Ethical leadership is important to achieve organizational long term goals. There are some factors that influence the ethical leader’s traits in the organization. These factors include leader’s morality, trustworthy, honesty, authenticity, and authority. Some unethical and toxic leader’s effects organizational objectives. The primary objective of this study is to present the factors that influence ethical and unethical behaviours of leaders in the organizations. Ethical decision making is done by ethical leaders through organizational ethical code of conduct and decision rules. Next, it is followed with organizational top management (effective leaders) importance in implementation of ethical programs to their subordinates. This is also explains the importance of corporate culture to achieve effective ethical leadership. Next part of this study describes Leader Member Exchange (LME) theory. Importance of this theory is also elaborated. This is followed with people and task orientation leadership roles. Nature of this ethical leadership style is explained with CISCO chairman and CEO, John Chambers. Lastly, this study explains the transformational ethical leadership with five dimensional model of transformational leadership. This study differentiates ethical and unethical behaviours incorporated in transformational leadership style. Organizational ethical behavioural improvement strategies are effectively illustrated at the end.
Ethical and Unethical Factors
Ethics is a “code of moral principles and values that governs a person behavior with respect to what is right or wrong” (Daft, 2008). Organization success is mostly depends on different leaders. Leadership in the organization is important to achieve the objectives and goals because they provide direction and process to the employees. Leaders have to establish the ethical standards and moral values in the organization. This will help the followers to change their behaviors. Every leader in the organization should act as ethically. Ethical leader characteristics are identified in the organization based on some set of factors. These factors include leader’s moral behavior, vision, communication, collective environment, and program (task) procedures (Daft, 2008). These factors should implant with organizational social and ethical values. Organizational leaders with these ethical characteristics are identified as ethical leader.
The factors that influences the unethical leadership is due to growing complex of the business, increase speed of information flow, and augmented pressure from top management about employee performance (Toor and Ofori, 2009). These factors influence the ethical leader to be act as unethical. Leadership is to act purposively and ethically according to the organizational needs. Toor and Ofori (2009) said that collective components of integrity, ethical standards, and strong relationship with employees are most important characteristics of the ethical leaders. Ethical leaders in the organization are strong moral persons and managers. Strong moral persons have characteristics of honesty, trustworthiness and reliable to others. When it comes to moral manager, they are very open to their followers by explicitly talks about the ethical standards and empower employees to achieve goals in the organization. Toor and Ofori (2009) have given some dimensions to the ethical leadership. They are morality and fairness, role clarification, and power sharing. These dimensions are adopted from fellow multi cultural leader’s behaviour.
One more important factor that influences the ethical or unethical leadership behaviour is decision making process. Ethical leaders have vision to achieve long term goals of an organization. This is key factor that influence the decision making process. It means that effective ethical leaders are not interested in short term goals. This kind of thinking helps the leaders to maintain good relationships between employees. This will achieve the effective communication between the employees. In order to implement this kind of ethical bevaiours, leadership requires high motivation, influence process strategies and self transformation of ethical standard conduct.
Most of the author’s research works suggested that there is special importance on organizational top senior executives because these people have ability to lead the company in ethical way (Athure and Melea, 2006). Most of the employees in the organization believe that their leaders are more ethically and honest. These kinds of beliefs bring some impact on the corporate culture of an organization. It means that organizational code of ethics should be incorporate with corporate culture (Athure and Melea, 2006). This can be done through ethical leadership because most of the employees in the organization are motivated by these ethical leaders. Ethical organization is build through the support of top management (Carlson et al., 1995). It means that the top management should support the local ethical leaders to establish ethical organization. For instance, McDonald has established ethical code of conduct through companies CEO and senior management because they are effective ethical leaders of that company (Carlson et al., 1995). These senior management and CEO have effective communication with their subordinates to achieve ethical requirement into new employee ethical training programs (Carlson et al., 1995). In order to build ethical behaviours, company has started some ethical programs such as ethical training to change internal values of employees, reorganization of ethical violations and finally increase awareness on organizational ethical code of conduct among the employees. This kind of organizational ethical behaviours can be constructed only through effective and efficient ethical leader. Effective ethical leadership is measured through two key factors. Those are degree of empowerment of employees by their leaders and identify leader’s motivation and character towards organizational objectives.
Leader Member Exchange (LME)
Leader Member Exchange (LME) theory is implemented for ethical leaders to achieve ethical leadership behavior. This theory will provide good relationships between the leaders and subordinates. This helps the leaders to clearly specify job roles, task, and role ambiguity in effective manner. The relationship between LME and ethics is to respond ethically with employees in the organization when they have any ambiguities in the workplace.
There two major leadership roles in the organization. They are people and task orientation leadership roles. Ethical leadership in people orientation role has mutual trust and more openness between the leaders and employees (Mendonca and Kanugo, 2007). Job roles and tasks are effectively defined in task orientation role by the ethical leader (Mendonca and Kanugo, 2007).
For instance, John Chambers who is the chairman and CEO of CISCO systems. Chambers used to use the following statement. That is “We want to create the greatest company in the history” and “We want to change the world” (Chambers, 2009). This is kind of leadership represents people orientation leadership styles because Chambers is uses to use a word called “WE”. This represents collaborative work through people orientation leadership style. Chambers is achieving task orientation leadership through people orientation leadership style. This is also represents transformational leadership style as well.
Transactional and Transformational Leadership
According to Kanungo (2001), authenticity and authority of the leadership behavior is expanded through leader’s moral standard conduct and integrity. Most of the transactional leaders are self centered, untrustworthy, more authorities, and manipulative (Toor and Ofori, 2009). According to Toor and Ofori (2009), transformational leaders have different ethical bevaviours such as moral character, strong concern for self and others, and ethical values. These ethical values are deeply manipulated with organization vision. Ethical leaders are very important to the organization to achieve its long term goals effectively. According to the recent research works, the transformational or charismatic leader’s ethical behaviour reaches to higher moral standards (Kanungo, 2001). These kinds of ethical behaviours are contrasted by transactional leaders. Transactional leaders establish control strategies to influence the followers. When it comes to transformational leaders, they use empowering techniques rather than control strategies. These empowering strategies demonstrate exemplary behaviours, helps to increase confidence, provide more resources to accomplish the objectives of the followers (Kanungo, 2001). These kinds of empowering strategies will improve human conduct and ethical objective of the leader as well as his/her followers (Kanungo, 2001). Some transactional leaders have consensus on organizational rules, rights, and responsibilities. This kind of behaviours influences the followers ethically because these are collectivistic transactional behaviours.
According to Kanungo (2001), the ethical nature of the leader’s behavior is judged based on three factors. They are leader motivation, apparent behaviour, and social context where ethical behaviours are presented. Leaders should improve their motivation, behavioural strategies and techniques, and understand the social situations in the organizations. Hence, these three factors keep the leaders ethically.
Leaders have to be show high ethical standards on their behaviours and actions that should be followed by the employees in the organization. Effective organizational governance can be achieved through efficient ethical leadership (Toor and Ofori, 2009). There are also some unethical leaders in which they exploit organizational management loophole to accomplish their desires. However, leaders ethical or unethical behaviors changes according to the organizational changes. However, leaders with highest social responsibility are more ethical to the organization (Toor and Ofori, 2009). Servant, transformational and spiritual leaderships are more ethical to the organizations because these leaders are very honest, fair, helping to their subordinates, behaving ethically, and having more motivation towards work and employees in the organization (Toor and Ofori, 2009).
Bass and avolio (Tervino and Brown (2004), 2000) has developed five dimensions of transformational leadership. They are individualized consideration, intellectual stimulation, idealized influence, and inspirational motivation. Idealized influence is a first dimension that contains high moral values. These moral values are transformed to subordinates without any self interest of the transformative leaders. The outcome of this dimension could be employee work satisfaction, high job performance, and organizational commitment. The leader is used to establish collectivistic direction in the followers rather than selfish manner. This will help the followers to increase self efficacy. When this idealized influence is mixed with inspirational motivation then it represents the charismatic leadership. In third dimension, leaders motivate the followers through clear future goals (Baucus, 2005). This is used to establish an attractive and optimistic visualization of the organization in follower’s perspective. The next dimension is intellectual stimulation. Leaders are used to accept challenges with clear directions. Intellectual stimulation in transformational leadership is effective because leaders creates effective work environment that the followers can able to accept the challenges. Leaders should have listening skills to improve collectivistic performance in the organization otherwise the team get into conflict situation. This conflict situation has occurred due to misunderstanding between leaders and followers. These kinds of situations are avoided with transformational leadership. The last dimension is individualized identification (Baucus, 2005). It is most important dimension that leaders should perform effectively to improve collaborative work environment. This dimension helps leader to identify individual subordinate skills but leaders should have some time to observe these skill set of the followers (Armstrong, 2008). Effectiveness and efficiency of transformational leadership is depends on leaders behavior. It is represented in below showed figure. This figure contains three input values to transformational leader in which instrumental and terminal values are ethical values and undesirable values are unethical values (Armstrong, 2008). Transformational leadership produces either ethical or unethical behaviour based on these three input values (Armstrong, 2008). Each and every task of the transformational leaders is represented with above discussed five dimensional transformational leadership models.
Ethical leaders are more ethical to their organizations because these leaders are moral persons with honest and trust worthy characteristic. These leaders can do anything for their subordinates. These ethical leaders are used to perform right thing in their professional and usual life. Ethical leaders used to make decision based on organizational ethical values and decision rules. Ethical leaders are more significant social person in the organization because they have very clear objectives and more ethical to their followers. According to Tervino and Brown (2004), ethical leaders are come under the category of transformational leadership style because they are highly motivate and consistent with organizational objectives. Tervino and Brown(2004) has define the relationship between leadership and organizational ethical conduct based on two factors. They are social learning and social exchange. Leaders become role models for their followers if they are ethically embedded with organizational ethical conduct. This kind of relationship is represented with social learning because followers are motivated through ethical leaders. Even more, ethical leaders actions are very clear to the organizations as well as his/her subordinates. Eventually, ethical leaders maintained social exchange relationship through leader’s ethical values such as trustworthiness, maintaining collaborative workplace, perceived fairness and moral behavior (Grojean et al., 2004). Hence, ethical leaders are used to help their subordinates by differentiating the ethical and unethical conduct of an organization values. According to Tervino and Brown (2004), leader’s power and control is important to make effective ethical decisions but it is used to maintain at lower levels.
Improvement of Organizational ethics
Organization can improve the ethical behaviour through transformational leadership. Triveno and brown (2004) has suggested five dimensional transformational leadership. This model clearly differentiates ethical and unethical behaviours of transformational leaders. Even transformational leaders are highly moral persons and motivated to organizational ethical values. This transformational leaders highly implements collectivistic team work through better communication. Even information flow between ethical leaders and followers are very effective. People and task orientation leadership is also effective in the organization to develop effective ethical leadership because the leaders are more legitimate and open to their subordinates. And even these leadership styles have clear job role and objectives. Ethical leaders should have some certain characteristics which are discussed in above. Organization top management should implement ethical training programs (Athure and Melea, 2006). Organizational ethical values are integrated with all employees through these training programs (Athure and Melea, 2006). Organization should follow Leader Member Exchange (LME) theory to effectively implement ethical relationship between leaders and subordinates.
Leaders have to take initiatives to develop ethical practices in the organizations. Organizational leaders not only create ethical code of conduct but also integrate these ethical standards into subordinates. Leader has to show some examples of ethical leaders to their fellow subordinates that build an ethical organizational context. This study differentiates transformational and transactional leadership by using transformational five dimensional model. Factors that affect leadership behavior have to provide solutions to ethical behaviours.