In pursuit of a bolstered bottom line, corporate leaders will often compel their employees to improve performance, and recent worker surveys by PricewaterhouseCoopers (PwC, 2022 and 2021) and the Ethics & Compliance Initiative’s 2023 Global Business Ethics Survey revealed that this pressure from higher-ups to create bottom-line outcomes has dramatically increased in the past several years. The extra carrots and sticks intended to enhance employee performance also incentivize workers to behave unethically in order to meet performance demands. Indeed, PwC’s ongoing surveys show that demands to increase corporate profits have doubled year to year, and they influence employees to bend their ethics to make extra contributions.
The results of unethical actions can be extremely costly for companies. One well-known example is when Boeing executives rushed production for the 737 Max jet, allegedly ignoring their engineers’ concerns about the plane’s safety systems. Two of these jets ended up crashing, killing hundreds of people, and Boeing engineers blamed their leaders for prioritizing profits over safety.
New research led by Marie S. Mitchell, professor of organizational behavior and Edward M. O’Herron Scholar at UNC Kenan-Flagler Business School, sought to untangle the relationship between supervisors’ focus on the bottom line and unethical behavior in business. Mitchell collaborated with Andrea L. Hetrick from the University of New Mexico, Mary B. Mawritz from Drexel University, Bryan D. Edwards from Oklahoma State University and Rebecca L. Greenbaum from Rutgers University on the new paper.
The authors found that supervisor bottom-line mentality (SBLM) — a supervisor’s laser focus on bottom-line outcomes — is not a static perception among employees. In fact, supervisors’ bottom-line demands on employees come in ebbs and flows throughout the workweek, often requiring employees to stop what they are doing and redouble their efforts toward activities that contribute to the company’s bottom line. When bottom-line demands are high, employees are motivated to engage in unethical behavior to meet the supervisor’s expectations. The study shows that consistent ethical leadership can mitigate this unethical response, diminishing employees’ motivation to act unethically in response to elevated bottom-line demands.
Although the drive to increase bottom-line contributions can motivate unethical acts, it isn’t unethical in and of itself for supervisors to ask employees to raise their performance efforts to meet certain financial ends. “Within the behavioral ethics literature, these influence tactics seem to be at odds with leaders being ethical, but my colleagues and I didn’t believe that’s true,” said Mitchell. “Asking employees to raise their performance is a natural part of being a manager and being in business.”
Mitchell and colleagues were interested in examining the connection between SBLM and employee anxiety, exhaustion and unethical behavior, and the role of the supervisor’s ethical leadership style. To conduct their investigation, the researchers conducted multiple studies that tracked employees’ daily and weekly reports of their supervisors’ focus on the bottom line and ethical leadership, and the employees’ levels of anxiety, exhaustion and unethical behaviors.
The authors found that SBLM was not constantly high but tended to peak at certain times. During these peaks, employees felt the need to shift away from routines that they like, which caused a lot of anxiety that exhausted them. This, in turn, motivated these employees to engage in unethical behavior, like undermining co-workers, to meet supervisor demands.
“Employees only have so much energy across their workweek, and when they’re constantly having to stop routines and then go back to routines afterwards, which are backed up, this becomes exhausting,” said Mitchell. “This is what motivates them to try shortcuts to meet those bottom-line directives.”
To understand why SBLM varies over time, the authors also asked supervisors to report on their own bottom-line focus across days, along with various factors that might influence it. This revealed two primary factors that drive upticks in these supervisors’ bottom-line focus across time: the degree to which the supervisor’s leader is shifting focus toward the bottom line, and fluctuations in the supervisor’s own demands and stressors across their work week.
“Importantly, we found that even though supervisors’ own perception of their bottom-line mentality does ebb and flow across time, their perception of it isn’t enough to elicit anxiety in their employees,” said Mitchell. “It is the employee’s perception that their supervisor’s focus is shifting that kicks their anxiety up.”
The study also showed that a consistently ethical supervisor, meaning one who is committed to being both a moral person (in their character and integrity) and moral manager (in how they emphasize ethics in work structure and rewards and punishments), can be extremely beneficial in keeping behavior above board. When this is the case, employees may still feel anxiety and exhaustion when the focus shifts to the bottom line, but they don’t turn to unethical behaviors to address those demands.
“Ethical leadership serves as a critical guidepost for employees on how to behave when they’re challenged and stressed, and diminishes their motivation to be unethical as a consequence,” said Mitchell. “Ethical leaders create positive infrastructures in their work environments, reward ethical and strong performance, they punish unethical behavior, and they give guidance and open communication to employees on how to approach things ethically.”
For business leaders who want to execute ethical leadership in their organization, Mitchell says it’s important to recognize that this leadership style is learned. “Studies have shown that supervisors imitate the behavior of their leaders all the way up the chain,” she said. “If a message about ethics isn’t relayed by upper management, there’s a very slim chance it’s going to be demonstrated at lower ranks.”
She adds that a commitment to employee well-being is key to performance and engagement in the long run. “I think more than ever, an emphasis on ethical leadership, compassion and caring for employees’ well-being can go a long way to help them attain their performance goals,” said Mitchell. “It’s also important to give your leaders and supervisors resources and support, because they are no different than employees in how they approach performance demands.” And the study shows their stress about the bottom line spills over on employees’ shoulders.
In future studies, the researchers would like to take a closer look at additional ways to motivate higher levels of performance without yielding dysfunctional outcomes. They also plan to examine how supervisors and employees who work for unethical leaders can get past that and do the right thing.