Leadership and Ethics

Leadership is a skill where it enables a person to have the ability to not only lead but also guide others in reaching the goal. By having good and also effective leadership skill, the leader will be able to maximize the effort of the people working under him or her in order to reach a goal set by the team or even the organisation. The ability to socialize and influence people also plays an important part for a person to be a good leader (Kruse 2013).

Ethical leadership is different than leadership. It is where the personal actions and also interpersonal relationships of a person are being demonstrated in the right or proper behaviour. Ethical leaders can also influence others in being more ethical through their actions. Leader can use a two-way communication when interacting with others. In an organisation, ethical behaviour can be reinforced so people will be aware of it and be more ethical. Ethical decision making from a leader will also make others to be more respectful to that leader and will also be more willing to follow that leader’s example (Brown et al. 2010: 216). Ethical leaders are also good role models due to their ability in capturing the attention of people (Brown and Mitchell 2010: 585).

The 4-V model of ethical leadership is important for ethical leaders. Dr. Bill Grace stated that this model was introduced so that one will be able to understand the differences between leadership and also ethics and avoid threats that may doubt their ethical way (Dr Subhasree 2012). Having values and visions, organisation can set purpose and direction through decision making and predicting future consequences. Voice is where by motivating and influencing others, it can provide connection and actions. And without the voice of the leader, the company will not have values and vision. Therefore, the voice is important for effective leadership. As for virtue, it is concerned with leaders using the correct conduct to achieve their goals (The Centre of Ethical Leadership 2016).

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Figure 1: The 4-V model (Source: The Centre for Ethical Leadership 2016).

Two theories were used in order to better understand the ethical behaviours in organizations. There are deontological (duty-based) ethics and teleological (result-based) ethics (Mullins 2013).

Video 1: Deontological and Teleological (Source: Webster 2014).

Deontological ethics is aligned to the action and not the results that come from their actions (BBC 2014). Teleological ethics is different compared to deontological ethics. It is aligned to the consequences or results from a person’s actions. Therefore, the action will be righteous when the consequence of the action is also righteous (BBC 2014).

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Figure 2: Ethical Paths in Western Philosophy (Source: Traer 2007).

For an organisation to be successful, the leaders, through their actions and behaviour, must serve as a good role model so that others will be willing to follow him or her (Mullins 2013).

One ethical leader will be the former CEO of McDonald, Jim Skinner. Skinner had a keen sense of business knowledge and was fair to both the customers and employees. Before becoming CEO, McDonald was in a bad state where people criticize the quality of the foods and was said to be responsibility for the obesity epidemic (Adamy 2007). Skinner was able to solve the problem and increase the company’s earnings by 40% in four years by just focusing on value and service (MBA Online 2015). During his time as CEO, the market capitalization exceeded $100 billion (McDonald’s 2012). He had earned many wards like “Executive of the Year” and “Most Respected CEO” (MBA Online 2015).

Skinner was responsible in addressing the issue in relate to the healthier food options especially for the children. The company had taken account from health-conscious parents in regards to the Happy Meal for not meeting the nutritional standards. Here, the company had made immediate changes to meet the standards like offering 1.1 oz. of French-fry or adding apples to every package that was purchase by the customers. It is said that the overall calories was reduced by 20% (Melnick 2011).

Figure 3: Jim Skinner as “CEO of the Year” (Source: Cooper 2012).

An example of a leader that performs unethical deeds will be Ramalinga Raju, who was the founder and chairman of Satyam Computers (India). Just like Skilling from Enron, he was sentenced to seven years in jail due to his involvement not only in data thefts but also the bribing of staff (Balachandran 2015). He confessed that he had been responsible in manipulating the profit of the company for many years and cheating many investors. He was responsible for creating more than 1 billion USD fictitious cash balance (The Economic Times 2009). Due to the drop in Satyam’s shares, many investors that were involved lost as much as 2.2 billion USD (Balachandran 2015). This shows that unethical leaders can bring negative influence on their followers and their organisations.

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Figure 4: Saytam Scandal (Source: Accounting-Degree n.d.).

Figure 5: Satyam Scam (Source: IBN Live 2009).

Unethical leadership may help to achieve the objectives and goals, but this style can create negative influence in their followers and also organisation. The company may also suffer loss of reputation, business, and inefficient outcomes for the stakeholders. Therefore, ethical leadership must be focused on because it is sustainable in creating many positive effects for both individual and the organisation and also helps the overall performance of company in the long-term period.

(803 words)

References

Accounting-Degree (n.d.) The 10 Worst Corporate Accounting Scandals of All Time [online] available from < http://www.accounting-degree.org/scandals/ > [23 January 2016]

Adamy, J. (2007) ‘How Jim Skinner Flipped McDonald’s’. The Wall Street Journal [online] 5 January. available from < http://www.wsj.com/articles/SB116794732551067483 > [24 January 2016]

Balachandran, M. (2015) The Satyam Scandal: How India’s Biggest Corporate Fraud Unfolded [online] available from < http://qz.com/379877/the-satyam-scandal-how-indias-biggest-corporate-fraud-unfolded/ > [24 January 2016]

BBC (2014) Introduction to Ethics [online] available from < http://www.bbc.co.uk/ethics/introduction/ > [21 January 2016]

Brown, M., Rubin, R., and Dierdorff, E. (2010) ‘Do Ethical Leaders Get Ahead? Exploring Ethical Leadership and Promotability’. Business Ethics Quarterly [online] 20(2), 215-236. available from < http://www.ebscohost.com >  [23 January 2016]

Brown, M. and Mitchell, M. (2010) ‘Ethical and Unethical Leadership: Exploring New Avenues for Future Research’. Business Ethics Quarterly [online] 20 (4), 583-616. available from < http://www.ebscohost.com >  [23 January 2016]

Cooper, M. (2012) Understanding the McDonald’s Leadership “Special Sauce” [online] available from < http://chiefexecutive.net/understanding-the-mcdonalds-leadership-special-sauce/ > [21 January 2016]

Dr Subhasree, K. (2012) ‘Ethical Leadership: Best Practice for Success’. Journal of Business and Management [online] 1(1), 112-116. available from < http://www.iosrjournals.org/iosr-jbm/papers/ICIMS/Volume-1/14.pdf > [21 January 2016]

IBN Live (2009) ‘Satyam Scam Bigger Than Disclosed by Raju: CBI’. IBN Live News [online] 22 March. available from < http://www.ibnlive.com/news/business/satyam-scam-bigger-than-disclosed-by-raju-cbi-311820.html > [21 January 2016]

Kruse, K. (2013) What is Leadership? [online] available from < http://www.forbes.com/sites/kevinkruse/2013/04/09/what-is-leadership/ > [21 January 2016]

MBA Online (2015) 10 Most Ethical CEOs of 2015 [online] available from < http://www.onlinemba.com/blog/10-most-ethical-ceos-in-corporate-america/ > [21 January 2016]

McDonald’s Corporation (2012) McDonald’s CEO Jim Skinner to Retire; Board Elects Don Thompson as Successor [online] available from < http://www.marketwired.com/press-release/mcdonalds-ceo-jim-skinner-to-retire-board-elects-don-thompson-as-successor-nyse-mcd-1634757.htm > [23 January 2016]

Melnick, M. (2011) How McDonald’s Plans to Make Happy Meals Healthier [online] available from < http://healthland.time.com/2011/07/26/how-mcdonalds-plans-to-make-happy-meals-healthier/ > [22 January 2016]

Mullins, L.J. (2013) Management and Organisational Behaviour. 10th edn, Pearson Higher Education

The Centre for Ethical Leadership (2016) Concepts and Philosophies [online] available from < http://www.ethicalleadership.org/concepts-and-philosophies.html > [21 January 2016]

The Economic Times (2009) Forbes names Ramalinga Raju as world’s 4th most outrageous CEO [online] available from < http://articles.economictimes.indiatimes.com/2009-11-27/news/27642413_1_forbes-list-ramalinga-raju-fund-manager > [24 January 2016]

Traer, R. (2007) Ethical Traditions [online] available from < http://doingethics.com/DEE/dee%20ch1/ethical.traditions.htm > [21 January 2016]

Webster, D. (2014) Deontological and Teleological [online] available from < https://www.youtube.com/watch?v=J9D6Dc3zHt0&w=560&h=315%5d > [21 January 2016]

 

 

 

 

 

 

 

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12 thoughts on “Leadership and Ethics

    1. Hi David,
      Welcome and thanks for commenting.

      Taken from Participedia:
      Service, Polis, and Renewal are three additional key factors in Ethical Leadership (Lee and Seo 2012).

      Service – bridge between Vision and Values because a true, selfless Vision is to be discovered only after providing service that support one’s Values.

      Polis – Greek word that means ‘city’ and it constitutes the English word ‘politics’. It is the product of a leader doing the work of presenting and sharing the Vision with a Voice in a public context.

      Renewal – last step that takes places while Voice transforming into Values. This is when the works done by a leader actually renews or modify the society’s original state as a result of Polis.

      Like

  1. Hi Law,

    Just wanna ask: Do you mind giving a scenario (or two) to illustrate the difference between ‘Deontology’ and ‘Teleology’ thinking?

    Also, a recommendation: For the leader Ramalinga Raju, perhaps you could include his picture (since you’ve already placed Skinner’s picture).

    Like

    1. Hi Wong,

      Thanks for commenting and will take into consideration by adding the picture for that example.

      As it is stated, ‘Deontology’ is aligned to the action while ‘Teleology’ is aligned to the consequences or results from a person’s actions.

      As an example, “A father steals food in order to feed his starving family.”

      From a Deontology point of view, we would argue that stealing is wrong, no matter what the consequence may be.

      But from a Teleology point of view, we would argue that the outcome that produced the most happiness is the most favourable outcome. From the action above, it would acceptable in the eyes of others since it is related to saving someone’s life.

      Like

  2. HI Law,
    Well written blog! Glad to be able to learn a new model for ethical leadership, the 4-V model by Dr Bill Grace and how the 4-Vs could be used to enhance the direction a leader. Good work.

    Seah Xin Wei

    Like

  3. Hi, Law

    Good job.

    I was able to understand a example of unethical leader, which was Ramalinga Raju, and I was also surprised because I have never heard the incident. On the other hand, I want to know deeply why he did such evil action.

    Thanks

    Susumu

    Like

    1. Hi Susumu,

      Thanks a lot for commenting. There are many reasons that leaders commit unethical ways. For Ramalinga Raju case, the main reason was mainly due to him being overconfidence. While it’s important to be confident in business, being overconfidence will lead to illogical rationalizations or overlook the complexity of problems or issues. All executives do not start out thinking that they would commit fraud. But they end up being in a position where they feel that it is the only way to get out of a bad situation.

      Liked by 1 person

    1. Hi Gaishnav,

      Thanks for commenting.

      As for Jim Skinner, I believe that he is a deontologist as we can see that he had taken account from health-conscious parents in regards to the Happy Meal by offering 1.1 oz. of French-fry or adding apples to every package that was purchased.

      As for Ramalinga Raju, he was a consequentialist as he commit data thefts but also the bribing of staff so that the company can gain profit from it.

      Like

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