Does It Pay for Leaders to be Moral?

We often overlook leaders who stray from integrity if they are highly intelligent and have reached great career heights. That is until things go terribly wrong as in the 2008 recession. More than ever, CEOs are being measured not only on job performance but also on character.

According to Fred Kiel, KRW International co-founder and author of Return on Character (2015), “Low-character leaders undermine the success of even the best business plans.”

Kiel’s research discovered a 9.35 percent return on assets (ROA) over a two-year period for CEOs who were considered high in character by their employees.  This is five times the ROA for leaders perceived as low in character (1.93 percent).

Anonymous surveys were sent to over 8,000 employees who evaluated how consistently their CEOs and management teams embodied these four key principles:

1. Integrity

2. Responsibility

3. Forgiveness

4. Compassion

According to survey responses, leaders rated high in character stood up for what’s right, moved forward after mistakes, expressed general concern for the collective good, and displayed empathy.

Kiel refers to those who ranked lowest in ethics as “self-focused CEOs.” Employees described them as caring more about their own financial security with little regard for others and unable to keep promises while blaming others for their own mistakes.

Character is, however, something that can be refined with increased self-awareness and receptive feedback. Leaders who continue to evolve are proving to be advantageous to their organizations’ overall financial success.