How Moral Leadership Impacts Loyalty, Performance of Employees

A new study by The HOW Institute for Society published finds the demand for moral leadership among U.S. workers is at an all-time high. In fact, 93 percent of employees believe the need for moral leadership is more urgent than ever. Yet only 10 percent of CEOs and 13 percent of managers consistently demonstrate behaviors associated with moral leadership.

Moral leadership — or the lack of it — impacts everything, from the levels of trust within teams, to employee loyalty, to the bottom line, the study shows.

Notable among the new findings in The HOW Institute's latest report: 71 percent agree that tackling the crises we currently face as a society requires strong moral leadership; 62 percent agree that businesses have a central role to play in exhibiting and promoting moral leadership to the rest of society; 50 percent agree that if company leaders demonstrated moral leadership, most labor unions would not need to go on strike; 59 percent believe that today's leaders are somewhat or very unprepared to grapple with ethical implications of generative AI.

"What we found is that in this extraordinary moment where we, collectively, are facing so many simultaneous crises, moral leadership has evolved from a worthy pursuit to a critical survival skill," says Dov Seidman, founder and chairman of The HOW Institute for Society. "Our research shows that people are seeking leadership that works to forge shared truths and engender an abundance of trust, and that scales deep, human moral values at all levels."

"We also found that when leaders and managers exemplify this type of leadership, they are more effective with their teams and achieve higher levels of business performance," continued Seidman. "Moral leadership is a precious resource, but it need not be a scarce one."

Among the headlines, The State of Moral Leadership in Business report found:

Moral Leadership Positively Impacts Business Performance

• Organizations with CEOs exemplifying moral leadership are far more likely to have satisfied customers, be positioned to improve results in the next year, and adapt quickly to internal and external change.

• In fact, 79 percent of those in organizations with CEOs in the top tier of moral leadership say their organization has satisfied customers and 75 percent report their organization is positioned to improve its business results in the next year, compared to 12 percent and 8 percent with CEOs in the bottom tier of moral leadership, respectively.

• Moral leadership also improves employee retention and reduces the likelihood of turnover. Only 11 percent of those reporting to leaders ranking high on the moral leadership scale are looking for a new job, compared to 29 percent of those reporting to bottom-tier managers.

Moral Leaders Build Trust and Catalyze Effective Teams

• Teams working with moral leaders are 15 times more likely to have trust and respect among team members, and 20 times more likely to be more innovative and experimental with their work.

• Moral leaders also help coworkers when conflicts arise. 78 percent of people with managers who rank high on the moral leadership scale say people on their team treat each other with respect, even in conflict or disagreement, compared to 5 percent with managers who don't exemplify moral leadership.

• Moral leaders take accountability for themselves and their teams and find authentic means to make amends when mistakes occur. The propensity to apologize is significantly higher among moral leaders. In fact, 85 percent of those working with top-tier moral leaders report witnessing their managers apologize.

• Moral leaders foster environments of accountability. High-performing employees are more likely to get away with being disrespectful or abusive to others in organizations without moral leaders.

Moral Leadership Helps Guide More Effective Return to the Office Strategies

• The majority of those employees who have returned to the office, in person, have had a positive experience, including attentiveness from managers to their personal situation and preferences, thoughtful organizational leadership that appeals to values rather than rules in explaining the return, and clear communication on the reason for the return.

• Yet only about one-third agree or strongly agree that their organizations have sufficiently involved employees in these decisions.

Employees Are Concerned about the Implications of Artificial Intelligence in Decision Making

• 29 percent of respondents say their organizations are integrating AI tools into everyday operations. Yet 71 percent indicate they are somewhat concerned and 39 percent say they are very or extremely concerned about AI making morally-questionable decisions.

Leaders Benefit from Building Cultures of Moral Leadership in their Organizations

• 87 percent of employees believe moral leadership can be learned and taught.

• Employees working in organizations that invest in professional development in principled decision-making are more likely to recommend their organization as a good place to work.

Check out the full report here.