Leading by Example: The Moral-Dimension of Ethical Leadership and Its Influence on Employee Productivity in Kenya’s Insurance Sector

Abstract

While the importance of ethical leadership in the context of organisations performance in service-driven sectors has recently garnered great attention, its moral aspects which include role modelling, code of conduct and the practice of leadership devoid of self-interest need further investigation. The study examined the effect of moral aspect of ethical leadership on employee productivity in licensed insurance and reinsurance companies in Kenya. The study involved descriptive correlational research design with a positivist philosophy where Ethical Leadership Theory as the basis. A stratified random sampling of 200 supervisors was randomly selected from a target population of 402 supervisors in 58 registered firms in the Insurance Regulatory Authority, Nairobi County. A total of 200 questionnaires were sent out and 192 were received, giving a 96% return rate. The data were analysed by descriptive statistics and simple linear regression, Pearson correlation, using IBM SPSS Version 28. The results indicated a very strong positive correlation between the moral-dimension and employee productivity (r = .987, p < .001, N = 192) that was statistically significant. The regression model was statistically significant, F(1, 190) = 7,429.13, p < .001 and explained 97.5% of the variance in employee productivity (R² = .975). The standardised coefficient also verified that the relationship is essentially perfect and that the model is predictive (β = .987, t = 86.19, p < .001). The research findings are that moral leadership is a strong determinant of employee productivity.