This article comes from Hogan Assessment Systems Inc.

Even one dishonest manager can cost companies hundreds of thousands, if not millions, of dollars in low morale and lost productivity. Unfortunately, there is more than one bad apple in the business world.

Daily organizational life includes regular episodes of staff abuse, rule breaking, and betrayal by people in positions of authority (Hogan and Kaiser, 2010). In a survey of more than 700 individuals, more than 80% of respondents reported they had been lied to, stolen from, cheated, or treated dishonestly by a supervisor or coworker. That’s bad news for the bottom line - managerial quality directly impacts employee engagement, and according to Gallup’s 2013 “State of the Global Workplace” survey, nationwide, only 30% of U.S. employees are engaged, with nearly one in five employees actively disengaged.

Short of systematically evaluating and wiping dubious individuals from your company’s ranks, how can you keep your existing managers honest?

1. Engage them. Research shows that job satisfaction accounts for some of the effects of moral personality traits on counterproductive work behavior. Give your managers meaningful tasks, make them feel valued, and treat them like adults.

2. Lead by example. Research shows that leaders’ morality level determines the degree to which employees perceive the organization as ethical or unethical. For leaders, the implication is clear: if you want your managers to act morally, start by acting morally yourself.

3. Pair them with ethical peers. Recent research suggests that peers play a critical role in determining the moral compass of our workplace. Teaming your less moral managers with colleagues who have strong integrity will motivate them to behave more ethically.

4. Invest in moral training. The Ethics Resource Center reports that businesses that implement formal programs to support ethical choices, such as whistle blowing, decrease counterproductive behaviors and misconduct rates, as well as increasing employee satisfaction.

5. Reduce their temptation. As Oscar Wilde once said, “anybody can be good in the countryside – there are no temptations there.” Everybody has a dark side, but the antisocial aspects of our personalities are much more likely to surface in toxic environments or situations of weak moral pressure.

6. Create an altruistic culture. Although organizational culture cannot be created overnight, meta-analytic reviews have demonstrated that a caring culture prevents unethical work behaviors, whereas a culture of self-interest promotes them.

The Bottom Line

Dishonesty among your managers can be enormously costly. However, using proper methods, companies can identify dishonest managers and either eliminate them or work to keep them on the straight and narrow.