Moral leaders perform better — but what’s ‘moral’ is up for debate

New research from the School of Management is clear: Leaders who value morality outperform their unethical peers, regardless of industry, company size or role. However, because we all define a “moral leader” differently, leaders who try to do good may face unexpected difficulties.

Led by Jim Lemoine, assistant professor of organization and human resources, the research team examined more than 300 books, essays and studies on moral leadership from 1970-2018. They discovered that leaders who prioritized morality had higher performing organizations with less turnover, and that their employees were more creative, proactive, engaged and satisfied.

A pre-press version of the study appeared online this month ahead of publication in the Academy of Management Annals in January 2019.

“Over and over again, our research found that followers perceived ethical leaders as more effective and trusted, and those leaders enjoyed greater personal well-being than managers with questionable morality,” Lemoine says. “The problem is, though, that when we talk about an ‘ethical business leader,’ we’re often not talking about the same person.”

He says prior research often treats all forms of moral leadership the same, missing their unique attributes and consequences.

Consider, for example, a company with an opportunity to sell cigarettes in a developing country. One executive would argue the sale is ethical because no norms or rules prohibit it. A servant leader might turn down the deal because of its negative health and environmental impacts. And a third leader, guided by his or her own internal convictions, might choose another course of action entirely.

All three of these leaders are acting morally, Lemoine says, even though they disagree with one another and might even view the others as immoral.

“Morality can be subjective, and how leaders put their own ethics into practice can have massive implications for the effectiveness of their leadership, teams and organizations,” he says.

The researchers found a strong sense of morality is positive for leaders and their organizations, increasing performance, engagement, motivation and other factors — but each specific approach to ethics had slightly different outcomes.

Leaders focused on matching norms and standards are often politically skilled and avoid legal scandals, but may exploit the rules to their own ends, the study showed. Servant leaders had the strongest results for customer service, community impact and employees’ work-life balance, but may struggle to manage competing priorities from their stakeholders. Finally, independent-minded leaders — think of the late John McCain, widely regarded as a maverick steadfast in his personal beliefs — can simultaneously build cultures of innovation and transparency while potentially frustrating employers who wish they would follow the company line more often.

So, which moral philosophy is best? None were consistently better or worse than the others, the study found. Instead, Lemoine says, the trick for leaders is to emphasize the overall importance of morality and its positive impact on profitability while also defining their specific code of ethics and recognizing their approach may not match those of their organization or followers.

“Morality is a great thing for managers to incorporate into their leadership styles,” he says. “But just because we consider something ‘moral,’ we can’t assume everyone else sees it that way. It’s important for leaders and organizations to get these differences out in the open and discuss them to avoid future misunderstandings and misconceptions.”

Lemoine also is a faculty researcher in the School of Management’s Center for Leadership and Organizational Effectiveness (CLOE). His co-authors on the study were Chad A. Hartnell, assistant professor in Georgia State University’s J. Mack Robinson College of Business, and Hannes Leroy, assistant professor in the Erasmus University Rotterdam School of Management.