n 2015, Volkswagen hit international headlines for all the wrong reasons. An investigation led by the US Environmental Protection Agency found the German car-maker guilty of installing software on its diesel-powered vehicles to cheat emissions tests. Dieselgate went on to become one of the biggest scandals in automotive history, costing the company north of $33billion in fines and damages; and CEO Martin Winterkorn his job.
Under Winterkorn’s stewardship, Volkswagen had prospered for some time. Consecutive years of growth had seen the firm’s market share more than double, and its chief executive lauded for his vision and efficiency. But under the hood, talk about Winterkorn’s leadership style was less complimentary. Authoritative and domineering, Winterkorn was feared by his subordinates. As one executive put it: “If he would come and visit you or you had to go to him, your pulse would go up.”
As the fumes surrounding Dieselgate settle, there’s not much evidence that Winterkorn himself was guilty of fraud, or that he even had any knowledge of the emissions cheating. By most accounts, he is innocent of any actual impropriety. But his case raises an interesting question – one addressed in a new paper by Garrett Brady and Niro Sivanathan, Professor of Organisational Behaviour at London Business School – and it’s this: is there a tie between leadership styles and unethical behaviours in the workplace?
When leaders are authoritative and domineering like Martin Winterkorn, are their people more likely to engage in things like lying, cheating or fraud? Garrett and Niro find evidence to suggest that they do.
“Leaders set the tone and the standard on what’s permissible and appropriate in the workplace,” says Garrett who is an Assistant Professor of Management and Technology at Bocconi University.
“Senior executives who are dominant or aggressive about getting things done could be construed as willing to cut corners, leading subordinates to believe that this sort of behaviour is more normative and thus acceptable.”
This could be an unintended consequence of a dominant leadership style, adds Niro.
“By resorting to intimidation, control and force, followers extrapolate these behaviours to create the narrative that they are also unethical, even if it’s not true. And this false narrative has a downstream impact on employees’ choices and behaviours – lying, cheating to cut corners or protect themselves from the boss’s wrath.”
To test these ideas, Garrett and Niro devised a series of tests and behavioural experiments.
First, they surveyed groups of executives and their employees in India and the US, and across different timeframes. Participants shared their perceptions of their leaders and then self-reported actual instances of workplace impropriety: things like taking credit for other people’s work, conducting personal business during professional hours or passing the buck for some kind of mistake or mishap.
Another study involved a lab experiment where participants worked for a fictitious company. Before starting the task they watched a video presentation of their “boss”. This boss, played by a professional actor, presented a more or less dominant leadership style. After watching the video, the volunteers were asked to complete a task where they had the opportunity to cheat for a larger monetary reward.
“We really wanted to create some realism in addition to the organisational surveys and online experiments,”says Niro. “Bringing volunteers, showing them the videos with different degrees of dominant leadership, and having them work as part of ‘the organisation’ meant we could see actual behaviours play out in real time.”
Across all of their studies and experiments, Garrett and Niro picked up a clear relationship between leadership style and employee behaviour: time and time again, working under a dominant leader led to more unethical behaviour.
“There’s a ubiquity to the effect that is impressive.” says Garrett. “We found evidence across different cultures, work places, and experiments. The experimental findings are particularly interesting. The actor in our videos never says anything unethical and there is obviously no history of unethical behaviour, and yet we still see subordinates making moral inferences and acting against the organisational interest for their personal gain. There’s this dynamic going on: here’s a boss who I think is likely to cut a corner or two… Therefore, these sorts of things are probably more prevalent and acceptable..”
So does this mean that leaders and organisations should eschew leadership that is overly dominant?
Garrett and Niro acknowledge some of the ambiguity here. There is a lot to be said for the clarity and control that dominant decision makers bring, particularly in times of rapid change, uncertainty or crisis. And dominant leaders shouldn’t be written off as inherently bad, says Niro.
Rather, he and Garrett would encourage organisations to be aware that dominant leadership styles can yield this unintended psychological and behavioural outcomes; and to take measures to combat inaccurate perceptions about leaders within the workforce.
This could be from a top-down approach where organisations double down on workplace values and standards, says Garrett, and emphasise to employees that unethical behaviours will not be tolerated. Additionally, from a bottom-up approach, leaders need to think hard about their leadership styles and how their influence may not always achieve the desired outcomes.
“A good place to start may be asking yourself if your leadership practice engenders distance or fear? Like Martin Winterkorn, is the prospect of a meeting with you likely to get people’s pulses racing? And if the honest answer is yes, you may want to rethink your definition of successful leadership.”
Niro Sivanathan is Professor of Organisational Behaviour at London Business School.
Garrett Levy Brady is Assistant Professor of Management and Technology at Bocconi University.
