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Effective Leadership, Decision Making And Ethical Management

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Effective leadership, decision making and ethical management are linked both in theory and in practice.How may leaders ensure organisational decisions are made ethically?



Leadership is a relationship dynamic in nature. It is based on mutual interest between the leaders and the associate in which both their contribution are able to develop and motivate others to achieve an objective. The importance of a business leadership is well in demand in any organization. The emergence of an effective leader is necessary because a good leader can make a weak plan successful but a poor leader can ruin the chances of the best laid plans. Hack & Johnson (2000) trusted that an effective leader well balances and mobilizes the organization’s resources to towards achieving the goal of a common objective. This is the reason why effective leadership development program at different levels across the organization can help to augment the best results. The most important and reliable effective leadership programs must include the hiring strategies, employee development and career planning. (Thompson, 2010)

Effective leaders have the ability to design decision making within an organizational environment thereby improving the performance as a whole. A strong decision making characteristic is a major component for the success of an organization and Leadership Decision Making program is much needed to enable the leaders to learn the optimal decision making techniques, the methods of communicating in a risk effective way and how to combat the emotional and intellectual stumbling blocks that can force experienced leaders to commit mistakes. Harvard Kennedy School organizes such Leadership Decision Making programs to enhance the decision making skill of the leaders. To be an effective leader it is not only necessary to have a sound decision making skill but also have a ethical string attached to it. Thus we define ethics. (Exed.hks.harvard.edu, 2015). Ethics are the values and beliefs that help an individual to distinguish between right and wrong behavior. So basically ethical leadership can be defined as the process of influencing and guiding a subordinate to make correct choice based on values, beliefs and principle. Thus the three key words of management are effective leadership, decision making and ethical management. We would try to establish a link among them.

Concept & theories:

Effective Leadership: And effective leader plays the role of transforming potentiality into reality. The leaders are the key factor in the success of an organization. They have the power to propose, mould or re-mould new archetype when the old ones lose their importance and effectiveness. Over a time span, a number of theories of leadership have been formulated (Leadership Theories, 2015)

  • Trait Theory/Great Man- People are born with traits and that the combination of right set of traits make an effective leader. This theory assumes that based on intelligence, perseverance and ambition a leader is characterized superior to any ordinary individual. Some traits includes adaptable to situations, energetic, cooperative, decisive, persistent, creative, organized, dependable, dominant etc. that make a leader.

  • Behavioral Theory- this theory assumes that individuals are not born with certain traits that make them leaders. Leaders are formed based on what leaders do. An individual with definable and learnable ability can be made into a leader. Behavioral theory exhibit two types of leader. The one that is concerned for the people and other that is concerned for production.

  • Participative Leadership- An autocratic decision by the leader may not be an effective one. Involvement in decision making to come to better decisions is the role of an participative leader. He seeks the involvement of his subordinates, seniors and other stakeholders for decision making.

  • Situational Leadership-Leadership skill is best exercised when he considers a range of situational factors. This theory emphasizes on the behavior of the leaders based on the given situational factors. Tannebaum and Schmidt (1958) established three forces of a leader’s course of actions:

  • The forces in the situation

  • The forces in the follower

  • The forces in the leader

  • Contingency Leadership- This theory assumes a broader concept of the capability of the leader based on contingent factors and other situational variables.

  • Transactional Theory- A dynamic process where leaders allocate work among the subordinates by engaging them in reciprocal activity exchange regime. Individuals are motivated when rewards, recognitions and punishments are incorporated. So it is the duty of transactional leader to set clear structures of work requirement to his subordinates.

  • Transformational Theory- According to MAcGregor Burns, Transformational leaders are able to encourage the followers to change perception, expectations and motivations to take common objective to a higher level of moral (Cherry, 2015)

Decision making:

Decision Making can be examined as an individual as well as collective process. The role of values is significant in setting the criteria for decision making. The five categories of value that are like a guide to the decision maker are:

Organizational values influence the decision maker to collectively promote interests of the organization. For instance, uniforms set by the military force or police instill in their minds that they are there for a common objective and this builds an organizational value among the workers. On the other hand the Professional values help to shape the behavior of the decision maker. Like doctors, teachers, lawyers acquire professional training, education and work experience to epitomize professional norms or values. Decision maker must work keeping in mind the interest of the public and their beliefs so they are able to perceive what is correct, proper, necessary and ethical. Thus a decision maker must work in accordance with these policy beliefs. Lastly, it is necessary for a decision maker to rationalize a action based on required ideology. For instance, Nationalism was an ideology in formulating many leaders’ behavior. Theories of decision making include:

The Rationale Comprehensive Model: The theory assumes that a leader must recognize the problem and set distinct and clear goals, vision & objective and accordingly rank based on importance.

The Incremental Theory- the Rationale behind this theory is that the decision makers’ selection of goals and objectives is interweaved with respect to the scientific analysis. Decision makers utilizes alternative dealing to a problem which differs incrementally form the existing policies.

Mixed Scanning- Sociologist Amitai Etzioni modified both the above theories into a theory of Mixed scanning. This theory considers both the approaches of the fundamental and incremental decisions. (https://www.unc.edu/, 2015)

Ethical Management

The management tool that establishes governance either in terms of corporate or public administration is Ethic Management. It is the study of behavior of employees and employers in the corporate world as well as in public administration. This study of behavior also focuses not only in the real world but also in the cyber world. An employee may be polite and decent in the real world while addressing his superior. But this very person may send mails using unethical languages. (Anbalagan, 2015)


Theoretical Linkage Between Effective Leadership, Decision Making And Ethics

The linkage between Leadership, Decision making and ethics needs to go through a series of compass points. A leader is said to be effective when his articulation that ethic is the priority is clear. An effective leader must communicate the practice of ethical decision making and to support ethical programs. The four tools for Ethical Leadership considering proper decision making are:

Demonstration of priority of Ethics- It is necessary for a transactional leader to consult with his subordinate to reach a ethical decision. The leader must ensure discussion of ethical concern and instill in their minds that ethic is most important.

Communicate clear expectation for ethical practice- Identification regarding the clarification of expectation is needed here. Leaders must be explicit during explaining the underlying values and also consider the barriers to expectations.

Practice ethical decision making- The most important aspect of an ethical and effective leader is to ensure that the decision made must abide by ethical reasoning. It is important for the leaders to identify, address and explain ethical decision systematically.

Support local ethics program- An ethical leader must support the cause of an ethics programs. He must encourage participation by others in such programs.

Leaders play an important role in creating, changing and sustaining in the organization’s culture by their behavior, ethical reasoning, ethical decision making and effective leadership skill. All leaders must exercise such behavior which helps in altering an ethical environment within an organization and its culture. It is then he is called a transformational leader.  Thus, based on theories it is evident that there is a strong correlation between how an effective leader makes decision based on ethical reasoning. (Fox, Crigger, Bottrell & Bauck, 2015)

We now try to focus on the practicality of the association of the three key factors of management.


Howard Schultz  is popularly known as the chairman and CEO of Starbucks.

Schultz came up with an effective, idealistic and practical big idea that would enable the US citizen to lend money to small businesses. Schultz’s movement always focused on “the jobs emergency”. He had this idea that small businesses could create job opportunity in the economy but most of these small businessmen lacked proper credit to hire due to financial crisis. He then thought about the microlending programs initiated by Starbucks in some of the countries where it bought coffee. Schultz, then took advantage of the downright strength of Starbucks and nearly 7,000 Starbucks store in the United States and around ten million customers were involved in this program of what Schultz called “Americans Helping Americans”.

The idea taken up by Schultz was that concoct with financial institutions who would loan out to small businesses. In this the customers would donate $5 or more and get a red-white-and-blue- wristband labeled “Indivisible.” Soon Starbucks associated with Community Development Financial Institutions (CDFIs). CDFIs are non profit and they loan at extremely low rates. Mark Pinsky’s organization, Opportunity Finance Network, plays the role of an umbrella group to both of them. This organization specializes in extending credit, getting paid back and paying back investors. The donations that would create Jobs for USA will not be loaned to the CDFIs, rather they will be turned into capital. Schultz is of the view that he would try and convince some national retail chains to get involved on this effort so that what governments and banks are unable to perform, it is they who can extend a helping hand. (NOCERA, 2011)

Taking up the story of Andrea Jung gives us a vivid knowledge of how leaders are born and transformed. Andrea is the CEO of Avon Products. Avon is one of the top beauty direct seller in the world and is the largest micro-lenders who lend credit to several numerous sales representatives globally. (Avoncompany.com, 2015) Andrea Jung was one of those women who quit her job from Neiman-Marcus without any other job. She then joined Avon products and becoming a CEO changed the structure of the company’s vision. The company, Avon which focused on selling beauty products was not just the vision anymore, Jung made sure that the mission should focus on women empowerment. Avon had gone from 1.5 million to 5.5 million increased in workforce and was successful in acquiring economic independence through their own efforts. Avon Foundation for Women raised and were rewarded $1billion to reinforce health and empowerment issues, this made it the largest women oriented corporate benevolence around the world. (Lublin, 2014)

This poses a practical approach to how effectively leaders of reputed organizations are able to make ethical decision. Their decision and effort not only benefited the organization but also augmented the states of the economy.

How may leaders ensure organizational decision are made ethically?

Ethical decision making is a four way process comprising of several stages to attaining a proper decision. It describes in the first stage to identify the moral issue by any moral agent. Secondly, he must make a moral judgment about the issue and undertake moral concerns and lastly it s necessary to act morally based on the issue. Trevino (1986,1992) proposed that ethical decision making is the interaction  between situational factors and individuals. Ethical issues are equivocal and can be interpreted in more than one ways. Its interpretation depends on the way an effective leader is able to find an ethical approach in solving.

Abercrombie & Fitch Stores Inc.,an organization in US has set had refused to hire an Muslim women Samantha Elauf because she wore a hijab to the interview. Is this ethical or not?

(Anbalagan, 2015)

Now the answer to this dilemma lies within the Washington State Human Rights Commission, Guide To Dress Codes. Here the employee and the employer must take part in an interactive decision making process and find a reasonable accommodation that would not neglect the religious belief of the Muslim employee. RCW 49.60 and Title VII of the Civil Rights Act of 1964 prohibit discrimination in employment based on religion or creed. An exemption from uniform is granted for persons having religious dressing beliefs (Washington Human Right Commission, 2015)

The U.S. Equal Employment Opportunity Commission (EEOC)  has instigated the US Supreme Court to review the allegation that the organization’s hire refusal has constituted religious discrimination. The EEOC alleged that Abercrombie had violated Title VII of Civil Rights Act of 1964 but the Tenth Circuit later reversed the decision. (The case is Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores Inc., 2014)



The key to effective and successful leadership lies in a combination of few steps. But the most invigorating steps to an effective leadership is the making a wise and ethical decision based on cognitive ability, insight, adequate understanding of the limit’s of his knowledge, learnable ability, concern for the employees, posses real world effective skill and appropriate organization values. (McKenna & Rooney, 2009).

The leader must model out a way keeping in view the business ethics. Inspire a shared vision by playing the role of a transactional leader and involve all his subordinates to achieve a common goal. He must also challenge the process of decision making based on the values, principles and objectives. A leader must enable others to act behaving like a transformational leader with either a fundamental or incremental decision making approach. It is also the Duty of a leader to ensure that each and every employee get the opportunity to voice their opinion and leader must encourage his subordinates to act in accordance with the contingent as well as the situational factors. In short, the linkage between the effective leadership, decision making and the ethical management plays the role of life and success of organizations. These three key factors of an organization and build a better of the organization on one hand and on the other hand these very three factors can ruin the prospects of ax expanding and growing organization. Thus there is need of an effective leader with ethical sense of decision making. (Pasternak, 2015) ('INDEX to MEDICAL DECISION MAKING', 2004)



Anbalagan, T. (2015). Meaning of Ethics ManagementAcademia.edu. Retrieved 5 February 2015, from https://www.academia.edu/4152189/Meaning_of_Ethics_Management

Cherry, K. (2015). How Do Transformational Leaders Inspire?About.com Education. Retrieved 5 February 2015, from https://psychology.about.com/od/leadership/a/transformational.htm

Ethical Leadership Factsheet. (2015). Retrieved 5 February 2015, from https://www.uvm.edu/extension/community/buildingcapacity/pdfs/ethical_leadership_factsheet.pdf

Exed.hks.harvard.edu,. (2015). HKS Executive Education. Retrieved 5 February 2015, from https://exed.hks.harvard.edu/Programs/ldm/overview.aspx

Fox, E., Crigger, B., Bottrell, M., & Bauck, P. (2015). Ethical Leadership Fostering an Ethical Environment & CultureNational Center for Ethics in Health Care. Retrieved 5 February 2015, from https://www.ethics.va.gov/ELprimer.pdf

https://www.unc.edu/,. (2015). Theories of Decision Making. Retrieved 5 February 2015, from https://www.unc.edu/~wfarrell/SOWO%20874/Readings/decisiontheory.pdf

INDEX to MEDICAL DECISION MAKING. (2004). Medical Decision Making24(6), 697-703. doi:10.1177/0272989x0402400618

Leadership Theories. (2015) (4th ed.). Retrieved from https://www.etsu.edu/ahsc/documents/Leadership_Theories.pdf

McKenna, B., & Rooney, D. (2009). Book Review: Eric H. Kessler and & James R. Bailey (eds.) Handbook of Organizational and Managerial Wisdom SAGE Publications: Los Angeles 2007. lxxiii + 579 pp: ISBN 978-1-4129-1561-8 (cloth). Organization Studies30(4), 447-449. doi:10.1177/01708406090300040702

NOCERA, J. (2011). We Can All Become Job Creators. The New York Times. Retrieved from https://www.nytimes.com/2011/10/18/opinion/nocera-we-can-all-become-job-creators.html

Offermann, L., Kennedy, J., & Wirtz, P. (1994). Implicit leadership theories: Content, structure, and generalizability. The Leadership Quarterly5(1), 43-58. doi:10.1016/1048-9843(94)90005-1

Pasternak, S. (2015). The role of ethical theories in ethical reasoning and behavior within organizations - Research proposal (1st ed.).

The case is Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores Inc., case number 14-86 (U.S. Supreme Court. 2014).


Washington Human Right Commission,. (2015). GUIDE TO DRESS CODES AND WASHINGTON STATE NONDISCRIMINATION LAWS. Washington Human Right Commission.

Avoncompany.com,. (2015). Avon Products Inc.. Retrieved 21 February 2015, from https://www.avoncompany.com/

Lublin, J. (2014). Andrea Jung, Former Avon CEO, to Run Microfinance GroupWSJ. Retrieved 21 February 2015, from https://www.wsj.com/articles/SB10001424052702303847804579481683309654694


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