Ethical Leadership and Organizational Success

Organizations seek secure and stable growth through the development of a long-term leader and follower relationship. Crews (2010) as cited in Gerard, McMillan, & D’Annunzio-Green (2017) argues that organizations need for new approach for leadership development within organizations. Although, organizations have failed to take the opportunities to adopt successful leadership development before the global financial crisis. The arguments suggest that there should be a leader and follower dialogue to put the idea of mutual-interdependency in practice.

The empirical research has provided an evidence that the ethical leadership represents an effective leadership style. According to Copeland (2015), studies could not introduce a multivariate model that illustrates the existence of a significant relationship between ethical leadership and organizational effectiveness, the expectations and preferences of the ethical leaders and the perceived values within organizations. Despite that, researchers assume that effective leadership is the main driver for the organizational success.

This report is mainly concerned with the ethical leadership behavior and its relation with effective decision making. It discusses the business ethics in organizations and ethical leadership, the values that support making ethical decisions and ethical leadership within organizations, the impact of social and public stresses for ethical behavior in organizations and finally promoting the organization’s CSR through values stakeholders within and outside the organization. 

The leadership ethical behavior was considered among the good manners that every leader should have. After the numerous ethical business scandals, for example, Enron, researchers started to separate the concept of ethical leadership from the other leadership styles that used to be considered in the leadership theories. According to Brown et al. (2005), as cited in Liu & Ren (2017), the ethical leader should be a moral person who expresses honesty and his followers trust him. He should be accountable, directs his followers in the ethical dimensions, sets the ethical standards and communicates in an ethical way. They also argue that the ethical behavior could be classified into three components, the individual traits, the establishment of ethical conduct and interpersonal relationship. Although, Liu & Ren (2017), argue that the leadership role in the organization should be a combination of these three concepts. The ethical leaders can make a positive impact on their organizations in terms of justice.

The ethical leadership theory mainly aims to achieve greater benefits through identifying the appropriate intent for achieving the organizational goals. It assumes that ethical leaders demonstrate high levels of emotional intelligence, respect the law, consider the public interest and maintains the professional standards (Roman, 2017).

Characteristics of Ethical Leadership

The ethical leaders are described with some characteristics, including honesty, empathy, altruism, fairness, empowerment and justice. These traits lead the followers to trust in their leader as their actions reveal faith, trust and confidence. Also, they influence the followers to follow the leaders’ directions as they trust that he acts according to their best interest. It is assumed to lead to goals achievement and high performance of the teams and the organization as a whole (Copeland, 2015).

The ethical leadership and follower theory that describes the relationship between ethical and unethical attitude has gained an increasing importance. Although, some researchers argue that this theory evokes an unethical behavior from the followers, but others as, Kalshoven et al. (2011), Detert et al. (2007) and Mayer et al. (2012), argue that ethical leadership is negatively associated with the followers’ unethical behavior.

Regarding the ethical characteristics of the leadership and based on the assumptions of the social learning theory, there is no described way that the ethical leader should follow. Each leader follows a certain way to influence his followers. The transactional leader uses effective communication and rewarding system to influence followers. It also results in a low engagement level of the followers in the socially disruptive behavior. According to Umphress et al. (2010), the unethical pro-organizational behavior (UPB) concerns with two main concepts; the first is that UPB acts in a morally unacceptable way by the society. The second is that this concept is not formally described within organizations. UPB also considers that increasing the moral awareness through social learning of the followers does not guarantee an improved moral conduct of the followers (Kalshoven, Dijk, & Boon, 2016). 

The ethical leadership increases the degree of employee engagement. The leader who treats the employees in a respected and fair manner, leads them to consider their relationships with their leaders as a social exchange process. The employees are more encouraged to make more effort to achieve the organizational goals. This also leads to the delegation of the authority and the employees to make decisions and act freely without the need of referring the leader’s judgement all the time. The ethical leaders empower the employees through continuous learning, training and support. The open communication between the ethical leaders and employees clarifies the organizational goals and the expected efforts of the followers. Employees become more job dedicated when they deal with ethical leadership (Engelbrecht, Heine, & Mahembe, 2017).

Relationship between Ethical Leadership and Employee Engagement

The self-development of the strategic leader theory assumes that there should be certain principles to control the process of decision-making. These principles include the way of acting while doing an activity and how to always develop and build his capacity (Sinha, 2017). The ethical leaders are able to give the right and supportive guidance to their followers about how to deal with problems, select the best alternative and take the right decision in the workplace. They provide guidance that helps the employee to overcome obstacles and make better performance (Peng & Lin, 2017).

The decision-making process requires to balance between the stakeholders’ needs. Information sharing within and outside the organization is essential. The decision making is highly influenced by the leader cognitive pattern. The core values of the leader guide the decision he takes. The decisions made in hard times are considered at the top rank that reflects the leaders’ values and beliefs (Mitchell, 2012).

The participatory leadership that was represented by Drucker assumes that the leaders believe that employees are self-motivated to perform their job tasks. The participative leadership involves information sharing and engaging the employees in the process of decision making. The leader is the responsible person as he reflects the managerial action. Accordingly, the good decision does not emerge accidentally, it has to be well prepared and reveals the collective efforts of the leader and the followers. It reflects the wise and ethical behavior of the teamwork. The good decision making requires good techniques. According to Gaissmaier (2011) and Moss (2011), as cited in Emery (2016) there are certain principles that should be considered in making good ethical decisions, they are represented in, determining priorities, setting time, gathering data, decision alignment with goals and ethics, balancing between decisions and follow up. 

The economic crisis has resulted in the development of the sustainable leadership theory. This theory requires a long-term perspective when making decisions. It aims at developing the employees’ capabilities to become more skilled and engaged to work activities. The sustainable leadership practices resulted in an increased customer value, lower costs and better performance (Gerard, McMillan, & D’Annunzio-Green, 2017).

According to Organ (1988), as cited Gao & He (2017), the employee behavior might not be recognized explicitly by the system of formal reward but contributes to the overall efficient and effective organizational performance. The corporate social responsibility (CSR) is likely to enable the employees to build a favorable ethical behavior, for example, the self-esteem. CSR is also considered to contribute to increasing the ethical leadership behavior. CSR is a decided and implemented by the top management in the organization, it controls the leadership behavior to be ethical. The leaders are supposed to act within the will of the top management represented in the CSR. Also, they are likely to be promoted for their ethical attitude. This means that the CSR developed and promoted by the top management influences the ethical leadership behavior of the middle and low-level management.

Strategic and Participatory Leadership Approaches in Ethical Decision Making

According to Ramamoorthy and Flood (2002), as cited in Gao & He (2017), the CSR accompanied with the moral aspects influence the leaders and the employees’ attitudes towards the ethical behavior that are enacted with the organizational policies.

The CSR and ethical leadership are supposed to improve the relationship with all of the organizational stakeholders, not only the employees. They disseminate the organizational values that increase the engagement of the stakeholders and decrease the employee turnover. The reduction of the turnover rate is accompanied by the level of work engagement to the workplace (Lin & Liu, 2017).

Organizations should recognize the various interests of their stakeholders to be able to maintain a sustainable relationship with them. Sustainability is likely to affect the organizational long-term performance. The sustainability of the organizational performance could be achieved when its employees are engaged, work in a healthy environment, treated fairly, empowered and motivated. The internal organization should encourage the effective and ethical leadership.  

The theoretical model that argues that the relationship between the leaders and stakeholders depends on the exchange is highly considered in today’s organizations. It focuses on the mechanic relationship between the two parties. Researchers as Ewen et al. (2013), as cited in Gerard, McMillan, & D’Annunzio-Green, (2017), argue that the social aspects should be considered in the relationship between the organizations and their stakeholders. They assume that the social aspects have the greatest impact on the relationship. They consider the social elements not only the outcomes of the relationship. 

The effective leadership main principle is to treat the stakeholders as partners. It involves being highly trusted, committed and dedicated to achieving considerable results within the organizational CSR. Robert Quinn, as cited in Caldwell & Anderson (2017), argues that leaders should recognize their shortages to be able to make decisions based on ethical consideration. He also assumes that leadership is about the moral power. It requires the leaders have long-term vision and rise above the individual interest and consider the collective interests. In addition, he assumes that great leaders are those who strive to achieve the outcomes that have social benefits and seek the opportunities to empower employees in order to discover their best skills.

The ethical leaders are challenged with communicating bad news with the stakeholders. Decision makers should communicate the bad news in an ethical way that minimizes their negative impact on the stakeholders. They should expect the potential response and negative feedback from the stakeholders and manage to avoid any problems. They should also be prepared with a plan that best serves the stakeholders and keeps the organization acting according to its ethical basis (Caldwell & Anderson, 2017).

Sustainable Leadership Practices and CSR to Promote Ethical Behavior in Organizations

Conclusions

The ethical leader should be a moral person who expresses honesty and his followers trust him. He should be accountable, directs his followers in the ethical dimensions, sets the ethical standards and communicates in an ethical way. These traits lead the followers to trust in their leader as their actions reveal faith, trust and confidence.

The ethical leadership increases the degree of employee engagement. The leader who treats the employees in a respected and fair manner, leads them to consider their relationships with their leaders as a social exchange process.

The open communication between the ethical leaders and employees clarifies the organizational goals and the expected efforts of the followers. The good decision does not emerge accidentally, it has to be well prepared and reveals the collective efforts of the leader and the followers. It reflects the wise and ethical behavior of the teamwork. The good decision making requires good techniques.

CSR is a decision made by the top management in the organization, it controls the leadership behavior to be ethical. The leaders are supposed to act within the will of the top management that is represented in the CSR. The CSR and ethical leadership are supposed to improve the relationship with all of the organizational stakeholders, not only the employees. Decision makers should communicate the bad news in an ethical way that minimizes their negative impact on the stakeholders 

References

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