Moral courage is a leadership competency

Ethical misconduct is pervasive and damaging in the working world, costing organisations globally trillions of dollars annually. Fraud alone is estimated to cost organisations 5% of their revenues, according to the Association of Certified Fraud Examiner’s 2014 Report to the Nations on Occupational Fraud and Abuse. This equates to almost $4 trillion in lost earnings across the globe each year.

To detect incidents of wrongdoing before they evolve into serious threats, organisations rely heavily on "ethical voice"— when employees communicate concerns or suggest remedies. The benefits to organisations are obvious, but what about for employees? Many people stay silent when they witness or experiencee unethical behaviout for fear of retaliation.

This fear becomes most acute when the wrongdoer is in a position of power. It’s a strong deterrent if speaking up could result in a negative performance review, exclusion from opportunities, or even dismissal. The greater the authority, the higher the stakes. Which means that, ironically, employees are least likely to speak out against those with the most capacity to cause harm.

Is there any upside for employees in challenging wrongdoers? Our new research suggests that there is. Traditional research has long highlighted the costs of confrontation rather than its potential rewards, but five studies we carried out with more than 3,200 working adults show that employees who confront powerful wrongdoers can gain reputational rewards, earning admiration, trust, and even greater resources as a reward for their moral courage.

Employees are well-placed to identify ethical misconduct. A 2021 study by Dhanani, LaPalme and Joseph found that 34% of employees had personally suffered ethical mistreatment at work, and 44% had witnessed it. The mistreatment took a range of unpleasant forms: bullying, discrimination, exclusion, harassment, incivility, interpersonal conflict, psychological aggression, sexual harassment, undermining, physical violence.

The reputational rewards of challenging wrongdoers

Our own research finds that employees who confront perpetrators who are more powerful than them can earn significant reputational benefits, because onfrontation – a common form of ethical voice that involves communicating concerns directly to the perpetrator – is viewed as being intended to benefit others despite incurring personal risk.

Observers consciously or unconsciously infer that the costs of confrontation – including retaliation risk, anxiety, and potential career damage – are significantly higher when the perpetrator is in a position of authority. The immense risk associated with challenging authority is seen as a sign of moral integrity and commitment to ethical standards.

For the employee demonstrating ethical courage, the reputational rewards translate directly into social capital within the organisation in three ways:

Elevated status and influence Status – the respect and admiration one commands from peers – is a fundamental form of social capital. By confronting authority for the greater good, employees signal a willingness to prioritise collective welfare over self-interest. Those who challenged powerful wrongdoers in our studies were consistently rated higher in status. This perception opens the door to informal leadership and broader impact within teams. Take the real-life example of Uber employee Susan Fowler. In 2017, she exposed harassment and bias at the company by raising concerns about ethical and managerial lapses to HR, despite warnings that her role was vulnerable. Her blog post and internal reports helped trigger board-level investigations and cultural reforms. Colleagues later praised her for speaking out, and she became a symbol of principled dissent, illustrating how confronting powerful figures can translate into durable status capital.

Increased trust and collaboration People who confront powerful wrongdoers are often seen as trustworthy, reliable, transparent, and fair, all qualities that drive collaboration and teamwork. Moral courage can reposition individuals as trusted collaborators and system stewards – roles that often carry influence even without formal authority. The 2015 accounting scandal at Toshiba is a case in point. When several engineers and mid-level managers raised internal concerns over accounting manipulation by senior executives at Toshiba, the company initially faced scandal and leadership fallout. Those who had spoken up were later acknowledged internally for their integrity. They became go-to figures for process redesign and internal controls, entrusted with rebuilding credibility within their divisions. To harness this dynamic, organisations should turn integrity into opportunity. Employees who demonstrate ethical courage could be offered access to cross-functional projects, mentoring roles, and high-visibility assignments that deepen both their impact and the organisation’s ethical fabric.

Financial and social reciprocity Reputation generates tangible returns. Even people not directly affected by a wrongdoing often choose to reward people who have acted ethically. This process – known as indirect reciprocity – translates moral admiration into concrete resources. Participants in one of our experiments voluntarily sacrificed their own financial rewards to benefit employees who had confronted powerful wrongdoers. The results showed that moral courage attracts resources, advocacy, and support, creating career capital through conscience.

Takeaways for senior leaders, managers and individual employees

Whether you are a senior executive, a line manager, or an individual employee, understanding these dynamics changes how you navigate power, integrity, and timing in organisational life. As organisations grapple with AI, geopolitical trends and sustainability, moral courage at every level has become a leadership competency, not just a personal virtue. How can you develop and encourage it?

For senior leaders: Recognise that silence often signals fear, not disengagement. Your role is to make integrity visible and safe. Celebrate principled action publicly and share stories of moral courage in town halls or internal communications. When ethical voice is rewarded, trust flourishes.

For managers: Realise that your team members constantly weigh the risks of speaking up. Protect those who raise uncomfortable truths, and coach them on how and when to escalate issues effectively. Model constructive confrontation yourself. When managers normalise dissent delivered with respect, ethical culture deepens – and your credibility as a fair leader grows.

For individual employees: Principled confrontation, even when risky, can strengthen your professional reputation and leadership trajectory. Challenging authority does not necessarily jeopardise your career; it may, in fact, enhance it.

Everyday acts of moral courage – from the Uber employee directly confronting senior leaders about harassment and misconduct, to Toshiba employees flagging accounting fraud – demonstrate that moral authority often outlasts hierarchical authority. These individuals not only preserve integrity but also help organisations reset their moral compass.

When companies recognise and institutionalise these behaviours by integrating ethical courage into promotion frameworks, performance evaluations, and leadership awards, employees view integrity as a pathway to advancement. In this way, organisations convert ethical confrontation from a reputational risk into a leadership asset. And because moral courage builds status, trust, and sustainable power, the result is a more resilient organisation.