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...