LITERATURE REVIEW OF LEADER INTEGRITY 1

A Literature Review of Leader Integrity and the Impact on Employee Engagement and
Retention
Mary Collins
Siena Heights University
LDR 602: Research and Professional Writing in Leadership
Dr. James Loughran
February 26, 2021
LITERATURE REVIEW OF LEADER INTEGRITY 2

A Literature Review of Leader Integrity and the Impact on Employee Engagement and

Retention

Employee engagement and retention is understood to be a vital component to the growth

and success of many organizations worldwide. An engaged workforce can have a direct impact

on an organization’s financial outcome, sustainability, and reputation. Whether an employee is

engaged or disengaged at work can often be an indicator of their willingness to remain with an

organization. Most engagement and retention strategies of an organization depend on the

influences of their leaders to meet desired outcomes. Leaders with certain character traits, such

as integrity, may have a greater influence on these outcomes in a positive manner.

Outline

This paper will address the topic of leader integrity, and the impact on employee

engagement and retention using both quantitative and qualitative analysis. The focus will be on

research from peer-reviewed articles and journals and books published primarily over the last

five years addressing the following research questions:

 What is the impact of employee engagement and retention on an organization?

 To what degree does leader integrity impact employee engagement?

 To what degree does leader integrity impact employee retention?

 To what degree do organizations influence employee engagement and retention?

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Literature Review

Organizational Impact

According to Gallup (2017), only 33% of employees working in the United States are

engaged in their job. Research shows that employee engagement is integral to an organization’s

ability to be innovative, grow and prosper (Martinez, 2016). Engelbrecht et al. (2017) assert that

engaged employees are more productive, more efficient, more involved in their work and enjoy

their work more than less-engaged employees. They also experience less absenteeism, less

work-related injuries, less errors and are more likely to remain employed than disengaged or

actively disengaged employees.

Martinez (2016) maintains that of the 100 million workers in the United States, there are

about 50 million that are disengaged and 20 million that are actively disengaged. Gallup (2017)

estimates that in the United States alone, employees that are actively disengaged cost

organizations between $483 billion and $605 billion annually due to lost productivity.

Leader Influence

“Leader integrity is a multidimensional construct capturing both perceptions that the

leader holds moral values and professes as well as enacts those values with a high degree of

consistency” (Erkutlu & Chafra, 2019, p. 613). Integrity is a crucial component of effective

leadership (Maximo et al., 2019). This article states that when a leader displays integrity in their

communication and decision making, employees tend to react in a more positive and cooperative

manner to the benefit of the organization. They view their role in the organization as more of a

stakeholder than just an employee. Engelbrecht et al. (2015) claim that this viewpoint increases

an employee’s willingness to put forth extra effort and enhance their performance. The research
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states that employees that perceive their leaders as having integrity, trust that their leader has

their best interests in mind which elevates their commitment. The research also asserts that it is

not enough for leaders to be individuals that possess integrity; leaders must exhibit integrity in

the way that they manage their workforce. Leaders that are perceived to be lacking integrity fail

to build trust which decreases commitment (Engelbrecht et al., 2015). Cialdini et al. (2021) state

that leaders with high integrity will entice like-minded individuals to be part of their team which

enhances employee engagement and retention.

Leader Integrity Impact on Engagement

Martinez (2016) indicates a positive correlation between leader integrity and employee

engagement. The research states that leadership is a substantial factor in fostering employee

engagement, and trust in a leader directly influences an employee’s trust in their organization,

performance, commitment, and overall engagement. Leader integrity is a crucial component of

that trust. Choi et al. (2020) emphasize that the role that integrity plays in relation to effective

leadership is by aligning the leader’s words to their actions. When an employee believes that

their manager or supervisor leads with integrity, they trust that the decisions that their leaders

make are fair and equitable. It is the perception of inequality and unfair treatment that can often

result in a decrease in an employee’s engagement.

Mo and Shi (2017) indicate that when employees serve under a leader with integrity, they

are more relaxed and positive about their job and work environment. Martinez (2016) asserts

that an employee’s level of engagement is connected to the way they are handled and directed by

their leader. The research also states that when a leader conducts themselves with integrity, they

are behaving in a manner that signifies that they are ethical, dependable, conscientious, and

consistent. Mishra (2018) asserts that when a leader possesses integrity, employees perceive
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them to be scrupulous and unwilling to compromise their trust. Xu & Thomas (2010) state that

employees can dedicate their focus into their job roles when their leaders exhibit and promote an

environment of encouragement and confidence. The research also shows that employees who

have faith that their leader believes in them and promotes an environment that is absent of guilt

or shame feel more engaged (Xu & Thomas, 2010).

Engelbrecht et al. (2015) indicate that a leader who consistently demonstrates integrity

will be successful in building a sense of reliance in their employees. Whereas Saleem et al.

(2019) state that leaders without integrity can create uncertainty and unrest amongst employees

which put organizations at risk. Yinghong et al. (2019) maintain that employees are more likely

to become detached and skeptical toward their team and company when they believe their leader

lacks integrity.

Leader Integrity Impact on Retention

Qing et al. (2018) indicate that when an employee resigns, the organization loses not only

the employee but of all their organizational background and awareness. Research shows that a

high level of employee engagement leads to more substantial organizational commitment and

retention (Nesic et al., 2020). Erkutlu and Chafra (2019) state that leader integrity affects an

employee’s commitment to their organization, and their intent to quit. The research also

indicates that disengagement can lead to employee turnover, which can be very disruptive and

costly to an organization. Agovino (2019) states that each employee that leaves an organization

costs approximately one-third of that employee’s annual salary in reduced productivity, lost

organizational and job-related knowledge, recruitment, and temporary labor costs.

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Yinghong et al. (2019) state that organizations are more successful at hiring, advancing,

and keeping skilled employees when led by individuals with integrity. Saleem et al. (2019)

maintain that employee’s perception of their leader’s integrity is important to their commitment

to that leader and the organization. Jha (2019) states that leader integrity is an important factor

in an organization’s ability to retain an employee. The article also suggests that when a leader

lacks integrity, it may cause an employee to feel distress which can contribute to a desire to leave

an organization. Cialdini et al. (2021) maintain that employees who believe that their own

ethical values closely align with those of their leader are more apt to remain with the

organization.

Organizational Responsibility

It is paramount that organizations understand that their employees, or human capital, are

their most important asset (Martinez, 2016). Engelbrecht et al. (2015) state that organizations

are now starting to recognize that ethical leader behavior is critical to overcoming the difficulties

of a volatile and ever-evolving business domain. Beck and Harter (2014) state that all

organizations should insist that every member of their team have the benefit of an effective

leader. Effective leadership is crucial to an organization, and ethical leaders are perceived as

effective leaders (Sharma et al., 2019). Parimalam and Mahadevan (2012) indicate that leaders

have a direct influence on employee retention, commitment, and satisfaction. The article states

that although leaders may be accountable for the engagement and retention of their employees,

the organization also shares in that responsibility. According to Rao (2017), organizations must

take ownership of their role in achieving organizational effectiveness. This includes educating,

guiding, and supporting leaders in fostering a culture of engagement and commitment.

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Leader Selection

Many organizations do not properly prepare employees to become leaders (Greer, 2013).

The research shows that leaders are often promoted from within the organization on the merits of

the work that they performed while in their previous roles, which had little to no leadership

components to them. Leaders need appropriate training and development in the components of

leadership, as well as the knowledge of the function of their department (Greer, 2013). Beck and

Harter (2014) state that many organizations promote their employees because they seem to

warrant it, instead of possessing the skills for the position. In fact, the research shows that

organizations in search of a leader with the most effective skills and abilities are unsuccessful in

their hiring choices 82% of the time.

Greer (2013) maintains that organizations must have defined criteria to support the

advancement of their employees into leadership positions. The research further states that

organizations must place a priority on selecting the appropriate individuals to manage and inspire

their workforce.

Leader Development

According to Sharma et al., (2019), leader integrity is one of the most crucial

characteristics of a leader and guides their beliefs, decisions, and values. The research supports

the idea that the prime focus of leader development should be to produce or enhance ethical

behaviors, like integrity, so leaders can be role models to their employees. The research also

states that developing ethical leadership in an organization is a vital but lengthy process that will

require organizations to continually invest and commit in their leaders’ success.

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Yanchus, et al., (2020) assert that the leaders that have the most impact on developing an

engaged workforce are those that work directly with employees every day. The article states that

supporting leader development should be included in an organization’s strategic plan. Martinez

(2016) maintains that leaders must exhibit that they are able to lead, encourage and foster their

employee’s potential and growth for the working relationship to be deemed successful. Greer

(2016) states that when organizations do not provide adequate training and development for their

leaders, it can have an irreparable negative impact on all stakeholders.

Leader Accountability

Gallup (2017) states that 70% of the variance in employee engagement is due to the

influence of their direct leader. Martinez (2016) asserts that the fundamental reason for either

high or low engagement scores is in how a leader connects with and manages their team.

According to Tucker (2012), engagement is at its most high when the accountability for

maintaining it is shared throughout an organization. The research also maintains that an

organization needs to first identify their goals and strategy, and then connect engagement to

those goals and strategy before holding their leaders accountable to the engagement of their

teams.

Engagement and Retention Strategy

Executives play an important role in the focus and accomplishments of an organization

which includes the engagement of their workforce (Yanchus, et al., 2020). This article also

indicates that executive leaders are now more aware and accepting of engagement as a vital

component to the effectiveness of their employees. The research also maintains that

organizations should assess engagement by conducting surveys to afford their employees an

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opportunity to provide input which can increase their commitment to an organization (Yanchus,

et al., 2020).

Conclusion

Summary

Employee engagement and retention are crucial to the success and sustainability of an

organization. The research has indicated a strong correlation between leader integrity and the

impact on employee engagement and retention. Organizations should select individuals for

leadership positions who consistently exhibit effective leadership characteristics like integrity.

Leaders with integrity can foster a work environment of trust, fairness and consistency which

enhances the dedication and commitment of their workforce. Leaders that lack integrity can

jeopardize the motivation and enthusiasm of their internal talent and cause them to become

unproductive and unhappy.

While it is evident that leaders can influence an employee’s job satisfaction and

commitment to the organization, executive leadership also plays an important role in engagement

and retention. It is imperative that executive leadership maintain solid processes for selecting

candidates for leadership positions and ensure that those candidates possess integrity and other

ethical behavioral traits. Executive leadership must also create and promote opportunities for

leader development. These opportunities may include trainings, retreats and financial support

towards continuing education. Finally, executive leadership should commit to regularly

conducting workforce engagement surveys to support engagement and retention efforts.

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Recommended Action

Leader development, employee engagement and employee retention should be a primary

focus for all organizations. Organizations need to develop a strategic plan to address these

important initiatives and regularly communicate the plan and desired outcomes to all

stakeholders to generate feedback for improvement. Once this feedback is obtained, an action

plan should be implemented to indicate how the opportunities that were identified are going to be

improved or resolved.

An important component of an organization’s strategic plan should be to regularly

provide employees an opportunity to give feedback on the organization, leader, and work

environment. The feedback should be obtained several different ways, including surveys,

forums, and one-on-one interviews, to ensure that all employees can feel comfortable providing

feedback and sharing their thoughts and feelings about their work environment.

Organizations and executive leadership should then hold their leadership teams

accountable to the feedback and engagement results. Leaders that are unable to meet or sustain

employee engagement and retention expectations would benefit from further development and

additional monitoring.

Another vital part of the strategic plan should include retention interviews with the high

performers of the organization. These interviews can help a leader determine whether an

employee is at risk of leaving the organization. By having this information in advance, leaders

can work with the employee to resolve any concerns they may have and potentially mitigate any

intentions of resigning.
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Positive employee engagement and retention should be a goal of every organization

worldwide. The negative impact to employee engagement and retention is too detrimental for

organizations and executive leadership not to take seriously. Leaders and organizations can no

longer afford to diminish or ignore the importance of an engaged and committed workforce.

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