# Ethical leadership: building a culture people trust Source: https://sarang.pro/ethical-leadership-culture-trust/ Author: Sarang | Published: 25 October 2026 Most organisations have a values statement. Far fewer have a culture where those values decide what happens when hitting a target and doing the right thing pull in different directions. That gap is where ethical problems grow, and it is closed or widened by the everyday choices of managers, not by the wording on the wall. This guide covers what research says ethical leadership involves, why people stay silent about problems, how to make speaking up normal, and how to check that your incentives match your values. It is written for managers at any level, including those who run small teams. ## Moral person and moral manager Linda Treviño, Laura Hartman and Michael Brown studied how executives build a reputation for ethical leadership. Their 2000 article in *California Management Review*, ["Moral Person and Moral Manager"](https://cmr.berkeley.edu/2000/08/42-4-moral-person-and-moral-manager-how-executives-develop-a-reputation-for-ethical-leadership), describes two pillars: - **Moral person:** people judge your character from your traits, your everyday behaviour and how you make decisions. - **Moral manager:** people judge whether you lead ethically by whether you model the behaviour you expect, use rewards and consequences to reinforce ethical conduct, and talk openly about ethics and values. Their most practical finding concerns the "ethically neutral" leader. Such leaders may be decent people, but because they never make ethics a visible part of how they lead, their teams do not see them as ethical leaders. Being good privately is not enough. People need to see and hear it. Later research built on this. Brown and colleagues developed a 10-item Ethical Leadership Scale in 2005, and [much of the theory](https://en.wikipedia.org/wiki/Ethical_leadership) rests on social learning: followers copy the conduct they see rewarded and tolerated by their leaders. ## Why people stay silent Even in organisations with good intentions, people often keep concerns to themselves. James Detert and Amy Edmondson's research on [implicit theories of voice](https://hbswk.hbs.edu/item/first-look-december-16-2008) found that people bring specific, measurable beliefs about the risks of speaking up into the workplace, and that these beliefs operate largely independently of their current leader's behaviour. Beliefs of this kind might sound like "never embarrass the boss in public" or "don't raise a problem without a solution". The implication for managers is uncomfortable. Being approachable is not sufficient, because people arrive with learned caution from previous jobs. You have to actively counter those beliefs, repeatedly, before people believe it is safe to raise a problem with you. (Our [guide to psychological safety](https://sarang.pro/psychological-safety-research-managers/) covers the team climate side of this in more depth.) ## Making it safe to speak up - **Ask directly and specifically.** "What's one thing about this plan that worries you?" gets more than "Any concerns?" - **Remove the solution requirement.** Say plainly that you want to hear about problems even when nobody has a fix yet. - **Thank the messenger, every time.** How you react to the first bad news decides whether you hear the second. - **Close the loop.** Tell people what happened as a result of what they raised, even if the answer was no. - **Offer more than one route.** Some concerns cannot go to a line manager. Make sure people know the other channels. - **Know the law.** In the UK, [GOV.UK explains](https://www.gov.uk/whistleblowing) that workers who report certain wrongdoing in the public interest, such as fraud, danger to health and safety, environmental damage or a cover-up, are protected from unfair treatment and dismissal. Confidentiality clauses cannot stop someone making such a protected disclosure. Personal grievances are generally handled under grievance policies instead. ## Values in practice: check your incentives The fastest way to undo stated values is to reward behaviour that contradicts them. In September 2016 the US Consumer Financial Protection Bureau [fined Wells Fargo $100 million](https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-fines-wells-fargo-100-million-widespread-illegal-practice-secretly-opening-unauthorized-accounts/), part of $185 million in penalties, after employees opened more than 2 million deposit and credit card accounts that may not have been authorised. The regulator said staff opened the accounts to hit sales targets and earn bonuses, and that the bank had not adequately monitored its incentive programmes. Few managers run incentive schemes at that scale, but the same mechanism works in small teams. A few questions to ask about any target or reward: - What is the easiest way to hit this number without doing the right thing? - Would we be comfortable if customers knew how this target worked? - Do we ever reward results while ignoring how they were achieved? - What happens to someone who misses a target because they refused to cut a corner? ## A worked example An example (illustration only). Fatima manages a customer retention team at a subscription business. The team is measured on the percentage of cancelling customers it persuades to stay, and the rate has risen sharply. Rather than celebrating, she listens to a sample of calls and finds two agents making cancellation deliberately hard: transferring callers repeatedly and not processing requests on the first call. She acts as a moral manager. She talks to the two agents privately and makes the expectation clear. In the team meeting she states that customers who want to cancel must be able to do so on the first call, and explains why. She changes the measure so it counts only customers who accepted an offer after being told they could cancel straight away. And she publicly thanks the colleague who had quietly flagged the call-handling issue to her a month earlier, while admitting she should have acted sooner. ## Common mistakes - **Staying ethically neutral.** If you never talk about values, people assume results are all that count. - **Shooting the messenger.** One defensive reaction can silence a team for months. - **Exempting high performers.** Letting top sellers bend rules tells everyone what you value. - **Ignoring the "how".** Reviews that look only at numbers reward shortcuts. - **Treating ethics as compliance only.** Training and policies help, but daily decisions shape culture more. ## When this matters most Ethical leadership matters all the time, but pay special attention when targets are stretching, when the business is under financial pressure, when you introduce new incentives, and when results suddenly improve without an obvious reason. Those are the moments when shortcuts are most tempting and least visible. A leader who asks how results were achieved, thanks people for raising problems and keeps incentives honest builds a culture where people trust that the values mean something.