ABSTRACT

From the objective  which was to access how accountability affects employee motivation and trust in micro finance institutions. The result showed that accountability has a significant positive influence in creating a motivating and trustworthy work environment as indicated by coefficient and sign. This in line with the expected result that accountability should affect positively. It affects positively because it provides a responsible culture and also to trace decisions.

For objective two, which was to verify how empowerment influence motivation and trust in micro finance institution. Empowerment has a negative influence in creating a motivating and trustworthy work environment as indicated by coefficient. This negates the expected results that it should affect positively.

to investigate the effects of role modeling in creating a motivating and trustworthy work environment in micro finance institutions. Role modeling has a significant positive effect in creating a motivating and trustworthy work environment as indicated by coefficient and sign. This is in line with expected results that it should affect positively.

According to the study, longevity as a control variable is seen to have a significantly positive effect on in creating a motivating and trustworthy work environment. This result meets the expectations of the study. On the other hand, the control variable institutions age has a significantly negative effect, thereby negating the expectations of the study.

The conclusion drawn from the study is that ethical leadership has a role to play in creating a motivating and trust worthy work environment in microfinance institutions

From the results obtain in this study, it recommends that microfinance institutions should be educated on the importance of ethical leadership. This will improve employee motivation and trust in their institutions

CHAPTER ONE

INTRODUCTION

1.1Background to the Study

Ethical leadership has to date been linked to attitudinal, motivational, well-being and performance-related outcomes; ethical norms and decisions and the ethical behaviors’ stemming from these.

Brown and colleagues (2005) define ethical leadership as “the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships and the promotion of such conduct to followers through two-way communication, reinforcement and decision-making.

Ethical leadership is a critical component in creating a motivating and trustworthy work environment. It involves leading by example, demonstrating integrity and making decisions that are fair and just. Ethical leaders’ priorities the wellbeing of their employees and the organization as a whole, and they are committed to upholding ethical standards in all aspects of their leadership.

According to Brown and Trevino (2006), ethical leaders are characterized as ‘… honest, caring and principled individuals who make fair and balanced decisions. They further indicate that such leaders communicate ethics to their employees and set clear standards regarding how things should be done in the organization.  

When leaders demonstrate ethical behaviors, it sets a positive tone for the entire organization. Employees are more likely to feel motivated and inspired when they see their leaders acting with honesty, transparency, and respect. This can lead to increases job satisfaction, higher level of engagement and improved overall performance.

Furthermore, ethical leadership fosters trust within the workplace. When employees believe that their leaders are acting with integrity and have their best interest at hand, they are more likely to trust in their decision and guidance. This trust creates appositive and supportive work environment where employees feel safe to voice their opinions, take risk and contribute to the success of the organization.

Employees will be inclined to trust ethical leaders because of their credibility and trustworthy behavior. Dadhich and Bhal (2008) found that affective trust (the emotional bond between individuals) and cognitive trust (where trust is required in cases of imperfect knowledge) are predicted by ethical leadership. Van den Akker, Herse, Lasthuizen and Six (2009) found that ethical leadership is significantly related to the level of trust that the follower places in the leader.

When employees trust their leaders, they also assume the assurance that their leaders are fair in their behavior and decisions. When the employees perceive the leaders as fair in the distribution of rewards and the treatment of their efforts, trust in the leaders will increase. Albrecht (2010) proposes that employees will engage in their work when the procedures and systems in the organizations are perceived as trustworthy, predictable and sensible. When employees exhibit the willingness to trust the leader and when an ethical leader establishes a basis of trust, the employee will also be inclined to trust the work environment and the organization. It can thus be hypothesis that ethical leadership leads to employees’ trust in the leader.

In contrast, a lack of ethical leadership can have a detrimental effect on the work environment. Employees may feel demotivated, disengage and untrusting of their leaders, which can lead to decreased productivity, high turnover rates and a negative organizational culture.

Overall, ethical leadership plays a crucial role in creating a work environment that is motivating and trustworthy. By prioritizing ethics and integrity in their leadership approach, leaders can inspire their employees, build trust and ultimately drive the success of the organization.

1.2 Statement of the Problem.

In our present organizational setting, there is a growing recognition of the role that ethical leadership plays in shaping employee motivation and trust. However, while substantial literature exists on ethical leadership and its impact on organizational outcomes, there remains a need to understand how ethical leadership influences employee motivation and trust, and the specific leadership behaviors that are most influential in cultivating a motivating and trustworthy work environment.

This study seeks to address this gap by investigating the relationship between ethical leadership, motivation, and trust within the context of diverse organizational settings, with the aim of providing practical insights for encouraging a positive work culture and enhancing organizational effectiveness.

This problem statement brings out the issues that our study seeks to tackle. By addressing this statement, the study aims to contribute meaningful insights on ethical leadership and its implications for creating a positive and productive work environment.

1.3 Research Questions

This part of work proposes the research question under study. It is sub divided into the main research question and the specific research questions.

1.3.1 Main Research Question

• What is the role of ethical leadership in creating a motivating and trustworthy work environment in micro finance institutions?

1.3.2    Specific Research Questions

• What are they effects of accountability in creating a motivating and trustworthy work environment?
• To find out the influence of empowerment in creating a motivating and trustworthy work environment?
• How does role modeling affect the creation of a motivating and trustworthy work environment?
• What are the effect of conflict resolution in creating a motivating and trustworthy work environment?

1.4 Research Objectives.

This is subdivided into main and specific research objectives.

1.4.1 Main Research Objective

• The main research objective is to investigate the role of ethical leadership in creating a motivating and trustworthy work environment in microfinance institutions.

1.4.2    Specific Research Objectives

• To access how accountability affects employee motivation and trust in micro finance institutions.
• To verify how empowerment influence motivation and trust in micro finance institution
• To investigate the effects of role modeling in creating a motivating and trustworthy work environment in micro finance institutions.
• To access how conflict resolution affects employee motivation and trust in micro finance institutions.