Lead by example for an honest employee base.

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Your employees are more likely to behave ethically if you as their boss light their path. New research, published in the Academy of Management Journal, shows that managers who demonstrate and demand ethical behaviour tend to have employees who do the same.

Researcher David Mayer, of the University of Michigan, Karl Aquino of the University of British Columbia, Rebecca L. Greenbaum of Oklahoma State University, and Maribeth Kuenzi, of Southern Methodist University, studied the effect managers have on the employees in their work units. They surveyed employees and their supervisors at organizations across the southeastern United States in the areas of technology, government, finance, law, retail, manufacturing, and medicine.

Employees filled out anonymous surveys that assessed their supervisors’ leadership. They responded to statements such as: “My departmental manager disciplines employees who violate ethical standards” and “My departmental manager can be trusted.” The supervisors answered questions such as: “To what extent do department employees pilfer company materials and supplies? Accept gifts or favours in exchange for preferential treatment? Pad an expense account? Divulge confidential information?”

“... ethical managers who demonstrate and demand ethical behaviour tend to have employees who do the same.”

The researchers found a direct correlation between the ethical behaviour of supervisors and that of their employees. They also found less internal conflict among departments that reported having “ethical” managers and better interpersonal relations with colleagues: the staff of ethical leaders were more likely to demonstrate support, respect, and fairness for each other.

Characteristics of an Ethical Leader

Ethical managers shared similar characteristics in how they upheld and reinforced ethical behaviour. They communicated expectations explicitly, discussing business ethics and values with staff, and disciplining employees who violated those values. Leaders also conveyed expectations implicitly, conducting their personal lives according to strong moral values, and defining work success not just by results, but by the way the results were obtained.

In a nutshell, these leaders told employees how they expected them to behave, and modelled that behaviour themselves.

While the findings may seem intuitive, they have clear implications for companies. The decreased productivity associated with an employee conducting personal business on company time or the increased costs associated with staff stealing supplies quickly add up to noticeable losses for the organization. And the negative market reaction that could result from employees divulging sensitive company information could be irreversible.

Building an Ethical Employee Base

To build a base of ethical leaders and employees, the researchers recommend engaging your human resources team. Ask that they establish selection methods that assess a managerial candidate’s integrity or moral development during the hiring process. And work with HR after the hire to provide training in ethical behaviour. The Society for Human Resources Management has toolkits in these areas – available for a fee.

You can also look for other ways to reinforce leaders’ moral identities, such as putting up posters in their work areas. It might sound trite, but a daily reminder in his or her environment may be all it takes to dissuade an employee from grabbing some supplies or falsifying that report.

Beyond Trust

The researchers note that the impacts of ethical leadership likely extend even further than employee trustworthiness. They recommend studying the impacts of ethical leadership on other outcomes such as employees’ willingness to voice their insights and to help the organization.

Source

Mayer, D.M, Aquino, K., Greenbaum, R.L., and Kuenzi, M. 2011. "Who Displays Ethical Leadership and Why Does it Matter? An Examination of Antecedents and Consequences of Ethical Leadership." Academy of Management Journal. 55,1: 151-171.