What sets a thriving work culture apart from a toxic work culture? Why do some organizations enjoy lasting success while others go off the business radar after a scandal or two? Why do employees get excited about interviewing at some companies and not at others? The answer is in two words: Ethical leadership.

Let’s understand what ethical leadership is all about, why it’s so valuable for organizations, and what makes a leader ethical.

Ethical Leadership + Why It is So Valuable

An ethical leader is someone who follows an ethics-first approach. They become a positive role model for their people by demonstrating qualities such as integrity, trust, honesty, fairness, accountability, and more.

Countless magical things happen when ethical leaders lead an organization. What sets an ethical leader apart is their ability to find every opportunity to create a positive, ethical, and productive environment for their people. Ethical leaders:

  • Establish a thriving organizational culture where everyone works as a team and wins!
  • Help attract and retain the best talent. According to a study by Frontiers in Psychology, ethical leadership is strongly associated with employee job satisfaction.
  • Help build customer loyalty. Customers today want to buy from companies that reflect strong moral values. For instance, about 66% of shoppers spend their money on brands that prioritize sustainability.
  • Help attract investors. When investors know that a business is led by ethical leaders, they feel more confident investing in it. After all, an ethical leader creates an ethical business. An ethical business then lowers the risk of negative publicity, regulatory fines, reputational damages, and other financial losses.

Some Examples

Here are some examples of business practices that demonstrate strong ethical leadership:

  • Everlane’s commitment to prioritizing its employees’ well-being + being transparent with their factory and supply chain process.
  • Costco’s practice of paying salaries that are well above the average industry numbers to attract the best talent and keep their turnover rates low.
  • Hiring a third party risk monitoring company to run a sanction screening program or to offer a confidential HR Hotline for employees.

What Contributes to Ethical Leadership?

While there are no specific rules to lead ethically, leaders known to do so have the following things in common:

Ethical Leaders Always Lead by Example

You can’t expect your team to put their best ethical foot forward when you fail to model similar behaviour. When employees see their leaders do the right thing, they begin to make decisions with ethics in mind. For instance, when a leader openly refuses to do business with a company that doesn’t put the environment first, the employees notice and bring similar ethical traits to their work ethic.

They Live and Breathe Equality

Ethical leaders lead with fairness. They also respect everyone equally. With an ethical leader at its helm, a workplace always enjoys a productive environment where everyone feels respected, supported, and valued. What’s more, treating everyone equally and respectfully helps these leaders create an environment of trust. This in turn lowers the amount of misconduct.

They Evolve Every Step of the Way

Ethical leaders are masters of adapting to change in the business world. This quality enables them to stay on top of laws, regulations, and rules as their organizations expand, merge, or get bought out. Ultimately, when leaders evolve and steer the ship in a positive direction, they’re employees evolve with them.

They are Great Problem Solvers!

Solving an issue isn’t just about arriving at a solution. It is about making a decision that is fair to everyone involved. Instead of solving a problem for the sake of solving it, an ethical leader will consider all opinions and offer an impartial judgment. Their goal is to ensure everyone in the workplace works as a team well after an issue has been resolved. Instead of brewing negativity, they nurture positive interaction and boost the overall team camaraderie.

They Communicate Clearly (and Openly)

Leaders who put ethics first are often great communicators. By communicating their expectations clearly and openly, they transform their workplace into a place of honesty and trust. They also use communication as a tool to stay aware of and resolve any issues within their organization.

They Create a Safe and Trusting Environment

According to a study by Harvard Business Review, about 67% of participants considered the ability to “demonstrate strong ethics and provide a sense of safety,” to be the top competency of a great leader. By setting high moral and ethical standards and effectively communicating these expectations with their teams, ethical leaders create a space where employees can relax, engage freely with teammates, innovate, and ultimately succeed at what they do.

They’re Aware of Implicit Biases

A leader who values ethics won’t hesitate to look into themselves for any unconscious biases. Furthermore, they will take every possible step to overcome these biases to create a positive and inclusive workplace.

They Reward Good Behavior

Ethical leaders know that what gets rewarded gets repeated. They don’t hesitate to appreciate their people every time someone does the right thing. By rewarding good behaviour, ethical leaders encourage everyone in the workplace to operate with ethics in mind.

Value Driven

Ethical leaders consider the values, mission, and vision of their organization as their moral compass. They only work with companies that advocate for similar values. These leaders also contribute their positive values to their company, accelerating its journey toward success.

Empathetic

Ethical leaders know how to put themselves in their employees’ shoes. They are empathetic communicators and listeners. They encourage their people to do the right thing, understand their concerns, and lead them through effective solutions.

Transparent

However unpopular a fact may seem, a leader with an ethics-first mentality will communicate it. They strongly believe in creating a culture of transparency to ensure everything stays out in the open and everyone makes morally right decisions with the information they’re given.

A Final Word

Good ethical leadership and high standards go hand in hand. A leader who values ethics and knows how to steer their team in the same direction is truly a gift to any organization. It’s a flawed belief that there is a choice to make between being ethical and being profitable. The fact is, that ethical leaders and employees are the strongest possible drivers of success.

  • About the Author
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Giovanni Gallo is the Co-CEO of Ethico, where his team strives to make the world a better workplace with compliance hotline services, sanction and license monitoring, and workforce eLearning software and services.

Growing up as the son of a Cuban refugee in an entrepreneurial family taught Gio how servanthood and deep care for employees can make a thriving business a platform for positive change in the world. He built on that through experience with startups and multinational organizations so Ethico’s solutions can empower caring leaders to build strong cultures for the betterment of every employee and their community.

When he’s not working, Gio’s wrangling his four young kids, riding his motorcycle, and supporting education, families, and the homeless in the Charlotte community.

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