Ethical business leader

A quick and simple way to identify unethical behaviour is to ask, “would I be comfortable with this action being the number one news item on everyone’s phone?”. Adding this question to any decision-making process is a short-cut to identifying ethics in business, but it doesn’t actually solve ethical challenges.

What is ethical leadership in business?

Ethical leadership is the ability to effectively model ethical behaviour while empowering employees to negotiate their own ethical challenges.

Some people see ethics in business as political correctness or a restriction on free speech. It’s important to realise that some of us hold a bias of one sort or another that might be considered offensive today. What’s changed is that those biases are now being called out. Behaviour that once went unchallenged is being addressed openly alongside calls for more ethical leadership in business.

Follow these five steps to achieve ethical leadership in business.

1. Discuss and define ethical behaviour

Ethical leadership starts the conversation. It serves no purpose to hang the organisation’s values in the foyer and forget about them. It’s essential to discuss ethics regularly and emphasise how ethical behaviour helps the organisation to achieve its goals.

2. Ethical culture flows from the top down

While senior executives and boards may scrutinise your results, your decisions and actions will be observed by your employees. A recent survey of employees in large companies found that less than 15 per cent said their leaders took a stand on moral topics, were empathetic, acknowledged their own failings, or made amends when they got it wrong.

3. Employ people who share the business’ values

While experience is important and valuable in a candidate, there’s no point hiring somebody who holds different values to those of the company. It’s unlikely that you’ll be able to mould them into the ideal, ethical employee and most people don’t respect someone who doesn’t share their values.

4. Reward people not only on what is achieved, but how it is achieved

Unethical behaviour must be called out, but the other side of the coin is to celebrate behaviour that displays good ethics. For some people, an encouraging word of praise can be just as powerful as a monetary reward, so tell them when you observe them doing the right thing. Even better, when sharing results with the organisation, detail the ethical ways that the results were achieved. In addition to bringing general awareness to ethics in business, this will empower employees to uphold organisational values.

5. Build ethical partnerships with external stakeholders

Support and empower staff to maintain ethical behaviour outside the organisation as well as within. Invite your suppliers, customers, regulators and other stakeholders to discuss business ethics. Communicating your alignment of values will support and empower employees in their decisions and practices. You may even prompt some stakeholders to improve their leadership in business ethics.

Ethics in business is more than its own reward

Earlier this year, The State of Moral Leadership in Business survey revealed that eight per cent of employees believe their workplace would make better decisions if their business leaders treated others in the way they’d like to be treated. With the moral authority that would come from such behaviour, 59 per cent say their organisations would be more successful in addressing their biggest challenges. And 62 per cent agreed their colleagues would be more effective and productive if their business leaders could rely more on their moral authority than on their formal authority.

So, it makes good business sense that organisations with ethical leadership will have more satisfied employees and a healthier bottom line. It follows that there will be a higher demand for ethical leaders. But if all leaders and employees are ethical, won’t they all make the same decisions?

Employing for cultural and ethical fit doesn’t mean that you’ll end up with a workforce of clones. In fact, finding employees with similar ethics and different experiences helps to bring different approaches to problems. Look at any group of like-minded people, while there’s a commonality that brings them together, they all have their own individual uniqueness.

Sharpen your ethical leadership skills

Ethics haven’t always been at the forefront of business education. A lot of ethical leadership has been learned on the job and through the experiences of others. The good news is that you don’t have to start at the beginning to sharpen your ethical leadership skills.

Deakin's Master in Leadership online recognises the leadership capabilities you’ve demonstrated in your career. Through reflective practice, you’ll apply leadership concepts to develop your leadership and identify key challenges in your workplace that you can address immediately. Find out more by contacting our Enrolment team on 1300 043 524.