There has been a lot of talk over the last few years about ethical leadership. A lot of that talk has been sparked by unethical behavior on the part of business leaders. From the fall of Enron in the early 2000’s to the sub-prime mortgage scandal, there never seems to be any shortage of examples of organizations where a leader’s bad behavior and selfish intents creates problems.
The challenge discussing ethics is that unlike laws that are clearly defined, ethics tend to evolve and change as the moral and fairness standards of a society progress. There is often a significant delay between when something begins to be considered unethical and it becomes illegal. Sometimes it takes a significant negative event (e.g., the Great Recession) for those ethical standards to become legally codified. Therefore if we want to encourage more ethical leadership behavior we can't just depend on leaders sticking to legal standards at the time. We have to make them think about three things.
- What does ethical leadership mean?
- What is ethical behavior?
- How do we encourage other leaders to be more ethical?
Deciding what ethical leadership means is tricky. It seems to be kind of like art in that it is hard to define but we know it when we see it. Or to be more precise, we know unethical leadership when we see it. For example, Amernic & Craig talk about the News Corporation phone hacking scandal in the UK and how it was largely a result of News Corporation CEO Rupert Murdock driving a culture where anything goes (2013). If we flip-flop this, we could contend that ethical leadership is about creating an environment and a culture where ethical behavior is the expected norm. This of course would lead us to the question of what exactly is ethical behavior in terms of organizations?
The question of ethical behavior is one that scholars have wrestled from the beginning of time. Traditionally ethics has been thought of to mean fair and equitable treatment towards customers, business partners, and even competitors. More recently that term has evolved to include corporations being concerned with corporate social responsibility and their impact on the global environment (Ormiston & Wong, 2013; Tarantola, 2013). Clearly the idea of what is (or is not) ethical is largely a function of the Zeitgeist and ecosystem in which the organization operates. To lead ethically, leaders must be tuned in to these evolving standards.
Even if we accept that ethical standards evolve, how do we encourage leaders to drive ethical behavior in others despite this moving target? Simply put we make it in their best interest to do so. We make unethical behavior more costly than ethical behavior. Why did the guys at Enron behave the way they did? They did it because they were initially rewarded for it. It is the same for the leaders at JP Morgan and all the banks that participated in the sub-prime lending debacle. They were rewarded for short-term gains regardless of the ethical implications or long-term impacts. If we want leaders to lead ethically, we must reward and punish based not only on the ends, but also on the means used to achieve them.
Amernic, J., & Craig, R. (2013). Leadership discourse, culture, and corporate ethics: CEO-speak at news corporation. Journal of Business Ethics, 118(2), 379-394. doi: http://dx.doi.org/10.1007/s10551-012-1506-0
Ormiston, M. E., & Wong, E. M. (2013). License to ill: The effects of corporate social responsibility and CEO moral identity on corporate social irresponsibility. Personnel Psychology, 66(4), 861.
Tarantola, D. (2013). Thinking locally, acting globally? American Journal of Public Health, 103(11), 1926.
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About the Author
Jimmy Brown, Ph.D. is a senior level management consultant with seventeen years of experience leading efforts to develop and implement practical strategies for business performance improvement. Dr. Brown has held senior level consulting positions at leading firms such as Booz-Allen & Hamilton, Accenture, and Hewlett-Packard.