Transformational leaders are responsible for ensuring moral and ethical behavior in themselves before influencing others, say leadership theorists. Ethical leaders influence others while respecting their rights and dignity. People who do not abide by an ethical code still influence others, but with unethical consequences. The nightly news reports the problems caused by unethical decision making..
During the past century, the main goal of leaders was to increase productivity and profit. When leaders focus on increasing profits, unethical behaviors are common. The public is not protected, legal systems activated, and profits are lost in defending the company. Leaders devalue respect for people when their vision rests on the bottom line..
History provides many examples of leaders laying aside their integrity.
The worldwide financial crisis of 2008 was blamed, in part, on unethical executives who encouraged employees to secure subprime mortgages in order to support derivatives that in turn supported hedge fund trading.
Wells Fargo executives encouraged the invention of hundreds of fake bank accounts and fake fees in order to increase profits.
Volkswagen invented mechanisms that defied car exhaust laws.
>President Trump recently changed pipeline laws and national monuments in order to increase production.
And the list goes on. Why is integrity so important in leadership’s decision making? Common definitions include: Being honest, having strong moral uprightness, and the choice to hold oneself to consistent moral and ethical standards. The Urban Dictionary defines integrity as, “doing the right thing, even when no one is looking.” (Dec 14, 2015).The words integrity and ethics may have different meanings but are used interchangeably in discussions and in this article. Decision making without honesty or care for human life invariably hurts someone.
Employees face difficulties is opposing unethical leadership. There are few whistle blowers in corporations or government. Few people are courageous enough to withstand illicit behaviors. The recent “Me Too” movement is an example of the problems employees face. Many women recently reported sexual harassment and abuse after decades of silence.
We live in a time when leaders are expected to display integrity, but many still fail to live ethical lives. Research indicates employees should be concerned about executives’ moral standards. Care for employee health and welfare is not a popular corporate concern. Employees may be forced to perform illegal or unwise tasks in order to make the company look better. Illicit executive behaviors are thought to be more frequent than publicly reported according to researchers. Although academics call for employee testing for integrity, little thought has been given to measuring corporate decision makers..
The Hippocratic oath is an early example of the importance of holding professionals to ethical standards..To ensure ethical behavior, most professional organizations hold their members accountable for recognizing ethical challenges and making correct decisions. If members of professional organizations fail to act ethically, they are dismissed from the organization and barred from professional labors. Doctors are a good example of this practice. If physicians break the law in one state they are barred from working in that state; but problems arise when physicians move to another state and set up a practice. State professional organizations believe national laws should prohibit this practice as protecting the public from unethical people with specialist knowledge.
Employees are expected to follow corporate ethical codes. Employees can be dismissed from a company if they do not follow the rules. Workers in power positions are dismissed less often. The recent senate sexual harassment scandal is a good example. So far, the government has demanded resignations rather than dismissing senators. The laws even protect the President of the United States from losing his job for unethical behavior.
The issue is important to business. Managers seek individuals they can trust. Predicting who will be truthful and work for the common good is not easy to accomplish. Beginning in the 1980s businesses began hiring consultants to develop ethical codes, and social responsibility charters. The movement to improve individual integrity was slow and ineffective. Few organizations meet with others to standardize business ethics, even governments do little more than encourage ethical behavior. Large corporations are still lead by individuals lacking moral standards leaving their employees at the mercy of organizational “for profit” motivations.
There are other barriers to increasing ethical behavior. Small business owners may find ethical behavior challenges their self-interests. For instance, owners play different roles in corporations than their employees. Executive roles are lonely because the responsibilities of “boss” conflict with the role of “friend”. Leaders who spend time with employees can promote jealousies, suspicion, and divisions among front line workers. Executives who hire and fire are discouraged from developing close relationships that may appear as conflicts of interest.
The use of social media complicates the differences in business roles and responsibilities. Integrity is vital at the keyboard. Managers learn that email is not private and can be used in court. Social media encourages oversharing that can be dangerous for the workplace. Social media comments are often misinterpreted and taken out of context. Leaders are urged to avoid social media because of the legal ramifications. Internet and phone communications are used in courts of law and performance evaluations. Workers need to be cautious about what they say because of the lack of privacy on computers or phones.
Learning Integrity
Integrity is first learned at home. The consequences and rewards may differ in each home and culture so the importance of integrity varies among employees. Therefore, business ethics are generally simpler and more conservative than in the general public. Employees learn the consequences of not obeying an ethical code can be drastic. Ethics are not situational and so require individuals to apply the rules to all environments. For instance, kindness, honesty, and truthfulness are minimum behaviors in all environments at all times. A lie is a lie no matter the time or place. Integrity demands that self-serving motivations should not cross ethical lines. Civilization hopes the home fire ethics are transferred to business communities.
Richard Maynes relates a story of his first exposure to business ethics. Richard’s father owned a factory and carefully taught his son how to work from the earliest age. One year he invited his grown son to attend a business meeting. The purpose was to secure a bid for engineering services and factory equipment with a new company. The top corporate purchasing officer met with them.
They reviewed the company’s bid and clarified engineering requirements, design specifications, logistics and due dates before discussing pricing. During this final step the boy learned about ethics instead of pricing.
Mayne said, “The corporate officer explained that our price proposal was the lowest of those who had submitted bids on the project. He then told us the price of the second-lowest bid. He asked if we would be willing to take our proposal back and resubmit it. He stated that our new price should come in just below the next highest bid. He then explained that we would split the newly added dollars 50–50 with him. He rationalized this by saying that everyone would win. Our company would win because we would be making considerably more money than our original bid provided. His company would win because they would still be doing business with the lowest bidder. And, of course, he would win by taking his cut because he put this great deal together.
The purchasing officer then gave us a post office box number where we could send the money he requested. After all of this, he looked at my father and asked, “So, do we have a deal?” Much to my surprise, my father stood up, shook his hand, and told him we would get back to him.”
When driving home, the father asked his son what he thought about the bid and the young man replied that they should not take the bid. The father asked the boy a business question, ““Don’t you think we have a responsibility to all of our employees to maintain a good backlog of work?”
The boy pondered the issue and his father answered his own question. “Listen, Rick, once you take a bribe or compromise your integrity, it is very difficult to ever get it back. Don’t ever do it, not even once.”
Integrity Tests
The frequency of theft, sabotage, not showing up to work, not working a full day, gossiping, and intentionally working slowly, leave some managers thinking dishonesty is just another cost of doing business. If managers refuse to fight unethical behavior, the result is the same as lowering ethical standards. Leaders must employ methods of ensuring honest work environments.
One way to battle employee dishonesty is to test potential new hires for integrity. Dr. Chris Berry supports personnel selection based on integrity testing. Studies indicate there is no difference in results among age groups, gender, or race. Integrity tests include the personality traits of conscientiousness, agreeableness, emotional stability, extraversion and openness.
Owners worry about employee integrity but may forget to address their own integrity. Research indicates employees are concerned about managerial integrity. Recent studies indicate there may be good reasons to be concerned about managerial integrity. Research suggests the lack integrity may occur more frequently than thought. Determining the state of integrity in your business, consider assessing integrity during the hiring process and during employment, Regular consideration of the prevalence and impact of managerial misconduct will likely reduce the frequency of problems. Interviews are found more reliable than testing when working with people over time. Norwood and Briggeman’s research indicates interviews are a useful tool in assessing communication skills, problems solving skills, ability to work with others and character.
Peter Drucker taught “you cannot manage anything unless you can measure it.” So, although measurement costs time and money, businesses report savings when measuring employee integrity. Executives are encouraged to regularly evaluate work ethics against a company checklist. Employee Performance Appraisals can measure judgment, integrity, attendance, availability, dependability, confidentiality and compliance with procedural standards of conduct. Monitoring attendance and work productivity is also possible.
Company owners are urged to think about the characteristics of integrity in their business. Surveys and interviews may help with that assessment. Owners can measure an executive’s communication with others and performance under pressure. Other concepts to assess could include: Nurturing others in the work environment, mistake management and the sharing of bad news. The acts of advertising ethical policies and testing have been known to encourage improvements in behavior.
In order to avoid organizational issues such as staff abuse, theft, rule bending, and skulduggery, frequent analysis is necessary. Since everyone in the company should be held accountable by the corporate ethical code, 360 degree evaluations of performance are popular. This method requires employees to evaluate each other. Coworker ratings of observed ethical behavior are considered reliable but may have a weakness. If the rating system does not provide high and low performance ratings supervisors may only identify malfeasance and not recognize managers needing remedial support to improve behaviors.
Ethical leadership is essential for good business. Ethical cultures are dependent on executives with integrity. These leaders provide examples to follow. Leaders demonstrate how to nurture workmates, manage conflict and emergencies, and how to make difficult decisions. Companies can create ethical cultures by testing new hires for integrity, and interviewing leaders as well as staff members about ethical issues. Small business leaders can avoid theft, abuse, conflict of interest and malfeasance by paying more attention to ethical issues. The benefit of maintaining ethical codes include saving money while promoting profits and developing employee integrity..
Other References:
Kaplan , R.B. K. How to (And Not to) Assess the Integrity of Managers. DeVries Inc. Robert Hogan Assessment Systems. https://www.apa.org/pubs/journals/features/cpb-a0022265.pdf
Maynes, R. (2017). Earning the Trust of the Lord and Your Family. October Conference. https://www.lds.org/general-conference/2017/10/earning-the-trust-of-the-lord-and-your-family?lang=eng
Staff. (2013).The Importance of Ethical Leadership. The Workplace Coach. http://www.theworkplacecoach.com/the-importance-of-ethical-leadership/
Trevino, L.K., Brown, M. & Hartman, L. P. (2003). A Qualitative Investigation of Perceived Executive Ethical Leadership: Perceptions from Inside and Outside the Executive Suite. Abstract. http://journals.sagepub.com/doi/abs/10.1177/0018726703056001448
Article by Deana Molinari PhD Dec. 9, 2017