That little twinge of temptation to cheat. Fudge. Lie. Play favorites. Maybe you've felt it. And as hundreds of headlines show us, companies veer off of the rules all the time. But according to research, if you want your business at the top, the one thing you shouldn't skimp on is your ethics.

Better ethics from leaders, better performance

In a study published in Academy of Management Annals, researchers reviewed more than 300 books, studies and other texts on moral leadership published between 1970 and 2018. They found that the organizations with the highest performance had leaders who prioritized morality. Those companies had employees were more satisfied, engaged, creative and proactive.

But why does sticking to a moral path get this result?

Coauthor Jim Lemoine, assistant professor of organization and human resources at the University of Buffalo, says that the employees tended to see ethical leaders not only as more effective, but also as more trusted. When workers know you stand for something, that you'll do what you think is right, they feel protected and stable. This subsequently frees them to focus on their jobs better, be more creative and interact with others in a relaxed way.

The big catch: Who decides what's moral?

As Lemoine points out, what's "right" can be subjective. As an example, consider the decision to open a new coal plant. One leader might say this is ethical because it provides jobs and relies on a natural resource. Another leader might say it's not ethical because of the harm to the environment or because there are more cost-effective forms of energy now available.

What's more, the research study asserts, different approaches to ethics can get different outcomes. For instance, leaders who focus on norms and standards can excel at keeping companies out of hot water legally or politically. But they might twist the rules to their own benefit.

At the end of the day, Lemoine says, there's no best moral philosophy. Just make sure you have a philosophy you live by. Even as you abide by a particular approach, you should recognize that others might have a way of looking at a situation or the world that's different than you. This doesn't make them right or wrong, but it does require that you communicate as openly as possible to avoid conflicts and work better together.

Published on: Nov 20, 2018