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As a group choose one of the trends identified in Assignment 1A that is relevant to your workplace. Discuss the trend and its implications for organisational behaviour and the psychological contract. Apply three OB theories/models from three different OB topics to analyse the trend and its implications. Identify strengths and weaknesses of the identified theories/models in relation to the trend that you are analysing. Provide three recommendations for managers in responding to the identified trend, and managing organisational behaviour. Provide justification for your recommendations in terms of findings from the literature on their relevance, and success.

For students who may not have work experience, you may use a newspaper or academic journal articles that discuss an OB trend/issue in an existing Australian or international organisation.

Use relevant OB concepts/theories/models in analysing an OB issue and providing recommendations.

This assignment is designed to develop further understanding of an OB topic/trend and ways of dealing with its implications in the workplace.
Learning objectives addressed in this assignment are as follows:
be able to critically examine assumptions and propositions of theorising about organisational behaviour in general;
be able to compare and analyse the strengths and weaknesses of organisational behaviour theories relevant to managers with human resource responsibilities;

Implications for Managers and Psychological Contract

Ethical leadership is a form of leadership, which the people show working for a common goal that is appropriate and acceptable in each area of organization. This is the leadership that is focused on the ethical values and beliefs, for the rights and self-respect of others. Brown et al., 2005 stated that ethical leadership associated with the concepts like; honesty, trust and fairness. In an organization, it includes directing the employees to create good relationships on the basis of trust and respect (Nelson & Quick, 2011). Cooper (2006) defined that the people with the ethical leadership believe in working with the honesty, equity, fairness, justice and integrity. From the last few years, it is a growing trend of promotion and development of leadership effectiveness and ethical leadership in the organization. Ethical leadership is considered to be important because of its effects, which the leaders may have on the organizational behavior and eventually on the performance of the organization. The Business times (2017) stated that ethical leadership is the fresh idea for growing companies.

Ethical leadership includes not only a moral manager but also a moral manager. If there is a moral manager, being a manger engages in promoting ethical behavior in others by using the effective communication, modeling and formal reward systems. Ethical leaders identify that the subordinates are looking for the ethical direction and that they can impact the ethical behavior of other people of organization in a positive manner. According to an article in Business times (2017), ethical leadership can impact the organization in a positive way in the future. There is an example of the ethical leader, i.e. Indira Nooyi, CEO of PepsiCo. She did the business in an ethical way. She leaded the performance with purpose initiative. This initiative ties the financial performance of the company with the environmental, human and employee retention (Northouse & Peter, 2013). This is the result of effective leadership in the organization.

Ethical leadership plays an important role in the success of any organization. It defines the relationship between values and behaviors and tries to find out the condition of personal desires which direct to ethics and beliefs in the formal leadership. The leaders in an organization work to develop an effective and open communication, thus sustaining an understanding of different values, views and opinions. Ethical leaders always stay open for other’s ideas and opinions, as they understand that these ideas can make the organization better (Kaifi & Noori, 2010). This thinking of leader motivates the employees to perform the task effectively. They understand that they are contributing to the organization. It sets a better environment in the organization and good relationships among employees of the organization. It means ethical leadership has the capacity to inspire the positive work engagement among the employees (Business Times, 2017).

Three Organizational Behavior Theories/Models

If the leader will be ethical, then there are very few chances that the followers will engage in the unethical behavior. This type of leaders create ethical and pleasant environment in the organization. If the organization follows the trend of ethical leadership, then there will be commitment to the collective mission and vision, which is ethically stranded (Bass & Bass, 2008). It creates consistency and harmony in the organization culture (Amanchukwu, Stanley, & Ololube, 2015). When the team will be focused in attaining the objectives then there will be less focus on mocking the colleagues.  It has a large impact on the manager’s job satisfaction, which in turn influences his/her behavior outcomes and performance. According to a research, it is identified that managerial performance can be enhanced by grooming effective and ethical leadership. For an organization, it is very important to understand that psychological contracts have a large impact on the effectiveness of the organization. So, first it must work to manage them (Northouse & Peter, 2013). Ethical leaders understand that these contracts are important because they connect the employees to the organization. They make sure that the mutual expectations, which involve the psychological contracts, are understood and accomplished, so there is good relationship between employee and employer (Memari, Valikhani, Aghababaee & Daveli, 2013).

Ethical theory on leadership generally focuses on two things, one is behavior and action of leaders and another is personality traits and characteristics of leader. It is essential that the leadership must include the ethics. This theory of leadership states that great leaders possess some individual traits or characteristics (Kaifi & Noori, 2010). An ethical leader must have some personal traits, such as; honesty, justice, dignity, community building and serving other people. These traits are strongly related to the leadership. According to this theory, individual with these particular traits emerge as the leaders.

This theory of leadership implies on the organizational behavior strongly. It can be seen in an organization that it is an ethical task of the organization’s leader to behave with his followers and subordinates with respect because they also have their own personality (Leigh, 2013). This fact explains that the traits and personality of leaders have an impact in enhancing the organizational behavior. In an organization, ethical leader serve others. As an ethical leader, he should give priority to the interest of his followers than his own interests. He must be kind to all the people. The leader must act in a way, which results good for his follower or subordinates. This assists in developing better working conditions in the organization. Ethical leadership emerges from the leader, when he respects others in organization. A leader should not take the use of his followers for fulfilling his own goals (Fairholm, 2009). The feelings, decisions and values of followers should be respected by a leader. It is an important factor for organizational behavior, because it includes listening effectively the subordinates, being concerned to them and be generous in hearing their viewpoints, if they are negative. If there will be these factors in the organization. The organizational behavior will be effective. All the followers must be treated equally in the organization. The leader is just and fair. If the followers are treated differently in any organization, then the reason for differentiation must be fair, clear and moral. It will enhance the organizational behavior (Brown, & Trevino, 2006). Developing the traits will help the leaders in establishing better relationship among employer and employees in the form of psychological contract. There are so many cases, in which the managers adopted the leadership personality traits and make the changes in the working environment (Winkler, 2010).

Application of Theory

There are some strengths and weaknesses of this theory of leadership, when it is applied to the organizational behavior. This theory is very simple theory (Kaifi & Noori, 2010). A research found that the leader in one situation may not be a leader in another situation. These personality traits are not enough for being an effective leader. Leadership does not exist in the person, but it generally needs examining the entire situation. The major focus of this theory is on small personality traits and it avoids some specific skills like; social skills and problem solving skills (Hein, 2013). Despite these weaknesses of trait theory, there are some strengths of this theory. This theory helped in encountering various strong challenges.  Apart from these weaknesses, leadership traits help in developing these personality characteristics in the followers. They feel more motivated and keep themselves engaged in the work for achieving their goals. Some of the authors defined that the leaders with the ideal traits are more successful than others (Northouse & Peter, 2013). In the workplace, it is very important for the leader and followers to have these personality traits to establish better relationships among employer and employees. It will help them in achieving their common goal.

It is good if trait theory is applied in the workplace environment. But there are some other strategies, which must be applied with it as only this cannot be effective for the organization behavior. This is true that an ethical leader have abilities and personality traits, which are different from other leaders, who are not ethical and effective in the organization (Deakin University, 2017). These traits are solely not used to identify a successful leader, but they can be seen as preconditions which provide people with the potential of leadership.

Another theory, which can be implied on the organizational behavior, is emotional intelligence theory.  Emotional intelligence is the ability of an individual to identify the emotions of their own and other people to determine between different feelings. Another purpose is to use the emotional data to lead the behavior and thinking (Brown, & Treviño, 2006). It also helps in managing and altering the emotions to adjust according to the environment or attain the goals of organization.

It can be seen in today’s organization that application of emotional intelligence requires the use of soft skills, which are beneficial for the organization (Brown, & Treviño, 2006). A substantial research has been conducted in identifying the relationships between emotional and social intelligence, which is related to social relationships, life satisfaction, team work, personality and leadership. In the organization, leadership is considered as the combination of behaviors, traits, administrative abilities and interactions, which are determined by the situations and the culture of organization (Mayer, Kuenzi, & Greenbaum, 2011). According to a research, there are so many evidences, which noted that emotional and social skills are important for the performance of ethical leader. There is a strong relationship between emotional intelligence and ethical leadership, which can be very beneficial for the organizational behavior. Golaman identified 5 components of the emotional intelligence, which assist the ethical leaders in decision making process.

The ethical leadership is considered as an emotional process, the extent of emotional intelligence in an ethical leader plays an important role in value of social interactions with the other people in the organization (Brown, & Treviño, 2006). Empathy must be a capability of the organization in the psychological contract, which is like an expectation and cultural norm of the managers and leaders that can be seen in the way, they deal or behave with the employees.

In the case of FedEx Express, emotional intelligence assisted in improving the ethical leadership (Freeman, 2014). The company found that people-side leadership is very complex, so it implemented new skills to managing the changing team (Northouse & Peter, 2013). It implemented action-based emotional intelligence. This included a three step model, which assisted them in using the emotional intelligence on regular basis. The model of FedEx is given below:

There are some considerable evidences that social skills are important for the performance of leadership. In an organization, an effective manager and leader takes the benefit of resources and emotional skills for interacting with the people and attaining good performance outcome. Riggio & Reichard (2008) defined that emotional skills are concerned the social aspect of emotional intelligence under the social interaction process. Under these situations, the results of managers and leaders are affected in managing the emotions of followers and human responsibilities. This argument is assisted by Goleman & Emmerling (2003), who stated that emotional intelligence is bas for the ethical leadership and especially when it is about the managing the human resource responsibilities.

Emotional intelligence is important but there is a dark side of it. It may have adverse impact on people. When the people develop their emotional skills, they create the ability to manipulate others (Business Times, 2017). When a leaders can control own emotions effectively and they know what the followers are feeling, then they can pull their feelings and motivate them to perform against their interests. It affects the ethical leadership in the organization.

At the work place, the emotional intelligence theory should be implemented to understand the feelings and behavior of the employees. It will help the manager and leaders in understanding their desires and social skills in working environment. It will allow them in setting the priorities and determine the majority of the day-to-day actions (Kim, Woo Gon, & Brymer & Robert, 2011). The ethical leaders should help the employees in understanding their own values by developing emotional intelligence in the organization.

Work place stress is the negative reaction, which the people have to extreme pressures at work. There may be some issues related to the health of the employees (Northouse & Peter, 2013). Workplace stress is safety and health issue of the employees. This is a growing problem around the globe, which impacts not only the health and safety of the employees but also the efficiency of the organization. This theory applies where demands of work outstrips the ability and capacity of the employees. This is one of the most common injuries in the Australian organizations (Youseff & Luthans, 2007). The primary reasons behind this are long working hours, work relationships and job security.

Stress and work-place stress is very common problem in today’s organizations. The ethical leaders and managers have to play an important role in overcoming this issue. An ethical leader is needed to address and prevent the stress at workplace by using the risk management model (Youseff & Luthans, 2007). The managers should understand that the human resources are their important capital, so they try to manage the human resource responsibilities. It is significant to appreciate that both individual and organizational level involve in addressing the reasons of mental stress. This is more effective than other approaches which only focus on the employees. This theory must be implied in the organization as it helps in motivating the employees towards their work. Implementing the stress management program in the organization helps in improving the working environment in the organization (Kim, Woo Gon, & Brymer & Robert, 2011). If the ethical leader applies this risk management then it will reduce the work related stress. First, the leaders will identify the aspects of work stress and create the strategies to eliminate the causes of work stress. If the leader is also having work stress and mental stress, then he will not be able to handle his followers and fail to motivate them. If the stress will be reduced by using the strategies, then there will be better organizational behavior and better relationships among employee and employer. For example, there is case of Cardiff and Vale, in which the organization implemented an employee well-being program for improving the health of people without any discrimination (French, 2011).

There are not more weaknesses of this theory. It is an effective theory for maintaining the organization behavior. The leaders must implement the risk management framework to deal with the issues of work place stress (Northouse & Peter, 2013). The important criticism on work stress is that it tends to accept a narrow concept of what establishes work, which can be defined in form of unpaid employment, home workers, looking for experiences of unpaid workers etc. Generally, this type of stress is arisen from the poor leadership in the organization. The employees, who face the problem of work stress, they may face some health problems (Detert, James & Burris, 2007).  From the factors of organizational behavior, lack of leader’s support can affect the health of subordinates. The environment is created and developed by the leader because they have a significant role in organization. So, an ethical leader must work to reduce the work stress and establish a harmonious environment. This theory of organizational behavior is both advantageous and disadvantageous to the organization and its human resources (Youseff & Luthans, 2007). The managers should find the solution of the issues of stress in the organization.

For dealing with the workplace stress, the ethical leaders should implement an approach of risk management. They should recognize the causes of stress and harm to health of the employees. After that, he must assess the risk of harm (Hassan, 2015). Implementing new strategies and tactics can reduce and overcome the problem of work place stress. This will be beneficial for the organization.


There are some recommendations, which are made to the managers for in responding to the ethical leadership and managing the organizational behavior. These are given below:

  1. In the organization, the managers must try to implement the ethical leadership to create a better environment, which will be free from any injustice and fraud. The managers must try to develop the trust, respect and integrity. For this, they must try to develop personality traits for leading the team. Verbos et al. (2007) stated, if the ethical leadership exists in the organization, then the managers must motivate the followers to follow the ethical and effective leader.
  2. If the managers are ethical, then they can ensure that the ethical practices are carried out in the organization. So, the managers should understand that ethical leadership is best for the success of the organization and it will enhance the overall organizational behavior. According to Freeman (2006), implementing ethical leadership will assist the managers in finding and developing best talent in the organization. With this, they should motivate the existing employees to be ethical. The managers can made it possible by reducing their stress related to work.
  3. Sama & Shoaf (2008) described that the managers should implement the ethical leadership, which will enable them in identifying the moral element of the decisions and looking at the ethical consequences of their decisions in the organization.
  4. According to Brown & Trevino (2006), the managers should be capable in judging the ethical issues and they should view them from different perspectives and support the decisions by adding their moral ethics. Developing emotional intelligence can help the managers and employees in judging and identifying the behavior of people. This will make an ethical environment in the organization and enhance the organizational behavior.

Ethical leadership is an opportunity and obligation, which demands a good deal from the people, who pursue it, informally and formally. These demands in the organization need the leadership to be ethical. Among all the characteristics of the ethical leadership, which is most important for an effective organizational behavior is honesty and openness. The discussion concludes that the organizational behavior trend, ethical leadership plays an important role in the success of organization.  All the theories are clearly defined with their application to the organization and recommendations are given. Thus, maintaining an ethical leadership is a continuous process, but it is very difficult to maintain in this competitive environment. 


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