What are the Most Important Aspects of Ethical Leadership for you and Why are these Important?

What are the Most Important Aspects of Ethical Leadership for you and Why are these Important?

Introduction

            In the 21st century, more than at any other time in history, ethics has become almost a mantra in the business world. This comes in the wake of various scandals in which company leaders have failed to conduct themselves with integrity, thereby resulting in the companies exhibiting irresponsible behaviour under their watch. At the same time, society has become increasingly impatient with the irresponsible and selfish actions of some of the leaders who are out to enrich themselves and their ilk while the rest continue to wallow in poverty. Therefore, commitment to ethical leadership within the organisation is a crucial expectation of the leadership of a company by civil society, governments, employees, shareholders, and activists.  This essay endeavours to explore the important aspects of ethical leadership that the author views as being important to them, and why they consider them to be important. These shall be discussed with reference to examples from the business world.

Ethics defined

            It is difficult to pin down a universal definition of ethics, seeing as different societies differ in terms of what they describe as acceptable behaviour. Nonetheless, ethics can be generally described as well-founded standards of wrong or right that prescribes the obligations, fairness, rights, and definite virtues of humans. For example, ethical standards entail such virtues as being compassionate, honest, and loyal. Margaret Walker, a moral philosopher, has defined ethics as "pursuing an understanding of morality, which provides an understanding of ourselves as bearers of responsibilities in the service of values" (2000, p. 89). Elsewhere, Johnstone (2002) is of the view that ethicists endeavour to "illuminate the processes by which... [moral] decisions are made in order to provide insight into the nature and conditions of competent moral judgement" (cited by Plaisance,2009, p. 8). These definitions point towards a close association between ethics and morality, in that ethics acts as a justification of that which we consider as being right (Plaisance, 2009). 

From an organisational context, ethics can be described as the issues and values considered as being important to the business and stakeholders. Freeman and Stewart (2006) describe ethics as an ongoing discovery, assessment, and reaffirmation of own principles and values. Most of the existing literature on ethics from an organisational context is largely described with respect to the ethical behaviour of the senior leaders (for example, CEOs), along with the culture that they subscribe to.  Ethics entails the "application of moral standards to business situations" (Pride, Hughes and Kapoor, 2009, p. 1).  Ethics in business is important because unethical behaviour by business owners and/or managers often affects their relationship with outcomes, employees, investors, competitors, and creditors. Each of these stakeholders in the business has specific concerns that need addressing when there are ethical issues involved in the business, and consequently, they usually exert pressure on the business.

Leadership

            Leadership refers to the ability to convince a follower to undertake the activities or things that the leader has established as goals.  Accordingly, leaders are charged with a crucial role in terms of directing an individual's behaviour towards the realisation of the set goals.  Leaders differ in terms of their individual style of leadership, and this is in turn dependent on personality characteristics. Certain leaders, especially transformational and charismatic leaders, possess individual qualities that enable them to engage employees effectively, even as others exert legitimate and positional power. Leaders also differ in terms of attitudes, conduct, values, practices, beliefs, and habits, and this is partly influenced by professional, organisational, or institutional culture.  Leadership is an indication of the relationships shared between a leader and his/her followers based on an organisational and situational setting.  Leadership demands a clear understanding of the organisation's values and vision, in addition to the risk and challenges of responsibility in the attainment of an organisation's goals (Swanson and Fisher, 2008).

Ethical leadership

Brown, Trevino and Harrison (2005) have defined ethical leadership as "The demonstration of normatively appropriate conduct through personal action and interpersonal relationships, and promotion of such conduct among followers through two-way communication, reinforcement, and decision-making processes." (p. 120).   Ethical leadership encompasses two main aspects. To begin with, ethical leaders are expected to act and make decisions based on ethics. Secondly, ethical leaders are expected to lead others in an ethical manner. This entails the manner in which they treat individuals in their daily interactions, in terms of how they encourage them, in their attitudes, and in their initiatives or actions to steer institutions or organisations in the right direction. Ethical leadership further involves visible and invisible components. The visible components of leadership refer to the way leaders treat those with whom they work, their statements, behaviours, and actions. On the other hand, invisible components of ethical leadership are to be found in the leader’s mindset, character, principles, and values that they subscribe to, in their decision-making process, as well as in their courage when faced with tough ethical decisions.  Ethical leaders are expected to remain so at all times, as opposed to when they are under scrutiny. They must consistently prove that ethics constitutes an important aspect of the philosophical and intellectual framework they rely on to relate to and understand the world. Ethical leadership aid in the realisation of the principles of business ethics.

According to Brown and Treviño (2006), ethical leaders denote integrity, altruism, and honesty, in addition to conducting themselves ethically even when they are faced with the pressure of adversity. Besides, ethical leaders also act as ethical role models to their followers by way of manifesting normatively suitable behaviours, not to mention treating others with respect and consideration (Brown et al., 2005). Brown and Treviño (2006) report that ethical leaders al sways endeavour to consider the effect of their choices while making decisions that could impact the well-being of the organisation, including individuals within and outside it.  Moreover, ethical leaders make fair decisions, and are also actively involved in advocating for normatively suitable behaviour by followers through clear communication of the ethical expectations, having their followers account for their unethical and ethical behaviour, and providing guidance to them (Brown and Treviño 2006).

 Ethical leadership has also been identified as revealing the willingness of employees to report the unethical behaviour of their colleagues (Shahidul, Wright and Yukl, 2014). Since ethical leaders tend to value transparent, honest, and open communication with followers, they are therefore more likely to listen carefully to concerns raised by their followers and are also likely to be highly receptive to their input. Conversely, there is a higher likelihood that employees would respect such leaders, in addition to viewing them as trustworthy. The openness of such leaders to various suggestions and ideas means that employees would be more comfortable in raising issues affecting them (Treviño, Brown, and Hartman 2003). Moreover, since ethical leaders exercise fairness while making decisions, their followers are likely to be receptive to the outcome of their decisions.

Important aspects of ethical leadership

            Ethical leadership within an organisation entails leading employees with a view to enabling them to build a good relationship that hinges on trust and respect. Moreover, effective leaders are convinced that acting with fairness, integrity, compassion, integrity, justice, and equity leads to the sustainable success of an organisation. These are some of the attributes of an ethical leader that I consider important in business, and which will be discussed below in more detail.  

Trust

            Trust is a key ingredient in various leadership theories, such as charismatic leadership and transformational leadership (Grover, Nadisic and Patient, 2015).  Robbins (2009) has identified trust (or lack of it) as a fundamentally crucial leadership issue in modern-day organisations. According to Robbins (2009), trust acts as a positive expectation that the other person shall not act opportunistically through their actions, words, or decisions. This is a very important parameter in leadership because leaders are expected by their followers to act with competence, openness, consistency, and integrity. In the same way, leaders expect that their followers will replicate these dimensions of trust while executing decisions and undertaking various activities within the organisation with competence, loyalty, and openness. Trust, therefore, goes both ways. An honest person is also truthful, which is an indication that they carry themselves with integrity. In this case, integrity is a much sought-after attribute of a business leader.  Fernando (2009) talks of a close relationship between business ethics and trust. In this case, the author is of the view that developing trust as a business leader calls for exercising ethical behaviour. In the same way, one must exercise ethical behaviour if at all they wish to gain trust. An employee is likely to trust their leader in case the leader in question is trustworthy and in case the leader displays such desirable characteristics of trustworthiness as kindness, acceptance, honesty, and generosity (Zeffane, 2010).

Ethical leadership entails various traits that are manifested in the trust relationships between a follower and a leader. Brown and Trevino (2006) note that ethical leaders are caring, principled, and honest individuals; who arrive at decisions in a balanced and fair manner. Ethical leaders also tend to communicate ethics to their followers, in addition to setting definite standards on how things ought to be carried out within the firm. According to Zhu, May and Avolio (2004), ethical leaders possess the courage to change their moral intentions into highly consistent ethical behaviour. Once employees perceive this consistency, they are likely to trust such leaders. Moreover, ethical leaders make sure that they involve employees in the various decision-making processes, in addition to facilitating the employees' potential growth and well-being (Zhu et al., 2004). Accordingly, employees are bound to trust such ethical leaders on account of their trustworthy behaviour and credibility. Ethical leaders also exemplify cognitive trust and affective trust. Cognitive trust refers to the kind of trust needed in case of imperfect knowledge, while affective trust refers to the emotional bond shared by individuals. According to Van den Akker et al (2009), there is a strong correlation between ethical leadership and the level of trust bestowed on them by their followers. Other scholars (for example, Johnson, Shelton and Yates, 2012) have also indicated that a positive relationship exists between organisational trust and ethical leadership. What this appears to suggest is that an ethical leader should also be trustworthy, and this is likely to impact the employees and the organisation positively.

Integrity

            I consider leaders who conduct themselves with integrity to be highly desirable for the realisation of the set goals of a business because, in the absence of commitment to integrity, it is very easy to compromise the ethical standards of a business (Longenecker et al., 2012). Integrity in the business world calls for a supportive organisational culture. Essentially, all employees and managers ought to instinctively deal with the various ethical issues facing them by just doing what is right. In order for an ethical culture to thrive in a business, it is important to have an environment that instills confidence in all employees that the organisation is fully committed to conducting its affairs in an honourable manner. Such an understanding largely hinges on strong ethical leadership. Peterson and Ferrell (2005) maintain that business leaders ought to truly understand their individual core values and sense of integrity. This is important because trust means ensuring integrity in the various activities of an organisations, and more so in the relationships between business leaders and the various stakeholders of an organisation (Peterson and Ferrell, 2005).

Should employees sense a disconnect between what their leaders say and do, this is likely to depress the employees' commitment, and trust, as well as a willingness to go that extra mile towards ensuring that the goals of the organisation are realised. Such negative effects are likely to increase employee turnover, reduce customer satisfaction, and harm the firm's profitability (Simons, 2002). Unethical behaviour and lack of integrity among leaders could lead to serious and extremely costly repercussions on the organisation, not to mention the individual behaving unethically and who lacks integrity. As a matter of fact, incredibly unethical behaviour could even mean the demise of a firm (Ireland, Hoskison and Hitt, 2008). The Enron case is a good example. In this case, Ken Lay, the founder of Enron, and Jeffrey Skilling, the CEO, acted opportunistically in managing the company. In other words, they managed the company with their individual best interests in mind first while making crucial decisions, as opposed to prioritizing the firm's best interests.  Enron, which was at one point the seventh-largest company in the United States, filed for bankruptcy in December 2001, a culmination of years of accounting tricks by the management to disguise failing ventures or huge financial debts with the aim of fooling shareholders. Although Enron's code of ethics hinged on integrity, respect, excellence, and communication, the senior management failed to live up to this code of ethics by acting opportunistically (Weiss, 2008).

Accountability

            Ethical leaders must also be accountable to the legal institutions affiliated with the business, the market, professional associations, company policies, the Board of Directors (BoD), and stakeholders (Belligham, 2003). According to Schweigert (2016), business leaders should be ready to partake in public ethical reflection of their being accountable to the organisation. Transparent leaders within an organisation must be seen to communicate in an honest, accessible, and open manner with their employees and other stakeholders. Transparency has ethical, environmental, and social impacts on the firm. Exercising transparency leads to reputation enhancement of the firm, and is hence an indication of the firm's ethical position to the various stakeholders, not to mention that it acts as a demonstration of the business leader's willingness to fulfill the demands of investors regarding performance information (Bachmann, 2016). Failure to exercise transparency by being honest and open regarding the firm and its practices could be harmful to the firm in that it could undermine its image. In this sense, therefore, transparency is morally correct, not to mention that it also makes a lot of sense from a business context. For example, a client who views an organisation as being truthful and honest might affect their decision of whether to do business with such a firm, or not, and this could have far-reaching implications on their overall satisfaction with the firm in question. Besides, transparency tends to improve the firm's credibility, the community's trust in them, as well as public trust.  Increased transparency among business leaders could also increase trust between firms. Conversely, reduced transparency is also likely to result in reduced trust (Kolb, 2008).

Credibility

Leaders who lack credibility are likely to create disengagement and distrust among employees. It could also affect productivity negatively. Moreover, a lack of credibility among business leaders might cause regulatory or reputational damage and could actually escalate into employee disloyalty. According to Leigh (2015), leader credibility undermines a company's efforts to develop strong brands, in addition to draining employee morale. For instance, should employees become uncaring, they are not likely to take pride in their work, and some may even share with the company’s customers an individual contempt for their leaders.  The credibility of ethical leaders is thus desirable if at they are to steer the organisation towards a realisation of its goals (V?duva et al., 2016). One leader who has come under scrutiny regarding their credibility is Van Beurden, the CEO of Shell. While he possesses a talent for high-flown rhetoric and powerful charisma, his ethical credential has come under the public spotlight, especially his stand on the significance of tackling climate change which is in conflict with what Shell is actually doing (Leigh, 2015). 

Taking responsibility

            Ethical leaders assume responsibility for all that takes place in the organisations under their watch, be it directly due to their actions, or indirectly. According to Foster III et al. (2000), leaders who assume responsibility for their actions and those of others under them end up winning the trust of their followers. However, ethical leaders cannot always be relied on to make a very ethical decision that involves the firm themselves. As a matter of fact, the employees rather than the management are involved in many of an organisation’s day-to-day decisions. Employees time and again encounter organisational opportunities and pressures in their workplace to partake in ethical misconduct or conduct. Considering that employee decisions have far-reaching implications on a firm, it is important therefore that ethical leaders empower their employees to take part in making ethical decisions but more importantly, assume responsibility for how they conduct themselves (Ferrell, Fraedrich, and Ferrell, 2016). I remember back in high school, a new student in our dormitory was attacked by certain students who had disguised themselves in the wee hours of the night. They beat him up in his sleep, and he sustained serious injuries.  The commotion woke us up by we could not catch the culprit, even after launching a manhunt. The dorm prefect reported the matter to the disciplinary master as was the protocol, and offered to resign because such an action was unheard of in the history of the school, not to mention that it took place under his leadership. This experience taught me an important lesson in life namely, that when we are in positions of leadership, we should be ready to take responsibility for anything good or bad that comes about and which relates to our work for which we have been appointed. 

            Ethical leaders are fully aware that finger-pointing and the blame game is a clear indications of failed leadership. A good example of a leader who tried to shift the blame on others when things did not work out as they had expected is Martin Winterkorn, the former CEO of Volkswagen, after the firm was caught knowingly cheating on emission tests (Tuffley and Antonio, 2015).  Queen (2015) outlines how Volkswagen knowingly programmed thousands of its cars running on diesel in a bid to cheat emissions testing. Such behaviours are outrageous and call for sanctions, correction, and restitution. By fraudulently misrepresenting the company's automobiles from what they really were, Volkswagen deliberately lied to the very people who were looking up to them for a duty of honesty. The company's CEO exacerbated the wrongdoing by the company in his response. Marting Winterkon by claiming that he was not aware of the actions taken by his engineers, was actually alluding to his failure as a leader and his level of incompetence (Queen, 2015). 

Accepting to be challenged

            Ethical leaders are not afraid to have their judgement challenged by their subordinates, and neither do they fear disagreeing with them. Only leaders who have a high level of tolerance and great understanding can do this. Ethical leaders are fully aware that being challenged by their juniors is part of a continuous improvement culture. They do not also extend their stay at the firm more than is necessary. Ethical leaders will typically groom successors to take over from them when they are gone (Tuffley and Antonio, 2015). More importantly, they know when it is the right time to call it quits, preferring to leave on a high as opposed to having to push to leave the firm. According to Llopis (2013), the modern-day uncertain workplace demands that leaders also pay close attention to their followers. This involves among others, being attentive and active listeners, appreciating the unique capabilities and talents of their subordinates, and practicing patience. They should not also afford to take risks or admit wrongdoing. Ethical leaders are bold enough to alter the status quo to enhance the firm's competitive advantage. They do so by anticipating a paradigm shift in business operations and being courageous enough to take timely action about it (May and Avolio, 2004). They do not also hesitate to make thought decisions, even if it means putting their jobs and reputation on the line. They know that they have to take charge of the situation and humbly accept the outcome. My uncle worked as a delivery man at a local media house where he had served diligently for more than 10 years. He was approached by an acquaintance of his who had formed a mining company and offered him the position of head of security. The new job paid three times what he was getting at his old company, in addition to a hefty insurance cover and car allowance. However, he was required to report within a week's time to start training, while his contract stated that he had to serve the company with a month's notice before leaving. His boss was adamant that he follows the rules to the letter but I pleaded with his boss to have him accept an able replacement for the remainder of the month as he went on training. The boss reflected on the offer and agreed to it considering that my uncle had been a diligent worker for nearly a decade. This is a clear indication that he was willing to listen to the opinions of his subordinate, who offered a better and workable plan to salvage the situation.

Conclusion

            In sum, ethical leadership is a rare gem to find in modern-day organisations. Ethics in leadership demands that managers should engage in activities that put the best interests of the company first, and not their individual interests. However, the number of corporate scandals witnessed over the past two decades, including Enron and Volkswagen indicate that the top leadership is often aware that the company is engaging in unethical behaviour but does not report it or take responsibility. This is a clear indication of a lack of credibility and accountability on the part of the leaders. Ethical leaders are not afraid to take risks that will enable the firm realise its set goals but at the same time, they should be ready to take responsibility for the outcome of a firm's actions, whether they were directly involved, or indirectly involved.  Above all, ethical leaders must go about their activities within the organisation with competence, openness, and loyalty so that they can win the trust of their subordinates, the owners, and even the competition. This would go a long way in improving the company’s competitive advantage.

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