The intersection of justice and leadership: Testing a moderation model of contingent reward and interpersonal fairness

European Management Journal (2012) 30, 490– 498

journal homepage: www.elsevier.com/locate/emj

The intersection of justice and leadership: Testing a moderation model of contingent reward and interpersonal fairness Steven L. Grover a b

a,*

, Amber Coppins

b

University of Otago, Private Bag 56, Dunedin 9011, New Zealand Wiri Timber, P.O. Box 76648, Manakau City, Auckland 2441, New Zealand Auckland, New Zealand

KEYWORDS Leadership; Contingent reward; Interactional justice; Interpersonal treatment; Respect

Previous studies show the positive impact of contingent reward on satisfaction, but few have examined moderators of this effect. We theorized that interpersonal fairness – treating people with dignity and respect – moderates the contingent reward effect because it creates the situation in which followers can positively engage with contingent reward efforts from their leaders. We therefore examined how interpersonal fairness moderates the contingent reward effect, finding that the positive impact of contingent rewards is stronger as interpersonal fairness increases. The implication of the finding is that using contingent rewards may only be effective when implemented in a polite, respectful manner represented by interpersonal fairness. ª 2012 Elsevier Ltd. All rights reserved.

Summary

Introduction Why some leaders are more effective than others is of perennial interest, and there is no more dominant leadership perspective, in both lay and academic circles for the past several decades, than transformational and transactional leadership (Avolio & Bass, 1994; Judge & Piccolo, 2004; Walumbwa & Hartnell, 2011; Wang, Oh, Courtright, & Colbert, 2011). While transformational leadership is often trumpeted in popular incarnations of the theory, BassÕs (1985) original theory and contemporary versions highlight the importance of both transformational leadership and

* Corresponding author. Tel.: +64 3 479 8542. E-mail address: [email protected] (S.L. Grover).

contingent reward. Additionally, recent meta-analyses have shown that contingent reward has positive effects on a range of positive organizational outcomes (Podsakoff, Bommer, Podsakoff, & MacKenzie, 2006) and that contingent reward has a positive impact on individual performance beyond that of transformational leadership (Wang et al., 2011). The moderating conditions under which contingent reward is more or less effective, however, have not received research attention (Podsakoff et al., 2006). The present paper therefore takes a closer look at contingent reward by linking the manner in which contingent reward is used to the organizational justice literature, specifically looking at how contingent reward is moderated by interpersonal fairness. By doing so we bridge two related but separate theoretical traditions: leadership and organizational justice (fairness).

0263-2373/$ - see front matter ª 2012 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.emj.2012.03.003

The intersection of justice and leadership: Testing a moderation model of contingent reward and interpersonal fairness 491

Leadership BassÕs (1985) transformational leadership theory suggests two types of leadership behavior: transformational and transactional. Transformational leaders motivate followers by tapping into followersÕ intrinsic motivation, described as the four IÕs: idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration. Transformational leadership has received a great deal of research attention, identifying relations to a number of positive outcomes, including job satisfaction, organizational citizenship behavior, and work effort (Burke, Sims, Lazzara, & Salas, 2007; Judge & Piccolo, 2004; Rowold & Heinitz, 2007; Wang et al., 2011). Transactional leadership includes behaviors seen as ineffective – management by exception and laissez faire leadership – plus contingent reward, which is viewed as positive. Contingent reward refers to the degree to which leaders provide clear expectations of performance and then back these up with exchanges. Meta-analyses show that both transformational leadership and contingent reward are positively related to outcomes and contingent reward and transformational leadership are strongly correlated to one another across studies (Judge & Piccolo, 2004; Wang, et al., 2011), which corresponds with full range leadership theories that argue for both transactional and transformational techniques (Antonakis, Avolio, & Sivasubramaniam, 2003). BassÕs (1985) original proposition was that transformational behaviors build on a solid base of contingent reward leadership. However, a recent meta-analysis found that ‘‘contingent reward predicted follower-individual-task performance beyond transformational leadership’’ (Wang et al., 2011, p. 253). Podsakoff and colleaguesÕ (2006) meta-analysis of contingent reward found positive impact of contingent reward on satisfaction with jobs, supervisors, and commitment to the organization. Practitioners and theorists agree that providing goals and feedback is beneficial to employees and the organization. It seems reasonable that there are better and worse ways of using contingent rewards, yet previous research has done little to examine the moderators of contingent reward (Podsakoff et al., 2006). For example, providing guidance and goals and then reinforcing their achievement can be done in either interpersonally sensitive ways or demanding and interpersonally insensitive ways. The justice literature on interpersonal fairness addresses this issue, finding that people respond to being treated respectfully or disrespectfully (Bies & Shapiro, 1987; Donovan, Drasgow, & Munson, 1998; Greenberg, 2006; Masterton, Lewis, Goldman, & Taylor, 2000; Zapata-Phelan, Colquitt, Scott, & Livingston, 2009). The present study therefore focuses on the effects of contingent reward at varying levels of interpersonal fairness.

Interpersonal fairness Interpersonal fairness refers the quality of interpersonal treatment including politeness, dignity, and respect (Bies & Moag, 1986; Colquitt, 2001). Interpersonal fairness is important to how leaders use contingent reward, but these two issues are explored in the separate literatures of justice and leadership. The present study explores the theoretical

intersection of justice and leadership to examine the joint influence of leadership and interpersonal fairness on followers. Leadership and fairness, especially interpersonal fairness, seem inextricably linked – having a ‘‘natural connection’’ according to Colquitt and Greenberg (2003) – but have only recently been compared. Both fairness and leadership focus on how people react to treatment from another party, and they have similar outcomes, including job satisfaction, commitment, and trust in the leader (Masterton et al., 2000; van Knippenberg, De Cremer, & van Knippenberg, 2007). One of the few empirical attempts to integrate fairness and transformational leadership theory found that interpersonal fairness was related to transformational leadership but not to transactional leadership (DeCremer, van Dijke, & Bos, 2007). FollowersÕ perceptions of interpersonal fairness were positively related to their perceptions of the leaderÕs transformational leadership ability, suggesting that leaders who treat people with dignity and respect are more inspirational and motivate people to contribute to the enterprise. In an extensive review of leadership and justice, van Knippenberg and colleagues (2007) found that there was a relationship between leader effectiveness and distributive, procedural, and interpersonal fairness. They painted a future, however, for an integration of leadership and fairness that moves beyond the direct ‘‘main effect’’ of fairness on leadership perceptions. For example, Podsakoff and colleagues (2006) have found that contingent reward is related to fairness directly, but previous studies have not considered the complex manner in which they work together. Van Knippenberg and colleagues (2007) conclude in their review that the dual fields of leadership and justice could benefit from a greater understanding of the inter-relationships between constructs beyond the simple direct effects of interpersonal fairness, contingent reward, and transformational leadership. They concluded that: ‘‘A more full-blown contribution to research in leadership requires research focusing on the link between fairness and other aspects of leadership – either focusing on fairness as an explanatory (mediating) mechanism or on leader fairness as interacting with other aspects of leadership’’ (van Knippenberg et al., 2007, p. 122). The present study answers this call by investigating how interpersonal fairness works in conjunction (interacts) with transformational and contingent reward leadership. Specifically, we investigate how interpersonal fairness moderates contingent reward on work satisfaction. This moderation is of practical significance because we can readily identify leaders who use contingent reward in more and less interpersonally sensitive ways. Less fair are those who are very specific about performance expectations but do not express those expectations in ways that demonstrate respect or the sense that the follower is valued. In contrast, the same contingent reward style of expectations can be expressed while simultaneously showing verbally and nonverbally that the follower is a valued and respected member of the team.

Moderation Based on feelings of self worth, we expect that interpersonal fairness moderates the impact of contingent rewards.

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Under the positive conditions in which people have been treated with dignity and respect (interpersonally fairly), their sense of self-efficacy is high enough that providing guidance and goals and subsequent rewards is supported by their self-efficacy (Bandura, 1997; Bandura & Cervone, 1986; Wright & Kacmar, 1995). In contrast, treating people in undermining or disrespectful ways reduces these feelings of self confidence or self worth (Duffy, Scott, Shaw, Tepper, & Aquino, 2012; Duffy, Shaw, Scott, & Tepper, 2006; Tepper, 2007; Tepper & Henle, 2011). Contingent reward has positive effects primarily by reducing role ambiguity (Podsakoff et al., 2006). People want to know how to contribute to the groupÕs or organizationÕs endeavors and therefore appreciate being offered the guidance, but positive outcomes require that followers have the requisite level of self-confidence to enact the goals. The goal setting literature demonstrates that people pursue goals when they feel self-efficacious (Fan, Meng, Billings, Litchfield, & Kaplan, 2008; Phillips & Gully, 1997; Tolli & Schmidt, 2008). Leaders who treat people with dignity and respect therefore support the required self-belief levels in individuals to gain a benefit from setting goals and then rewarding them. This is consistent with Wang and colleaguesÕ (2011) meta-analytic finding that contingent reward adds incrementally after transformational leadership to performance because the follower and leader have engaged in a value-based relationship that provides the grounding for contingent reward. On the negative side of this interaction lie leaders who do not treat people interpersonally fairly by being rude and disrespectful. In contrast to their high interpersonal treatment counterparts, these leaders at best do not support esteem, but at worst undermine followersÕ self-confidence (Breaux, Tepper, Carr, & Folger, 2010; Duffy et al., 2006). Followers are not likely to engage with leaders who undermine dignity by treating people rudely and disrespectfully. When followers do comply as required with such formal leaders, they are unlikely to pursue a substantial interpersonal relationship or to take great heed in what the leader says or does for two reasons. First, followers minimize exposure to disrespectful leaders because it is unpleasant. This alone hinders any positive effects of transactional leadership. Second, they have little interest in following through with leader requests because there is little or no personal contract to fulfill with the leader. Moreover, people are treated respectfully and politely reciprocate this affective and cognitive treatment. The theoretical reasoning surrounding the self concept of followers leads to an interaction between contingent

reward and interpersonal fairness shown in Figure 1. Both interpersonal fairness and contingent reward are positively related to outcomes such as satisfaction. Therefore, even without a moderating impact, satisfaction is likely to be low when both interpersonal fairness and contingent reward are low and higher when they are both are high. However, our theoretical reasoning is that interpersonal fairness facilitates the positive outcomes of contingent reward in such a way that contingent reward positively influences satisfaction when people are treated with dignity and respect. People will not engage with leaders who do not provide the baseline of respect and, therefore, such leaders do not have the benefits of contingent reward at their disposal whether they use the techniques or not. In contrast, leaders who provide the baseline of dignity and respect to followers are likely to experience benefits from contingent reward if they use it. These arguments lead to the following hypothesis. Hypothesis 1. Interpersonal fairness moderates the positive effect of contingent reward such that contingent reward has a greater impact on satisfaction at higher levels of interpersonal fairness compared to lower levels of interpersonal fairness. Transformational leadership promotes a positive self-concept on its own and may not be moderated by interpersonal fairness. DeCremer and colleagues (2007) note that ‘‘(transformational) leaders must be interactionally fair because followers have an active role in considering and accepting their leader as charismatic’’ (p. 1802). Transformational leadership works by creating an emotional appeal based on followersÕ values, which in itself promotes self esteem, and people engage with transformational leaders because they are inspired to follow. In contrast to contingent reward techniques, it would be difficult to imagine leaders using transformational techniques in a way that did not demonstrate that they respected their followers. Transformational leaders can only inspire, promote the ideal vision of the future, and provide individualized consideration when they are doing so as part of a positive relationship with a follower (Bass & Steidlmeier, 1999). We therefore make no prediction about the interaction between interpersonal fairness and transformational leadership beyond a simple additive effect. In addition to hypothesis 1, which is the centerpiece of this study, we make three predictions based on previous theoretical and empirical work reported in meta-analyses noted above (Cohen-Charash & Spector, 2001; Colquitt, Conlon, Wesson, Porter, & Ng, 2001; Judge & Piccolo, 2004; Podsakoff et al., 2006; Wang et al., 2011). Hypothesis 2. Transformational leadership is positively related to job satisfaction.

Interpersonal Fairness

Contingent Reward

Hypothesis 3. Contingent reward is positively related to job satisfaction. Satisfaction

Transformational Leadership

Figure 1 Theoretical model of contingent reward, interpersonal fairness, and satisfaction.

Hypothesis 4. Interpersonal fairness is positively related to job satisfaction. This paper makes a number of contributions to the field. First, it integrates justice and leadership literatures by exploring how leader fairness and mainstream leadership

The intersection of justice and leadership: Testing a moderation model of contingent reward and interpersonal fairness 493

behaviors interact (van Knippenberg et al., 2007). Second, it explicitly examines interpersonal fairness, which is more naturally related to leadership (van Knippenberg et al., 2007), compared to procedural and distributive fairness recently examined by others (DeCremer et al., 2010; Erdogan & Bauer, 2010). Third, it investigates a moderator of contingent reward to determine how it can be used in more and less positive ways according to the respect granted followers.

Method Participants Participants from 19 different organizations in and around Auckland, New Zealand participated in this study. There were 28 workgroups and therefore 28 leaders in the sample, of whom 20 were male and 8 were female. The organizations were six large manufacturing companies, small retail establishments, and service enterprises, including a gym, and two community recreation centers. Seventy-three subordinates completed questionnaires: 46 men, 27 women. Only two were less than 20 years old, 23 were 21–34, 34 were 35–49, and 14 were older than 49. They were predominantly white (47) or indigenous people (12) and the remainder (14) were members of Asian or other ethnic groups. There was a range of service with the organizations: 11 had worked for less than one year, 26 for one to three years, ten for three to five years, and 26 for longer.

Instruments Contingent reward and transformational leadership were measured using the Multifactor Leadership Questionnaire (MLQ) created by Bass and Avolio (2002). This is the dominant measure for this variable and has established psychometric properties. The response scale for the leadership items had five points, ranging from ‘‘not at all’’ to ‘‘frequently, if not always.’’ Contingent reward Four items comprised this scale, which measures the degree to which the leader expresses expectations and sets up the exchange relationship. Sample items include, ‘‘Provides me with assistance in exchange for my efforts,’’ and ‘‘makes clear what one can expect to receive when performance goals are achieved.’’ Transformational leadership Twenty items comprised this scale, which assesses the leaderÕs use of the following behaviors: idealized influence (attributed and behavioral), inspirational motivation, intellectual stimulation, and individualized consideration. Sample items include, ‘‘talks about their most important values and beliefs,’’ and ‘‘gets me to look at problems from different angles.’’ Interpersonal fairness Perceived interpersonal fairness was measured using the four items from ColquittÕs (2001) interpersonal fairness measure. Sample items include: ‘‘Has (he/she) treated you in polite manner?’’ and ‘‘Has (he/she) treated you with

respect?’’ The response scale had five levels ranging from ‘‘to a small extent’’ to ‘‘to a large extent.’’ Job satisfaction This variable was measured using the 20 item short form Minnesota Satisfaction Questionnaire (Weiss, Davis, England, & Lofquist, 1967). The stem question was: ‘‘on my present job, this is how I feel about:’’ with sample questions: ‘‘being able to do things that donÕt go against my conscience’’ and ‘‘my pay and the amount of work I do’’. The response scale had five levels from ‘‘very dissatisfied’’ to ‘‘very satisfied.’’ All the variables had satisfactory psychometric properties shown in Table 1.

Results To test the hypotheses a regression was run with satisfaction as the dependent variable and transformational leadership, contingent reward, and interpersonal fairness as independent variables. The main effects were calculated in the first stop and then the interaction terms added due to the shared variance of interaction coefficient estimates with the main effects. All independent variables were centered to avoid problems with multicollinearity of interaction terms (Aiken & West, 1991). The results are shown in Table 2. The main effects for transformational leadership and interpersonal fairness were positive and significant (b = .23, p < .01, l2 = .14, and b = .37, p < .01, l2 = .13, respectively). As expected, people were more satisfied when their leaders used transformational techniques and treated followers interpersonally fairly. Contingent reward was not significantly related to satisfaction. The interaction of interpersonal fairness and contingent reward was of greatest theoretical interest. To test the interactions, two-way interaction terms were entered in the model as a second step. The interaction of interpersonal fairness with contingent reward and transformational leadership were entered after the main effect analysis. Hypothesis 1 is tested by the first interaction effect. The second interaction term was entered because it could correlate with the contingent reward · interpersonal fairness term and provide a faulty finding for our main hypothesis, or at least have provided an alternative explanation. The predicated contingent reward · interpersonal fairness interaction had a positive regression coefficient estimate, indicating that the interpersonal fairness effect on satisfaction is stronger at higher levels of contingent reward (b = .36, p < .01, l2 = .09). This effect is illustrated in Figure 2 using Aiken and WestÕs (1991) technique of plotting means one standard deviation above and below the mean, showing that the greatest effect of interpersonal fairness on satisfaction occurs with high levels of contingent reward. Figure 2 illustrates that there is little or no benefit to contingent reward when interpersonal treatment is low but a great positive impact when it is accompanied by fair interpersonal treatment. This finding supports hypothesis 1. The significant transformational leadership · interpersonal fairness interaction was not predicted (b = .37, p < .05, l2 = .07). The statistical interpretation of an interaction term with a negative coefficient estimate is that

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Table 1

1. 2. 3. 4. 5. 6. 7. 8.

Means and inter-correlations.

Variable

Mean

SD

Age Sex Tenure Ethnicity Transformational leadership Contingent reward Interpersonal fairness Job satisfaction

2.82 1.37 2.70 1.92 2.70 2.68 4.42 4.16

.77 .48 1.11 1.76 .65 .84 .75 .50

1

2 .19 .34** .30* .07 .06 .14 .02

3

.05 .18 .11 .02 .02 .05

.13 .12 .14 .12 .06

4

5

6

7

8

.13 .17 .03 .04

(.90) .77** .33** .51**

(.76) .35** .39**

(.87) .46**

(.92)

Notes: n = 74; age and tenure are categorical variables. Cronbach alphas for scale reliabilities shown in parentheses. * p < .05. ** p < .01.

Table 2

Regression results for satisfaction.

First step: main effects Intercept Contingent reward Transformational leadership Interpersonal fairness R2 Second step: interactions Transformational leadership · interpersonal fairness Contingent reward · interpersonal fairness R2 DR2

Coefficient

t

l2

4.16 .06 .37 .23

86.80** .70 3.18** 3.31**

.45 .01 .13 .14

.37 .36

2.30* 2.62**

.07 .09

.36**

.42** .06*

Notes: understandardized coefficients shown, n = 73. * p < .05. ** p < .01.

leadership is weaker at higher levels of interpersonal fairness. (Or the effect of interpersonal fairness weakens as transformational leadership increases.) As the illustration of this interaction shows in Figure 3, the significant interaction effect echoes the pattern of significant main effects of both transformational leadership and interpersonal fairness. They interact because the effect is weaker at higher levels represented by slightly different slopes of the lines in Figure 2. This finding was not predicted and could be an anomaly of the data, or could warrant further investigation as will be discussed below.

Discussion

Figure 2 Illustration of interaction of interpersonal fairness and contingent reward on satisfaction.

the (positive) effect of one independent variable on satisfaction diminishes as the level of the other independent variable increases. For example, the effect of transformational

The main finding of this study is that contingent reward had significantly greater impact on work satisfaction when it was combined with high levels of interpersonal fairness. Providing guidance and then reinforcing desired behavior with rewards has a long history of being viewed as positive (Judge & Piccolo, 2004; Podsakoff et al., 2006; Wang et al., 2011), yet the previous work on contingent reward has not considered how interpersonal treatment might

The intersection of justice and leadership: Testing a moderation model of contingent reward and interpersonal fairness 495

Figure 3 Illustration of interaction of interpersonal fairness and transformational leadership on satisfaction.

moderate the effect. The present findings show that people are positively influenced by contingent reward when it is accompanied by polite and respectful treatment, but less so or not at all in the absence of these features. The positive effect of contingent reward has been well established in the literature (Judge & Piccolo, 2004; Podsakoff et al., 2006; Wang et al., 2011). The previous research has found positive effects for contingent reward and suggested primarily that this effect was achieved by reducing role ambiguity (e.g., Podsakoff et al., 2006). Role ambiguity reduction explains contingent reward effects on the premise that people want guidance so that they can contribute to the organization or the work group and the guidance provided through contingent reward reduces ambiguity. The present research has addressed the question, however, of how the guidance and rewards are enacted, and demonstrates the importance of interpersonal treatment in so doing. Being treated with dignity and respect is a baseline expectation from employees, because receiving respect fundamentally affects a personÕs self-concept. Sennett (2003) theorized that poor people who were treated in humiliating or disrespectful ways by authorities have weaker self-concepts that lead to reduced ambition and achievement. Disrespectful treatment so profoundly and negatively influences how a person perceives themselves and their sense of happiness or satisfaction with the job that the style of management becomes irrelevant. On the other hand, granting respect may provide a sense of freedom and purpose that allows a person to take on board the suggestions of a manager giving clear expectations with contingent reward techniques. The positive effect of contingent reward from previous studies might be explained by leaders who do well at establishing the social exchange inherent in contingent reward do so in an interpersonally fair fashion, resulting in more satisfied followers. This theory is consistent with Wang and colleaguesÕ (2011) finding that contingent reward has an incremental effect on individual performance beyond that of transformational leadership: Like treating people interpersonally fairly, transformational

leadership helps to establish the positive interpersonal connection that sets the stage for followers to accept instruction. Positive self construction, whether explained as self-efficacy or self-esteem explain this central effect. Self esteem provides people with confidence to take actions and experiment and take risks; for example, people with higher versus lower self esteem return to and re-attempt tasks at which they were unsuccessful (Brockner, 1988). Ample research suggests that treating people disrespectfully undermines their sense of self and particularly their feelings of self-efficacy (Bandura, 1997; Bandura & Cervone, 1986; Duffy et al., 2006, 2012; Tepper, 2007; Tepper & Henle, 2011; Wright & Kacmar, 1995). The theories of self-esteem from psychology (e.g., Brockner, 1988) and the abusive supervision literature (e.g., Tepper & Henle, 2011) therefore mesh with the sociological treatment of respect (Sennett, 2003) to help explain why respectful interpersonal treatment supports (when it is positive) and diminishes (when it is negative) the effects of contingent rewards. Hypotheses 2 and 4, calling for main effects of interpersonal fairness and transformational leadership were supported as suggested by ample previous literature. People enjoy being treated with respect and feel good about themselves when they are (Sennett, 2003). Followers also have a strong preference for being engaged by transformational leaders who pay attention to them individually and draw on their values to inspire them to action. Hypothesis 3, predicting a main effect of contingent reward was not supported. This comes as a surprise because contingent reward generally related to satisfaction (Podsakoff et al., 2006). As can be seen in Table 1, Contingent reward is positively and significantly related to satisfaction, but this effect falls away when controlled for transformational leadership and interpersonal fairness. This finding is consistent with our main hypothesis that contingent reward affects satisfaction when interpersonal fairness is at high levels, and presumably adding this dimension inhibits and explains the predicted main effect for contingent reward. The contingent reward effect may demand fair interpersonal treatment in order to work as well as for follower to perceive that the leader has used contingent reward in a positive way. The unexpected interaction between interpersonal fairness and transformational leadership deserves further investigation. Our data suggested that at the highest levels of transformational leadership, additional interpersonal fairness may not contribute as much to satisfaction as at lower levels. Because this effect occurs at the highest levels of either variable, the method creates the potential for a ceiling effect. Therefore, the interaction effect results from people who have rated their leaders at the very highest level of transformational leadership on all the questions. It is not known what happens at these very highest levels, as most leadership research has been concerned with the broad range of potential leadership behavior from those very low to those very high in transformational leadership. To fully explore this effect in future studies requires focusing on highly transformational leaders. A study could look only at very highly rated transformation leaders and examine their differences in interpersonal fairness. Such a study would extend the variance in interpersonal fairness and

496 provide more fine grained analysis because it would include only leaders who are transformational in the sense of looking to the future and relating to followersÕ values but who vary on the interpersonal treatment dimension. This issue has practical implications. For example, in the recent spate of stories concerning Apple Computer Founder Steve Jobs, few question his visionary and inspirational qualities, but some authors have questioned his interpersonal approach as demonic (Isaacson, 2011). The question we have before us for future research, therefore, is about the great transformational leaders and how they vary. Instead of the effect of interpersonal fairness being reduced among these leaders, as found in the present study, having the variance to study the range would presumably produce a typology of different types of transformational leaders, which would enrich our understanding of high performance transformational leaders.

Theoretical implications & future directions The present findings prompt the question of the degree to which leadership behavior matters. Just as we found that contingent reward mattered to satisfaction when interpersonal fairness was present, other task-oriented leadership structures may only matter when people are treated with dignity and respect, or may have greater influence when people are treated in this way (Derue, Nahrgang, Wellman, & Humphrey, 2011). Interpersonal treatment provides the foundation to create individual self-esteem required for task-oriented leadership behaviors to be effective (Sennett, 2003). This same process should extend to other task-oriented leadership behaviors such as initiating structure. Relation-oriented leader behaviors, such as consideration, may be conceptually related to interpersonal fairness. In fact, at least part of the transformational leadership construct is relational (Derue et al., 2011). Theoretical unity comes from marrying fairness and leadership research, yet these literatures are ironically closely conceptually related but largely separate (van Knippenburg et al., 2007). The fairness literature is reasonably mature and provides well developed theory and constructs to explore leadership issues, and especially to enrich leadership research through the investigation of moderators. The two literatures complement one another. Particularly useful are issues of interpersonal fairness, which is related to positive outcomes such as organizational citizenship behavior (Chiaburu & Lim, 2008), insomnia following pay change (Greenberg, 2006), performance appraisal perception (Narcisse & Harcourt, 2008), turnover intention (Zhang & Agarwal, 2009), and job satisfaction (Andrews, Baker, & Hunt, 2008). Whereas previous research has discovered the impact of interpersonal fairness in a number of different domains, the present study brings interpersonal treatment more firmly into the domain of leadership. At the core of interpersonal fairness is treating people with dignity and respect, that is, valuing people. Lay philosophers have for centuries identified the importance of respect in leadership. The fairness and justice literature has investigated this issue thoroughly over the past few decades and provides mature theory to apply to leadership studies.

S.L. Grover, A. Coppins The present paper examined interpersonal fairness at the expense of other types of fairness because it is most closely related to the notion of respectful treatment, which is our primary theoretical interest. Informational fairness is another type of fairness related to how people interact, and it assesses the quality of and timeliness of communication. Colquitt (2001) identified these two types of fairness as distinct parts of Bies and MoagÕs (1986) interactional fairness concept. Some studies combine these two types of fairness (Ambrose & Schminke, 2009), but the present theory revolves around the quality of interpersonal treatment, including being treated politely, with dignity and respect. Informational fairness focuses on timely communication of procedures, and moves toward procedural fairness, which is the quality of the procedures used to make decisions. These other types of fairness could influence how leaders affect their followers, perhaps at a different level of analysis. For example, organizations that have low levels of institutionalized procedural fairness could hinder positive leadership behavior. That is, just as we have theorized that people need to be treated with dignity and respect in order to achieve the benefits of contingent reward, followers may need to be offered a type of respect by being informed how specific procedures work. For example, performance reviews can be procedurally fair or unfair in whether people know what process is used to make the decisions and have some input to the decisions and chance to question or appeal such decisions. Distributive fairness could also interact with leadership in accordance with Brockner and WiesenfeldÕs (1996) theory of the interaction of outcome favorability (distributive justice) and procedural and interpersonal fairness. People must balance distributive fairness – the distribution of the spoils – with how they are led. When peopleÕs needs are not sufficiently met or they feel inequitably compensated, for example, then transformational techniques may have little positive effect. Additionally, there are other conceptualizations of leadership that might be moderated by fairness concepts, such as LMX or relational leadership theory (e.g., Uhl-Bien, 2006). Future work should therefore continue the call to develop more complete and intertwined theory of leadership that considers how it is moderated by justice and fairness concepts (van Knippenberg et al., 2007).

Practical implications The inspiration for this study came from executives who recognized that respect was a powerful and perhaps essential part of leadership. Combined with other research on interactional fairness, this study supports the importance of interpersonal treatment for managers and leaders. The greater importance of the present findings, however, is that using other positive leadership techniques such as contingent reward only work well when people are treated respectfully. This baseline condition of positive interpersonal treatment enables the self efficacy and esteem that allows for the realization of positive outcomes from techniques such as providing subordinates with goals and then reinforcing those goals. It should be remembered that the theoretical basis for contingent reward as outlined by Bass

The intersection of justice and leadership: Testing a moderation model of contingent reward and interpersonal fairness 497

(1985) is sophisticated in that it is not just about a clear goals and tangible rewards. Contingent reward is really about leaders providing direction so that followers have the knowledge that they will benefit from contributing to said direction and that those benefits may be tangible or intangible. The practical significance of the melding of justice and leadership theories is that the nature of interactions as polite and respectful, as perceived by the followers, is essential to straightforward management practices of contingent reward. We expect that moving managers toward this interpersonal sensitivity is one key to managerial success. Since transformational and transactional leadership ideas will continue to be taught, it is paramount to emphasize that the quality of interpersonal treatment facilitates the normal management technique of contingent reward.

Limitations The present study has a number of limitations. First, the data are based on only 28 work groups, and there may be something unique about this sample that biases our results. Perhaps, for example, due to the law of small numbers, too few managers successfully use leadership techniques and treat people poorly. While larger samples could mitigate this risk, the work groups in our study are diverse such that a systematic bias is unlikely. Another limitation of the crosssectional sample is that we cannot make inferences about causation. Exploring the interaction of contingent reward and interpersonal fairness using experimental techniques would be a fine addition to the literature that would bolster the present findings by providing causal inference. Lastly, this study did not directly measure self-concept or self-esteem as explanatory variables. Being part of the theorizing, this could be addressed by assessing self esteem in future studies. However, there is ample evidence that setting goals works more positively with people who have high levels of self-efficacy (Fan et al., 2008; Phillips & Gully, 1997; Tolli & Schmidt, 2008).

Conclusion The present study is the first, to our knowledge, to investigate the effects of interpersonal fairness and leadership. We believe that the present data contribute to the understanding of how contemporary leadership theory fits with contemporary social justice literature on interpersonal relations. All leaders probably know in their hearts that respectful relationships lie at the core of their leadership successes or failures. This study has provided a foundation for how treating people with dignity and respect connects with leading them in a pragmatic ways.

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Amber Coppins is the Sales and Marketing Manager for the Wiri Timber Group in Auckland and completed the present study as part of her honours degree in management at the University of Otago.