If you have your head screwed on straight, you are concerned about being an ethical leader. Examples abound of corporate scandals in recent memory that provide a compelling reminder that financial gain is worthless if obtained through unscrupulous means. WorldCom, Enron, Tyco and Adelphia are a few well-known failures fueled by ethical vacuums at the top of their organizational leadership. So, we all know that ethical leadership is important from the perspective of compliance with laws and to demonstrate a level of responsibility to customers and external stakeholders. But recent research [1] supports an important internal benefit of ethical leadership…it can be a powerful tool for employee engagement to boost workforce commitment to the organization.
However, simply modeling ethical behaviors may not be enough to foster desired commitment levels from employees; the social exchange relationship (SER) between leaders and subordinates appears to be a mediating factor that affects the level of commitment which can be derived from setting an ethical example. A SER is defined in management literature as the relationship between an employee and his/her organization or leader [2]. And it is important to note that SERs created between top organizational leaders and employees result in different outcomes from SERS between supervisory level leaders and employees. A study [3] conducted with 201 mid-career employees from a large corporation in the eastern United States showed survey results related to ethical leadership and SERs that support two primary findings:
- Employee commitment to the organization is more strongly related to organizational ethical leadership than to supervisory ethical leadership
- Employee commitment to the supervisor is more strongly related to supervisory ethical leadership than to organizational ethical leadership
So leaders at the supervisory level can positively influence employee commitment to themselves by actively creating SERs with employees and modeling ethical behavior, but this does little to boost overall commitment to the organization. This highlights the necessity for top organizational leaders to not only set ethical standards and model ethical behavior, but to also foster ways in which they can engage in social exchange with employees at all levels. Top leaders must recognize how their actions and behaviors influence employees’ overall view of the organization and take advantage of the potential this presents when considering their formal ethics efforts.
[1] Hansen, S. S., Alge, B., Brown, M., Jackson, C., & Dunford, B. (2013). Ethical Leadership: Assessing the Value of a Multifoci Social Exchange Perspective. Journal Of Business Ethics, 115(3), 435-449.
[2]Shore, L. M., Tetrick, L. E., Lynch, P., & Barksdale, K. (2006). Social and economic exchange: Construct development and validation. Journal of Applied Social Psychology, 34, 837-867.
[3] Hansen, S. S., Alge, B., Brown, M., Jackson, C., & Dunford, B. (2013). Ethical Leadership: Assessing the Value of a Multifoci Social Exchange Perspective. Journal Of Business Ethics, 115(3), 435-449.