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The Dangers of Unethical Leadership: How to Avoid the Negative Effects


As a leader, it’s crucial to understand the difference between what you have the power to do and what is morally right to do.

Ethical leadership is at the core of being an authentic leader, who consistently knows and acts upon the right thing.

In today’s business landscape, ethics are no longer just a nice-to-have, they are a necessity for any leader. In a recent Gallup poll, both Gen Z and millennials ranked ethical leadership as a top priority.

These generations, in particular, place a high value on ethics. In a Deloitte survey, 37% of Gen Zs and 36% of millennials stated that they have rejected a job or assignment based on their personal ethics. Additionally, nearly half of all Gen Zs and millennials in senior positions have turned down positions and projects that did not align with their values.


With Gen Z and millennials comprising 38% of the global workforce, and projected to make up 58% by 2030, it’s crucial for organizations to attract and retain this talent pool by prioritizing ethical leadership.

Are you ready to meet the ethical leadership demands of the future workforce?

Defining ethical leadership and its importance in organizations

An ethical organization is one that prioritizes integrity, honesty, and fairness in all its actions and decisions. It’s a company that operates with a strong moral compass and holds itself accountable to a set of values and principles that guide its behavior.

An ethical organization recognizes the impact of its actions on all stakeholders, including employees, customers, shareholders, and the community. It strives to create a culture of transparency and accountability, where everyone is held to the same high standards of ethical behavior.

An ethical organization also prioritizes the well-being of its employees and takes steps to create a safe, healthy and fair working environment. It also encourages a culture of open communication and collaboration, where employees feel comfortable raising concerns or reporting any misconduct.

In an ethical organization, the leadership sets the tone for the culture and lead by example, by practicing what they preach. They also promote a culture of continuous improvement and learning, where employees are encouraged to question the status quo and look for ways to improve the organization’s practices.

It’s no secret that a strong ethical culture can drive business success. In fact, a 2021 survey by LRN found that companies with the strongest ethical cultures outperform their peers by a staggering 40%.

But what makes an ethical culture? It all starts with leadership.


Impact of Ethical Leadership

An ethical leader sets the tone for the organization by establishing a culture of integrity, honesty, and fairness. They lead by example and hold themselves and their employees accountable to a set of values and principles.

Not only do ethical leaders create a positive work environment, they also attract the best talent. Top employees want to work for companies that align with their personal values and ethics.

Ethical leaders also inspire employee loyalty and increase investor confidence in a company.

Customers and vendors also prefer to work with companies that have a strong ethical culture, which can lead to positive press and a boost in the bottom line.

Dangers of having non-ethical leaders

Unethical leadership is a serious problem that can have far-reaching consequences for both employees and organizations. From the big headline-grabbing scandals, to the small acts of dishonesty right under our noses, unethical behavior is all around us.

But what exactly are the dangers of having non-ethical leaders?


For starters, unethical leaders can create a toxic work environment where employees feel compelled to engage in unethical behavior themselves.

This can range from cheating on expense reimbursements, to stealing company property, to taking credit for someone else’s work.

The consequences of unethical leadership can be severe.

  • Studies have shown that unethical leaders can lead to poor employee performance, negative attitudes, and a decline in motivation.
  • Employees may also lose trust in their leaders and feel alienated from their work.
  • The ripple effect of unethical leadership can also extend to employees’ private lives, causing anxiety, frustration, and other negative consequences.

Unethical leadership is like a virus that spreads throughout an organization, infecting employees at all levels. It’s a cancer that can eat away at the very fabric of a company, causing long-term damage to its reputation, bottom line, and the well-being of its employees.

How an inspirational ethical leader can turn an unethical culture around?

As an ethical leader, it’s important to understand the delicate balance between corporate responsibility and individual responsibility when working in an unethical organization.

While it may seem daunting to try and turn the entire culture around, it’s important to remember that small actions can have a big impact.

  • Understand that working for an unethical organization requires a balance between corporate ethical responsibility and individual responsibility, especially for managers and leaders.
  • Have your own code of conduct and let people know what you stand for, and build a good reputation for honesty by consistently doing what you say you will do.
  • Attract positive attention to yourself by honing your leadership skills and developing your leadership presence.
  • Enhance your presentation and facilitation skills and learn how to chair a meeting with savvy.
  • Raise the bar on your communication skills, speak as a leader, and learn to inspire your listeners through storytelling and metaphors.
  • Work on building rapport with higher-ups and colleagues, allowing them to get to know you.
  • Become an expert in your area of responsibility. Being regarded as an expert confers a leadership status and is crucial in influencing others.
  • While you may not be able to turn the entire organization’s culture around, you can, by example, impact the culture of your own team or department positively.
  • Modeling the way can have a ripple effect in one department and, with time, could influence other areas of the organization.
  • Be prepared for the possibility that unethical leaders will eventually be ousted, and work on your leadership skills so that you will be on the radar of the powers that be as a suitable replacement.

Case study

The consequences of an unethical leadership and the opportunity for an ethical leader to rise.

Dana (not her real name) found herself in a difficult situation when she reported to Bill, a senior leader who was self-interested and arrogant. Bill had a history of unethical behavior, including misusing corporate funds for personal gain and giving preference to hiring his own family members. He even went as far as altering numbers in reports and asking subordinates to cut corners by skipping standard procedures. But it was when he cut a deal with a vendor for personal financial gain that he finally crossed the line and was fired.

But Dana’s story has a happy ending. Because she had consistently shown herself to be an ethical leader, standing out at every touchpoint, the company saw her as a suitable replacement for Bill.

Dana’s leadership skills and her reputation for doing the right thing made her an attractive candidate for the role.

It’s a reminder that people do notice those who stand out as ethical leaders and that being an ethical leader can have a positive impact on your career. The company’s culture improved and the employees were more motivated and dedicated to their work, which helped the company to achieve better results.

Let’s Summarize

As a leader, it’s essential to understand the value of ethical leadership and the impact it has on your organization.

A strong ethical culture not only attracts the best employees, but it also inspires employee loyalty, increases investor confidence, and engenders customer loyalty. It also helps to garner positive press and attract the best vendors. And, most importantly, it can boost the bottom line.

One must remember that, it’s important to note that ethical leadership starts with you. As a leader, you must model the way and establish an ethical culture within your organization.

It’s crucial to have your own code of conduct, consistently do what you say you will do, and maintain a good reputation for honesty.

By honing your leadership skills, developing your leadership presence, and becoming an expert in your area of responsibility, you can have a positive impact on the culture of your team or department.

In the end, it’s essential to remember that your reputation is your passport to ethical leadership.

So, live in such a way that if someone spoke badly of you, no one would believe it.

As Zig Ziglar said, “live in such a way that if someone spoke badly of you, no one would believe it.”



Marty Hoffman

Marty Hoffman, MBA, PhD Management Consultant for Fortune 500 and Corporate Strategist 📍 San Francisco, CA More »

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