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4 Signs That Unethical Leadership Could Be Negatively Impacting Company Success

Posted by CLIMB Professional Development and Training on January 18, 2017

iStock-515604620.jpgThere’s an old saying that “a fish rots from the head down.” Nowhere can this be truer than in the business world. From huge corporations, to small business, leadership at all levels sets the tone for any organization. If any of that leadership is unethical, it will more than likely have a trickle-down effect to the rest of the company.

But what signs of unethical leadership should business owners look for within their organizations? And how could the effects of an unethical leader or manager negatively impact overall success?

Below are four signs that unethical leadership could be having a negative impact on your business, and how best to address them before it’s too late. You may also review the upcoming Leadership courses or customized programs offered by PCC's Professional Development and Training programs. 

1. Poor Employee Performance & Attitudes

Improper conduct in leadership levels usually has a direct impact on the attitudes and performance of employees. Employees who do behave ethically, for example, will begin to feel like following the rules won’t get them ahead within the company. This causes the motivation and performance of otherwise model employees to erode over time. On the flip side, some employees may see unethical behavior and assume it’s ok to adopt it themselves. If a restaurant manager is seen stealing money from the cash register at the end of the day, the bartenders and servers will start to think they should be doing the same thing. If your employees exhibit a laissez-faire attitude towards even small rule violations, unethical leadership might be to blame.

2. Bad Quality of Employee Relations

Lack of ethical leadership will also affect employee relationships in the workplace. Employees often can’t help but act odd or awkward around leaders who are known to engage in bad behavior. Many times, employees will avoid these leaders altogether because they’ve lost respect for that leader. People who play by the rules will also come to resent those who’ve gotten ahead by “cheating,” which eventually will lead to a decrease in overall sense of trust and community that successful businesses rely on. So, if you see awkward interactions between leaders and employees, or growing sense of resentment, it might be a sign that unethical leadership is a problem.

3. Unfavorable Perceptions of Your Company

Another negative impact of unethical leadership on company success is the damaging effect it can have on your reputation in many different areas. It’s often hard to keep unethical leadership a secret, and word typically spreads quickly within your industry or local community when it’s happening. With employer review sites like Glassdoor.com becoming more prevalent, it’s easy for current or former employees to call out unethical behavior for the public to see. Some companies can survive public ethics scandals through public relations campaigns or re-branding, but often there is lasting damage in the form of lost credibility or key customer base. If you see negative chatter on review sites like Glassdoor.com or social media around your brand, it might be time to look under the hood for unethical leadership issues.

>>> Learn more about The Power of Ethical Leadership course

4. Legal Issues & Problems

Managers, leaders or employees who partake in unethical behavior can also result in serious legal issues for your business. Employees that are passed over for a promotion for someone who has earned the position unethically, for instance, may decide to file a lawsuit against your company. Employees who witness unethical leadership often feel helpless in the actual workplace due to power dynamics and will resort to legal action to redress perceived wrongs. Legal actions taken against your business by former (or current) employees is almost a sure sign that there is inappropriate behavior taking place within the ranks.

Preventing Unethical Behavior

Many times, lack of ethics in leadership positions stem from things like poor planning or faulty processes in various areas of the business. In general, here are some tips you can use to prevent unethical behavior before it starts:

  • Proper training. This is one of the best ways to eliminate unethical behavior right from the start. By training people on what’s acceptable and what’s not, you’ll eliminate the excuse that they weren’t educated.
  • Realistic goals. It’s crucial to set realistic, achievable performance goals for your employees and managers. If people feel like the standard they’re being held to is unachievable while playing by the rules, they’ll be more likely to consider unethical means to reach their benchmarks.
  • Consistent performance monitoring. You want to make sure that you’re monitoring performance, rewarding good behavior, and punishing bad ones. Avoid giving slack or “free passes” to people that violate rules or that try to take credit for projects that they might leave unfinished.

Avoiding the negative impact of unethical leadership on company success is doable for any business. The key is to watch for the warning signs mentioned above, get to the bottom of the unethical behavior taking place, and put systems in place that will prevent the likelihood of it occurring in the future.

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Topics: Professional Development, Leadership

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