Ethical leaders inspire their team, create a culture of respect and a feeling of psychological safety. It is a vital skill if you want your employees to feel respected, empowered and supported at work – but what is it? And how can you make sure Ethical Leadership is being prioritised in your business?
We are going to dive deeper into the world of ethical leadership, what it is and why it’s so important. In this blog, we’ll cover the ethical leadership principles and take a look at some examples in industry today about ethical leaders and the positive changes their making in their organization.
What is ethical leadership?
Ethical Leadership is when business leaders demonstrate appropriate conduct - in accordance with recognized principles and values - both inside and outside of the office.
Through their words and actions, ethical leadership is about demonstrating strong moral principles that will point out wrongdoings (even when it may not benefit their business) and showing what’s right at the core of being an ethical leader. Ethical leaders set the example for the rest of the company and expect their actions and words to be respected and followed with the same convictions from their staff.
We have some poor examples of ethical leadership in many of our politicians and CEOs, but there are equally good examples of leaders where ethical leadership has been a key turning point for their success.
Why ethical leadership is so important
The benefits of Ethical Leadership have been studied by clinical researchers and highlighted in many successful business stories.
By implementing Ethical Leadership, you’ll see benefits such as:
- Improved brand image
Maintaining moral brand practices has become even more important today in a digital, fast world where one image can destroy a brand. By behaving and acting responsibly, Ethical Leadership can dramatically improve brand image to onlookers.
- Improved staff morale
Ethical Leadership is about leading, inspiring, motivating, and making the employees feel accountable for their work. When this happens, greater business success is achievable because employees are happier to be at work.
- Positive workplace culture
If ethical leaders can influence results, then they can equally influence workplace culture. Walking the walk and talking the talk is where ethical leaders can develop the workplace to inspire and motivate others to follow good ethical behavior.
- Customer loyalty
Customers are moving away from buying a “good product” - they want their purchases to be ethical as well. A business who can demonstrate good ethical choices and decisions will benefit.
For example, rucksack retailor Millican aims to “re-use as much recycled material as possible (88%) in the construction of their items and inspire climate awareness initiatives through our working practices.”
- Staff loyalty
Ethical Leadership is about building trust with your employees. If people feel less threatened, less objectionable to the direction of the business, an increase in staff loyalty is more than achievable.
- Improved recruitment
With more people working remotely, hiring the right people who possess both ethical and moral ideas is essential in order to reflect those of the business and the leadership so that the company can receive equal service.
- Attracting investment
Potential investment is increased when a business stands for clear ethical and moral practices, as they inspire confidence among investors generally. They’re creating a general good impression and a positive brand image in the market.
The overall perception of Ethical Leadership is a business which stands for the just causes and sees that their staff are well looked after. This creates a positive image around the business, its people and the product or service it’s producing.
Ethical leadership principles
We’ve spoken a lot about ethical leadership, but there is a framework that needs to be followed for it to mean anything. The acronym, FATHER is the framework which best explains the principles of ethical leadership.
Fairness
Fairness is a core ethical leadership attribute. Fairness is about how humans interact with each other and expect to be treated. We expect to be treated fairly and in return we treat others fairly.
Accountability
Being accountable for poor decisions and mistakes is a good thing; this is another important attribute of ethical leadership. Some of us make a mistake and like to move on quickly, others like to blame someone or even the gods. But taking accountability for a mistake shows you are a strong, well-rounded leader who people would like to follow.
Trust
You can’t have a great team without trust, and it’s vital when leaders are developing a high-performing team.
Honesty
We all appreciate it when people are honest, so when our leaders are it creates an environment where we can openly discuss important issues. This feeds directly into trust. If you can’t be honest with someone then trust is eroded and you won’t be able to hear the truth in that discussion either.
Equality
Discrimination shows that you are working with someone who is not well rounded, ethical or moral whatsoever. Working with ethical leaders means that the playing field is the same in their eyes, and in turn, fosters an attitude that looks at these issues with the same level of respect around the team.
Respect
The art of respectful disagreement has been lost. There are hundreds of YouTube videos designed to show us how we can do it – that’s how toxic some discussions in the world have become.
Respect at its core is whilst you may not agree with the other person, you show regard for their wishes, feelings and rights. A real understanding of humanity is about showing the ability to consider the ideas and thoughts of others and why there are differences in thoughts and different points of views.
Characteristics of ethical leaders
We have gained an understanding of Ethical Leadership - “when business leaders demonstrate appropriate conduct” - and using the FATHER acronym, we have come to understand what the principles of ethical leadership look like.
So, how can ethical leaders demonstrate these principles in practice? Here are some key points.
- Sets a great example
Walking the walk as much as talking the talk is one of the most important aspects of ethical leadership. Ethical leaders would have high standards for their team, the same standards they set for themselves on a daily basis. Would they do the job that they are asking someone to do for them? The answer should always be ‘yes’.
- Respects everyone equally
Holding respect for others and equally around the team and company is another example of ethical leadership. Egalitarian treatment of their peers is key, there is no favoritism being played out and no ill treatment of any member of staff through any form of discrimination. Ethical leaders are equipped to listen attentively, be compassionate, consider opposing viewpoints fairly and value their contributions equally.
- Open communication
Building an ethical team requires communication to trickle down in the day-to-day discussions, helping to build trust and respect for one another.
- Fair mediation
Being able to mediate issues is also a key strength of ethical leadership. Showing fairness, listening to both sides equally and coming up with solutions that satisfies both parties is essential. Again, the treatment of others in creating an egalitarian standpoint is critical in an ethical leadership style.
- Effective stress management
Ethical leaders have the task of managing teams where stress can be a factor. These teams are generally high performing and require persistent encouragement and understanding of the job at hand.
A key trait of an ethical leader is the ability to manage stressful situations and listening to the team when things are starting to bubble over. Being a calming influence and creating the environment of fairness and trust helps to do this.
- Adapts to change
A key to ethical leadership is the ability to find common solutions that work for the benefit of team members rather than just one individual.
Ethical leadership is about understanding changes, listening to concerns but also making decisions that need to be made and respected across the team. Working in new environments and scenarios can happen at any time, an ethical leader can help make it a smooth transition.
- Zero tolerance of ethical violations
Ethical leaders hold themselves accountable and don’t allow others to break ethical codes of conduct.
How are ethical leadership skills developed?
When you think about what Ethical Leadership is, it’s pretty simple. Ethical Leadership is a way of putting people into management and leadership positions who will “promote and be an example of appropriate, ethical conduct in their actions and relationships in the workplace.”
In the short-term, ethical leaders can boost morale, get staff excited about their work and go that extra mile to achieve for the team. It can have positive effects on building teamwork and creating a better organization overall by making people feel happier being there.
In the long-term Ethical Leadership can prevent company scandals, ethical dilemmas, and ethical issues. This leads to:
- Better partnerships and customers
- Better revenues and profits
- Developing loyal employees
All of which is a crucial element of long-term success for a business.
The good news is if you want to build an ethical leadership framework, you can. Here are just some of the ways you can build ethical leadership skills;
Deal with ethical dilemmas in a timely manner
- Ensure issues are dealt with and solved as soon as possible to avoid further issues.
- Listen to your stakeholders who are raising the issues. Don’t ignore them and escalate as quickly as possible.
- Consult your ethical framework - may be a charter - to see where the business may have a procedure for disciplinary issues if required.
Develop confidence skills
- Ethically challenging situations takes a lot of courage.
- Confront the issues with integrity and confidence.
- Don’t shy away from dealing with the matter.
Be aware of the ethical risks associated with certain processes
- Be aware of, act on and address ethical issues around recruitment, termination, and promotion.
- Where required, consult ethics and ethical law.
Education
- Continue to educate yourself and other leaders on ethical practices in business and management.
- Stay informed on the latest issues that employees may be facing, whether they're based around certain cultures, religions or general issues.
Respect
- Develop and gaining respect between teams and employees across the business.
Ethical leadership examples
There are plenty of examples of ethical leadership across businesses and institutions of different sizes.
The first comes from the USA where, during a time of mass political inaction, one company decided to make a stance about the selling of firearms in their stores. Dick’s Sporting Goods decided to remove the ability for customers to buy guns in their stores - much to the anger of some of their customers - in response to mass shootings taking place across the country in schools and parks. Whilst they faced a backlash initially, Dicks Sporting Goods has gone on to deliver record profits and share values since.
Procter & Gamble may have spent years being seen as testing the boundaries of ethics but a decision in 2019 saw them address a key gender bias issue that they found across their business. Their campaign, ‘We See Equal ’ helped them to look at recruitment differently and opened the doors to more egalitarian hiring practices and championed the inclusion of more women in senior positions.
Gary Ridge, C.E.O. of WD40 passionately speaking about how creating a culture of trust (not fear), respect, and candor has been transformative: "Leadership is about learning and teaching. Why waste getting old if you can't get wise? We have no mistakes here, we have learning moments," he explained in a Forbes interview. Under his ethical leadership values, Ridge has seen the company have a 90% staff retention rate and shareholder value increase year on year in the last 14 years.
At Thomas, we’ve helped many organizations develop ethical leadership, such as Durban University Technical (DUT). Here, we upskilled managers in how to deliver constructive feedback to their team members and helped put together a system to allow candidates to be treated in a fair and ethical way.
Another great example of ethical leadership comes from the outdoor clothing company Patagonia which, thanks to its founder, Yvon Chouinard has a strong ethical core. Patagonia donates at least 1% of sales or 10% of profit - whichever is more - to environmental groups, and has done for many years. Considering Chouinard pioneered mountain climbing, it shouldn’t be a surprise. But in 2008, when CFO Rose Marcario joined the company and became CEO in 2014, she took that to a new level.
Whilst also achieving financial success, Marcario has fought to defend public lands and has created Patagonia Action Works to help its customers become involved in environmental and social activism. She has also encouraged customers to exchange and repair their clothes rather than buying new - standing true to the idea that “you do things not when it is convenient or when someone is watching, but because it is the right thing to do.”
How can you deal with ethical issues in the workplace?
What are the best ways to deal with ethical issues in the workplace? Here are just some of the more common practices.
Clarification
It’s important to gather the facts from all sides before making any kind of decision. Be sure to get clarity on the matter in hand, understand what happened and get the details.
You want to be able to equally consider all perspectives and backgrounds. Ensure that you have thought about cultural or language differences and how this may be a factor in the situation that is being investigated.
Provide resources and education
It may be that the ethical issue at hand is something where better training and education is needed. Involved parties may require more information on the ethics around the particular topic.
Providing ethics training can also set a precedent for conduct across the team and company. It helps to train the business by getting people to talk about these issues more openly and making them more aware of these problems in the future.
Employers must provide educational opportunities for all employees in order to successfully implement policy changes and set goals for senior leaders and managers. This may include literature or multimedia presentations explaining the importance of the changes, “icebreaker” games that demonstrate acceptable behavior or workshops with experts in the ethics field.
Escalate issues if necessary
Once you have clarified the situation with all parties, that should be enough to take action. However, sometimes, you may find that clarification isn’t all that is needed. You will need to escalate the situation if that hasn’t worked, and you’ll need to determine the next person to inform.
Depending on your organization, this may be your boss’s leadership, general counsel, a compliance officer, a hotline, an auditor, or an HR representative.
It is vital that any ethical issues that are not easily resolved are escalated swiftly and action is taken at the appropriate level.
Maintain consistency in handling of similar issues
The biggest issue with Ethical Leadership is how consistent you should remain in all of these decisions. The way to clarify this is by creating a policy which must detail the ethics and the ethical decisions that an organization must take.
To further this, employees must sign the new policy, indicating their understanding and pledging their compliance and agreeing to hold themselves to a higher standard and to face the consequences of not doing so. Employers must agree to hold themselves to this same standard. If either side compromises the agreement, the system will fail.
Setting a precedent for how quickly and efficiently similar issues are handled is essential for creating a culture that respects ethical considerations.
Find and develop ethical leaders with Thomas
Ethical leadership is when business leaders demonstrate appropriate conduct - in accordance with recognized principles and values - both inside and outside of the office. It’s becoming increasingly apparent that the future of business, and the future of leading change in our workplace practices will be when we have leadership that is more ethical and strives to deliver results in a more holistic way. From the added benefits - including financial ones among others, ethical leadership is about being accountable for actions and facilitating change that matters.
The difference between an acceptable leader and an exceptional leader often lies with emotional intelligence. Emotionally intelligent leaders are self-aware, excellent communicators and can adapt their behavior to suit a variety of situations. Thomas' Emotional Intelligence assessment (also known as TEIQue), explores levels of emotional intelligence, creating an environment of understanding that boosts self-awareness among your leaders and can be used for both recruiting and developing leaders.
If you would like to learn more about how Thomas can help your business work towards ethical leadership, speak to one of our team.
