Study reveals clear link between ethics and performance

The MoralDNA of Performance’ reveals clear links between ethics and performance, and the report’s conclusion points towards a need for far-reaching changes in business culture to drive long-term prosperity.

Essentially, ethical leadership is a critical driver of performance: where leadership styles are coaching, visionary and democratic, three quarters (75 per cent) of respondents say the effectiveness of management is excellent, as compared to only 18 per cent where a command and control leadership ethos prevails.

Ethics are also key to employee engagement. Managers in organisations with excellent staff satisfaction score 13 per cent higher on the ethic of care. There’s also a connection when it comes to an employer’s ability to attract new staff.

Statistics also point to the fact that managers who work in growing organisations score higher for ethical behaviour than those in declining organisations, who are much more likely to say that their organisation behaves unethically.

Yet, despite the evidence of links between good ethics and business performance, almost a third of managers (29 per cent) rate their organisation as mediocre or worse when it comes to standards of ethical behaviour. This equates to 928,000 managers across the UK. 

Worryingly, senior managers have a rosier picture of current standards than those in junior roles – 48 per cent of senior managers believe their organisation has excellent ethical behaviour, compared to only 22 per cent of junior managers. The report suggests that some leaders may need to check if employees share their perceptions about company culture and work to close the gap.

Small firms are less likely to rate their workplace as ethically poor. However, when it came to the public sector, only 20 per cent rated the company’s ethics as excellent, making them the worst performing sector.

Ann Francke, chief executive of CMI, said: “When it comes to management and leadership in the 21st century, the truth is that who cares, wins. Ethics should be at the heart of every organisation’s culture, whatever their size or sector, and this research shows clear connections to business performance. 

“Every manager has a part to play: leading by example, making value-based decisions, and rewarding the right behaviour, not just results. If employers get the ethical culture right, they’ll reap the rewards through better performance, stronger employee engagement and improved relationships with their customers.”

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