Mediating Role of Leader-Member Exchange to the Relationship of Ethical Leadership and Employee Performance in the Municipal Government of Balayan, Batangas

This descriptive-correlational study investigated leader-member exchange as a mediator between ethical leadership and employee performance. Specifically, it examined whether the dimensions of leader-member exchange (affect, loyalty, contribution and professional respect) significantly mediates the relationship between the dimensions of ethical leadership (respect, service, justice, honesty and community) and employee performance. As determined by the Raosoft sample size calculator, 139 respondents represented the 216 permanent, coterminous, temporary and casual employees, detailed in a frontline service office, of the Municipal Government of Balayan, Batangas. The researcher used primary data for the manifestation of the extent of ethical leadership and leader-member exchange and secondary data for the employee performance from the Final Average Rating of the Individual Performance Commitment and Review of the respondents for the period of January to June 2023. The data collected were analyzed using descriptive and inferential statistical tools. A Generalized Linear Model Mediation Analysis was used and it was found that leader-member exchange does not significantly mediate the relationship between ethical leadership and employee performance.


INTRODUCTION
In the Philippine setting, it is mandated under the Republic Act No. 7160 or the Local Government Code of 1991 that every local government unit shall establish an accountable, efficient, and dynamic organizational structure and operating mechanism that will meet the priority needs and service requirements of its communities.The structure illustrates the organizational hierarchy of the employees, with those in lower ranks being led by those in higher ranks, which have been established by their qualifications and professional standing.The performance of the employees is a fundamental component of every organization that provide the foundation for outstanding performance must be investigated throughout every organization as it cannot rely exclusively on the input of a single team member.There are a multitude of factors that have an impact on employee performance and one of these is having an ethical leader.In the third edition of the Chandler Institute of Governance's Chandler Good Government Index, which evaluates each nation's capacity for good governance and public sector effectiveness, the Philippines • Email: editor@ijfmr.com

IJFMR240426222
Volume 6, Issue 4, July-August 2024 2 dropped three places to 66th out of 104 countries.The nation's ranked third lowest in East Asia and the Pacific.Indicators under the leadership and foresight pillar include ethical leadership, where the Philippines scored lower than the global average score.Ethical leadership influencing employee performance is among the studies conducted by different scholars from all around the world however, majority of these studies focused on small and medium enterprises, manufacturing enterprises, and banks, rather than local government units, which is the focus of this study.Furthermore, different mediators were associated with the relationship between ethical leadership and employee performance.
As visualized in an organizational structure, tying together the employees and their immediate supervisors are the invisible lines illustrating relationships, interactions, and exchanges which can also be associated with the leader-member exchange.
Employees in the public sector were brought in from the state bureaucracy to uphold the law, guarantee transparency, advance democracy, and guarantee the satisfaction of citizens in receiving services from different groups of participants.Currently, the Municipal Government of Balayan, Batangas employs, approximately, around 300 individuals grouped according to different departments or sections.Two hundred sixteen of these are employees who are detailed in distinct frontline service offices.Every department or section is led by an immediate supervisor who leads and supervises the employees in performing duties and responsibilities for the provision of basic services and facilities to the public.
In the Municipal Government of Balayan, Batangas, a department or section head acts as an immediate supervisor of the human resources detailed in every department.Their primary role is to supervise and manage the performance of their respective offices with the end goal of delivering public service to their constituents.Aside from being the key players in the supervision of the employees, they are also role models of practicing and doing public service delivery with compliance to the ethics and the norms of conduct that are much expected by the public as their customers.
Much like any other institution, the Municipal Government of Balayan, Batangas receives complaints from its clients-and maybe even more so from the residents themselves-about the work that its personnel perform.When questioned, employees additionally point out that the management approach taken by the leaders of each of their distinct sections and/or departments has an impact on how they perform their duties.
As the researcher is an internal auditor, among her functions is to review the organizational structure and staffing of a local government unit.The researcher believed that there is an intervening factor in how interactions between superiors and subordinates mold and sustain employee performance in the work environment.Even though the concept of "leader-member exchange" initially emerged in the 1970s, performing research on a local government like the Municipal Government of Balayan, Batangas, does not frequently make utilization of this concept.

Research Design
The researcher used a Descriptive Correlational Research Method as the research design of this study as it is the most applicable to assess mediating role of leader-member exchange to the relationship of ethical leadership and employee performance in the Municipal Government of Balayan, Batangas.The data indicating the manifestations of the extent of ethical leadership and of leader-member exchange with their subordinates were documented and gathered by means of a survey questionnaire.Furthermore, the data of the employee performance were gathered through the Individual Performance Commitment and Review forms as evaluated by immediate supervisors.Thereafter, these data were used by the researcher to identify and describe the performance of the employees and to identify the highest and lowest rated dimensions of ethical leadership and leader-member exchange of the immediate supervisors.The findings were used by the researcher in proposing a program addressing the significantly related dimensions of ethical leadership and leader-member exchange which lead to the improvement of the performance of the employees.

Respondents
Only employees as of June 2023 detailed in a frontline service office and appointed with permanent, conterminous, temporary and casual status under the Civil Service Commission Omnibus Rules on Appointments and Other Human Resource Actions were included in this study.A sample size of 139 out of 216 respondents was computed using Raosoft sample size calculator at 95% confidence level.The 139 respondents were randomly selected and all of them responded to the survey questionnaires and consented to provide their individual Performance Commitment and Review results for the period of January to June 2023.

Data Gathering Instrument
The researcher used a survey questionnaire with adapted and contextualized questions from a number of corresponding studies as the main instrument that assessed the mediating role of leader-member exchange to the relationship of ethical leadership and employee performance in the Municipal Government of Balayan, Batangas.The first part served as the profiling of the respondents in terms of Age, Sex, Highest Educational Attainment, Employment Status, and Length of Employment.While, the second section reflected the Individual Performance Commitment and Review final average rating of the respondents for the period January to June 2023.Access to these secondary data were provided by the Human Resources and Management Office personnel and consent was also secured from the respondent.Performance was consistently below expectations, and/or reasonable progress toward critical goals was not made.Significant improvement is needed in one or more important areas.The third section of the questionnaire was the assessment of the ethical leadership of the immediate supervisor.The questionnaire was constructed based on the principles of ethical leadership developed by Peter G. Northouse in his book titled, "Leadership: Theory and Practice".The 43-item scale was divided into indicators of Respect, Service, Justice, Honesty, and Community with four items each.The scoring and interpretation used for the questionnaire is a four-point Likert scale.

Data Gathering Procedure
Being a first-class municipality similar to the municipality of Balayan, the researcher performed a dry-run procedure in the Municipal Government of Lemery, Batangas where 20 respondents who met the conditions for employment status and being detailed in any frontline service office participated.With the reliability test resulting to Cronbach's alpha values exceeding 0.9 for every construct, the researcherconstructed questionnaire was used for the survey.An enumerator was employed in administering the distribution of the survey questionnaires to the randomly selected 139 respondents.The data gathered were tabulated, summarized and tallied for further analysis.All entries were double checked to ensure the accuracy and reliability of the results.Table 5 indicates that female employees make up more than half of the respondents.They accounted for 59% of the respondents, with males making up the remaining 41%.This reflects that the results of the study are more on the point of view of female employees than male employees.As depicted from Table 6, 73% of the respondents, the majority, are college graduates.This is followed by the college undergraduates which made up the 13% of the respondents.Seven respondents made up the five percent of the respondents who have units in master's degree or those who already possess a master's degree.Four percent of the respondents are high school graduate and the remaining four percent are made up of employees with doctoral degree, finishers of vocational courses, high school undergraduate, elementary graduate and undergraduate.The results of the study indicate that among the employees, a doctoral degree is the highest level of education attained, while being an elementary undergraduate is the lowest.Table 7 shows the profile of the respondents as to employment status.Majority of the respondents possesses permanent positions.They made up the 78% of the respondents.They are followed by casual employees making up the 21% of the employees.And the remaining one percent is made up by a coterminous employee.Most of the employees have the proper eligibility, according to these data.However, the company employs people who are not only qualified and eligible but also people appointed solely for essential services when the regular workforce is insufficient to meet demand and are appointed based on the appointing officer's trust and confidence.Table 8 shows the profile of the respondents as to length of employment.The majority of the 61 respondents worked for the Municipal Government of Balayan, Batangas for five years or less.Aside from them, 28 respondents (20%) work for the organization for a span of 21 years or more; 24 respondents (17%) are employed for six to ten years; 14 respondents (10%) are employed for 11 to 15 years; and the remaining 12 respondents (9%) are employed for 16 to 20 years.

Employee Performance
Table 9 shows that 72% of the respondents earned a final average rating which fell on the description of Very Satisfactory meaning that the performance of these employees exceeded expectations and all goals, objectives and targets were achieved above the established standards.Twenty-nine employees or 21% of the respondents earned an Outstanding final average rating which indicates that performance of these employees represents an extraordinary level of achievement and commitment in terms of quality and time, technical skills and knowledge, ingenuity, creativity and initiative.The remainder 7% of the respondents received a mark of Satisfactory indicating that the performance of these employees met expectations in terms of quality of work, efficiency and timeliness and the most critical annual goals were met.The mean ratings for the immediate supervisors' level of ethical leadership in terms of service are summarized in Table 11.The mean score obtained from the respondent's assessment was 3.68 overall.Except for one, every item was heavily discussed; the statement that makes decisions that are beneficial to others' welfare and not harmful had the highest mean score (3.74).The statement that carries out team building activities has the lowest mean score (3.44), both when compared to the statements related to Service and the other characteristics of ethical leadership.

Very Great Extent
The manifestations of the ethical leadership of the immediate supervisors in terms of Honesty were described by the respondents as addressed in a very great extent with an overall mean of 3.69 as shown in Table 13.It means that the immediate supervisors display a very high level of being free of deceit and untruthfulness.The highest ranked statements represent reality as fully and completely as possible and balances transparency and assesses the proper information dissemination with mean score of 3.72.While the lowest ranked is the statement admits his/her mistakes and is accountable to them with a mean score of 3.64.The Municipal Government of Balayan likewise exhibits a positive work atmosphere, and the direct supervisors put up a great deal of effort to keep it that way.In addition, the immediate supervisors exhibit a very kind approach toward both their clients and their subordinates.In addition to encouraging employees to interact with people outside of their immediate surroundings so they can be flexible in handling the various characters and individualities, immediate supervisors encourage their subordinates to communicate their personal histories through a variety of methods.Only two statements pertaining to loyalty garnered an excellent remark as they resulted to a mean score of 6.52 and 6.57, respectively.These are the statement my supervisor expresses gratitude for having me in the office and the statement my supervisor does not embarrass me in front of other people while the rest of the statements received a very good remark.The statement my supervisor defends my work actions to a superior, even without complete knowledge of the issue in question which resulted to a mean score of 6.15 ranked the lowest not only among the statements pertaining to loyalty but also of all the other dimensions of leader-member exchange.18 indicates that the respondents rated the leader-member exchange with their immediate supervisor as excellent overall, with a mean score of 6.57 for Professional respect.Out of all the dimensions of leadermember exchange, the dimension of Professional respect had the highest overall mean score.A mean score of 6.67 was obtained for the statement, "I respect my supervisor's knowledge of and competence on the job."It is the greatest of all the dimensions of leader-member exchange in addition to the statements about professional respect.The immediate supervisors evaluated that the statements "people compliment our office for operating effectively" and "others speak highly of my supervisor's technical expertise" were both very well displayed, with mean scores of 6.46 and 6.43, respectively.

Differences on the Employee Performance when Grouped According to Profile
Table 19 shows the differences on employee performance of the respondents when grouped according to all of the profile variables.The profile variable with the lowest p-value is the employment status with a pvalue of .068while the length of employment with a p-value of .343has the highest.Since none of the profile variables produced a p-value below the .05level of significance, it can be concluded that there is no significant difference in the respondents' employee performance when grouped based on their profile.The findings suggest that the performance level of employees in the Municipal Government of Balayan is not influenced by their demographic features.Regardless of the employee's age, they go above and beyond what is required of them in carrying out their designated tasks and obligations.
The trend toward eliminating gender-based inequalities has also meant that an employee's performance is unaffected by their gender within the company.Employees perform similarly regardless of the level of schooling they have received because, by default, the tasks assigned to them are only those that are within their purview.Furthermore, this holds true for their employment situation.The performance of those with shorter employment durations is likewise highly satisfactory, which may be attributed to their willingness to complete tasks with an open mind to learning.Longer serving members demonstrate that they have mastered the art of providing public service via experience.

Mediation of Leader-Member Exchange on the Relationship between Ethical Leadership and Employee Performance Figure 1 Path Diagram of the Mediation of Leader-Member Exchange on the Relationship between Ethical leadership and Employee Performance
The effects of the mediation effect of leader-member exchange on the relationship between ethical leadership and employee performance were decomposed based on different paths.The path of ethical leadership to employee performance as mediated by leader-member exchange determined the indirect effect.While, the path of ethical leadership to leader-member exchange and the path of employee performance to leader-member exchange determined the component effects.Moreover, the direct effect was determined based on the path ethical leadership to employee performance without the considerations for leader-member exchange.And lastly, the combination of the indirect and direct effects determined the total effects on the mediation effect of leader-member exchange on the relationship between ethical leadership and employee performance.

A. Indirect Effects
From table 20, it is shown that half of the paths have positive relationships while the other half have negative relationships.Similarly, half of the paths are above the average while the other half are below the average.From the paths created, it is shown that the effect of Honesty on Employee performance as mediated by Professional respect resulted to the lowest p-value of .055.While the effect of Service on Employee performance as mediated by Affect resulted to the highest p-value of .913.

B. Component Effects
From the results on Table 21, it is shown that the effect of Respect to all dimensions of leader-member exchange resulted to p-values which ranged from .321 to .583.The effect of Service also resulted to pvalues ranging from .340 to .899.While the effect of Justice to all dimensions of leader-member exchange resulted to p-values which ranged from .165 to .779.The effect of Honesty on dimensions of Affect, Loyalty and Professional respect resulted to p-values greater than the .05significance level.The effect of Community on Affect and Loyalty also resulted to p-values greater than the .05significance level.As to the effect on employee performance, only the Professional respect resulted to a p-value lower than the .05significance level while the rest of the dimensions resulted to p-values greater than the .05significance level.

C. Direct Effects
All the dimensions of ethical leadership do not have a significant direct effect on employee performance as shown in Table 22.Among the five dimensions of ethical leadership, the effect of Community on employee performance resulted to the lowest p-value of .103.It is followed by the effect of Honesty on employee performance with a p-value of .395.The effect of the dimension of Service on employee performance with a p-value of .663ranked to be in the middle.Having a p-value of .725placed the effect of Justice on employee performance at the second rank.And the effect of Respect on employee performance with a p-value of .845made it the least significant among the five dimensions of ethical leadership.

D. Total Effects
The effect of Honesty on employee performance had the lowest p-value of .066among the five characteristics of ethical leadership, according to the results shown in Table 23.The p-value for the impact of Community on employee performance, which came out to be.201, lies next to it.The effect of Service, which had a p-value of.530, is in the center of the ranking for the impact of an ethical leadership dimension on employee performance.The overall impact of Justice on employee performance produced a p-value of.785,which is 0.175 values below the relation with the greatest p-value.Of the five aspects of ethical leadership, the effect of Respect on employee performance was found to be the least significant, with a pvalue of .960.

CONCLUSIONS
Based on the significant findings of the study, the researcher drawn the following conclusions: 1. Majority of the respondents are female, college graduates and have a permanent employment status.
Moreover, most of the respondents are millennials and have the shortest length of employment at five years and below.2. The performance of the respondents based on their Individual Performance Commitment and Review had a Very Satisfactory rating.3. Ethical leadership of the immediate supervisors of the Municipal Government of Balayan, Batangas, on all of its dimensions namely, respect, service, justice, honesty and, community, is manifested on a very great extent.4. The quality of the leader-member exchange between the immediate supervisors and the subordinates of the Municipal Government of Balayan, Batangas, on its dimensions namely, affect, contribution and professional respect, earned an excellent manifestation except for loyalty which only earned a very good manifestation. 5. Employee performance do not have a significant difference when grouped according to the profile in terms of age, sex, highest educational attainment, employment status and length of employment.6. Leader-member exchange does not mediate the relationship between ethical leadership and employee performance in the Municipal Government of Balayan, Batangas.

RECOMMENDATIONS
Based on the foregoing findings and conclusions, the following recommendations are hereby presented: 1. Based on the results, the organization may consider the proposed program by the researcher that focuses on promoting the culture of interdependence through the characteristics of having a sense of community, honesty, contribution and professional respect displayed by their immediate supervisors.2. The organization may institute a consultation system that enables employees to freely and amicably address matters about their employment and how they affect their performance.3. The department and sections heads of the Municipal Government of Balayan, Batangas may consider building relationships with their direct subordinates by engaging various approaches in assessing how they can boost the culture of interdependence which will also empower the camaraderie within the organization.4. Lastly, it is recommended that future researchers look into ethical leadership, employee performance, and leader-member exchange further, either locally or nationally, to see if the study's conclusions apply to the respondent organization they have selected.

Statistical Treatment of Data The
data gathered were interpreted and analyzed through Frequency and Percentage, Mean, Standard Deviation, Kruskal Wallis Test, Mann-Whitney U Test and Generalized Linear Model Mediation Analysis.

RESULTS AND DISCUSSIONS Profile of the Respondents Table
4 illustrates the division of the population into four age groups: 40% fall between the 27 and 42 age range, 38% fall between the 43 and 58 age range, 13% fall between the 11 to 26 age range, and 9% fall between the 59 and 77 age range.The generation of Millennials makes up the majority of respondents, while Baby Boomers make up the smallest percentage.

Table 10
, shows that the respondents' immediate supervisors addressed ethical leadership in the context of Respect to a significant extent.Out of all the components of ethical leadership, the dimension of Respect had the highest overall mean score.Among the statements of the other dimensions of ethical leadership as well as the statements linked to Respect, the statement that treats subordinates with decency and kindness received the highest mean score of 3.81.The lowest mean score of 3.63 was obtained by the statement that subordinates are not merely taken to be instruments to other people's goals.

Table 11 Extent of Ethical Leadership in terms of Service
Similar to the dimension of Service, the dimension of Justice received an overall mean score of 3.68 as shown in Table12.The statement of the grounds for differing treatment are transparent, rational and based on moral values, and the statement of maintains a diverse, equitable, and inclusive workplace are the highest ranked statements pertaining to justice receiving a mean of 3.71.While the statement establishes clear guidelines for distributing rewards and punishments received the lowest mean score of 3.62.

Table 12 Extent of Ethical Leadership in terms of Justice Statement Mean SD Interpretation Makes
it a top priority to treat all of their subordinates in an

Table 15 Quality of Leader-Member Exchange in terms of Affect
Among all of the dimensions of leader-member exchange, the dimension of Loyalty received the lowest overall mean score of 6.42.Despite being the lowest, it is still within the range of the very good remark.

Table 16 Quality of Leader-Member Exchange in terms of Loyalty
Similar to the dimension of Affect, the dimension of Contribution received an overall mean score of 6.53 as shown in Table17.The statement, I willingly work overtime when needed to meet my supervisor's goals and deadlines is the highest ranked statement pertaining to contribution which received a mean score of 6.64.On the other end, the statement I do not mind working the hardest for my supervisor received the lowest mean score of 6.40.Similar to this statement, the statement I do work for my supervisor that goes beyond what is specified in the job description which has a mean score of 6.48 was also assessed by the respondents on a very good note only.

Table 17 Quality of Leader-Member Exchange in terms of Contribution Statement Mean SD Interpretation
I do work for my supervisor that goes beyond what is specified in

Table 18 Quality of Leader-Member Exchange in terms of Professional respect Statement Mean SD Interpretation
• Email: editor@ijfmr.comIJFMR240426222 Volume 6, Issue 4, July-August 2024 13