Business Environment

Group E

Ethical leadership is leadership that is involved in leading in a manner that respects the rights and dignity of
others. Leaders who are ethical demonstrate a level of integrity that is important for stimulating a sense of
leader trustworthiness, which is important for followers to accept the vision of the leader. Ethical leadership
really has two elements. First, ethical leaders must act and make decisions ethically, as must ethical people
in general. But, secondly, ethical leaders must also lead ethically in the ways they treat people in everyday
interaction, in their attitudes, in the ways they encourage, and in the directions in which they steer their
organizations or institutions or initiatives.
Some important components of ethical leadership

The willingness to encourage and take seriously feedback, opinions different from your own, and
challenges to your ideas and proposed actions.
The encouragement of leadership in others.
Making the consideration and discussion of ethics and ethical questions and issues part of the culture
of the group, organization, or initiative.
Maintaining and expanding the competence that you owe those who trust you to lead the
organization in the right direction and by the best and most effective methods.
Accepting responsibility and being accountable.
Perhaps most important, understanding the power of leadership and using it well sharing it as much
as possible, never abusing it, and exercising it only when it will benefit the individuals or
organization you work with, the community, or the society.

Guidelines for Ethical Leadership as per article

1. Treat corporate values and formal standards of conduct as absolute: The Company is either
working in the host country or abroad, the company must follow its ethical values, formal standard
of conduct. The company must formulate its ethical standard in such a way that it must support good
relationship between coworkers within the company.
2. Design & implement conditions of engagement for suppliers and customers: Whenever the
company undertakes a business it must deal with some of the suppliers as well as customers. So,
while doing business with them the company must design and implement conditions of engagement/
agreement in which it find out rather the ethical values and principles of the suppliers of customers
are matching with us or not. If it matches it is ok but if there is gap or contradict with the companies
ethical values like child labor, crime, against environmental standard, against human rights, then the
company should trade off with them on the applied principles.
3. Allow foreign business units to help formulate ethical standards and interpret ethical issues:
The host company if working with collaborating any foreign country then it must allow foreign
subsidiaries to augment the lists of corporate ethical principles with their own suggestions.
4. In host countries, support efforts to decrease institutional corruption: Along with the host
company the foreign companies also have to follow the host companys values and ethics. Both the
company must do the supporting activities of the host countrys tax system, import and export
procedure, procurement practices and any other legal practices. If any unethical activity is done by
foreign company, the host company must take action against foreign company.
5. Exercise moral imagination: This means resolving tensions responsibly and creatively. For
example, Coca cola for instance, has consistently turned down requests for bribes from Egyptian
officials but has managed to gain political support and public trust by sponsoring a project to plant
fruits trees.

Additionally from our opinion:

1. Reflect on Values & Establish Trust: To focus the appropriate attention on the ethical tone of the
organization, a leader must "draw on their own fundamental values and capabilities" in order to
optimize their leadership potential (Quinn, 2005). The company must build an environment of trust
with employees in order to create an environment where employees feel free to discuss ethical
dilemmas and issue with management.
2. Establish a Shared Ethical Vision: To ensure buy-in and commitment from the organization,
include members from various levels of the team to help create a "Code of Conduct" that is aligned
with the Ethical Vision of the organization.
3. Act: To be effective, the leader must show that all the organization is serious about ethical behavior.
All reports of unethical behavior must be investigated thoroughly. Furthermore, all violators of
ethical standards must be punished equally and justly throughout the organization, regardless if the
perpetrator is a senior executive or first line hire. In addition to punishing negative behavior, effort
should be made to reward and recognize positive ethical behavior (Trevino and Nelson, 2005).
4. Monitor and Sustain Ethical Behavior: The leader must consider ethical leadership a key aspect of
their role as a manager. It cannot be seen as a passing organizational fad. Effort must be made to
gather feedback through surveys, focus groups, one-on-one interviews, etc. to identify employee
concerns regarding the ethical environment where they work.
5. Ethical Communication & Collaboration: Ethical leaders set the standard of truth for every
employee they lead. The moment people take leadership positions, they have an opportunity to place
the highest premium on truthfulness. Ethical leaders need many advisors. They pick the most astute
within their organizations and hire some from other companies, but they surround themselves with
answers. Wise leaders collaborate to incorporate best practices, solve problems, and address the
issues facing their organizations.
6. Ethical Succession Planning: If principled leaders possess a need for control, they satisfy that need
by establishing strong organizational standards and operational procedures for quality and
communication. Yet for the long-term success of the organization, ethical leaders must set aside
issues of "turf" and let other leaders surface within the company, giving potential successors
opportunities to exercise and build their leadership skills.
7. Ethical Tenure: How long should a leader lead? Whereas the most important leader in the American
government leads for four to eight years, industry has no governing standard to length of tenure.
Should leadership in industry, like its counterpart in government, have a shelf life? The answer lies
on the conduct of the leader. Leadership expert Peter Block contends that "We search, so often in
vain, to find leaders we can have faith in."
Ethical leadership requires from the leader a coherent ethical framework that will guide her decisions and
actions all the time, not only in specific situations. A significant part of the world is destroyed every day by
unethical behavior. The billions of dollars of lost asset value of Enron, Anderson, world.com, Global
Crossing, Micro Strategy, the huge cost in trust in government by everyday people due to Nixon, Agnewand
Clinton, all take a huge toll on the world. Until we develop a solid theory of ethical leadership, begin to
monitor leadership from an ethical perspective, and begin to define ethical leadership in positive terms as
opposed to todays set of dont dos, we cannot generate the unanimity and political will to demand that all
leadership consist of ethical leadership.