SOCIAL BEHAVIOR AND PERSONALITY, 2013, 41(4), 613-624

© Society for Personality Research

http://dx.doi.org/10.2224/sbp.2013.41.4.613

THE EFFECT OF AUTHENTIC LEADERSHIP ON EMPLOYEE

TRUST AND EMPLOYEE ENGAGEMENT

DAN-SHANG WANG AND CHIA-CHUN HSIEH

National Changhua University of Education

In this study we examined the effect of authentic leadership on employee engagement through
employee trust. We collected data from 386 employees in the top 1,000 manufacturing
companies and the top 500 service companies in Taiwan. Hierarchical multiple regression
was employed to test the hypotheses. The results showed that both supervisors’ consistency
between words and actions as well as their moral perceptions are positively related to
employee engagement, while only supervisors’ consistency between words and actions is
positively related to employee trust. Moreover, employee trust was shown to be positively
related to employee engagement. Finally, employee trust was found to have a partial
mediating effect between authentic leadership and employee engagement.

Keywords: authentic leadership, employee trust, employee engagement, moral perceptions,

Taiwan.

Today’s global environment continuously undergoes rapid changes, enterprises

experience ethical meltdowns, and organizations face a multitude of challenging
and turbulent problems. It is therefore increasingly evident that enterprises
need a new kind of business leader in this, the 21st century (George, Sims,
McLean, & Mayer, 2007). Specifically, organizations need leaders who lead
with purpose, have strong values and integrity, who are able to create enduring
organizations, and who motivate their employees to provide better customer
service (George, 2003). In both Eastern and Western societies, integrity and
authenticity are considered as two of the most important societal values (George
et al., 2007; Wang, 2010). Kouzes and Posner (2002) found that the most

Dan-Shang Wang and Chia-Chun Hsieh, Graduate Institute of Human Resource Management,
National Changhua University of Education.
Correspondence concerning this article should be addressed to: Chia-Chun Hsieh, Graduate Institute
of Human Resource Management, National Changhua University of Education, No. 2 Shi-Da Road,
Changhua City 500, Taiwan, ROC. Email: cutevivi168@yahoo.com.tw

613
614 LEADERSHIP AND EMPLOYEE TRUST AND ENGAGEMENT

important component of effective leadership is that leaders treat their employees

authentically. This is because it promotes a humane enterprise and achieves
enduring outcomes in organizations. In recent years, the focus on the topic of
authentic leadership has gradually increased in both practical (George, 2003)
and academic fields (e.g., Avolio, Gardner, Walumbwa, Luthans, & May, 2004;
Walumbwa, Avolio, Gardner, Wernsing, & Peterson, 2008). A reason for this
is that authentic leadership is acknowledged as a root construct of all positive
forms of leadership; it plays a vital role in addressing organizational and societal
problems (George, 2003).
In recent studies it has been suggested that authentic leadership may positively
affect employee attitudes and behavior, as well as work outcomes (e.g., job
satisfaction), job commitment, creativity, engagement, and organizational
citizenship behavior (OCB; Rego, Sousa, Marques, & Cunha, 2012; Walumbwa
et al., 2008; Walumbwa, Wang, Wang, Schaubroeck, & Avolio, 2010). Employee
engagement is the individual’s involvement in, satisfaction with, and enthusiasm
for work (Harter, Schmidt, & Hayes, 2002). When employees perceive that they
are supported and treated sincerely, they increase their engagement at work.
Winning employees’ trust is a vital element of being an effective leader. Trust
has long been recognized as being fundamental to cooperative relationships
(Blau, 1964). In particular, employee trust is a critical part of the relationship
between individuals and organizations. However, the main issue has previously
been “trust in whom?” (Perry & Mankin, 2004). Hunt and Aldrich (1998)
suggested that direct supervisors have a stronger influence than CEOs. In turn,
trust in leaders has been tied to desirable outcomes such as job satisfaction,
commitment, and OCB (Dirks & Ferrin, 2002). Overall, trust in supervisors can
be said to be one of the important elements of employee engagement.
Good leaders do not have to be born with specific characteristics or traits.
Leadership emerges from one’s life story, experiences, and so forth, which can
facilitate authentic morality and integrity (George et al., 2007). Our purpose in
this study was to test the relationships among authentic leadership, employee
trust, and employee engagement. Through the research findings, we aimed to
show that via employee trust, authentic leaders facilitate closer relationships
with their employees, increase employee work engagement, and contribute to the
sustainability of the organization.

Literature Review

Authentic Leadership, Employee Trust, and Employee Engagement

Authentic leadership means leader behavior that draws upon and promotes
positive psychological capacities and a positive ethical climate that nourishes
self-awareness, an internalized moral perspective, balanced processing of
 LEADERSHIP AND EMPLOYEE TRUST AND ENGAGEMENT 615
information, and relational transparency for how leaders work with employees,
fostering positive self-development (Walumbwa et al., 2008). Additionally, trust
is a person’s confidence in, and willingness to act on the basis of, the words,
actions, and decisions of another (McAllister, 1995). Further, Schaufeli, Salanova,
González-Romá, and Bakker (2002) and Schaufeli, Bakker, and Salanova (2006)
argued that engagement is defined as a positive, fulfilling, work-related state of
mind. They claimed it is a persistent affective-cognitive state, characterized by
vigor, dedication, and absorption.

The Relationships Among Authentic Leadership, Employee Trust, and

Employee Engagement
Initially, social exchange theory was focused on individual behavior, whereafter
it was concentrated on the exchanges of small-group members, and extended
even further to the entire social structure (Blau, 1964; Homans, 1958). This
theory has later been applied to research on the manager-employee exchange
relationship (e.g., Whitener, Brodt, Korsgaard, & Werner, 1998). Researchers
adopting the social exchange approach have focused more on the norm of
reciprocity (Cropanzano & Mitchell, 2005) and found that followers are willing
to reciprocate when treated fairly and with concern by their leaders (e.g., Mayer,
Kuenzi, Greenbaum, Bardes, & Salvador, 2009). Morrison and Robinson (1997)
stated that employees believe their supervisors are obliged to tell them the truth
about the company, and, if they do not, the employees feel that they are treated
unfairly, which then decreases their work engagement. Thus, leaders’ openness
and consistency between beliefs and actions play an important role in influencing
employees’ decisions to provide voluntarily comments or suggestions intended
to spark organizational improvement, which in turn help them to learn and to be
engaged at work (May, Chan, Hodges, & Avolio, 2003). Leaders’ authenticity
must be further accompanied by integrity, defined as having personal values
grounded in morality for the leader to be respected by the employees and to be
able to influence their actions (Fields, 2007). When employees perceive their
supervisors as being consistent between words and actions and holding moral
perceptions, they are more likely to be engaged in their work. We thus formed
the following hypotheses:
Hypothesis 1a: Supervisors’ consistency between words and actions will be
positively related to employee engagement.
Hypothesis 1b: Supervisors’ moral perceptions will be positively related to
employee engagement.
Leaders must develop their self-awareness and become role models for
communication in the organization because trust depends largely upon consistency
of both communication and action, and is the emotional glue that binds followers
and leaders together (Clutterbuck & Hirst, 2002). Supervisors must further
616 LEADERSHIP AND EMPLOYEE TRUST AND ENGAGEMENT

understand their own merits and demerits, and show consistency between beliefs
and actions, as this facilitates a feeling of pride in their employees due to the
employees’ dependency on the supervisors’ professional competencies and
affective behavior. Norman, Avolio, and Luthans (2010) found that the leader’s
exhibited level of positive psychological capacities has a positive relationship
with the follower’s perceived trust in the leader. It is also important that through
their moral characteristics, leaders can show their warmhearted consideration for
others, as when there is no empathy, trust cannot be built (George & Sims, 2007).
Thus, the influential elements that develop employees’ trust for their supervisors
are integrity, goodwill, and professional competency; these are necessary
components that determine whether or not supervisors can be trusted (Colquitt,
Scott, & LePine, 2007; Mayer, Davis, & Schoorman, 1995). Thus, when
employees consider their supervisors to be consistent between their words and
actions and to hold moral perceptions, the employees will trust their supervisors
more. We therefore proposed the following hypotheses:
Hypothesis 2a: Supervisors’ consistency between words and actions will be
positively related to employee trust.
Hypothesis 2b: Supervisors’ moral perceptions will be positively related to
employee trust.
Social exchange relationships cannot develop in the absence of trust (Blau,
1964). Avolio et al. (2004) pointed out that employees’ trust in their leader is
associated with their positive attitudes and behavior. In their meta-analysis Dirks
and Ferrin (2002) also suggested that when trust in leadership is well placed,
authentic leaders guide in their actions through end values. That is to say, when
employees identify with their supervisors, they will trust their supervisors and be
willing to engage in their work. We thus formed the following hypothesis:
Hypothesis 3: Employee trust will be positively related to employee engagement.
A primary premise of social exchange theory is that one’s expectation of
unspecified obligations based on trust is formed for the other, assuring that
gestures of goodwill are reciprocated at a future time (Blau, 1964). Furthermore,
trust in leaders has been identified as a pivotal element in leadership effectiveness
(Bass, 1990). In their meta-analysis Dirks and Ferrin (2002) revealed that trust in
leaders is related to a variety of important organizational outcomes, such as high
OCB, high satisfaction with leaders, and low employee turnover. Further, they
found that trust in leaders plays a mediating role between the leader’s actions and
attitudinal variables, such as job satisfaction, while it has no mediating effect on
OCB, which is a behavioral outcome. In other words, there is a transformable
effect between trust and employees’ attitudes in that if employees believe their
leaders are trustworthy, their psychological well-being can be positively affected,
and they will be more engaged in their work. Hence, when employees consider
their supervisors to have authenticity, the desire of employees to reciprocate
 LEADERSHIP AND EMPLOYEE TRUST AND ENGAGEMENT 617
voluntarily increases, which in turn produces trust and dependency, and helps
employees to engage more fully in their work. We thus proposed the following
hypothesis:
Hypothesis 4: Employee trust will mediate the relationship between authentic
leadership and employee engagement.

Method
Participants
The participants involved in this study were employees from companies on
the ‘Top 1,000 manufacturing companies and top 500 service companies in
Taiwan’ list published in the 2008 Commonwealth Magazine (see Huang, 2008;
Ma, 2008). Managers of 37 firms agreed to support this study. A total of 915
questionnaires were distributed, and 386 valid responses were obtained. The
sample characteristics are as follows: 60.9% of participants were from service
industries and 39.1% from manufacturing industries; 56.5% were male; 6.0%
were aged under 24 years, 30.8% were 25-29 years old, 24.4% were 30-34 years
old, 20.7% were 35-39 years old, 7.3% were 40-44 years old, 10.9% were aged
over 45 years; 52.6% were married and 47.4% were not married (e.g., single,
divorced, widowed); 21.2% had obtained a high school degree, 31.1% a college
degree, 35% an undergraduate university degree, and 12.7% a postgraduate
qualification; 64.5% were general employees, 25.1% primary supervisors, and
10.4% operators; 42.7% worked in the sales sector, 36.3% in the administrative
management sector, 12.7% in the production line sector, and 8.3% worked in the
R&D sector; and 5.4% had a job tenure of less than 1 year, 16.3% between 1 and
3 years, 21.0% between 3 and 5 years, 23.3% between 5 and 10 years, 14.0%
between 10 and 15 years, 13.0% between 15 and 20 years, and 7.0% more than
20 years.

Measures
Responses for all scales were made on a 5-point Likert scale ranging from 1 =
strongly disagree to 5 = strongly agree.
Authentic leadership. To measure authentic leadership, we used the 16-item
scale developed by Walumbwa et al. (2008). We applied factor analysis followed
by a varimax rotation to obtain our factor solution that consisted of two clear
factors explaining 61.04% of the total variance. The first factor was called
“consistency between words and actions”. The factor loadings of the 13 items
ranged from 0.61 to 0.78, and the total item variance explained was 43.21%.
The second factor was called “moral perceptions”. The factor loadings of the
three items ranged from 0.73 to 0.82, and the total item variance explained was
17.83%. The Cronbach’s  for the above factors were 0.94 and 0.78, respectively.
The total Cronbach’s  for this scale was 0.94.
618 LEADERSHIP AND EMPLOYEE TRUST AND ENGAGEMENT

Employee trust. We employed McAllister’s (1995) 11-item scale to measure

employee trust. It included a 5-item “affect-based trust” subscale and a 6-item
“cognition-based trust” subscale. The two constructs’ correlation in the original
scale was .63, whereas in our study the correlation was .84. Here too we adopted
factor analysis followed by a varimax rotation to obtain our factor solution. The
analysis yielded only one factor that explained 69.12% of the total variance. The
factor loadings of all the items retained ranged from 0.74 to 0.89. We called this
factor “employee trust”. The total Cronbach’s  for this scale was 0.96.
Employee engagement. We adopted the 17-item scale (UWES) of Schaufeli
et al. (2002) to assess employee engagement. It included a 6-item “vigor”
subscale, a 5-item “dedication” subscale, and a 6-item “absorption” subscale.
There were high correlations between the three constructs (r = .77~.81, p < .001).
We therefore followed the recommendation of Sonnentag (2003) and Schaufeli
et al. (2006) and computed an overall work engagement factor score of the
UWES. We conducted confirmatory factor analysis (CFA) to examine “employee
engagement”. The CFA results exhibited that the model provided an acceptable
level of fit for the data (2 = 654, df = 119, CFI = .96, NFI = .96, GFI = .82,
RMSEA = .11), and that the loadings values ranged from 0.56 to 0.85. The total
Cronbach’s  for this scale was 0.95.
Control variables. Sonnentag (2003) argued that gender, age, and tenure can
affect engagement. Additionally, McAllister (1995) suggested that employees’
gender, age, education level, job tenure, position level, and job type might all
influence employees’ trust. Therefore, we included all of these items as control
variables. Furthermore, company type and marital status were also included as
control variables in this study.

Data Analysis
In this study we applied hierarchical multiple regression analysis to test the
hypotheses. In order to reduce problems associated with multicollinearity, the
variance inflation factor (VIF) was used to assess the degree of multicollinearity
among the variables. The results showed the VIF for each of the independent
variables ranged from 1.183 to 5.060. All of them were below the critical value
of 10.0 (Kutner, Nachtsheim, Neter, & Li, 2005).

Results

According to the results of the correlation matrix, all variables were positively
and significantly correlated with employee engagement (r = .50~.81, p < .01).
In addition, authentic leadership was positively and significantly correlated with
employee trust (r = .80, p < .01) and employee engagement (r = .58, p < .01),
and employee trust was positively and significantly correlated with employee
engagement (r = .64, p < .01).
 LEADERSHIP AND EMPLOYEE TRUST AND ENGAGEMENT 619
We had previously proposed that supervisors’ consistency between words
and actions and moral perceptions would be positively related to employee
engagement. To investigate this, the variables were entered into a hierarchical
multiple regression. We entered the control variables at stage 1 (company type,
gender, and so on), and then added consistency between words and actions, and
moral perceptions at stage 2. The results of the standardized coefficients ()
are presented in Table 1. Model 1 shows that age, marital status, and position
level significantly influence employee engagement. In Model 2 it can be seen
that both the supervisors’ consistency between words and actions ( = .369,
p < .001) and moral perceptions ( = .268, p < .001) were positively related to
employee engagement. Thus, Hypotheses 1a and 1b were supported. We had
further proposed that supervisors’ consistency between words and actions, and
moral perceptions would be positively related to employee trust. The results of
the standardized coefficients () are also presented in Table 1. Model 3 shows
that marital status, position level, job type, and job tenure had a statistically
significant influence on employee trust. Model 4 exhibits that only supervisors’
consistency between words and actions ( = .808, p < .001) were positively
related to employee trust. Thus, only Hypothesis 2a was supported. Finally,
we investigated whether or not employee trust would be positively related to
employee engagement. The results in Model 5 (Table 1) show that age, marital
status, and position level had a significant effect on employee engagement.
Model 6 exhibits that employee trust ( = .607, p < .001) was positively related
to employee engagement. Thus, Hypothesis 3 was supported.
We had further hypothesized that employee trust would mediate the relationship
between authentic leadership and employee engagement, and applied hierarchical
multiple regression to test this. The results of the standardized coefficients () are
presented in Table 1. Model 7 is identical to Model 5, and Model 9 shows that
the effect of employee trust on employee engagement was statistically significant
( = .444, p < .001). In Models 8 and 9 the effect of authentic leadership on
employee engagement decreased dramatically, from  = .562 to  = .206, but still
had a statistically significant effect. Thus, Hypothesis 4 was partially supported
in this study.
 620

Table 1. Hierarchical Multiple Regression of the Results

Independent variable Employee engagement Employee trust Employee engagement Employee engagement
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7 Model 8 Model 9

Age 25~29 years old .224* .165* .224* .191** .224* .182* .185*
Marital status Married .144* .104* .111† .051 .144* .063 .144* .103* .080†
Position level Manager .241*** .205*** .128* .067* .241*** .163*** .241*** .202*** .179***
Job type Administrate -.150* -.099*
R&D -.094† -.059†
Job tenure 15~ below 20 years -.171† -.023
More than 20 years -.150† .021
Authentic leadership .562*** .206**
Consistency between words and actions .369*** .808***
Moral perspectives .268*** .009
Employee trust .607*** .444***
R2 .129*** .423*** .098* .682*** .129*** .461*** .129*** .409*** .475***
ΔR2 ----- .294*** ----- .584*** ----- .332*** ----- .280*** .066***
Adjust R2 .076*** .384*** .043* .661*** .076*** .427*** .076*** .371*** .440***
F 2.443*** 11.012*** 1.792* 32.210*** 2.443*** 13.446*** 2.443*** 10.893*** 13.613***
Note. N = 386; † p < .1, * p < .05, ** p < .01 , *** p < .001. Only statistically significant control variables are shown in the table.
LEADERSHIP AND EMPLOYEE TRUST AND ENGAGEMENT
 LEADERSHIP AND EMPLOYEE TRUST AND ENGAGEMENT 621
Discussion

Implications
Our aim in this study was to examine the relationships among authentic
leadership, employee trust, and employee engagement. However, our findings
illustrated that supervisors’ authenticity is positively related to employee trust,
and that within authentic leadership it is a supervisor’s consistency between
words and actions that has the strongest influence, and there is no significant
relationship between supervisors’ moral perceptions and employee trust. Just
like the sayings of Confucius: “People will hear what one says and observe what
one does”. That is to say, employees appraise the words and actions of their
supervisors simultaneously. Thus, a supervisor’s consistency between words and
actions increases employees’ trust and dependence more than does a supervisor’s
moral perceptions.
Our findings provide practical implications for managers and organizations.
First, enterprises should recognize the value of authentic leadership. However,
it is not easy to foster such leaders, as they must not only hold a high level
of opinion and accurate judgment, but also be imbued with the characteristics
of integrity and concern for others. We therefore recommend that supervisors
develop the following five categories of behavior: behavioral consistency,
behavioral integrity, sharing and delegation of control, competent communication
(e.g., accuracy), and demonstration of concern (Whitener et al., 1998). George
et al. (2007) also suggested the following useful methods to foster authentic
leadership: knowing your authentic self, practicing your values and principles,
balancing your extrinsic and intrinsic motivations, and empowering people to
lead. When supervisors demonstrate these behaviors the likelihood increases of
employees reciprocating actions, trusting their supervisors, and engaging in their
work.
Second, trust is an adhesive force that links people, processes, and the
environment, and can therefore improve the rate of success, while lack of trust in
supervisors and the organization has been found to influence a lack of engagement
by employees in their work (Covey & Merrill, 2006). Employee work motivation
primarily comes from support from and psychological trust in supervisors;
when employees trust their supervisors, they will be more engaged in their
work. Covey and Merrill suggested that authentic concern can stimulate trust,
which then produces reciprocation. By leading their employees authentically
supervisors gain approval from their employees, whose willingness to engage
then increases. Further, by adopting good communication skills, supervisors can
build mutual trust, which further helps increase employee engagement. Elsbach
and Elofson (2000) and Norman et al. (2010) suggested that supervisors use
easily understood language and communicate more transparently as this leads
622 LEADERSHIP AND EMPLOYEE TRUST AND ENGAGEMENT

to positive relationships with their employees, and an increased trust in the

leaders. Thus, effective leaders are also effective communicators (Clutterbuck
& Hirst, 2002). Through authentic communication supervisors can build trusting
relationships and show their support for their employees through encouragement.

Limitations and Suggestions for Future Research

As with most studies, this research is not without limitations. The first
limitation is related to the use of self-reported survey data from the same
sources, raising concerns regarding common method variance (CMV). As our
research was based entirely on employee perceptions, the results could thus be
artificially inflated. To minimize this risk, we applied procedural remedies in our
study as recommended by Podsakoff, MacKenzie, Lee, and Podsakoff (2003).
We included (a) psychological separation of measurement, (b) protection of the
respondent’s anonymity and an attempt to reduce evaluation apprehension, and
(c) counterbalancing question order. By applying these, we were able to reduce
significantly the likelihood of CMV. The second limitation in this study is
cross-sectional design, as it did not allow us to infer a causal effect between the
constructs. A longitudinal research design could allow us to make a sound and
robust causal conclusion.
In order to expand on the current findings, we propose the following
directions for future research. In this study we illustrated employees’ perception
of authentic leadership. However, the interdependent relationships between
supervisors and employees were pointed out by Kelley (1992). We therefore
suggest that future researchers could measure both leader and employee
authenticity, testing the paired authentic fit effect on employee engagement.
Furthermore, within the academic research of management, in numerous studies
researchers have confirmed differences exist between the cultural values of
areas and nations. Managers must adapt to the cultural differences if they are to
achieve their goals effectively (Hofstede, 1980). We suggest future researchers
could take culturally related variables (e.g., individualism-collectivism) into
account. Finally, in this study, we treated authentic leadership as a variable at the
individual level, and did not analyze it through multilevel modeling. However,
authentic leadership operates at multiple levels, including individual, dyadic,
group, and organizational (Yammarino, Dionne, Schriesheim, & Dansereau,
2008). Therefore, we suggest that future researchers explore models through
multilevel modeling, thereby clarifying and uncovering a more realistic effect of
authentic leadership on employees’ attitudes and behavior.
 LEADERSHIP AND EMPLOYEE TRUST AND ENGAGEMENT 623
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