Ethical leadership creates organizational benefits. These benefits
are not just the peace of mind that accrues to the leadership of an
organization when this leadership functions ethically. This post will take a
look at a few of the potential benefits of ethical leadership and why it is so
important for today’s leaders.
“A
leader is a person who has an unusual degree of power to create the conditions
under which other people must live and move and have their being, conditions
that can be either as illuminating as heaven or as shadowy as hell. A leader
must take special responsibility for what’s going on inside his or her own
self, inside his or her consciousness, lest the act of leadership create more
harm than good.” (Palmer, 1996, P.200). A leader has a vast amount of influence
over the business they are running and over the people working for them. It is
especially important in this age of digital technologies that leaders act with
an ethical compass and moral integrity, for everything they say and do, can and
most likely will be visible for everyone to see. An ethical leader is one who
displays traits of trust, fairness, honesty, charisma, integrity and dignity. They
care about their company, their workers and the impact they have on everyone in
the real world. But is this really a benefit for companies in this day and age?
In short…absolutely and here is why.
Ethical
consumerism is a type of consumer activism whereby shoppers will choose to
either positively endorse a product and company or, in extreme cases, vilify and
boycott them (Giesler & Veresiu, 2014). If your
company is having a negative environmental impact, or has a poor history of
treating its workers, this type of information is easily accessible to the
public and any negative reaction could have a devastating impact on your bottom
line or in the very least, cause significant financial damage. In 2012 Johnson
and Johnson decided to reformulate their baby shampoo due to a call for boycott
from the U.S. Campaign for Safe Cosmetics (CSC) over their use of potentially
harmful chemicals in the shampoo’s production (Successful Boycotts, 2015). In
this case, Johnson and Johnson only acted because they were pressured to. The bigger
problem was that they had previously reformulated their shampoo and removed the
chemicals in question for other markets (Johnson, 2011). This was a clear sign
to consumers that the mighty dollar was the most important measure for the Johnson
and Johnson and even after reformulating the product to remove the chemicals the
negative publicity continues to plague the company’s reputation today.
Companies that act ethically may reduce their business liability (National
Ethics Association, 2012). “The more moral the people are in their
business dealings, the less paperwork you need, the more handshakes you can
have, the more the wheels of capitalism work better because there’s trust in
the marketplace. Business ethics is not a joke.” (Santorum, 2015). When your
company is seen or is known for behaving in an ethical manner it is not only
the consumers who are aware of this type of behavior but other businesses as
well. Businesses do not want to be associated in any way or form with companies
that have a poor ethical track record. It is quite easy for anyone to connect
the dots between one company and its relationship with another. Apple knows this
only two well as they were the target of a significant consumer backlash when
Foxconn, a company that created devices for Apple, was vilified for the inhumane
treatment of their workers at a plant in China (Barboza and Duhigg, 2012). It
wasn’t Foxconn that was targeted by the general public but Apple as they were
found guilty by association.
When your company is known for making strong ethical decisions based
on trust, fairness, honesty and integrity, this type of behavior will help your
company attract and retain the best people as employees (Thornton, 2013). As today’s
students are graduating and looking for work they are increasingly looking at
what is the best fit for them, not just financial compensation, but what the company has to offer for them personally (Tapscott, 2009). Sometimes they
are looking for the freedom to work how they want and from where they want but part
of this decision making process includes making sure that when they attach
their name to a company there won’t be any future negative associations. Most
students don’t see themselves working at the same company for an indefinite period
of time and this type of mindset tends to make sure there won’t be future roadblocks
in store for them for past decisions.
Another major benefit of strong ethical leadership is that it
promotes high quality customer service (National Ethics Association,
2012). When a leader can motivate his employees by showing them how
much they truly care for their company and their products, this type of behavior
can have a direct effect on the employees of that company. This type of
leadership is what’s known as transformational leadership, whereby the leader
not only talks the talk but walks the walk, inspiring employees, and more
importantly empowering the employees to become better leaders themselves
(Burns, 1978). The trickle-down effect of this type of leadership is not to be
underestimated and can even make its way to those working in customer service. When
you believe in your product and your company you will have a tendency to deal
with your customers in a more positive manner and treat them as you yourself
would like to be treated. This is a major benefit for any company as it helps
employees make good decisions which in turn grows the bottom line (National
Ethics Association, 2012).
It’s not easy to do the right thing as a leader, especially in the
short term and when working for a large organization where you are constantly
pressured about turning a profit. What should be imperative is the long term
vision and the strong ethical leadership will help guide the ship in the right
direction.
References
Barboza,
C., Duhigg, D. (2012, January 12). In China, Human Costs Are Built into an
iPad. Retrieved from The New York Times: http://www.nytimes.com/2012/01/26/business/ieconomy-apples-ipad-and-the-human-costs-for-workers-in-china.html?_r=1
Burns, J. M. (1978). Leadership. New
York: Harper and Row.
Giesler,
M., Veresiu, E. (2014). "Creating the Responsible Consumer: Moralistic
Governance Regimes and Consumer Subjectivity". Journal of Consumer
Research 41 (October):
849–867. doi:10.1086/677842.
Johnson,
L. A. (2011, January 11). Johnson &
Johnson Baby Shampoo Has Cancer-Causing Chemicals, Group Says. Retrieved
from Huffington Post: http://www.huffingtonpost.com/2011/11/01/johnson-johnson-baby-sham_n_1069123.html
Palmer, P. (1996). Leading from within.
In L. C. Spears (Ed.), Insights on leadership: Service, stewardship, spirit,
and servant-leadership (pp. 197–208). New York: Wiley, p. 200.
National Ethics Association. (2012, May
16). Retrieved from Ethics Center: Business Ethics: Five Benefits of Ethical Leadership: http://www.ethics.net/a/five-benefits-of-ethical-leadership
Santorum, R. (2015). Rick Santorum, BrainyQuote.com.
Retrieved June 9, 2015, from BrainyQuote.com Web site: http://www.brainyquote.com/quotes/quotes/r/ricksantor558137.html
Successful Boycotts. (2015, June 9).
Retrieved from Ethical Consumer: http://www.ethicalconsumer.org/boycotts/successfulboycotts.aspx
Tapscott, D. (2009). Grown up digital.
New York: McGraw-Hill.
Thornton, L. F. (2013, January 23). How is Ethical Leadership a Strategic
Advantage? Retrieved from Leading InContext: http://leadingincontext.com/2013/01/23/howis-ethical-leadership-a-strategic-advantage/
