“Ethical leadership, defining it as ‘the demonstration of normatively appropriate conduct through personal actions and interpersonal relationships, and the promotion of such conduct to followers through two-way communication, reinforcement and decision-making’… [and] the evidence suggests that ethical leader behavior can have important positive effects on both individual and organizational effectiveness” (Rubin et al 2010: 216-17).
Several definitions of the ethical leadership were defined in the different perspectives that it could influences on industry business categories perhaps. Although the definitions are different meanings and there is no absolute answer for moral leadership, the core value of ethical leadership is going to the same direction that is “Doing what is right” based on morality both leading style and business performance (Community-tool-box 2014). A reflection of leader’s behavior is presenting the influence to subordinates and organisation ethically. Integrity is also the important part of the ethical manage with the relationship that ethical behavior create integrity and creating integrity produce ethical manament.
Jim Skinner, McDonald’s CEO, is apparently the good example of the ethical leader that drives McDonald’s to the worldwide brand. He established the business direction ethically by concerning to customers’ mind and healthy. He focused to the children health by launched healthier food option for kids. (MBA 2012)
Skinner produces a trust to customers by launching products with fairness and transparency management. He treats all concerned parties fairly that create loyalty to the McDonald’s brand to customers and employees. This is a kind of the ethical leadership that lead McDonald’s successful.
There is no strictly rule and general concept of ethical leadership but it is combining in the word of ‘Fairness’ that can generate ‘trust’ to become a good ‘collaboration’ in organisation (Community-tool-box 2014).
The way to become a ethical leader is not a difficult way but if managing without concentrate that cane become unethical behaviour. Dishonesty, greed, withholding information, excessive profit, distortion of facts, unfairness, misleading are some kind of the unethical behavior that is immorality and those behavior may harm the organisation structure (Business-balls 2014). The unethical behavior is not unlawful behavior but many people will consider that is unfair and unacceptable in part of business sector.
In the modern time, people is more concern about ethic that obviously action in many activities that cal Corporate Social Responsibility (CSR). CSR is the famous method to show that your organisation is the ethical company. Meanwhile, some companies is using CSR directly to the intrinsic value to create brand awareness and advertising. According to the CSR is the low cost of advertising and creating the positive attitude to public, this is the popular way for the immoral organisation. Therefore, the main objective is not concern about how you conduct or present your behavior but it is the purpose of behavior and activity that you intend to do that is the sustainable strategy to manage your business.
4-V model for ethical leadership is aligning the value, beliefs, behaviors and actions for the good practice of leading style. 4-V medel was created by Dr. Bill Grace based on ethic. There are 4 relevant factors to be a good leader (Ethical leadership 2014):
1. Value – begins and establishs core value individually based on personal identity.
2. Vision – ability to scope of our actions
3. Voice – sharing your voice by articulating our vision to motivate them to action
4. Virtue – it is combined 3 above factors to do right and good things
According to insurance industry in Thailand, there was a big flood occurred in 2011 damaged to the majority of north and central part of Thailand. All damaged insured intended to claim the coverage from the policy which cover flood damage but in the right value of the damage properties that should less depreciation. The ethical companies indemnified regarding to the policy condition. The Managing Director of insurer had issued the giving resident project to help employees for who was impact from this catastrophic damage and donate money to communities for treat victims of disaster.
On the other hand, some companies were using this situation to indemnify the loss over the actual value to help the companies who came from the same countries. Moreover, some company rejected to indemnify the coverage because the management did not have enough money to pay but told the customers about no coverage for flood (Siamturakij 2012).
In conclusion, the leader or manager play the important role to conduct the company’s direction in the integrity for the effective management and maintain the loyalty of subordinates and customers. Making the right choices helps company to gain the long-term benefit. Furthermore, the moral leader can drive company over the competitors by gaining competitive advantages, gaining positive value to customers and strong customers’ loyalty. So, ethical behavior is the essential style for the leader to built the sustainable business strategy and transparency management.
List of reference
Business-balls (2014) Ethical leadership, decision making and organisations. [Online] available on: <http://www.businessballs.com/ethical_management_leadership.htm> [18 June 2014]
Community-tool-box (2014) Leadership and management. [Online] available on: <http://ctb.ku.edu/en/table-of-contents/leadership/leadership-ideas/ethical-leadership/main> [18 June 2014]
Ethical leadership (2014) Ethical leadership. [Online] available on: <http://ethicalleadership.org/about-us/philosophies-definitions/ethical-leadership> [5 July 2014]
MBA (2012) 10 Most Ethical CEOs in Corporate America. [Online] available on: <http://www.onlinemba.com/blog/10-most-ethical-ceos-in-corporate-america/> [18 June 2014]
Siamturakij (2012) Reinsurance ready to indemnify flood 2011 in Thaland. [Online] available on: <http://www.siamturakij.com/home/news/display_news.php?news_id=413358951> [18 June 2014]