Leaders key to shaping workers’ ethical behaviour

that have a strong bearing on how employees think and behave.
They hold the levers of power and determine the destiny of the organisation.
They have control over organisational rewards and punishment processes.
Leaders influence important organisational outcomes such as pay and promotions.
Because of all this, leaders are better placed than anyone else in the organisation to shape and influence employees’ ethical and unethical conduct.
Proponents of moral psychology postulate that most employees look outside themselves to rules and laws and to the expectations of others in their environments for guidance on what is ethically right. By virtue of the power and influence bestowed upon them by organisational processes, leaders are the most conspicuous source of what behaviour is appropriate and inappropriate for employees. They set the ethical tone at the top.
Dr Linda Trevino, who has written a number of books on managerial ethics identified what she called the social learning and the social exchange perspectives in understanding the influence of leaders on employees’ ethical and unethical conduct in the workplace.
The social learning perspective suggests that leaders influence ethical and unethical conduct through modelling processes, and the social exchange perspective postulates that subordinates reciprocate with positive behaviour when they perceive that their leaders and supervisors prioritise and uphold ethical values.
Modelling is a powerful tool for transmitting values and acceptable behaviour to employees. Employees learn what to do, as well as what not to do, by observing how their leaders behave.
Leaders are models by virtue of their assigned role in the organisation, their status, and their power to determine who gets rewarded and punished.
The modelling view suggests that consequences such as rewards and punishments facilitate learning in an instrumental manner.
Employees pay attention to and mimic leaders’ behaviour, and they will do what encourages rewards and avoid doing what attracts punished in the organisation. Employees pay close attention to rewards and punishments because of their salient nature and significant effect on their personal lives.
Rewards and sanctions thus inform employees about the benefits of modelled ethical behaviour as well as about the negative effects of modelled inappropriate behaviour.
In the US, employees’ perception about the degree of care about ethics of company leaders has over the years been associated with the levels of employee ethical or unethical conduct.
The National Business Ethics Survey report of 2009 concluded that corporate leaders directly affect the ethical culture of their companies and that culture is the largest influence on employee conduct, which follows that the better the tone above the less misconduct observed in lower ranks.
When leaders engage in unethical conduct, they create an environment that encourage employees to engage in unethical behaviour.
If company leaders are observed enriching themselves at the expense of the organisation, employees learn that such behaviour is acceptable. If a salesperson who is known to lie to customers is given a huge performance bonus at the end of the year, employees will learn that lying to customers is rewarded, and will copy such behaviour.
If leaders are rewarded for unethical conduct, the need to imitate such behaviour by employees becomes even stronger.
The CEOs of Enron and WorldCom at the turn of the century provide a good example.
Financial analysts and the American media celebrated the two as exceptional executive leaders as they defied conventional wisdom by continually surpassed Wall Street’s short-term financial expectations.
They were publicly hailed and financially rewarded for achieving extraordinary financial outcomes, and no one seemed to care what means they used to achieve those outcomes.
Sadly their subordinates followed their lead and became increasingly adept at inventing new and unethical ways with which to contribute to these “astonishing” financial results. And the eventual result was the dramatic fall in 2002 of the two corporate giants.
When employees believe that they are treated fairly by their leaders, they are motivated to give more of themselves in support of their leader and the organisation. Fair treatment engenders satisfaction and loyalty among employees, and perceived unfair treatment can provoke strong negative reactions from employees. Employees react to perceived unfair treatment from management by stealing, abusing sick leave, lying to supervisors and misusing company resources such as stationery, vehicles and phones.

l Bradwell Mhonderwa is the Managing Consultant of Business Ethics Centre, a Corporate Governance and Business Ethics Management firm. Phone 04-293 2948, 0772 913 875, or e-mail [email protected]