The Influence Of The Top Management
On Employees' (Ethical) Behavior by Using Ethical Leadership
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In today’s business world, a company’s integrity is crucial for its long-term success.
Scandals and ethical violations can significantly damage a company’s reputation and cause financial losses.
Headlines such as “Amazon employees allegedly sold customer data,” “Spiegel reveals fraud case within its own ranks,” or “Crime scene at car factory: Temp worker steals 4,000 GPS devices” confirm the need to positively influence employees’ moral awareness and ethical behavior.
The relevant question is: How can company leadership influence employees’ ethical behavior through the example they set, and how strong is this influence?
This answer to this question was the focus of my research, which I present in this article.
The influence of company leadership, whether in a small 10-person business or a multinational corporation, is known to be very high.
This applies to every work area, be it occupational safety, work morale, sustainability, or ethical behavior.
But why did I focus on the aspect of ethical behavior?
because economic crime causes billions of dollars in losses annually and can severely damage trust in a company.
Studies show that most offenses are committed by employees at lower levels (not executives), often without direct orders from superiors.ethical principles influence many other behavioral aspects (as mentioned above).
This raises the question of how companies can promote ethical behavior and prevent unethical behavior.
Company leadership plays a central role, as they can significantly influence employees’ behavior through ethical leadership.
First, let me briefly explain what ethics is.
Ethics, morality, and integrity are often used interchangeably but have different meanings.
Morality refers to societal norms and values, ethics to the reflection and study of these values, and integrity to the alignment between what a person says and does.
In the business context, these concepts are crucial to creating an environment that fosters ethical behavior.
What is Ethical Leadership?
Ethical leadership is a leadership style based on ethical principles. An ethical leader is characterized by honesty, care, and fairness and serves as a role model for their employees.
Studies have shown that employees who perceive their leaders as ethical are less likely to engage in unethical behavior.
This is because ethical leaders build trust and inspire their employees to act ethically.
Now let's get to the core:
In my research study, I surveyed various employees and leaders at different hierarchical levels on this topic.
The questions aimed to answer the following:
Is there a connection between the level of ethical leadership and the moral disengagement (willingness to act unethically) of employees?
Is there a connection between the level of ethical leadership and the moral identity of employees?
Does the influence of company leadership on employees' moral disengagement depend on the level of employees' moral identity?
Does the influence of company leadership depend on the hierarchical distance from the employee?
Does the influence of company leadership depend on the level of employees' identification with their company leadership?
To answer these questions, it was essential to fundamentally determine the moral value system of the respondents, identify their (hierarchical) proximity to company leadership, and understand how ethical they perceive their company leadership to be – perception is a critical factor.
It's not about how ethical a person truly is but how they are perceived by relevant individuals, in this case, the workforce.
The results were varied and quite differentiated but ultimately very clear.
Company leadership has a significant influence on employees' ethical behavior through ethical leadership. This influence manifests in various forms:
Role Model Function: Employees tend to emulate their leaders' behavior. When company leadership exemplifies ethical behavior, employees adopt these values.
This extends across multiple hierarchical levels in large corporations to the lower levels.Communication of Values: By clearly communicating company values and ethical standards, leaders can make their expectations regarding behavior clear. Role modeling is essential here.
Promotion of an Ethical Climate: An environment that rewards ethical behavior and sanctions unethical behavior motivates employees to adhere to ethical standards.
Moral Identity of Employees: The moral identity of an employee, i.e., the extent to which a person integrates moral values into their self-image, moderates the influence of ethical leadership. Employees with a strong moral identity are less prone to unethical behavior.
Results of the Empirical Study
In summary, my research shows that:
Employees who perceive their company leadership as ethical leaders exhibit a lower level of moral disengagement, meaning they are less likely to justify unethical actions.
There is a connection between the perceived level of ethical leadership and employees' moral disengagement.
Employees' moral identity influences the effectiveness of ethical leadership. Employees with a strong moral identity are less easily influenced by the (mostly negative) behavior of company leadership.
Employees’s positive moral identity has a moderating effect on the (mostly negative) managements impact on moral disengagement.
Employees' identification with company leadership also influences its impact on them. However, the reason for this could not be clearly identified.
Further Studies
In addition to my findings, numerous other studies confirm the importance of ethical leadership and its influence on employees' behavior:
Psychological Empowerment: Studies show that ethical leadership promotes employees' psychological empowerment, leading to higher organizational commitment and lower turnover
Organizational Citizenship Behavior (OCB): Ethical leadership is associated with an increase in OCB, where employees voluntarily take on non-work-related tasks that benefit the company
Innovative Behavior: Research suggests that ethical leadership promotes employees' innovative behavior by creating an environment that supports creativity and knowledge sharing
Job Satisfaction and Work-Life Balance: Ethical leadership contributes to job satisfaction and helps reduce work-life conflicts, positively impacting employees' overall well-being
Practical Implications
For companies, this means that by promoting ethical leadership at the leadership level, they can positively influence employees' ethical behavior.
However, this requires clear communication of company values, exemplification of these values by leaders, and the creation of a work environment that supports ethical behavior.
The results of my research and other studies underscore the importance of ethical leadership for promoting ethical behavior in companies. Company leadership can significantly influence employees' ethical awareness and behavior through their actions and communication.
However, this influence depends on various factors such as employees' moral identity and hierarchical distance.
Of course, there are also pros and cons to ethical leadership. Advantages include promoting a positive work climate, reducing unethical behavior, and strengthening employees' trust in company leadership.
However, ethical leadership also requires significant effort to implement. Additionally, the effectiveness of ethical leadership depends on employees' moral identity.
Communicating across large hierarchies can also be a significant challenge. However, this problem applies to all leadership styles equally.
Overall, promoting ethical leadership at the leadership level is an effective strategy to strengthen ethical behavior in companies. Companies should invest in developing their leaders and clearly communicate ethical standards. Authentic and open communication is crucial.
Finally, creating an appropriate environment or culture is key. Where ethical behavior is rewarded and violations are consistently addressed, companies can not only protect their reputation but also strengthen the trust of their employees and customers.
Your Thoughts
What do you think about the topic of ethical leadership? What experiences have you had? Are there points you particularly agree or disagree with?
Feel free to leave a comment. I look forward to a discussion!
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