LEADERSHIP & ETHICS

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I strongly agree to the above statement by Rubin et al (2010). An ethical leadership may lead the organisation in a manner that respects the rights and dignity of others (Ciulla 2004). Ethical leadership enhance employee satisfaction with leaders, thus increase work output effectiveness and dedication to making extraordinary efforts as part of their performance (Brown, Trevino and Harrison 2005). However, some scholars stated otherwise and asserted that not only leaders must act ethically but employees must behave ethically to enhance positive effects on organisational effectiveness (Brown and Mitchell 2010).


Ethical Theories

Two of the most popular business ethics are Teleological and Deontological. In later years, although they have been largely substituted by many modern approaches, they form part of the tradition which newer approaches have been constructed.

Teleological approaches hold that the moral worth of actions or practices is determined by their consequences (Beauchamp and Bowie 2004). Action is judged desirable if it leads to the best possible balance of good consequences over bad consequences. In view of business ethics, it is crucial to weigh the costs of a business and social benefits before determining whether to pursue it. For instance, The Arctic National Wildlife Refuge in Alaska is under threat by fossil fuel interests (DesLauriers 2016). The oil company must weigh the economic benefits of oil drilling activities against the costs of environmental degradation in a preserve land. Teleological philosophy appears drawbacks as an approach to business ethics in measuring the benefits and costs of a course of action. How does drilling company evaluate the harm done to the region’s ecosystem?

Kantian ethics, deontological approach emphasis on “respect for person”. People have dignity and need to be respected as such (Rachels 1986). It is departs significantly from teleological that focus on consequences. In Kantian ethics, violation of ethics emerged if co-workers working for long hours, minimum wages and under unfavourable working condition. Co-workers are being treated like machines and not as conscious moral beings that have dignity. However, Kant’s ethical philosophy also has some limitations in the extent to which that his philosophy excludes moral emotions and sentiments such as sympathy and caring. Secondly, Kant’s philosophy sometimes is weak in providing correct guidance for every decision to be made.


The 4 V Model of Ethical Leadership

The 4-V Model (Figure 1) is a model that aligns the inner (values) with the outer (actions) to achieve common good (Kar 2014). Leaders need to discover and integrate their core values, exploit the vision on how the things could be distinct, discover their personal voice to articulate their vision by motivating followers and achieve the desire goals that can brings outer commitment and common good.

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Figure 1: 4V’s Model in Ethical Leadership (Kar 2014)

This model can be seen on Robert Smith (Figure 2), a private-equity financier and chairman of Vista Equity. He was famous for the donation worth $20 million to National Museum of African American in 2016 (Alexander 2016).  He gained respect from his employee due to his values on real talent and does not discriminate them (Gelles 2014). Robert mentioned that he wish to inspire other leaders to contribute to society. As described in 4V Model, leader must initially understand the core value, then a vision is developed on how the world could be distinctive from others, then voice out the vision in convincing manner to inspire others and at the end inculcate this morality to cultivate virtue (Center for Ethical Leadership 2016).

robert_f_smith_vista_equity_partners
Figure 2: Robert F. Smith – The little -known black billionaire who made a $20 million USD donation to the African American Smithsonian Museum (Washingtonpost 2016)

Example of Unethical Leadership Behaviour in Toshiba

Ethical leaders in an organisation would bring huge business impacts while unethical leaders might cause tremendous effect to the organisation (Brown and Mitchell 2010). One of the examples of unethical leadership was happened in Toshiba’s due to their accounting scandal that caused financial losses and public mortification. Toshiba’s ex-CEO, Mr. Hisao Tanaka confessed that they had overstated operating profits to about $1.2billion for past seven years (Mochizuki 2015). The fraudulent accounting was due to the culture practised in corporate as the employees forced submissive to superiors without challenging them. Consequently, Toshiba faced a fine of $60million, share value declined by as much as 40% and losses $318 million after the scandal came out (Millman and Curtis 2015). Video 1 explain clearly to the accounting scandal happened in Toshiba.

Video 1: Toshiba CEO quits over $1.2 billion accounting scandal


Example of Ethical Leadership Behaviour in Wipro

Wipro Limited was awarded for “2016 World’s Most Ethical Company” (Figure 3) for 5th consecutive year by Ethisphere Institute (Ethisphere 2016). The corporate committed in leading ethical business standards and fostering transparency at every level. For instance, Azim Premjit (Founder of Wipro) emphasised Code of Business Conduct (COBC) as a guideline that applied to all levels of employees in Wipro from top to ground (Wipro 2017). COBC strictly prohibit unfair trade practices, foreign corrupt, abolition of forced labour etc. Employees are encouraged to report suspected violations to their respective supervisor and whoever engaged in prohibited conduct will be subjected to disciplinary action including termination.  This is to ensure the business is conducted in an ethical way and to earn trust from all stakeholders. Wipro has proven that performing an ethical business will pay off (Daily News & Analysis 2016).

Wipro_Most Ethical Firm
Figure 3: Wipro voted world’s most ethical firm (Source: Asian Lite News 2016)

Conclusion

Code of ethical needed to be incorporated in every organization ranging from top level management to the operational level employees.  Managers should be embedded with code of ethics in themselves and implement the practice of ethical to their employees as part of integral component of company culture. Eventually, this will create positive work environment that would gains trust and confidence from all stakeholders.

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References

Alexander, K.L. (2016) ‘Who is This Robert Smith?: A Quite Billionaire Makes Some Noise with $20 million Gift to the African American Museum’. The Washington Post [online] 24 September. available from <https://www.washingtonpost.com/national/who-is-this-robert-smith-a-quiet-billionaire-makes-some-noise-with-20-million-gift-to-the-african-american-museum/2016/09/23/547da3a8-6fd0-11e6-8365-b19e428a975e_story.html?utm_term=.0515b8033fad> [3 February 2017]

Beauchamp, T.L. and Bowie, N.E. (2004) ‘Ethical Theory and Business’ Upper Saddle River, NJ:Prentice-Hall

Brown, M., Trevino, L. and Harrison, D. (2005) ‘Ethical Leadership: A Social Learning Perspectives for Construct Development and Testing. Organizational Behavior and Human Decision Processes, 97(2), 117-134

Brown, M.E. and Mitchell, M.S. (2010) ‘Ethical and Unethical Leadership: Exploring New Avenues for Future Research’. Business Ethics Quarterly 20(4), 583-616

Center for Ethical Leadership (2016) Our History [online] available from http://www.ethicalleadership.org/our-history.html [3 February 2017]

Ciulla, J. (2004) Is Good Leadership Contrary to Human Nature. Presentation at the Gallup Leadership Institute Summit, Lincoln, NE, USA.

Daily News & Analysis (2016) Wipro Named as World’s Most Ethical Company [online] available from < http://www.dnaindia.com/money/ report-wipro-named-as-world-s-most-ethical-company-2187802> [30 January 2017]

DesLauriers, K. (2016) ‘Why We Must Act to Protect the Arctic National Wildlife Refuge from Oil Drilling’. The Huffington Post [online] 30 November. available from < http://www.huffingtonpost.com/entry/why-we-must-act-to-protect-the-arctic-national-wildlife_us_583e0b7ae4 b08347769c04d3> [30 January 2017]

Ethisphere Institute (2016) World Most Ethical Companies [online] available from <http://worldsmostethicalcompanies.ethisphere.com/honorees/&gt; [30 January 2017]

Gelles, D. (2014) ‘A Private Equity Titan with a Narrow Focus and Broad Aims’. The New York Times [online] 10 April. available from https://dealbook.nytimes.com/2014/04/10/a-private-equity-titan-with-a-narrow-focus-and-broad-aims/?_r=0 [3 February 2017]

Kar, S. (2014) ‘Ethical Leadership: Best Practices for Success’. IOSR Journal of Business and Management, 112-116

Millman, R. and Curtis, J. (2015) ‘Toshiba faces $60m Accounting Scandal Fine’. IT Pro [online] 7 Dec. available from < http://www.itpro.co.uk/ strategy/25246/toshiba-faces-60m-accounting-scandal-fine> [31 January 2017]

Mochizuki, T. (2015) Toshiba CEO Resigns After Accounting Scandal [online] available from https://www.wsj.com/articles/toshiba-ceo-felled-by-accounting-scandal-1437468537 [3 February 2017]

Rachels (1986) ‘Kantian Theory: The Idea of Human Dignity’. The Elements of Moral Philosophy, 114-117

Rubin, R.S., Dierdorff, E.C. and Brown, M.E. (2010) ‘Do Ethical Leaders Get Ahead? Exploring Ethical Leadership and Promotability’. Business Ethics Quarterly 20(2) 215-236

Thornton, L.F. (2013) ‘7 Lenses: Learning the Principles and Practices of Ethical Leadership. Leading in Context LLC

Wipro Limited (2017) Code of Business Conduct and Ethics. India: Wipro Office

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12 thoughts on “LEADERSHIP & ETHICS

  1. A good illustration of Deontological and Teleological theories as well as the 4V model, I like the way you compare the differences between Deontological and Teleological in different sectors to show the difference of thoughts.
    Yet, I am looking forward to read more about the ethical and unethical examples and the impact of being ethical/ unethical for a better understanding.

    Like

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