By Nguyen Thi Thuong

The global business world has experienced numerous ethical issues in business that have devastating impacts on business performance. Ethical leadership is related to the behavior and virtuousness of leaders (Ko 2018, p.120). For that reason, making leadership decisions involves implicit or explicit ethical issues. Some of the companies involved in ethical issues with their leadership are United Airlines, Equifax, and Google.

Considering Equifax, the company faced an ethical scandal where hackers stole consumer data from more than 148 million of its customers due to an old security system (Primoff & Kess 2017, p 14-17). Even after the scandal, the company delayed reporting about stolen data for two months. The Equifax CEO resigned after two months of the consumer data breach. However, the main question remains how the company never communicated to its customers allowing their data to circulate for two months before confessing to the issue.

Characteristics of Ethical Leaders

Some of the standard leadership ethics are responsibility, honesty, loyalty, and integrity. The principal theories of ethics include:

Two Principles of Ethics

What do ethical leaders do, and how do they do it?

Ethical leaders create trust in vendors and business partners by ensuring the company is complying with ethical codes of business operation and respects competitors’ way of running their business.

Ethical leaders give workers more freedom to perform their tasks by conducting less micromanagement. Notably, workers performed at their level best when they were given the freedom to be themselves and mentored where the need arose.

Ethical leaders instill positive culture and boost employees’ performance and morale. By doing so, an organization grows its production and revenue.

Ethical leaders attract professional employees. According to current statistics, 79 percent of employees depicted that they are willing to work for a corporate with a clear mission and value (Waldman et al., 2017). While 35 percent illustrated, they could work at any pay rate as long as the organization runs on ethical practices.

Ethical leaders create a conducive workplace environment that absorbs employees and promotes their emotional wellbeing. 

Ethical leaders enhance good habits through rewards and promotions. When ethical leaders discover employees’ ethical conduct, they reward them through bonuses and job promotions.

Ethical leaders ensure satisfaction. When an organization operates morally, the legal bodies, customers and employees will be content with its products and management.

Why leaders do as they do, and what are the outcomes of ethical leadership?

Leaders in a company possess the power to manage subordinates’ ethical behavior by modeling and enforcing consequences and establishing standards. Ethical leaders act as role models who communicate the ethical standards’ significance, design a conducive environment and hold employees accountable to the ethical standards (Demirtas 2015, p.277). Ethical leaders design an environment to support conducive ethical behavior.

Ethical leaders transmit ethics by constructing human relationships, teaching people how to reason about moral questions, growing upcoming ethical leaders, and empowering ethical conduct among employees (Lawton & Páez 2015). It requires a leader to be more than a reasonable person to inspire ethical behavior among employees.

Ethical leaders can impact the culture, behavior, and policy of a corporation. For that reason, ethical leadership can be the most significant step in ethical practice, which is designed to support ethical behavior (Waldman et al., 2017, p. 1290). Additionally, ethical leadership improves the social mechanism and psychological imperative of managing an organization.

Example of an Ethical Leader

Bill Gates, co-founder of Microsoft: Bill Gates uses his own personal wealth which Microsoft helped him to create to support charitable work. His philanthropist behavior is an ethical example of how business and business leaders can give back and do good for society (Brown , 2020).

Reflection

What I have learned from the research about ethical leadership is that moral leadership traits connected to justice, honesty, respect to others, loyalty, among others, can positively impact organizational performance. One of the key lessons will be honesty and loyalty, justice, and believing in principles when facing an ethical leadership crisis and maintaining a moral leader’s traits, explaining why the company remains successful. When a leader lacks ethics in their management style, he is at risk of losing his relevance to the organization. An ethical leader can peacefully mediate employees’ issues and provide an alternative solution to understand ethics codes.

References

Demirtas, O., 2015. Ethical leadership influence at organizations: Evidence from the field. Journal of Business Ethics, 126(2), pp.273-284.

Klenke, K. (2005). Corporate values as multi-level, multi-domain antecedents of leader behaviors. International Journal of Manpower, 26(1), 50-66.

Ko, C., Ma, J., Bartnik, R., Haney, M.H. and Kang, M., 2018. Ethical leadership: An integrative review and future research agenda. Ethics & Behavior, 28(2), pp.104-132.

Lawton, A. and Páez, I., 2015. Developing a framework for ethical leadership. Journal of Business Ethics, 130(3), pp.639-649.

Primoff, W. and Kess, S., 2017. The Equifax data breach: What CPAs and firms need to know now. The CPA Journal, 87(12), pp.14-17.

Waldman, D.A., Wang, D., Hannah, S.T. and Balthazard, P.A., 2017. A neurological and ideological perspective of ethical leadership. Academy of Management Journal, 60(4), pp.1285-1306.

Brown, M., 2020. Fact check: Bill Gates has given over $50 billion to charitable causes over career. [Online]

Available at: https://www.usatoday.com/story/news/factcheck/2020/06/11/fact-check-bill-gates-has-given-over-50-billion-charitable-causes/3169864001/
[Accessed 2 April 2021].