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Leadership Is Essential To The DevelopmentEthical Decision Making

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Question:

Is leadership Essential to the Development of Ethical Decision making in Modern Organisations?
 
 

Answer:

Introduction

The role of a leader is to guide their subordinates not only in terms of acquiring the business knowledge but also help them to develop their knowledge and skills both for professionally and personally. However, leader follow four basic decision-making styles- commanding style, collaborative styles, consensus decision making style and convenience style (Ferrell and Fraedrich 2015). Apart from the decision making, an effective leader also pays a crucial role as a communicator, strategic thinker, team-builder and image builder for an organization. However, Thiel et al. (2012) argues that ethical thinking of a person allows them to work ethically in every aspect of their work and these people have the potential to be an ethical leader. In this assessment the role of leadership in developing ethical decision making in contemporary organizations will be illustrated. 

Discussion

Ford and Richardson (2013) portrays that in terms of accomplishing programs, policies and decisions for the business in a standard and correct way, formulation of code of ethics is necessary. It is the liability of the leader to develop an ethical organizational culture. Some ethical aspects in a workplace are- leadership ethics, employee ethics and ethical organizational culture. Kuntz et al. (2013) stated that all these aspects have to be considered in an organization by a leader. However, these aspects depend on the characteristics of the leaders. Cianci et al. (2014) depicts that an ethical leader make ethics as a first priority of their agendas and they set standard and hold every subordinate accountable for following those standards. In addition to that, Ford and Richardson (2013) affirms by stating that these leaders work ethically and do hard work through recruiting, training, and performance management systems by following all the code of ethics so that efficient and ethical people can be selected, who can follow their business objectives. Craft (2013) on the other hand argues that having top-level managers and supervisory level managing authorities in the contemporary organization have a positive impact for flourishing the lower-level ethical leaders; however, the major problems is in the attitude of the mid-level managers as these people often associated with unethical working approaches. Thus, managing authorities are responsible for regular communication with these mid level managers and evaluate their performance and guiding styles so that problems in their approach can be evaluated and diminished Crossan et al. (2013).Moreover, managing authorities or leaders of an organization have to consider four aspects for taking effective decision making. These managers have to judge between ethical and legal situation, ethical but illegal situation, unethical but legal situations, unethical and illegal situation (Phipps 2012).

Image 1: Situational Ethical Dilemmas in Contemporary Organization

(Source: Phipps 2012)

Hartman et al. (2014) mentioned that the traits of ethical consideration in an individual came from their environment in which they belong but on the other hand, Craft (2013) argue by depicting that with proper training and evidences of ethical procedure, sense of ethics can be developed. These training allow a person to get aware about the business areas of anti-bribery and corruption, data protection, economic sanctions, anti-money laundering, market misconduct, fraud and collusion. However, Johnson (2013) expostulate the above perception by stating that leader may gain knowledge on ethical business decision but traits of treating everyone equally and ethically cannot be taught by training. Taken for instance, in context of an organization named Enron, two leaders Enron's Jeff Skilling and Kenneth Lay were found guilty for the bankruptcy of the entire organization. The major reasons for the insolvency of the company are due to accounting frauds, inappropriate corporate culture, improper trade practices and especially the unethical business approaches (BBC News 2002). In the accounting frauds, actual revenues were shown more by couple of billion than the actual balance sheet (BBC News 2002). Even the partnerships formulated in their annual report are unreal and are done for hide huge debt and heavy losses in their utility trading business (BBC News 2002).

 


On the other hand, one of the most effective and ethical leaders in today’s contemporary world is Tony Hseih of Zappos.com, who follows the ethics of equality in their workplace. He uses the same cubicle as other employees. The major thing that this leader follows is making their employees happy and develops an informal business culture within the workplace (Kopelman et al. 2012). The ethical consideration that Tony Hseih maintains is to celebrate each person’s individuality apart from their working capabilities and competencies by following all the organizational and governing legislations regarding the online business. Zappos.com utilizes the concept of recycling and reusing things for their packaging materials as a part of their “going green” initiatives. This leader also encourages their employee to take noble steps to helping people in the community. In addition to that, in recent times, the example of unethical proceeding’s example can be illustrated from Donald Trump’s leadership style. The concerned leader of the United States not only generates an immigration ban on the entry of Muslims in their nation but also accept emoluments from many foreign ministers against the legislation of Article I, Section 9 of the U.S. Constitution (D'Antonio 2015). These activities are the evidence regarding the corruption of the President's loyalty to the U.S. It is also apparent that followers follow the leader’s approaches and hence a leader has to be ethical regarding their business activities. In this case, banning some facilities for some individuals based on their cultural differences is not legal as well as ethical. Donald Trump follows authoritative leadership styles and considered his principles are right and everyone must adhere to his principles; whereas leaders in contemporary world should follow situational leadership styles (Sung 2014). Thus, a leader take decision depending on  the demand of the situation by following basic ethics like not harming any subordinates and all the legislation governing their business procedures.

In contemporary organizations there are some ethical dilemmas that a leader has to consider- accomplishing organizational values and objectives, maintaining individual’s emotion and diminishing internal conflicts (Eisenbeiss 2012). Bello (2012) furthermore highlight that contemporary managing authorities also emphasizes on the corporate social responsibility as a part of ethical business procedure. Phipps (2012) argues that organization consider this fact in order to attain competitive advantage compared to other organization whereas in reality there are very less organization that follows an ethical procedure. Craft (2013) highlighted that maintain trust, integrity, effective interpersonal relation and transparency are the key elements of ethical decision making approach. Mangers in recent times make their subordinates understand the rules and principles for right and wrong conduct so that their business growth can be ensured. Jackson et al. (2013) also explains that an effective leader encourages their subordinates for assessing three major points- act of an individual, procedure for structuring of an organization and approaches for structuring the society. These attitudes among the leaders can be developed through models like- utilitarian model, moral right model and justice model (Hassan et al. 2013). In utilitarian model, the managers emphasizes on making ethical decisions for a happy employees and outcome of a business procedure; whereas in moral right model, leader protects and respects individual liberties and privileges. Lastly, there are some managing authorities in recent times, which impose and enforce rules impartially and fairly for effective business procedures. Thus, leadership plays a crucial role in making employees understand the benefits of following best and ethical approach within their workplace. These leaders focus on formulating a code of ethics in order to overcome the dilemmas in decision-making. Kligyte et al. (2013) also mentioned that these leaders communicate those codes of ethics regularly with their subordinates regarding its implementation in their decision.

 


In addition to that, these ethical leaders punish an employee for breaching these codes of ethics so they can be an ideal example for everyone. Taken for instance, other ethical consideration that should be followed by the leader is the concept of equal pay and abolishing discrimination within the workplace. Thus, if an employee is witnessed to harass other employees based on their gender, race, ethnicity, culture and traditional differences, the leader of the organization must take appropriate steps for overcoming the conflicting situation. Kuntz et al. (2013) also stated that these leaders should punish the employee according to both the organizational and legal legislation so that victims can get proper justice. In Singapore, there are legal working principles for adopting fair employment practices like recruitment based on merits, fair and respectful behaviors with colleagues, provision of equal opportunity, training and development along with the opportunities, rewarding eligible employees and abiding Tripartite Guidelines on Fair Employment Practices and all the labor laws based on The Employment Act (Cap. 91) (Fair employment practices 2017). Resick et al. (2013) compared these legislation with that of the Australia that the latter country have legislation on every ethical right of the organization in every aspects like Fair Work Act 2009, Sex Discrimination Act, Racial Discrimination Act and Equal Opportunity for Women in the Workplace Act 1999 (Cth) (Fairwork.gov.au 2017). These separate legislation also denotes that Australian leader considered the ethics of their residing people effectively in all possible direction so that they can get proper justice. In addition to that every organizational leader also abides these rules for treating their employee fairly.

 


Morales-Sánchez and Cabello-Medina (2013) on the other hand analyses that managers must provide a good role model by being honest and ethical all the times, maintain transparency not only in terms of business regulations but also in their communication, celebrating failure by admitting the faults and shows ways for overcoming those failures, develops ethical symbols, stories and slogans for sharing ethical values in the workplace, motivate people for proceeding ethical approaches and lastly protecting people, who raise unethical issues in public but make them understand with proper example regarding the consequence of those unethical approaches and highlights the positive impact of the alternative ethical procedures. All these aspects make the subordinates realize that their leaders are effective and they should adhere their ways to attain success in the future. Resick et al. (2013) highlight that following these procedures allows an organization to get success in their business terms and maintaining good brand recognition in the community. It is also evident that subordinate employees can sense of satisfaction and happiness by working in an ethical environment and this allows them to adopt ethical motive for their decision making ability. In this way, it can be said that a leader plays a very crucial role not only for taking ethical decision making themselves but also guide other to take ethical decisions. Ford and Richardson (2013) on the other hand summarize the effective procedure for the role of the leader in decision making that is ethical and effective.

Image 2: Process for Ethical Decision Making Adopted by Leaders

(Source:  Created by Author)

These leaders follow the first step of recognizing the need for taking a decision based on a situation. The second step that they emphasize is the framing of the problem on which decision have to be taken; while the third step is to generate and assess alternative decisions that is appropriate for the considered situation (Yidong and Xinxin 2013). The fourth step is choosing the best suitable and ethical decision among the all listed alternatives and then implements the decision, which is the fifth step. The sixth and the final step are to evaluate the outcome of the decision by taking feedback from the employees. In this way, not only the managerial decision is considered but the employees also get a chance to participate in the decision making procedure, which on the other hand signifies the ethics of equality among the members of the organization (Shin 2012).  

 

Conclusion

Thus, from the discussion it can be concluded that leadership plays an essential role to the development of ethical decision making in modern organizations. The primary reason behind this is followers adopt the procedure followed by their leaders and hence the leaders have to take every decision ethically. It is also concluded that this ethics can be measured in terms of following legal obligations and organizational regulations. Providing equal chances to every subordinate based on skills and competencies and not on favoritism and guide the employees to follow such actions ensures the business growth. Thus, these aspects can only be fulfilled if the leader of the organization makes ethical decision making.

 

References:

BBC News | Business | Enron scandal at-a-glance., 2002. [online] News.bbc.co.uk. Available at: https://news.bbc.co.uk/2/hi/business/1780075.stm [Accessed 23 Feb. 2017].

Bello, S.M., 2012. Impact of ethical leadership on employee job performance. International Journal of Business and Social Science, 3(11).

Cianci, A.M., Hannah, S.T., Roberts, R.P. and Tsakumis, G.T., 2014. The effects of authentic leadership on followers' ethical decision-making in the face of temptation: An experimental study. The Leadership Quarterly, 25(3), pp.581-594.

Craft, J.L., 2013. A review of the empirical ethical decision-making literature: 2004–2011. Journal of Business Ethics, 117(2), pp.221-259.

Crossan, M., Mazutis, D. and Seijts, G., 2013. In search of virtue: The role of virtues, values and character strengths in ethical decision making. Journal of Business Ethics, 113(4), pp.567-581.

D'Antonio, M., 2015. Never Enough: Donald Trump and the Pursuit of Success. Macmillan.

Eisenbeiss, S.A., 2012. Re-thinking ethical leadership: An interdisciplinary integrative approach. The Leadership Quarterly, 23(5), pp.791-808.

Fair employment practices., 2017. [online] Ministry of Manpower Singapore. Available at: https://www.mom.gov.sg/employment-practices/good-work-practices/fair-employment-practices [Accessed 23 Feb. 2017].

Fairwork.gov.au., 2017,  Welcome to the Fair Work Ombudsman website. [online] Fair Work Ombudsman. Available at: https://www.fairwork.gov.au/about-us/legislation [Accessed 23 Feb. 2017].

Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson Education.

Ford, R.C. and Richardson, W.D., 2013. Ethical decision making: A review of the empirical literature. In Citation classics from the Journal of Business Ethics (pp. 19-44). Springer Netherlands.

Hartman, L.P., DesJardins, J.R., MacDonald, C. and Hartman, L.P., 2014. Business ethics: Decision making for personal integrity and social responsibility. New York: McGraw-Hill.

Hassan, S., Mahsud, R., Yukl, G. and Prussia, G.E., 2013. Ethical and empowering leadership and leader effectiveness. Journal of Managerial Psychology, 28(2), pp.133-146.

Jackson, R.W., Wood, C.M. and Zboja, J.J., 2013. The dissolution of ethical decision-making in organizations: A comprehensive review and model. Journal of Business Ethics, 116(2), pp.233-250.

Johnson, C.E., 2013. Meeting the ethical challenges of leadership: Casting light or shadow. Sage Publications.

Kligyte, V., Connelly, S., Thiel, C. and Devenport, L., 2013. The influence of anger, fear, and emotion regulation on ethical decision making. Human Performance, 26(4), pp.297-326.

Kopelman, R.E., Chiou, A.Y., Lipani, L.J. and Zhu, Z., 2012. Interpreting the success of Zappos. com, Four Seasons, and Nordstrom: Customer centricity is but one?third of the job. Global Business and Organizational Excellence, 31(5), pp.20-35.

Kuntz, J.R.C., Kuntz, J.R., Elenkov, D. and Nabirukhina, A., 2013. Characterizing ethical cases: A cross-cultural investigation of individual differences, organisational climate, and leadership on ethical decision-making. Journal of Business Ethics, 113(2), pp.317-331.

Morales-Sánchez, R. and Cabello-Medina, C., 2013. The role of four universal moral competencies in ethical decision-making. Journal of Business Ethics, 116(4), pp.717-734.

Phipps, K.A., 2012. Spirituality and strategic leadership: The influence of spiritual beliefs on strategic decision making. Journal of business ethics, 106(2), pp.177-189.

Resick, C.J., Hargis, M.B., Shao, P. and Dust, S.B., 2013. Ethical leadership, moral equity judgments, and discretionary workplace behavior. Human Relations, 66(7), pp.951-972.

Shin, Y., 2012. CEO ethical leadership, ethical climate, climate strength, and collective organizational citizenship behavior. Journal of Business Ethics, 108(3), pp.299-312.

Sung, C.C.M., 2014. Media representations of gender and leadership: From a discourse perspective. Brno studies in English, 39(1).

Thiel, C.E., Bagdasarov, Z., Harkrider, L., Johnson, J.F. and Mumford, M.D., 2012. Leader ethical decision-making in organizations: Strategies for sensemaking. Journal of Business Ethics, 107(1), pp.49-64.

Yidong, T. and Xinxin, L., 2013. How ethical leadership influence employees’ innovative work behavior: A perspective of intrinsic motivation. Journal of Business Ethics, 116(2), pp.441-455.

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