Often, we think of ethical failures in business as a problem of character — that the people behind high-profile lapses of morality like Enron’s fraud, the BP oil spill, or Volkswagen's emissions scandal simply didn't care enough about doing the right thing for everyone, they made the choice that benefits themselves.
But research from Sarah Carver, Assistant Professor of Industrial-Organizational Psychology at the University of Guelph, and Hayden Woodley, Assistant Professor of Organizational Behaviour at Ivey Business School, suggests the missing ingredient may not be morality. It’s likely emotional intelligence.
When people recognize their own emotions and recognize how other people feel, they feel more aware of the social impact of the strategic decisions they have to make, says Woodley. “They are also less likely to do counterproductive behaviours and more likely to help others for the same reason.”
Carver and Woodley’s paper, Emotional Intelligence and Business Ethics: Feeling Confident in Doing the Right Thing, published in the Journal of Business Ethics, explored whether emotional intelligence could predict not just how people treat their colleagues day-to-day, but how they make the bigger, harder calls — the more consequential decisions that could impact customers, shareholders, and communities.
Essentially, how closely are emotional intelligence and ethical decision-making intertwined within a business setting?
What emotional intelligence actually is
Woodley says emotional intelligence is a bit of a misnomer: “It’s actually quite different than intelligence — intelligence is an ability, it’s something you can or can’t do,” he says. “Whereas emotional intelligence, there’s substantial evidence that you can grow and develop this as a skill — it’s a trait that you can get better at.”
At its core, emotional intelligence comes down to four capabilities: recognizing and regulating your own emotions, and recognizing and regulating the emotions of others. Most people, Woodley argues, are less practiced at this than they think. The ability to name what you’re feeling, and to understand how that feeling is shaping your judgment, is not something most professional environments have historically encouraged, he says.
“People think being an effective leader means you can’t be vulnerable [or] have weaknesses,” he says. “But leaders that we truly follow are people that we feel a connection to because of their flaws — [you want them] to have a conversation and acknowledge that they’re human.”
By going deeper into the link between emotional intelligence and decision-making, the research team was able to explore why emotional intelligence leads to ethical decision-making.
A question of confidence, not character
Woodley says previous research has shown the throughline between emotional intelligence and self-efficacy: a person’s confidence in their ability to achieve a goal. Separate research has also identified the role of self-efficacy in decision-making. “When people have less confidence in their capabilities, they feel like they have to cheat to get ahead,” says Woodley. “The more confident you make somebody feel, the more ethical they’ll behave.”
Carver and Woodley wanted to bring the two ideas together. To do so, they conducted two studies, one with employed professionals and another with business students. They used London-based SIGMA Assessment Systems’ practical EI assessment. Participants were presented with ethical dilemmas drawn from real business contexts.
In one dilemma, respondents were asked to imagine owning a significant stake in an auto manufacturing company that has identified a potential safety defect. Do you disclose it — even at cost to shareholders? The scenarios were designed to capture the moments where personal or organizational gain pulls in one direction, and the well-being of others pulls in another.
The findings were consistent across both studies and three separate measures of emotional intelligence: higher EI predicted more ethical business decisions, more helping behaviours, and fewer counterproductive ones. The mechanism linking them was self-efficacy. Emotionally intelligent people develop a stronger belief in their own capacity to act, says Woodley, and that confidence is what converts good intentions into ethical decisions.
Building more ethical leaders
The good news, says Woodley, is that emotional intelligence can be assessed, developed, and modelled. And the research suggests that doing so pays dividends well beyond the individuals involved. Developing and promoting emotionally intelligent and a strong belief in their ability to succeed can help foster a wider culture of ethical business decision-making across an organization. So where do you start?
1. Hire for it
Incorporating an emotional intelligence assessment into the recruitment process is a practical first step. Evaluating candidates for both emotional intelligence and self-efficacy, alongside technical skills, can help organizations build teams that are more likely to make ethical decisions when it counts.
2. Train for it
Both emotional intelligence and self-efficacy can be developed. Organizations that invest in training focused on emotional recognition and regulation — helping employees name what they’re feeling and understand how it shapes their judgment — are likely to see returns not just in workplace culture, but in the quality of the decisions their people make.
3. Model it from the top
No training program will stick if leadership doesn't demonstrate it. Research has shown that ethical leaders increase self-efficacy in their followers — the way they show up emotionally has a direct effect on how their team makes decisions. Vulnerability, self-awareness, and the willingness to acknowledge the human consequences of business decisions aren’t soft skills, they’re leadership fundamentals.
Read more about how Carver and Woodley identified the link between emotional intelligence and ethical decision-making here: Emotional Intelligence and Business Ethics: Feeling Confident in Doing the Right Thing
