Leaders are responsible for setting goals, making decisions, and ensuring the success of their teams. However, leaders can fail, and their downfall can have significant consequences for both themselves and their organizations. One of the most common reasons for leadership failure is unethical and amoral behavior.
Leaders play a crucial role in shaping the culture, and values of organizations. Their behavior can have a significant impact on the ethical standards and social responsibility of their organizations, as well as on the broader society.
Leader Failures
Unethical and amoral behavior can take many forms. It can involve lying, cheating, stealing, or engaging in other forms of misconduct. When leaders engage in such behavior, they undermine the trust and respect of their followers, colleagues and other stakeholders. This loss of trust can be devastating for an organization, leading to decreased motivation, productivity and morale.
Only 27% of Americans have a great deal of confidence in 14 major American institutions on average, a record low since 1979 and a 5% drop from 2021, according to a poll conducted by Gallup, which found sharp declines in trust for the three branches of the federal government, the presidency, the Supreme Court and Congress. Gallup found confidence declined significantly for 11 out of the 16 total institutions from 2021 to 2022, including the criminal justice system, police, the medical system and public schools. In 2021 only 46% of Americans polled trusted “Big Business.”
Many think America is experiencing a crisis in facts and truth, and they believe this problem ties into the current state of distrust people have in institutions. The Center recently reported that half of U.S. adults say made-up news and information is a very big problem in the country today, and about two-thirds say it causes a great deal of confusion about the basic facts of current issues and events.
Behavioral economists Simon Gächter of the University of Nottingham in England and Jonathan Schulz of Yale University set out to do in a study published in the journal Nature. Their findings suggest that corruption not only harms a nation’s prosperity but also shapes the moral behavior of its citizens.
One of the primary reasons leaders fail is a lack of emotional intelligence. According to a study by TalentSmart, 90% of high-performing leaders have high emotional intelligence. Leaders with low emotional intelligence have difficulty managing their own emotions, resulting in impulsive decision-making and difficulty building positive relationships.
Examples of Unethical Leadership
One high-profile example of unethical leadership is the case of Enron. The energy company’s leaders engaged in fraudulent accounting practices that misled investors and ultimately led to the company’s bankruptcy. The Enron scandal not only cost investors billions of dollars but also led to the loss of jobs for thousands of employees.
Another example of the case of Volkswagen, which was found to have installed software in its diesel cars that enable them to cheat emissions tests. This unethical behavior led to a massive scandal that damaged the company’s reputation and led to significant financial penalties.
Then there’s the case of Purdue Pharma and its owners and leaders, the Sackler family. The firm’s high-strength prescription painkiller, OxyContin, drove an epidemic that has ultimately claimed more than 500,000 lives over the past two decades.
Purdue’s guilty pleas to federal crimes on two occasions, over its huge marketing push to sell OxyContin to the masses, which included false claims that the drug was less addictive than other narcotic painkillers.
In 2017, Donald Trump’s presidential Commission on Combatting Drug Addiction and the Opioid Crisis said Purdue’s “aggressive promotion” of OxyContin, and its broader impact on the use of opioids for pain treatment, was a leading cause of the epidemic.
Two years ago, the National Bureau of Economic Research released a study of the impact of OxyContin which concluded that “the introduction and marketing of OxyContin explain a substantial share of overdose deaths over the last two decades”.
Purdue used its wealth to influence politicians and regulators, keeping open the floodgates to ever larger prescribing of opioids in the US, far beyond other developed countries, even as the evidence grew of a public health crisis in the making.
Two of a group of billionaire Sackler family members that own Purdue Pharma refused to apologize for their role in the opioids crisis that has killed almost half a million Americans, during a hearing in Washington.
And last but not least in the corruption in President Trump’s administration. “The most corrupt presidency and administration we’ve ever had,” says Zephyr Teachout, a Fordham University law professor who authored a book titled Corruption in America: From Benjamin Franklin’s Snuff Box to Citizens United.
The number of White House officials who have had to face questions, lawsuits or investigations is astonishing: Trump, being sued for violating the “emoluments clause” of the U.S. Constitution by running his Trump International Hotel in Washington, D.C.; Paul J. Manafort, the second Trump campaign manager, indicted on money laundering charges; General Flynn, for undisclosed lobbying work done on behalf of the Turkish government; son-in-law and consigliere Jared Kushner, for failing to disclose $1 billion in loans tied to his real-estate company; and at least six Cabinet heads being investigated for or asked about exorbitant travel expenses, security details or business dealings. And that’s not to mention the current legal difficulties that Trump faces from election tampering to campaign violations and obstruction of justice.
The Impact of Unethical Leader Behavior
Unethical behavior can take many forms, including fraud, corruption, insider trading and other forms of misconduct that violate the law or ethical standards. Amoral behavior, on the other hand, refers to actions that are not necessarily illegal but lack a moral compass, such as exploitation, greed and selfishness. The consequences of both types of behavior can be devastating for organizations and society.
Organizations that tolerate or encourage unethical and amoral behavior by their leaders may suffer from damaged reputations, decreased employee morale, and loss of trust among stakeholders. According to a study by the Ethics Resource Center, employees who observe misconduct by their leaders are more likely to engage in similar behavior, leading to a toxic culture of unethical behavior.
A study published in the Journal of Personality and Social Psychology found that leaders who exhibit narcissistic traits, such as arrogance, entitlement and lack of empathy, tend to engage in unethical behavior that harms others. This can include lying, cheating and exploiting others for personal gain.
And leaders who prioritize profits over ethical behavior can have a significant negative impact on the environment and public health. For example, the BP oil spill in 2010 caused significant damage to the environment and wildlife in the Gulf o Mexico, as well as long-term health problems for the communities, affected by the disaster.
What Can Be Done About It?
What can organizations and institutions do to prevent leadership failure due to unethical and amoral behavior? The first step is to establish a strong ethical culture. Leaders must set the tone for ethical behavior by modelling it themselves and holding their employees accountable for their actions. They should also ensure that their employees are trained on the organization’s values and ethics and that there are clear policies and procedures in place to prevent misconduct.
Another key factor is transparency. Leaders should be open and honest with their employees, stakeholders and the public about the organization’s goals, challenges and performance. This transparency can help build trust and ensure that the organization is accountable for its actions.
Finally, organizations should be prepared to take swift and decisive action when unethical behavior does occur. This may involve disciplinary action, restitution, or other measures to address the harm caused by the misconduct.
You can read more about the importance of a leader’s ethical behavior in my new book, Virtuous Leadership: The Character Secrets of Great Leaders.
