Applied Psychology OPUS

Effects of Supervisor-Employee Relationship on Job Performance

by Justin Conway

         Employee job performance is one of the most important factors within business analytics for maintaining and increasing productivity for companies (Elangovan, & Xie, 1999; Spreitzer, 1995). Employee job performance is operationally defined as the extent to which an individual completes the duties that are required in order to occupy a given position, which s/he assumes within an organization. Some of the most common responsibilities of supervisors are to delegate work, and to give information or advice to subordinates. In acknowledging that it is the duty of supervisors to ensure that employee job performance is at maximum potential, it would be advantageous for managers in all trades and industry sectors worldwide to understand what types of employee-supervisor interactions are associated with employee job performance. Knowledge regarding the possible association between supervisor-employee relationship and job performance would enable the implementation of more effective systems for management, and subsequently, better productivity for the company through increased job performance. This assessment seeks to evaluate examples from current research to understand the relationship between four dimensions of employee-supervisor interaction [perceived organizational support (POS), trust in the supervisor (TS), leader-member exchange (LMX), and reward systems (RS)], and employee job performance. Research on the associations of these variables shows varied results because of the difficulty in ruling out extraneous variables in the workplace. However, researchers generally agree that POS can act as a foundation for interaction with supervisors that allows other beneficial constructs, such as trust, to begin to develop.

Perceived Organizational Support
        Perceived Organizational Support (POS) is operationally defined as: the extent to which an employee believes that his/her company cares about them and appreciates his/her contributions to the company (Eisenberger, Huntington, Hutchison, & Sowa, 1986). Moreover, employees tend to measure interactions with their superiors as positive or negative to create a global POS assessment of how they rank at their company (Rhodes & Eisenberger, 2002). An organization is really a complex system that has no physical body of its own, so if an employee is to feel a sense of support, it will result from interactions with other individuals within the company. Supervisors act as the face of the organization, giving employees feedback and advocating on behalf of their company. High POS is established when an employee feels that s/he has more desirable interactions with their supervisors than non-desirable ones (eg: more compliments than complaints). In this respect, Rhodes and Eisenberger (2002) stated that favorable treatment from a supervisor is synonymous with support from the organization, which raises POS among employees. They continued to explain that increasing POS is generally achieved through better treatment of employees in areas such as fairness, support, rewards, and favorable job conditions, and that extending these gestures seems to be recognized as a sign of high POS by the employees who receive them, regardless of the reward or managerial system in place at that organization (Rhodes & Eisenberger, 2002). In other words, whether the company has an organizational hierarchy, team management, positive reinforcement, or negative reinforcement method of management, employees tend to view fairness, support, rewards, and favorable job conditions as signs of POS.

        When employees feel that they are appreciated and receive rewards for service to their company, their motivation to continue receiving rewards increases, and levels of job performance increase (Rhodes & Eisenberger, 2002). POS acts as an emotional reward to employees for their continued loyalty and high job performance. These effects are exaggerated if the employee feels that the reward/support was voluntarily given to them (eg: a promotion for accomplishment in work duties), and reduced if the employee feels that such reward or support was simply a matter of policy (eg: government imposed mandatory pay increases; Rhodes & Eisenberger, 2002). In this respect, the psychological state of employees acts as a moderator in the POS to job performance relationship. Furthermore, current mood often affects the way support is received. For example, an employee that is usually grateful to receive help from a supervisor may see the help as annoying or unnecessary if the employee were in an unsociable mood.

        Additional benefits of POS include a ‚positive relationship between POS and organizational commitment (Eisenberger, Fasolo, & Davis-LaMastro, 1990; Shore & Tetrick, 1991; Shore & Wayne, 1993), in-role performance (Eisenberger, Huntington, et al., 1986; Eisenberg, Fasolo, et al., 1990), organizational and citizenship behavior (Moorman, Blakely, & Niehoff, 1998; Shore & Wayne, 1993; Wayne, Shore, & Liden, 1997) and a negative relationship with absenteeism‛ (Eisenberger et al., 1986 as cited in Coyle-Shapiro & Conway, 2005, p. 775). Furthermore, research concludes that high POS is a predictor of happier, more productive employees, and when high POS is present, employees report higher levels of perceived established trust (Rhodes & Eisenberger, 2002; Eisenberger, Rhoades, & Cameron, 1999).

Trust In the Supervisor
        Trust is defined by Rousseau, Sitkin, Burt, and Camerer (1998) as, ‚a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of another‛ (p. 395). To operationalize the definition of trust in a way that that is directed specifically toward the supervisor, we will simply replace the word ‚another‛ with the words ‚a supervisor‛ (ie: trust in the supervisor is: a psychological state comprising the intention to accept vulnerability based upon positive expectations of the intentions or behavior of a supervisor). Trust is an essential factor in the acceptance of duties and information from supervisors. Generally, whether an action was performed on an employee’s own volition, or it was requested by a superior, an employee is expected to ‚know better‛ than to act in ways that are unfavorable to the company and will be held accountable for any resulting consequences. If an employee feels that his/her supervisor may give incorrect information or a task that will not benefit the company, the employee may take extra precautions and/or be reluctant to perform when working (Elmuti, 1997). This behavior could result in slower task completion (Elmuti, 1997). In this scenario, the lack of trust established acts as an impediment to employee productivity, and consequentially results in losses for the company in the form of wasted employee time. McAllister (1995) stated that trust is ‚a variable seen as critical to organizational coordination‛ (as cited in Gómez & Rozen, 2001, p. 57). When TS is very low subordinates may disregard directives from their supervisors out of fear that the information given to them is unreliable. In order to optimize the efficiency of the delegation of duties, it is important for supervisors to gain the trust of their employees.

        Showing competence is one of the first and most important things that a supervisor can do to begin establishing trust with subordinates. Elangovan and Xie (1999) reported that perception of supervisors has an impact on many employee outcomes related to production. They went on to explain that perception of a supervisor has a positive correlation with motivation and a negative correlation with stress in employees (Elangovan and Xie, 1999). The hiring process is the first sign of trust and acceptance of an employee by a manager, and it is generally expected that trust will be reciprocated by the employee. Quinn, Reed, Browne, and Hiers (1997) explained, ‚When one moves into the managerial structure of the large corporation or firm, one is not just moving into a ‘job’ but into a bureaucratic setting that contains its own social and cultural environment and rules of behavior‛ (p. 1426). Employees are allowed to take on responsibilities that are important to the company, and acquire roles within the social framework of the organization, but they are expected to always act with the best interests of the company in mind. The supervisor is responsible for insuring that work performed by subordinates effectively adds to the productivity of the company, so if the employee fails in his/her duties, so does the supervisor. As trust in an employee increases, supervisors tend to respond by providing the employee with job enlargement, the intentional increase in the duties and responsibilities of the employee. To ensure that employees recognize job enlargement as a sign of trust, the assigned work must be given with a corresponding increase in responsibility. When employees are given more work duties without increased responsibility, it may indicate to the employees that they did not do enough work or that they are being punished. On the other hand, if more work is delegated and responsibility is increased, employees are likely to see it as a sign of appreciation and trust in their performance, which translates to a boost in self-esteem and motivation to perform (Gómez, & Rosen, 2001). In assessing the necessary factors for trust in the workplace, it is apparent that trust accumulates over time through events that allow the respective parties to evaluate and reevaluate each other based on their actions. The goal for the supervisor is to keep the employees’ interest in remaining a part of this system, and the goal of the employees’ is to gain more power within it (Henderson, Wayne, Shore, Bommer, & Tetrick, 2008). In the organizational hierarchy, the only way to gain power is through empowerment bestowed by a supervisor.

        Hierarchical structuring of a company keeps power situated within individuals who maintain higher ranking. When a superior feels that a subordinate employee can be trusted to take on more responsibility, more duties may be delegated to that employee, thus s/he becomes empowered through the corresponding increase in power and authority. Elmuti (1997) explained how allowing employees a level of control and authority within an organization improves ‚both individual motivation and organizational productivity‛ (p. 237). Additionally, Gómez and Rozen (2001) stated that ‚The LMX theory builds in the constructs of managerial trust and subsequent employee empowerment,‛ and went on to explain that empowerment is born of a combination of trust and LMX, and (p. 54).

Leader-Member Exchange
        Leader-member exchange (LMX) is operationally defined as the degree to which an employee feels that he/she is in the manager’s in-group, and has a quality relationship with their manager(s) (Gómez & Rozen, 2001). Due to the fact that the method of rating LMX and the way in which one views his/her manager’s in-group relies on personal opinion that differs across individuals, for the purpose of this paper it will be operationally defined as: an employee feeling that s/he is accepted by his/her supervisor, and is given preferential treatment. The implication here is that managerial trust in employees gives those employees special treatment in the form of information and a certain level of autonomy (Gómez & Rozen, 2001). Research shows that employees are selected to be a part of managerial in-groups based on managers’ assessments of employees’ skills, motivation, and the level of trust that the managers feel the employee deserves (Liden & Graen, 1980). Once LMX has begun to be established, the supervisor will delegate more responsibility to the employee, which is associated with an increase in employee empowerment. Empowerment is a key factor in creating innovation within a company (Spreitzer, 1995) because it serves as an indication to employees that they are responsible for and have the right to control certain aspects of his/her company. If employees are motivated to increase company productivity or make systems more efficient, empowerment will serve as a license to innovate. Managers use empowerment as a method of increasing organizational effectiveness (Conger & Kanungo, 1988; Kanter, 1989) and quality of exchange (Spreitzer, 1995, 1996). Without LMX:

…employees and managers at lower levels
perceived senior management as distant and
formal in their communications with
employees. This was thought to impede
motivation and make communications more
difficult..." (Winter & Jackson, 2006, p. 429)

Effective managing involves the issuance of the proper responses to actions performed by employees and effective communication to insure that employees understand supervisors’ instructions and intentions. When employees misunderstand supervisors’ intentions, managerial efforts can become ineffective, or even counterproductive.

        In order to use LMX in management techniques, it is important to know how they operate from the employee’s perspective. Research has shown that perceptions of LMX among subordinates are subject to the frog-pond effect, or the effect that referents have on an individual’s perception. In other words, ‚Individuals may engage in comparisons and may use social information derived from referents when evaluating the fulfillment of their PCs‛ (psychological contracts; Henderson et al., 2008). The more variation of LMX within a group, the more subordinates with high LMX will feel that they are treated special in comparison to their peers (Erdogan & Liden, 2002). Therefore, a pleasant interaction with a superior holds extra significance if other employees did not receive the same level of interaction. Henderson et al. states, ‚Frog-pond effects and their associated comparison processes engender a positive relationship between RLMX (LMX relative to a within-group average) and PC fulfillment‛ (2008). It is important to note however, that LMX must first be established by creating a relationship with a give and take nature. The exchange element in LMX is fundamental because it allows for the conceptualization of mutual trust and respect, which encourages information exchange. In this respect trust and LMX are intertwined, acting as both source and product of the other. When a subordinate is accepted into a manager’s in-group, it can be perceived as a reward because it is typically the result of good job-performance and fulfillment of the psychological contract on behalf of the employee (Henderson et al., 2008).

Rewards Systems
        A reward is commonly known as, ‚something given or received in return or recompense for service, merit, hardship, etc.‛ (Merriam-Webster Dictionary; Reward Systems (RS) are groups of standardized responses that are designed to give benefits to employees who perform tasks specified by their company or superior ( A RS is another form of supervisor-employee interaction in the sense that a reward is typically created by a manager to give to subordinates, and subordinates respond to those rewards verbally or behaviorally. In fact, all of the constructs previously discussed are heavily connected to RS by either being rewards themselves (POS, LMX), or acting as a part of the measurement of the construct trust in supervisor (TS). POS and LMX are methods of positive reinforcement because they are increased as an employee fulfills their psychological and occupational contracts. Employees typically want to be included in their manager’s in-group and feel that they are supported by their organization. Thus, increases in support areas such as POS and LMX that correspond to job productivity are seen as rewards (Gómez & Rozen, 2001). When employees determine their level of TS, reward distribution is considered because employees must feel that they are rewarded properly for their contributions in order to know that their supervisors have their best interest in mind.

        Research shows that most RS methodology has a positive correlation with job productivity in employees (Elangovan and Xie, 1999). Employees can be rewarded in a variety of ways that stimulate their intrinsic and/or extrinsic desires, and an effective RS is built from a combination of knowing which rewards are most effective for which employees and distributing those rewards properly. The primary forms of rewards are psychological (eg: compliments); material/tangible (eg: pay increases, bonuses); and intangible (eg: preference in receiving company perks, privilege of using company property such as cars, boats, houses, etc., promotions), but a reward can be anything that employees enjoy, which their companies can supply to them in exchange for good employee performance. Rewards act as both a way for organizations to show their gratitude to employees for work well done and as motivational factors for those employees to produce at high levels (Elangovan & Xie, 1999). In order to increase company productivity, it is common for managers to implement a system in which employees receive more rewards for a corresponding increase in job productivity; however, this system is only effective under certain circumstances, usually dictated by the psychological state of the employee. This tends to be where Industrial/Organizational practices are preferred over typical managerial methods because of their effectiveness in accounting for psychological factors.

         Elangovan and Xie (1999) found that RS had a positive correlation with motivation, but self-esteem served as a moderator. Moreover, participants with low self-esteem were motivated more by the implementation of an increased RS (R2 =0.029; F(l,150)= 5.02, p < 0.05), but those who had high self-esteem did not have increased motivation when rewards were increased (Elangovan, & Xie, 1999, p. 366). This data demonstrates that familiarity with subordinates, particularly with regard to the self-esteem construct, is imperative for implementing effective RS. The bare essentials for implementing an RS involve: designing a system, the process of distributing information about the new system, supplies and processes for distributing the rewards to employees, and a method of tracking the completion of certain tasks that are to be rewarded. Setting up these features within a company can be a costly enterprise, and if the reward system does not cause a significant increase in employee production, the system will simply serve as a loss to the company. For this reason, LMX, and employee testing procedures are invaluable in allowing superiors to gain critical information about their subordinates, so that the RS can be designed with high confidence of leading to increased revenue for the company.

         In addition to the direct effects of RS on employees, Elangovan and Xie (1999) demonstrates how employees also benefit from feeling empowered through receiving rewards. They posit that rewards are part of the five bases of social power (i.e. reward, coercive, legitimate, expert, and referent), which implies that as rewards are distributed, employees’ social power is raised. They continued to explain that rewards also had a significant positive correlation with motivation, and work effort, which are predictors of employee job performance (Elangovan, & Xie, 1999).

        The sum of research on employee-supervisor interaction implies that POS, TS, LMX, and RS have positive correlations with employee job performance. Supervisors that maintain high levels of positive interaction and support for their subordinates will increase POS, which acts as a reward for employee fulfillment of occupational obligations, and the psychological contract (Rhodes & Eisenberger, 2002). Trust is mutually established through significant interactions, and acts as the foundation for building POS and LMX in the employee-supervisor relationship, and that relationship is rated more positively when employees feel that they have more positive interactions with supervisors than negative interactions. ‚According to LMX theory, those employees who are considered part of a manager’s in-group have a high-quality exchange (Dansereau, Graen, & Haga, 1975 as seen in Gómez & Rozen, 2001, p. 54),‛ and LMX has a significant impact on employee in-role (within the expected range of job requirements) and extra-role (outside the expected range of job requirements) behaviors (Gerstner & Day, 1997; Ilies, Nahrgang, & Morgeson, 2007), which translates to increased company productivity.

         Although studies have shown a positive correlation between RS and job performance, psychological states of employees, particularly with regard to self-esteem moderate the relationship. In order to have a high degree of confidence in a RS; LMX, and superior’s knowledge about subordinate’s psychological states must first be established. Then RS serves as another form of supervisor-employee interaction upon which POS, LMX, and TS can continue to be built.

        Although evaluations of employee performance are highly correlated with LMX (Bauer & Green, 1996), research has not yet determined cause and effect, which suggests the possibility that managers who have good relationships with their employees tend to rate their performance higher due to the managers’ feelings toward those employees. Furthermore, this positive rating may be independent of actual employee performance levels. Future studies would benefit from a cross-lagged panel design that could use time as a quasi-experimental variable in order to derive statements that imply cause and effect between the variables LMX, and employee job performance.

         Additionally, the prevalence of research that indicate associations between the constructs studied in this paper (ie: POS, TS, LMX, RS), and empowerment may be an indication that said constructs are mediating or moderating the relationship between empowerment and job performance. In the case of a mediating relationship, the ability of empowerment to predict job performance should exist at some level independently of the other constructs. Future research would benefit from testing the levels of employee empowerment in addition to POS, TS, LMX, and RS. For data analysis, a hierarchical multiple regression with the other constructs (POS, TS, LMX, RS) put into the equation before empowerment could be used in order to test the effect of empowerment on job performance after the other constructs have been accounted for.


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Author's Biography

Justin Conway is a senior in the Applied Psychology program. He is currently assisting Dr. Elise Cappella on the BRIDGE research team studying the effects of social interactions and child behaviors within the classroom. While studying at NYU Justin has provided counseling services to inmates at Rikers Island Correctional Facility and mentoring services to high-school students at Upward Bound. He was previously published for his literary works, and is a recipient of the QSA Presidential Service Award. Justin's focus is primarily based in organizational development and management consulting and his main research interests include the supervisor-employee relationship, motivation, and decision making. After graduating he plans to work within a consulting firm while pursuing his MA degree in Industrial/Organizational Psychology.