Whether a local, national, or global business leader, the quickest way to lose the support of your colleagues is by practising unethical leadership. Businesses tend to reflect the attitude and actions of their chosen leaders. So ethical leadership leads to ethical practices throughout the business. “Doing the right thing” isn’t viewed the same by everyone, but ethical leaders who display these habits are certainly more likely to make moral decisions than those who do not.  Being ethical aligns with our true nature and so we demonstrate our authenticity through our ethical stance. 

What is Ethical Behavior?

Ethical behaviour refers to actions and decisions that are morally upright, fair, and socially responsible. It encompasses a wide range of practices. These include treating others with respect, adhering to organisational policies and procedures, maintaining confidentiality, and avoiding conflicts of interest (Ferrell, Fraedrich, & Ferrell, 2015). Ethical behaviour also involves considering the potential consequences of one’s actions. Mainly these impacts are felt by stakeholders, such as employees, customers, and the community.

Organisational culture plays a significant role in shaping ethical behaviour among employees. When leaders create a culture that values integrity, fairness, and accountability, employees are more likely to behave ethically. They are more likely to feel comfortable speaking up about unethical practices (Treviño, Butterfield, & McCabe, 1998). Research has shown that employees are more likely to engage in ethical behaviour when they perceive their leaders as ethical and supportive.

One example of a company that fosters ethical behaviour is the outdoor clothing and gear company Patagonia. Patagonia actively encourages its employees to engage in environmentally responsible practices. These practices include recycling and reducing waste and supporting social initiatives, such as fair labour practices and community involvement. The company’s commitment to ethical behaviour has earned it a strong reputation among consumers. It has also contributed to its long-term success and growth.

Why Is Ethical Leadership Important?

Ethical leadership is crucial in today’s rapidly changing and competitive business environment. It helps organisations create a positive culture. It drives employee engagement and promotes long-term success. Research has shown that ethical leadership can lead to increased job satisfaction. Not only that but is shown to have reduced turnover and improved organisational performance.

Ethical leaders not only act with integrity themselves but also encourage and reward ethical behaviour in their teams. According to Treviño, Brown, and Hartman (2003), this type of leadership can foster an environment where employees feel empowered to make ethical decisions and engage in responsible behaviours. By setting high ethical standards and living by them, leaders can build trust and credibility with their employees, partners, and customers, which can ultimately contribute to a company’s reputation and bottom line (Berenbeim, 2005).

One example of ethical leadership’s impact is the turnaround of Starbucks under Howard Schultz’s leadership. Schultz made a conscious decision to focus on the company’s social responsibility and ethical practices, which led to improved employee morale and customer satisfaction (Michelli, 2007). This shift in focus was instrumental in the company’s growth and success in the years that followed.

What Is The Theory Of Ethical Leadership?

The theory of ethical leadership focuses on the role of leaders in promoting ethical behaviour and decision-making within an organisation. It emphasises the importance of leaders serving as moral role models. Ethical leaders actively encourage ethical conduct among employees (Brown & Treviño, 2006). Various theories of ethical leadership have been proposed, with some of the most notable ones being the Ethical Leadership Model (ELM) and the Virtuous Leadership Theory.

The ELM posits that ethical leaders demonstrate moral management, role modelling, and ethical guidance. They engage in open communication with their teams. Also, they create an environment that supports ethical decision-making. They hold themselves and others accountable for ethical behaviour. The ELM highlights the importance of both personal and organisational factors in shaping ethical leadership behaviour.

The Virtuous Leadership Theory focuses on the development of virtuous qualities in leaders, such as wisdom, courage, and compassion. This theory suggests that by fostering these virtues, leaders can inspire ethical behaviour and decision-making in their employees. The Virtuous Leadership Theory emphasises the importance of personal character and moral development in shaping effective and ethical leadership.

Habits And Characteristics of Ethical Leaders

What is described below are some of the essential habits and characteristics to look for in potential leaders.  If you truly want to demonstrate your true nature and hone your ethical behaviour, then these are a good place to start.  Practice these habits and characteristics and watch your positive reputation grow. 

1. Be Honest

Sometimes people don’t like to hear the blunt truth at first  Leaders who maintain a reputation of always calling it like it is gain trust in the long run. Sugarcoating the reasons why a given task needs to be completed is not good for anyone. Most employees understand that sometimes they will draw the short end of the proverbial stick. Ethical leaders will lay out those situations as such and reward individuals for extra effort. 

2. Be Respectful

Honesty and respect do go hand-in-hand, but just because a leader is honest doesn’t mean they know how to convey things in respectful ways. Understanding that everyone in your work circle is going through different things is as important as being respectful of the fact that everyone comes from different walks of life, as well, and ethical leaders will practice and encourage diversity and inclusion in the workplace.

3. Encourage and Empower Individual Growth

Great leaders continually make those around them better, and the greatest of the great go out of their way to empower individuals to continue to do the same. Ethical leaders should not be afraid of any of their team members becoming even better than they are at a given task. The leaders should want that to happen, and ethical ones do. 

Ethical leaders are open to hearing ideas and should make the individual growth of their team members as important as the growth of the company. 

4. Be Stern Against Ethical Violation

The best way for caring and ethical leaders to prove that they believe what they preach is by showing no tolerance for anything that violates the ethical codes they lead by. Without displaying this zero-tolerance mindset, leaders will be taken advantage of and implementation of quality ethical behaviours will be much more difficult. 

5. Display a Team-First Mindset

Project management methodologies can work wonders in personnel management, especially the aspects related to making everyone feel equally important in a given process. Ethical leaders give themselves difficult jobs more often than they divvy them up to others, and this is the best way to prove with action words about teamwork

6. Encourage Ethical Practices Beyond the Workplace

Ethical leaders reflect their morals in the workplace outside of it, and participating in and encouraging involvement in community projects is a characteristic of all ethical leaders. As a bonus, corporate social responsibility adds to business longevity, so it’s a true win-win-win situation! People are helped, ethical practices are toned, and business does well. 

7. Be Proactive

Far too often in the workplace, issues are met with other issues, rather than being resolved. Ethical leaders will hear issues and immediately work to adjust them, rather than point a finger back at someone. Certainly, times will exist when a request can’t be met, but this should only happen when an ethical, fair decision has been made regarding the issue, and the reasons should be transparently shared. 

Ultimately, the old golden rule is the best thing ethical leaders can follow. Treat everyone you work with how you would want to be treated in their situation.

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Andrew Deen has been a consultant for startups in almost every industry from retail to medical devices and everything in between. He is currently writing a book about scaling up business and his experience implementing lean methodology.