Truth 31. Ethical Leadership

Unethical practices by executives at organizations as varied as Enron, HealthSouth, Countrywide Financial, Berkshire Hathaway, Fannie Mae, AIG, and News Corp. have increased the need to consider ethical standards when evaluating a leader’s effectiveness.

Ethics touches on leadership at a number of junctures. For instance, charisma has an ethical component. Unethical leaders are more likely to use their charisma to enhance power over followers, directed toward self-serving ends. Ethical leaders use their charisma in a socially constructive way to serve others. Leaders who treat their followers with fairness, especially by providing honest, frequent, and accurate information, are seen as more effective. Leaders rated highly ethically tend to have followers who are willing to put in the extra effort to ensure work is done properly and on time; and who then experience psychological well-being and high job satisfaction. There is also the issue of abuse of power by leaders when they give themselves large salaries, bonuses, and stock options while, at the same time, they seek to cut costs by laying off long-time employees. And the topic of trust explicitly deals with honesty and integrity in leadership. Because top executives set the moral tone for an organization, they need to set high ethical standards, demonstrate those standards through their own behavior, and encourage and reward integrity in others.

Leadership effectiveness needs to address the means that a leader uses in trying to achieve goals as well as the content of those goals. For instance, the late Steve Jobs was regularly characterized accurately as both a genius and charismatic leader. He was also rude, fiercely demanding, uncompromising, a bully, and the poster-boy for control freaks. He led Apple to the pinnacle of success; in the spring of 2012 it was the most valuable company in America. But the company’s success was achieved by means of a ruthless work culture. Apple has frequently been described as a brutal and unforgiving place, where perfection is expected and accountability strictly enforced. Importantly, Apple’s culture mirrors the personality of Jobs: ruthless, intense, unforgiving, and obsessed with perfection.

In addition, ethical leadership must address the content of a leader’s goals. Are the changes that the leader seeks for the organization morally acceptable? Is a business leader effective if he or she builds an organization’s success by selling products that damage the health of its users? This question, for example, might be asked of executives in the tobacco and junk food industries. Or is a military leader successful by winning a war that should not have been fought in the first place?

Leadership is not value-free. As a leader, you should be prepared to be judged by both the means you use to achieve your goals and the moral content of those goals.