Over the last decade many organisations have featured in news stories due to the exposure of unethical practices in their business dealings.
Only last month, FIFA officials were questioned following mistrust in the methods used to decide who would host the 2018 and 2022 world cups. Back in 2013, the NHS – in particular, the Mid Staffordshire trust – uncovered malpractice and sparked a national outcry.
These cases are not uncommon and shockingly arose only a few years after the 2008 banking crisis which led to a global recession and huge distrust in banking operations.
Now, unethical practice is once again at the forefront. The recent Volkswagen scandal has exposed Volkswagen’s cover-up about the emissions from their diesel engines. This has resulted in the company losing 1/3 of its share value overnight, the likelihood of an unprecedented level of lawsuits, and refusal from the European Central Bank to underwrite its car leasing schemes.
Why is unethical practice rife?
In each of the above situations, the unethical business dealings have been appropriated to the leaders of the organisations. Leaders were, or are currently being investigated for malpractice in each of these cases.
How ethical leaders drive ethical behaviour
Leaders’ impact culture and culture is the foundation of organisational behaviour. Schein’s (1985) ‘Leadership Culture Change Actions’ provide some of the psychological reasoning behind why unethical leaders result in unethical organisational practices.
- Allocation of rewards. Leaders who breathe ethical practices will put processes in place to reward ethical behaviours, and eradicate unethical ones.
- Role modeling. Ethical leaders believe in ethical practices, and, therefore, practice what they preach. People see what leaders do and how they act, and they recognise that these are the things that they should do if they want to be well regarded in this environment.
- Reactions to crises. In difficult times, human nature dictates that it’s more difficult for us to hold our guard. When the going gets tough people tend to show their true colours. In leadership positions, the going often gets tough, and the way this is displayed to the rest of the organisation dictates what is important to that leader.
- Attention. A leader focuses their attention on things they believe are most important. When employees see where the focus lies, they believe this is where they should also focus.
- Selection and dismissal. People tend to hire people that emulate their values and ideals. If a leader is unethical, they are likely to attract and hire employees with similar beliefs. Of course, it is also the responsibility of employees on the front line to speak up if they see malpractice, but this can be difficult if it could jeopardise a person’s job.
Ethical leaders build ethical behaviours
Ethical leaders build ethical cultures, and ethical cultures result in ethical behaviours. By recruiting leaders that operate with ethical dealings at the forefront of their practice, these will filter into the organisation and build ethical behaviours across it.
Do you want to know more about creating a framework to recruit the right leaders into your organization who will drive your culture? Contact us today.