It’s fair to say that, overall, organizations can benefit from loyal employees. Loyal employees stay with their organizations longer,1 even when there is conflict.2 They form tighter bonds between each other3 and cheat less.4 But, of course, those benefits can also come with important costs. It’s not surprising that loyal employees, and organizational members more broadly, are sometimes willing to do things—unethical things—on behalf of their organizations. So what, in the light of this, should companies do—foster loyalty, discourage it, or just let it be? Put another way, is it possible for organizations to cultivate a sense of loyalty for their employees and simultaneously avoid any negative effects?
I find this tension—that between fostering loyalty and avoiding its negative effects—fascinating. I take stock of it in my new paper, forthcoming in Current Directions in Psychological Science, which I penned with my coauthors Neil Lewis, Jr. (Cornell University) and Walter Sowden (U.S. Army). We reviewed research on loyalty and discovered that loyalty is a force that facilitates good, but also one that sometimes justifies the bad. It creates strong ties between people and their objects of loyalty and obligates them to act on behalf because it’s the “right thing to do.” This is why we tend to think of loyal people as better friends, romantic partners, and employees.
Too much loyalty can become an ethical liability.
Still, as was clear from our research, loyalty can push us to act well or poorly in any given situation. That is, it has a dark side. What several studies have found is that, even though people agree that it is wrong to engage in unethical behavior, they tend to downplay the significance of wrongdoing committed by people they are loyal to. And, even worse for organizations, people protect their loyal ties who have engaged in unethical behaviors, and tend to avoid blowing the whistle on them.
It is not just loyalty to peers that can pose problems for organizations—loyalty to the organization itself can also create ethical challenges. A 2019 study, which surveyed thousands of employees, found that people who were loyal to their organizations were far less likely to blow the whistle when they observed wrongdoing and corruption in the organization. This is a huge issue, given that 49 percent of people, according to the 2020 National Business Ethics survey, report witnessing some form of wrongdoing in their organization.
Organizations are thus faced with a large challenge: Fostering loyalty to the organization—by, for example, increasing employee engagement in organizational decision-making or offering bonuses—could let corruption and wrongdoing go on for some time before ever being discovered. This could bring with it extremely high financial and reputational costs.
Everyone saw elements of this in the downfall of Theranos. Elizabeth Holmes, the infamous CEO of Theranos, demanded loyalty from her employees, both to the organization and its leadership. Demanding this loyalty led to employees almost never speaking-up about corruption or strange intra-organizational decisions, such as prohibiting engineers from talking to medical experts about the technology that they were working on. Perhaps Theranos would not have taken off like it did, for as long as it did, had loyalty to the organization and its leadership not been compulsory.
It wouldn’t be quite right to say that the downsides of fostering loyalty mean that promoting loyalty is too dangerous. But leaders should proceed with caution in cultivating it. Too much loyalty can become an ethical liability.
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Prudent organizations will be clear about their ethical values. When people are loyal to an organization, they tend to behave in line with the rules and values it espouses. Organizations should be clear on things like the importance of uncovering wrongdoing, as well as the importance of never behaving unethically for the sake of doing a job better or helping the organization in some other way. To put it more simply, organizations should instill in their employees the value of honesty, both in their work and in reporting what they see. And organizations should consistently profess these values, such as at company-wide meetings, through monthly emails, or even through posters or banners placed around the office. The norms that an organization creates can significantly influence employees.5
The second thing that organizations can do is work to create an ethical climate in their workplace. An ethical climate refers to the overarching practices and procedures within an organization that constitute what ethical behavior at work should look like.6 One important aspect of creating and sustaining an ethical climate is putting ethical leadership into place. Ethical leaders ideally embody the ethical values of the organization, and influence their peers and subordinates to do the same and behave accordingly.7
A lot of research in management and organizational behavior has found that ethical climates significantly reduce wrongdoing in organizations.8 Employees are heavily influenced by both the people who are leading them and their peers, so creating an ethical climate sustained by ethical leadership is an important way to mitigate the risks that can come from promoting loyalty among employees.
Taking loyalty lightly may very well leave organizations unprepared for the ethical breaches workers can commit, all while feeling like it’s the right thing to do. The answer isn’t to discourage loyalty in organizations, but to integrate it within the clear values of a broader ethical culture.
Zachariah Berry is a PhD student in organizational behavior at Cornell University. Follow him on Twitter @zberry37.
- Kondratuk, T. B., Hausdorf, P. A., Korabik, K., & Rosin, H. M. (2004). Linking career mobility with corporate loyalty: How does job change relate to organizational commitment? Journal of Vocational Behavior, 65(2), 332–349. https://doi.org/10.1016/j.jvb.2003.08.004
- Hirschman, A. (1972). Exit, Voice, and Loyalty. Harvard University Press. https://www.hup.harvard.edu/catalog.php?isbn=9780674276604
- Van Vugt, M., & Hart, C. M. (2004). Social Identity as Social Glue: The Origins of Group Loyalty. Journal of Personality and Social Psychology, 86(4), 585–598. https://doi.org/10.1037/0022-35184.108.40.2065
- Hildreth, J. A. D., Gino, F., & Bazerman, M. (2016). Blind loyalty? When group loyalty makes us see evil or engage in it. Organizational Behavior and Human Decision Processes, 132, 16–36. https://doi.org/10.1016/j.obhdp.2015.10.001
- Tankard, M. E., & Paluck, E. L. (2016). Norm perception as a vehicle for social change. Social Issues and Policy Review, 10(1), 181–211. https://doi.org/10.1111/sipr.12022
- Victor, B., & Cullen, J. B. (1988). The organizational bases of ethical work climates. Administrative Science Quarterly, 33(1), 101–125. https://doi.org/10.2307/2392857
- Brown, M. E., & Treviño, L. K. (2006). Ethical leadership: A review and future directions. The Leadership Quarterly, 17(6), 595–616. https://doi.org/10.1016/j.leaqua.2006.10.004
- Treviño, L. K., den Nieuwenboer, N. A., & Kish-Gephart, J. J. (2014). (Un)ethical behavior in organizations. Annual Review of Psychology, 65, 635–660. https://doi.org/10.1146/annurev-psych-113011-143745