Evidence of the Impact of Leader Statusrelated Behaviors on Organizational Outcomes in Financial Service Firms

The U.S. financial services industry has been in a state crisis for three decades, precipitated by ethical misconduct within the industry. Regulatory and legislative changes have been introduced, yet the industry’s ethical climate remains largely unchanged. Industry participants have acknowledged the limitations of external intervention and have called for change at the organizational level that specifically targets organizational leadership and culture to promote ethical and organizational citizenship behavior (OCB) outcomes. Deming proposed that firms may improve quality through comparative performance assessment with outside industries. This study is modeled after research conducted by Nembhard and Edmondson (2006) to determine whether significant organizational findings from the healthcare industry are reproducible in the financial services industry. This study used a multivariate, experimental design to examine the relationship of professional status and psychological safety on organizational citizenship behavior outcomes, while incorporating the moderating effect of leader inclusiveness. 247 current financial services professionals participated in this study. The study implemented a three-phased analytical process involving latent class analysis, recursive path analysis, and qualitative analysis. The results of the study indicate that professional status influences perceptions of psychological safety and is moderated by leader inclusiveness. The results also confirm that leader inclusiveness has a direct influence on OCB-voice and that psychological safety directly mediates OCB helping and organizational commitment outcomes. The findings of this study provide managerial insights on how organizational leaders in the financial services industry might effectively manage professional status differences to enhance employee perceptions of psychological safety and to stimulate organizational citizenship behavior in employees