Leadership and Ethical Decision Making: A Brief Overview

The best way to understand ethical leadership is to examine each of the components that define an ethical leader.

Core Values

Ethical Leadership is a demonstration of normatively appropriate conduct through personal actions and interpersonal relationships and the promotion of such conduct to subordinates through two-way communication, reinforcement and decision making.

Ethical leadership means that individuals behave according to a set of principles and values that are recognized by society and relevant professions as a sound basis for the common good. These include:

• Integrity
• Respect
• Trust
• Fairness
• Transparency
• Honesty
• Responsibility & Accountability

Ethical Principles

The literature identifies five principles for ethical leadership including: build community, respect others, manifest honesty, exhibit justice, and serve others. These five principles define much of what ethical leaders should do. Here is a bit more detail on the characteristics of these principles:

• Maintain honest relations with employees.
• Subordinates will strive to perform more innovatively for the success of the organization.
• Ethical leadership encourages job performance of employees and decreases turnover while increasing job satisfaction and employee work engagement.
• Ethical leaders must be good communicators and promote transparency in decision-making.
• Ethical leaders should establish an ethical tone at the top and an ethical climate of trust and responsible action.

Ethical Climate

Ethical climate defines what is correct behavior and how ethical issues should be resolved within organizations. 

Ethical climate affects employees’ awareness of the existence of codes of ethics and ethical values in the organizations and their perceptions that impact their attitudes and behaviors. 

• It is the culture of an institution related to right and wrong problems.
• All organizational values that pertain to questions of right and wrong contribute to the company’s ethical climate.
• The governance that exists in an organization stems from values, norms and habits, which make up the ethical climate.
• The ethical climate stems from a firm's past experiences and leadership. 
• Attitudes and tone of the environment within an organization establishes its ethical climate. 
• The ethical climate is the agreed view of the right way to behave in an organization when facing ethical choices. 

Brown, Trevino & Harrison suggest: “The ethical approach adopted by ethical leaders should positively influence behavioral outcomes, but managers need to be cautious in pushing too much ethical conviction to employees so that it does not threaten their personal ethical standards, which may create resistance in the workplace.”

CEOs set the vision for the organization and its middle management implements it, which should be in accordance with ethical values, the result being establishing an ethical climate in the organization.

Public Value

Moore defines public value as, “A framework that helps us connect what we believe is valuable and requires public resources, with improved ways of understanding what our ‘publics’ value and how we connect to them.” Public value creates identifies the need to act in the best interests of society and the overall public interest. Here is a more complete look at the framework.

• Public value is a contribution of an organization towards society and its way to contribute it.
• The public value in an organization is constructed on three building blocks which are services, outcome and trust.
• The outcome of these services should be positive and valuable for the whole society and build trust of the stakeholders.
• Public satisfaction is not enough to measure public value, but other features are also needed such as what are the expectation of the public before providing them a particular service and the way it can best accomplish its goal to serve the public interest.

Ethical Environment of Organizations

• The ethical behavior of the supervisor is the core source to create an environment friendly attitude among employees which ultimately creates public value.
• CEOs play an important role in establishing an organizational culture that positively influences middle and lower-level management and ultimately organization performance.
• CEOs act as role models for their subordinates and clearly communicate the values of the organization.
• Ethical behavior of middle management is important for creating public value.
• Lower staff are influenced by the positive behavior of middle management.
• Managers and supervisors should follow ethical standards in dealing with their staff to create public value.

Dealing with Ethical Issues

There are a few things ethical leaders should do to effectively deal with ethical issues. Here is a brief list of some of those steps.

1. Identify potential “trigger” situations.
2. Deal with ethical dilemmas when they arise.
3. Prepare in advance.
4. Evaluate the evidence.
5. Seek out advice.
6. Formulate an approach to resolve the matter (i.e., philosophical reasoning).
7. Create an ethical decision-making process.
8. Make the most ethical decision and back it up with the courage of your convictions.

Ethical Decision-Making Model

The following is a decision-making model that ethical leaders should follow to enhance decision making:

1. Identify the decision to be made.
2. Gather relevant information.
3. Identify alternatives.
4. Evaluate and weigh the evidence.
5. Identify alternative courses of action.
6. Take action.
7. Review decision and consequences.

Ethical Leadership Scale

The “ethical leadership scale” includes several behavioral characteristics of ethical leaders that should be used to gain the trust of employees and enhance ethical decision-making:

• Talk about the importance of workplace integrity and doing the right thing.
• Set a good example.
• Do not blame others when things go wrong.
• Support employees’ efforts to do the right thing.
• Hold themselves and others accountable for violating the organization’s code of conduct.
• Give positive feedback for acting with integrity.

Trust is the basis of all business activities between an organization, its employees, suppliers, customers, and other stakeholders.

• Trust-based organizations build relationships and promote responsible behavior at all levels of the organization.
• It establishes a culture that says: "Do what I say and what I do," rather than "Do what I say not what I do."
• It engenders feelings of respect for others in the organization and builds ethical leaders.
• Such an organization establishes an ethical tone at the top and directs others in a way that is consistent with sound organizational values and in compliance with rules and regulations.

There is, of course, a lot more that could be said about ethical leadership. My blog is meant to touch upon the characteristics of ethical leaders, the ethical climate of organizations, building an ethical organization environment, and creating a process for ethical decision making. If you would like to read more about my thoughts on these matters, check out another blog I wrote on these issues.

Blog posted by Dr. Steven Mintz, The Ethics Sage, on September 15, 2022. You can sign up for Steve’s newsletter and learn more about his activities on his website  (https://www.stevenmintzethics.com/) and by following him on Facebook at: https://www.facebook.com/StevenMintzEthics and on Twitter at: https://twitter.com/ethicssage.