Many of us will have experienced ethical leadership - alternatively, some of us will have experienced a lack of ethical leadership in our professional lives. Having people in place at the very top will determine what kind of leadership style is in place. Ethical leaders give way to employees by inspiring, developing and creating a culture of trust and respect.
It’s becoming increasingly apparent that the future of business, and the future of leading change in our workplace practices will be leadership that is more ethical and strives to deliver results in a more holistic way. But what is ethical leadership and why is it so important in the way we approach business today?
From delivering winning teams to lower turnover, higher productivity, and loyalty towards the company, ethical leadership has many different advantages which we will look at in detail in the coming guide.
We are going to dive deeper into the world of ethical leadership, what it is, why it is so important, ethical leadership principles and take a look at some examples in industry today about ethical leaders.
What is ethical leadership?
Ethical leadership is when business leaders demonstrate appropriate conduct - in accordance with recognised 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 that their actions and words are respected and followed with the same convictions from their staff.
You could say that we see poor examples of ethical leadership in many of our politicians and CEOs today but there are equally good examples of leaders in both these fields where ethical leadership has been a key turning point for their success.
The importance of ethical leadership
Ethical leadership has many benefits, and these have been studied over time by clinical researchers and highlighted in many successful business stories. Here are just some examples of the benefits to ethical leadership.
- 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 behaviour.
- 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, there is a rucksack company in the UK called Millican which 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 and in return getting trust back. 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 amongst investors generally. They are creating a general good impression and a positive brand image in the market.
The overall perception of ethical leadership is that to promote a business which stands for the just causes and sees that their staff is well looked after. This creates a positive image around the business, it’s people and the product or service it is producing.
Ethical leadership principles
We have 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 most commonly associated framework which best explains the principles of ethical leadership. We will now break this down.
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.
There is no place for favouritism in fairness when the situation is the same for everyone, and equally, fairness is also related to how you discipline someone. If two people commit the same error, then they need to be punished the same way.
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 that runs through it. How can you be expected to complete work if you don’t trust that your team won’t use it, or claim it as their own etc. Trust is integral to the way we live and work - we expect that those around us to trust and develop high-performing teams, whether in the military, football teams, or teams within your company.
Honesty
We all appreciate it when people are honest with us, so when our leaders are, what does that do? It creates an environment where we can openly discuss important issues. This feeds directly into trust, and if you can’t be honest with someone then trust is eroded and you can’t hear the truth in that discussion either.
Equality
There has been much discussion about equality in our day to day lives but equality forms the basis of our survival and happiness. No one wants to be treated as unequal and discrimination against a myriad of things does nothing to either help us in both our survival and happiness.
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 is how toxic some discussions in the world have become. Respect at its core is that 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.
Traits 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 do 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? Yes should be the answer.
- 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 favouritism being played out and no ill treatment of any member of staff through any form of discrimination. Ethical leaders are equipped to listen attentively, being compassionate, considering opposing viewpoints fairly and valuing their contributions equally.
- Open communication
Being a good communicator is also the sign of an ethical leader. From greeting people to holding presentations and discussing topics in meetings, being a good, open communicator is a trait that is sometimes overlooked. Building an ethical team requires this 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 satisfy 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. One of the key traits to an ethical leader is that of tempering stressful situations and listening to the team attentively 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
Key to ethical leadership is the ability to listen to others and find common solutions that work for the benefit of team members rather than just one individual at a time. Change is sometimes thrust upon a business, an environment, a team without any warnings - and sometimes with a warning.
Ethical leadership is about understanding the 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 to account on a daily basis therefore it is about doing the right things at the right times - not when it is convenient to or when someone is watching. This is why, holding themselves accountable and not allowing others to break ethical codes of conduct is essential.
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.”
What this means in the short and long term of a business can be defined. In the short-term, ethical leaders can boost morale and get staff to feel excited about their work and also happy about their management - going that extra mile to achieve for the team. It can have positive effects on building teamwork and creating a better organisation overall by making people feel happier being there.
In the long-term ethical leadership can prevent company scandals, ethical dilemmas, and ethical issues. This can lead to better partnerships and customers which leads to better revenues and profits as well as developing loyal employees who are also a crucial element of long-term success for a business.
The good news is that, if you want to build an ethical leadership framework, you can. It is something that is totally achievable no matter what size of business you are and the people working in the business. 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 take a lot of courage to deal with and confidence to follow through with solutions you think are right
- Confront the issues - as challenging as they may be - with integrity and confidence.
- Don’t shy away from dealing with the matters.
Be aware of the ethical risks associated with certain processes
- Be aware of, act on and address ethical issues around recruitment, termination, promotion, etc.
- Where required, ethics and ethical law may need to be applied together to ensure that you are doing nothing illegal even when following processes that have been signed off.
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 be based around certain cultures, religions or general issues.
Respect
- Developing and gaining respect between teams and employees across the business.
Ethical leadership examples
There are plenty of real life 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 - but this was 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 which was called, ‘We See Equal ’ helped them to look at recruitment in a different way and opened the doors to more egalitarian hiring practices and championed the inclusion of more women in senior positions.
Gary Ridge, CEO of WD40 passionately speaks about how creating a culture of trust (not fear), respect, and candour 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.
Thomas has helped organisations develop more ethical leadership such as with Durban University Technical (DUT) where they helped managers do better at rating their teams performances. Over time, the Thomas team managed to put together a system which allowed for the candidate to be treated and tested 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. For many years, it has donated at least 1% of sales or 10% of profit - whichever is more - to environmental groups. Considering he 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 always buying new ones - 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
You want to be able to have all the facts from all sides before making any kind of decision. Be sure to get clarity on the matter in hand, understand what has actually 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 & education
It may be that the ethical issue at hand is also something where better training and education is needed. One or more 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/company. It also helps to train the business on some of the lesser known areas of ethics by getting people to talk about these issues more openly and getting them to be 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 behaviour 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 in order 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 organisation, this may be your boss’s leadership, general counsel, a compliance officer, a hotline, an auditor, or an HR representative.
Importantly, any ethical issues that are not easily resolved are escalated swiftly, if necessary, 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 be detailed on the ethics and the ethical decisions that an organisation must take. To further this, employees must sign the new policy, indicating their understanding and pledging their compliance, they agree 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 recognised 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 amongst 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 behaviour 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 amongst 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.
