Scandal by top managers hits new job prospects for others

Employees of scandal-hit companies find it hard to land a new job as moral suspicion from higher-ups' wrongdoing spills down to people lower in an organisation, even if they did not work directly under the moral transgressor, a study says.

While past psychology research has looked at how people's moral reputations are tarnished by their own moral failings, this study is one of the few to examine how people's moral reputations can be damaged by others' moral failings.

"In order to preserve one's moral reputation, it may not be enough to be ethical yourself; it's also important to surround yourself with ethical co-workers and, particularly, to work under ethical management," said study co-author Takuya Sawaoka from the Stanford University in the US.

Across the experiments, the researchers found that participants reported greater moral suspicion toward group members exposed to immoral behaviour of higher ranking, compared to lower ranking, group members.

And in one study, they found that this moral spillover damaged people's ability to be hired.

The participants who read about the unethical behaviour of a high-ranking executive, rather than an entry-level employee, made significantly more negative hiring recommendations for the job applicant.

The fact that the job applicant simply worked for a tainted organisation, without any direct influence from, or even relationship with, the transgressor "suggests that the implication of direct supervisory control is not necessary for these effects to occur", Sawaoka added.

To reduce this spillover effect, Sawaoka suggests that when a scandal occurs, the affected organisation emphasise the ways in which the moral transgressors are not representative of the organisation, but rather the result of personal flaws or values.

Another way would be to downplay the status of the perpetrator(s) in the organisation, the researchers suggested.

The study appeared in the journal Social Psychological and Personality Science.