Organizations with Virtuous Leaders Flourish More

Do virtuous leaders achieve better outcomes? And if so, what does this leadership style looks like? Let’s take a tour. Virtuous leadership is a style of leadership where the leader consistently exhibits voluntary behavior that aligns with core virtues, such as prudence, temperance, humanity, courage, and justice. Does it benefit the organization, and can virtuous behaviour affect company results?   The infinite list of corporate leadership scandals and the marginal role of leader character in the training and evaluation of leaders suggests a common belief that this is not the case. The academic world remained silent on this issue for a long time. But consistent evidence has emerged in the past decade that subordinates, organizations, and the leaders themselves flourish more when the leader demonstrates virtuous leadership.

Recent findings show that virtuous leadership positively influences the work-related well-being of employees. This positive effect occurs through three main channels. First, virtuous leaders create better objective conditions for subordinates, such as a fair and considerate allocation of work tasks. Second, they create a psychologically safe environment for subordinates, which facilitates a trusting relationship with subordinates. Third, by exemplifying virtuousness, leaders can influence, through internalization, the virtuous behavior of others in the organization, thereby stimulating a more virtuous organizational climate. In turn, better employee well-being improves organizational performance through lower employee turnover and absenteeism and higher productivity.

Other evidence reveals that virtuous leaders themselves also experience a higher well-being level and are more effective in their organizational leadership role. A first reason is that leader performance strongly depends on employee performance, which is positively influenced by virtuous leadership. Second, investors, clients, and suppliers are more willing to do business with virtuous leaders, thereby improving both the performance and well-being (e.g., self-esteem) of the leader. Third, virtuous leaders have greater referent power because they are respected and trusted more, meaning they can more effectively implement their vision and ideas in the organization. Fourth, doing well is inherently rewarding; for instance, there is abundant proof that prosocial behavior makes a person happier and that virtuous leaders perceive to have more meaningful work and therefore have higher work engagement.

Furthermore, virtuous leadership leads to better performance within teams and organizations because of the better performance of leaders themselves, and their subordinates. The emerging scientific evidence thus consistently shows that the concern of many leaders that demonstrating virtuous leadership has detrimental effects for themselves or their organizations, and that others will get ahead by ‘doing wrong’, is frequently mistaken. Conversely, it provides support for the revived belief that virtuousness is pertinent for effective and sustainable leadership and may thereby contribute to creating thriving organizations with flourishing employees. There is growing agreement among business scholars that leaders must have both character and competence to be successful. In addition, virtuousness is its own reward and does not require a positive instrumental outcome to be of worth. Organizations may therefore strongly benefit from stimulating virtuous leadership. It does pay off.

Author:

Martijn Hendriks (Senior researcher at Erasmus Happiness Economics Research Organization and assistant professor at Erasmus School of Economics)

References:

Hendriks, M., Burger, M., Rijsenbilt, A., Pleeging, E., & Commandeur, H. (2020). Virtuous leadership: a source of employee well-being and trust. Management Research Review, 43(8), 951-970.

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