A few years ago, my team and I were launching a leadership development program for a client. Just before the pilot was launched, the company was hit with a high-profile scandal. It significantly damaged the reputation of this once great company, all because of the unethical behavior of a couple of rogue senior leaders.
The client decided to proceed with the leadership development program. It saw the unethical behavior as another reason why the company needed to strengthen its leadership.
When we were kicking off the pilot session, the corporate scandal quickly became the “elephant in the room” topic. It wasn’t long before we realized we had to discuss it with those leaders. They needed the forum to express their personal views on those events. What we found was that the leaders felt a deep-seeded anger over the events. You could feel it.
Many of the participants admitted they were embarrassed to work for the company now. Others were devastated because they were once so proud to be part of that company and now felt empty inside.
There was another group of leaders who felt a real sense of resentment because they feared that the reputation of all of the company’s leaders was negatively tainted by the scandal. They were already seeing a change in relationships with customers and vendors. Trust was eroded.
What I have noticed is that when stories of corporate scandal break out in the media, the attention is often on the bad leaders involved or about the damaged reputation of the company. Few stories dig deeper to understand the impact to other leaders and employees.
What I learned from this experience with this organization is that a scandal can rock the culture of an organization to its core. It impacts all employees in significant ways. In fact, there is new research to suggest that the impact is far more significant than previously thought.
In a research paper published in Social Psychological and Personality Science, researchers Takuya Sawaoka and Benoit Monin of Stanford University report that that the personal reputations of good and ethical leaders are in fact damaged in companies embroiled in corruption or a scandal. The researchers call this the “moral spillover effect.”
What it means is that if you happen to find yourself in a company experiencing a major scandal, there is a high probability that your own personal reputation will also be marred even if you had nothing to do with the wrongdoing.
The researchers went on to say that not only are personal reputations damaged, but one’s career can be derailed completely. It seems the negativity of being associated with a corrupt organization can linger for a long time and diminish one’s chance of getting hired by another firm.
This is pretty serious stuff.
Now I suspect that bad leaders who are engaging in bad or unethical behavior don’t really care about the collateral damage they are creating in the aftermath of their actions. They certainly don’t care about the personal reputations of their fellow employees. This blog isn’t for them.
Instead, this blog is for you – a leader who shows up every day trying to do what’s right and ethical. What I conclude from these research findings is that it may no longer be enough to be personally ethical. You must now make sure that the colleagues that you work with day in and day out are also ethical. Their behavior can impact your reputation in significant ways.
This week’s Gut Check question asks: Are you confident that you are working with ethical leaders?
About the Author
Vince Molinaro is the Global Managing Director of Strategic Solutions at Lee Hecht Harrison. He is also the author of The Leadership Contract – a New York Times and USA Today bestseller. Vince has spent more than 20 years as an adviser to boards and senior executives looking to improve leadership in their organizations.Follow on Twitter More Content by Vince Molinaro