Creating value through ethicality
The Australian Leadership Index (ALI) is a national survey that provides a comprehensive picture of perceptions of leadership for the greater good in the government, public, private and not-for-profit sectors.
The ALI model of institutional leadership for the greater good delineates three sets of indicators of leadership for the greater good that pertain to the type of value that institutions seek to create, how institutions create value, and for whom institutions create value.
For each of these indicators, we measure public perceptions and expectations. In addition to this, we calculate the relationship between perceptions of each indicator and overall perceptions of leadership for the greater good, yielding insights into the key drivers of public perceptions of leadership in the government, public, private, and not-for-profit sectors.
This note is part of a three-part series on how institutions create value. The focus of this note, the final in the series, is on ethicality, which is the extent to which institutional leaders behave in a manner that accords with relevant moral standards of professional conduct.
A note on the survey process
The results reported in this research note are the average of the results obtained from quarterly ALI surveys (1,000 people per quarter) between September 2018 and March 2020, which represents seven quarters of data collection.
Respondents are recruited via an online panel by Dynata and recruitment is designed to ensure that the sample is nationally representative in terms of locality (i.e., States and Territories), gender and age.
Results are analysed at the overall national level, as well as at the sector (i.e., government, public, private and not-for-profit sectors) and institution-level. ALI results can be further segmented according to a range of demographic variables. More information about the survey process can be found here and the ALI data portal can be found here.
What is the relationship between ethicality and leadership?
Against a backdrop of unethical leadership and ethical scandals in business, political, and religious institutions, in Australia and internationally, there is a deep appreciation of the need for ethical leadership in these institutions.
What role do public perceptions of ethicality play in public perceptions of leadership for the greater good in the government, public, private and not-for-profit sectors?
ALI research reveals that public perceptions of ethicality is a strong predictor, or driver, of perceptions of leadership for the greater good in the government, public, private and not-for-profit sectors. This means that the more institutional leaders are perceived as demonstrating high ethical standards, the more they are perceived to show leadership for the greater good.
In the context of enduring public concern about political and business ethics and persistently low trust in government and business, improving public perceptions of ethicality is one way in which institutional leaders can restore public trust in these institutions and their leadership.
Ethicality at the sector-level
Having established the relationship between ethicality and leadership for the greater good, it’s pertinent to consider what ALI reveals about perceptions and expectations of ethicality in the government, public, private and not-for-profit sectors.
The public have high expectations of the degree to which institutions in the government, public, private and not-for-profit sectors should be ethical. Roughly two-thirds of respondents expect the government, public, private and not-for-profit sectors to be ethical to a “fairly large” or “extremely large” extent.
The public sector is regarded as the strongest performer in terms of ethicality, with 40% of respondents judging this sector as ethical to a “fairly large” or “extremely large” extent. Consistent with this, the public sector is also associated with the smallest gap between perceptions and expectations of ethicality (35-percentage points).
The not-for-profit sector is the second strongest performer, with 33% of respondents judging this sector as ethical to a “fairly large” or “extremely large” extent. The not-for-profit sector is associated with the second smallest gap between perceptions and expectations of ethicality (37-percentage points).
The government sector is seen as the weakest performer on this criterion, with only 23% of respondents regarding government as ethical to a “fairly large” or “extremely large” extent. Consistent, the government sector is associated with the largest gap between perceptions and expectations (48-percentage points).
The private sector is perceived similarly to the government sector, with 26% of respondents regarding business as ethical to a “fairly large” or “extremely large” extent. The private sector is associated with the second largest gap between perceptions and expectations (40-percentange points).
Figure 1. Perceived and expected ethicality, sector-level, September 2018-March 2020
Explore this data for yourself via the ALI custom chart builder.
Ethicality at the institutional-level
Charities are regarded as the strongest performer in terms of ethicality, with 49% of respondents judging charities as ethical to a “fairly large” or “extremely large” extent. Consistent with this, charities are also associated with the smallest gap between perceptions and expectations of ethicality (27-percentage points).
Although charities are associated with the most favourable public perceptions of ethicality, public health and public education institutions are also well-regarded, with 46% and 40% of respondents, respectively, viewing these institutions as accountable to a “fairly large” or “extremely large” extent.
However, perceptions of charities differ markedly from the two other institutions that comprise the ALI measure of the not-for-profit sector; namely, trade unions and religious institutions. Religious institutions and trade unions are perceived by only 26% and 24% of respondents, respectively, as ethical to a “fairly large” or “extremely large” extent.
A similar pattern is observed for the institutions of the private sector. National businesses and multinational corporations are viewed by 24% and 22% of respondents, respectively, as ethical to a “fairly large” or “extremely large” extent. Consistent with this, the institutions are associated with some of the largest gaps between perceptions and expectations of ethicality. By contrast, the public expects considerably less from small and medium enterprises (SMEs) than other types of business and evaluates SMEs more favourably.
The institutions of the government sector are perceived as among the worst performers in terms of ethicality. The Federal Government is perceived as the least ethical institution of all twelve institutions measured by the Australian Leadership Index. Specifically, only 21% of respondents view the Federal Government as ethical to a “fairly large” or “extremely large” extent. Consistent with this, the Federal Government is associated with the largest gap between perceptions and expectations (50-percentage points).
State Governments do not fare much better. Only 23% of respondents view State Governments as ethical to a “fairly large” or “extremely large” extent, which, when combined with high expectations of State Government ethicality, produces the second largest gap between perceptions and expectations (49-percentage points). Local Governments are perceived as somewhat better than Federal and State Governments – 26% of respondents view Local Governments as ethical to a “fairly large” or “extremely large” extent.
Figure 2. Perceived and expected ethicality, institution-level, September 2018-March 2020
Explore this data for yourself via the ALI custom chart builder.
Please note that full details about public perceptions and expectations of ethicality in government, public, private and not-for-profit sector institutions are provided in the ALI 2019 Annual Report, which is available here.
