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January 25, 2023

The Power of an Ethical Leader

Bruna Martinuzzi

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Distinguishing between what you have a right to do and what is the right thing to do cuts to the heart of ethical leadership: being an authentic leader who knows and does the right thing.

Today, more than ever, ethics are a leadership imperative. Ethical leaders rise above the din of the crowd to inspire us at a time of uncertainty and large-scale corporate cases of fraud and unethical behavior in organizations.

It's not surprising that in a 2021 Gallup poll, both Generation Z and millennials rated ethical leadership highly.

Ethics are a key value for these generations, in particular. A recent Deloitte survey reveals that nearly 37 percent of Gen Zs, and 36 percent of millennials, have rejected a job and assignment based on their personal ethics. Moreover, almost half of all Gen Zs and millennials in senior positions have declined positions and projects that did not conform with their values and ethics.

Gen Z and millennials currently account for approximately 38 percent of the global workforce. They will increase to about 58 percent by 2030, making these upcoming younger generations the most dominant in the workplace in less than ten years' time.

When it comes to ethical leadership, how ready is your organization to attract and retain this talent pool?

What Is a Definition of an Ethical Organization?

Simply put, an organization that practices ethical leadership is where all those in management and leadership positions set an example of ethical conduct in their everyday actions and relationships.

What Is the Impact of Ethical Leadership?

A 2021 survey by LRN, based on data collected from 8,000 employees worldwide representing 17 industries, showed that companies with the strongest ethical cultures outperform their peers by 40 percent across all measures of business performance. A company's ethics are only as good as its leaders. Ethical leaders:

  • Establish an ethical culture in an organization.
  • Attract the best employees.
  • Inspire employee loyalty.
  • Increase investor confidence and trust in a company.
  • Engender customer loyalty.
  • Garner positive press.
  • Attract the best vendors.
  • Help boost the bottom line.

The Dangers of Having Non-Ethical Leaders

We've all read about significant unethical behaviors that become headlines, from bank employees creating fake profiles to file fraudulent applications to government relief programs, to a major car company cheating on emissions tests. While these are significant cases that may seem far removed from our daily life, how about the small acts of unethical behavior right on our doorsteps?

Let me count the ways:

  • Cheating on expense reimbursements.
  • Stealing company stationery items.
  • Altering a timesheet.
  • Taking credit for someone else's work.
  • Doing work that isn't related to the office during office hours.
  • Sidelining a deserving employee as a result of nepotism.

Unethical leadership spreads like a virus, infecting employees at all levels. Unethical leaders breed dishonest employees. For example, a manager seen stealing company products influences other employees to do the same.

Numerous studies show the devastating effects of unethical leadership on employees and organizations. These include poor employee performance, negative attitudes, anxieties, frustration, motivational decline, loss of trust toward the leaders, work alienation, and related negative consequences for employees' private lives, to name a few.

Can an Inspirational Ethical Leader Turn an Unethical Culture Around?

We all want to work for ethical organizations. But it may be unrealistic to expect all organizations to do the right thing consistently in a tumultuous world.

A coaching client of mine once lamented that he'd unintentionally found himself working in an environment where some parts of the company weren't operating ethically.

So, what do you do in this case?

First, it's essential to understand that if you work for an unethical organization, you're walking a fine line between corporate ethical responsibility and individual responsibility, especially if you're a manager or leader in the organization. Regardless of what goes on around you, have your own code of conduct and let people know what you stand for. Build a good reputation for honesty by consistently doing what you say you will do.

You also want to attract positive attention to yourself by honing your leadership skills and developing your leadership presence. Consider these points to help you raise your leadership profile:

  • Enhance your presentation and facilitation skills and learn how to chair a meeting with savvy.
  • Raise the bar on your communication skills. Speak as a leader. Don't just deliver the facts – learn to inspire your listeners through storytelling and metaphors.
  • Work on building rapport with higher-ups and colleagues. Allow them to get to know you.
  • Put effort into becoming an expert in your area of responsibility. Being regarded as an expert confers a leadership status and is crucial in influencing others.

While you may not be able to turn the entire organization's culture around, you can, by example, impact the culture of your own team or department positively.

At a minimum, your leadership presence will be noticed and can influence others, starting with those closest to you on your team. Modeling the way can have a ripple effect in one department and, with time, could influence other areas of the organization.

Consider as well that unethical leaders are eventually ousted. That's when senior leaders look around for a suitable replacement. If you've consistently shown up as an ethical leader and have worked on your leadership skills, chances are you'll be on the radar of the powers that be.

This is what happened to Vivian (not her real name). Vivian reported to Ken, a self-interested and arrogant senior leader. Ken initially got away with many infractions, including inappropriate use of corporate funds, such as expensing massages for his wife at the country club. Other instances included giving preference to hiring his daughters as summer interns, altering numbers in reports, and asking subordinates to cut corners by skipping standard procedures. But he tipped the scale when he cut a deal with a vendor for personal financial gain. When he was fired, the company replaced him with Vivian, who'd made inroads by showing leadership at every touchpoint. People notice those who stand out as ethical leaders.

Final Thoughts on Ethical Leadership

Author Zig Ziglar once said, "Live in such a way that if someone spoke badly of you, no one would believe it." Your reputation and ethics go hand in hand – even the slightest unintentional ethical lapse can harm your leadership.

To be considered an ethical leader who inspires and positively impacts the culture, you must guard your reputation with your life. Your reputation is your passport to ethical leadership.

About the Author:

Bruna is an educator, author and speaker specializing in emotional intelligence, leadership, communication, and presentation-skills training.

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