Can Ethical Leadership Be A Predictor Of Success?

As we discuss ethics in business, it is important to consider the role of ethical leadership and the interplay between culture and outcomes. We presume that ethical leadership is a necessary qualification for leaders within an organization. Studies show that ethical leader behavior positively affects employee morale, productivity, and increases employee trust. Conversely, studies show that unethical leader behavior increases turnover, decreases employee job satisfaction and negatively impacts employee attendance and engagement.

However, the question remains; does ethical leadership increase the leader’s own effectiveness, mobility, and promote-ability? What are the personal results for leaders? Can ethical leadership be a predictor of personal success? How do ethical leadership characteristics factor in decisions to promote or offer greater visibility and opportunities to a leader or potential leader?

Significant research indicates that qualities such as honesty and integrity, as well as fairness and charismatic leadership styles are routinely rated by supervisors as important indicators of a leader’s effectiveness. These characteristics, deemed necessary for a leader’s success, are also considered characteristics of ethical leadership. That being the case, it can be reasonable to presume that ethical leader behavior increases the leader’s potential for career advancement…at least initially. Being viewed as an ethical leader has been determined to be a baseline for effectiveness, mobility and promote-ability.

When you think about it, it really does make sense. People do business with people they like and trust. An ethical leader who builds trust within the organization and outward in the community can have a direct impact on bottom line results. Ethical leader behavior positively reflects on the organization as a whole – internally and externally. Business success is based, in part, on relationship building—which speaks to trust, which is at the core of ethics. As such, it is not a huge leap to see that ethical business practices and ethical leadership can result in increased profits and the achievement of desired business results. These consequences speak to a leader’s overall job performance and effectiveness; important factors in mobility and promote-ability.

It is sometimes the pressure to increase profits and achieve desired business results that can derail the efforts of leaders to be ethical. However, culture has been recognized as significantly influencing organization-wide ethical behavior and compliance. Organizational culture can often dictate the leader’s response in the face of conflicting values and desired outcomes. The culture of the organization provides the guidance or framework from which leaders operate. The more imbued ethics are into the culture of the organization, the more likely it is to foster and reward ethical behaviors.

Interestingly, a study published in the California Management Review in 2008, stated that if an organization wishes to foster a culture that embraces ethics, it must concentrate on developing an attitude of fairness. Fairness was seen as the primary driver of an ethical culture in business.
While no one has yet to concretely correlate increased profit with ethical leader behavior; it can be posited that without an ethical baseline, relationships would be tenuous and difficult to maintain. Relationships are key to business success. Relationships and trust, so important in ethical business practices, are increasingly important in a global economy as well. To compete globally, organizations must rely on the knowledge, skill, experience and judgment of their people. Our work environment is a knowledge-based environment. Necessarily, the role of a leader is vital, and the challenges are considerable. Fostering an atmosphere where ethical leader behavior is the norm can go a long way to bridge cultural differences that exist in a global economy.

Therefore, when we consider the personal value of ethical behavior and whether such behavior results in increased mobility and promote-ability; it can be concluded that without an ethical baseline, a leader may remain stagnant in his/her career. The characteristics of an ethical leader are some of the primary qualities supervisors consider when there is an opportunity to promote or move a candidate. Ethical leadership also becomes important as we move up the corporate ladder and interface with others who bring those qualities to the table. Additionally, ethical leadership fosters relationships that are well grounded, lasting, and key to developing global alliances.