Ethical Leadership

Content provided by the Ethics Research Center (ERC), the research arm of ECI.

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Ethical Leadership

A Research Report from the National Business Ethics Survey® (NBES®)

Employee Views of Leaders’ Personal Conduct Drives Perceptions of their Ethical Leadership. Workers’ Judge Leaders Primarily by Three Factors.

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This study was created by the Ethics Research Center (ERC), the research arm of ECI, and made possible in part by support from the Raytheon Company

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ECI members get access to this entire report at no charge. The full report is available to members of the public for a contribution of $35.

Corporate leaders who are perceived by their employees as demonstrating strong personal character are much more likely to be perceived as setting a strong tone from the top.

“It is often said that a strong tone for ethics begins at the top,” ECI Chief Executive Officer Patricia J. Harned, Ph.D. said. “The value of this report is that it specifically identifies the most important things that leaders can do to set that tone.”

ECI also found, however, that direct supervisors also can have a significant impact when comes to modeling good behavior, keeping promises, and upholding organization standards. It concluded that ethics is increasingly a 24-7 job because workers expect their managers to behave ethically off the job as well as in the workplace.

“Everything a leader does sets a tone,” Harned said. “Leaders and organizations need to recognize that the line between public and private gets less clear every day.”

ECI recommended that organizations that want to support strong ethical leadership should:

  • Seek out personal character when hiring and make 24-7 integrity a job expectation.
  • Educate managers about the way employees evaluate leaders
  • Encourage leaders to share credit for success and seek honest feedback from employees.
  • Annually review business objectives and policies to ensure they promote ethical performance.

Executive Summary

In every human endeavor, including ethics, leadership can make the difference between success and failure. As part of its National Business Ethics Survey®, ECI set out to learn what’s required for successful ethical leadership and what leaders can do to set an ethical tone at the top and inspire employees to do the right thing. With data from the survey, we explored the relationship between management behaviors and employee conduct. 

Among the most notable findings: the most significant factor in ethical leadership is employees’ perception of their leaders’ personal character. Leaders who demonstrate they are ethical people with strong character have a much greater impact on worker behavior than deliberate and visible efforts to promote ethics.

Workers Judge Leaders on Three Factors 

Employees at all sizes of organizations draw conclusions about their leaders’ character primarily on three factors: 

  • The overall character of their leaders as experienced through personal interactions; 
  • How senior managers handle crises; and 
  • The policies and procedures adopted by senior leaders to manage the organization. 

Employees want to know, for example, whether leaders treat lower level employees with dignity and respect, share credit when good things happen, and uphold standards even if it reduces revenues and profits. They watch to see whether leaders are steady in crisis, hold themselves accountable or, alternatively, shift blame to others. Workers also look at day-to-day management decisions to gauge whether ethical behavior is recognized and rewarded, or whether praise and promotions go to workers who bend the rules.

Supervisors Can Impact Ethics as Much as CEOs

We also found that tone at the top doesn’t just come from the C-suite. When it comes to modeling good behavior, keeping promises, or upholding organization standards, direct supervisors may matter just as much or more than CEOs and other senior executives. In fact, two in five workers we surveyed pointed to their immediate supervisor when asked who they consider senior leadership. However “senior leadership” is defined, workplaces in which leaders display ethical leadership tend to have lower rates of misconduct, less pressure to break rules, and greater employee engagement. 

Ethical Leadership Is a 24-7 Job 

Finally, ethical leadership is increasingly a round-the-clock job. When it comes to ethics, everything a leader does sets a tone. In a world where old distinctions between public and private are increasingly blurred, leaders’ private behavior can matter just as much as what they do at work. When leaders practice 24-7 integrity, workers’ own commitment to ethical conduct tends to be stronger. In matters of ethics, leaders are always setting a tone.

Recommendations for Strengthening Ethical Leadership 

Organizations can build on leaders’ personal strengths to increase the odds that managers and employees will do the right thing. Based on findings, ECI recommends organizations: 

  • Pay attention to personal character when hiring and make 24-7 integrity a job expectation. 
  • Educate managers about the way employees evaluate leaders, including the impact of “private” behavior in the age of social media. 
  • Encourage leaders to share credit for success and seek honest feedback from employees. 
  • Annually review business objectives and policies to ensure they promote ethical performance.

View report methodology.