Abstract
This article investigates the role that trust plays in moderating the relation between employee engagement and fairness, in service enterprises. The study’s purposefulness was to examine, first, the link between employee engagement and fairness and, second, whether trust — often treated as a dependent or an intermediate construct—moderates the relation between these two constructs. By utilizing both cross-sectional and quantitative-data collection methods, a questionnaire survey allowed collecting data from 202 service employees, randomly selected from both private and public banks, in Pakistan’s Larkana District. Tested through regression, a pair of empirically assessed hypotheses show the distinct moderating role that trust plays in the relation between employee engagement and justice, in service enterprises. The article concludes with the study’s limitations, which point to the implications and scope for policymaking and future research.
Introduction
According to [1], for more than 2,200 years, humanity has been subjugated under totalitarian régime’s “absolute Despotism”, explicitly addressed in USA’s Declaration of Independence (www.ushistory.org). Owed to the régime’s curious conception of ‘fairness’ or ‘justice’, Distributive justice has been consistently downgraded, and in lieu of it, the left-centre-right particracy has been subversively promoting corruption, occult pseudo-metaphysics and violence. Thirsty for fairness and righteousness, business researchers inadvertently contribute to this downgrade, when they ignore the fact that only two forms of justice truly exist: Corrective Justice and Distributive Justice, wherein redistributive justice (civil code) and retributive justice (penal code) compose Corrective Justice, and the fair, arithmetical isodistribution of public material and political goods comprise Distributive Justice [1, pp. 257–268]. Just because business enterprises and other societal organizations pursue and rely on the ethical, moral and civic ideals of fairness or justice, that does not generate any new fairness or justice ideals, peculiar to business enterprises and other societal organizations.
One of the popular research topics in the previous three decades is embracing fairness in operations of business enterprise [2]. It is “grown around attempts to describe and explain the role of fairness as a consideration in the workplace” [3] and is also important as it generates perception of justice in an organization. Fairness also results in having a higher level of work performance, encompassing trust in supervisors, creating psychological ownership and generating organizational commitment [4].
Before the empirical study of Colquitt et al. [5], fairness was only conceptualized by researchers as fairness in processes to reach outcomes of decisions [6], fairness in consistency of ends with the norms (implicit) for allocation [7, 8], and fairness in treatment received by an individual in procedures [9]. Considerable research has been conducted over time on fairness in processes and outcomes [10], yet very little research on fairness in treatment received by individuals in procedures is documented [11].
The concept of fairness (in treatment) given by Bies and Moag [9] was comprised of four criteria (justice, truthfulness, respect and propriety). Among these, respect and propriety are considered under fairness in interaction with supervisor, and justification and truthfulness are categorized under fairness in explanations supervisor offers as decision making procedures [5, 12]. Most researchers in the field of fairness [13–16] surveyed classifications published by Colquitt, et al. [5], who empirically proposed and supported such categories. Nevertheless, research conducted in organization behaviour commonly uses terms which include candid explanations (fairness in explanation). Certainly, a number of researchers [17–19] claim that fairness (in explanation) is far more important in comparison to other dimensions of fairness. One of the prime salient features of fairness (in explanation) is that it exerts significant effects, trust [20] and satisfaction [21], in an employee’s behaviour and attitude.
Employee engagement on the other hand has remained an unclear notation in the literature [15]. Kahn [22] proposed that people express themselves physically, emotionally and cognitively when showing engagement in performing their roles. Later, it was also argued that if you want your employees to demonstrate engagement physically, emotionally and cognitively, then performance appraisals must be perceived as fair [23].
Employees tailor their personal engagement with their perceptions in situations (i.e., benefits, guarantee, safety) [22]. Perception of fairness generates a sense of safety in that if they were unable to complete their task (due to external factors), their organization will treat them fairly by considering their efforts. Similarly, it generates psychological safety where they feel unthreatened and able to predict social situations, which enables them to engage.
Commutatively, these situations urge employees to work without any negative consequences, i.e., self-image, status or career [22]. This reciprocal relation between employee and employer is said to be trust. This trust is because of a psychological contract that generates reciprocity [24]. Robinson [25] and Robinson & Morrison [26] proposed that trust binds this reciprocal relation. If employees feel that a promise is breached, then they reciprocate by reducing efforts and performance because the trust is lost [27].
In this study, we expect trust to play a moderating role between fairness (in explanation) and engagement. Leaders depict proximal behaviour to avoid candid explanations for decision-making by showing care, respect and sincerity. In this case, employees consider that care, respect and sincerity are the organization’s benevolent support and they start showing engagement in their work. Organizational benevolent support creates trust, it is integral for maintaining managerial effectiveness and increasing organizational performance [28], and it encourages volunteer support which is required now because working environments have transformed over the years [29]. Considering social exchange theory [30], justice in the work place reciprocates in behaviours, which benefit the source. We assume that fairness may recompense the imbalance of social exchange by reciprocating goodwill to the organization.
The study comprises two purposes. First, we examine the link between fairness and employee engagement, and second, we investigate whether trust moderates the relation between them. The results of our studies will contribute in four ways. First, the findings will direct the focus of research to fairness (in explanation) from other dimensions of fairness. Second, our findings will contribute to the literature regarding trust as a moderating variable to engagement. Third, we assembled literature regarding fairness, with engagement having a moderating role in building trust. Lastly, it will enhance the negligible studies in fairness in a South East Asian (Pakistan) context.
Theoretical background
Fairness
The first person to apply the concept of fairness to performance appraisal is Greenberg [31]. fairness in organizational context is when organizations consider fairness as an integral function [31]. Literature reveals that people are attracted to three dimensions of fairness. First, fairness in outcomes, also known as “content of fairness” [32], provides for individual gain in organizations [33]. Colquitt et al. [5] define it as fairness in comparison to what others receive. Second, fairness in procedures and dealing with issues of fairness in methods, mechanism and processes used to reach outcomes [33]. it is also the perceived fairness in performance appraisal criteria adopted in the organization [15]. Lastly, the third dimension was presented by Bies & Moag [9], who explain fairness as the conduct perceived at the time of implementation of procedures. Additionally, an extension is proposed by Greenberg [12] in fairness literature that fairness (in conduct) may contain two other factors. Fairness (in interaction), which is the treatment (politeness, dignity, respect) employees receive from supervisors at the time of implementing procedures or considering outcomes. Fairness (in explanation) is providing the information to subordinates for procedures and outcomes. Fairness (in explanation) is established when interpersonal communication is kept fair during the appraisal process. However, the model proposed by Bies & Moag [9] suggests that fairness (in procedures) serves as a factor of an individual’s reaction to the organization’s original action. In contrast, Fairness (in explanation) and fairness (in interaction) are factors of individual authority figures (i.e., supervisors) [20].
Several studies have been conducted on distributive and procedural dimensions of fairness [34, 35]; however, much less has been done on fairness (in explanation), leaving some unresolved issues [2]. Three streams are found in the literature regarding fairness (in explanation). The first classifies antecedents [See: 13, 16, 19, 20, 36]. The second stream refers to outcomes [See: 13, 37–42]. Lastly, the attention is towards the link between employee attitudes, behaviour and fairness (in explanation). For example, Patient & Skarlicki [36] found that moral development moderates the relation in leaders with empathic concerns on interpersonal and informational communication. In addition, Andrews et al. [43] revealed that when group cohesion is high rather than low, individuals’ perception within a work group moderates the relation between fairness (in explanation) and commitment.
Employee engagement
Employee engagement has remained a frequently discussed topic in Human Resource Management since Kahn [22] provided the idea. Many researchers and practitioners have shed light on this subject with growing interest and discussion; yet, the concept is an enigma with inconsistencies and overlapping definitions [44, 45]. Additionally, the concept of employee engagement lacks a universal definition, which makes it difficult to conceptualize [15, 45]. Kahn [22] has defined it as “the harnessing of organization members’ selves to their work roles; in engagement, people employ and express themselves physically, cognitively, and emotionally during role performance”. Similarly, Seligman & Csikszentmihalyi [46] defines it as traditionally developing of a positive psychology. Alternatively, employee engagement is considered as the conceptual opposite of burnout, both constituting a different independent construct and a differentiation in status, therefore, it must constitute a dissimilar instrument [47]. In their perspective, engagement is “a positive fulfilling, work-related state of mind that is characterized by vigor, dedication, and absorption” [47]. When at work, mental resilience, persistence and vigor are utilized in dealing with difficulties. Dedication is a deep involvement in work, along with enthusiasm, inspiration, pride, challenge and a sense of significance. Lastly, absorption is a sense of attachment where, over a period of time, the employee finds it difficult to detach himself/herself from work.
Different authors have built on Kahn [22]. Luthans & Peterson [48] established employee engagement empirically by working on personal engagement. He constructed questions by utilizing focus groups of over 2500 businesses, constituting health care and educational units. Similarly, Rich et al. [49] also developed a scale proposing physical, emotional and cognitive engagement as new dimensions. However, Thomas [50] argued on these dimensions pertaining to consequences and proposed a unidimensional concept of engagement. However, prior behaviour is unidimensional.
Since the concept of employee engagement is overlapping with job involvement, motivation and commitment [15], few researchers have argued for its distinctiveness in concept with job involvement, motivation and commitment [44, 51–53]. They have mentioned that conceptually all are different from one another, which results in different dimensions [15]. Organization commitment and employee engagement are also different in the manner in which personal attitude and attachment towards the organization are characterized. Engagement is extent of employee attentiveness in performing role, which contrasts attitude [52].
Social exchange theory
Social exchange theory states that a person encounters numerous interpersonal transactions in their social life. Explicitly, the individual may come across having “economic exchange relationships” and “social exchange relationships” [54]. “Economic exchange relationships” have narrow scope as they foster transactional relationships, however, the individual depicts strong emotional connections, mutual support and long-term relations in “social exchange relationships” [55]. In relation to social exchange relationships, trustful relations are based upon the rule of reciprocity with mutual loyalty; repay others for moral with moral [56, 57] and immoral with immoral [58]. Additionally, it requires the exchange party to trust and affiliate others [59]. The study of Lavelle et al. [60] revealed that an organization or leader can build a social exchange relationship. Similarly, this relationship leads to making work behaviour effective, increasing performance at work and providing help to colleagues [61].
Trust
Trust has yet another debatable definition in the literature [62]. It is also defined in context of trustee by some scholars, as it is a confident and positive expectation in situations bearing risk [63, 64]. Trust in leaders (i.e., managers) is an important source to reach organizational effectiveness [65]. Contributions of employees cannot be replicated or imitated when they have trust in their leader, therefore, trust is also presumed to be a contributor in organizational performance [66]. Management desperately needs performance above expectations and trust contributes in willingness to perform above expectations [67]. It is the willingness of subordinates to trust in their leader and to be vulnerable in actions; however, it is the responsibility of the leader to communicate plans and procedures to them as made and implemented by management [68]. It is also important for a supervisor to act in a way with his or her followers that build behavioural and emotional trust towards them [69]. Supervisors can develop and strengthen their trust by practising fair and consistent leadership [70]. There will be a flow through trust in leadership when judgement of an employee to trust is reciprocated by the supervisor [68]. Similarly, distraction from high work performance is observed in absence of trust in the supervisor [71].
The role of trust is centre of discussion in number of ways. Lind and Tyler [72] focus on trust was purely as economic concern of employee because it provides explanation about likely benefits to be gained from their current context of employment. Tyler and Degoey also argued that trust provides identity relevant information [73]. Put simple, showing trust is important because it explains your standing within organization [74]. Folger [75] explains fairness-trust under different circumstances as when employees feel performance appraisal is unfairly, they start predicting what their outcomes could or should have been. Referent cognitions theory helps in answering these questions, it argues that individuals seek explanations regarding trust worthiness of decision maker (employer) [76]. When fairness perception for performance appraisal is high employees feel no need to explore the further reasons of decision [75]. Accordingly, trust in decision making entity matters more to people in low, rather than high, fairness in performance appraisal. Thereupon, trust is not given, but it must be earned by supervisor to the extent to which fairness is more conducive to organization.
Hypothesis development
Employees believe that their leaders (i.e., managers) are organizational agents [77]. Therefore, how their immediate supervisor treats them tends to predict how the organization is viewed by employees. Additionally, employees most often rely on the guidelines provided by their immediate supervisor because they lack knowledge and experience in dealing with certain job situations [78]. Hence, fairness will most likely help employees show engagement and increase work performance because employees often seek explanations during times of ambiguity (i.e., distribution of rewards) and supervisors are involved in providing information (i.e., procedure, management decisions). This helps employees show engagement and is reciprocated by the supervisor. We examine fairness (in explanation) because former studies have shown information sharing with employees enables engagement and develops explanatory arrangements to expect outcomes [79, 80]. We argue that fairness is positively related with employee engagement. This brings into consideration uncertainty management theory [81]. Uncertainties increase anxiety regarding fair treatment from the immediate supervisor because these situations lack information and breed a desire to reduce anxiety. Therefore, when the supervisor communicates details and the reasons are perceived to be fair, employees feel less uncertainty and feel secure about their future career [82]. Less uncertainty and a secure career will help them engage more easily. Therefore, we propose the following:
Hypothesis 1: Fairness is positively related to employee engagement.
We further hypothesize that trust will moderate fairness and the employee engagement relation, because people feel obliged to reciprocate the supportive treatment they receive. Employees who perceive trust from their organization or leader in the workplace tend to reciprocate the same in their social exchange relationship [30]. Deducing this to performance appraisal fairness, when their immediate supervisors make them feel fully informed, providing sincere explanations about procedures and distribution of rewards, then employees feel motivated to reciprocate in positive ways (i.e., increase work performance and engagement). Possibly, they are reciprocating their immediate supervisors because they tend to perceive their supervisors as organizational agents [77]. Earlier, we hypothesized that fairness is positively related to employee engagement. This relation gets strengthened in the presence of trust and it will enhance the previously hypothesized relation positively. Hence, we predict the following:
Hypothesis 2: The positive relation between fairness and employee engagement is stronger with trust.
Methods
Participants, Procedure, and Sample
The research comprised cross-sectional and quantitative data collection methods. We used a mail questionnaire survey to collect the data in Pakistan. Based on random sampling, the sample of 275 employees were selected from different banks (public and private) located in Larkana District. Two and a half months after the initial distribution of the questionnaires to the employees, a follow-up letter was mailed. A total of 212 responses were received constituting a response rate of 77%. Ten of the responses received were not useable because of having experience less than one year, thus not having gone through the appraisal process. The remaining 202 responses were used to test the hypotheses of the study.
Demographic data distribution show that 84% of respondents were male, 70% were in age group of 25 to 34 years, 62% were married, 15% of the respondents were having experience greater than five years in banking sector and 55% of the respondents had a Masters Level education. These demographical characteristics indicate that respondents are educated, experienced, professional and possess reasonable knowledge about their position, responsibilities, guidelines and procedures.
Instrument
Items for fairness (in explanation) were adapted from Colquitt [5], the language of questionnaire was modified to reflect performance appraisal settings, and this questionnaire was used by Gupta & Kumar [15] in an Indian context. The employee engagement measure items were adapted from Thomas [50] and are also employed by Gupta & Kumar [15]. Trust was measured by adapting the scale from Brockner et al. [83] and was used by Crawshaw & Brodbeck [76]. All items were measured by the five-point Likert scale from “strongly disagree – (1)” to “strongly agree – (5).”
Ethical considerations
The participants responded out of their free will and were not personally known to the researchers. Prior to sending the postal questionnaire, written permission from each branch manager to conduct research was obtained. The permission letter and research instruments clearly stated the purposefulness of the study and provided instructions to fill the questionnaire. The researchers ensured privacy, anonymity and confidentiality of the respondents. Because this study is part of a project, ethical considerations are adhered to within guidelines of the School, the University and the project committee.
Data analysis
For the purpose of analysis, we used regression to test the hypothesis, using the Statistical Package for the social sciences (SPSS & SPSS AMOS, V21). Having taken care of the errors extension of multiple regression, we were enabled to test regression equations simultaneously. Additionally, Hair [84] discussed that it allows us to examine relations between or among independent and dependent variables (either factor or measured). Confirmatory Factor Analysis (CFA) has been conducted to measure the adequacy of our measurement model. Cronbach Alpha was used to test the internal consistency of the items to estimate reliability of test scores. However, to test the interaction effect, a Hierarchical Multiple Regression Analysis (HLM) was conducted [85]. It was also employed by Gupta & Kumar [15] in the context of India, while measuring impact of performance appraisal justice on employee engagement.
Results
Our hypothesized three-factor model provided a good fit to the data (χ2 = 89.220, χ2/ df = 2.230, CFI = 0.947, IFI = 0.948, and RMSEA = 0.078. Relative χ2 (χ2/df)<3, CFI & IFI > 0.90 and RMSEA < 0.08 were taken as acceptable threshold levels [5, 86]. Descriptive statistics, a reliability analysis and correlations are presented in Table 1. Among the variables, the informational justice mean value is 4.01, employee engagement as 4.08, and trust is 3.78; however, the standard deviations are 0.623, 0.505 and 0.772, respectively. Cronbach’s alpha values for the items are ranging between 0.9 > α≥0.8, referring to internal consistency as ‘good’ [87] and reliable for further statistical analysis. The correlational analysis indicates that all correlations are statistically positively correlated and are significant at p < 0.01.
Mean, Standard Deviation, Reliability and Correlations of study variables
Mean, Standard Deviation, Reliability and Correlations of study variables
SD: Standard Deviation. **P < 0.01.
To test our proposed hypothesis that fairness is positively related to employee engagement and that trust moderates the relation between fairness and employee engagement, a hierarchical multi-regression analysis was conducted. In the initial step, fairness and trust were included and they accounted for a significant amount of variance in employee engagement R2 = 0.259, F (2, 199) = 34.789, p < 0.001 (Table 2). To avoid potential problems of multicollinearity with an interaction term, the variables were centred before creating interaction between fairness and Trust [85].
Change Statistics
aPredictors: (Constant), Informational justice, Trust. bPredictors: (Constant), Informational justice, Trust, Informational justice×Trust.
Next, the interaction term was added to the regression model between fairness and trust, which accounted for a significant proportion of variance in employee engagement, ΔR2 = 0.092, ΔF (1, 198) = 28.081, P < 0.001 (Table 2), b = 0.331, t = 5.299, p < 0.001 (See Table 3, Model 2). Additionally, when exploring the interaction, we found that when trust is high, engagement is greater, b = 0.49, t = 4.992, P = 0.000; however, significantly low engagement was observed with low trust b = 0.376, t = 5.217, P = 0.000. (see Fig. 1).
HLM analysis
*p < 0.05; **p < 0.01; ***p < 0.001.
The moderating effect of trust on the relation between fairness and employee engagement.
The results offer support for both hypotheses; there is a positive relation between fairness and employee engagement (r = 0.355, p = 0.01), and the positive relation between fairness and employee engagement is stronger with trust (ΔR2 = 0.092, ΔF (1, 198) = 28.081, P < 0.001).
This study enhances the existing literature on trust. In accordance with social exchange theory, we analysed the effect of trust on the relation between fairness and engagement. Perception of fairness (in explanation) in appraisal has emerged as an important antecedent of employee engagement [15]. Similarly, our study also shows the positive correlation between fairness and engagement. More engaged employees have reported higher levels of fairness, which is consistent with the study of Gupta & Kumar [15]. Additionally, it suggested emphasis on fairness (in explanation) more frequently in service sectors, such as banks [39]. The employee considers fairness before deciding to engage in their work. Taylor et al. [88] has also discussed that to generate employees’ self-esteem and admiration among employees, truthfulness of the information must be assured. Employees who exhibit greater engagement in work are those who have been communicated with the necessary information during their performance appraisal.
Trust strengthens the relation between fairness and engagement. Being informed by the supervisor generates a psychological contract and frequent behaviour by the supervisor in delivering timely, sufficient information, which tends to create trust [89]. This generated trust encourages employees to reciprocate positively by engaging in work and increasing performance. The stronger the psychological contract, the greater the trust. Consequently, the greater the trust, the higher the engagement and vice-versa. Likewise, employee trust will also increase if they perceive fairness in determining rewards and ways to achieve outcomes [55, 72]. Similarly, a greater level of fairness will generate high trust [90], which encourages the employee to demonstrate higher engagement.
Our findings also have practical implications. At a very general level, fairness in explanation plays an important role to contribute in employee engagement. Therefore, employees should be provided with sufficient and truthful explanations in performance appraisal settings. Similarly, the decisions for awarding rewards or punishments shall be provided timely and with proper feedback. It is worthwhile to emphasize fair appraisal-related information [15]. This information will allow employees to trust in agents (managers) and increase engagement. Employee reciprocity, willingness of employee to engage in discretionary extra-role behaviour, is strongly dependent upon perceptions of the beliefs, integrity and benevolence of managers [91]. Since, trust is such a significant feature of employee-employer relationship, management must work to earn trust of employees by gathering and sharing evidences of their trust, if they expect to gain discretionary support of their employees.
It is important for managers to share information with employees. Therefore, open and transparent communication shall be held between the employer and employee. In this way, trust will build between the employee and employer. A positive perception for fairness will enhance the engagement of employees at work. Additionally, engagement at work will also increase task productivity [92] which is expected out of employees.
This study consists of some limitations. First, the data were collected from one district (Larkana, Pakistan) only. Second, the study incorporated both public and private banks. Third, trust is considered in the support for organizational authorities [83]. Additionally, an important limitation of this research is that it has largely ignored the context in which trust is engendered. Therefore, an strict non-recursive regression approach is used to test hypotheses. Lastly, cross-sectional designs may presume, but not confirm, causality. Future studies may incorporate trust on two different levels: organizational and supervisory [93]. Similarly, comparative analysis may be carried out separately for public and private banks.
Despite the abovementioned limitations, this study adds to the existing knowledge of fairness and engagement. The study has empirically elaborated on the distinct moderation phenomenon of trust between two constructs. Finally, this study established that managers can increase employee engagement by winning their trust.
Declaration of conflicting interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Footnotes
Acknowledgments
This work was supported by the National Natural Science Foundation of China (71472055, 71272175), National Social Science Foundation of China (16AZD0006), and Heilongjiang Philosophy and Social Science Research Project (14B105).