How Ethical Leadership Shapes Employees' Readiness to Change

Introduction

Today's organizations are operating in such a highly dynamic and competitive environment that they need to undergo continuous change. However, most change projects fail to achieve the expected results, and people's attitudes are a likely reason for this outcome. Some people may welcome change, viewing it as a chance to draw benefits and improve their status in the organization; others, however, view it as a threat and display negative attitudes toward it. In the latter case, people are said to be resistant to change. This resistance might be due to their inability to adjust their behavior, skills, and commitment to meet the new requirements; they may not possess skills related to a readiness to change. Successful change requires readiness to change, as it is a critical factor in bringing about effective implementation of change. As George and Jones state, "organizations only change and act through their members".

Individual readiness to change thus plays an important role in every instance of organizational change and appears to be critical in successfully implementing changes in organizations. This concept is similar to the "unfreezing" concept introduced by Lewin to refer to the process by which beliefs and attitudes about a pending change are altered in a way that change is perceived as a necessity, and likely to be successful. While theorizing readiness to change in this way has a high level of acceptance, it overemphasizes personal beliefs about the appropriateness of the change in the organization and underemphasizes the personal capacities of employees and their willingness to make change efforts. However, the latter elements are a clear indication that the employee is truly ready to change. If an employee is not willing to change, then their adaptation to the change can be limited, thus undermining the success of the implementation of any change in the organization. In fact, scholars increasingly emphasize involvement and commitment-to-change conceptualizations to refer to this concept.

Individual readiness to change is thus defined in terms of reactions toward the change, where the person has confidence in his/her abilities to manage it by accepting, embracing, and adopting a particular plan to purposefully alter the status quo. In Vakola's words, for example, a person is ready to change when he/she "will start or continue being engaged in behaviors associated with change such as support and participation," which requires that this person "has confidence in his/her own ability to succeed in change". Thus, taking into consideration these insights from the literature, employees' readiness to change will be conceptualized in the current study as the extent to which employees have confidence in their own abilities to succeed in change, and are psychologically or physically prepared to participate and be involved in making the change work.

As an individual's readiness to change is so critical for organizational change to be successful, the identification of its antecedents has become an issue of interest among practitioners and scholars during the last decade. Drawing on Choi and Holt et al., these antecedents are typically grouped in terms of context (e.g., organizational culture, leadership), content (e.g., extent, favorableness, and appropriateness of the change), and process (e.g., successful history of change and positive experiences in previous change projects and fairness of the change process). Factors related to the individual are also important antecedents (e.g., change self-efficacy), but several previous research studies have suggested that individual factors appear to be far less important than situational variables in predicting an individual's readiness to change. In fact, for employees to be ready to change, previous studies have revealed the critical influence of the context, including leadership. In particular, transformational leadership has been highlighted as a critical antecedent of readiness-to-change-related outcomes. Because transformational leaders are characterized for articulating a challenging and attractive future vision of the organization as well as for inviting their employees to challenge the status quo these leaders are highly likely to enhance employee readiness for change. In effect, these leaders create the vision and institutionalize the change efforts and are more likely than others to be proactive and coach the change, which is critical to prepare employees for change efforts. However, some previous research reveals low levels of variance explained by this type of leadership in some change-related employee outcomes, which suggests that other elements could also be important in this regard. For example, trust in leaders – intimately related to ethical behavior and ethical leadership – is also important to ensure readiness to change, which suggests that the ethical dimension of the leader could make a difference in helping boost this valuable individual outcome in organizations. Thus, other more ethics-focused forms of leadership approaches may also capture significant variance in predicting such an important employee outcome. Hoch et al., for example, found that ethics-rooted leadership approaches such as authentic and ethical leadership show similar correlations as transformational leadership with a wide variety of positive employee outcomes (e.g., trust in supervisor, engagement, and job satisfaction). Furthermore, their meta-analytic study found that the more emphasis leaders put on ethics, the stronger their ability to predict positive outcomes. Ng and Feldman also demonstrate that ethical leadership, even in the presence of transformational leadership, is significantly positively related to task performance of employees. Thus, there is the possibility that ethical leadership can play an important role in predicting a valuable outcome in the workplace such as readiness to change, which until now has been practically unexplored.

In effect, a review of the literature reveals that perceiving managers as trustworthy and having faith in their intentions, which is likely to occur when employees are led by ethical leaders, can underlie employees having a stronger readiness to change. However, research has not explicitly addressed the role of ethical leadership in promoting employees' readiness to change in organizations. In studies on ethical leadership, only Sharif and Scandura focused on change, although they did not evaluate the influence of ethical leadership on employees' readiness to change. In fact, existing research connecting change and leadership has failed to investigate the impact of leadership on change outcomes, with studies being more focused on the role of leaders in supporting change. However, ethical leaders are, among other things, trustworthy, fair, and people-oriented, and provide ethical guidance. They encompass a number of critical features that can reduce the stress and turmoil faced by employees in uncertain and changing times. Because stress makes employees develop negative attitudes toward change, ethical leaders may have a positive impact on employees' readiness to change. Such an impact may also occur indirectly, through shaping the culture of their organizations in a way that favors readiness to change. Leaders determine the aspects in which the culture of their organizations emphasizes most, which ultimately shapes the behavior in the workplace, so the idea that ethical leaders could foster readiness to change through shaping the culture of their organizations is underpinning and fills an important void in the literature.

Leaders constitute primary sources of information about salient attributes of the environment, and play an important role in shaping the culture within the organization, a concept that is related but distinct to organizational climate. The organizational climate describes the shared perceptions of those aspects of the work environment (i.e., policies, practices, and procedures) that inform members about which behaviors will be rewarded, expected, and supported. The organizational culture instead concerns the shared basic, implicit assumptions (i.e., taken-for granted beliefs about how things should be in the organization that reside below the surface), beliefs, and values that are taught to newcomers as the proper way to think and feel, and that guide the behavior within the organization. Thus, while the emphasis in the organizational climate is on tangible policies, practices, and procedures as the causes of people's experiences, the emphasis in the organizational culture is on the values, beliefs, and assumptions that are implicit in all these mechanisms. Leaders, with their espoused values, behavior, and actions, play an important role in shaping both aspects, but may be more important in shaping the system of shared values, beliefs, and assumptions that helps direct employees' decisions and behaviors within the organization. In fact, the measurement of organizational culture has typically focused more on values than on artifacts (i.e., the visible and perceptible language, materials, and behaviors in an organization).

Thus, by choosing the organizational level of analysis to conceptualize the organizational culture in this study, leadership (either from the upper, middle, or lower echelons) will be considered as helping to embed their beliefs and values into employees' shared understandings. Indeed, leadership is intimately linked to communicating and inspiring values in others, and this process is highly likely to be effectuated through embedded mechanisms, both primary (i.e., deliberate role modeling, disciplining, and coaching) and secondary (i.e., organization structures, procedures, and formal statements). Furthermore, these values are more than likely to be fostered because of their usefulness in the past in helping organizations to adapt themselves to external problems and to solve internal integration issues. Thus, it is of no surprise that leaders typically become transmitters and drivers of values, beliefs, and assumptions concerning the most important issues faced by employees in gaining organizational effectiveness.

In this sense, ethical leaders have distinctive characteristics that can have a special influence on shaping an organizational culture of effectiveness, conceptualized as the shared assumptions, beliefs, and values that affect employees' attitudes and behaviors in a way that drives effectiveness. For example, servant leaders, who practice an ethical form of leadership, have an important positive impact on team effectiveness. Team effectiveness, in turn, is usually seen in organizations where the organizational culture fosters organizational change. As such, for organizations to be effective in terms of change, shaping an organizational culture of effectiveness that emphasizes aspects, such as dealing with change, working in teams to achieve goals, customer orientation, and the strength of these shared beliefs and values, may be very helpful. Such a culture might be more aligned with change objectives which, according to existing research, should encourage employees' readiness to change. This leads us to suggest that ethical leaders could encourage employees' readiness to change through shaping an organizational culture of effectiveness. Yet, existing research has not addressed any of these issues, so the question of whether ethical leaders foster employees' readiness to change, and whether an organizational culture of effectiveness mediates this relationship, is an intriguing research gap to fill.

The principal research objective is therefore to explain the role of ethical leadership in encouraging employees' readiness to change. To this end, this study examines the direct positive effect of ethical leadership, and the mediating effect of organizational culture of effectiveness in this relationship. These efforts advance previous research that has indicated that employees' readiness to change is positively related to factors such as trust in management, support from management, empowerment of employees, and good leader–employee relationships. In addition, by investigating these relationships, this study helps expand the set of positive outcomes of ethical leadership. Also, this investigation is based on an Arab cultural context (i.e., Egypt), where ethical leadership research is lacking. In ethical leadership research, studies using Western societies abound, yet the Arab context has been scarcely explored. However, the cultural context can affect how employees react to leadership perceptions and could shape the relationship between ethical leadership and its outcomes. Thus, by offering findings in a non-Western society like Egypt – that professes high levels of power distance, collectivism, avoidance uncertainty, restraint, and short-term orientation – this study may offer compelling insights concerning the context-sensitivity or universality of ethical leadership theory, particularly on the basis of the relationship that is predicted in this study between ethical leadership and employee readiness to change.

This study also advances previous research by investigating the mediating effect of organizational culture of effectiveness on this relationship, and thus by explaining how or why ethical leadership predicts or causes employees' readiness to change. Although previous research has indicated a positive relationship between ethical leadership-related approaches and team-organizational effectiveness, the relationship between ethical leadership and organizational culture of effectiveness has yet to be studied. However, some aspects of an organizational culture of effectiveness (i.e., teamwork) enhance employees' readiness to change, and could help explain how ethical leadership positively relates to employees' readiness to change. Thus, the current study will offer new insights into how to succeed in times of organizational change. Using Egyptian society, this study will also contribute to the literature in Arab societies as well as in countries with similar cultural characteristics. For managers, this study is particularly relevant; it provides new knowledge and strategies to help encourage readiness-to-change-related tendencies in the workplace. Figure 1 summarizes the research model.