Ethical leadership is becoming increasingly recognized as an important variable for organisational success. The meaning of ethical leadership is not however absolutely clear. What does ethical leadership involve and what are its benefits?
In this article Jane Van Buren discusses ethical leadership. She defines ethical leadership as “the process of influencing people [to achieve goals] through principles, values, and beliefs that embrace what we have defined as right behavior.”
Van Buren confines her discussion of ethical leadership to the context of non-profit organizations which depend on donations to function. Van Buren is right to recognize that ethical practice is very important for non-profit organisations and she notes a few important areas in which ethical questions are raised in non-profit organizations. Here is a list of the most significant areas:
1. Compensation
Giving that non-profit organizations rely on donations for their functioning it is only natural that there is an expectation that salaries should not be too high. Very high salaries in non-profit organizations is deemed unethical.
2. Conflict of Interest
Non-profit boards are often made up of community members that have interests outside of the organization. This introduces the possibility of biased decision making to favor the interests of the board members.
3. Financial Integrity
Non-profit organizations face question about where they should accept money from. Should an organization working with people affected by cancer accept money from a tobacco company?
4. Publications and Solicitations
Non-profit organizations must be transparent in all publications and in all solicitation for funds about the percentage of funds spent on administrative costs.
Van Buren notes that ethical leadership is essential for getting the above things right in a non-profit organization. It is clear that leaders set the moral tone for an organization. Some of the steps leaders can take to create a strong ethical culture include, setting themselves up as ethical role models. Communicating ethical expectations is also essential so that employees are aware of the “code of ethics” they are expected to observe. Other measures include providing ethical training to employees and institutionalizing an ethical culture by measuring employee performance against the code of ethics.
There are benefits to the strict adherence to such a code of ethics. It does seem to be a good thing in itself for organizations, particularly non-profit organizations to get these ethical questions right. This makes for a healthy organisation that can make a meaningful contribution to society. Beyond this there is also the benefits of enjoying a good reputation. An ethical business will inevitably get a reputation for being ethical and reap the rewards from this reputation as such a reputation often leads to customer loyalty or donor commitment.
There is another benefit to be gained through ethical leadership but this benefit is not capture by understanding ethical leadership merely as the cultivation and organizational adherence to an ethical code of conduct. The benefit I have in mind is the commitment of the employees to the well being and interests of the organisation. Such commitment is not the result of the existence of an ethical code of conduct but rather the result of a benevolent intent on behalf of the leader towards his/her employees.
The benevolent intent of the leader is a firm commitment to care for and grow his/her subordinates. Ethical leadership has to include this element, a leader has the obligation to look after the well being of his/her employees and be genuinely concerned about their empowerment. That this is overlooked by Van Buren’s understanding of ethical leadership is evident from her definition of ethical leadership. She understands ethical leadership as influencing people to achieve goals, but in line with an ethical code of conduct. The issue here is the idea that ethical leadership is about influencing people to achieve goals. This cant be ethical leadership, it is closer to manipulation than it is to ethical leadership. Ethical leadership should instead be defined as “assisting subordinates to achieve excellence whilst observing ethical principles, values, and beliefs that embrace right action.”
A leader who does this for his/her employees will inevitably get the commitment of the employees. They will also end up with excellent employees who are exceptionally capable human beings who can accomplish their tasks with distinction. It is important to note that helping subordinates achieve excellence is not a matter of being nice all the time. This is a common mis-conception. An ethical leader will be absolutely concerned with what is good for the subordinate, even if that is harsh punishment. The key variable is the intent of the ethical leader, the ethical leader must be concerned in the first instance for the well being and excellence of his/her subordinates. The job of a leader is the excellence of his/her subordinates, an ethical leader succeeds in recognizing this.
A code of conduct is an important element in any organization and it is part of the job of the ethical leader to cultivate adherence and strict observance of it. This does not however fully capture what is required of an ethical leader. The other element that is required is a genuine commitment to the well being of the subordinates.