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Ethical leadership and dilemmas in the workplace.


An effective leader must have the ability to make changes. One cannot always stick to the same teachings. As times change, so must ideas. The word "leader" first appeared in the English language in the 1300s; it stems from the root leden meaning "to travel" or "show the way." The term "leadership" followed some five centuries later. Indeed, the scientific study of leadership (as opposed to the study of leaders) has arisen primarily in the United States and almost exclusively since the turn of the twentieth century ( articles/sorensonapsa.htm). Most people think leadership is just the ability to lead, but as you can see, it is more than just leading people.

What is the real meaning of leadership? Is it having an impression on others? Is it possibly inspiring their decisions? Is it having many followers? An ethical leader must have good communication skills. When we consider what constitutes "good" leadership, Ciulla (1995) urges us to consider both ethics and competence. She states that good leadership refers not only to competence but also to ethics. She further points out that people long for highly ethical leaders (Ciulla, 1995).

Leadership and business ethics is emerging as one of the most important needs in business today (Jones, 1995). Organizations that lack these important elements can cost businesses billions of dollars. However, before the importance of these elements can be understood, ethics must be defined. How can we make sense of what ethics really are? According to Webster's dictionary, ethics involves a standard of conduct generally accepted as a moral guide for human behavior. Ethics is about doing what is right. Thus, ethics involves a systematic study of rules, standards, and codes or principles which provide guidelines for moral conduct (Lewis, 1985; Banerji & Krishnan, 2000). There are many concepts about ethics, but ethics narrows down to one thing--knowing right from wrong. Current literature has examined the relationship between leadership styles and behaviors and the ethical practices in the organization (Caldwell, Bischoff, & Karri, 2002; Mendonca, 2001).

An individual's values are the basic principles and tenets that guide beliefs, attitudes, and behavior (Gordon, 1996). Values, such as respect, honesty, fairness, and responsibility, help guide how one ought to behave. The leadership style of the CEO thus serves to communicate and exhibit the values that lead to an ethical orientation in the organization (Hood, 2003).

Although the idea of business ethics means different things to different people, the ethical orientation of the leader is considered to be a key factor in promoting ethical behavior among employees in order for the goals of the organization to be met (Carlson & Perrewe, 1995). Several organizations have already faced public scrutiny because the leader's conduct within the organization was either unethical or illegal.

Ethics plays a significant role to the success or failure of an organization (Mendonca, 2001, p. 267). Otherwise, businesses would cease to exist without ethics as the foundation. It is a known fact that we live in a litigious society with people filing lawsuit after lawsuit against any corporation that commits imagined or real offenses. Unfortunately, many law suits result from leaders failing to do the right thing causing "the courts, federal and state legislatures, and administrative agencies to intervene to make a wrong right or implement laws to preclude future breaches of ethical behavior" (Odom and Green, 2003, p. 5).

The problem is that many organizations are faced with the challenge to create an ethical environment. Ethical guidelines are crucial to businesses especially during times of fundamental change. Now, the attention to ethical leadership in the workplace alerts leaders and employees how to act.


Leadership Defined

What does it mean to be a leader? There are several different definitions for the word leadership as there are styles of leadership (Hempill & Coons, 1957). Northouse (2001) defines "leadership as a process whereby one individual influences a group of individuals to achieve a common goal." The problem with defining the word is that there is not one widely accepted definition amongst scholars. According to Andrew Durbin, a few are:

* Leadership is an act that causes others to act or respond in a shared direction (Durbin, 1997).

* Leadership is the art of influencing people by persuasion or example to follow a course of action (Durbin, 1997).

* Leadership is the key dynamic force that motivates and coordinates the organization in the accomplishment of its objectives (Durbin, 1997).

In short, leadership deals with persuading, inspiring, motivating others, and spearheading useful changes (Durbin, 1997). Supervisors and managers complete the more mechanical aspects of the business, while leaders are those with the inspiration and vision of where the company is heading (Fulton, 1995). In order to be an effective leader, the people you are attempting to lead must have confidence in you and give you their support and commitment (Durbin, 1997).

Leadership is a choice. This is evident from the men who have held the highest office in the land--the presidency. But the legacies of three presidents are present even after they left office. Lyndon Johnson, John F. Kennedy, and Franklin Roosevelt were three very different people and presidents. But their stories offer at least ten useful lessons for leaders of today's organizations ( summer98/goodwin.html).

* Timing is (almost) everything. Knowing when to introduce an initiative, when to go before one's constituents--and when to hold off--is a crucial skill( summer98/goodwin.html).

* Anything is possible if you share the glory. Giving others a chance to claim credit is an easy, and effective, way to get results (

* Trust, once broken, is seldom restored. It is the most fragile yet essential attribute of leadership. No leader can afford to take his word lightly (http://www.pfdf. org/leaderbooks/L2L/ summer98/goodwin.html).

* Leadership is about building connections. Effective leaders make people feel they have a stake in common problems (

* Leaders learn from their mistakes. To succeed, leaders must acknowledge and understand and improve on their shortcomings (

* Confidence--not just in oneself--counts. Most leaders are self-confident, sometimes to a fault; the real gift is the ability to extend faith in oneself to others. That means actually believing in their gifts (http://www.pfdf. org/leaderbooks/L2L/ summer98/goodwin.html).

* Effective partnerships require devotion to one's partners. Attention to the needs of the remote plant or institution pays off with energetic commitment (http://www.pfdf. org/leaderbooks/L2L/ summer98/goodwin.html).

* Renewal comes from many sources. Leaders must know themselves and find their own sources of strength (

* Leaders must be talent brokers. The ability to identify, recruit, and effectively manage the best and brightest people--including unlike oneself--is itself a key talent ( leaderbooks/L2L/summer98/goodwin.html).

* Language is one's most powerful tool. Without the ability to communicate, leaders can possess all the other attributes and still fail to have an impact ( L2L/summer98/goodwin.html).

According to Hilt (1990), leadership and ethics go hand-in-hand. The two words are not mutually exclusive, but dependent upon each other. To understand the concept of leadership is fundamental to understanding managerial ethical leadership (Enderle, 1987).

Ethical leadership has never been more challenging than in today's high-pressured business world (Trevino & Brown, 2004). Developing and mastering leadership skills at every level is very critical to the success of any organization. Mendonca specifically addresses the issue that "the organization's success, in fact its very survival, over the long term is dependent on ethical leadership" (Mendonca, 2001, p. 268). Although leadership and ethics are not mutually exclusive words, they are extremely dependent upon each other. Without ethical leadership, organizations will find it difficult to overcome obstacles and meet day-to-day challenges within the organization.

Ethical Leadership

Certainly, ethical behavior has always been important within organizations; however, today more and more attention is being paid to ethical leadership. We see that more and more companies are trying to observe the rules of business ethics. Why? One reason is because of managerial accountability. The second reason is that we are more aware of unethical practices.

There are many companies that practice good ethics; however, we are beginning to hear about more companies that do not. The Enron scandal is one of those events in history that devastated the world. Instead of telling the truth about what was going on, "Enron leaders chose to ignore its ethics for purposes of achieving the bottom line" (Odom and Green, 2003, p. 5). Employees were clueless about the company's financial status and not aware that Enron had had as many outstanding debts as they did. Enron leaders seemed followed their own code of ethics. They took advantage of their role and responsibility as leaders and demonstrated that they did not care about the organization or its employees.

The Enron scandal is the perfect case study to ensure sure that organizations practice ethical leadership because so many hardworking people lost their livelihood and their life savings (Odom and Green, 2003). Enron, one the most wealthily corporations in America, was destroyed because of unethical practices. Nowadays, it is absolutely important for leaders to accept moral responsibility and honesty in exchange for immoral conduct and deceitfulness.

Similar to Enron, WorldCom had been recognized as one of the top organizations in the communication industry; however, WorldCom has been under scrutiny for faulty bookkeeping that showed more debt than income ( 2002/06/26/0626topnews.html). As the media continues to cover these kinds of stories, it reveals the truth to America and uncovers the many scandals occurring within the organization.

The point to be made here is that great competence on the part of leadership in business and individuals who are employed by businesses is required now and in the future to face and solve the ethical issues which will confront them. Thus, a clearly defined role about what ethical leadership is will help in identifying many of those key issues. Therefore, how do we define ethical leadership?

Ethical leadership is a process, according to Kouzes and Posner (1992), about what is right and wrong, and a mode of conduct that sets an example for others to follow. Odom and Green (2003) state that a more contemporary definition of ethical leadership is leadership that engages in ethical conduct that is based on right or wrong behavior towards members of society (Rost, 1998). Therefore, we can begin to understand that a commitment to service others and foster goodwill is the essence of what it means to be an ethical leader. Thus, the concept of ethical leadership is important and needs to be understood in order for an organization to succeed (Trevino, Brown, & Hartman, 2003, p. 2).

Rubenstein (2004) states that "...the fact that there is not one universal set of behaviors one considers ethical and the fact that the terms moral and ethical are often used interchangeably should not dissuade people from seeking to develop a general theory of ethical leadership. "Leadership," in the broadest sense of the term encompasses behaviors that are ethical as well as those that are generally considered unethical" (!hrethical.html).

Ethical Decision Making

The influence of businesses on society and the influence of corporate leaders on individuals, however, are not always positive (Kelly, 1989). Poor ethical leadership and decision making is sometimes the result of poorly run businesses and leaders who misuse their power and authority. According to James Macgregor Burns (1978), leaders hold effective power rather than authority to the degree that they can activate the need and motivational bases of other leaders and subordinates in the organization. Other things being equal, the stronger the motivational base that the leader taps, then the greater control over that person the leader can exercise. Thus, leaders are persons who use different methods to ensure that the right work gets done. Hence, not only do leaders need to know how to deal with persons but also must know what the right things are and how to make quality decisions.

Aronson (2001, p. 2) states that "CEOs are obliged to set a moral example for organizational members and to demarcate the constant striving for increased profits from those activities which may be detrimental to the values of society in general."

Every day we are faced with ethical decisions that require our judgment. Observations by Bennis and Nanus (1985) and Kelly (1990) highlight that leaders are responsible for setting the moral tone: "The leader is responsible for the set of ethics or norms that govern the behavior of people in the organization" (Bennis and Naus, 1985, p. 479).

Ethical Code of Conduct

Ethical dilemmas occur every day at work. However, most codes of conduct, which are structured from the top down, serve to protect the company (Trevino et al, 2003). A business code of conduct helps to clarify expectations, helps in the decision making process, and fosters ethical behavior (Grundstein-Amado, 1999). Research supports that "codes help leaders in public service organizations to foster a strong ethical climate and instill a desire to pursue moral conduct" (Grundstein-Amado, 1999, p. 248).

What matters is that more and more corporations need to adopt "a code of ethics that sets forth professional and organizational values and standards" (Grundstein-Amado, 1999, p. 248) and try to live by it. The trend will ultimately result in the creation of a kinder, more orderly society. It is a trend, all right. Unlike other trends, it is not likely to go away, not in a society becoming increasingly litigious, where whistle blowers of all kinds can make life difficult for the corporation that cuts corners. To begin, leaders should obey the law. If a corporation and its leaders behave in an unethical manner, then litigation against the corporation and its leaders should be highly recommended.

Ethical Practices of Leaders

Ethical leaders possess many characteristics of ethical leaders such as integrity, honesty, and trustworthiness (Trevino, Hartman, & Brown, 2000, p. 9). At the center of their belief system, ethical leaders have a high regard for human worth and dignity. They make decisions and take action in accordance with these deeply held beliefs. It is the leader's beliefs, values, vision and action that set the tone and the standard of the organization (Banerji and Krishnan, 2000, p. 405). Being ethical is a choice one makes when passion, authenticity, and credibility are aligned with a sound belief system. Being a leader means recognizing ethics as the cornerstone of effective leadership upon which we lay the foundation to bring about change. "It is thus essential for leaders to make ethical choices and create an ethical work environment" (Banerji and Krishman, 2000, p. 405).

Ethical leadership has become so important that it is the topic of numerous books, the subject of seminars, and the basis for research in the business arena (Trevino et al, 2000). A company or organization can succeed or fail due to its ethical leadership (Seidman, 2004). There is much attention given to the subject matter in the business world.

Generally, organizations with excellent reputations are the ones that can withstand even during a crisis. Being an ethical leader requires developing a good reputation for ethical leadership. "A reputation for ethical leadership rests upon two essential pillars: perceptions of you as both a moral person and a moral manager" (Trevino et al, 2000). According to Seidman (2004), "Reputation cannot be fabricated or asserted; it can only be earned through the consistent demonstration of trustworthy conduct" (p. 135). When ethical leaders make expectations clear to both its customers and its employees, a sense of trust is developed, and trust is an important element to establish a sound reputation (Trevino et al, 2000).

Seidman (2004) further states that we experience trustworthy conduct (ethical behavior) "when we have tangible evidence that someone has not taken advantage of us" (p. 135). It is important for ethical leaders to treat people, especially employees how they want to be treated. Ethical leaders should always be concerned about equal treatment for individuals, regardless of ethnicity, and handicap.

Therefore, there should be effective practices to make sure that a reputation for ethical leadership has been cultivated. As an ethical leader, some of these practices include reading books, attending workshops and seminars, or talking with a spiritual advisor about how shared values can be applied to work (Trevino et al, 2000, p. 8).

Effects of Ethical Leadership in Corporate America

Spurred in part by costly legal settlements, a growing number of organizations are changing the environment and changing the way they handle unethical behavior. In the article entitled Table of Contents (2003), one of the authors, Cialdini, states that "... when unethical behavior is accepted by an organization's culture, it causes a crisis within the organization." The effects are astounding. Often, "employees leave to find new jobs or employees lose interest in their work and their commitment to the organizations goals and objectives" (Table of Contents, 2003, p. 9).

Nowadays, employees are no longer satisfied with mediocre leadership because they are more informed. The more informed they become about unethical practices; the more employees will require that leaders within the organization demonstrate that role of leadership by practicing honesty and making the right decisions (Messick & Bazerman, 1996). As a result, organizations' have lost huge profits when leaders want to cheat the organization as the result of dishonesty and corruption.

Ethics and Transformational Leadership

Leadership is more than getting people to do what you asked them to do; it is the ability to get people to follow your lead. On the other hand, ethical leadership is about doing what is right (Trevino et al, 2003). What are ways to differentiate ethical leaders from ordinary leaders? Ethical leaders are results driven, not popularity driven. As a role model, ethical leaders are highly visible and "lead by example and walk the ethical talk" (Trevino et al, 2003). True ethical leaders possess high moral and ethical standards (Jones, 1995). Ethical leadership is an essential part of an effective organization. Thus, without ethical leadership, businesses would only go so far.

Traits of an Ethical Leader

There is not one leadership type. Every leader possesses the same initiative and desire, and every person has some degree of leadership ability, although some people utilize this skill more when faced with certain situations. Does this prove that one does not need to be a leader if they do not demonstrate ethical leadership ability? Can leadership be demonstrated in other areas? Do we need ethical leadership? (Trevino et al, 2000).

Leadership traits are very important to an organization. Some of the traits of an effective leader include being a visionary, honesty, trustworthiness, integrity, innovative, courageous, initiating change, and having personal power (Capowski, 1994; Trevino et al, 2003). Through innovative actions and courage, ethical leaders act as change agents and always demonstrate a willingness to take risks (Tichy and Devanna, 1986, 1990).

As a facilitator, ethical leaders recognize the diverse talents of employees within the organization by creating an environment where employees can best apply their individual talents. Ethical leaders are always measuring decisions against the question--Does this fulfill the mission and goal of the organization? How will performance and results be measured?

Ethical leaders must also provide a clear vision and direction to the organization concerning where they are going and why (Tichy and Devanna, 1986, 1990). Ethical leaders provide "... 'followers with a clear sense of purpose that is energizing', being 'a role model for ethical conduct' and building 'identification with the leader and his or her articulated vision'" (Trevino et al, 2003, p. 2).

Another important trait of an ethical leader is integrity. This attribute also encompasses other traits such as honesty and trustworthiness. Research states that "integrity is ... consistency. It's doing what you say, it's following up and following through, and a pattern that when you say something, people believe it because historically, when you've said it, you've followed through" (Trevino et al, 2003, p. 8). When a leader's integrity is at issue, then his or her vision "however noble, well-crafted, and articulated--is viewed with skepticism by the followers, loses its vigor, and is incapable of motivating them towards its realization (Kanungo & Mendonca, 1996; Mendonca, 2001, p. 266).

The most important thing to understand about ethical leadership is how to be a good communicator and to possess the ability to get along well with others (Trevino et al, 2003). A leader, who communicates openly and honestly, will motivate their employees on a daily basis. These are the ones who will accomplish more of their goals. Motivation is an important key factor in ethical leadership. When leaders recognize employees for a job well done, employees are more motivated to keep up the good work because they believe in the organization's mission, goals, and objectives.

Lastly, ethical leaders must maintain the highest ethical standards by consistently honoring the business code of conduct and other important business related matters.

Transformational Style of Leadership

In a business environment, the position or function of a leader is to posses the ability to lead. It is the act of moving the organization forward to a desired level of performance. A distinction can be made between a leader who gets people to achieve specific goals and a leader who gets people to achieve specific goals and develops a self-actualization belief system or culture. The latter is expressed as transformational leadership. Transformational leaders motivate employees to do more than what is asked (Bass, 1985).

Burns defines transformational leadership as "a process in which one or more people engage with others in such a way that leaders and followers raise one another to higher levels of motivation and morality" (Burns, 1978, p. 20). According to Burns (1978, p. 4): "a transforming leader looks for potential motives in followers, seeks to satisfy higher needs, and engages the full person of the follower." In the simplest terms, transformational leadership is a process that changes and transforms individuals (Northouse, 2001). In other words, transformational leadership is the ability to get people to want to change, to improve, and to be led. It involves assessing associates' motives, satisfying their needs, and valuing them as associates (Northouse, 2001). These leaders are the ones who can bring life back into a failing company with great success. Therefore, a transformational leader is a leader who strives toward change.

Transformational leadership is a different approach to leadership, not only is the organization transformed, but the leader as well. Tichy and Devanna (1986, 1990) state that "transforming an organization requires new vision and new frames for thinking about strategy, structure, and people." The transformational leader works on the vision for the organization as a whole and prepares the employees of the organization to meet the challenges of the future and deal with all of them. Researchers, Carlson and Perrewe (1995) and Tichy and Devanna (1986, 1990) note that there are some common characteristics of transformational leaders:

* They identify themselves as change agents. Their professional and personal image was to make a difference and transform the organization that they had assumed responsibility for (Tichy & Devanna, 1990, p. 4, 271-280).

* They are courageous individuals. These are prudent risk takers, individuals who take a stand (Tichy & Devanna, 1990, p. 4, 271-280).

* They believe in people. They are powerful yet sensitive of other people, and ultimately they work toward the empowerment of others (Tichy & Devanna, 1990, p. 4, 271-280).

* They are value-driven. Each transformational leader is able to articulate a set of core values and exhibited behavior that was quite congruent with their value positions (Tichy & Devanna, 1990, p. 4, 271-280).

* They are lifelong learners. A transformational leader is able to talk about mistakes he/she has made without seeing them as failures but learning experiences (Tichy & Devanna, 1990, p. 4, 271-280).

* They have the ability to deal with complexity, ambiguity and uncertainty. A transformational leader is able to cope with and frame problems in a complex, changing world (Tichy & Devanna, 1990, p. 4, 271-280).

* They are visionaries. The ability to dream, the ability to translate those dreams and images so that other people can share them (Tichy & Devanna, 1990, p. 4, 271-280).

The details of these characteristics of transformational leadership can be a positive influence as well as change to the entire organization.

Effects of Transformational Style of Leadership

A person can perform the vital functions of leadership in many different ways. Thus, there are many classifications of leadership styles and a lot of research has been undertaken on them. Some situations may favor one leadership style over another. As mentioned above, the transformational leadership style is complex and varied as it depends on certain behavioral traits. However, research states that the transformational style of leadership is the best approach for practicing ethical behavior in organizations and an organization must possess certain elements for the transformational style of leadership to be effective (Carlson & Perrewe, 1995).

The business environment is forever changing in America. All these changes in the business environment have led to a change in the leadership styles. Leaders of the public sector need to be adopt "transformation" leadership, where the employees of an organization are moved towards achieving objectives, not for the sake of keeping their jobs but because they believe in the objectives of the organization (Carlson & Perrewe, 1995).

Change of leadership style is an important area in which organizations should invest time and energy. Employee satisfaction is an easy thing to forget, however, it is important that their needs are fulfilled, if the organization is to be successful. Employees are the greatest asset an organization has and if ethical leaders within the organization adopt leadership styles that are democratic and transforming, then the organization would be on its way to achieving its objectives. Organizations do not need leadership styles that are intimidating and that will retard the progress of the organization.

Carlson and Perrewe (1995) state that "As leaders transform followers, the followers begin to trust and respect the leaders, and they are motivated to do more than originally expected. Kouzes and Pozner suggest that through the understanding of employees and subsequent concern for them, they are strengthened and empowered. According to Burns, when the transformational process occurs, the members of the organization become transformational leaders themselves" (Carlson & Perrewe, 1995, p. 6).

Carlson and Perrewe (1995) rationale supports the fact that "the transformational leadership process results in outcomes that are essential for implementing ethics in an organization (Carlson & Perrewe, 1995, p. 6).


Ethics and leadership is a topic that covers a lot of territory. In order to tackle this topic, one needs to approach the situation with a defined objective and a clear vision. In today's world, authoritative forms of leadership have collapsed. A leader will need to resort to all styles of leadership to interact with others. The style of leadership a leader adopts depends on the situation and on his or her personality traits.

Ethical leadership is moving in many directions. Although transactional and charismatic leadership are gaining importance, transformational leadership has proven to be a more effective style of leadership to maintain ethical orientation within the organization.

It is a known fact that we live in a litigious society with people taking arms against any organization that commits imagined or real offenses. The multiple changes occurring in society and the business world created a greater need for transformational leadership.


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College of Business and Information Technology

Argosy University


College of Business and Information Technology

Argosy University

Address correspondence to Michelle Thomas Drew, PhD, College of Business and Information Science at Argosy University, (478) 390-9920,
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Author:Noriega, Pender; Drew, Michelle Thomas
Publication:Consortium Journal of Hospitality & Tourism Management
Date:Aug 1, 2013
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