Ethical leadership, defining it as “the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through two-way communication, reinforcement and decision-making”… [and] the evidence suggests that ethical leader behaviour can have important positive effects on both individual and organizational effectiveness (Rubin et al 2010: 216-17).
“Leaders spend most of their time learning how to do their work and helping other people learn how to do theirs, yet in the end, it is the quality and character of the leader that determine the performance and results”. – Frances HesselBein
Ethics is a combination of moral principle and code of conduct that governs the behavioural instincts in an individual to do a right or wrong. Ethical management is related to the requirement that fulfils not only economic goals and legal responsibilities of an organisation but also meets the ethical expectations enforced by social norms in conducting business.
An ethical aspect of Bill Gates Leadership is “Humanity’s greatest advances are not its discoveries, but in how those discoveries are applied are applied to reduce inequity”. Bill Gates who is a predominant and a manipulative leader had clutched on to certain ethical policies which had created a culture of innovation and commitment among the employees in Microsoft. The inspiration and motivational programs conducted by Bill Gates had made the bond between the employees and the management stronger, empowering them with all the information they had to know (Alireza, 2014).
As Brown stated in his theory of conceptualization of ethical leadership, the three building blocks of ethical leaders are being an ethical example, treating people fairly and actively managing morality (Brown, 2005). Kraft Foods Group Inc has set 10 ground rules of ethical behaviour to ensure no misuse of corporate power. The introduction of this Kraft code of ethics had suggested that employees should let values guide their action in all cases. The 10 rules are: Market responsibly; treat people fairly; compete fairy; respect the environment; Make food that is safe to eat; keep honest books and records; deal honesty with the government; respect the free market; never trade on inside information; give Kraft Foods your complete business loyalty (Lisa Magloff-Chron, 2014).
Ethical Models can help business leaders to decide whether they are considering a legitimate approach and exhort directors and managers to operate in an ethical manner. Decision making tools like Decision Tree, Seven Step Method and Vroom-Yetton-Jago Decision Model can be used as a tool to practice ethics in an organization. Using these models, the leaders of the company can decide whether. 1) “The proposed action is against law or not”, 2) “If the proposed action is accepted by the law and community, will it maximize the share holders’ value or not” (Mindtools, 2014).
Gerber Products, Inc., the well-known baby products company, was using phthalates in the baby products until the CPSC (Consumer Product Safety Commission) was spurred by the media to inspect the content of the product. Gerber had used the decision tree analysis to decide whether the company had to continue the usage of phthalates. From the analysis it was understood that if the company continues the illegal usage of phthalates, the company’s sales will be adversely affected due to the sensationalistic nature of the press coverage. Thus, this model had helped Gerber to save company’s goodwill from the face of the media and public (GBR, 1999).
Why is ethics important in an organization?
Ethics is a set of principles that directs an organization in its programs, policies and decisions for the business. Organizations which have adapted an ethical philosophy could improve their productivity, reputation and bottom line of the business. The ethics are differentiated in terms of leadership ethics and employee ethics. Leadership Ethics: The ethics followed by the leaders in an organization may have an effect on the morale and integrity of workers. Leaders have set high ethical standards which encourage the workers in an organization to meet at the same level and also enhance the company’s reputation in financial market and community (Luanne Kelchne-Chron, 2014). The characteristics that an ethical leader should posses are 1) Dignity and Respectfulness 2) Serving others 3) Justice 4) Community Building and Honesty (MSG, 2014). Employee Ethics: Employees who use ethics as a guide for better prospects will ensure an organization to complete work with honesty and integrity. This guide can help an employee to meet standards for quality in their work, which can enhance the company’s reputation for quality products and services (Luanne Kelchne-Chron, 2014).
Ethics makes an individual a better person by Trusting Relationships: Gaining the trust of co-workers and managers at work places will help to enhance productivity and an opportunity to take up new responsibilities, possibly leading to promotion and pay raises. Team Cohesiveness: Committed to be a better team player by making positive contributions in a group setting and never hinder a group activity. Value to Employers: Gaining the trust of top managers and business owners by following ethical policies and using ethical reasoning while making company decisions. Personal Wellness: Using ethical code to guide all actions, to gain emotional stability, job satisfaction and cultivating last friendship (David Ingram-Chron, 2014).
Ethical Leader plays an important role in leading the lives of many through the paths of integrity and commitment. An ethical leader provides a direction for the organisation to fulfil its mission and achieve its goals. One such ethical leader who excelled himself to the top was Jim Skinner, CEO of McDonald’s. Jim Skinner had started his career in McDonalds as a Manager after his 10 years of service in the US Navy. As a reward to his hard work and focus on customers, Jim had received awards like “Executive of the Year” and “Most Respected CEO”. The company chief who turned his collar from blue to white had to go through a lot of hardships and commitments. In 2004, Jim Skinner had worked his way out to be the CEO of McDonalds and led the company to a 40% earnings bump in four years. At present he is on a mission to steer McDonalds towards healthier food options for kids and programs like National Hiring Day, which saw much needed jobs offered to 60,000 Americans (OnlineMBA, 2012).
Thus, I strongly believe that an ethical behaviour when practised in an organization could produce a number of followers with increased dedication, productivity, responsibility, effectiveness, job satisfaction and problem reporting. An ethical leader with true strength and courage will help the organization to reduce the unethical behavioural practices and maximize benefits through enforced ethical policies. Leaders use ethical code policies as an instrument in encouraging ethical behaviour and to eliminate the differences between their subordinates. Moreover, a Leader has the privilege to exploit the punishment systems when an employee performs an unethical act of conduct within an organization.
 OnlineMBA. (2012) 10 Most Ethical CEOs in Corporate America; [online] available from <http://www.onlinemba.com/blog/10-most-ethical-ceos-in-corporate-america/>; [Accessed: 12 May 2014]
 Lisa Magloff-Chron. (2014) Examples of a Code of Ethics for Business; [online] available from <http://smallbusiness.chron.com/examples-code-ethics-business-4885.html> [Accessed: 12 May 2014]
 MSG. (2014) Leadership Ethics – Traits of an Ethical Leader [online] available from < http://www.managementstudyguide.com/leadership-ethics.htm> [Accessed: 12 May 2014]
 David Ingram-Chron. (2014) How Do Ethics Make You a Better Person in the Workplace?; [online] available from <http://smallbusiness.chron.com/ethics-make-better-person-workplace-11979.html> [Accessed: 12 May 2014]
 Brown. (2005) Who Displays Ethical Leadership and Why Does it Matter? An Examination of Antecedents and Consequences of Ethical Leadership; [online] available from <http://webuser.bus.umich.edu/dmmayer/Published%20Articles/Mayer,%20Aquino,%20Greenbaum,%20&%20Kuenzi.pdf > [Accessed: 12 May 2014]
 Alireza. (2014) Human Capital Management ; [online] available from <http://www.slideshare.net/khosroyar/who-displays-ethical-leadership-and-why-does-it-matter> [Accessed: 12 May 2014]
 GBR. (1999) How Gerber Used a Decision Tree in Strategic Decision-Making; [online] available from <http://gbr.pepperdine.edu/2010/08/how-gerber-used-a-decision-tree-in-strategic-decision-making/? [Accessed: 12 May 2014]
 Mindtools. (2014) Decision-Making Techniques; [online] available from < http://www.mindtools.com/pages/main/newMN_TED.htm> [Accessed: 12 May 2014]
 Luanne Kelchne-Chron. (2014) The Importance of Ethics in Organizations [online] available from < http://smallbusiness.chron.com/importance-ethics-organizations-20925.html> [Accessed: 12 May 2014]