Ethical Leadership – Definition, Meaning, Importance, Principles and Examples

Ethical leadership is the art of influencing people and guiding them to make good decisions rooted in ethical values like fairness, morals, ethics, trust, honesty, accountability, equality, mutual respect, and honesty.

It is a way for leaders to teach people the difference between right and wrong. It provides value to businesses by motivating employees to be inspired and hold up their philosophies and values. Research and experience show that ethical leaders are exceedingly good at generating higher employee satisfaction and low turnover rates.

What is Ethical Leadership?

Definition: Ethical leadership is defined as a type of leadership that is incorporated by those leaders who demonstrate appropriate and ethical behavioral conduct inside as well as outside the organization. Leaders with ethical leadership styles exhibit good values via their words and actions, plus they do what is right, show integrity, and do not overlook wrongdoing.

Ethical leadership is gaining increasing importance in today’s world as people are getting more sensitized to relevant issues in the workplace. A business leader needs to know the philosophies of ethical leadership to help employees accomplish organizational goals keeping the company’s core values in mind.

Traits of Leaders who make Ethical Decisions

Ethical leaders will not let wrongful behavior and actions slide. Even if such activities benefit the organization, they ensure never to compromise company morals. Traits of ethical leaders-

• Leads by example
• Willing to evolve
• Respects everyone equally
• Communicates openly
• Manages stress effectively
• Mediates fairly

Importance of Ethical Leadership

Some of the key reasons why ethical leadership is important for an organization are-

1. Channelizes positive culture

Ethical leadership is considered quite pivotal in improving the morale of the employees in a manner that they won’t behave unethically to make profits. This prevents behavioral and organizational corruption.

2. Optimizes brand image

The ethical leadership of an organization is quite effective in showing the best that a brand has and hence, it optimizes the brand’s reputation.

3. Prevents bad PR and Scandal

When the whole organization functions under ethical leadership, it comprises a positive and ethical culture that naturally impeded bad PR and company scandals.

4. Ensures loyalty

A business or brand that is led by ethical leadership has employees as well as customers who are loyal to that because of the ethical value system of that brand.

5. Enhances emotional well-being

Ethical leadership is quite effective in channelizing a stress-free and constructive work environment that optimizes the emotional well-being of the employees and improves organizational efficiency.

3 Key Elements of Ethical Leadership

1. Leading by example

In ethical leadership, leaders are supposed to lead their teams by their own ethical activities. Behaving in an honest, ethical, and unselfish manner is pivotal in setting examples for the subordinates. This way leaders also gain the respect of their team members.

2. Championing the Importance of Ethics

Ethical leadership also incorporates an absolute focus upon ethics by following ethical standards in all activities. They also pay heed to ethical issues and ensure how their as well as organizational behavior would influence society.

3. Communicating

Being a good communicator is also integral to ethical leadership culture in an organization. Leaders should not only be able to communicate well, plus others should also not be scared of speaking to them.

Types of Ethical Leadership Approaches to make good Ethical Decisions

1. The American Approach – Duty Based Approach

At the time when US workers had minimal employment rights, the duty-based ethical approach came into existence according to which, it was the duty of the shareholders to keep the company functioning at the expense of anything. It had been the reason behind mass unemployment and ghost towns in the USA.

Deontological (duty-based) ethics teaches that a few specific acts are right or wrong because of the kinds of things they are and it is the duty of the associated individuals’ to act accordingly does not matter the good or bad consequences that can be produced by that act.

2. The German Approach – Utilitarian Based Approach

The German labor market has been more protected and it had asked employers to pay the severance packages as per the situation. Because of this approach, German car assemblers asked employees to voluntarily move to part-time employment during the recession that impeded the pain of social implosion due to the mass unemployment and collapsing communities, unlike the USA’s ghost towns.

Though the workers faced a reduction in income, they did not lose their employments and homes. As per utilitarianism theory, right or wrong is determined by focusing on the outcomes. It suggests that the most ethical option would be the one that will ensure the greatest good for the greatest number of ethical people. This is the only approach that justifies military force or war.

Principles of Ethical Leadership

Scholars of ethical leadership point out the five major principles of moral leadership that are:

1. Honesty

Any form of dishonesty is not accepted in such a leadership style. Dishonest behavior is a leader will only create an environment of mistrust and disrespect. Such leaders are not dependable and do not gain the trust of their subordinates. As a result, an ethical leader is honest and never even takes the liberty to misinterpret reality.

2. Justice

An ethical leader is a fair and just leader. Such leaders value the opinions and points of view of all individuals. They prioritize equal treatment of all the employees within the organization. No individual in the organization receives special treatment from an ethical leader.

3. Respect

An ethical leader is respectful in their speech, manner, and approach towards peers and employees. They value other’s opinions and concerns by listening carefully to what is said and unsaid. They act as a mentor to others in the organization and impart the values and ethics within the organization.

4. Community

Ethical leaders have strong interpersonal skills, and they place the welfare of their employees in high esteem. Ethical leaders behave altruistically and help build a community. They respect the values of both the individuals and the organization.

5. Integrity

An ethical leader has a vital moral purpose and is extremely honest in their approach. Ethical behaviors have high standards of conduct for themselves and others. Employees prefer ethical leaders that demonstrate integrity. Ethical leaders bring out the best in the people they work with and attract ethical hires. Integrity is a virtue that even investors value in a leader.

There is also another way of classifying different principles of ethical leadership which are based upon the FATHER framework-

FATHER Framework of Ethical Principles

The six principles according to the FATHER framework are-

1. Fairness – It suggests treating others fairly and having an organizational culture where everyone treats others with fairness.
2. Accountability – Ethical leadership suggests that leaders should also take accountability for their bad decisions or mistakes.
3. Trust – For building great relationships and teams, ethical leadership utilizes mutual trust-building.
4. Honesty – It is important for leaders who want to follow an ethical style of leadership to understand that honesty is the best policy.
5. Equality – When it comes to following leadership ethics, following the principle of equality is its backbone which is also integral to global human survival and bliss.
6. Respect – In ethical leadership, respect is associated with showing regard to other’s perceptions, rights, wishes, feelings, orientations, etc.

What Causes Ethical Failures?

According to the author and ethical leadership expert Linda Fisher Thornton, two types of causes behind ethical failures can be-

• Individual causes- It revolves around ignoring boundaries such as organizational values or industry codes, lack of self-control, or following the crowd
• Organizational causes- It revolves around a lack of positive role models, lack of accountability, or the lack of codified standards of behavior and training

How to Be a Ethical Leader?

Some of the steps that can help you become a leader who follows ethics-

1. Defined Organisation’s Values:

An ethical leader sets the vision of the organization. This vision is deeply rooted in the philosophies, morals, ethics, and values of the organization. The idea of a company is the ultimate goal they want to achieve, but what about day-to-day functioning?

An ethical leader ensures that people uphold the company’s core values even in the daily functioning of the business. After setting the organization’s goals, the leader must convey the same to the team members.

2. Be Aware of your Values:

Good leaders are in touch with their values and virtues and understand the organization’s values and goals.

Ethical leaders never compromise on their morals, and as a result, they ensure to behave in ways that maintain their morals while upholding company values.

3. Set the Tone:

The ethical leader creates an environment that fosters such morals and values. They set the tone of conduct, behavior, and the mindset of the organization. A way to do this is to be a good role model to others in the business.

Actions have consequences, which may be the driving force of an ethical leader’s behavior. These consequences set the standard of conduct that they will follow—both positive and negative consequences matter. Positive consequences matter as well and act as a reward for good behavior.

4. Identify Ethical Dilemmas:

An ethical leader should be an expert at recognizing ethical dilemmas. These situations may not include an outright lie but may be a misinterpretation of reality. Whatever the case may be, it is not the absolute truth.

Ethical dilemmas may arise due to purchasing, hiring, firing, calculating bonuses, promoting, etc. The best way to recognize an ethical dilemma is to listen to the inner voice that tells you whether you are right or wrong.

5. Dealing with Ethical Dilemmas:

Identifying ethical dilemmas is another key step here. Once an ethical leader recognizes a moral dilemma, it is essential to do damage control. There are various ways of responding to the ethical dilemmas:

• Be Prepared: Creating possible scenarios can help one work to react if such a situation arises. This allows the team to prepare for a crisis because it is necessary to be ready to decide in a matter of minutes in such a scenario.
• Gather Evidence: Evidence of unethical behavior should be gathered so that it can be verified. This is necessary to determine what action should be taken.
• Reevaluate your decision: If you come up with a decision, pause, rethink the same. No ethical leader can afford to make a hasty decision. The wrong decision may have disastrous consequences.
• Seek Advice: An ethical leader will gain others’ advice and input to understand and evaluate the situation more rationally. This helps them earn multiple points of view on the same matter. As a result, they can recognize and deal with such dilemmas effectively.

6. Have Courage:

An ethical leader must have the courage to take a stand for what’s true when maybe lying or manipulating is the simpler choice. Such a decision requires the maker of the decision to be risky and bold.

Sometimes the choices made by an ethical leader are the harder alternative, or it is the unpopular choice. Even in such a situation, the ethical leader must persevere and stay on the side of integrity, morality, and honesty.

Ethical Leadership Behaviors to Practice

1.  Set an Example:

Ethical leaders, like any other leaders, are the model example of behavior and conduct in any organization. Through their conduct, they set an example for others in the organization.

As a result, a leader trying to follow the ethical leadership style must work towards being a worthy example for others in an organization to look up to. Ethical leaders also expect that managers and members alike lead by example.

2. Be Vocal About the Importance of Ethics:

People who want to be ethical leaders make it their way of life to never compromise on certain morals and principles they choose to live by.

They communicate the value of ethics articulately and by their actions as well. They coach others to practice ethics in the workplace and to remain true to some principles.

3. Reinforce Ethical Behaviour:

Ethical leaders ensure that to create an ethical environment in the workplace, they reinforce ethical behavior. They train others to practice such behavior while establishing clear dos and don’ts with comprehensible consequences.

Good and ethical behavior is rewarded, while unethical behavior is punished. A reward can even be a small compliment or some token of appreciation as long as it reinforces positive and desirable behavior.

4. Make Ethical Decisions:

A person aspiring to become an ethical leader will always ensure that the decisions taken by them do not go against their values and beliefs as well as the mission of the organization. They implement only those decisions that meet their criteria of acceptance.

This applies to all decision making arenas. Such leaders are conscious of their actions and their community. Such leaders are likely to make environmentally friendly decisions even if that would lead to a dent in the organization’s pocket.

5. Establish Zero Tolerance for Ethical Behavior:

Ethical leaders do not entertain any form of ethical violation. They believe in doing the right thing all the time without any exceptions and questions.

As a result, they cannot tolerate any unethical behavior or actions that violate the organization’s belief system. They hold others to the sea standard of behavior as they hold themselves.

6. Practice Justice:

Ethical leaders are fair and just by nature. They practice the same by building a mutually respectful relationship with their team members and treating everyone the same. They do not discriminate or favor any employee based on gender, religion, nationality, ethnicity, age, or any other unique factor about them.

They listen carefully to every viewpoint and perspective. They give it all equal weightage and make rational decisions without letting any prejudices or biases cloud their judgment.

7. Recruit Ethical Employees:

An ethical leader not only ensures that employees in the organization possess values similar to the organization but also ensures they hire ethical individuals.

They hire diverse people who no doubt will be trained but at least have similar fundamental or core values that they share with the organization.

The 4-V Model of Ethical Leadership

When it comes to ethical leadership, some key points from the pillars of successful leadership, they are defined in this 4-V model.

1. Vision

It is no news that in the successful administration of any team, the leader requires a good vision. He/she should have the necessary foresight to judge the impact of his/her decisions and the team’s performance on the business.

This vision should include some moral policing of the leader and the team to maintain proper ethical leadership.

2. Values

Every person lives by some values. A person leading a life without morals is like a flower blooming without any colour and fragrance. In a team, the costs of the leader impact the working of the whole team.

An ethical leader should take care that he/she is not compromising on anyone’s morals and ethics and then lead the team by establishing values that will motivate the whole team and help them get an identity for themselves.

3. Voice

What is a leader without a say? Hence, an ethical leader should have a clear vision set on the goal and the way to approach it. Also, it is essential to voice this vision out.

There should be transparency in the team, and everyone should know each other’s thoughts, especially the leader should take the initiative for this.

4. Virtues

Virtues are the good points and the ethics which cause no harm to others. An ethical leader should be virtuous and should promote others’ virtues and morals as well.

Also, he/she should verify that his/her actions are being aligned in line with his/her ethics. The leader should take care that his vision, voice, and values are concurrent with each other.

Example of Ethical Leadership – Abraham Lincoln

Abraham Lincoln’s style of ethical leadership is considered as one of the best gifts ethical survival of humanity. He fought for equality of all human beings and some of his ethical traits were-

Respect, Trust & Honesty – Lincoln could listen to different points of view, plus he was instrumental in creating a climate in which cabinet members could disagree without fearing retaliation. He was also well adept at knowing the right to stop the discussion and make a final decision.

Accountability – He used to stand up to the mistakes made by the members of his cabinet and he was ready to take the blame for his wrongdoing.

Equality – Despite things were not favoring his political part, he stood firm on resolving the issue of slavery.

Respect & Integrity- In his Second Inaugural Address, he had said-

With malice toward none; with charity for all; with firmness in the right, as God gives us to see the right, let us strive on to finish the work we are in; to bind up the nation’s wounds; to care for him who shall have borne the battle, and for his widow, and his orphan—to do all which may achieve and cherish a just, and a lasting peace, among ourselves, and with all nations.

Characteristics of Ethical Leaders

• Value Sharing
• Quality Orientation
• Openness
• Participation
• Succession Planning
• Setting high ethical standards and meeting them
• Being fair in all personal decisions
• Keeping your word
• Treating everyone with respect

Here is a video by Marketing91 on Ethical Leadership.

Effects of a Good Ethical Leadership

Leading a team is like treading on a knife’s edge. Sometimes, there is a minimal margin between what is right and what is wrong. There can be various shades of a single decision, but maintaining ethicality should be of the highest importance.

The best impact of ethical leadership is the upholding of superior moral values. Here are some parallel effects of ethical leadership.

1. On every individual

It creates a positive attitude of the individuals and an amicable bond among the team members. If they know that their leader is keen on maintaining ethicality, they start trusting and believing their leader.

Trust is the most considerable investment of an individual. If their trust wins, they can do anything for the leader and the team to achieve the goals and gain good outcomes.

2. On the team

A team comprises of individuals. If every individual has a positive attitude, it will make for a healthy and positive atmosphere.

When co-workers have strong relationships with each other, it has a good impact on the working style.Helpfulness, friendliness and untarnished ethicality are enhanced, and even the team starts practising it along with the leader.

3. On the organization

A right individual leads to a good team, and a good team is the pioneer of a healthy organization. If ethical leadership is maintained in every department of an organization, its well-being will know no bounds.

The health of the organization remains good, and there is the least space for any moral clashes. There is faith instilled that the organization will not impose any unfair decision or a biased treatment.

Ethical Leadership in Business

When you are a leader, you need to guarantee that no-harm occurs to anyone in your leadership, plus you should also manage issues that may undermine the effectiveness of your team.

Some of the key things that might influence the ethics of any business are-

1) Values

This is one of the most critical aspects of an organization. Values are the thoughts that leaders or managers protect.

Values are generally shared by the workforce, community, or any kind of group. For instance, in many countries, people value the freedom that they have. – And for that, they respect the individuals who have sacrificed their lives to permit then to live freely.

In the same way, there can be some ethical values that leaders need to keep intact, as it might affect the ethics of the company.

2) Regulatory bodies

You must have noticed that many of the professions have their Code of Ethics and business policies.

Such codes spread out not just the things that are critical to preserve and promote yet, also, the steps for handling the ethical issues that may arise.

Ethical leadership should pay heed upon such a Code of Ethics while resolving any ethical issues in the company.

3) Leadership

When leaders have confidence in their team and convey their values to team members and others, there is a superior possibility that working in the whole organization will be ethical.

Leaders are supposed to be unbiased while making decisions whenever any ethical issue occurs in the company.

4) Sub-groups

Different types of unions are quite common in companies.

A group of people who have a set of common principles and value-system wants to promote their ideologies. They may, for instance, not coordinate with others around them while they might be eager to fight for their belief system or rights.

For instance, unions go on to protest for their ethics does not matter if their ethics match with the ethical policies of the employer or not. Leaders need to handle such situations with excellent power of acceptance and the ability to understand multiple perceptions.

5) Process

As discussed above, sub-groups with different values may cause some issues in the organization. While handling such scenarios, the business should have a resolution is required with the end goal that everybody lives and works in concordance.

It is consequently significant that leaders incorporate an ethical procedure that individuals can follow, so issues related to the difference in the opinions and values get managed soundly.

Ethical leadership needs to ensure that everyone is accepted well in the team, and all of them are ready to participate as per the guidelines set by the leaders.

Conclusion

Ethical leadership is of great importance. A good leader is followed, but a moral leader is respected and trusted. You can take the help of the information given above to sharpen your skills in ethical leadership.

To be an ethical leader, it would be good if you surround yourself with those who comprise a sound level of integrity and moral conduct. It will empower you in ethical decision making as well.

In the ethical dilemma situations, it would be good for you to take some time for deliberating the most right, constructive, and productive course of action as a whole.

Share your views about ethical leadership in contemporary social and business systems in the comment section.