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Why is ethical leadership so hard?

In the second part of our Epic Ethical Leadership Fails blog series, our guest author Dr. Bettina Palazzo explores why so many people of success and leaders often fail on ethics.

by Dr. Bettina Palazzo 3 min

    When we look from the outside at recent “epic ethical leadership fails” from Novak Djokovic to Boris Johnson, we usually wonder:

    “What were they thinking?”

    Yes, from the outside, of course, we all understand that leaders are under constant ethical scrutiny, that they are judged by their actions as well as their words, and that they are mercilessly punished if they believe they are entitled to special rights because of their position of power.

    As (omniscient) observers are all too willing to forget that in retrospect and as an uninvolved outsider, it is so much easier to recognize the ethical leadership traps than someone who in the heat of the moment has to react to a complex problem under pressure of time and success.

    We seem to be dealing with a divergence of two dynamics here:

    On the one hand, most leaders have never learned how to lead ethically and how to avoid the ethical pitfalls that come with positions of power. On the other hand, society’s tolerance level for bad role models in the C-suite has dropped dramatically.

    According to a study by PWC, in 2018, for the first time in the history of this annual survey, more CEOs in the U.S. were fired for moral lapses than for poor financial results. The sin registry goes from sexual misconduct to involvement in fraud, corruption and insider trading.

    So we have to ask ourselves: Why do so many executives fail in ethics?

    I already talked about power poisoning in my last blog post. According to neuropsychological research, people in positions of power tend to be disrespectful and impulsive, believe they are entitled to more than others, and always have a clever excuse for their unethical behavior.

    Power poisoning + presumption bias = ethical missteps

    The effects of power poisoning are further compounded by many leaders’ overconfidence. Clearly, leaders must be self-confident, or they would not be leaders. But the downside of a very positive self-image is that it can very easily turn into over-confidence bias and one does not ask oneself the necessary (self-)critical questions at the decisive moment.

    This form of overconfidence is often accompanied by the human tendency to consider oneself more ethical than others. This is called “moral superiority bias.” There are many studies that show that most people consider themselves to be smarter and more hard working than the average – even though statistically this is not possible, it helps to boost our self-esteem. People seem to exaggerate the most when it comes to assessing their own moral qualities: according to a study with British prison inmates, even they rate themselves as more trustworthy, honest, and compassionate than the average person.

    You may know this yourself if you’ve ever lived with roommates: We’re always convinced that we clean up more than the other person….

    Power poisoning + presumption bias + poor speak-up culture = ticking time bomb

    We also know from research that we all think we are good people, and when someone questions this, we immediately get angry and defensive. The scientific term for this is “moral identity threat.” This is one of the reasons why people in leadership positions usually don’t get critical feedback on their ethics, because the people around them know very well that this would jeopardize the relationship. But if you never get critical feedback, you can’t think self-critically about the ethical dimension of your actions. No one is ethically perfect, and without outside guidance, it is very difficult to question oneself in this regard.

    The result is that people in the companies often already knew about the problems long before the bomb of a corporate scandal “suddenly” goes off. And then everyone wonders, quite startled, why no one said anything.

    As with power poisoning, it is not at all easy for individual managers to remain self-critically grounded in the facts and not become defensive in the face of critical questions about their moral qualities.

    Here, as well, we need corporate structures that promote the ethical competence of managers, give egomaniacal self-promoters no chance, and build a culture of open dialogue in which raising ethical concerns is normal and encouraged.

    In the next part of this ethical leadership series, we will discover why a higher proportion of women in leadership could be a recipe for success for less ethical leadership fails.

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    Dr Bettina Palazzo
    Dr Bettina Palazzo

    Dr Bettina Palazzo is convinced that unethical companies make people unhappy. That’s why she has spent 25 years working tirelessly to make business ethics a topic that is attractive to everyone. She helps companies and non-profit organisations advance the ethical skills of their managers.