Companies have become increasingly aware of the advantages that being ethically conscious have to offer, especially in the global economy.

Using the overview of ethical leadership provided in this week's lecture and readings, in what way can ethical business practices increase organizational competitiveness in their respective industries and help to further substantiate the notion that an ethical culture is good for business?

Conversely, how does unethical leadership adversely affect the organization's bottom line? What impact can a leader's position on ethics have on the culture of an organization?

Ethical Leadership

As discussed last week, leadership is a process whereby the leader influences others to reach a common goal. The influence dimension of leadership requires the leader to have an impact on the lives of those being led. Effecting change in other people carries with it an enormous ethical burden of responsibility.

Because leaders usually have more power and control than followers, they also have a responsibility to be sensitive to how their leadership affects followers' lives. This week, we will explore the effects of leadership on organizational outcomes and the leader's responsibility for creating an ethical climate.

Whether in a professional organization or community project, leaders engage and utilize subordinates in their efforts to reach common goals. In each of these situations, leaders have the ethical responsibility to treat followers with dignity and respect. Ethics is central to leadership, and leaders help to establish and reinforce organizational values.

Values promoted by the leader have a significant impact on the values exhibited by the organization (Carlson & Perrewe, 1995; Schminke, Ambrose, & Noel, 1997; Trevino, 1986). Again, because of their influence, leaders play a major role in establishing the ethical climate of their organizations.

Effective Leadership

Leaders face ethical dilemmas every day, and they have to make decisions. The decisions leaders make, as well as the ways by which they make those decisions, determine whether or not they are ethical and effective.

Ethics can be as difficult to define as leadership. Ethical behavior, in its simplest terms, is knowing and doing what is right. The difficulty is in defining "right."

Ethical leadership is part - although by no means all - of the definition of an effective or "good" leader. An effective leader is someone who manages to get people to do what he or she wants. An effective leader could be defined as one who exerts influence to get others to achieve his or her objectives regardless of the outcome. The outcomes can be good or bad.

Conclusion

Leadership is a process of influencing others; it has a moral dimension that distinguishes it from other types of influence, such as coercion or control. Leadership involves values, shows respect for others, and builds community.

It is not a process that we can demonstrate without showing our values. When we influence, we have an effect on others, which means we need to pay attention to our values and ethics.

Forbes School of Business Faculty References