How Unethical Bosses Corrupt the Reputation of Their Employees

When high-ranking members of an organization break the rules, it’s not just their own reputation on the line. Research from Stanford University shows that the stain of transgression sends its fingers out to every organizational member.

In a series of online studies, published in Social Psychological and Personality Science Takuya Sawaoka and Benoît Monin presented participants with information about a hypothetical company employee involved in unethical activity such as deceptive marketing. When the culprit’s position in the company was senior rather than low-ranking, participants were more likely to see his behaviour as representative and go on to make assumptions about other dodgy company practices.

It’s probably not hard for people to believe that ripping off clients is a company-wide policy, especially if they hear that their boss is doing it. But what about less likely policies that directly harm the company? In fact, when bosses were presented as rigging performance data to maximize their bonuses, participants continued to suspect the wider organization — and not just in a linear, cause-and-effect fashion. A bonus-fiddling boss made people suspicious of mid-ranker’s motives for giving investment advice that turned out to be poor. The assessment seems a more fundamental one: people assume a dishonest leader means a dishonest organisation.

The effect generalises from these more corporate contexts, with a 300-participant experiment replicating it in situations such as medical ethics and fabrication of scientific data. Sawaoka and Monin also show that where participants bristle at employees working under the corrupt, they are also willing to bite, being less prepared to give a work referral to a hypothetical employee exiting such a company to seek work elsewhere.

Although leaders are often prototypical of a group and can shape organizational culture — meaning that bad leaders may truly cast a shadow beyond themselves — we can see how this judgment can become unforgiving. Think of the thousands of employees at Enron, only a fraction of whom were involved in fraud, but forever colored by that high-profile exposé. Or the high-profile cases of fraud or irregularity in scientific studies, and the challenges that may face junior, innocent researchers as a consequence of their association.

Yet the reality is lower-ranking employees have less influence and knowledge about what is really going on, and may not have a lot of choice about where to work in the first place. If we see a spoiled apple at the top of the barrel, we’re tempted to draw conclusions, but we should instead continue to apply judgment and consider people on their actions, rather than on the associations about which they may have limited control.

And finally, the research points to the need for a robust whistleblower system and code of ethical conduct in organizations.

In my book, Toxic Bosses: Practical Wisdom for Developing Wise, Ethical and Moral Leaders, I examine in detail the far ranging detrimental impact of unethical and amoral leaders and what to do about it.