“EXPLOITATIVE LEADERSHIP, PSYCHOLOGICAL DISTRESS, EFFORT-REWARD IMBALANCE, AND EMPLOYEES’ JOB PERFORMANCE IN THE BANKING SECTOR OF PAKISTAN”

Abstract

This paper examines the effects of exploitative leadership on job performance of the employees by use of psychological distress as a mediating variable and use of effort to reward imbalances as a moderating variable in the Pakistani banking industry. Based on the Conservation of Resources (COR) theory and the Effort-Reward Imbalance (ERI) model, the study follows the quantitative, cross-section research design using the data gathered with 309 different employees working in various banks. The hypothesized relationships were tested using Structural Equation Modelling (SEM) with SmartPLS 4. Findings indicated that exploitative leadership can definitely negatively impact job performance but positively impact psychological distress. In addition, this relationship partly happens through psychological distress, which affirms the fact that exploitative leaders lower performance mainly through augmentation of emotional strain. The moderation analysis also showed that the negative relationship between distress and performance is increased by the moderation effect of effort reward imbalance, meaning that the perceptions towards inequity increase the negative side of the effect of psychological fatigue. All of these results as a whole reveal the devastating effect of predatory leadership and the relevance of fair reward structures and psychological sustenance solutions as a means of maintaining staff morale and output. The research adds to the existing literature on leadership and occupational psychology by highlighting the context of dark leadership in a high power-distance society and provides valuable insights to the human resource policy, ethical management, and mental health intervention in rising economies.