When it comes to ethics, we look to leaders to lead on ethics and take responsibility for both good and bad results. Philosophers have been discussing ethical leadership (as in what leaders should do) for quite some time but the topic is relatively new as an area of social scientific study.
Leaders who lead ethically are role models, communicating the importance of ethical standards, holding their employees accountable to those standards, and- crucially- designing environments in which others work and live. As described below, ethical leadership has been shown to cause a host of positive outcomes, and to reduce the risk of many negative outcomes.
Leadership may therefore be the most important lever in an ethical system designed to support ethical conduct.
- Make ethics a clear priority. Being an ethical leader means going beyond being a good person. Ethical leaders make ethics a clear and consistent part of their agendas, set standards, model appropriate behavior, and hold everyone accountable.
- Make ethical culture a part of every personnel-related function in your organization. Leaders must work hard through hiring, training, and performance management systems to bring in the right employees and then help employees internalize the organization’s underlying values.
- Encourage, measure, and reward ethical leadership at multiple levels. Ethical leadership from the top is very important- because it creates an environment in which lower-level ethical leaders can flourish- but ethical leadership at the supervisory level has a huge impact on followers’ attitudes and behavior. In fact, mid-level managers often find promoting C&E a greater challenge than do senior executives. Mid-level managers should be encouraged to:
- Regularly communicate about C&E issues to employees in their work unit;
- Ensure that C&E “performance” is adequately reflected in employee evaluations and compensation decisions;
- Be alert to exemplary ethical behavior in the work unit, and—as appropriate—praise that behavior to others in the unit.
- Do ethical leaders have special characteristics? Anyone can become an ethical leader, but researchers have found a few traits that are more commonly found in leaders who are rated by their followers as being ethical leaders. These traits include:
- Conscientiousness (Walumbwa & Schaubroeck (2009); Kalshoven, Den Hartog, and DeHoogh (2011)), which means being thorough, careful, or vigilant;
- Moral identity (Mayer et al., 2012), which means the degree of importance for individuals to define themselves as a good person with moral traits; and
- Cognitive moral development, meaning how sophisticated one’s thinking is about ethical issues (Jordan et al., 2013).
- How do people become ethical leaders? We have some evidence that having had an ethical role model can contribute to being perceived by one’s followers as an ethical leader (Brown & Trevino, 2013). But we need a lot more research on this question. For example, can ethical leaders be trained/developed?
- Does ethical leadership matter? In major ways. Followers who rate their leader as more ethical have more favorable job attitudes such as job satisfaction and commitment. They are also less likely to report intentions to leave the organization. This is because followers are attracted to ethical role models who care about them, treat them fairly, and set high ethical standards.
Ethical leadership is also associated with more helpful behavior from employees, perhaps because ethical leaders model helpful behavior (Mayer et al., 2009; Walumbwa & Schaubroeck, 2009). Ethical leadership also reduces deviant or unethical behavior in followers (Mayer et al., 2009; Mayer et al., 2012). Again, ethical leaders are role models, and followers learn how to behave by observing them (Moore, et al. 2014). When unethical acts do occur in the social environment, employees who have an ethical leader are more likely to report the wrongdoing to management because ethical leaders create a psychologically safe environment and are trusted to handle reports fairly and with care (Mayer et al., 2013).
In addition, a study summarized in Harvard Business Review reported that good leadership impacts the bottom line. Researchers found that CEOs whose employees gave them high marks for character had an average return on assets of 9.35% over a two-year period. That’s nearly five times as much as what those with low character ratings had; their ROA averaged only 1.93%. More in Kiel, Return on Character, 2015.
- Why does ethical leadership matter? How does it work? Research is investigating the processes that contribute to understanding how ethical leadership affects outcomes. The most important process appears to be modeling (from social learning theory) (Bandura, 1986). If an ethical leader models ethical decisions and behaviors, followers can be expected to do the same.
Further, research has found that followers of ethical leaders tend to identify more with the organization, report higher self efficacy, and a stronger leader-follower relationship (Walumbwa, Mayer, Wang, Wang, Workman & Christensen, 2011). Also, we have learned that ethical leaders create ethical cultures that influence followers to behave more ethically and to refrain from behaving unethically (Schaubroeck et al., 2012). An essay in Fast Company by ES collaborator David Mayer outlines why it takes more than being a good person to inspire ethical conduct among employees.
- What level of ethical leadership matters most: top management or lower-level supervisory leadership? There is some evidence that ethical leadership at the top “trickles down” and affects behavior at lower levels (Mayer et al., 2009). But, in general, research suggests that the leader closest to an employee is the one with the most impact. This is reinforced when we consider immediate supervisors interact with and influence employees every day, while senior leaders are more distant in the hierarchy and, potentially, by location.
- Enron’s Jeff Skilling and Kenneth Lay (“The Smartest Guys in the Room“) Notice how Jeff Skilling created an environment at Enron in which unethical behavior could flourish, based on his understanding of Darwinian evolution and the principle of “survival of the fittest.” Leaders are responsible for creating the environment in which their employees work; in this case, the environment readily enabled unethical behavior.
- Lance Armstrong, whose decision to dope was enabled by an infrastructure of colleagues within his organization and now serves as a reminder that cheating can be a “slippery slope.” See a summary of the case study by Harvard Business School.
- James Burke, CEO of Johnson & Johnson in the early 1980s when the company’s McNeil Division was hit with a crisis: Tylenol in Chicago drugstores had been laced with cyanide and seven people died. Burke responded with a recall of 31 million bottles and set up a crisis hotline to answer consumers’ questions. Burke said over and over again that the company’s Credo, which put customers first (and profits last), helped to guide decision making throughout the firm during the crisis. As a result, Johnson & Johnson went onto develop the tamper resistant packaging that we have all come to expect, and successfully rebuilt the brand. See HBR’s cases on James Burke’s career and his handling of the crisis for more information.
- Tony Hseih of Zappos.com, succeeded in creating an environment within Zappos that attempts to avoid many of the most common ethical failings. For instance, he creates a culture of equality by using the same cubicle as other employees. He recently reorganized the company’s structure to avoid hierarchies: see this link for more. His guiding ethical principle is to “make employees happy, and good things will happen.” Here is a link to a profile of Zappos on 20/20 and another link to a profile of Zappos from Nightline.
- Is there a limit to how ethical most employees want their leaders to be? Recent research has found that employees behave in a more cooperative manner for moderately ethical leaders than highly ethical leaders (Stouten et al., 2012).
- Are men or women typically more ethical when in leadership positions? Are men or women judged more punitively for ethical lapses? Does it depend on the nature of the transgression?
- Are the criteria for being an ethical leader different in distinct cultures (countries)? Do employees and society more broadly respond differently to ethical lapses (or ethical greatness) from leaders in different cultures?
- To what extent do leaders think of ethics as part of their responsibility at work? Do they tend to think ethics and values should be relegated to family and religious domains? What is the influence of a leader’s orientation about ethics at work on their own behavior and the behavior of their employees?
In a radio interview, Nick Epley talks about understanding the human mind, particularly the minds of others, which is no doubt vital in leading others:
Adam Grant on one way leaders can foster ethical conduct:
Articles – Academic
- Biggerstaff, L. Cicero D, & Puckett, A. (2014). Suspect CEOs, unethical culture, and corporate misbehavior. Journal of Financial Economics, 20-86
- Brown, M. E. & Mitchell, M. S. (2010). Ethical and unethical leadership: Exploring new avenues for future research. Business Ethics Quarterly, 20, 583–616.
- Brown, M. E., Treviño, L. K., & Harrison, D. A. (2005). Ethical leadership: A social learning perspective for construct development and testing. Organizational Behavior and Human Decision Processes, 97, 117–134.
- Brown, M. E., & Treviño, L. K. (2006). Ethical leadership: A review and future directions. The Leadership Quarterly, 17, 595–616.
- Killingsworth, S. (2013). ‘C’ is for Crucible: Behavioral Ethics, Culture, and the Board’s Role in C-Suite Compliance. RAND Center for Corporate Ethics and Governance Symposium White Paper Series.
- Mayer, D. M., Aquino, K., Greenbaum, R. S., & Kuenzi, M. (2012). Who displays ethical leadership and why does it matter? An examination of antecedents and consequences of ethical leadership. Academy of Management Journal, 55(1), 151-171.
- Mayer, D. M., Kuenzi, M., Greenbaum, R., Bardes, M., & Salvador, R. (2009). How low does ethical leadership flow? Test of a trickle down model. Organizational Behavior and Human Decision Processes, 108, 1–13.
- Moore, C., Mayer, D., Chiang, Flora F. T., Crossley, C., Karlesky, M. & Birtch, T (2014). Leaders Matter Morally: The Role of Ethical Leadership in Shaping Employee Moral Cognition and Misconduct.
- Schaubroeck, J., Hannah, S., Avolio, B., Kozlowski, S., Lord, R., Treviño, L.K., Dimotakis, N, & Peng, C. (2012). Embedding ethical leadership within and across organizational levels. Academy of Management Journal, 55(5): 1053-1078.
- Treviño, L. K., Brown, M., & Hartman, L. P. (2003). A qualitative investigation of perceived executive ethical leadership: Perceptions from inside and outside the executive suite. Human Relations, 56, 5–37.
- Wellman, N., Mayer, D. M., Ong, M., & DeRue, D. S. (2016). When are Do-Gooders Treated Badly? Legitimate Power, Role Expectations, and Reactions to Moral Objection in Organizations. Journal of Applied Psychology.
Articles – Practitioner
- Banaji, M., Bazerman, M., & Chugh, D. (2003). How (un)ethical are you? Harvard Business Review, 81, 56-64.
- Bazerman, M. H., & Tenbrunsel, A. E. (2011). Ethical breakdowns. Good people often let bad things happen. Why? Harvard Business Review, 89, 58-65.
- Messick, D. M., & Bazerman, M. H. (1996). Ethical leadership and the psychology of decision making. Sloan Management Review, 37, 9-22.
- Treviño, L., & Brown, M. (2004). Managing to be ethical: Debunking five business ethics myths. Academy of Management Executive, 18, 69-83.
- Treviño, L.K., Hartman, L.P., Brown, M. (2000). Moral person and moral manager: How executives develop a reputation for ethical leadership. California Management Review, 42(4): 128-142.
- Weaver, G. R., Treviño, L. K., & Agle, B. (2005). Somebody I look up to: Ethical role modeling in organizations. Organizational Dynamics, 34, 313-330.
- Ali, Usman and Hirshleifer, David A. (2015). Opportunism as a Managerial Trait: Predicting insider trading profits and misconduct
Books – Practitioner
- Treviño, L. K., & Nelson, K. A. (2011). Managing Business Ethics: Straight talk about how to do it right (5th Ed.). Wiley, John & Sons, Inc. (public library) (Ethical Systems summary of 5th edition)
This page is overseen by resident experts Linda Treviño, David Mayer, and Nick Epley, although other contributors may have added content.
Miscellaneous Links & References
- David Mayer (2015), Ongoing Series of Articles on Leadership and Ethics with Fast Company
- CEOs with military experience are less likely to be involved in fraudulent activity, and less likely to engage in excessive risk taking. (Benmelech & Frydman, 2014)
- Ratings of a leader’s “empathy” are the strongest predictor of employee ratings of the leader’s ethics. at FinancialPost.com. [posted by jon haidt, 7/13]
- Treviño, L. K., Weaver, G. R., & Brown, M. E. (2008). It’s lovely at the top: Hierarchical levels, identities, and perceptions of organizational ethics. Business Ethics Quarterly, 18, 233-253. [posted by Selin Kesebir] This article shows that senior managers have “rosier” perceptions of the organization’s ethics than lower level employees. Compared to senior managers, lower level employees were less likely to perceive that the organization cared for and rewarded ethical behavior, were more likely to believe that formal ethics and compliance programs exist to protect top management from blame, and less likely to think that employees would report unethical conduct or seek ethical guidance.
- John Antonakis and colleagues on power, corruption and testosterone.