A lot has been said about the leadership, its styles, how to incorporate etc. However, there is another side attached to these leadership styles which is called ethical leadership. “Ethical leadership is knowing your core values and having the courage to live them in all parts of your life in service of the common good” (Grace, 2006).
Ethical leadership comprises of two parts, “First, ethical leaders must act and make decisions ethically, as must ethical people in general. But, secondly, ethical leaders must also lead ethically – in the ways they should treat people in everyday interaction, in their attitudes, in the ways they encourage, and in the directions in which they steer their organizations or institutions or initiatives”. (Rabinowitz, 2013).
Vision and mission statements are generally associated with ethical leadership. “Vision provides the overall reference of what the organisation would like to reach and how it will look. Within this vision the mission statement defines what the organisation aims to acheive” (Mullins, 2013:665).
The 4-V model of ethical leadership is a framework which associates four attributes necessary for an ethical leadership. It can be regarded as a checklist for this leadership. They are:-
- Values: Values should be first discovered as a basic identity of a leadership. It should be integrated along with the choice-making on personal and professional level.
- Vision: is the overall picture of where an organisation will heed to. It provides a driving force behind the formulation of the strategy.
- Voice: is the essential of any leadership. All the ideals should be clearly communicated to the employees in order to go through a smooth operation.
- Virtue: is all to do with good ethics. Practicing vitreous behaviour instils the basic good character. Virtue can be said as a foundation of an ethical leadership (Gracy, 2006).
Should ethical leadership be practiced? Is it useful for an organisation? These have become the topics of most debates. For this, we’ll consider the benefits of ethical leadership and an example of going too far in unethical behaviour.
Benefits of ethical leadership:
- Corporate Social Responsibility (CSR) is a way in which an organisation can pay back to the society. Doing this not only helps the society but builds a good reputation for the organisation.
- Ethical organisations strike a good rapport with the customers and the stakeholders. A strong trust develops between them which is prospective from the business point of view.
- Greater trust and longevity are generally associated with the ethical leadership run organisations. More and more people tend to associate themselves with an organisation which has a good image.
- As a result profit level and customer count increases which gives a boost to the organisation.
- Sets out a good example within the corporate world. Other managers and organisations can learn a lesson form an ethically lead organisation.
Inspite of all the good values associated with the ethical way of business, some organisations tend to be un-ethical in order to maximise their profits. They do succeed in doing so but the charm is only short lived. A bit of unethical behaviour could still be tolerated but going way to far can prove costly.
One such example is of Enron which went bankrupt due to its un- ethical behaviour. “Its shoddy business practices, aided by bankers and advisors feeding from the gravy train, brought down the company in December 2001.” (Silverstein, 2013). This is a best example of a company which was quite far prom practicing ethical behaviour. At the end it was the company that bear the brunt not forgetting their stakeholders. “Unethical companies will eventually get exposed: Witness Enron. Companies that live and breathe their missions, by contrast, will get recognized by both the retail and capital markets. But solid principles are good for business, and ultimately good for corporation valuations” (Silverstein, 2013).
Ethical leadership could hence be said as a long and sustainable way of doing business. The pace of making profits might initially seem slow but is sustainable. Ethical way of doing business not only helps in increase of customers or stakeholders, but also gets renowned for its honest image. Starbucks for example started a joint venture with TATA- a company known for its values, to start their business in India. Mr. Schultz CEO of Starbucks was quite moved by the ethical leadership of Ratan Tata, head of TATA. “Mr Schultz said his company has developed an incredible relationship with TATA and he could not imagine bringing Starbucks to India without Ratan Tata’s assistance” (NDTV, 2013). This shows the level of trust gained by the ethical leaders in the corporate world.
Grace, B. (2006) Ethical leadership, [Online], Available: http://ethicalleadership.org/about-us/philosophies-definitions/ethical-leadership .
Mikulin, R. (2009) The Benefits of Running a Socially Responsible and Ethical Company, 11 Nov, [Online], Available: http://www.insidebusiness360.com/index.php/the-benefits-of-running-a-socially-responsible-and-ethical-company-16023/ .
NDTV (2013) Ratan Tata’s grace and wisdom moved me: Starbucks CEO, 19 Nov, [Online], Available: http://profit.ndtv.com/news/corporates/article-ratan-tatas-grace-and-wisdom-moved-me-starbucks-ceo-372629 .
Silverstein, K. (2013) Enron, Ethics And Today’s Corporate Values, 14 May, [Online], Available: http://www.forbes.com/sites/kensilverstein/2013/05/14/enron-ethics-and-todays-corporate-values/ .
Mullins, L.J. (2013) Management & Organisational Behaviour, 10th edition, Harlow: Pearson Education