Ethical Leadership and Why Little Things Matter

By: Matt Kramer, EdD '13

Ethical lapses, invariably, make for good reading. Whether in the press, or as analyzed in an ethics class, lapses reflect our human desire to relish in not only the decisions others make, but importantly, the comeuppance they so richly deserve.

What’s lost in the discussion is how ethical lapses contribute to the health of your organization, or more accurately, its illness. Because while we focus on the dramatic, we regularly ignore the precursors that often determine if the small lapse will turn into the headline grabbing major disaster. For ethical lapses are not only a human failing, they are a leadership and institutional failing. When we fail as individuals we are merely human. But when we fail as institutions we destroy trust, credibility, and far too often, the livelihoods of others impacted by the overall situation. Ethical leaders are more than just a moral compass; they are a very necessary element in organizational success.

What is Ethical Leadership?

The challenge in ethical leadership is not, curiously, to be a perfectly ethical person. We can and should try, but we also must recognize that we will fail. The real challenge is to ensure that leaders respond to ethical lapses in a way that ensures that a minor lapse remains just that and can be corrected with training, discipline, and engagement by leaders at all levels. Left unchecked, minor mistakes slowly, but surely, will destroy a company from within, even as outsiders see an organization seemingly untouched by the ethical scandals that make the evening news.

Why are ethical leaders so important? First and foremost, because employees need to know that their leaders model and support an ethical culture and that a lapse at any level will not be tolerated. An organization’s perception of ethical compliance is directly related to the status of an individual in the organization. Whereas senior executives may believe that they collectively have high ethical and organizational compliance, lower ranking employees have less confidence in their organization’s ability to weather an ethical lapse. Interestingly, the longer the tenure of an individual at the company the greater the change in perceived confidence. While long-tenured executives tended to believe rhetoric on ethical compliance, long-tenured, but lower ranking employees showed increasingly negative confidence in corporate and leadership ethical behavior.

This disconnect serves to divide employees and to encourage a workforce not committed to shared success. Employees often accelerate their departure from companies where their sense of personal purpose, and personal ethics, conflicts with their perception of the corporation itself. When leaders fail to live up to the values of their employees, the result is a workforce not vested in the organization itself.

Worse yet, when individuals experience a disconnect relative to their personal values and those of the organization, they actually experience a sense of betrayal and are left with significant doubts as their own future. Hardly a positive way to inspire loyalty and engagement with your employees.

Interestingly, the US Government, through the Sarbanes-Oxley Act of 2002, created a legal requirement for companies to establish an ethical culture. Yet the law cannot define an ethical culture beyond mere compliance. Minimum standards, by themselves, are not sufficient. In fact, the Department of Justice recognized a distinction between organizations that have an ethics program and those organizations where the corporation’s employees “are convinced of the corporation’s commitment to it.” When lapses happen, is mere compliance desired, or are employees engaged and committed to ensuring compliance? And who better than ethical leaders to engage on that very point?

Without ethical leaders, will subordinates in turn respect the ethics of the organization? The ability of a subordinate to withstand situational pressure from a superior can be predicted in part based on the organizational commitment to ethical behavior and compliance. When organizations provide only lip service to compliance, they are inherently suggesting only lip service responses to ethical lapses. Employees quickly become disconnected, disenchanted, and sooner rather than later find a way to leave the organization. Without ethical leaders, the organization is actively engaged in accelerating employee turnover, convincing, in the most negative way possible, the best, most committed employees to leave due to their disenchantment with both leaders and the company as a whole.

The Need for Ethical Leadership

All of this is to reinforce the primacy of ethical behavior on the part of leaders, but as importantly, quick and active corrections to the lapses that we all are subject to. A lapse in and of itself is not the end of the world, but how we respond to it may be.

Importantly, leaders in an organization can never forget that while organizational objectives matter, and clearly will occupy significant communications space, a focus on ethics can create the very positive employee engagement that companies relish.

Little things do matter, and ethical leaders committed to the importance of a positive, fast, and accurate response, will reap the benefit of a far better and engaged workforce than those organizations that fail to engage with their most important asset, their employees.

Evolve Your Leadership

Develop ethical leadership skills in a program that integrates practice and insights from experienced faculty and high-achieving peers. Learn more about the online Doctoral Program in Interdisciplinary Leadership at Creighton University.

References:

Ardichvili, A., Jondle, D., & Kowske, B. (2012). Minding the Gap: Exploring Differences in Perceptions of Organizational Ethics Between Executives, Mid-level Managers and Non-managers. Human Resources Development International, 15(3), 337-352.
Johnson, C. (2012). Meeting the Ethical Challenges of Leadership. Thousand Oaks, CA: SAGE Publications, Inc.
Lowe, J. & Reckers, P. (2012). An Examination of the Contribution of Dispositional Affect on Ethical Lapses. Journal of Business Ethics, 111(2), 179-193.
Pope, K. (2015). Steps to Strengthen Ethics in Organizations: Research Findings, Ethics Placebos, and What Works. Journal of Trauma and Dissociation, 16(2), 139-152.
Rothausen, T., Henderson, K., Arnold, J., & Malshe, A. (2015). Should I Stay or Should I Go? Identity and Well-Being in Sensemaking About Retention and Turnover. Journal of Management. Published on-line February 9, 2015.
Ziegler, R. (2008). New Obstacles in Setting the Tone at the Top. Center for Ethical Business Cultures. Retrieved June 20, 2016 from: http://www.cebcglobal.org/wp-content/uploads/2015/02/New_Obstacles_in_Se...