The Relationship Between Ethical Leadership and Employee Performance

Topic(s): ethics, leadership, performance
Publication: Journal of Applied Psychology, 2018
Article: Too Many Sheep in the Flock? Span of Control Attenuates the Influence of Ethical Leadership
Authors: C.E. Thiel, J.H. Hardy III, D.R. Peterson, D.T. Welsh, J.M. Bonner
Reviewed by: Jacqueline Marhefka

Ethical leaders demonstrate moral behavior that appears to set a good example for employees. But how exactly does ethical leadership relate to positive employee outcomes? And what other factors at work may affect the extent to which ethical leadership relates to these positive results?


Researchers (Thiel, Hardy, Peterson, Welsh, & Bonner, 2018) explored the above questions using two studies in two different organizations. Overall, they found that ethical leadership is related to positive employee outcomes including higher performance, going above and beyond to help the organization, and engaging in fewer harmful behaviors.

The results showed that the way ethical leadership relates to these positive outcomes is through something called leader-member exchange (LMX). Leader-member exchange describes the quality of the relationship between the leader and follower. High-quality relationships increase the follower’s sense of trust and obligation to meet expectations. In other words, ethical leaders treat followers in a moral and respectful way, which makes for a better quality relationship, and then employees react with more positive work behavior.


In order for ethical leaders to develop strong relationships with followers, they need opportunities to interact with them individually, demonstrate accountability and honesty, and reciprocate good behaviors. This becomes much more difficult to do when leaders have many followers. Researchers call this a wide span of control, meaning they have “control” over a large number of employees. A leader only has so much time in the day, so the more employees a leader is responsible for, the less time there is for individual relationship-building interactions.

The researchers found that when leader span of control was high, the positive effect of ethical leadership on leader-member exchange did not come through. This can lead to consequences for follower performance down the line. However, when span of control was lower, ethical leadership did have a positive influence on leader-member exchange, which leads to those beneficial employee outcomes.


This research comes at an important time, as it has implications for a recent workplace trend. Some organizations are moving toward a “flatter” organizational structure, where there are more followers with fewer leaders. The goal of this is to increase employee independence. However, the authors note that this type of structure may have consequences for the benefits of ethical leadership. Further, although it may seem to be useful to give ethical leaders a wider span of control to positively influence a larger number of employees, the research findings here suggest that this may have the opposite effect.

It would be valuable for organizations to consider the impact that leader span of control has on ethical leadership, leader-member exchange, and performance outcomes. The authors argue that while it may seem more cost effective to widen leader span of control within an organization, there may be more substantial hidden costs. Specifically, when there is a lack of opportunity to display ethical leadership, decreased employee performance may result.


Thiel, C. E., Hardy, J. H., III, Peterson, D. R., Welsh, D. T., & Bonner, J. M. (2018). Too many sheep in the flock? Span of control attenuates the influence of ethical leadership. Journal of Applied Psychology. Advance online publication.