Many academicians describe leadership as revolving around vision, ideas and has more to do with inspiring people as to direction and goals than with day-to-day implementation (Bennis 2007:132). In order to define ethical leadership one must examine the root concepts of the two main schools of ethics: deontological ethics and consequentialist ethics.
- Deontological ethics places special emphasis on the relationship between duty and morality of people’s actions and not the consequences of their actions. Philosopher Kant explained the concept as follows: “it is unethical to tell a lie in order to save a friend from murder” (Introduction to ethics 2014). According to Zidaric (2015), business leaders such as Henry Ford (Ford Motors) and Jack Ma (Alibaba) have enforced deontological principles in their corporate culture. By treating every individual they inspired their employees to follow them in acting morally right.
- In contrast, consequentialist ethics focuses on the consequences of an action. Firstly, whether an act is right or wrong depends on the results of that act and secondly, the better the consequence an act produces, the better that act (Vilcox and Mohan 2008). The main advantage of this theory is its flexibility as it can account for any circumstance, however rare or extraordinary. On the other hand, consequentialist ethics are impractical in the real life as “the goodness” of consequences is difficult to measure and it’s easy for leaders be biased. Milton Friedman, a consequentialist leader, said that businesses should focus more on increasing profits rather than acting in a socially responsible way.
Among the most popular ethical leadership models, the 4-V model, developed by Dr. Bill Grace, has been widely implemented mainly due to its simplicity.
The model is based on the four main pillars of ethical leadership: value, vision voice and virtue. Value is at the top of the triangle as committing to core values is the starting point for ethical leaders. Leaders also need to be visionary and anticipate how their actions will benefit all members of society in the future. Next, ethical leaders should voice out their values to influence and motivate the public in acting towards a common goal. Virtue symbolises ethical integrity and doing what is right for the common good. Virtuous behaviour (ethical behaviour) is at the centre of the model acting as a glue that binds all the V’s together (Ghurman and Aswathappa 2010).
ETHICAL LEADERSHIP DILEMMA
Ethical Leaders are defined as honest, trustworthy, caring and principled persons who are proactive models for ethical conduct and practice what they preach (Brown and Trevino 2006:505). Ethisphere has named three main principles to help identify ethical businesses. These are: enforcement of ethical corporate standards internally, enabling managers and workers to make better decisions and contribution to shaping industry standards.
Example 1: Ethical Leadership at Accenture
Accenture, listed for nine consecutive years as one of the most ethical companies by Ethisphere, exemplifies how a company built on a solid ethical foundation can raise the bar for ethical standards in the industry. Accenture makes the growth of people and communities its main focus by implementing business practices that benefit the community. “We believe that companies should have a deep commitment to ethics from the top as well as sustained dedication to high standards from employees at every level” explained Chad Fentress (2010) of Accenture.
Contrary to ethical governance, unethical leadership is practiced by manipulative and self-absorbing leaders, who are insensitive to employees’ needs, use power in their self-interest, and have little regard for community development (De Hoogh and De Hartag 2008).
Example 2: Unethical Leadership at Toshiba
In 2015 Toshiba’s CEO and half of Toshiba’s Board resigned after an independent investigating team had uncovered that the management overstated earnings by “pressuring employees into creative accounting tactics such as postponing loss reports or moving certain costs into later years”. Toshiba’s corporate culture de-emphasized business ethics, reducing all decisions to the purely economic and it discouraged employees to challenge the management decisions. (Mochizuki 2015). Toshiba accounting scandal proves that unethical leadership based on greed and deception is unsustainable in the long term.
To ensure that ethical issues are deliberated, leaders should learn from the past accounting scandals and craft an ethical culture based on their own virtues, promoting good ethics to all levels within an organization, appoint ethics officers and be morally courageous and motivate others to do the same (Dowling et al. 2009:153). However not all ethical dilemmas have a clear solution and in those cases it will reflect on the leader’s ability to make hard decisions for the best interest of the company.
- Accenture News Room (2010) [online] available from <https://newsroom.accenture.com/subjects/awards-rankings/accenture-named-one-worlds-most-ethical-companies-for-third-consecutive-year.htm> [18 September 2016]
- Bennis, W. (2007) On Becoming a Leader: Twentieth Anniversary Edition. Philadelphia: Warren Bennis Inc.
- Brown M. E. and Trevino L. K. (2006) ‘Ethical leadership: A review and future directions’. The Leadership Quarterly, 595-616
- Brown M. E., Trevino L. K. and Harrison D.A (2005). Ethical leadership: A social learning perspective for construct development and testing. Organizational Behavior and Human Decision Processes, 97, 117−134.
- De Hoogh and De Hartag (2008) ‘Ethical and despotic leadership, relationships with leader’s social responsibility, top management team effectiveness and subordinates’ optimism: A multi-method study’. The Leadership Quarterly, 297-307
- Dowling P.J., Liesch P., Gray S.J. and Hill C.W.L. (2009) International Business. Asia Pacific Edition. Australia: McGraw Hill
- Friedman M. (1970) ‘The Social Responsibility of Business is to Increase its Profits’ New York Times Magazine [online] available from <http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html > [18 September 2016]
- Ghurman K. and Ashwathappa K. (2010) Management: Concepts, Practice and Cases. New Delhi: Tata McGraw Hill
- Introduction to Ethics (2014) [online] available from <http://www.bbc.co.uk/ethics/introduction/> [18 September 2016]
- Kar S. (2014) ‘Ethical standards in business raised questions about role of leadership’. IOSR Journal of Business Management, 112-116 [online] available from <http://iosrjournals.org/iosr-jbm/papers/ICIMS/Volume-1/14.pdf>
- Mochizuki M. (2015) ‘Toshiba CEO Resigns After Accounting Scandal’ The Wall Street Journal [Online] available from <http://www.wsj.com/articles/toshiba-ceo-felled-by-accounting-scandal-143748537> [16 September 2016]
- Vilcox M. W. and Mohan T. O. (2008) Contemporary issues in Business and Ethics. USA: Nova Scence Pub Inc.
- Zidaric Z. (2015) ‘Deontological or Consequentialist Leadership’ [online] available from<https://www.linkedin.com/pulse/deontic-consequentialist-leadership-zeljko-zed-zidaric> [16 September 2016].