Does morality in business matter?

Many corporate superstars have been celebrated for their business acumen, innovation, and even edginess but rarely for their moral leadership. However, research shows that morality matters, regardless of industry, firm size, or the status and level of a leader in a company. The benefits range from individual and team performance, to financial measures, and perceptions of justice, trust, engagement and motivation. Dr Hannes Leroy, of Rotterdam School of Management, Erasmus University (RSM) raised the obvious question: Does morality in business matter?

For the research the authors reviewed some 300 studies on moral leadership. “We discovered that morality is – generally speaking – a good thing for leadership effectiveness but it is also a double-edged sword about which you need to be careful and smart,” Dr Leroy says.

The review of the theoretical foundations underlying different approaches to moral leadership, and a supporting body of empirical research aligned with distinct moral philosophies:

- First, followers can be inspired by a leader who advocates the highest common good for all and is motivated to contribute to that common good from an expectation of reciprocity (servant leadership; consequentialism).

- Second, followers can also be inspired by a leader who advocates the adherence to a set of standards or rules and is motivated to contribute to the clarity and safety this structure imposes for an orderly society (ethical leadership; deontology).

- Third and finally, followers can also be inspired by a leader who advocates for moral freedom and corresponding responsibility and is motivated to contribute to this system in the knowledge that others will afford them their own moral autonomy (authentic leadership; virtue ethics).

A caution for managers

Most of us consider ourselves moral and feel that all people necessarily think the way we do about morality. Managers should realise, however, that their form of morality may differ from that of their employees.

“The manager may be a servant leader,” Leroy says, “focused on the common goods, making sure that everybody gets along and reinforce this message to the team. But what if you run a team of very proactive individuals and their definition of morality actually is more aligned with people should get the freedom to do things their own way and be left alone to make their own ethical decisions. Well you can see now if you're a leader that emphasizes the common good for a team of people who actually are more predicated on those individual freedoms.”

Morality in organisations matters

The tensions between the multiple approaches to morality may mean that some benefits are reaped but others are lost, and that some followers are convinced (those adhering to the same moral philosophy) but others distance themselves. Although these tensions in morality in organisations matter for leaders and those being led, a more nuanced and more careful approach to moral leadership is warranted.

Dr Leroy concludes that managers and leaders should realise that their form of morality may differ from that of their employees. Even if you are a great moral leader, if your morality doesn’t match that of your employees, you may not be as effective as you expect to be.

Source: DiscoveryRSM.nl

RSM offers short and longer programmes about leadership, such as Essentials of Leadership  and other open programmes, and it’s also part of the Personal Leadership Development  sessions in the MBA programmes.