The role of leadership in mitigating the negative effects of economic stress on employee well-being
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2024-06-28
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en
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The changing economic environment for organisations and its potential negative effects on a particular group of employees are inevitable. Economic stress is a result of this, and amongst employees it is one of the top causes of occupational stress and declined well-being. Leadership can be recognised as a workplace factor that could enhance well-being amongst subordinates and weaken the impact of economic stress. This study aims to find out whether transformational and ethical leadership are potential mitigating factors for the negative effects of economic stress on employees’ well-being. By a sophisticated investigation, this study hopes to contribute to literature by providing insights on the phenomenon of economic stress in the workplace, and to society by seeking evidence-based strategies for enhancing economically vulnerable employees’ well-being.
A deductive-positivistic study was conducted (N=658) that tested multiple hypotheses. The results surprisingly indicated that only ethical leadership included a moderating effect, however this effect was not mitigating but more aggravating. Nevertheless, it was found that indeed economic stress decreases, and both transformational and ethical leadership increases employees’ psychological subjective well-being. This outcome indicates that employees experience transformational and ethical leadership as a good thing, but when economic stress comes in it questions if this leadership could soften the impact of this on their subordinates. Therefore, more investigation is needed upon this crucial topic of an organisation’s role in combatting economic stress amongst workers.
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Faculteit der Managementwetenschappen