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Surviving Crises: Research proves ethical leadership key

A recent university study revealed that there was long-term value for brands that hire ethical leaders.

Photo: iStock.

March 1, 2021 by S.A. Whitehead — Food Editor, Net World Media Group

A recent university study revealed that there was solid long-term value for brands that not only hire for but hone ethical leadership.

The study, co-written by Kyle Emich, associate professor of management in the University of Delaware's Alfred Lerner College of Business and Economics, found that while business leaders who behave badly might initially achieve success, they will lose their teams when crises strike.

"There are many examples of highly successful unethical leaders who come to mind. They win sports titles and elections alike, and lead major companies," Emich said. "But what unethical leaders have massive amounts of trouble doing is holding their teams together after failure."

In the study's case, ethical leaders were defined as those who had "meaningful relationships" with their followers, who also do all of the following three things:

• Live and breathe fair behavior.
• Prioritize process over results.
• Encourage two-way communication.

The study, published in the Journal of Business Ethics, aimed to explain this phenomenon and illustrate why ethical leadership matters. It looked into specific executives who've gotten in hot water in recent years due to allegations or criminal conduct. Wells Fargo CEO John Stumpf, for example, was not only banned from banking but also paid a hefty fine after bank employees were found to have opened accounts to meet sales quotas. Former Volkswagon CEO Martin Winterkorn will be tried this year on charges related to his alleged role in the diesel emissions scandal.

In those cases, the media attention was fast and furious, casting a particularly sickly pallor over both the leaders and their brands in the view of many. But the researchers said that more ethical leaders who took on the role of leading their organizations through rough times tend to accrue media attention and industry accolades at a slower pace that makes their success sometimes seem less salient. The advantage of the latter, however, was found that the slower process ends up maintaining employee confidence in their organizations and employees' desire to keep working there.

Still, the authors admitted that the result of all these phenomena often ends up being that the general public either thinks most business leaders are unethical or that those, who are actually ethical, matter less.

"The reason for this is that whereas unethical leaders are prone to spectacular downfall, the benefits of ethical leadership build up through a slow, continuous, perhaps unexciting daily commitment," Emich said.

He cited the case of Jim Goodnight, founder and CEO of business analytics software vendor SAS, who has consistently rejected calls to make his company public, instead, focusing resources on his employees. For example, the company provides extensive benefits, including onsite daycare, healthcare and parental leave as well as onsite recreation, fitness, hair and nail salons, while increasing profit margins even through the 2008 financial crisis.

Previous research conducted by Emich and others found that success and failure play a large role in how teams view themselves. That conclusion might seem obvious, but teams that win feel confident that they can do so again and want to stay together, while teams who lose also tende to lose confidence in themselves, which often results in their members opening themselves to leaving for better options.

This pattern has been found across industries.

In fact, Emich and his colleagues revealed that ethical leaders were able to break this pattern and maintain a team's confidence in itself, too, as well as members' desire to remain a team even after failure. For the more unethical leaders, however, once the winning stops, so does the desire by employees to work at that organization.

"Because everything is fine as long as a team is winning," he said. "But, when unethical leaders lose, people jump ship."

Granted that in the restaurant industry today, the pandemic has forced thousands from their jobs, but any glance in a QSR's window proves many jobs are still available, which was certainly the case before the pandemic wreaked its havoc.

For that reason, it stands to reason that if employee attraction and retention is part of a restaurant brand's success, it pays for companies to underscore the long-term and organizational benefits of the most ethical leaders, along with leadership development that drives this ethos home.

Or as Emich put it, "Although you may see an unethical leader succeed in the short term, in the long term, ethical leaders will always come out on top."

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.