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Ethical Leadership in the Workplace

Introduction

With countless moral shortcomings in corporations, sports, academia, and religious entities, ethics in the workplace has become a principle topic. Therefore, the focus of this research report will be examining the oft misunderstood definition of ethical leadership. In many executive and corporate circles, ethical leadership is defined as an individual’s characters and moral fortitude. However, this research report purports that ethical leadership must also include the cultivation of corporate ethics and culture. According to a research report from the National Business Ethics Survey (NBES), there’s a direct correlation between organizational ethics culture and the efficacy of the (E&C) ethics and compliance program (Ethics Research Center, 2015). The proposed thesis of this report is that organizational leadership should both model and encourages ethics in the workplace due to its ability to improve employee morale, increase organizational productivity, and ensure a healthy corporate organization.

Key Indicators of Ethical Performance

Ethical performance was assessed using five key indicators. Large organizations (90, 000 or more employees) with an effective (E&C) program scored significantly higher than those without effective (E&C) programs. In organizations with an effective (E&C) program only 3 % experienced pressure to compromise standards versus 23 % of those without an (E&C) program. Also, the reporting of misconduct only occurred 32% of the time for organizations without an (E&C) program versus 87% for those with an effective (E&C) program (Ethics Research Center, 2015). Such statistics reveal the value of intentionally creating an ethics program.

In addition to forming E&C programs an organization must retain equally competent ethical leadership. In fact implicit within the very formation of an E&C program is an understanding that ethical leadership does exists. Such leadership views constituents as worthy stakeholders who embrace common goals, with an aligned organizational vision and belief system. Individuality and autonomy are viewed as invaluable characteristics of a moral community. Also within ethical leadership there is the embodiment of organizational value systems while simultaneously translating such values to internal and external stakeholders (Freeman & Stewart, 2006).

Ethical Leadership and Workplace behavior

The Social Learning (SL) theory is often applicable within the realm of ethical leadership. In the workplace the SL theory enables leaders to guide internal stakeholders (i.e. employees) through the process of navigating ethical issues. According to Brow et al. (2005) as cited in Resick, Hargis, Shao, & Dust (2013) SL theory involves the demonstration of normative behaviors. This dualistic process requires a leader’s personal actions and interpersonal relationships to be consistently appropriate. Also, scholastic research shows that a subordinates actions (i.e. task performance and corporate commitment) are often dictated by ethical leadership. Subsequently the success of a leader to translate personal ethics into subordinate cognition and compliance will oft determine corporate ethical performance (Resick, Hargis, Shao, & Dust, 2013).

An ethical leader must model a broad ethical cognition and simultaneously operate as a moral manager. A moral manager enforces legal compliance, articulates ethical expectations, and promotes ethical accountability (Resick, Hargis, Shao, & Dust, 2013). The researcher recalls previous work experiences where a leader would be stronger in one role (i.e. moral manager) but not as competent in personal moral attributes. One leader specifically was very strong in the enforcement of compliance initiatives, but did not simultaneously inspire subordinates through personal ethical traits and modeled behavior.

The flow of leadership, a trickle-down model

According to D.M. Mayer et al (2009) ethical leadership is a tiered process. At the top level administration may display leadership however their direct social engagement with subordinates is often limited. Therefore, supervisors are likely to influence subordinates the most based on exposure to supervisory behavior. The cascading effect or model is effective only to the degree that ethical leadership flows downward. Another critical mechanism is that subordinates should be compelled to replicate ethical leaders. As leaders also incorporate a rewards and punishment system, employees are more likely to comply (D.M. Mayer et al, 2009).

The next level of ethical leadership is cross-pollination of what constitutes appropriate values and behaviors between subordinates. This is also understood as group-level construct and occurs through social engagement. There are several associated theories that expand upon the group-level construct theory. One is the social information processing theory which purports that individuals interpret cues from their environment. Within the social learning theory there is emulation of appropriate behaviors with the expectation of rewards and avoidance of inappropriate behavior. The avoidance is usually associated with the belief and understanding that unacceptable behavior will be punished by leadership (D.M. Mayer et al, 2009).

There is also the attraction-selection-attrition (ASA) model. This theory explains how homogenous work groups are established. In the ASA model organizations or workgroups proactively seek to place employees in groups with similar behavioral tendencies. This ensures a greater probability of compliance with normative behavior (D.M. Mayer et al, 2009). In previous work environments the researcher recalls instances where the ASA model was effectively utilized. In those instances there was noted efficiency and employee morale. The researcher also experienced a greater level of personal satisfaction within the workplace. However, unfortunately there were also instances where the ASA model was not utilized either because the organization was unaware of its benefits or simply chose not to implement it. In those instances the researcher experienced low-morale and observed higher turnover within the organization.

Ethical Leadership: A social learning perspective

Although implicit in previous literature analysis there are several salient points that are noteworthy. The first is that in order for the cascading effect to take place supervisors and administrators must be great models. Subordinates are less likely to be receptive to leaders that don’t themselves model ethical leadership. Additionally, it is important that the organization collectively communicates the importance of ethical leadership and cognizance. If there is a disreputable business environment even if the direct supervisors are not involved, it could have an adverse impact on employees. This could then cause them to resist any ethical modeling that takes place within the corporate environment (M.E. Brown et al., 2005).

Ethical Leadership: A review and future directions

What has essentially been described so far in the research paper are components of a social-scientific approach. Although it appears simplistic, organizations must begin by redefining what they view as ethical leadership. From a macro perspective ethical leadership in its truest form extends beyond the actions of one individual. In order for it to permeate the very culture of an organization role modeling and the formation of ethics within a specific work context must take place. There are also specific characteristics that are identified as necessary for moral leadership including agreeableness, conscientiousness, moral reasoning, and locus of control. Each of the aforementioned characteristics are positive in the nature. However, there are also extreme characteristics that leaders must be consciously aware of and avoid. This includes neuroticism and Machiavellianism which are psychologically driven by unhealthy psychological needs (Brown & Trevino, 2006).

There is also an identified causative relationship between ethical leadership and leadership theories (transformational, authentic, and spiritual). These are all viewed as having an ethical dimension of holistic leadership. Trevino et al. (2000, 2003) as cited in Brown & Trevino, (2006), conducted an exploratory research project. The objective of the project was to ascertain the perspective of what ethical leadership is from the perspective of senior executives. As such there were 20 senior executives and 20 ethics compliance officers who provided such feedback through survey responses. One insight gleaned from respondents was the understanding that executives oft viewed a moral person with altruistic motives as successful.

The study also revealed that ethical leadership was inextricably connected to the influence that such leaders have on subordinates. In other words being a moral manager was only one component of ethical leadership. Such leaders needed to translate their personal ethics into a leadership agenda that could be communicated to followers. This leadership agenda would outline a value message of acceptable behaviors in a clear and concise manner (Brown & Trevino, 2006).

Also the leadership agenda would inspire others through communication of desired outcomes. In this way subordinates felt compelled towards active involvement in the communicated agenda. Such intentional modeling and communication of value is essential for every organization regardless of industry. This is especially true given the fact many corporate cultures often are perceived as either ethically neutral or unethical in some respects (Brown & Trevino, 2006).

When examining authentic leadership key similarities with ethical leadership include altruism, ethical decision-making, integrity and role modeling. However, ethical leaders are more transactional and focused on others whereas authentic leaders focus on self-consciousness. There are also key similarities between spiritual leadership and ethical leadership. Spiritual leadership focuses on integrity, and modeling visioning, faith, as a life calling. Whereas ethical leadership focuses on behaviors and moral management as a process, spiritual leaders see it as a “deep” life calling. Transformational leadership is similar to ethical leadership however emphasis includes vision, values, and intellectual growth.

Misconceptions of Ethical Leadership: How to Avoid Potential Pitfalls

An attempt to understand why certain leaders experience instances of moral failure can be complex and frustrating. Perhaps this is why incidents like the Enron scandal in 2001 still represents a profile of epic corporate failure. For those pinpointing specific leaders that have had a moral collapse Bernie Ebbers, Ken Lay, and John Rigas come to mind. Two proposed reasons for incidents of moral inadequacy include poor character and social influence. Such responses according to psychologists are understood as fundamental attribution error.

While there may be some level of validity to the power of fundamental attribution error to influence leaders, there needs to be accountability for actions. In other words organizations cannot afford to remain powerless in the face of ethical adversity. The risk of moral failure is too great as it can translate to significant financial loss, a toxic work environment, and eroding trust from stakeholders (internal, external).

As such those seeking to operate as ethical leaders must learn how to cultivate their inner compass. This internal cultivation of an inner compass requires leaders to operate based on principle reasoning. However, there is a misconception that leaders should subsequently not be concerned with the feedback from others. But this concept is not accurate as leaders who become too self-reflective and not sufficiently externally focused become unbalanced. Very few persons would assess themselves as low on the scale in the areas of honesty and competency (Brown, 2007).

The ego has a strange way of distorting how a leader actually is operating. A comparative analysis of ratings by the individual, superiors, and subordinates often reveals that self-ratings are higher. This is not necessarily to indicate that the leader is consciously distorting their own self-rating for selfish gain although that does occur. Rather it is to indicate that due to psychological or emotional mechanisms an individual leader has an inclination to elevate their sense of self-accomplishment and worth (Brown, 2007).

Implicit within the understanding of psychological or emotional mechanisms is the existence of bias. Such bias is not beneficial for the leader, subordinates, or the organization as a whole. One example provided is where managers take credit for the attainment of corporate goals but deflect blame. While this may feed the ego of the leader in the short-term the long-term risk is far greater and more costly. In the leaders mind they are avoiding negative criticism because they may perceive themselves as morally superior. However, subordinate trust is based on a willingness to listen to constructive feedback from all internal stakeholders (Brown, 2007).

In fact it could be argued that when there is moral engagement through constructive discourse the organization grows. Nothing communicates value as much as allowing every stakeholder to know that their voice matters. Leadership research is most accurate when it considers employees rating of leaders, as opposed to self-ratings. Subordinates are more likely to rate leaders accurately as they understand that their success, and organizational success is directly tied to leadership success.

Conclusion

Ethical leadership in the workplace is challenging but a necessary component of every organization. It is necessary not just to model and communicate ethical leadership, but feedback is equally important. Perhaps this is why the majority of all Fortune 100 companies implement a multi-source feedback system. For example Procter & Gamble CEO A.G. Lafley, implements a system that enables employees to comment on his performance. Also, the U.S. navy is in the process of rolling out a 360 degree program for feedback to occur (Brown, 2007). When employees see that there is a standardized process for providing such feedback that is a great start to building organizational trust. However, this must simultaneously be combined with adherence to feedback as mentioned throughout this report.

The researcher recalls a previous supervisor who had an open door policy but was not receptive to feedback. This was frustrating as the researcher felt unappreciated and disrespected. Although the researcher understood the supervisors challenging workload it appears that the supervisor made time for other employees. This created within the researchers mind a feeling that the supervisor operated with a double-standard. Also, the supervisor only provided feedback when it was of a critical nature and did not provide praise for excellent work.

This experience can be contrasted with a supervisor from another company that showed great appreciate for the researcher. Not only was their opportunities for promotion, the supervisor also spent time personally mentoring the researcher. This resulted in increased job satisfaction and more authentic trust in the subordinate-supervisor relationship. In fact, there was also greater trust and feelings of appreciation by the researcher. Although the supervisor in the second scenario was also the CEO this made the work experience even more rewarding. If anyone had the opportunity to say they were too busy for mentoring it would have been the CEO.

References

Brown, M. E. (2007). How to Avoid Potential Pitfalls. Organizational Dynamics, 36(2), 140-155.

Brown, M. E., & Trevino, L. K. (2006). Ethical Leadership: A review and future direction. The Leadership Quarterly, 17(6), 595-616.

Brown, M. E., Trevino, L. K., & Harrison, D. A. (2005). Ethical leadership: A social learning perspective for construct development and testing. Organizational Behavior and Human Decision Processes, 97(2), 117-134.

Ethics Research Center. (2015). The State of Ethics in Large Companies. Retrieved from http://www.ethics.org/nbes/wp-content/uploads/2015/03/LargeCompaniesExecSummary.pdf

Freeman, E., & Stewart, L. (2006). Developing Ethical Leadership. Retrieved from http://www.corporate-ethics.org/pdf/ethical_leadership.pdf

Mayer, D. M., Kuenzi, M., Greenbaum, R., Bardes, M., & Salvador, R. (2009). How low does ethical leadership flow? Test of a trickle-down model. Organizational Behavior and Human Decision Processes, 108(1), 1-13.

Resick, C. J., Hargis, M. B., Shao, P., & Dust, S. B. (2013). Ethical leadership, moral equity judgments, and discretionary workplace behavior. Human Relations, 66(7), 951-972.

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