Fourth Industrial Revolution

We need moral leadership in the future of work

Image: Riccardo Annandale/Unsplash

Dov Seidman
Founder and Chairman, LRN and The HOW Institute for Society
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Demand for moral leadership has been rising in response to an increasingly unstable and uncertain world, according to a State of Moral Leadership report published last year. While much has been written about the future of work—particularly how skill requirements will evolve as AI grows—less attention has been given to leadership, and specifically the model for leadership in the age of intelligent technologies.

The Fourth Industrial Revolution and the disruptive changes it will bring to the world of work put additional stress on companies, employees and leaders. Here at LRN, a global corporate advisory services, technology and education company, our latest research demonstrates why moral leadership, as we define it, is the most effective approach for this new world of work.

What we found was that when executives and managers use the behaviors of moral leadership—inspiring with a noble purpose and giving freedom and trust, rather than giving orders—they unleash uniquely human traits and capabilities such as empathy, creativity, collaboration, and innovation. These traits will drive differentiated performance in the new world of work.

Demand for moral leadership is high

By surveying 1,100 employees, managers, and top executives, we uncovered the demand for moral leadership, how it translates into superior performance in critical areas such as innovation, and the degree to which moral leadership exists today. (It remains all too rare.)

One of the most important findings is just how much people want moral leadership. In fact, 87% of respondents say the need for moral leadership is more urgent than ever. They want moral leadership because they believe it makes them and their organizations more successful. And more than 80% say when leaders do not consider the ethical implications of their actions, their companies are put at greater risk.

There is something profound going on here: People hunger for moral leadership not only because they recognize the performance benefits, but also because they are responding to our reshaped world.

Technology and globalization have made us hyper-connected and increasingly interdependent. There are benefits. With a swipe of a screen, we can put ourselves into intimate proximity with people anywhere on the planet, allowing us to forge new relationships, encounter life-changing ideas, and look into once-opaque institutions. But there are dangers, too. The same connections spread fake news and vitriol, undermining the truth and trust that are the foundations of vibrant democracies, dynamic economies, and healthy societies. Likewise, we are witnessing the rise of AI and other intelligent technologies that will push the boundaries of human capabilities—but will also redefine millions of jobs.


What is the World Economic Forum doing about the Fourth Industrial Revolution?

Together, these unprecedented forces are radically altering our world. In this reshaped world, moral leadership reconnects us with the eternal human values that provide clarity amid confusion. Equally important, moral leadership helps companies compete successfully in a changing business environment. Today, companies need employees who are creative, innovative, and adaptable. The old daily grind—doing the next thing right—is disappearing as machines take on routine work. The future requires employees who have the imagination and moral sense to identify and do the next right thing, which could be collaborating on a new product, figuring out how to improve a customer interaction, or making the right ethical choice.

In a top-down world, the formal authority that comes with a title (plus a few carrots and sticks) was sufficient when all we wanted was for people to do the next thing right—exactly as specified. Human systems can’t function without formal authority, whether it’s the commander-in-chief, CEO, or school principal.

But organizations work best when leaders occupying those formal positions have moral authority, too. Only moral authority can build trust, inspire colleagues, and free employees to bring their full humanity to work every day and do the next right thing.

But what is moral leadership?

Moral leadership is not about moralizing. It's not simply taking a stand on social or political issues, although that can be part of it.

Moral leadership is a framework and set of principles informing leaders in how they approach everything they do: how they interact with others, how they make decisions, how they manage and conduct themselves. Formal authority can be conferred with a promotion, or even seized, but moral authority is earned every day through these behaviors.

We measured the presence of moral leadership by asking whether or not people observed 43 specific behaviors in their managers and executives. And there's a correlation between moral leadership and results. Executives and managers seen as moral leaders are nine times more likely to be regarded as effective in achieving business goals and seven times more likely to encourage innovation.

Unfortunately, few companies are seeing these benefits. Only 7% of respondents say their leaders consistently behave like moral leaders and, alarmingly, 59% say their managers and executives exhibit few or none of the behaviors of moral leaders.

Image: LRN Corporation
The outlook for moral leadership

Clearly, we have a long way to go. But there is growing recognition of the need for moral leadership.

For example, 72% of respondents say their colleagues would perform better under moral leadership. As the realities of our reshaped world compel executives to find more effective approaches, we expect to see the ranks of moral leaders grow. This is what employees want and, increasingly, it’s what investors, business partners, and consumers expect.

On top of all that, it is a more satisfying and rewarding way to live. Moral leaders have deep connections with colleagues, who share common values and a noble purpose. They don’t get out of bed every day to hit the next financial or market-share target; they are driven by a belief they can create a better future.

The state of moral leadership today

What’s new in this year’s report? How does this year’s study connect to CEO priorities?

  • Innovation and Creativity: Employees say managers who behave like moral leaders (treating people with dignity, showing humility so others can shine, etc.) are eight times better at encouraging innovation and creativity.
  • Lower Risk: We have not always recognized that the wrong kind of leadership is a measurable risk area in business. Yet, employees recognize things go wrong when those in positions of formal authority don’t have moral authority. In fact, 82% of respondents say not having moral leadership is a risk and hinders growth.
  • Better Performance: Employees want moral leadership because they believe it helps them perform better. The share of respondents who say colleagues would perform better under moral leadership jumped from 62% to 73% between 2018 and 2019. And the share who believe moral leadership would help them solve their biggest challenges rose from 59% to 72%.
  • Expectation for Moral Action: Moral leadership is not just behaving ethically and standing up for a moral cause. This year, 45% of employees say their CEOs are taking stands on moral issues, but only a quarter of CEOs exhibit the behaviors of moral leadership that generate better performance. This gap underscores our finding that even though 87% of people surveyed say the need for moral leadership is more urgent than ever, adoption is slow. This represents a risk area.
  • A Culture of Doing the Next Right Thing: Building moral leadership is a company-wide effort. The maximum impact is realized when people across the organization behave as moral leaders in their roles. This requires not only modeling the right behaviors at the top, but also training and reinforcement. Today, only half of managers and executives get any training in dealing with moral issues.
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