Can a Leader be Effective Without An Ethical Foundation?

It is important to consider the role of ethical leadership and how culture and results work together. We assume that a leader in an organization needs to be able to lead ethically.

Studies show that when a leader acts ethically, it boosts employee morale, increases productivity, and makes employees trust the leader more.

On the other hand, studies show that unethical leader behavior causes more people to leave their jobs, makes people less happy at work, and hurts attendance and engagement.

A leader can’t be effective without an ethical foundation:

Poor performance and bad attitudes from employees

When leaders misbehave, it usually directly affects how employees feel and how well they do their jobs. For example, employees who do the right thing will think that following the rules won’t help them move up in the company.

This makes even the best employees less motivated and less productive over time. On the other hand, some employees might see unethical behavior and think it’s okay for them to do it too.

If the restaurant manager steals the cash register at the end of the day, the bartenders and servers will start to think they should do the same. If your employees don’t care if they break even small rules, it could be because you lead in an unethical way.

No moral rules

Lying to your employees is the fastest way to lose their trust, but employers do it all the time. One out of every five employees says that their boss or manager lied to them in the past year.

If employees don’t know what’s right, they are more likely to do wrong. Without a moral code, they might not be honest.

A code of ethics is a way to deal with unethical behavior before it happens. It says what the organization’s values are and how they should be followed. Everyone has to be responsible.

Bad reputation

Another way that bad leadership can hurt a company’s success is by hurting your reputation in many different ways. When unethical leadership is going on, it’s often hard to keep it a secret, and word spreads quickly in your industry or community.

More and more people are using employer review sites like Glassdoor, making it easy for current or former employees to point out unethical behavior to the public.

Some companies can recover from public ethics scandals with public relations campaigns or rebranding, but the damage is often permanent, like losing a key customer base or credibility.

If people are saying bad things about your brand on review sites or social media, it might be time to look under the hood and see if there are problems with how the company is run.

Employer-employee interactions are strained

A leader who doesn’t act ethically will also affect employee relationships. When leaders are known to do bad things, employees often can’t help but act strange or awkward around them.

Employees will often stop working for these leaders because they no longer respect them. People who follow the rules will also dislike those who have gotten ahead by “cheating.”

This will hurt the overall sense of trust and community that businesses need to be successful. So, awkward interactions between leaders and employees or a growing sense of resentment could signify a problem with leadership that doesn’t follow the rules.

Unethical activity by managers, executives, or workers may lead to major legal problems for your company.

Employees who are passed over for a promotion in favor of someone who has obtained the job unethically, for example, may decide to sue your organization.

Employees who see unethical leadership may feel powerless in the workplace owing to power imbalances and often seek legal recourse to correct perceived wrongs.

Former (or present) workers bringing legal action against your company is nearly always an indication of unethical activity among the ranks.

Setting a bad example

Doing the right thing starts at the top. Employees try to be like their leaders, and personal character is the most important factor in ethical leadership.

Researchers say that employees are more likely to think that a strong tone is set by a business leader who shows personal character. If workers see that their boss leaves early every day, they may do the same.

Not paying attention to the little things won’t always lead to the kind of scandals that make the news. But not following the rules could cost a lot of money. Getting to the bottom of these causes of unethical behavior at work could stop problems and limit the damage.

What’s to stop someone from inflating their expense report if their coworkers do it and don’t get caught? Too often, people copy the bad habits of those around them.

Researchers say that people act unethically because they tend to accept the questionable actions of people like them, like their coworkers, more than the questionable actions of people different from them.

Loss of respect

When managers or leaders start to do things that aren’t right, it can cause employees to lose a lot of respect for them. It can be hard for the leader to get back the lost respect and trust when this happens.

When their team thinks they’re making bad business decisions, it’s hard for them to run a successful business. Leaders may also get on the nerves of their workers. As employees, they feel like their reputations are starting to go downhill along with the business.

Exploiting workers

Some businesses choose to pay their workers less to make more money for the owners. Some of the ways they do this could be seen as unethical, and some are clearly against the law.

They might pay their workers low wages, which would make it more likely for them to get food stamps and welfare at the expense of taxpayers. Or, they might make their products in countries that don’t have laws to protect their workers, such as those that allow children as young as five to be forced to work.

Some companies have been found guilty of breaking wage and labor laws in the United States by making hourly employees work past the clock or risk losing their employment or terminating workers who complain about pay infractions.

How to Get Better at Being an Ethical Leader?

Great leaders know that there is always something that can be done better. You might want to read our article on the five principles of ethical leadership.

Additionally, here are some things you can do to become a better leader in ethics.

Choose honest business partners

Who you choose as partners, employees, consultants, suppliers, attorneys, and customers will tell everyone else what you stand for.

Make wise choices

Never ask a worker to break the rules that have been set. Rules are there for a reason, and a good leader should never ask a team member for an exception or let themselves get one.

For example, if the rule is that after an 8-hour shift, team members get a long break, a leader should never ask them to stay late. This will help keep things the same and set a good example for everyone watching.

Acknowledge other people

Even if they work for you, you shouldn’t take credit for their work. Instead, celebrate the successes of the people on your team. This will make people more loyal, motivate them, and improve their performance.

Set up a way to control the behavior you want to see

Your values should show up in your actions, which are things that can be seen and judged from time to time. Take the time to think about whether you act the way you want to. If there is a difference, it should be looked at and fixed before it becomes a problem.

Don’t get in the way of your team members' growth

Help your team members be the best versions of themselves, even if it means you might lose them to another opportunity. You can’t keep every employee forever, but you can help them get better at their jobs while they work for you.

Final verdict

Any organization can avoid the detrimental effects of immoral leadership on its performance. The goal is to keep an eye out for the warning indicators described above, investigate the unethical activity, and put measures to reduce the risk of it happening again.


About the Author
James has over 20 years of experience as a leader and entrepreneur. As a founder, he led startup teams as well as million-dollar companies. He has recently turned to leadership coaching and writing to pass his knowledge to the next generation. If you have any questions or comments regarding the content of this post, please send us a message via the contact page.

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