How Much Bad Leadership Will We Tolerate When the Numbers Are Great?

Exceptional results can quietly distort how we judge executive behaviour. Here's why it happens, and what it means for leadership accountability.

In more than 20 years of working with senior executives, I've met some extraordinarily successful leaders. People who transformed businesses, delivered outstanding financial results and created enormous value for shareholders.

I've also met executives whose commercial success came with serious questions about how they treated the people around them. And I've often wondered how much that success shaped our willingness to challenge them.

Picture a CEO who has delivered three consecutive years of exceptional performance.

Revenue is growing, margins are improving, the strategy is working and the board is delighted.

Behind the results, though, concerns are surfacing. Members of the executive team describe being intimidated or humiliated in front of colleagues. People have stopped challenging decisions. Capable executives are leaving, and those who stay are increasingly guarded about what they say.

The board knows something isn't right. So what happens next?

Does it investigate and hold the CEO to account? Or does it conclude that the CEO is demanding, occasionally difficult, but ultimately delivering what the business needs?

Now imagine the same behaviour from a CEO who has missed every financial target. Would the response be the same? Of course not!

How much bad leadership are we prepared to tolerate when the numbers are good?

This isn't just a question about individual executives. It goes to the heart of how organisations define performance, apply their leadership standards and hold their most valuable people to account. And the research suggests we're less objective about it than we'd like to admit.

High performance changes how we judge bad behaviour

One of the most revealing studies I've come across is Above the Law? How Motivated Moral Reasoning Shapes Evaluations of High Performer Unethicality, published in the Journal of Applied Psychology in 2023.

Elizabeth Campbell and her colleagues examined whether an employee's performance influences how supervisors evaluate unethical behaviour. Their findings suggest that high performers can be judged more favourably than lower performers for comparable misconduct.

In other words, the same behaviour can be assessed differently depending on who did it.

That matters. Performance isn't just shaping how valuable someone is considered to be; it can shape how we judge the behaviour itself. The high performer made an unfortunate mistake. The lower performer who did the same thing is judged more harshly.

The study looked at employees and supervisors rather than CEOs and boards, so we shouldn't assume the findings map neatly onto every governance decision. We shouldn't do that 😉 But the underlying psychology is highly relevant. If someone's commercial contribution colours how we judge their conduct, our assessment of their leadership is less independent than we believe.

Which leads to an uncomfortable possibility: the executives who deliver the most value may be the ones whose behaviour we're least willing to challenge.

Why we make exceptions for high performers

Several psychological mechanisms help explain why organisations grow more tolerant of problematic behaviour when the results are exceptional.

Motivated moral reasoning

Put simply, we tend to interpret behaviour in ways that protect outcomes we value.

If one executive is responsible for much of an organisation's success, acknowledging serious concerns about them creates a problem. The organisation may have to intervene. The executive may disengage or leave. The business could lose someone it considers critical.

Those consequences create a powerful incentive to read the behaviour charitably. Perhaps the executive is simply demanding. Perhaps people are struggling with the pace of change. Perhaps complaints are the inevitable price of raising expectations.

Sometimes those explanations are entirely reasonable. Sometimes they're just convenient.

Idiosyncrasy credits

Research on what psychologists call idiosyncrasy credits suggests that people who have proven their value to a group earn more latitude to depart from its norms.

In the boardroom, this looks like growing reluctance to challenge someone regarded as indispensable. The CEO has delivered before. They know the business. Investors trust them. Replacing them would be hard. So concerns that might otherwise prompt action become things to manage rather than reasons to act.

Dependence

The more an organisation believes its success rests on one person, the higher the perceived cost of confronting them. And, boy, do these leaders pick up on that. This isn't smearing great leaders in totality, but If you've ever worked in sales; have you ever been blown away by the behaviour of the top salesperson - and not in a good way?

This is where it gets really interesting. Tolerating bad behaviour often isn't driven by indifference to employees or a conscious disregard for values. It happens because the people responsible for intervening genuinely believe they're protecting the business.

But protecting short-term performance and protecting the organisation aren't always the same thing.

The trouble with calling it "tough leadership"

Before going further, an important distinction: demanding leadership isn't the same as bad leadership.

I've worked with executives who set extraordinarily high standards, make hard calls and expect exceptional performance. Some are unpopular precisely because they make decisions others would rather avoid. Restructuring a business, removing underperformers or challenging entrenched practices will always generate resistance. None of that makes a leader destructive, and not every complaint about a senior executive points to unacceptable behaviour.

But there's a real difference between demanding high performance and creating a climate of intimidation, humiliation, retaliation or unethical conduct.

A CEO can hold someone accountable without humiliating them. They can challenge poor performance without threatening people. They can make unpopular decisions without being dishonest about why. And they can insist on exceptional standards while holding themselves to those same standards.

The problem starts when organisations treat behaviour that would normally be unacceptable as an unavoidable side effect of high performance. Intimidation becomes intensity. Aggression becomes passion. Refusing to be challenged becomes decisiveness. A leader who repeatedly undermines colleagues is just difficult to work with.

The language changes. The behaviour doesn't.

So at what point does calling someone a demanding leader become a way of avoiding a harder conversation?

What destructive leadership actually costs

The research here is substantial. A meta-analysis by Schyns and Schilling (2013), along with later work on abusive supervision, links destructive leadership to lower job satisfaction, weaker organisational commitment, psychological strain and counterproductive behaviour.

The wider literature also connects abusive supervision with withdrawal and intentions to leave.

These costs rarely stay with the individuals directly affected. Consider what happens when people become reluctant to challenge a senior executive:

• Important information stops reaching the people making decisions.

• Problems get hidden or softened.

• Executives focus on managing the CEO's reactions rather than having the difficult conversations that improve performance.

• A leadership team looks aligned in the room while privately disagreeing with the strategy.

  
  

And all the while, the business can keep posting strong financial results.

That doesn't mean every organisation with a difficult CEO is suffering these effects. Nor does the research show that destructive CEOs inevitably destroy long-term shareholder value. One limitation of the literature is that much of it measures employee perceptions and behaviour rather than company-level financial outcomes.

Still, the evidence gives us good reason to take the organisational costs seriously. Which raises a further question: how many of those costs actually show up in the measures we use to judge executive performance?

Are we measuring performance, or just results?

Most organisations assess executives with reasonable sophistication: revenue, profitability, margins, growth, customer outcomes, operational efficiency, strategic milestones. Boards also weigh risk, succession, culture and capability, though how much weight varies.

The difficulty is that financial outcomes are far easier to quantify than the quality of the leadership environment that produced them.

Imagine a CEO who substantially improves profitability over three years. The results are clear. But over the same period, several highly capable executives leave, people stop challenging decisions, and the leadership team becomes increasingly reliant on the CEO's personal authority.

How should that shape our assessment? Those developments may represent serious organisational risk. Or there may be other explanations. The point is that they need to be investigated, not dismissed on the assumption that strong numbers tell us everything.

A CEO's results are evidence of performance. They aren't a complete measure of leadership effectiveness.

This matters most when you ask whether the organisation can keep performing after the CEO has gone:

• Have they built a strong leadership team?

• Can people challenge assumptions and make decisions independently?

• Is the organisation better able to adapt to change?

• Or has success become dependent on one person's judgement and authority?

  
  

These are questions about the durability of performance, and they deserve as much attention as the financials.

Accountability doesn't stop with the CEO

For me, this is the most uncomfortable part of the discussion.

If an executive repeatedly behaves unacceptably and the organisation knows about it, responsibility doesn't sit with that individual alone. It extends to the people charged with holding them accountable: for a CEO, principally the board; for other senior executives, the CEO, their peers or the relevant board committees.

Accountability gets complicated when someone is seen as essential. Imagine a board receiving credible concerns about a CEO with an exceptional track record. The directors may recognise how serious the behaviour is. But they also know the CEO has investor confidence, strong customer relationships and deep knowledge of the business. Removing them would create real uncertainty. Even confronting them carries risk.

Those are legitimate considerations. But they shouldn't decide whether the behaviour itself is acceptable.

There's a difference between deciding what action is proportionate and deciding that strong performance makes unacceptable conduct less serious. The first is a governance judgement. The second is a double standard.

And double standards ripple outward:

• What does it tell employees when the most commercially successful leaders seem to play by different rules?

• What does it teach the next generation of executives about which behaviours are really valued?

• What happens to the credibility of your values when they apply more strictly to some people than others?

  
  

An organisation can have excellent leadership principles, clear behavioural expectations and a thorough code of conduct. But those standards are only truly tested when enforcing them becomes inconvenient.

The test: would we decide the same if the numbers were different?

This is a useful question for anyone involved in assessing senior executives. Take the financial results out of the conversation for a moment and look at the behaviour on its own:

• Would we regard it as acceptable?

• Would we tolerate it from another member of the executive team?

• Would we be comfortable explaining our response to employees?

• Would we reach the same conclusion if this executive were delivering average results?

  
  

These questions don't remove the complexity. Context matters. Evidence matters. The seriousness and frequency of the behaviour matter, and so does how the executive responds to feedback.

But they help expose the moments when commercial performance is shaping judgements that should rest on consistent standards. The research on motivated moral reasoning suggests this is a genuine risk: we can believe we're being objective while unconsciously reading the evidence in ways that protect the outcomes we value. That should concern anyone evaluating executive performance, especially when the executive in question is exceptionally successful.

So, how much bad leadership should we tolerate?

The answer isn't that every difficult executive should go. Organisations need leaders who can make unpopular decisions, challenge established thinking and hold people to account. And leadership effectiveness was never a popularity contest.

But there's a difference between accepting the discomfort that comes with demanding leadership and excusing behaviour that undermines the standards an organisation claims to uphold.

The evidence suggests that high performance can soften how we judge misconduct, and that destructive leadership carries meaningful costs for people and organisations. What's less certain is exactly how those costs translate into long-term financial performance, particularly at CEO level.

That uncertainty doesn't make the question less important. It makes the quality of our judgement more important.

Because if we let exceptional results decide whether behaviour is acceptable, we end up with two standards of leadership: one for the people who deliver, and another for everyone else.

We like to believe our leadership standards are non-negotiable. But how non-negotiable are they when enforcing them might cost us our highest-performing executive?

It's a question every CEO and board should be ready to answer.

Research and references

• Campbell, E. M., et al. (2023). Above the Law? How Motivated Moral Reasoning Shapes Evaluations of High Performer Unethicality. Journal of Applied Psychology. Examines how high performance influences evaluations of unethical workplace behaviour; the principal empirical foundation for this article.

• Sungu, L. J., & Weng (2024). Licensed to Misbehave? Leader Decisiveness Given Follower's Competence and Misconduct. Journal of Leadership & Organizational Studies. Examines how competence and misconduct interact in leaders' evaluations and responses.

• Schyns, B., & Schilling, J. (2013). How Bad Are the Effects of Bad Leaders? A Meta-Analysis of Destructive Leadership and Its Outcomes. The Leadership Quarterly. A meta-analysis of the links between destructive leadership and employee attitudes and behaviour.

• Mackey, J. D., et al. (2017). Abusive Supervision: A Meta-Analysis and Empirical Review. Journal of Management. Synthesises evidence on abusive supervision and its employee and organisational outcomes.

• Wang, R., et al. (2019). Will You Forgive Your Supervisor's Wrongdoings? The Moral Licensing Effect of Ethical Leader Behaviors. Frontiers in Psychology. Investigates how a leader's past ethical behaviour can shape responses to later misconduct.

Vantyr Group specialises in executive search, leadership assessment and executive integration coaching. Our approach combines the appointment of senior executives with a structured assessment of leadership capability and six months of integration coaching.

We believe executive appointments should be ju

dged not only by the quality of the person selected, but by their ability to deliver sustainable results through the people and organisations they lead.