Ethical Leadership is leading by knowing and doing what is right. The problem with ethical leadership is that it is difficult to define “right”. Ethical leadership is divided into two parts. The leader must act and make decisions ethically, and second, the leader must also lead ethically in their attitudes and interactions13.
Traditionally, the view of leadership has been that the main goal of leaders is to increase production and profits7. The traditional view of leadership is slowly diminishing, as more theorists in the 21st century are asserting that leaders also have the responsibility for ensuring standards of moral and ethical conduct1. Good leadership refers not only to competence, but to ethics and transforming people as well6.
All leadership is responsible for influencing followers to perform an action, complete a task, or behave in a specific manner 6. Effective leaders influence process, stimulate change in subordinate’s attitudes and values, augment followers’ self-efficacy beliefs, and foster the internalization of the leaders’ vision by utilizing strategies of empowerment6. It is believed that the nurturing aspect of leaders can raise organizational cultures and employee values to high levels of ethical concern6. Ethical leadership requires ethical leaders6. If leaders are ethical, they can ensure that ethical practices are carried out throughout the organization.
Leaders who are ethical demonstrate a level of integrity that is important for stimulating a sense of leader trustworthiness, which is important for followers to accept the vision of the leader7. These are critical and direct components to leading ethically4. The character and integrity of the leader provide the basis for personal characteristics that direct a leader’s ethical beliefs, values, and decisions7. Individual values and beliefs impact the ethical decisions of leaders9.
Leaders who are ethical are people-oriented7, and also aware of how their decisions impact others8, and use their social power to serve the greater good instead of self-serving interests7. In ethical leadership it is important for the leader to consider how his or her decisions impact others7. Motivating followers to put the needs or interests of the group ahead of their own is another quality of ethical leaders3. Motivating involves engaging others in an intellectual and emotional commitment between leaders and followers that makes both parties equally responsible in the pursuit of a common goal4. These characteristics of ethical leaders are similar to inspirational motivation, which is a style component of transformational leadership2. Inspirational motivation “involves inspiring others to work towards the leader’s vision for the group and to be committed to the group”7. Similarly, ethical leadership “falls within the nexus of inspiring, stimulating, and visionary leader behaviors that make up transformational and charismatic leadership”4. Ethical leaders assist followers in gaining a sense of personal competence that allows them to be self-sufficient by encouraging and empowering them7.
Characteristics of Ethical Leaders
Ethical behavior, in its simplest terms, is knowing and doing what is right. The difficulty is in defining “right.” Different individuals, different cultures, and different religions define it in different ways. The accepted treatment of women and attitudes toward slavery in different cultures and at different times in history provide prime examples of how what’s “right” can vary.
Ethical leaders distinguish themselves by doing that which is inconvenient, unpopular, and even temporarily unprofitable in the service of long-term health and value. They view the world as interconnected and develop multidisciplinary solutions to address complex problems that crop up every day. Rather than automatically extending payment terms to a supplier during economic busts, for example, ethical leaders consider the financial stability of the supplier, potential negative impacts to the supplier (as well as to the supplier's employees and its suppliers—and to the company itself) if payment terms are elongated.
Ethical leaders also consider other solutions (e.g., sharing best practices with suppliers) that may require an investment but generate more value over the long term. Ethical leaders extend trust to their workers, creating the conditions necessary to empower employees, suppliers, and even customers to take the risks necessary to create game-changing innovations. The Ritz-Carlton's leadership team allows each employee to spend up to $2,000 to address customer issues at his or her own discretion (an example I will expand upon in my next column). What's more, ethical leadership is a renewable human resource and, for this reason, represents one of the most efficient and practical assets an organization can put to use.
Ethical leadership in organizations
In organizational communication, ethics in leadership are critical. Business leaders must make decisions that will not only benefit them, but also they must think about how the other people will be affected (Stansbury 33). The best leaders demonstrate and clarify their values and their ethics and preach them in their leadership style and actions. These actions consists of communicating complete and accurate information, where there is a personal, professional, ethical, or legal obligation to do so (McQueeney 165). When leaders practice ethics, they gain the respect and admiration of employees, with the satisfaction of knowing they are making the most moral choice. If a leader never makes their actions or choice clear to others, those choices can be seen as a sign of mistrust.
Unethical actions in the workplace includes anything from taking personal phone calls while at your desk, to lying about the status of a payment, to taking office supplies for your personal use. Most organizations have an ethical code, which is usually a list of rules that tells you what behaviors are acceptable and what are wrong in the workforce.
For your organization, you might want to let employees know your values right off the bat. Such values can be, teamwork, ambition, honesty, efficiency, quality, accomplishment, and dedication.
A real world example of lack of ethical leadership was the structure of Enron. According to Seeger and Ulmer, which is noted in Organizational Communication: Perspectives and Trends by Michael J. Papa, Tom D. Daniels and Barry K. Spiker, this is the best way to understand the company's ethical failures.
Enron Corporation is an energy company that turned into a huge enterprise. In 2001, the company collapsed due to scandals and bad leadership. The reason why they failed was due to the fact that the company had no assets related to energy. Enron was able to legally offer fuel at a set price for future years, when they had no control over the future price. Even though there were no legal obligations, executives at Enron ran the company until fuel cost them more to purchase than what customers bought it for.
The conclusion to the Enron case, according to Wee Heesun, is that intelligent CEOs will realize that an honest, transparent, and trustworthy culture is an effective way to do business. In addition to its efficiency, it also boosts employee morale and ultimately guards shareholder value.
Opposing perspectives surrounding ethical leadership exist. The perspectives of ethical leadership summarized above present a social learning view that involves role modeling and promotes normative and ethically appropriate conduct that is demonstrated in the decisions that leaders make4. Contrasting perspectives focus on the leaders’ cognitions and actions, and assert that ethical leadership is demonstrated through multiple levels of psychological processes7 that impact behavior and not social learning.
- Seidman, Dov. "Ethical Leadership: An Operating Manual". Bloomberg Business Week. Retrieved 1 December 2013.
- Barnard, C. I. (1938). The functions of the executive. Cambridge: Harvard University Press.
- Bass, B. M. (1985). Leadership and performance beyond expectations. New York, NY: Free Press. # Bonner, W. (2007). Locating a space for ethics to appear in decision-making: Privacy as an exemplar. Journal of Business Ethics, 70, 221-234.
- Brown, M. E., Trevino, L. K., & Harrison, D. A. (2005). Ethical leadership: A social learning perspective for construct development and testing. Organizational Behavior and Human Decision Processes, 97, 117-134.
- Dirks, K. T., & Ferrin, D. L. (2002). Trust in leadership: Meta-analytic findings and implications for research and practice. Journal of Applied Psychology, 87, 611- 628.
- Reilly, E. C. (2006). The future entering: Reflections on and challenges to ethical leadership. Educational Leadership and Administration, 18, 163-173.
- Resick, C. J., Hanges, P. J., Dickson, M. W., & Mitchelson, J. K. (2006). A cross-cultural examination of the endorsement of ethical leadership. Journal of Business Ethics, 63, 345-359.
- Trevino, L. K., Brown, M., & Hartman, L. P. (2003). A qualitative investigation of perceived executive ethical leadership: Perceptions from inside and outside the executive suite. Human Relations, 56(1), 5-37.
- Watts, T. (2008). Business Leaders’ Values and Beliefs Regarding Decision Making Ethics. Los Angeles, CA: LULU.
- Papa, M.J., Daniels, T.D., Spiker, B.K.(2008). Organizational Communication: Perspectives and Trends. Los Angeles, CA: SAGE Publications.
- McQueeny, E.(2006). Making Ethics Come Alive. Business Communication Quarterly, 69(2), 158-170
- Wee, H. Corporate Ethics: Right makes might. Business Week Online.
- Stansbury, J.(2009). Reasoned Moral Agreement: Applying discourse ethics within organizations. Business Ethics Quarterly. 19(1), 33-56.
- Rawls, J. (1971). A Theory of Justice. Belknap Press of Harvard University Press. 28, 55-75.
- Seidman, D. (2010), Bloomberg Business Week. Ethical Leadership: An Operating Manual. 10, 1-2.