CFO to CEO: What happens if we invest in developing our people and they leave us?

CEO: What happens if we don’t, and they stay?

Being an effective leader involves making tough decisions that balance business needs with ethics and values. A previous blog post examined how ethical leadership can smoothen conflict while meeting employee expectations.

But what constitutes unethical behavior at work? Some companies clearly articulate these in employee handbooks and corporate policy. For example, theft, embezzlement, harassment, and corruption are well-known examples of unethical behavior. But some aspects are often not explicitly stated, and many may view them as being simply inappropriate rather than unethical. Some examples are:

  • Using one’s position as a leader to promote employees in exchange for sexual favors or because they are a relative (nepotism) or engaging in fraud.

A 2007 study into the causes and effects of top management fraud found that it depletes a society’s moral climate, social capital, and confidence in the free market system including corporate leaders and politicians.

  • Taking advantage of an employee’s desperation to insist on overtime or difficult deadlines without adequate compensation.

This case study found that a quarter of the employees working overtime are forced to do so by their higher-ups under threat of losing their jobs. Mental health problems like stress, overeating, insomnia, and depression are proven consequences of consistently working overtime.

  • Harassing an employee for mistakes and taking credit for their work.

Lisa Quast, a career coach and business consultant, advises that most employees make mistakes when trying something new. Encouraging them for their initiative, innovation, and confidence, instead of blaming them excessively for mistakes, can significantly boost employee morale and engagement.

  • Having unrealistic expectations of quality, turnaround time, availability, and working hours, which adds up to an abusive work culture.

A study examining abusive workplace environments characterized by workplace bullying, harassment, etc., finds that such behavior increases the organizational cost by eroding positive company image, self-esteem, employee morale and health, leading to high turnover and absenteeism.

All of these instances do amount to unethical leadership and can cause negative sentiment at work, when not addressed in time.

Being an ethical leader

While employees have a handbook on appropriate workplace behaviors, the rules for leaders are often verbal rather than written, which can lead to ambiguity. Here are some guidelines for managers to follow to ensure they are on track to being ethical leaders:

  • Be respectful and impartial in the treatment of employees, particularly when setting expectations and awarding recognition.
  • Be accountable when it comes to organizational money, expenditure, interactions, and procedure.
  • Be confidential about personal and proprietary information that belongs to employees and the organization.
  • Be honest about one’s professional mission as well as the organizational vision. Take onus of achievements as well as mistakes and be open to apologies when needed.

As Azim Premji, tech leader and Founder Chairman of Wipro Limited reminds us, “The real threat to business is from within, from poor ethical standards and lack of integrity that can do incalculable harm… Employees must know that compliance is not a tick-box activity and they ought to witness their organizations transcend compliance and infuse ethical practices into everyday action.”

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