Situational theory of leadership : A key to leadership effectiveness and flexibility

 

Sheena Mae P. Palaspas

Divine World College of Laoag, Ilocos Norte, Philippines

Abstract 

As Albert Einstein once said, “the measure of intelligence is the ability to change”. This is all too relevant in all organizations because if you are not changing, you are not growing. In the beginning, leadership style was only limited in two extremes: the autocratic (directive) style and the democratic (supportive) style. Autocratic leaders used position power and their authority to get results while democratic leaders used personal resources (power) and involved others in participative problem-solving and decision-making (Anonymous, 2014).  But in modern times, the mode of business, culture exchange, and communication have been improved and developed, which then changed the corporate world and all organizations at a very fast pace.

The emergence of people from different backgrounds, cultures, and nature into a single platform increases the need for leader-managers to be fully engaged to handle diverse criticalities in every situation. Thus, the leader-managers need to know the importance of being able to choose and adopt certain leadership styles to be adept with all kinds of changes and be able to maintain job satisfaction, influence, and growth that is needed by every employee in the organization. This article discusses the definition of situational leadership, a brief discussion on the description of the different situational theories of leadership, and focuses on achieving leadership flexibility.

 

Keywords: leadership, situation, situational leadership theory, flexibility

 Introduction

Situational leadership is a leadership theory that merges both directive and supportive dimensions, and each of these dimensions is needed to be applied correctly in a given situation. Leaders operating under the situational leadership theory have to assess their employees by evaluating their commitment to accomplish a certain task. (Ghazzawi, K., Shoughari, R.E., Osta, B.E., 2017). Situational leadership means that leaders have to change the degree of supportiveness and directness to their employees according to the given situation of subordinates and their level of motivation. This type of leadership demands that leaders vary their behavior and leadership style according to their subordinate’s commitment (Kindle, 2009). Situational leadership is a mixture of task behavior, worker commitment, and relation behavior. A situational leader tries to discover the characteristics of his follower to know which leadership style to use (Farmer, 2012)

Psychologists assumed that there is no optimal profile for a leader that exists, and no leader got the same characteristics as others. Therefore, different situations should be handled differently since every situation has its characteristic (Milternberger, 2011). Today’s leaders can no longer lead solely based on positional power but it is now dependent on the diversity of a given situation. Leadership is directly affecting the behaviors of communities, groups, and followers. Many theories evolved, giving birth to the different styles of leadership, and each one of these styles leads to a distinct behavior inside the organization.

Situational Leadership Models

The situational theories put emphasis not only on the personal qualities or traits of a leader but also on the situation in which he operates. A good leader is the one who molds himself according to the needs of a given situation. The following theories have been developed to recognize the situational aspects of leadership. Each theory attempts to provide an analysis of how leadership can be most successful in various situations.

 

A.     Fiedler’s Contingency Model:

Fiedler’s theory assumes leaders are predisposed to a particular set of leadership behaviors. Leaders are either task-oriented or relationship-oriented. Task-oriented leaders are directive, structured in all types of situations, sets deadlines, and focuses on making task assignments. While relationship-oriented leaders focus on people, they are considerate and are not strongly directive (Sinha, K. (2004).  

 

Fiedler suggested that three major situational variables determine whether a given situation is favorable to leaders and these are:

1.      Leader-member relations: Refers to the personal relations with the members of their group. Leader-member relations describe the quality of the relationship between subordinates and the leader. This dimension includes the amount of trust between the leader and the subordinates and whether the leader is liked and respected by the subordinates or not.

2.      Task structure: Refers to the degree of structure in the task that their group has been assigned to perform. Task Structure describes the extent to which the work is well defined and standardized or ambiguous and vague. When the task structure is high, the work is predictable and can be planned. A low task structure describes an ambiguous situation with changing circumstances and unpredictable events.

3.      Position power: Refers to the power and authority that their position provides. Position Power refers to the formal authority of the leader. A situation with high position power lets the leader hire people and directly reward or punish behavior. A leader with low position power cannot take such actions. In the latter situation, policies may constrain the leader from using any rewards or punishments.

 

Fiedler defined the favorableness of a situation as “the degree to which the situation enables the leader to exert influence over the group.” The most favorable situation for leaders to influence their groups is one in which they are well-liked by the members (good leader-member relations), have a powerful position (strong position power), and are directing a well-defined job (high task structure). On the other hand, the most unfavorable situation for leaders is one in which they are disliked, have little position power, and face an unstructured task. (Chand, S., 2020).

 

B.     Hersey-Blanchard Situational Model:

This model is based on any empirical studies of Hersey and Blanchard that the leader has to match his style with the needs of maturity of subordinates which moves in stages and has a cycle (Cherry, K., 2019). This model is also known as life cycle theory of leadership and is based on interaction among three factors or variables:

1.      Task Behavior: refers to the extent to which leaders are likely to organize and define the roles of the members of their group and to explain what activities each is to do and when, where and how tasks are to be accomplished, characterized by endeavoring to establish well-defined patterns of organization and ways of getting jobs accomplished.

2.      Relationship Behavior: Refers to the extent to which leaders are likely to maintain personal relationships between themselves and members of their group by opening up channels of communication providing socio-emotional support, active listening, and psychological strokes and facilitating the behavior.

3.      Maturity Level: Maturity is the capacity to set high but attainable goals plus the willingness and ability to take responsibility and to use education and/or experience. Ability refers to the knowledge and skills of an individual to do the job and is called Job Maturity. Willingness refers to psychological maturity and has much to do with the confidence and commitment of the individual. People tend to have varying levels of maturity depending upon the specific task, function, or objective that they are attempting to accomplish.

 

These are defined as the four stages of followers’ readiness(R):

1.      R₁ – People are both unable and either unwilling or too insecure to take responsibility to do something. They are neither competent nor confident.

2.      R₂ – People are unable but willing to do the necessary tasks. They are motivated but currently lack appropriate skills.

3.      R₃ – People are able but unwilling or are too apprehensive to do what the leader wants.

4.      R₄ – People are both able and willing to do what is asked of them. They are at a very high level of maturity.

 

According to Hersey and Blanchard, as the level of subordinate maturity increases in terms of accomplishing a the specific task, the leader should begin to reduce task behavior and increase relationship behavior. As the subordinate moves into the above-average level of maturity, the leader should decrease both task and relationship behavior. At this level of maturity, there is a reduction of close supervision and an increase in the delegation as an indication of trust and confidence.

The theory indicates that effective leadership should shift as follows:

Ø  Stage I → High task and low relationship behavior.

Ø  Stage II → High task and high relationship behavior.

Ø  Stage III → High relationship and low task behavior.

Ø  Stage IV → Low task and low relationship behavior.

 

Thus, to be effective, the manager’s style must be appropriate for each maturity level to his subordinates. According to the levels of maturity of subordinates, there are four styles’ of leadership:

1.      Telling Style (specific guidance and close supervision): Telling style emphasizes directive behavior. It is the high task and low relationship behavior stage, where the subordinates have low maturity i.e. neither they can do nor they are willing to do. These leaders make decisions and communicate them to others. They create roles and objectives and expect others to accept them. Communication is usually one way. This style is most effective in a disaster or when repetitive results are required.

2.      Selling Style (explaining and persuading):  In the second stage, which is marked by high task and high relationship behavior, subordinates require both supportive and directive behavior. Selling leadership style is appropriate for subordinates of moderate maturity i.e. high willingness but lack of ability. These leaders may create the roles and objectives for others, but they are also open to suggestions and opinions. They “sell” their ideas to others to gain cooperation.

3.      Participating Style (sharing and facilitating): In the third stage, participating style of leadership will be effective because it is a high relationship and low task behavior stage. Subordinates, in this stage, have high to moderate maturity i.e. who can do but lack the willingness to do. Thus, a high external motivating force is needed to motivate such subordinates. These leaders leave decisions to their followers. Although they may participate in the decision-making process, the ultimate choice is left to employees.

4.      Delegating Style (letting others do it): In the fourth stage, of a low task and low relationship behavior, delegating style of leadership is suitable. Subordinates in this stage are at a very high level of maturity, i.e. they have the ability as well as a willingness to work. Thus, they hardly require any leadership support. These leaders are responsible for their teams, but provide minimum guidance to workers or help to solve problems. They may be asked from time to time to help with decision-making.

Hersey-Blanchard’s model is simple and appealing. It helps the managers to determine what they should do and in what circumstances. This model has provided a training ground for developing people in organizations.

 

C.     House’s Path-Goal Theory:

Path-goal theory sees the leader’s role is one reason that is affecting a subordinate’s motivation to reach the desired goals. It states that a leader’s job is to create a work environment (through the structure, support, and rewards) that helps employees reach organizational goals. Two major roles involved are: to create a goal orientation and to improve the path towards the goal.

 

According to this theory, leaders are effective because of their impact on (followers’) motivation, ability to perform effectively, and satisfactions. The theory is called Path-Goal because its major concern is how the leader influences the (followers’) perceptions of their work goals, personal goals, and paths to goals attainment. The theory suggests that a leader’s behavior is motivating or satisfying to the degree that the behavior increases (followers’) goal attainment and clarifies the paths to these goals (Sinha, K. (2004).

 

Path-goal theory proposed the following four leader behaviors.

1.      Directive: Directive leader behavior focuses on what must be done when it must be done and how it must be done. This behavior clarifies performance expectations and the role of each subordinate in the workgroup.

2.      Supportive: Supportive leader behavior includes concern for subordinates as people and the needs they are trying to satisfy. Supportive leaders are open, warm, friendly, and approachable.

3.      Participative: Participative leader behavior includes consultation with subordinates and serious consideration of subordinates’ ideas before making decisions.

4.      Achievement-Oriented: Achievement-oriented leader behavior emphasizes excellence in subordinate performance and improvements in performance. An achievement-oriented leader sets high-performance goals and shows confidence in peoples’ abilities to reach those goals.

 

Each of the above leadership styles works well in some situations but not in others. While exercising leadership styles the leader must consider two groups of situational variables-characteristics of subordinates and work environment.

 

Characteristics of Subordinates:

Subordinate characteristics are one set of situational variables that moderate the relationship between leader behavior and the outcome variables of subordinate satisfaction and effort. Personal characteristics of employees partially determine how they will react to a leader’s behavior. For example, internally oriented employees, who believe they can control their behaviors, prefer a supportive leader. But externally oriented employees, on the other hand, prefer a directive leader as they believe that fate controls their behavior. Finally, individuals who feel that they have high levels of task-related abilities may not respond well to directive leader behavior. Instead, they may prefer an achievement-oriented style of leadership.

 

Characteristics of Work Environment:

Three broad aspects are considered in the work environment:

1.      Subordinates task-structured or unstructured,

2.      Formal authority system and

3.      Primary work group-its characteristics and stage of development.

 

These aspects of the work environment influence subordinate’s behavior concerning a particular leadership style. If the subordinates are working on a highly unstructured job characterized by a high degree of ambiguity in roles, they will require directive leadership behavior. Subordinates working in a low ambiguity situation can see what must be done and how to do the task. Directive leadership in this case will be redundant; rather it could reduce satisfaction and motivation. A better leadership style in this situation will be supportive.

 

Thus, the theory proposes that there is nothing like the best leadership style appropriate in all situations. Appropriate style is one that helps the subordinates cope with the environmental ambiguity. A leader who can reduce uncertainties of the task and sets clear paths is considered to be satisfying because he increases the expectations of the subordinates that their efforts will lead to desired results.

 

D.     Vroom-Yetton and Jago’s Contingency Model:

The contingency model developed by Victor Vroom and Phillip Yetton is based on a model commonly used by researchers who take a contingency approach to leadership. Vroom and Yetton were later joined by Arther Jago in the development of this model which emphasizes the role played by leaders in making decisions.

 

The model focuses on the degree to which employees should be allowed to participate in decisions. Three factors that are to be considered for this purpose are decision quality, decision acceptance and decision timing (Jago, A.G., Vroom, V.H., 2007).

1.      Quality of a decision is highest when the best alternative is chosen, independent of the effects that may be associated with the necessity that the decision is accepted by subordinates.

2.      Decision acceptance is important whenever a decision has implications for subordinates’ work motivation and whenever a decision must be implemented by subordinates.

3.      Decision timing plays an important role whenever timing uses constraints on decisions.

 

The Vroom-Yetton model is based on the assumption that situational variables interacting with personal attributes or characteristics of the leader result in leader behavior that can affect organizational effectiveness. According to Vroom Vetten and Jago model leaders with multiple subordinates have five basic decision styles available:

1.      AI. The leader makes the decision or solves the problem himself, using information available to him at the time.

2.      All. The leader obtains the information from his subordinates, then decide on the solution to the problem himself. The subordinates act only as of the information source. They may not be told what the problem is while getting information from them.

3.      CI. The leader shares the problem with the subordinates individually, getting their ideas and suggestions without bringing them together as a group. Then he makes the decision that may or may not reflect the influence of the subordinate.

4.      CII. The problem is shared with the subordinates as a group, collectively obtaining the ideas and suggestions. Then, the leader makes the decision that may or may not reflect the group’s influence.

5.      GII. The leader and subordinates meet as a group to discuss the problem, and the group makes the decision. The manager accepts and implements any solution which has the support of the entire group.

 

The Vroom-Vetten-Jago-decision model of leadership provides the leader with, in effect, a decision tree to help him choose an effective decision-making style. The decision process involves answering a lot of questions about the nature of the problem. After working his way through the decision tree, the leader selects the style that is most appropriate for the situation. The following questions relating to the problem attributes include:

a.       Is there a quality requirement such that one situation is likely to be more rational than another? (Quality Requirement)

b.      Does the leader have sufficient information to make a high-quality decision? (Leader’s information)

c.       Is the problem structured? (Problem structure)

d.      Is acceptance of the leader’s decision by the subordinates critical to effective implementation? (Commitment requirements)

e.       If the leader were to decide by himself, will it be accepted by the subordinates? (Commitment probability)

f.       Do subordinates’ share the organizational goals to be obtained in solving the problem? (Goal congruence)

g.      Does conflict among subordinates likely to occur in preferred solutions? (Subordinate conflict)

 

Despite some criticisms and limitations of these situational leadership theories, we cannot deny that it has made a significant contribution to the present leadership approaches. From these leadership models and styles, we can say that there is no absolute model that can be used in an organization because every employee in an organization is diverse and each needs a different form of management and leadership style to be applied to bring out the best in them

The difference between situational leadership and other leadership styles is that situational leadership incorporates many different techniques. The style of choice depends upon the organization’s environment and the competence and commitment of its followers. Thus, leaders must weigh many variables in their workplace and choose the leadership style that best fits their goals and circumstances.

Flexibility in Leadership

Flexibility is an increasingly important trait in a rapidly changing economic and social environment. Flexible leaders are those who can modify their style or approach to leadership in response to uncertain or unpredictable circumstances (Anderson, B. 2011). Besides, flexible leaders can adapt to changes as they come. They can revise their plans to incorporate innovations and overcome challenges, while still achieving their goals. Flexibility is not only about surviving and thriving in new situations. Adaptable leaders can also implement new behaviors into old, existing situations. This allows them to express creativity in their work and find new ways to solve problems. Flexibility is the willingness to try new behaviors, regardless of whether one is currently undergoing a time of change in their company (Yukl, G. & Mahsud, R. 2010).

 

Concerning this, we can say that situational leadership is more of a flexible leadership approach. It is a relationship-oriented leadership and bases the directives of the leader on the ability and readiness of the followers. To get through the situation, the leader must develop a good relationship or rapport with the team members so that he can understand their state of mind when receiving directions for the tasks they need to complete. Situational leadership also evaluates the maturity levels of the people within the organization as well as the tasks they are set and their level of competency (World, T.E. 2019). It would be suicide to introduce a novice and let them get on with a highly complicated task that requires years of training to become competent in. This person would soon become unhappy, stressed, and demotivated. In the same way, it will detriment the productivity and morale of a team member who is so competent at a task that they can easily do it quickly, efficiently, and competently, but they are still being micro-managed. This scenario will lead to feelings from the individual of being stifled in development and not trusted for every task given (Anonymous, 2016).

 

Furthermore, situational leadership involves right thinking and right working in the situation prevailing with competency and commitment; and in “doing” things right, turning around situations if necessary, and obtaining better performance from people for results.  In other words, he adopts various developmental and supporting style, with flexibility and commitment, and integrity in all kinds of situations.

 

With these, it is important to note that, being open to new behaviors is not enough to make an effective flexible leader in addressing a certain situation. Thus, leaders need to recognize first the situations in which their old behaviors are not working. Next, they need to decide how to approach the problem, including what new behaviors or approaches are feasible, and which will accomplish their goals within the restraints of their situation. Finally, once a new path is decided upon, flexible leaders need to be able to assess the current success and progress of their new behaviors and re-evaluate or further modify unsuccessful behaviors.

Flexibility is critical for effective leadership to take place. The critical thing to do is to lead and manage individuals effectively so they can work in harmony with the team and achieve the objectives set. It is also imperative for leaders to appropriately respond in the constantly evolving working environment and to sharpen their ability to determine which leadership style is needed to be applied to a specific scenario. This is where good leaders stand apart, they are the ones who assess and analyze the situation first and the behavior of employees before acting on it the way things need to be done.

Conclusion

Situational leadership can be used as a framework to give leaders the guidance that they need to coach their people throughout the performance coaching cycle. The discussed situational theories of leadership suggest that there is no ‘one size fits all’ style suited to every situation and there is no single leadership style that is the best (Heatley, S. 2018). Determining the best-suited type of leadership and strategies are dependent on the varying task and situation that is present. The most effective leaders are those that can adapt their style to the situation, collaborate available leadership styles, and look at the cues such as the type of task, the nature of the group, and other factors that might contribute to getting the job done. When choosing a leadership style, it is important to understand the different frameworks, so you can develop your way of becoming a flexible and effective leader.

A successful situation leader effectively partners with people within the organization. He set clear goals and can enlist the right support and advice from others. He builds teams and task-forces of people with commitment around him. Utilizing and building upon the human resources offering entrepreneurial skills and capabilities. Knowing that everyone has some peak performance potential, the leader needs to know where they are coming from and meets them there for results. 

There are no good and bad leadership theories, but there are leadership styles that work best for certain situations, tasks, and people (Chris, J. 2015).  To be an effective and flexible leader, regardless of one’s leadership approach or style that is adopted, one must be able to assess first the current situation properly, choose and apply the best style for the situation at hand and review and re-evaluate one’s choice continuously to address any loopholes in the current leadership style being used.  Much like a chameleon that can quickly change their color to suit their surroundings to survive and thrive, a leader must be able to quickly change their style to suit their surroundings to influence and lead others. Successful leadership requires the ability to quickly make changes to lead in ways that work for their followers. To do this, leaders should use a multi-directional model to ensure they communicate effectively and adopt the right style of direction that a follower requires to complete any given task.

References

 

Anderson, B. (2011). Great Leaders Are Flexible. Retrieved from https://www.sigmaassessmentsystems.com/flexible-leader/. Retrieved on July 31, 2020.

GBS-Corporate. (2014). What Is Situational Leadership? How Flexibility Leads to Success. Retrieved from https://www.gbscorporate.com/blog/situational-leadership-how-flexibility-leads-to-success. Retrieved on August 1, 2020.

Educational Business. (2016). Situational Leadership Theory: Providing Leadership through Flexibility. https://www.educational-business-articles.com/situational-leadership-theory/. Retrieved on August 1, 2020.

Chand, S. (2020). Situation leadership theory: a test from three perspectives. Retrieved from https://www.yourarticlelibrary.com/leadership/situationalcontingency-approaches-to-leadership/28007. Retrieved on August 8, 2020.

Cherry, K. (2019). The Situational Theory of Leadership. Retrieved from https://www.verywellmind.com/what-is-the-situational-theory-of-leadership-2795321. Retrieved on August 8, 2020.

Chris, J. (2015). 6 Situational Leadership Style Examples. Retrieved from http://www.josephchris.com/6-situational-leadership-style-examples. Retrieved on July 31, 2020.

Farmer, L. (2012). Situational Leadership: A model for leading telecommuters. Journal of Nursing Management.

Ghazzawi, K., Shoughari, R.E., Osta, B.E., (2017). Situational Leadership and Its Effectiveness in Rising Employees Productivity: A Study on North Lebanon Organization. Retrieved from http://article.sapub.org/10.5923.j.hrmr.20170703.02.html. Retrieved on: August 8, 2020

Heatley, S. (2018). What is situational leadership and why is it hot right now?. Retrieved from https://www.perkbox.com/uk/resources/blog/what-is-situational-leadership-and-why-is-it-hot-right-now. Retrieved on July 31, 2020.

Jago, A.G., Vroom, V.H., (2007). The Role of the Situation in Leadership. Retrieved from http://web.mit.edu/curhan/www/docs/Articles/15341_Readings/Leadership/Vroom_Jago_2007_The_role_of_the_situtation_in_leadership.pdf. Retrieved on July 31, 2020.

Kindle. (2009). Leadership: Theory and Practice. Kindle Edition.

Milternberger, R. (2004). Behavior Modification Principles and Procedures. Behavior Modification. (p 74-150)

Sinha, K. (2004). Situational Contingency Theory of Leadership (With Diagram). Retrieved from https://www.yourarticlelibrary.com/leadership/situational-contingency-theory-of-leadership-with-diagram/64024. Retrieved on August 8, 2020

World, T.E. (2019). Situational Leadership and How Flexibility Leads to Success. https://www.theenterpriseworld.com/situational-leadership-and-how-flexibility-leads-to-success/. Retrieved on July 31, 2020.

Yukl, G. & Mahsud, R. (2010). Why flexible and adaptive leadership is essential. Consulting Psychology Journal: Practice and Research, 62(2), 81-93.

 

 

The need for ethical leadership in organization

Elma Ocampo Gabriel, BSBA-MA MAPA Ph.D. major in Development Management Divine Word College of Laoag Laoag City, Ilocos Norte, Philippines

“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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