INTRODUCTION

512px-Portrait_of_Niccolò_Machiavelli_by_Santi_di_Tito.jpg
Image: Portrait of Niccolò Machiavelli by Santi di Tito, via
Wikimedia Commons. Machiavelli told political leaders that it
was more important for them to be feared than loved. In lawless
times with weak institutions and many assassinations, he may
have been right. But in today’s business world, for most
industries, the evidence points more the other way.

When we say “the buck stops here,” what do we mean?  When it comes to ethics, it means that we look to leaders to “lead” on ethics, and take responsibility for the results. Philosophers have been discussing ethical leadership (what leaders should do) for quite some time (see Joanne Ciulla’s work, e.g.,​ The Ethics of Leadership (2002)) 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 we’ll describe below, ethical leadership has been shown to cause a host of positive outcomes, and to reduce the risk of many negative outcomes. So, leadership may be the most important lever in an ethical system designed to support ethical conduct.


 

IDEAS TO APPLY (Based on research covered below)

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  • 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.  Organizations may want to channel resources toward developing ethical leadership in their supervisory-level leaders.


 

AREAS OF RESEARCH

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  • 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: 1) conscientiousness (Walumbwa & Schaubroeck (2009); Kalshoven, Den Hartog, and DeHoogh (2011)), which means being thorough, careful, or vigilant; 2) Moral identity (Mayer et al., 2012), which means how important it is for an individual to define himself as a good person with moral traits; and 3) Cognitive moral development, an individual difference that concerns 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 by trained/developed?

  • Does ethical leadership matter? It absolutely does - a lot. 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 is 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. 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).

  • Why does ethical leadership matter? How does it work? Research is beginning to investigate 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).  

  • 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 a follower is the one with the most impact.  That makes sense because immediate supervisors interact with and influence employees every day, while senior leaders are more distant.


 

CASE STUDIES

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Failures

  • Enron Jeff Skilling and Kenneth Lay (see: “The Smartest Guys in the Room.” You can watch it for free here) 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 this link for a summary of the HBR case.

Successes

  • James Burke was 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, at 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 any other employee as an office. 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.


 

OPEN QUESTIONS

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  • Is there a limit to how ethical most organizations want their leaders to be? For example, some 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?

  • Is CEO ethical leadership related to important firm outcomes?

  • 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 leader’s orientation about ethics at work on their own behavior and the behavior of his/her employees?


 

TO LEARN MORE

Articles ​ Academic

Articles – Practitioner

Books – Practitioner

Videos

  • 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:                                    

  • Barry Schwartz gives his advice on how leaders can better cultivate an ethical climate in their organization: 

  • Simon Sinek discusses how leaders can harness human biology to benefit their organizations and themselves: 

  • Watch more from experts studying and practicing ethical leadership in business & the US military, and much more on our Leadership playlist at the Ethical Systems YouTube channel.

 

This page is overseen by resident expert Linda TreviñoDavid Mayer, and Nick Epley, although other contributors may have added content.
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Miscellaneous Links & References