single factors. (3) The items used to measure individualized consideration did load on the hypothesized leadership construct, explaining 24.06% of the variance (eigenvalue = 4.57; Cronbach's alpha = .92).

In light of the aforementioned results, the factor loadings were converted into factor scores and used as independent variables in the regression analysis.

Control variables. The following control variables for characteristics of employees were measured in this study: supervisory status, gender, ethnicity, work location, and job tenure. Details about the operationalization of these variables are included in Appendix 2 and the correlation matrix is provided in Table 1.

Previous research suggests that these characteristics have an effect on employees' trust in leaders. For instance, Cho (2008) suggests that supervisors are likely to express more positive views about their organizations than individual employees. Thus, it can be said that supervisors will hold more positive perceptions about their leaders' trustworthiness than non-supervisors. Also, given Eagly's (1987) work suggesting that women have a stronger tendency than men to avoid risk in interpersonal relations, it is plausible to assume that women are less likely to have trust in their leaders than men (Cho, 2008). Given historical patterns of discrimination, Jackson and Alvarez (1992) argue that minority employees are less likely to have trust in their leaders than non-minority employees. Further, employees who work in the field can be said to have less trust in their leaders, given the difficulties-e.g., lack of resources-they experience when implementing public policies (Cho, 2008). Last, the amount of time an employee has spent at an organization can be said to affect the judgments he makes about his leaders' trustworthiness; this, since the longer his length of service, the more an employee knows about an organization's values, principles, and procedures (Carnevale & Wechsler, 1992) and the more stable his relationship is with his leaders (Cho, 2008).

Model Specification

In order to test the hypotheses in this study, an ordinary least squares (OLS) regression model predicting employee trust in leaders was specified.

Employee trust in leaders = f (leadership behaviors, control variables)

Independent variables: transactional leadership, transformational leadership, individualized consideration.

Control variables: supervisory status, gender, ethnicity, work location, job tenure.

RESULTS

A review of the means and standard deviations revealed some interesting patterns. On average, federal government employees perceive their managers to be "trustworthy" (Mean = 3.80, SD = 1.20, 1-5 range). From among 263,475 total valid observations, 175,250 employees (66.5%) agreed to strongly agreed with the item used to measure employee trust in leaders; 39,981 (15.2%) disagreed to strongly disagreed; and 15.8% neither agreed nor disagreed.

The OLS multivariate regression results are presented in Table 2. The results indicate that, together with the controls, the three leadership variables had a significant impact on employee trust in leaders, explaining 73% of the variance. The results indicate that all three leadership variables are positively and statistically related to employee trust in leaders at the P < 0.01 level.

Specifically, the results are as follows. When leaders display transformational leadership-i.e., when they role model ethical behavior (idealized influence); communicate attainable goals (inspirational motivation); and encourage employees to view issues from new perspectives (intellectual stimulation)-, employees are likely to report higher levels of trust in their leaders (β = .30). Also, when leaders engage in individualized consideration-i.e., when they show concern for their employees' needs and welfare-, employees are likely to have more trust in their leaders (β = .74). Further, when leaders engage in transactional leadership-i.e., when they consistently reward employees for their performance (contingent reward) and take corrective actions when problems arise (management by exception)-employees are likely to have more trust in their leaders (β = .28). These results lend support to Hypotheses 1 and 2.

Regarding the magnitude of the effects of transactional and transformational leadership behaviors on employee trust in leaders, the findings suggest that, compared to transactional leadership-i.e., contingent reward and management by exception (β = .28), transformational leadership- i.e., idealized influence, inspirational motivation, and intellectual stimulation (β = .30); and individualized consideration (β = .74)-are likely to build higher levels of employee trust in leaders. These results lend support to Hypotheses 3.

The results of the control variables show interesting patterns. Non-supervisors are likely to have more trust in their leaders than supervisors. Females are likely to have less trust in their leaders. Minority status is marginally negatively related to employee trust. Job tenure is likely to have a negative effect on employee trust in leaders.

DISCUSSION AND CONCLUSION

This is one of the few recent large-scale studies reported in the public administration literature on the relationship between leadership and trust. It makes an empirical contribution by offering evidence on the relationship between employee perceptions of transactional and transformational leadership behaviors and employee perceptions of trust in leaders within public organizations. Specifically, the research findings suggest that both transactional and transformational leadership behaviors are likely to build employee trust in leaders. These results are consistent with previous findings in the leadership literature suggesting that both transactional (Greenberg, 2003; Pillai et al., 1999; Bradberry & Tatum, 2002) and transformational leadership behaviors (Bradberry & Tatum, 2002; Greenberg, 2003; Gillespie & Mann, 2004; Jung & Avolio, 2000; Kirkpatrick & Locke, 1996; Podsakoff et al., 1990; Pillai et al., 1999) build trust among followers.

Also, this study offers empirical evidence on the effectiveness of different leadership behaviors in building interpersonal trust within public agencies. The findings in this study suggest that, on average, transformational leadership behaviors are likely to build higher levels of interpersonal trust, which confirms that leaders who are more effective are more transformational than transactional (Avolio & Bass, 1991). Further, these results suggest that in the context of the federal government "care and concern perceived in the relationship" (Dirks & Ferrin, 2002, p. 614) between leaders and employees- which is the emphasis of transformational leaders-appear to be more important than being "seen as fair, dependable" (Dirks & Ferrin, 2002, p. 614) when rewarding and correcting employees.

These results also confirm that given the fundamental differences between private and public organizations (see, Perry & Rainey, 1988; Rainey & Bozeman, 2000, for reviews), public sector leaders need to emphasize certain leadership behaviors over others (Hansen & Villadsen, 2010; Thach & Thompson, 2007) within their organizations. This may be because compared to private organizations, the social purpose of public organizations is more important (Thach & Thompson, 2007), and thus, leaders need to "stir their employees to look beyond their own self-interest for the good of the [public]" (Bass, 1990, p. 21). In addition, being inspirational may be more important for public managers since they experience more difficulties when motivating employees (Cho & Lee, 2011); this is because compared to their counterparts in the private sector, they are more constrained in the use of extrinsic rewards (Rainey & Bozeman, 2000).

The findings in this study have several implication for executive leaders, managers, and supervisors in the public sector. Leaders need to be aware of the important role that different leadership behaviors play in building interpersonal trust within their organizations. Also, they need to recognize that they cannot solely rely on transactional leadership to motivate employees and thus to build employees' trust in them.

Further, since federal employees' trust in their supervisors (OPM, 2012) and in higher-level leaders has declined in recent years (MSPB, 2009), leaders in the federal sector need to be particularly aware of the key role that different leadership behaviors play within their organizations to build interpersonal trust. After all, employee trust in leaders is crucial, as the more they trust in their leaders, the more motivated they are, the more time they spend on required tasks, and the more they perform beyond standards (Knovsky & Pugh, 1994; Von Krogh et al., 2000).

It is important, therefore, that in their leadership development programs, federal agencies-particularly those managed by transactional leaders-invest more in improving the transformational leadership competencies of their executives, managers, and supervisors. In this way, interpersonal trust will developed within federal agencies and thus employees will be more motivated and productive when serving the public. After all, transactional leadership behaviors do not build the level of trust needed to unleash a workforce's full potential (Jung & Avolio, 2000). To do so, transformational leadership behaviors are needed (Gillespie & Mann, 2004).

LIMITATIONS AND FUTURE RESEARCH

A main limitation of this study is the presence of common-source bias. This is because the variables in this study are drawn from the same survey. Thus, it is possible for common-source bias to inflate (but not invalidate) the relationships found (Crampton & Wagner, 1994). While some researchers find that the impacts of common-source bias are minimal (Doty & Glick, 1998), the reader should still be cautious when interpreting the results in this study.

Also, given the limitations in the FedView Survey data, multiple dimensions of trust in leaders were not explored in this study. The measure developed for this construct only included one survey item. Thus, future studies should use a measure of trust that taps into multiple dimensions of the construct.

Last, given the cross-sectional nature of this study, claims about causality cannot be made. Other researchers should extend this research topic by studying longitudinal trends and linking employee trust in leaders to employee motivation and organizational performance. Other studies should also investigate how employee trust in leaders mediates the relationship between leadership and organizational outcomes within public agencies.

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AuthorAffiliation

HUGO ASENCIO

California State University, Dominguez Hills

EDIN MUJKIC

University of Colorado Colorado Springs

AUTHORS' NOTE

We wish to thank Donald Klingner and the anonymous reviewers for their helpful comments on previous drafts. Any remaining errors of fact or interpretation remain our responsibility. Please address correspondence to Hugo Asencio, California State University, Dominguez Hills, Department of Public Administration, 1000 E. Victoria St., Carson, CA, 90747, email: [email protected].

Appendix

(ProQuest: Appendix omitted.)

Word count: 5594