Ethics must begin at the top of an organisation. It is a leadership issue and the chief executive must set the example. – Edward Hennessy

The world of business is full of ethical dilemmas, from where to direct scarce resources to serving the local community. Every leader will make ethical decisions, whether or not they acknowledge them at the time. But the decisions they do make can determine whether their leadership is based on an ethical framework or not.

Ethical Leadership Guide: Definition, Qualities, Pros & Cons, Examples

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In this guide, we’ll examine the ideas and concepts of ethical leadership. We’ll study the basic principles of ethical leadership and the characteristics ethical leaders showcase. Before detailing a few examples of ethical leaders, we turn our attention to the advantages and disadvantages of being an ethical leader.

UNDERSTANDING THE CONCEPTS INFLUENCING ETHICAL LEADERSHIP

Ethical leadership cannot be discussed without considering the concept of ethics first. The idea of ethical behavior can be different depending on when, from whom and how you ask the question and therefore, the theory requires an understanding of the definition and context of ethics.

In this chapter, we’ll examine what ethics means and the modern context of ethical leadership.

What is ethics?

Ethical behavior is a tricky subject and the difficulties in defining ethics date back to the beginning of humanity. Societies from Ancient Greece to Ancient China have explored the concepts and ethical behavior is the cornerstone philosophy in almost all of the world’s religions.

In its simplest definition, ethics relate to knowing and doing what is ‘right. According to the Oxford Dictionary, ethics is “moral principles that govern a person’s behavior or the conducting of an activity”. By being moral, you are doing what is ‘right’.

The problem of ethical behavior comes from defining what is ‘right’. As mentioned above, ‘right’ or indeed good deeds can depend on whom you ask the question. People from different cultures, religions and even from the opposite gender can view certain things as ‘right’ that others would disagree with. The definition of ethical behavior has even changed within similar cultures as society has developed and changed.

Defining what the ‘right’ behavior is has always been at the centre of ethics. As we’ll see later in this section, there are different valuations for correct behavior. One of the most common ways to define what’s right comes from asking a set of questions before committing to a specific behavior. According to Patricia Pinnell and Shirley Eagan from West Virginia University Extension, people use four common questions for determining the ethics of an action. These are:

  • The child on your shoulder. Are you OK for doing the action, even if your children are watching?
  • The front paper story. Would you feel OK if the action/behavior became the front-page story in your local newspaper?
  • The golden rule. Are you comfortable for being on the receiving end of this action or decisions?
  • The rule of universality. Would it be OK if everyone in the world would behave or act that way?

The idea of the questions is that if you can answer yes, the action or behavior is likely an ethical one.

Ethics is therefore open to interpretation. Nonetheless, there are a few defined interpretations of how ethics can be viewed, especially in terms of behavior. Below chart shows some of the common ways of defining ethics.

Situational ethicsThe ‘right’ action is dependent on the context of the situation. This means that the right action might be wrong in another context.

As an example, you might be right to lie to someone when they ask your opinion, even though lying in other situations would be considered ethically wrong.

Cultural relativismCulture determines what is ‘right’ and it isn’t correct to judge other cultures based on one’s own culture. What is accepted and ethical in one culture might not be so in another.

A modern example is the question of animal slaughter, which in certain cultures follows a strict cultural or religious code, which might seem wrong to a Westerner.

Professional ethicsThe right is determined by a code of ethics of a specific profession and people in the profession should follow these.

The code of ethics, or the Hippocratic Oath, is a good example of professional ethics.

Value-based ethicsA person’s personal values should guide their behavior.

Everyone has a set of values, which they should use to determine the ‘right’ and ‘wrong’. You should always follow your inner voice when judging your own actions.

Rule-based ethicsThe rules of specific group or organization determine what is right. These include the society’s rules, religion’s rules and an organization’s rules.

An organization might give a guidebook that determines which behaviors are acceptable when dealing with customers, for example.

Fairness-based ethicsThe ‘right’ actions and behaviors are determined by their fairness. Everyone should be treated fairly and equally.

Generally, uses the ‘golden rule’ as the guiding practice. Ethical behavior is anything that doesn’t discriminate others.

Ethics based on general principlesAssumption that there are generally accepted principles, which guide human behavior and therefore, determine what is right.

As an example, the ‘right’ actions might occur when you put the greater good ahead of personal interest and try avoiding harming other people.

When discussing ethics, people often think ethics and morality are the same thing. But in order to understand ethical leadership, it can be beneficial to view these two concepts differently.

One of the most important ethical philosophers of modern times has been John Rawls, who made a clear distinction between comprehensive moral systems and less comprehensive systems. The distinction can help better understand the idea of ethical leadership.

To Rawls, the two differ in the following manner:

  • Comprehensive moral systems cover not just one’s behavior, but also bigger issues such as where one’s place is in the universe. These moral systems would include the world’s religions, for example.
  • Less comprehensive moral systems would only cover areas of politics, social, and economics.

Therefore, morality is generally based on much broader set of values and beliefs. These can or cannot be logically coherent. Whereas ethics is based on social norms, following coherent philosophical principles. Nonetheless, morality can form a basis for ethical leadership, such as ethical leadership.

The modern context of ethical leadership

Ethical leadership is essentially a leadership theory, which uses the above ethical concepts as a guide to managing subordinates. Since ethics deals with the principles of ‘right’ behavior and leadership with influencing other people to achieve goals, ethical leadership is influencing people through ethics.

The rise of ethical leadership can be traced back to the scandals inside the corporate world in recent decades. The fall of big organizations such as Enron and the Lehman Brothers has partly been blamed for unethical behavior and therefore, there’s been a call for a more ethical leadership to appear. In a qualitative study published in 2010, Plinio, Young and Lavery concluded the lack of ethical leadership and poor ethical behavior is among the biggest problems modern organizations face.

Ethical leadership is considered to be one solution for creating a balance between the wellbeing of the subordinates and the wider community, and the organization’s profitability. The theory understands the importance of trust and good relationships. In essence, modern ethical leadership theory places importance on the idea of service. The theory is therefore somewhat close to Robert Greenleaf’s concept of servant leadership. Greenleaf wrote in 1977, in his famous book Servant Leadership, “Service to followers is the primary responsibility of leaders and the essence of ethical leadership”.

Ethical leadership often takes the form of three separate approaches to leadership. The three have historical and philosophical foundations and all three emphasize different aspects in decision-making.

  • First approach is Utilitarianism Theory, which sees the leader maximizing the welfare of the subordinates. The focus is on ensuring the subordinates feel good and are happy, before deciding on an action. Concern is on the proper ends of the action, not necessarily on how you get there. The approach is closely associated with John Stuart Mill and the ethical cost-benefit analysis.
  • The second approach focuses on the Libertarianism Theory. The leader is to protect the freedom of the individuals as the main concern. If an action or decision would restrain the subordinate’s freedom, then the leader would not proceed with the course of action. The concern is on the intent of individuals. The approach follows Aristotle’s idea of virtue ethics or eudaimonism.
  • Finally, the last approach to leadership emphasizes Immanuel Kant’s Ethical Theory of doing the right thing. The approach to decision-making is therefore looking at the proper means. Moral and ethical actions come from understanding what are the rules and customs of the organization and following these. The idea is that by understanding these common, agreed values, a leader can make the right decisions.

In the modern context, ethical leadership theories often emphasize either one of the above approaches or a mixture of the three. Importantly, ethical leadership requires a leader to act and lead in an ethical way. This generally means ethical leadership is both visible and invisible. Leader’s actions should show in public and give reassurance to subordinates about the ethical behavior, but the leader must also think in an ethical manner. The leadership theory requires the leader to have ethics as an integral part of their everyday framework.

Ethical leadership should also be understood through the lens of its influence over other leadership theories. Being ethical is a core part of other leadership styles and a strong ethical foundation is required for styles such as transformational and charismatic leadership. While strong ethical outlook is required for these leadership theories, ethical leadership places the biggest emphasis on implementing ethical values to every aspect of leadership.

In their 2006 analysis of ethical leadership, Michael E. Brown and Linda K. Treviño compared ethical leadership with other notable leadership theories. While the similarities are often clear, Brown and Treviño concluded that, “ethical leaders explicitly focus attention on ethical standards through communication and accountability processes”. It’s precisely this aspect of ethical leadership that separates it from authentic, charismatic and transformational leadership.

THE CORE ELEMENTS OF ETHICAL LEADERSHIP

The above explored the concept of ethical leadership and how the theory has developed in modern context. Let’s now turn our attention to the core elements of ethical leadership. What does it mean to lead in an ethical manner?

Components of ethical leadership framework

The above showed how ethics and ethical behavior could manifest in a number of different ways. The idea of ‘doing the right thing’ can depend on your approach and whether you focus on the means or the end goals, for example. Therefore, ethical leadership requires a solid framework to work. There are three core components of the ethical leadership framework:

  • Internal uniformity – Different elements within the organization must be ethically consistent and not have contradictions.
  • Proactivity – The framework should tell people what to do, instead of outlining the things you shouldn’t do. Ethical leadership framework looks forward and acts pre-emptively.
  • Vigour –The framework is regularly re-examined and updated according to the needs of the organization and the subordinates. In short, the framework is dynamic instead of a static system.

Ethical framework helps a leader and the organization to make decisions and approach actions with a coherent plan, instead of having to constantly re-think and assess the situation. A framework will not provide ethical leaders with a clear decision each time, but it makes it easier to analyze the situation and to listen to other people’s opinions regarding the matter.

The best way to go about creating an ethical framework requires you to follow a few simple steps. First, the leader’s ethical framework should always align with that of the organization he or she is leading. Consider the example of having to lead an organization that believes the leader should solely do decision-making, whereas you are a strong believer in collaboration. The ideologies will clash and cause problems. The exemption to the rule is a situation where the organization is seeking for a leader to change the current ethical framework.

The above also points out to another important implication of ethical leadership. The leadership theory strongly encourages the leader to place the vision and mission of the organization at the core of decision-making. Therefore, the basis for the framework and decision-making should always be accomplishing and following the organization’s mission statement and existing framework.

The other important step is to ensure the ethical framework guiding the leadership is visible and part of the larger conversation within the company. Ethical leadership should always be explained, as well as re-examined. Subordinates have the right to understand why decisions are made the way they are and to have their own say about things. As mentioned before, ethical leadership is not a static state; therefore, different opinions and changes within the organization will and should influence the framework and shape it to match the vision.

In addition, ethical leadership should remain a shared process. This means that ethical leadership encourages and empowers others to take the lead. It has a big mentoring component attached to it, which calls for people to experience the difficulties of leadership. The idea of this is to guarantee an organization is never in a position where leadership is not available.

Finally, ethical framework alone won’t help achieve ethical leadership. In the theory, ethical thought must always be followed by action. Holding ethical principles is not enough to constitute to ethical leadership.

Integrating ethical leadership

In terms of integrating ethical leadership and ethical framework into an organization, the focus on openness and communication is the key. Linda Fisher Thornton established seven practices to integrating ethical leadership into an organization in her 2013 book 7 Lenses: Learning the Principles and Practices of Ethical Leadership.

#1 Facing the complexity ethical decisions bring about

As mentioned earlier, communication is key to ethical leadership. The framework must be outlined clearly and people should be aware of the ethical standards in use. Furthermore, the decision-making process should be openly discussed, even when it requires difficult decisions.

Open communication on ethical standards and decisions will develop subordinates’ sense of ethics and can help them make better decisions as well.

#2 Not separating ethics from other business activities

Thornton also highlights the importance of implementing ethical leadership throughout the organization. Ethics shouldn’t be only considered at times of trouble or big decision-making, but rather also part of the day-to-day business.

Everything within the company should be done with the ethical framework in mind. This includes training and hiring new employees, as well as making deals with other companies. If standards are not kept, the ethical leadership base, which relies on trust and example, will erode. It creates an environment where subordinates and other stakeholders won’t know what promise will be kept.

#3 Not allowing negative interpersonal behaviors to erode trust

For ethical leadership to work, the leader must be able to create meaningful relationships with the subordinates. These relationships must then rely on trust, respect and open communication.

Ethical leadership understands the difficulties in interpersonal behavior in organizations. People’s differing opinions on ethics shouldn’t be treated with negativity, but rather cultivate a relationship within the organization where different views can be discussed. After all, ethical leadership relies on development and growth.

#4 Seeing ethics beyond laws and regulations

While one aspect of ethics clearly believes that ethical behavior can be determined by the focus on following laws and regulations, ethical leadership should embrace ethics more widely.

Organizations shouldn’t just consider doing the right thing in terms of what the regulations say, but to express ethics in a wider framework of social justice and sustainability.

#5 Not exempting subordinates from ethical expectations

Just as ethical leadership should be implemented organization-wide and in day-to-day activities, the subordinates shouldn’t be exempt from meeting the ethical expectations set by the framework.

People should be aware of the framework and the ethical behavior that is paramount for the team, and they should behave accordingly.

#6 Celebrating positive ethical moments

Although it’s important to hold people accountable in terms of ethical behavior, the framework also requires celebrating positive achievements. Since the leadership calls for proactive behavior instead of reactive, leaders should be focusing on the positive outlook.

The focus should be on implementing and enforcing the right model and framework for ethical leadership, instead of pointing out what it shouldn’t look like.

#7 Understanding ethics to be a long-term development

Finally, ethical leadership is a long-term development plan and framework. It’s not about quick fixes and it can take a long-time to develop a strong ethical behavior across an organization. Importantly, ethical leadership is never a finished process, but the framework should change with the organization and with time.

As mentioned above, ethics change according to time and therefore, what the organization does now might not be considered ethical by its own standards within thirty years.

THE QUALITIES OF AN ETHICAL LEADER

Ethical philosophy is not a static framework people are born with. As the examples above have shown, ethical behavior can be determined in many ways. People develop internal ethical frameworks over time, with different experiences and life events influencing the ethical approach. Therefore, the qualities of ethical leaders are not innate, but rather, can be enforced and developed throughout the leader’s life.

Furthermore, your life experiences can reinforce or reignite specific ethical ideas within you. Your ethical leader framework will be a constant examination of your own behaviors and qualities.

In this section, we’ll examine the qualities ethical leaders highlight, before providing you with an idea of the actions an ethical leader should take in their everyday life.

Before you venture into reading about the characteristics, watch the interview of Apple CEO Tim Cook explaining how he developed his ethical compass:

The core characteristics of ethical leaders

There are specific characteristics ethical leaders showcase. The traits you should focus on as an ethical leader include the following.

Conscientious

Studies on ethical leadership has shown one of the most crucial traits of an ethical leader is being conscientious. Fred Walumbwa and John Schaubroeck’s research published in the Journal of Applied Psychology in 2009 and Karianne Kalshoven, Deanne Den Hartog and Annebel De Hoogh’s paper on ethical leadership, published in the Journal of Business Ethics in 2011, pointed out ethical leader’s ability to be thorough, careful and vigilant.

Ethical leaders take their positions seriously and they want to succeed in their role. Furthermore, they want to help empower others and ensure the organization and subordinates they serve are succeeding. The leader focuses on the diligence and dedication to get the job done.

Conscientiousness also means the leader should showcase strong moral identity. An ethical leader wants to define and think of him- or herself as a good person. There is a concern present for doing the right thing and perhaps more importantly, of thinking what the right action would be.

Conscientiousness and moral identity are perhaps the traits innate in an ethical leader. The willingness to consider ethics and to behave in a moral manner is something that stems from the inside and it can be hard to instill in a person. Nonetheless, as a leader, you want to start thinking about your actions more often and to consider the ethical implications of making choices.

Inclusive

Ethical leaders are inclusive. This means that they are open to other opinions and encourage people to voice different ideas within the organization. But on top of this type of communicative and collaborative inclusiveness, ethical leaders also work with people from all sorts of backgrounds. An ethical leader understands the benefits of a diverse work environment, and therefore, wants the organization to be more inclusive of people from different ethnicities, races, cultures and backgrounds.

Inclusiveness requires understanding as well as acceptance of different people and of differing opinions. An ethical leader must therefore educate him- or herself in a variety of things, such as cultures and gender identity. It’s important to be open to listen at all times without passing judgment. Perhaps importantly, an ethical leader should remember that while ideas can be criticized, people shouldn’t.

Accountable

Accountability is another important characteristic of an ethical leader. The responsibility of ethical leadership must be treated with respect and in a serious manner. As mentioned before, by doing what you are saying, you can show true ethical leadership and therefore build trust among the subordinates. You must, as a leader, be responsible for the actions and decisions.

The modern corporate world has shown examples of the importance of accountability at the highest level. During the Enron scandal, the Chairman and CEO, Ken Lay and Jeffrey Skilling, argued against their accountability in the context of not knowing about the illegal accounting practices.

But the point isn’t as much whether these leaders actually knew or not, since they should have known because of their position. The responsibility of being in charge and ensuring the ethical standards are upheld fall ultimately on the leaders and an ethical leader would take responsibility.

Considerate

Considerate behavior is important for an ethical leader in two separate senses. First, an ethical leader must consider all of his or her actions and find the ways to minimize harm. Indeed, Rushworth Kidder presents moral dilemmas in his book How Good People Make Tough Choices, not as a choice between right and wrong, but between two rights (or two wrongs).

Ethical leaders will often be faced with situations where both actions might do good or harm, yet they have to be considerate of choosing the ‘best’ solution for the situation, keeping in mind the overall ethical framework of his or her leadership and the vision of the organization.

The second type of consideration requires the proper treatment of subordinates and other stakeholders. The characteristics of treating people with fairness and honesty might seem rather obvious, but it’s, nonetheless, an important trait a leader would want to focus on. The key thing to remember is that the saying, “everyone is equal”, does not mean that each subordinate is the same. Rather, the saying implies that the worth of each subordinate should never be different in the eyes of the leader.

Consistent

All of the above traits are enhanced by consistency. As mentioned above, ethical leadership framework must be present at all times and an ethical leader must showcase consistency in his or her approach. An ethical leader can inspire the workforce by staying true to his or her own ethical standards. Rules and regulations shouldn’t be seen as an obstacle you could bend if the situation requires it. As a leader, you shouldn’t high higher standards in a specific field, such as labor standards, if you are willing to overlook certain other regulations, such as environmental standards.

Consistency is also required in the way you treat subordinates and stakeholders. You must outline the rules and the ethical framework and hold on to these standards when you deal with people. You can’t tell off someone for doing something you wouldn’t punish for in another situation.

Authoritative

Ethical leaders must learn to be authoritative and to use his or her power. But there are important distinctions in how autocratic or authoritarian leaders use power and how ethical leaders control the subordinates. Whereas in the more authoritarian models decision-making is in the hands of the leader, in ethical leadership there must be collaboration in the process. It doesn’t mean that the ethical leader wouldn’t be in charge of the final decision, but only implies the authority is structured in a way other people can share it with the leader.

Importantly, there is a distinction in the use of power. In his book, Escape from Freedom, Erich Fromm distinguished two separate ideas of power. First, there is the power over, which allows leaders to use subordinates in order to achieve an end. Power to means the ends can be achieved without using one’s power to force others in doing something. Notice the latter doesn’t mean leaders wouldn’t need help, for instance, but only that others don’t act through coercion or force.

Power for an ethical leader is about the latter option. The focus is to achieve the ends, not to gain personal accomplishments or to prove you are better than others. In essence, ethical leaders use authority as a mean to empower others and sharing responsibilities and power is seen as a means to increase the chances of success.

Key actions of ethical leaders

In addition to the above traits, ethical leaders also engage in specific actions as part of their leadership. Below are some of the things an ethical leader should focus on in order to improve his or her ethical behavior and build more trust with the subordinates.

Creating I-Thou relationships

For the organization to work, positive relationships are required. Ethical leadership focuses on relationships that rely on respect and trust, even when there isn’t always agreement. It’s important to trust each member within the team, even if you don’t always agree with the decisions. German philosopher and theologian Martin Buber called these as I-Thou relationships. The distinction between the I-Thou relationships and the I-It relationships is explained on slide 8 of the following presentation.

The ethical leader must embrace subordinates as valuable and important to the organization and its success. There must be a level of respect, even if the leader doesn’t always see eye-to-eye with the person.

In order to create the I-Thou dialogue and relationship, the leader must treat subordinates with trust and respect. This requires honesty in saying what needs to be said. Whilst ethical leader never wants to intentionally hurt anyone, the leader should not sugar-coat things either. If you are honest and you respect other people’s opinion, they will respond with the trust.

As a leader, you must also place the interests of the organization before your own self-interest. You can’t expect respect from subordinates or other stakeholders, if your decisions are based on what is good for you. The accountability factor plays a crucial role in this aspect, as you need to be willing to put yourself on the line if it’s in the interest of the organization and the common good.

Setting up proper communication and collaboration channels

Communication and collaboration are the cornerstones of ethical leadership. An ethical leader must set up proper communication channels to allow feedback to fly in both directions. With proper communication comes less rumors, suspicion and ultimately resentment, as people can be more aware of what is happening around them. Creating an open culture and one that enforces explanations will help build more trust and respect among the theme.

In order to have proper communication, you should improve your overall communication skills. This includes understanding the importance of verbal and non-verbal communication and to strive for clarity in expression.

In addition to communication, you want to pay attention to collaboration. Collaboration means asking for ideas and channeling power to other people. If you allow people to take the lead and you trust their ability to make good choices, you will gain further respect.

Harness your communication skills by watching this video.

Striving to increase your competence

Leaders must be competent and knowledgeable, as this is the main reason they are trusted in the first place. Ethical leaders should be striving to increase their competence and to enhance their own skillset – just as they should expect the subordinates do.

In part, this might require you to admit your shortcomings. You should forget about the notion that showing imperfections is a sign of weakness, and instead celebrate your ability to admit you need help. Delegating is not a dirty word in ethical leadership. You should never accept responsibilities or tasks as a leader you are not competent in doing.

Furthermore, you need to continuously educate yourself and discuss the industry and the leadership position with other leaders. You want to enhance your understanding of the organization and everything relating to the industry, but also improve your ability to be ethical and to lead other people.

Re-examining your ethical behavior and values

By now you should have understood that ethical leadership is a journey, which doesn’t finish. Ethical leaders don’t wake up one day and feel they’ve become ‘the best they can be’. Rather you need to be constantly prepared to re-examine and re-evaluate your own behavior and the ethical framework you adhere to.

Consider your values and ethics regularly and allow yourself to be challenged. Don’t defend your arguments or behavior blindly, but openly consider you might have to learn something new. Don’t give up on your high standards in the face of adversity. Remind yourself and others around you of the benefits of ethical behavior and the things you’ve been able to achieve and accomplish with ethical behavior.

ADVANTAGES AND DISADVANTAGES OF ETHICAL LEADERSHIP

Ethical leadership has been closely scrutinized, perhaps because of its nature to focus on such grandiose concepts such as ethics. While it has a number of tangible advantages, the leadership theory is not always the best approach to solving organizational problems.

Advantages of ethical leadership

Perhaps the biggest advantage of ethical leadership is how it leads to better rates of job satisfaction, which in turn improves employee commitment. In the 2009 study, Walumbwa and Schaubroeck found employees under ethical leadership to be less likely to leave the job and overall, the employees were more happy and helpful.

The increased job satisfaction is driven by the leadership theory’s focus on communication and collaboration. An employee won’t feel out of line for expressing their opinion and the relationship between the people in higher ranks and the people in lower positions is based on mutual respect. Each individual is treated with respect and the work they do is appreciated.

Furthermore, since ethical leaders lead by example, the helpful behavior is likely to spread across the organization. Ethical leaders shape the organization and therefore, the organization will attract people whose own moral and ethical framework is similar to that of the leader and the organization. In fact, David Mayer et al found in a study published in 2012 that ethical leadership reduces unethical behavior in subordinates. Therefore, the leadership theory has a powerful impact across the whole society.

The strong ethical framework and leadership example can also help ensure employees report on problems quicker. Issues that might not arise otherwise can become something subordinates feel compelled to discuss with the leadership, which can guarantee the organization won’t run into troubles later. For instance, in companies such as Enron, a stronger ethical framework would have alerted the leadership about the wrongdoing (assuming they didn’t know about it).

Ethical leadership can also provide an additional collaborative benefit to an organization. As mentioned above, ethical leadership framework embraces collaboration and this doesn’t just imply co-operation within the organization. Ethical companies also collaborate with other organizations that share the same ethical framework. The open approach to dealing with other organizations and being a trustworthy partner can boost innovation within the organization.

Overall, the leadership model can reduce business liability and prevent costly errors within the organization. In fact, a Harvard Business Review summarized a study, which found that good leadership could boost a company’s bottom line. Employees, who marked their CEOs higher for character qualities, saw the organization have an average return on assets of 9.35% over a two-year period. This was almost five times the average return of the organizations with lower character ratings.

Disadvantages of ethical leadership

Despite the positive elements ethical leadership can provide to an organization, it arguable can cause issues as well. Ethical leadership requires the leader’s ethical framework to fall in line with the vision of the organization. But it’s not just the leader and the organization that need to be aligned, the subordinates can find it difficult working in an environment with certain ethical standards. You should be aware by now that ethical behavior depends on the person’s worldview and therefore, ethical behavior of an organization might not be considered ethical by another person. The different ethical frameworks can cause tension within an organization and therefore, certain people might not find the environment pleasant or welcoming.

Furthermore, ethical leadership can be rather dependent on the leader’s ability to influence. In a way, ethical leadership has charismatic leadership tendencies, which means people might be following the leader without a critical approach. This can mean that employees trust the leader so much, they forget about the leader’s humanity – meaning they are blind to any mistakes or problems. For an organization, a blue-eyed approach to following the leader can be devastating in terms of making the right decisions.

Ethics are difficult and upholding high ethical standards at all times can be extremely complicated. The so-called grey areas are more than likely to arise and cause issues. The problem for organization is upholding ethics while trying to maintain a positive bottom line. In certain situations, such as keeping up with regulations, the costs can go up and therefore make ethical leadership financially harmful for the business. The downsides in terms of finances tend to be short-term, but the short-term impact can be crucial for new companies, for example.

With ethical leadership, organizations are going to have to pay more attention to policies. Clarity is paramount for the leadership model and this can mean the need for clear and coherent policies, rules and regulations. The more detailed the policies, the easier it is to guarantee proper ethical standards are upheld. But this can mean plenty of extra work, especially at the start. The rigorous clarity and consistency could be challenging, especially for smaller organizations.

Finally, as eluded above, the requirements for consistency could act as a drawback. Ethical leadership can be difficult to maintain, but if you step out of the framework once, you can damage the respect earned with your subordinates and other stakeholders. Claiming to be an ethical leader and not acting in an ethical manner could be worse than following another framework but implementing ethical behaviors in occasionally.

EXAMPLES OF FAMOUS ETHICAL LEADERS

To highlight ethical leadership in the real world, we’ve gathered a few examples of ethical leaders. Through these examples you can see how ethical leadership works in practice and perhaps notice better the advantages and disadvantages it entails.

James Burke / J&J

James Burke is often one of the first examples of ethical leader people give and when you understand the story, you understand why. Burke’s ethical leadership highlights the difficulties of the corporate world and the need of creating a trust-based relationship with the organization’s customers.

Burke’s ethical leadership became evident during a Tylenol Crisis his company J&J faced in the fall of 1982. Burke took immediate action to have all the company’s Tylenol capsules removed across the country, although this created a large financial loss for the organization. He went even further than that. He allowed the media to follow company meetings, he spoke on several occasions on TV and he introduced new protections to the way the organization packaged its products. The costs weren’t added to the price, but were absorbed by the organization.

In an interview for a 2004 book Lasting Leadership, Burke said,

You tell me any human relationship that works without trust, whether it is a marriage or a friendship or a social interaction; in the long run, the same thing is true about business.

Tony Hsieh / Zappos

Tony Hsieh has achieved meteoric success with his online shoe retailer Zappos. The organization started in 1999 and turned the retailer market upside down. The success can partly be put down to Hsieh’s ability to put ethics at the core of what the company does.

David Henderson interviewed Hsieh for his book Making News in the Digital Era and the ethical revolutionary pointed out two important parts of leadership. First, the company knew it had to embrace transparency – it wouldn’t achieve its objectives by trying to hide from its customers. Second, Zappos has tried to create a company culture on core values.

Hsieh made an interesting point about core values in the interview stating,

It doesn’t really matter what the core values are, as long as the entire organization commits to those core values. The most important thing in any large organization is alignment [around values and vision].

Howard Schultz / Starbucks

Starbucks has consistently appeared on the World’s Most Ethical Companies list by the Ethisphere Institute. Large part of the company’s ethical approach to making business has stemmed from its leader Howard Schultz, who has always put employee wellbeing at the heart of the organization.

Schultz wanted to ensure all employees receive access to healthcare, even if they work part-time for the organization. The coffee is sourced ethically and there is emphasis on sustainability throughout the business, from choosing business partners to providing the service to customers.

The company’s leader has also received personal accolades, continuously ranking high on the Glassdoor’s list of Highest Rated CEOs. Schultz has been recognized for understanding that great customer service starts from happy employees. Through ethical leadership, he has been able to inspire employees to serve better.

Interestingly, Starbucks is also a good example of the scrutiny ethical leadership brings about. Because the company has set such high standards to itself, protesters regularly point out to any problems the company might have in meeting its targets.

You should watch the start of this interesting talk with Howard Schultz at the 2012 Aspen Ideas Festival. The conversation tries to answer the questions “Can corporate values drive shareholder value?” The whole video is rather long, but the starting minutes are the most crucial to understanding ethical leadership.

FINAL THOUGHTS

Ethics is part of the discussion when it comes to leadership, as leaders and organizations have to make ethical choices every day. The kind of role these ethical decisions take within the organization naturally depend on the leadership style and the vision the company wants to use. Ethical leadership is a model, which emphasizes the importance of ethics in decision-making and highlights the positive impact the leadership style can have.

Ethical leadership is based on trust and respect. For the framework to work, ethical leaders must align their own ethical standards with those of the organization and ensure there is an environment of openness. Ethics isn’t a stagnant concept, but it requires constant challenging and re-evaluation in order to provide the benefits.

But the dynamic nature of the leadership theory also makes ethical leadership challenging to accomplish. Consistency can be difficult to maintain and aligning different ethical standards will be crucial for leadership success. Nonetheless, having a well-thought ethical framework can help in the decision-making process, especially in today’s complex world.

55 – Ethical Leadership Guide Definition, Qualities, Pros & Cons, Examples

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