Ethical leadership boosts employee performance

Does it matter whether business and government leaders are ethical?

Does it matter whether business and government leaders are ethical?

Leaders who behave ethically can help organizations avoid scandals that would tarnish their reputations. And researchers have found that good ethics among leaders encourages good ethics among followers.

But what about day-to-day performance? It’s nice to have a boss who is honest and trustworthy, and who encourages you to be that way too. But does it actually help you do your job? And if so, how?

Those were the questions that associate professor Dave Bouckenooghe and his co-authors investigated. They surveyed 171 white-collar employees and their 24 supervisors. They asked the employees about the ethics of the supervisors, and the supervisors about the performance of the employees. The surveys also asked employees about their goals and feelings regarding the workplace.

The study found that employee performance was indeed higher where supervisors were more ethical. This effect seemed to occur in two ways. First, ethical leadership helped employees build their “psychological capital”; that is, their sense of optimism, resilience, and confidence. This increased their motivation toward their jobs. Second, ethical leadership helped ensure the supervisors and employees were pursuing common goals. Both of those factors were instrumental in enhancing employee performance.

Given these results, Bouckenooghe suggests that organizations include ethics in their leadership development programs. Furthermore, organizations that include ethics in their recruiting and promotion strategies may benefit from increased employee performance.

Dave Bouckenooghe is an associate professor of organizational behaviour. His teaching deals with Organizational Development and Change, Human Resource Planning and Organization Design. His research focuses on the pivotal role of employees in organizations. He is especially interested in how people and organizations are impacted by change and how they make sense of and respond to change.

Dave Bouckenooghe, Asma Zafar, Usman Raja, 2015, “How ethical leadership shapes employees’ job performance: the mediating roles of goal congruence and psychological capital,” in Journal of Business Ethics 129 (2), 251-264.