Note: This scenario is related to your reading, “Strategic Leadership: Creating a Learning Organization and an Ethical Organization.”
Is it important that leaders be truthful and transparent with their employees and firm stakeholders? On the one hand, ethical leaders are supposed to show
openness and candor with others, and to not deceive investors, partners, and employees. On the other hand, deception and even lying may be important to
motivate employees and curry favor with outside stakeholders.
Focusing on employees, research going as far back as the mid-20th century shows that positive feedback, even bogus positive feedback, motivates people to
strive to live up with that prior feedback. This has been labeled the Pygmalion Effect. When leaders provide guidance that they believe followers have the
potential to be high performers, people strive to meet those expectations. This has been found with students who receive fake test results, sales people who
receive strong goals, and military personnel who are given demanding expectations. Additionally, if leaders speak highly about employees to other
supervisors, those supervisors treat these employees better. But to do this, leaders must deliver inflated or bogus information to or about their followers.
Thus, if leaders want followers to excel beyond their basic capabilities, these leaders will have to say things they may not believe. This may trigger employee
growth, but it can also leave employees feeling that leaders are not authentic.
Turning to other firm stakeholders, investors and potential business partners want firms to be open and honest with them. But investors want to invest in and
partner firms want to work with firms that are seen as strong and healthy. This creates a tension for corporate managers. If they are truthful, they increase
the likelihood that others will trust them, but if leaders successfully convey optimism and confidence, even when it isn’t truthful, they can attract support from
investors and cooperation from business partners. This support, in turn, can help lead to the success that the leaders try to project. However, if leaders
project unwarranted confidence and underdeliver on outcomes, they can erode their legitimacy as leaders.
Discussion Questions
1. Is employing deception with employees or firm stakeholders unethical?
2. In what ways can deception pay off for executives? In what ways is it dangerous?
3. Jeffrey Pfeffer, a management scholar (click here to see article in this week’s readings), has argued that leaders should be trained to be deceptive. Do you
agree or disagree?