“Leading with positive ethical values builds trust and
brings out the best in people, which brings out the best in the organization,
which leads to great results.”
– Linda Fisher Thornton
Abstract
Ethical leadership requires ethical
leaders who have
the responsibility for ensuring standards of moral and ethical conduct. Good
leadership then, refers not only to competence, but to ethics that transform
organizations and people’s lives. Ethical leaders think
about long-term consequences, drawbacks and benefits of the decisions they make
in the organization. They are humble, concerned for the greater good, strive
for fairness, take responsibility and show respect for each individual. Ethical
leaders set high ethical standards and act in accordance with them and have
the courage and will to apply them for the good of the organization and other
people around. Effective leaders also influence processes,
stimulate change in attitudes and values, and amplify empowerment and
self-efficacy of their followers as they foster the internalization of corporate
vision. The
more the leader “walks the talk”, by translating internalized values into
action, the higher level of trust and respect he generates from followers. Such
engagement creates an intellectual and emotional commitment between leaders and
their followers that makes both parties equally responsible in the pursuit of
common goals.
Keywords:
ethical leader, character, leader-follower relationship, ethical behavior,
corporate governance, corporate culture, social constructs
Introduction
Ethical leadership is critical to
the success of any business. It is about far more than having an
understanding of the right values, or of having a strong character that leads
by example. An ethical leader not only has high values and the determination to
succeed but also understands the importance of building a strong framework that
allows others to follow the examples set so that everyone benefits. Ethical
leadership is about striving for the same goal and embodying the same purpose,
values and vision. An ethical leader works to create an open conversation, and
working practice, that encourages the sharing of ideas, knowledge and vision so
that the benefit of the learning is shared. The leader must also compel others
to follow the lead that he/she sets by the standards that are reflected in the
way they live, influence and inspire.
This article focuses
on ethical leadership within the organization. In this respect, the paper
analyses various principles of ethical leadership. In addition to this, the
paper will define ethical leader and its role fostering ethical behavior and
examines the importance of ethical leaders as well as the challenges
of ethical leadership to organizations.
Ethical Leadership
Ethical leaders speak to us about our identity, what
we are and what we can become, how we live and how we could live better
(Freeman & Stewart, 2006). Ethics is a philosophical term originating from
Greek word “ethos” meaning custom or character. It is concerning with
describing and prescribing moral requirements and behaviors, which suggests
that there are acceptable and unacceptable ways of behaving that serve as a function
philosophical principle (Minkes, Small, & Chatterjee, 1999). Ethical
behavior is defined as a behavior which is morally accepted as “good” and
“right” as opposed to “bad” or “wrong” in a given situation (Sims,1992). Ethics
is the code of values and moral principles that guides individual or group behavior
with respect to what is right or wrong. Ethical behavior is both legally and
morally acceptable to the larger community (L.K. Trevino, 1986). We define
leadership as the art of persuading a follower to do the things, activities,
that the leader sets as goals. The role of leaders therefore in the process of
directing the individual’s behavior towards a desired goal. Leaders vary
depending on the individual leadership style that stems from the personality
characteristics. Some leaders, particularly charismatic and transformational,
have personal power through which they engage employees, whereas other exert
the positional, legitimate power. Leaders are characterized by different
values, attitudes, beliefs, conducts, habits and practices and that is to a
certain extent dependent upon the organizational, professional or institutional
culture. Leadership signifies a relation between a leader and his followers
within a situational and organizational context.
Principles of Ethical Leadership
Practitioners and scholars of
ethical leadership point to five key principles of ethical leadership: honesty,
justice, respect, community and integrity.
Honesty
Dishonest behavior is a form of lying or misrepresenting
reality. Dishonest behavior by leadership creates an atmosphere of mistrust and
can lead to leadership being seen as not dependable. People will lose faith in
dishonest leadership. As a result, it is critical for ethical leaders to behave
with honesty.
Justice
Ethical leaders are also concerned with issues of
justice and fairness. These types of leaders prioritize treating everyone in an
equal manner and placing justice and fairness at the center of their
decision-making more broadly. They make a rule of never giving certain
individuals special treatment, except when a particular situation demands it
for the purposes of justice.
Respect
Leaders who convey respect to their peers and employers
approach others with an inherent sense of their worth and value as individuals.
Respect means listening carefully to others and confirming their inherent
value. Leaders should also mentor others to become aware of their own purpose,
values and needs so that ethical qualities spread throughout the organization.
Community
Ethical leaders behave with altruism. They place the
welfare of their subordinates high in their esteem, and engage in activities
like team building, mentoring, and empowerment behaviors. This means ethical
leadership helps to build community. These leaders take into account the values
and purpose of their employees as well as of the organization as a whole.
Integrity
Integrity refers to the quality of having a strong moral
purpose and being honest. Ethical leaders demonstrate appropriate values to
those around them via their own behavior. Leaders who act with integrity can
strengthen the organization by attracting talented, ethical hires. People
generally want to work for leaders they perceive as acting with integrity.
Investors and customers feel the appeal of leadership that acts with integrity
and are more likely to be attracted to those organizations.
The Leader’s Role in Fostering Ethical
Behavior in Organizations
Basic rules of conduct that
ethical leaders should follow in order to be considered true leaders are
outlined as follows (Freeman, Martin, Parmar, Cording, & Werhane, 2006):
§ Leader
principle: a leader is foremost a member of the company and
its spokesman; therefore, his deeds must serve the purpose and benefits of the
corporation
§ Constituents
principle: leaders respect their co-workers and perceive them
as people who share common purpose. Their individuality and freedom are
accepted within the borders of ethical behavior.
§ Outcome
principle: a leader connects values to stakeholder support as
well as societal legitimacy. Company mission, vision, values and goals
(strategy and tactics) are outlined within an understanding of ethical ideals
§ Processes/skills
principle: the leader is open to different opinions and
ideas, views and creates an atmosphere of dynamic and fruitful communication
§ Situation/context
principle: moral judgements are used to make ethical
decisions and when crossing the boundaries of different ideas. The ethical
leader knows the limits of the values and ethical principles they live.
§ Ethics principle: a leader understands
leadership and ethics as an integrated process and frames actions and purposes
in ethical terms.
Importance of
Ethical Leaders in Organization
Ethical leaders can help
establish a positive environment with productive relationships over three
levels: the individual, the team and the overall organization. Nurturing the
relationships at each of these levels can lead to the following outcomes and
benefits:
1. The Well-Being of the Individual
Ethical
leaders who lead by example may influence others to do the same. Positive
communication among co-workers may help influence job productivity and attitude.
Employees
who work under an ethical leader are often more likely to keep their jobs
because the ethical leader may be strict about the rules but he or she is also
considerate about the needs of the employees. They work towards creating a
working environment in which the employees can thrive on the benefit of the
company and its shareholders, thus also benefiting the employees in the end.
2. The Energy of the Team
Ethical
leadership can also involve the management of conduct and collaboration within
a team. Employees
who are treated well are more likely to focus on their work, thus ensuring that
they generate as much output as expected of them by the organization. This
ensures that under their ethical leader, the employees are able to devote
themselves all to the company in return for the leader’s consideration and
efforts.
3. The Health of the Organization
The importance of maintaining a positive attitude in the workplace has a lot to do with improving the overall health of the organization. When people can show respect for one another, and can value other’s opinions, it may help create a productive working environment. An ethical organization can occur when communities of people work together in an environment of mutual respect, where they can grow personally, build friendships and contribute to the overall goal.
Challenges
of Ethical Leadership
As a concept of management,
ethical leadership faces a lot of challenges including corporate culture,
corporate governance, and social constructs.
An organization’s
corporate culture is the way in which people inside the organization
interact especially as far as decision making is concerned. Companies having a
bureaucratic nature tend to rely on the top tier management to make all the
crucial decisions and pass the orders down the corporate ladder to the
implementation points. This means that among other things, the managers in
these organizations have the autonomy to make any decisions without involving
their employees. This kind of power is a factor for unethical behavior, thus
presenting a challenge to ethical leadership within the organization. If
presented with a tough situation, the leader here is likely to resort to
unethical solutions provided it would get them out of the predicament and no
one would have the right or grounds to question them.
Corporate governance
refers to the system of checks and balances within an organization where the
shareholders, leaders, and employees are all organized to ensure effective
management of the company’s activities. A company with good corporate
governance is likely to have a comprehensive network of checks and balances at
every level of operation. This is done in order to ensure that all the
decisions being made are agreed upon by more than two individuals. Companies
whose corporate governance is somewhat flawed, are unable, however, to keep
their leadership in check as they tend to consolidate the decision-making powers at the top. In such
organizations, it is much easier for the leader to act unethically as they are
able to make autonomous decisions and follow-up decisions in order to cover up
their misconduct. This opportunity is yet another challenge to otherwise
ethical leader if presented with the right conditions.
Social constructs also impede ethical leadership by invoking the biases of the leader. For example, in the society where gift giving is acceptable, the business leader is likely to be affiliated with the entity that has the ability to offer the best or most expensive gift. The fact that this gift is given after the tender or partnership has been awarded further allows for justification, which is yet another primary factor in fraud and unethical behavior. This generally means that in order to eliminate unethical leadership, all these gift-giving expectations must be shunned so that business interactions are conducted based on merit and not on the partner’s gift-giving capacity.
Conclusion
Ethics are the foundation of great leadership and ethical leadership is essential for today’s leaders. This article presented the opportunity to understand the fundamental of ethical leadership, importance and the critical role that ethical behavior plays in every leadership position. This goes to show that when a leader and their company consistently do the right thing, employees will be aware of the foundations of their leadership. Management’s actions convey to the rest of the company that the leaders act with integrity. This, in turn, means employees will be more pro-active about communication, including when things go wrong. In addition, if employees recognize responsible leadership in their supervisors and the company, they are more likely to believe that they will receive fair treatment, will be motivated to live up to the company’s values and will be more willing to take extra-role responsibility and risks, resulting in the overall improvement of the organization’s performance – hence a closed reciprocal loop is formed between individuals and organizations.
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